Thursday, March 23, 2006

How to fund a political party

I note that there has been a certain amount of discussion on this subject of late, in the light of revelations about Labour being funded by some decidedly dodgy-looking loans.

Political party funding has always been a controversial subject; this isn't new, and election campaigns have always been expensive exercises. I'm not going to write an essay on the history of electoral campaigning and the funding thereof, but suffice it to say that money has always been spent in quantity on elections, and that the concept of funding parties through membership subscriptions and jumble sales was never anything to do with the real world.

So where have parties got money from in the past? Mostly, rich individuals with something to gain - either personally wealthy candidates, or donors who got honours, or government contracts. Remember that Lloyd George, as well as selling peerages, funded himself through contract bribes and insider trading. Occasionally, funds have come more openly from businesses, from trades unions, and even occasionally from a mass membership. But the last is very rare indeed - few political parties have enough members to make any impact.

The proposal that is widely bandied about is state funding. Of course, we already have state funding of political parties, in the form of Short and Cranbourne money, as funding for group officers and political assistants on local councils, in the office costs allowance for elected parliamentarians, and in policy development funds. But most of that money comes with strings attached - the one major string in most cases is that it can't be spent on campaigning.

But there are major objections to state funding of political parties.

First, it's clearly unfair for all parties to be funded the same, as tiny minority parties would then get loadsamoney. Other allocation schemes proposed are either mechanical based on votes cast - which will trail public opinion, probably quite badly (imagine how much money the Tories would have been getting in 1996, based on the 1992 General Election, but when they were about to lose in a landslide), or are going to involve subjective measures, or opinion polls. Any measure that takes into account numbers of elected representatives faces both the distortion of the FPTP electoral system and the further distortion of the huge variations in council seat sizes from one council to the next. Coming up with a scheme for allocation that is widely regarded as fair is going to be challenging to say the least.

Second, many people will object to their taxes being put to this use. Hostility to politicians isn't new - That Was The Week That Was is 43 years ago, and the sentiment is older than that - but it is relatively strong at the moment, and many people's antipathy is going to make them very annoyed to see some of their taxes going into political parties' coffers. Some extreme parties are going to provoke even more radical reactions. It's traditional to mention the BNP at this point, but it's not hard to devise schemes to avoid giving significant money to a party with negligible elected representation. But in Northern Ireland that just doesn't apply - Sinn Fein will inevitably gain a great deal of funding, as will the DUP. And there are very few people who will be comfortable with their taxes going to both Ian Paisley and Gerry Adams.

Parties just having less money simply isn't a credible option - they will just come up with "soft money" deals like in the USA, where an arms-length body gets the money. Soft money also creates a problem in that it - by definition - doesn't go into the official structures of the party, which means that it increases the power that a clique of power-brokers have and weakens that mass membership's power.

My solution is this:

When people pay their income tax (ie on their P60 at the end of each year, if they pay by PAYE, or on their tax return if they have one) taxpayers can choose an accounting unit of any registered political party to receive an amount equivalent to 0.1% of the taxpayer's taxable income. If they don't choose to direct money to a political party, then the money goes into the General Fund, the same as the rest of their tax.

A 0.1p income tax should raise about £350m, but I expect a majority of the population to decline to hand the money over to any party, so I reckon we're looking at about £30m per party per year, which is a serious amount of money in party terms, and would mean that regulations to stop parties getting vast wodges of dosh from individual donors would have a chance of being effectively enforced.

The benefits I see:
  • No-one is compelled to contribute
  • No-one can see their money given to a cause they oppose
  • Money goes to party directly, to appear in public accounts and where the party's internal democracy can determine what happens to it.
  • Putting the money in the hands of accounting units means that people can make their donation to a local party body - a constituency, or a local council, or a region, or whatever, instead of all money going to the centre. This should prevent the centralising effect that you would expect from more conventional state funding.
Some necessary tweaks (the small print, if you like): Taxpayers would be entitled to either appear on a list of donors that the accounting unit recieves along with its cash, or not. The amount they donated would not be revealed. The total number donating to each accounting unit would be public, as would the amount donated. Obviously, parties could have internal transfer processes to move money into poorer areas, or not.

Tuesday, March 07, 2006

Why not privatise the Royal Mail

Just realised that my original post on this didn't explain why we shouldn't just privatise the Royal Mail - I very carefully explained that selling any shares would either be tantamount to privatisation, or else they wouldn't sell, and then didn't say what was wrong with privatisation in the first place.

Firstly, if our policy is to be privatisation of the Royal Mail, then the case for privatisation has to be made openly and publicly, rather than simply be a consequence of a motion that is passed for other reasons and argued on some other basis. I don't think it's right to commit the party to effective privatisation of the Royal Mail without Conference knowingly voting for privatisation.

Secondly, Royal Mail letter delivery is a natural monopoly. This is because of a very ingenious scheme devised by a Mr. Rowland over a century and a half ago. In the modern delivery sector, it's known as the USO - the Universal Service Obligation. The rule is that the Royal Mail is obliged to deliver to every address in the country at the same rate and cannot offer discounts to that rate based on the location of either the sender or of the addressee.

Without USO, delivery prices would be based on cost, which would competitively drive down prices in urban areas, and drive up prices in rural areas, especially in remote regions such as the Scottish Highlands and Islands. If you don't believe me, check out courier prices, which is a genuinely deregulated market.

The monopoly on letter delivery (which is enforced by requiring anyone other than the Royal Mail to charge a minimum of £1 per item) is natural, in that there is an expensive infrastructure that would be very costly to duplicate for a competitor. The simplistic solution of removing the monopoly, but simultaneously imposing the USO on any competitor wishing to move into the same market, would result in no competitor entering the market - the Royal Mail has a large, expensive, fully amortised infrastructure, and any competitor would need to build one from scratch and would then have to pay for the financing costs, while simultaneously needing to undercut RM to build market share. It's only interesting if you can drive RM out of the market and then raise prices to take a large monopoly rent once you own the market yourself.

Is there really a big infrastructure cost? Yes: post boxes, and the delivery network. The sheer number of postmen is huge, and would cost a fortune to recruit. The rest of the network is equivalent to something the couriers already have, but just on a much bigger scale; still, they certainly could scale up the sorting/processing function. It's also massively inefficient to have multiple delivery networks. With letter post, you really do need to have a postman passing every delivery point every day; with couriers, you only need a van down a given road once a week or so. Change that to vans of two or three different companies sharing that demand and it's fine; change to two or three postmen and you're paying two or three times the infrastructure cost.

OK, so it's a monopoly. Private monopolies are a problem; they seek to obtain monopoly rent and to turn that into profit. With barriers to entry on the scale of the USO/postal service, any private monopoly could easily raise letter prices significantly to take a large monopoly rent.

So we have the option of scrapping the USO, which would make for cheaper postal services in urban commercial areas (where each delivery point is getting a sackful daily anyway), not much difference for suburban areas, and increases for rural areas, with big increases for genuinely remote areas as they lose the cross-subsidy.

Or we have to accept the natural monopoly that is implicit in the USO and cross-subsidy. If we accept that, then our options are a regulated private monopoly, a public sector operation, or a third-sector public-interest corporation.

The arguments against the pure public-sector operation, in an area where a profitable business is possible, are manifold. The two principal problems are political interference in commercial decisions, and the public sector's tendency to take out all the profit and not leave in enough for reasonable infrastructure investment.

The arguments against a regulated private monopoly are more to do with regulatory capture, and the perennial struggle against monopoly rent in a case where ultimately the important business decisions are being made by a regulator which is inevitably not in possession of the full facts, as the business will be continually arguing for ever higher stamp prices and bending every rule in sight to get them.

Public-interest corporations, well-designed, do not have the incentives for monopoly rent that the private sector does - there is neither dividend, nor any possiblity of senior management directly benefitting through stock options, or even large salaries.

Now, if it's a pure staff co-operative, without customer involvement, then there is a risk of taking monopoly rent to finance excessive staff levels and over-generous salaries and benefits. A customer co-operative, like the mutual model for building societies and the likes of the Co-operative Retail Society and the Co-operative Bank, should avoid the worst of that model, though there may still be a tendency to a bit of excess fat in a non-competitive environment.

Anyway, that's the case on ownership models proper, that I failed to make in the previous post.

Monday, March 06, 2006

Privatising the Royal Mail

This motion we passed in Harrogate was not clever, but it wasn't a straight privatisation either. Mind you, not that is matters - the media and the other parties will talk endlessly about privatisation in any case.

I can understand the desire to raise some large chunk of money to try to save local post offices, but there are two essential weaknesses in selling off a minority shareholding in the Royal Mail to do so:
  1. The sell-off gets in capital money, not revenue, and the Post Office network needs money every year, not a one-off infusion of cash.
  2. Either the minority shareholding will mean that the Royal Mail is a commercial profit-taking business, in which case we might as well have privatised it in the first place, or the co-operative/state sector 51% will be able to resist short-term profit-taking pressures, in which case the shares won't be worth anything and we won't raise the money we want to.
What we should have proposed is to turn the Royal Mail into a third sector public-interest corporation. Whether that should be a workers' co-operative, a customers' co-operative, a trust or some new legal status, either created specifically for the purpose, or made generally available to other third-sector corporations is the sort of question that the high-powered working group should have been working on. But there are too many economists and financiers on this group for me to regard the idea that 51% is still state/co-operative owned as anything other than an attempt to convince conference representatives into supporting privatisation without realising that is what they were doing.

If we feel that an injection of cash from the Royal Mail will turn the Post Office network back into a profitable business, then bonds could be issued on the open market on behalf of the Royal Mail corporation before it is separated from the public sector, with that money turned over to the Post Office. If a more long-term revenue stream is wanted, then give a chunk of the RM shares to the PO – that would create a long-term stream of revenue. Obviously, if the money is to be directed to unprofitable sub-post-offices, then it would need to be done through a trust mechanism, rather than directly to the top-line of POCL.

Beyond Gay Marriage

This post was transferred from my original blog

This is an attack on polyamory. I'm not poly, but I have many friends who are. The entire argument seems to be that it will negatively affect the upbringing of children:

"Once the principles of monogamous companionate marriage are breached, even for supposedly stable and committed sexual groups, the slide toward full-fledged promiscuity is difficult to halt."

My entire reaction to that is: So What? It might mean more promiscuity, but I think you need to prove there's something wrong with promiscuity.

"Polyamory websites are filled with chatter about jealousy, the problem that will not go away."

So is nearly any discussion of monogamous marriage.

"Once monogamy is defined out of marriage, it will be next to impossible to educate a new generation in what it takes to keep companionate marriage intact."

Companionate marriage is, itself, a deeply unstable institution. Economic, arranged marriage, is stable - as long as expectations are low enough. Though it's well worth remembering that the arranged marriage era is also the era of the formally established official mistress.

Fish Swim

This post was transferred from my original blog

Fishing is a big environmental problem for a reason that can be summed up in two words:

"Fish Swim"

I know it sounds silly, but bear with me.

National waters are those within 12 miles of the nearest shore, and belong to the same nation as that nearest shore. Beyond that, out to 200 miles, is the EEZ (Exclusive Economic Zone), which is not national territory (so ships of any flag can travel through EEZ waters even without the consent of the country). In the EEZ, the country can regulate economic exploitation of the resources of the sea - ie fishing and offshore oil.

The problem is:
Nations regulate fishing in their EEZ to preserve fish stocks The fish swim out of the EEZ and get caught by fishermen of a different country
The nation then has to reduce fishing even more Fishermen get pissed off because they can't fish and people from other countries can. Fish stocks still decline. This makes regulating fishing extremely difficult. Even worse is that most fisheries extend outside of EEZs altogether, which means that exploitation can't be restricted - sure, national governments can restrict landings in their ports, but you only need one country not to have limits.

I'm not proposing a solution here, just explaining why fisheries policy is such a nightmare.

The EU can reasonably set policy for the Baltic and Irish Seas (The Russian EEZ in the Baltic is tiny). But it needs to negotiate with Norway for the North Sea and with at least Iceland, Greenland, Canada and the USA for the North Atlantic. And parts of the North Atlantic are completely outside of the EEZs.

So, even if the CFP was fixed instead of being a shambles, it still wouldn't work!

A fishery: the range of a single species of fish, or the combined ranges of several species where they overlap and get caught together (so if one species only covers areas A and B and another covers B and C but anyone fishing in B will catch both and can't just catch one or the other, then A B and C form one fishery).

Michael Crichton talks sense

This posting was transferred from my original blog

On the environment as it happens. Crichton isn't always the most profound thinker, and I know that historically his research has turned out to be interesting rather than 100% accurate, but the basic concept here is sound. The problem that environmental scientists have is the same one that evolutionary scientists have: they're not prepared to say anything that confronts the orthodoxy because there are so many people who will jump on it to claim something that is driven by non-scientific motives.

For the environmental scientists, their opponents are driven by commercial motives. For instance, if you acknowledge that all we have on climate change at the scales we're looking is a correlation between CO2 levels and temperature, and a correlation between CO2 emissions and CO2 levels in the atmosphere, that we have no certain knowledge of the feedback effects and that it's entirely possible that we could be headed for another ice age, not a major temperature rise, then the combustion industries (oil, motor vehicles, and air transport above all) will jump on this and say "we don't know, so let's not worry about it and carry on buyng our stuff". The problem is that lack of proof of danger is seen as proof of safety, where what you really have is cause for concern.

For the evolutionary scientists, the opponents are religiously driven, and I'm sure that this is what has hardened evoluntionary science from "this is the best explanation that fits the evidence we have" to "this is as well-proven as gravity". It's about as well-proven as Einsteinian General Relativity, so while the latter is technically true, it gives off completely the wrong implication (viz. that it's as solid as things going down when you drop them, rather than there is no solid evidence to the contrary, fits all the available evidence and no better explanation has been offered). The other point is that evolutionary scientists regularly get pissed off by Christians trying to argue Intelligent Design in a completely non-scientific manner. So they get intolerant in return and end up with a quasi-religious belief in evolution.

What this goes to prove is that the scientific mindset is hard and is not really natural. Prejudiced, emotional responses are much more natural to the human being. Popperian philosophy (believe nothing, disbelieve only that which you have completely disproven) is, while necessary to science, something that few can maintain.

European Constitution

This posting was transferred from my original blog

Well, that would be a good idea, wouldn't it?

Having one, that is.

What does a constitution (of a federal body) do?


Defines the institutions of the federal government.

Defines the powers of the member governments and the federal government.

Enumerates the rights of the people.

and does the basic things that all constitutions must do, that is technicalities like how to amend the constitution and how to resolve disputes on interpretation.

It also should be short and simple enough that you can hold the basic structure in your head and so find the bit you're looking for quickly. Indeed serious constitutional scholars should pretty much know the whole thing verbatim.

Just compare the Constitution of the United States of America:


It's not well laid out, in that it could really do with Articles I.8, I.9 and I.10 separating out into their own Article covering the powers of the federal government as a whole.

It also does not make clear that interpretation of the Constitution is reserved to the Federal Courts and so ulitmately to the Supreme Court of the United States.

But the whole thing is short enough that you can flick through it and find the bit you're fishing for in no time at all.


First Amendment: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.


Article II-10: Freedom of thought, conscience and religion
1. Everyone has the right to freedom of thought, conscience and religion. This right includes freedom to change religion or belief and freedom, either alone or in community with others and in public or in private, to manifest religion or belief, in worship, teaching, practice and observance.
2. The right to conscientious objection is recognised, in accordance with the national laws governing the exercise of this right.
Article II-11: Freedom of expression and information
1. Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers.
2. The freedom and pluralism of the media shall be respected.
Article II-12: Freedom of assembly and of association
1. Everyone has the right to freedom of peaceful assembly and to freedom of association at all levels, in particular in political, trade union and civic matters, which implies the right of everyone to form and to join trade unions for the protection of his or her interests.
2. Political parties at Union level contribute to expressing the political will of the citizens of the Union.

And the right to petition is somewhere in Title I

Now that Constitution is a bit unwieldy, and seems to be mostly descriptive rather than prescriptive (that is, it describes the institutions that we already have, rather than creating new ones) but it's still a Constitution. But it has the problem that the EU always has. It's souless. It's OK, but who's going to fight for the right of conscientious objection to be constrained by national law? You're asleep already.

Put the soul back in. Make the language sing. Give me the European Idea. And I'll win you a referendum. But don't ask me to fight for a fudge. I might fight for fudge, especially Thornton's fudge, but not for this political fudge. Give me something magnificent!

A hereditary monarchy?

This posting was transferred from my original blog

Worth pointing out that we don't actually have a hereditary monarchy. Since William I, succession by the hereditary heir is not really that common:

Not the hereditary heir to the previous king:
William I, William II, Henry I, Stephen, Henry II, Henry IV, Edward IV, Richard III, Henry VII, William II/Mary II, George I, George VI (12)
Took over while a previous king was still alive:
Edward III, Henry IV, Edward IV, William II/Mary II, George IV, George VI, Elizabeth II (7)
Didn't take over on death of previous king, but had to wait:
Charles II (1)
Total with "dodgy" successions: 17

Heir succeeding on death of previous monarch:
Richard I, John, Henry III, Edward I, Edward II, Richard II, Henry V, Henry VI, Henry VIII, Edward VI, Mary I, Elizabeth I, James I, Charles I, James II, Anne, George II, George III, William IV, Victoria, Edward VII, George V, Edward VIII, Elizabeth II (24)

So that's 23-16 in favour of the hereditary succession in neat order (Elizabeth II is in both categories in that she succeeeded George VI conventionally, but Edward VIII was still alive on their coronations).

Hardly the overwhelming victory for the hereditary principle that you might anticipate from some people's rather prejudiced views of history. Admittedly, I do get some help from the Normans (five successive kings without a conventional succession), but it's still only 2:1 in favour of the hereditary principle if you start from Henry II instead of William I.

Elective Monarchy

This posting was transferred from my original blog

Drafted up as a motion to Lib Dem Conference...

Elective monarchy
Conference notes:
1. That all four countries of the United Kingdom have ancient traditions of elective monarchy.
2. That the Act of Succession (1707) establishes that monarchs rule only by consent of the people
3. That each new monarch requires a new grant of that consent through the procedureof acclaim at Coronation.
Conference believes:
1. That acclaim is an outdated and undemocratic means of establishing popular consent.
2. That popular consent to constitutional change is best determined through referendum.
Conference calls for:
1. At the end of a monarch's reign, a referendum should be held, prior to the coronation, on the single, yes/no question of whether the heir in the line of succession should assume the throne. If the heir is rejected, then a second referendum should be held offering alternative candidates for monarch, and also several types of republic. This election should be counted by the Alternative Vote.
2. Procedures should be established in advance for nominating candidates for monarch (including members of the Royal Family) and for deciding which republican options should be offered to the public.
3. The heir to the throne should act as head of state with the title of Prince(ss) of Wales until the referendum(s) are completed and a new Head of State (whether monarch or president) is in place.