Sunday, October 30, 2005

Everything I thought I knew turned out to be wrong

I've considered myself to be fairly "centrist" or "centre-left" in my political views for most of my life. I remember heated arguments with friends at Cambridge where I would routinely find myself to be in a minority of one.

However, I have just finished reading a book that has turned many of my preconceptions completely upside down.

James Bartholomew's "The Welfare State We're In" is absolutely fascinating. And utterly depressing.

Written by a less careful (and caring) writer, this book could easly have been dismissed as a right-wing diatribe and ignored.. Instead, Bartholomew enumerates all the things that were intended to be improved by such things as the NHS and State Pensions and shows how, perversely and counter-intuitively, they have been made worse. By the end of the book, his claim that Britain (and all Britons) would have been better served if the modern welfare state had never been created is credible and almost inescapable.

I'd love to read a critique or rebuttal of this book.... perhaps I've just been too trusting of the figures and excellent writing but the worrying thing is that I really don't think I have... the very people intended to be helped by the massive increase in state intervention in the last 60 years really do appear to have been those most harmed by it.

It has given me far more to think about than any book I've read for a long time.

I would encourage any reader - of any political outlook - to read this book. It is truly eye-opening.


Quentin Way said...

Is his argument that heavy state intervention encourages dependence and eventually a kind of 'welfare class'? Thats the sort of argument I've heard before.

Reading the synopsis in the link, I noticed the trouble he had getting this book published. He mentions certain 'backers' named in the book, who might they be?

Richard Brown said...

Yep - that's one of the arguments. However, there are several others (since he also covers education, healthcare and more).

However, he covers it in such a way that you can't write him off as a reactionary (or unfeeling) attacker of the less fortunate.

As for getting it published... yes - I can't remember who helped him but it took concerted persuasion from various people plus a brave publisher I think :-)

Quentin Way said...

I shall have to keep an eye out for it, a good argument is always good to read, whether you agree or not.

And I do have plenty of time for reading at the moment.

James Governor said...

you have any kids? have a baby on the NHS like me and my wife did a month ago and you might change your opinions. we recieved fantastic care, pre-during and now post natal. fantastic.

of course i havent' read the book, but we only need to look at america and sweden and realise that the public sector does have a role to play in providing better health and education for our citizens.

You could probably make an argument the railways should have been left well alone. the victorians created some amazing privatepublic institutions.

but healthcare and education, imho, do require some public sector steering.

i am also VERY wary of the private sector provisioning is always better story. i mean look at national IT - its all provided not by public sector workers but private companies. they fail and fail and fail. there are loads of inefficient private companies out there.

also you can't remove public interference any more than you can remove private service provisioning. successful markets require government structures and regulation. i would be very interested to see Boing, BAE, Lockheed, Halliburton, and others succeed with ongoing and constant government subsidies. the big lie - is that so many public, not public-sector, companies aren't on welfare.perhaps his work would say let them dangle, with creative destruction. but i am still very wary of this stuff. you want to send me the book and i will read it? James Governor, RedMonk, 17 Leman Street, London E1 8EN. i will return it when i am done

Richard Brown said...

Thanks for the interesting thoughts, James.

No - I don't have children and my experience of the health service is certainly limited. (Congratulations on the birth, by the way!)

However, one of the depressing themes of the book is how the idea of a "national" health service (or education system or housing service, etc) - built on the promise of equality - is actually nothing of the sort: you are far more likely to get a good service if you're an educated middle-class person than you are if you are very poorly-educated, with limited access to information.

As I said, I'd be fascinated to hear reasoned critiques of the book (as indeed would the author - I exchanged a few emails with him to find out if anybody had written a good rebuttal). I only live ten minutes from your office and I'd be happy to lend it to you - I'll drop it off on my way to or from work sometime this week. Let me know what you think of it :-)

Your comments about state support or subsidy for certain companies or industries are, of course, valid. However, there's a separate argument (made by Russ Roberts at George Mason University I believe) that says this is a strong argument *for* reducing the size and power of government. If a government has less power and/or wealth to splash around, the incentives for companies to seek influence or act in a rent-seeking manner are reduced, he argues. However, that is outside my area of knowledge and I have yet to form a firm opinion.

On the question of IT project failures in the public sector, that could provide enough material for a hundred Ph.D theses!

You correctly say that involving a private company doesn't make things better - and in many cases appears to make things worse.

I suspect a major cause of this is that not enough work has been put into ensuring the incentives in place align with the desired behaviours. If one's incentives reward on-time delivery of components, for example, and punish tardiness, the unintended consequence is that an immediate barrier of unhelpfulness will spring up between the contractor and the client. Change requests will be both bogged down and expensive. Worse, the components in question will be implemented to the letter of the contract even when it is manifestly incorrect (which, it will be since nobody can specify a system perfectly 2 years in advance).

I'm not saying this is what happens (I don't work on these kinds of projects so I couldn't know - and in any case, our projects always go well :-) ) but I would not be at all surprised.

Contrast this with BAA's terminal 5 project at Heathrow. Apparently this is on-time and under-budget. I read an interview with the head-honcho project manager a few weeks ago (can't find the link - sorry) where he said that he had structured the relationships with his contractors completely differently. He put incentives in place that rewarded team-work and shared problem-solving and which punished short-term myopic decisions. This was achieved essentially by pooling all contractors' potential bonuses and using the pot to pay for problems as they arose. This gave contractor B a strong incentive to help out contractor A if they hit a problem since any increased expense to fix the problem would directly reduce the size of the bonus pot for contractor B.

So - I'm not sure IT projects are necessarily a good example of private sector failure but I do accept they're a hard example to use in *favour* of private provision :-)