Influenced by Smith’s ideas, successive British governments liberalized duties, taxes and regulations, culminating in the repeal of the Corn Laws in 1846.  It unleashed a period of unparalleled prosperity in Britain.

Next I cited John Maynard Keynes, who taught that governments could regulate the business cycle to some extent by “priming the pump” with public spending at times of insufficient private spending to boost employment levels.  The Keynesian approach dominated the post-war consensus, with government playing an active and leading role in economic management.  Politicians liked to be seen to be doing things and in control instead of simply reacting to events.

Although Milton Friedman was famous for monetarism, I suggested he probably played a larger role in discrediting government intervention and boosting the case for private enterprise and opportunity in its place.  He certainly played a leading part in emboldening governments to undertake privatization and the reassertion of market economics in the final quarter of the last century.

Following the financial crisis of 2008, I suggested that the Austrian School was now winning the argument about its causes, pinning responsibility firmly on the cheap borrowing instigated by governments and central banks that lay behind the credit bubble and the careless risk-taking that accompanied it.

My final note was that despite what economics teaches, politicians would probably continue to advocate silly things such as a financial transactions tax, or punitive tax rates on high achievers, and would continue to damage and limit wealth creation by an excessive preoccupation with its redistribution.

His review is here:

The influence of think tanks: presenting the right ideas, to the right people, at the right time

and the book is available on Amazon here:

Think Tank: The Story of the Adam Smith Institute

I spoke first on how to put across the central ideas of Austrian Economics to make them seem like simple common sense, drawing heavily on my “Economics is Fun” series of videos.  In my other session I explored two different routes of libertarian ideas.  One is the deductive school which derives the principles of liberty from what are claimed to be undeniable premises.  This is the school of von Mises, Rothbard and Ayn Rand, and draws on a style of reasoning used by Aristotle and Thomas Aquinas.  The other is the empirical school which finds that societies which have stressed individual liberty and property rights have been better in practice at securing the general benefit of their members.  This school includes J S Mill and Friedrich Hayek, and uses a style of reasoning employed by David Hume and perhaps John Locke.

There was much discussion afterwards of the relative merits of liberty, which I favour, versus equality, which I rate less worthwhile than liberty and opportunity.  It is interesting to see how libertarian ideas are becoming ever more widespread among young people.  It is a phenomenon so pronounced that it is bound to attract national attention fairly soon.

Secondly, the supplementary top rate of income tax falls to 45%, hopefully on the way towards 40% or lower, telling the world that Britain welcomes enterprise.

Thirdly, the threshold at which income tax is paid rises to £9,205.  This is a further step towards the minimum wage level of £12,500, below which there should be no income tax liability at all.  This tells people that Britain values their work and will let them keep the rewards that it brings.

In government or civil service, we must recognise that our representatives or officers will maximize their advantage just like everyone else, and that this will sometimes stop necessary and useful reforms from being made.  This effect is called ‘Public Choice Theory’ and shows how those in politics and policy try to better their condition just as those engaged in commercial activity do.

I said it was not, and cited the 50% top tax rate that punishes high earners without raising money, the 28% Capital Gains Tax that drives people to leave investment locked in to yesterday’s business rather than reinvesting it in growth industries.  I pointed to the 25% Corporation Tax, double that of the Republic of Ireland, and to the retroactive legislation used by the Treasury to make decisions of business that were legal at the time illegal after the fact.

Most of all I drew attention to the prevailing culture, fanned by the media, of hostility to achievement.  It is, I said, anti-business, anti-bankers, anti-bonuses, and anti-success.  It castigates those who create the wealth in society.

The House agreed, and our side narrowly won the debate, concluding that Britain is no longer good for business.  Obviously things need to change.

I have argued this for nearly a decade, but it was only when the Liberal-Democrats put into the coalition agreement a commitment to raise it to £10,000 that any progress was made.  It was to be done in stages over a five-year parliament, but the talk now is that it might be done sooner.

This would make work more attractive than welfare, putting people who are presently dependent on state support into paying jobs.  It would give lower paid people more money to spend, and make it easier and more attractive for small and start-up firms to recruit people.  It would reduce the state’s welfare bill.  All of these are good supply-side measures.

I have to be ready with those arguments and more when the budget comes, either to applaud and defend the Chancellor if he does it, or to criticize his timidity if he does not.