To the Liberal Democrats a New Leader. Assessing Nick Clegg

I rejoined the Liberal Democrats (British political party) so I could vote for Nick Clegg as leader. He won, though by less than 1% of votes cast after a campaign so aid back it looked like an attempt to apply Zen meditation to politics. There were perhaps good reasons for that, the main rival Huhne was evidently dying to turn it into a social (left) liberal versus Thatcherite contest. Sinc ehis vitory Clegg has returned to his good work in promoting a vision of liberalism rooted in a limited state, open markets, individual choice, localism, and voluntary action. He’s opened up the possibility of cutting the overall tax burden.

He has marginalised attempts to commit to dumping British nuclear weapons, I don’t love them but the negative impact on the international order would be more than any benefit gained. While the British place as a permanent member of the UN Security Council is an anachronism, the international community is not remotely ready to work out how to restructure the Security Council. Since the other 4 permanent members have nuclear weapons the issues are linked, and let’s forget about negotiating way British nuclear weapons until a clear program emerges for a new UN and international order, or attempt at order the worlds nations. This order, such at is, needs Britain’s continuing commitment to UN military operations. It’s hard to see how Britain’s enormous role could be politically sustainable if the place of the Security Council went, I wish things were different but this is the real context . The Liberal Democrats (including the old Liberal Party back to Gladstone’s time) have been the most internationalist force in British politics. Opting out of the nuclear club is not the way to continue that tradition.

Clegg has recently committed to substantially reducing the number of MPs in the British parliament. This is very important as we cannot reasonably argue for regional government within England and radically strengthened local government, and not offer a way of saving money and complexity with regard to the UK parliament.

The party’s recent party conference has voted for a proposal for more private involvement in the National Health Service. There are very powerful reasons for this which come both from: strengthening private economic activity in Britain; and the more efficient delivery of basic public services to all, with the minimum burden of taxation.

These are early days for Clegg’s leadership, but he has already taken big steps towards ending Liberal Democrat tendencies towards automatically taxing and spending more than the Conservatives and ‘New’ Labour (which has substantially increased tax and spending, and public borrowing). He has manoeuvred the party away from assuming that social welfare means keeping the private sector out of public services, and has successfully led it towards a very positive attitude to the sovereignty of consumer choice over producer interests.

What comes next? I would like to see Lib Dem acceptance of tuition charges for higher education under the current UK system where the government provides low interest loans. I think this is coming. The same applies to a general broadening of choice and competition in the provision of public services.

What is more remote is the use of private insurance funds in public health provision and more charges in the provision of public health services. This will be greeted by many as social cruelty on a level with throwing orphans in the snow. The reality is that the world2s top rated health service, in France, uses private funds and charges (often recoverable through insurance or waived for those on low incomes). It’s very clear in Britain that free visits to local doctors means they are spending their time on trivial or non-existence complaints. Efficient allocation of resources needs some element of market forces, even if the overall pattern is one of guaranteeing health care for all who need it. Using private insurance funds as well as general taxation to fund public health services will realise more money overall flowing into public health services which will benefit everyone. A hospital which can invest using private funds will be able to make the results available for everyone, and şf we go so far as to put everyone in competing insurance funds with the poorest insured by the state, then everyone can clearly benefits from competition and market disciplines.

What are the current problems? The biggest issues for me are: a new form of soak the rich posturing; a default position for many party representatives of promising more public spending. The soak the rich issue has arisen in relation to ‘non-doms’, that is non-domiciled foreigners, though another group, British citizens who are only in the country for a maximum of 90 days in a year has been included in that debate. Resentment exists that foreigners, including billionaires, do no pay any tax on overseas earnings and investments. The issue for British citizens is that if they are not in the country for more than 90 days is that they have similar rights. Public resentment overlooks the fact that the non-taxed income and wealth is outside the UK. Taxing non-doms overseas income and wealth will not on the whole mean more money for the British state. It will mean very mobile people leaving who pay very large amounts of tax in Britain through indirect taxes when they spend money and direct taxes on money they make in Britain. These people are mobile and if they disappear than the British tax payer will be faced with a bigger burden. Britsh citizens who work a maximum of 90 days tend to be engaged in very highly skilled professional work, many in the financial sector. Great harm would be suffered by the financial sector including the Stock Market, and associated enterprises, if these people are frightened off. Again there would be a big loss for the British tax payer. Issues arise her eof tax havens which should be separated from non-dom status. I find bizarre Medieval left overs like Monaco and Lichtenstein, which make money from charging hardly any direct tax on wealthy foreign residents, artificial and absurd. The answer is a mixture of law enforcement with regard to assets hidden in these ‘countries’ and lowering of corporation taxes and taxes on wealth. The goal should be to increase the volume of tax revenue, not to impose high marginal rates of tax on the rich because it serves feelings of resentment and envy while deterring enterprise and creating huge incentives for shifting corporate registration and private wealth off shore.