Erosion of private property rights in the UK

Three issues in the past few days have exemplified how the notion that private property rights are sacrosanct has been seriously eroded in the UK. They are around pay TV, mobile phones and bed and breakfasts.

First, Ofcom, the UK media regulator deemed that the UK's most successful pay TV operator - BSkyB - must be forced to sell content from its Sky Sports 1 and 2 channels to competitors at 23% less than it currently chooses to do so. The reason? "Sky exploits this market power by restricting the distribution of its premium channels to pay TV providers." This "reduces consumer choice." "

Now BSkyB has brought more choice to British TV viewers than any other broadcaster. It offers 615 TV channels, and people pay for it voluntarily, unlike the BBC which is paid for by state enforced demand notice. The story of BSkyB is how it started operation to the UK without a licence, because it was operating entirely from outside the UK. It easily bet the state endorsed BSB, bought it out and became an enormous success story, against the odds (the story is in this book). It lost money for many years, never seeking a penny from taxpayers, and became successful because it took risks, it bought broadcasting rights for major sports events and people wanted to pay for it.

In other words, it was a great British entrepreneurial success story, something to be proud of. So what does the state do? Kneecap it. It wants to boost the competitors, the lacklustre Virgin Media (which bought out the poorly performing cable TV companies NTL and Telewest), BT's (once the focus of Ofcom diktats till it was cut down to size) Vision service and even the barely known Top Up TV. What it does is say the broadcasting rights Sky bought from various sports codes are NOT Sky's, but the "people's", so it is helping out Sky's competitors.

What will be the result? Sky's competitors wont bid for the sports broadcasting rights, so the price paid to the distributors and clubs will be lower, since Sky will only be bidding against the beleagured commercial networks ITV and 5, and state owned Channel 4 and the BBC. It means Virgin Media, BT Vision and Top Up TV will have to make less effort to appeal to viewers, they can be clones of Sky.

It is another example of pseudo-entrepreneur Richard Branson seeking the gloved fist of the state to take from his competitors to help him out. A charlatan indeed.

Remember, what did Ofcom ever do to increase consumer choice? The UK has one of the most vigorously competitive pay TV sectors in the world, one which has not been subject to the ridiculous rules on price and content that is seen in the US, and the content rules in Australia. As the Daily Telegraph says "the UK desperately needs strong media conglomerates that can compete internationally. In a globalised digital era when Google is eating ITV's lunch, that means we must stop being so parochial and let British companies grow and succeed.That might mean, say, Sky and ITV gaining an uncomfortably strong domestic position. But – like a monthly subscription to Sky Sports – that's a relatively small price to pay."

However, dare the politician speak up against the wide open mouthed "consumer" in favour of the property rights of the producer.

The second issue is about mobile phones. In the UK four companies operate national mobile phone networks of their own - O2, Vodafone, Orange/T-Mobile and 3. In all they, and their wholesalers (for example, Virgin Mobile uses the Orange/T-Mobile network), have 121% market penetration. In other words, there are mobile phone accounts for every adult and child in the UK, and a fifth have a second! With a vigorously competitive industry, multiple network providers, you'd think the free market could reign. Oh no. Ofcom, yet again, sets the price those companies can charge other operators (including fixed line operators) for terminating their calls.

According to the Daily Telegraph, the current price is 4.3p/minute, it is to drop to 0.5p/minute by 2014. Allegedly it is partly due to EU pressure, as clearly it thinks it has some moral authority to set prices for contracts between private companies. Orange and Vodafone are unimpressed saying respectively:

"If these measure are put in place they will stifle innovation. Any incoming government should be mindful of what these ill-considered proposals mean for the future of their country. Handsets may no longer be subsidised, you may have to pay receive calls."

and "A cut of this magnitude deters future investment, makes it less likely that the UK will continue to lead in mobile communications and is at odds with the Government's vision of a Digital Britain."

Of course the bigger question is "Why the hell should the state interfere in contracts between companies in an open fully competitive market"?

Naturally, those advantaged by it are happier. "3" is a relatively new network, so its customers make more calls to competitors than it receives. BT, long been battered into submission by the state for being the former monopoly (and which has withdrawn from a long line of overseas investments in recent years) has also welcomed it.

What WOULD happen if Ofcom said "Set the price you wish"? Well the operators would negotiate rates based on what they thought their customers could bear. Their customers don't want to be on networks nobody wants to call after all.

Again, the UK has spawned one of the world's most successful mobile phone companies, with Vodafone the largest mobile phone company in the world by revenue, and second largest by subscribers. It's UK competitors are French-German, Spanish and Hong Kong owned, and it has thrived. New Zealanders might note that without it they would have waited far longer for text messaging, prepaid mobile phones and competitive pricing with Telecom.

However, what incentive does Ofcom have to NOT meddle?

Finally, a gaffe. Conservative Shadow Home Secretary Chris Grayling was recorded, off the record, by an Observer journalist saying that those who run bed and breakfasts from their homes have a right to turn away gay couples. This is contrary to "human rights" laws which say otherwise. His point was that there should be respect of people of faith who have genuinely held beliefs. His point is the wrong one.

Now, he has since felt the need to backtrack on this, pointing out he voted for the said laws which ban such discrimination, and he voted for civil partnerships to be allowed. There is little sign he himself holds so-called "homophobic" views. Of course, those on the left are out like sharks to claim the Conservatives "haven't changed".

The point he should have made IS about private property rights. It is your home, you decide who enters it. If you run a B&B then you should also be able to turn away anyone, for whatever reason or feeling you have. Simple as that. If you, as a prospective customer or visitor don't like it? Then use free speech to say so, but don't expect the state to come banging down the door to force anyone to let you in.

You don't have a right to enter anyone's property without the owner's permission. Now had Grayling said that, he might have escaped some of the dirt thrown at him. If you had children and ran a B&B, you might not ever want single men staying, or you may not want priests or whatever. You don't need to justify yourself, it's your property.

Sadly, in the UK today, the argument of private property rights is peripheral. Both Labour and the Liberal Democrats actively reject such rights and will surrender them at will. However, the Conservative Party hasn't the wherewithal to argue differently.

It's about time there is a choice that does!

What do you do when you have a record budget deficit?

Go to an election promising to EXPAND the welfare state.

Yes, Gordon Brown has announced he would set up a National Care Service, described as "NHS for elderly care". In other words, he wants taxpayers to pay for everyone who needs it to have resthome care in their declining years.

Great! The budget announced last week is already borrowing an EXTRA £8,000 per household this year to pay for the current bloated UK state sector. Why not borrow more? Gordon Brown will be well retired and not giving a damn when the kids have to pay off the debt he incurred.

Of course the NHS is a model the whole world envies, well rather Michael Moore does, except he doesn't envy it enough to actually LIVE in the UK. The world envies it so much that the model hasn't been adopted anywhere.

After all is it not as if old age is unpredictable and cannot be planned or saved for, especially if the state stops pilfering your income to pay for everyone else in the meantime!

Spring of discontent

Is it 2010 or 1979 in Britain? One might be briefly excused. You see there is a Labour government in power, far from popular. Two large trade unions are holding strikes literally weeks before the general election.

UNITE representing British Airways cabin crew is now into itsr second strike and now the RMTU, led by the avowed Marxist (yet paid a healthy six figure salary) Bob Crow, is calling the first national rail strike since 1994.

Why? Well British Airways is in dire financial straits. Many of its Heathrow based cabin crew are on pay and terms and conditions that hark back to before the airline was privatised, with the average pay double that of Virgin Atlantic and reportedly higher than any other airline globally. The management is seeking to put Heathrow crew on the same pay and conditions as Gatwick crew, given the airline has had record losses. In short, this is about the survival of the airline, in a world where most recently Japan Air Lines, Olympic Airways and Alitalia have all effectively folded and either been recapitalised or bought out from the creditors.

On the railways, the issue is with Network Rail, the government guaranteed nominally private company that owns and runs the rail network. It is seeking to change maintenance practices so that trains can run more frequently at weekends and late evenings, and has endorsement from the Office of Rail Regulation for the changes. The union is claiming the strike is about safety, but has little support from that from elsewhere.

So many BA flights are not taking off (Gatwick flights will given the crew there have no reason to strike, and some cabin crew at Heathrow are refusing to go on strike), and the four days after Easter will see most trains not running. A spring of discontent is in the wind. Gordon Brown is less than impressed.

Of course the problem Labour has is that UNITE is the largest financial contributor to the Labour Party, and the RMTU is also affiliated. Some Labour MPs support the strike, although they are keeping very quiet about it. However Gordon Brown and the rest of Cabinet cannot hand on heart state opposition to those who fund them. In other words, a very clear political link can be made between Labour and the unions who have decided to go on strike close to the election.

Isn’t this suicide, you say? Surely unions WANT Labour in government? Well, this is about two things. Firstly, the belief that this pressures Labour Ministers to intervene on the side of the union, to get what they might otherwise not get if the government changes. What the unions don’t realise is that this is likely to play into the hands of the Conservatives, by showing Labour as anti-business and back in the bad old days of government intervening in industrial disputes. Secondly, as far as the RMTU is concerned, Bob Crow says that it doesn’t really matter if Labour loses, because both main parties are so similar.

What some in the union movement want is for Labour to lose, so that Gordon Brown can be replaced, and the vestiges of New Labour are purged to move it further to the left. In other words, they still believe in socialism. What they failed to note was how roundly such a Labour Party was defeated in 1983 when it had the socialist wet dream manifesto.

It is too early to tell whether it means the deathknell of the government. If only because the Conservative Party seems like it engages in the art of spin, of saying very little and criticism rather than ideas. When asked about spending cuts, the Conservatives talk about small ticket items and protecting the NHS. The simple truth is that whatever major party governs Britain, it is made up of politicians who primarily want to spend other people’s money and direct their lives. Until that trap is broken, the cycle of discontent will continue.

Bribing voters with their kids future stolen money

What do you do on the eve of a general election, when your predecessor as Chancellor of the Exchequer (now Prime Minister) used most of the last 13 years of economic prosperity to grow the size of the state from 39% of GDP in 1997 to over 46% today?

When public debt, at 43% of GDP when this government was first elected in 1997, is now forecast to be 72% this year, and some say when including state sector pension and Public Finance Initiative liabilities is over 100% of GDP?

You do next to sweet bloody nothing.

You keep middle and upper class welfare, like the "Winter Fuel Allowance" which is a subsidy to home gas and electricity prices for everyone over 60 over winter. Yes David Bowie, Paul McCartney and Mohamed al-Fayed can all get this one.

You set up a couple of new financial/planning bureaucracies to "invest" in the economy.

You hike up some taxes, cut the fringes of a few others, and keep propping up the property market (can't let prices drop to market levels to let more people afford to buy can you?).

You optimistically forecast that you'll halve the deficit in five years, which simply means you'll keep borrowing from future taxpayers a bit less each year.

You announce proudly that you're borrowing, on behalf of every British household, ANOTHER £8,000 each. That is on top of the current public debt per household of around £50,000.

You DON'T announce big cuts in spending in welfare, health, education, nanny state bureaucracies, corporate welfare and the like.

You leave that to the next government, which is more likely than not going to NOT include Labour.

Then, no doubt, you'll moan and point fingers at the cruel heartless new Conservative (maybe Conservative/Liberal Democrat) government for all of the spending cuts it imposes, saying how mean they are for NOT wanting to hike up the debt of future generations of taxpayers.

Meanwhile, the 30% plus of the public dependent on taxpayers for their jobs or incomes will dutifully march to give you a tick at the next election, because you now cater for them - because if they weren't so dependent, they might just be less interested in voting for you.

The first bid in the advance auction of stolen goods has been made, and it's pretty much "keep spending and let your kids worry about Greek levels of debt per capita".

Of course one difference with Greece (the most important one is that the UK government isn't lying about the figures, generally speaking), is the pound is responsive to all of this - given UK public sector borrowing is effectively printing money (by issuing bonds).

The Pound has fallen to a two week low against the US Dollar.

You see, one of the tactics (with little concern for the effect) is to simply steal from holders of Sterling in the form of devaluing their cash savings by borrowing more.

Now it's time to call an election, shame the alternatives are as inspirational as a puddle in a tunnel.

Why Obama's health reforms are quite wrong

If you simply read and listen to many in the mainstream media talk about this story, you might ask whether any of them bothered to critically review the legislation passed by the Congress and signed by Obama on healthcare.

In the simple, binary world of so many the impression is given that health care in the US is a "privately owned fully commercial free market system where people are left to die on the streets unable to pay for ambulances or lying in hospitals not being treated because they can't pay".

This is a bold faced lie on multiple levels. How many say that half of all US healthcare is funded by government through Medicare and Medicaid, which provide healthcare for the elderly and poor families respectively? How many say that the budget for Medicare is 20% of the federal budget, with Medicaid being half that again?

How many say that the health market in the US is heavily regulated, with hospitals required to treat accident and emergency patients regardless of ability of pay? How many say that some states restrict the market to protect some health providers, so there isn't free and open competition across the country? How many talk about the burden that precedents to allow ridiculous tort law claims imposes upon the health sector? (In the last case the Republicans do, because high profile Democrats include tort lawyers).

The failure in the US is not about universality. As Libertarianz Leader Dr. Richard McGrath (himself a health professional) states:

"When the figure touted was 47 million uninsured, the breakdown was like this:

18 million earned over $50k (half of this group earn over $75k) and chose not to insure themselves;
13 million were illegal aliens;
8 million were under age 18 and had public cover available if poor;
leaving 8 million uninsured (3% of the population), many of whom were 18-20 year olds at low risk of medical problems."

So the REAL figure of those without insurance is far less than is bandied about by the press. The big issue in the US is cost, and the biggest source of cost inflation has been the public sector. Who says that? The Congressional Budget Office notes:

"total federal Medicare and Medicaid outlays will rise from 4 percent of GDP in 2007 to 12 percent in 2050 and 19 percent in 2082—which, as a share of the economy, is roughly equivalent to the total amount that the federal government spends today. The bulk of that projected increase in health care spending reflects higher costs per beneficiary"

In other words, the GOVERNMENT side of US healthcare (which is largely ignored) is growing exponentially. The legislation signed by Obama doesn't touch this at all.

The Cato Institute solution is wiser. Its proposals are:
- Eliminate tax incentives for employer bought health insurance and apply them to individually bought health insurance. This means people have a vested interest in buying health insurance that meets their needs, and puts pressure on such insurance to not provide excessive cover;
- Eliminate restrictions that prohibit people buying health insurance from providers in other states, this is an unnecessary restriction on competition;
- Eliminate state specified minimum requirements for health insurance that in some cases include cover for procedures many would not wish (e.g. in vitro fertilisation) (indeed allowing interstate competition would produce strong incentives on states to do this);
- Licensing and regulation of what medical practitioners can do, and standards for licensing should be shifted towards industry driven accredited standards.

For example, it makes sense to be able to insure against accident or disease that is not predictable. Not to insure against self injury, or the consequences of heavy drug or alcohol consumption. No bigger incentive towards healthier lifestyles would exist than for people to notice that if they smoked, they might not get any health cover for respiratory diseases.

The Obama health reforms tinker with health insurance to make it compulsory for everyone to have health insurance, and to subsidise those who can't afford it. It does not address the cost escalation in the heavily regulated market, but especially does not address cost escalation in the US's own socialised health care - Medicaid and Medicare.

Expect future years to have healthcare remain a major issue in the US, because Obama is, for now, printing money and borrowing it, to pay for his grand plans. Living for now, letting future generations bear the cost - a curious metaphor for how so many of those living at the bottom treat their own lives.

Oh and while you consider that, it is worth noting that both the UK and New Zealand are rare among developed countries in not having an insurance based model for healthcare. The result of that is a continued growth in concern about significant groups of people who live unhealthy lifestyles, and a desire to tell them what to do in order that governments ration spending on diseases of lifestyle.

A better approach is for people to pay themselves, buy insurance and face higher premiums or the inability to get insurance because no one will sell it to them if they are eating, drinking, smoking and idling themselves into chronic conditions.

However, socialists prefer to treat such people as children, and for you to pay when they don't listen.