Wednesday, March 22, 2006
Tuesday, March 21, 2006
The BBC enters the advertorial business
Listening to BBC3 in the car this morning (someone else's car) I found myself listening to a programme which was clearly designed for American cable TV. It was essentially an advert for a miraculous invention; glow in the dark house numbers so that ambulances/pizza delivery can find you more easily. While this was dressed up as a feature with incredibly probing questions like "well, wasn't it a little expensive?" to which the answer was, obviously, "the technology is expensive but we now have a special discount just for this show" it always reverted to a sales pitch. Had they been selling versatile blenders it couldn't have been much tackier.
With the collosal bias in the BBC news coverage, advertising features like this and BBC online's ongoing crippling of the UK online industry through its massively subsidised websites surely the case for scrapping the license fee has to be mounting. It was while I was in China appreciating the role of the BBC in undermining dicatatorships only to realise that the relevant service was BBC Worldwide (which was sold off and is a private concern) that I finally appreciated the complete pointlessness of the license fee we are all forced to pay.
With the collosal bias in the BBC news coverage, advertising features like this and BBC online's ongoing crippling of the UK online industry through its massively subsidised websites surely the case for scrapping the license fee has to be mounting. It was while I was in China appreciating the role of the BBC in undermining dicatatorships only to realise that the relevant service was BBC Worldwide (which was sold off and is a private concern) that I finally appreciated the complete pointlessness of the license fee we are all forced to pay.
BT released from price regulation
After 22 years Ofcom have decided to stop regulating BT's prices. The regulators deserve credit for taking a decision that reduces their ability to control and resisting the temptation to define their purpose ever outwards.
The logic behind this move is very sensible. The market for phone calls has been entered by VoIP phone services like SkyPE, cable operators and mobile phone companies. All of these firms bring different advantages from the flexibility offered by mobile phones to the extremely low costs available through Internet services. While BT has advantages in this market, such as a well developed infrastructure, these are not nearly enough to be worthy of monopoly regulation.
The stock market response suggests that investors do not expect new monopoly rents to flow. BT's share price responded with a slight fall; investors can see that with so much new competition and a mature market there are difficult times ahead. While this is hardly cast iron evidence that there are no monopoly rents for BT to make it does suggest that no one can currently see where they might come from.
The logic behind this move is very sensible. The market for phone calls has been entered by VoIP phone services like SkyPE, cable operators and mobile phone companies. All of these firms bring different advantages from the flexibility offered by mobile phones to the extremely low costs available through Internet services. While BT has advantages in this market, such as a well developed infrastructure, these are not nearly enough to be worthy of monopoly regulation.
The stock market response suggests that investors do not expect new monopoly rents to flow. BT's share price responded with a slight fall; investors can see that with so much new competition and a mature market there are difficult times ahead. While this is hardly cast iron evidence that there are no monopoly rents for BT to make it does suggest that no one can currently see where they might come from.
Funding political parties
State funding of political parties creates far too many difficulties for good governance to be a good idea. Such a move would leave the funding of political parties dependent upon the government and, therefore, create powerful electoral incentives for the government to change the system to skew it towards advantaging their own side. While it might lead to fewer funding scandals they would be replaced by massive cynicism each time a government attempted to fine tune the funding formula and commentators saw unsavoury motivations behind the changes. These fears won't always be irrational, the recent problems with Labour pushing postal voting too fast and risking fraud in defiance of the Electoral Commission in order to shore up its Northern vote provide an important example of the sort of trouble we don't want to see in the funding process.
Caps, as supported by ConservativeHome, are just as problematic. Last time these were floated it was a Labour response to Lord Ashcroft's financing of the Conservative party, the new Conservative enthusiasm for them can be traced to the widening of the Conservative funding base following the election of David Cameron. The level of the cap provides the ability for governments to adjust the system in their favour and, therefore, creates the problems described above for state funding.
The solution to this crisis has to be more along the lines of the ad hoc Labour response. When there are crises due to poor information in industries like financial services the best regulatory response is not to restrict the risk or return of products (a cap) or to have the state step in and nationalise (state funding). A proper role for government in situations like this is for it to ensure regular accounting standards and open information. This is a crisis caused by a lack of open information; the proper response is to let the information flow and leave the judgement on whether a party's funding is proper to the electorate.
Caps, as supported by ConservativeHome, are just as problematic. Last time these were floated it was a Labour response to Lord Ashcroft's financing of the Conservative party, the new Conservative enthusiasm for them can be traced to the widening of the Conservative funding base following the election of David Cameron. The level of the cap provides the ability for governments to adjust the system in their favour and, therefore, creates the problems described above for state funding.
The solution to this crisis has to be more along the lines of the ad hoc Labour response. When there are crises due to poor information in industries like financial services the best regulatory response is not to restrict the risk or return of products (a cap) or to have the state step in and nationalise (state funding). A proper role for government in situations like this is for it to ensure regular accounting standards and open information. This is a crisis caused by a lack of open information; the proper response is to let the information flow and leave the judgement on whether a party's funding is proper to the electorate.
Sunday, March 19, 2006
An idea for reforming the House of Lords
The new cash for peerages scandal highlights the problem with the lack of a long term solution to the organisation of the House of Lords. So long as the House of Lords remains an appointed body it will remain a means for patronage. Making the funding of political parties more transparent is clearly a good idea but this will not remove the suspicion surrounding a system where presence on a house of parliament can be used to return a favour.
Designing a new House of Lords faces the fundamental problem of balancing several conflicting priorities:
First, there is a need for democratic legitimacy. Without a link to public opinion the House of Lords will increasingly lack the authority to challenge the Commons and fulfill its function as a second house. This authority is necessary for the Lords to be able to properly defend civil liberties and other minority issues. Appointment is simply not close enough to the electorate and leaves the Lords as a subsidiary of the Commons dependent directly upon Commons' structures.
Second, it is important that the balance of opinion in the Lords not track the currents of public opinion reflected in the Commons too quickly. If the Lords is simply a duplicate of the House of Commons with a slightly different electoral cycle then it is likely to offer little in terms of improved governance. Defending the interests of a minority is best done in a similar manner to that of the US Senate, by having the balance of power change slowly; this allows the Lords to slow radical programmes from incoming governments who may allow transient overreactions to endanger liberty. Clearly appointment is little help here as it acts to reflect the balance in the Commons.
Finally, the Lords should be as free from the pressures of reelection as possible so that they can act as a check to interest politics and the distortion of the electoral cycle. The system in the US Senate appears to be failing in this regard. The debates over issues such as drilling in Alaska demonstrate a failure of the deliberative body as it descends into farcical interest politics.
Another concern, although subsidiary, is that there needs to be a mechanism for an orderly transition to a new system which does not involve bringing collosal tranches of new members at once.
The best system, in my view, would be to combine the life time appointments of the current House of Lords with an entirely elected system. Elections could be held in line with each general election and every Lord who died since the last general election could be replaced. The exact system for electing them would need to be designed in detail but should be a direct vote. The number of Lords who we can expect to replace each election can be calculated from the mortality rates for those in the Lords' age bracket multiplied by the number of Lords. The final figure would probably be around 72 initially (using the 65-74 age band as the average age of a Lord is 68) but would probably fall as the Lords become younger once no longer appointed in return for, and after, a life of service to country or party.
Judging by the criteria above this seems to be a suitable design. As directly elected representatives they will possess the legitimacy needed to challenge the Commons when required. Movement in the house of around 10% per election is sufficiently glacial to act as a bar to transient majorities. As the Lords would not need to be reelected they would not suffer the interest pressure which appears to have found its way into the Senate. This system even suggests a mechanism for transition by removing no current peers but instead treating the current balance as the starting point from which replacement elections are held.
The problem seen in the Supreme Court with life appointments, that each appointment has far too much at stake is negated by the House of Lords being a body of hundreds. Could a system of lifetime election be the way forward?
Designing a new House of Lords faces the fundamental problem of balancing several conflicting priorities:
First, there is a need for democratic legitimacy. Without a link to public opinion the House of Lords will increasingly lack the authority to challenge the Commons and fulfill its function as a second house. This authority is necessary for the Lords to be able to properly defend civil liberties and other minority issues. Appointment is simply not close enough to the electorate and leaves the Lords as a subsidiary of the Commons dependent directly upon Commons' structures.
Second, it is important that the balance of opinion in the Lords not track the currents of public opinion reflected in the Commons too quickly. If the Lords is simply a duplicate of the House of Commons with a slightly different electoral cycle then it is likely to offer little in terms of improved governance. Defending the interests of a minority is best done in a similar manner to that of the US Senate, by having the balance of power change slowly; this allows the Lords to slow radical programmes from incoming governments who may allow transient overreactions to endanger liberty. Clearly appointment is little help here as it acts to reflect the balance in the Commons.
Finally, the Lords should be as free from the pressures of reelection as possible so that they can act as a check to interest politics and the distortion of the electoral cycle. The system in the US Senate appears to be failing in this regard. The debates over issues such as drilling in Alaska demonstrate a failure of the deliberative body as it descends into farcical interest politics.
Another concern, although subsidiary, is that there needs to be a mechanism for an orderly transition to a new system which does not involve bringing collosal tranches of new members at once.
The best system, in my view, would be to combine the life time appointments of the current House of Lords with an entirely elected system. Elections could be held in line with each general election and every Lord who died since the last general election could be replaced. The exact system for electing them would need to be designed in detail but should be a direct vote. The number of Lords who we can expect to replace each election can be calculated from the mortality rates for those in the Lords' age bracket multiplied by the number of Lords. The final figure would probably be around 72 initially (using the 65-74 age band as the average age of a Lord is 68) but would probably fall as the Lords become younger once no longer appointed in return for, and after, a life of service to country or party.
Judging by the criteria above this seems to be a suitable design. As directly elected representatives they will possess the legitimacy needed to challenge the Commons when required. Movement in the house of around 10% per election is sufficiently glacial to act as a bar to transient majorities. As the Lords would not need to be reelected they would not suffer the interest pressure which appears to have found its way into the Senate. This system even suggests a mechanism for transition by removing no current peers but instead treating the current balance as the starting point from which replacement elections are held.
The problem seen in the Supreme Court with life appointments, that each appointment has far too much at stake is negated by the House of Lords being a body of hundreds. Could a system of lifetime election be the way forward?
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