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It was once stated by the American Secretary of State, Arthur Kissinger, that economics was too important to be left to economists, but its potential is also so significant that we should prevent it from being squandered by politicians. The only people who can prevent any waste of the resources which the government raises in the form of taxation and levies and spends on many different types of goods and services as part of the delivery of public services, is the electorate.

Who is hoodwinking who?

The challenge facing the people of this country is that of fostering a broader awareness of the role of economics in contributing to the promotion of freedom and the ability of each and everyone to satisfy their own freely-formed preferences free from cajoling politicians and leaders of economic "schools" attempting to convert the heathen to seeing the light.

It is more than apparent that although advances in the understanding of economics have taken place over centuries, a considerable intellectual effort, we still have far to travel so as to arrive at the point where it is productively integrated into important political decisions. Part of the reason for this lack of integration is tied up with the complexity of nature and, indeed, economic theory itself. On the other hand, there is no body of knowledge which is impervious to willing souls dissecting the content with the objective of explaining to others its significance. No matter how complex a topic, the logical complexities can be broken down on the principle of divide and rule so that by explaining simple relationships at first, it is possible to follow this up with inter-relationships and eventually a sound appreciation of how the economy works ¹ .

Increasing globalization, increasing instability

The most important problem, however, is that whereas our understanding of how nature is structured and works is fairly robust, our methods of applying such knowledge through political means remain crude. We know, for example, the main issues which can afflict society and which at the extreme are basic physiological issues as having sufficient food, water, shelter and freedom from aggression. There are therefore rewarding and exciting challenges, which have a significant spiritual and inspirational force, that of applying our knowledge of nature to improve the conditions of mankind. In approaching such things as constitution, we aim to move society in a direction where people can lead happy lives. We cannot deny that we have acquired a lot of knowledge on how nature works and what human needs are but during the last century, at least, societies have achieved much through economic development to satisfy a large range of basic needs. There is very little doubt, however, that many gains in welfare and wellbeing seem to be at risk of being eroded by an increasing exposure to international markets where an increasing number of players have become influential and each following a range of motivations. Some of these are not purely that of buying and selling but include foreign policy strategies linked to commodities and economic development. But it is quite apparent that our politicians, be they of the government party or the opposition, stand transfixed, unable to come up with convincing solutions, and in particular, credible economic policies.

There have been centuries of intellectual effort which has advanced economic theory but we still have far to travel so as to arrive at the point where it is productively integrated into important political decisions ...

Whose preferences?

Politicians have until now been largely concerned with offering the electorate "preferences" which they have fashioned into ideas for policies and these with many other items make up a political party manifesto. Political parties see fiscal policy, that is the means of raising funds, to be the means whereby they can pay for the policies they wish to apply. The problem is that, for example, the current government with a majority in the House of Parliament to carry any decision it wishes, within reason, under the threat of withdrawal of government positions from those MP's enjoying Prime Ministerial patronage. These make up some 41% of the Labour MPs so the Prime Minister with the assistance of the Whip can normally get what he wants. This means imposing the party dogma in the "name of the majority". The problem is that the majority do not support such policies because the government only has the direct support of 19% of the electorate (actual proportion of the electorate which actually voted for the government party).

There are two very serious issues here. One is that our contentious political party system sees political parties fashioning preferences which they think are important. But since all of the British parties together have a total membership of less than 1% of the electorate, what they fashion is unrepresentative of the preferences of the people. Indeed, they do not even seek to know what these are. Therefore, what people vote on is not their freely formed preferences but rather a highly restricted and unrepresentative set of alternatives which represent the exclusive preferencfes of an extremely tiny proportion of the British electorate, who happen to be members of political parties. The second issue is that since only 19% of the electorate support the governing party, even if such votes were based on the people's preferenes as opposed to the party preferences, the representation would still be that of a minority faction.

Force fed and forced to pay up

The government programme and a government run public sector consume 40% of the GNP and this is paid for by the public through taxation, levies and many other means. The problem here is that not only is the majority marginalised by policy imposed by such a minority faction, but the majority are expected to pay up. But the government does not inform the electorate what each policy costs, they simply adjust the "pennies in the pound" tax rate and shift levies and other indirect taxes to take funds from the public. The outcome is that the people of this country pay a large amount of their money to fund activities which the vast majority have never expressed any preference.

The public do know how to spend their money

The statement that the political situation is that of an elective dictatorship and the economic policy machine, a monopoly, is not far from the truth when one considers the damage to participatory democracy and to freedom of choice which such a combined system imposes. In order to unravel this massive constraint on the free expression of the people of the country and for them to regain the ability to express and satisfy their own preferences, rather than those of political parties, there is a need for the public to be more proactive in demanding better economic explanations of benefits as well as clear statements of the prices of each policy they are being forced to consume. The government monopoly on public sector information flow, management decision making and the scope and content of policies would never be tolerated in the private sector. Like consumer spending options and choice, governments need to be required to improve their decision analysis on the selection of policies and to use more participatory methods in arriving at options. Part of the "consumer preference" which needs to be factored in to decision analysis is the cost, that is the price to be charged for each public sector good or service. Accordingly, although economic theory might be something which helps policy management, the economics of exchange and preference is not beyond the majority of the electorate. If we can purchase houses, cars and utilities as well as food and other products then we are in a position to also decide how to spend our money on things on sale from the public sector.

Buying influence with our money - they all do it

Centralization of policies means that government revenue is also centalised and this means political party influence over those who wil be selected to apply such funds. There is a never never world created within the public sector of people totally reliant upon the government for their income. Clearly such people are going to vote for the politial party most "committed" to public sector employees., the loyal bands who help impose government policies.

National transparency before Transparency International

Although politicians pay lip service to this degree of freedom of choice with respect to public services they never the less ensure that the process of taxation is a legally secured "duty" imposed on the public irrespective of the fact that the price of each consumed policy output is effectively hidden from the consumers by the government. As a result political parties remove the transparency and the connection between the prices we pay as consumers and what we receive in the form of good and service from the public sector. The reality is that political parties do all they can to prevent consumer choice and thereby erode basic freedoms. The electorate is not really seen as consumers capable of making intelligent choices but rather as fodder for electing political parties into office.

Economics, maybe out best weapon in the defense of our freedom

Therefore, economics is, after all, very important to all of us but by obscuring costs and imposing their own unwanted policies, political parties undermine a basic freedom of economic choice. This freedom of choice has been crushed largely by the nature of political party confrontation which creates winners and losers. With our bizarre first past the post electioral system we have a system where the losers are the majority. But markets, a lesson from economics, can never work in this way unless the population is under duress, forced to comply and legal instruments are use to extract money from them. Markets adjust freely to a wide range of needs and people vote freely with pound notes. Unwanted goods and service die out and the preferred thrive and frequently, minority preferences and special interests are satisfied by producers of niche goods and services. There are no reasonable justifications as to why our transactions with public services should not be shaped by a similar economic basis of free choice. To achieve this the electorate needs to exert its economic muscle more proactively and only pay for what it wants.

¹ George Boole - deduction, understanding essentials, preferences & taking decisions: On the question of being able to take decisions on complex topics we come up against the issue of how people deduce things from what they know and learn. How people deduce and make decisions was well established by the brilliant work of George Boole (1815-1864) a self-taught Englishman who developed the theory and the specific mathematical logic of deduction broadly referred to as Boolean Logic. Boole published his findings on how people arrive at conclusions in 1854 in a book entitled, "The Laws of Thought". Naturally the way in which people arrive at conclusions, on any particular matter, is influenced by their personal inclinations or culture based on experience and their knowledge and experience of the domain in question. Boole's work provided the rationale and methodology for reducing complex logical relationships to simpler sets of relationships or rules or answers to questions. These rules are capable of reproducing all of the possible relationships from which the set was derived. This process is known as Boolean reduction. The success of modern digital circuitry design and manufacturing, including micro-devices and the computer industry based upon these, rests directly upon the practical utility of these same procedures of Boolean reduction. George Boole's objective in developing this approach to logic was to explain how individuals use information and knowledge to deduce and express preferences by taking decisions. Complexity broken down by dividing and ruling: The important finding of the work of George Boole was that the only way to establish the simpler rules, that is statements most can understand, is by making use of knowledgeable individuals and methodologies to extract the essential rules or relationships which make up the complexity concerned. This enables the extraction of critical knowledge represented in the form simple intelligible statements or rules and this enables the correct questions to be asked set against a comprehensive and correct knowledge of the domain in question. This approach is sometimes referred to as "dividing and ruling complexity." From: Notes: 78 and 94 on page 379 and 387 respectively in "The Briton's Quest for Freedom - Our unfinished journey", McNeill, H.W., Hambrook Publishing Company, Portsmouth, July 2007, ISBN: 978-0-907833-01-7

27th June, 2008.