E.U. Election Results: A Guide to Europe’s Political Factions

For those of us who are more used to two-party democracy, last week’s elections to the European Parliament could easily be a source of confusion. By my estimate, the European Parliament’s 751 seats will soon be divided between representatives of 198 different national parties, themselves organized into seven (or possibly eight) official groups—with each of those representing a political faction that draws support from at least 25 members of the European Parliament (MEPs) who must, between them, represent no fewer than seven of the E.U.’s 28 member states. Got it?

If you want to know more, read on for a guide to Europe’s main political factions, how they did in last week’s elections, and what it means for the future of the European Union. Continue reading

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How Libertarian is the UK Independence Party?

The UK Independence Party (UKIP), which is on course to either win or come a close second in the British segment of this week’s elections to the European Parliament, describes itself as a “libertarian, non-racist party seeking Britain’s withdrawal from the European Union.” How apt is that description?

The third part—seeking withdrawal from the European Union—is undeniably true. The second part—non-racist—has prompted raised eyebrows in some quarters. But having met many of the party’s officials, activists, and candidates over the years (including this wonderfully straight-talking chap), I’m prepared to give UKIP the benefit of the doubt. But does UKIP deserve the label “libertarian”? Here, I’m with Rational Optimist Matt Ridley:

As the Ukip campaign ploughs steadily farther off the rails into the anti-immigrant bushes, in search presumably of former British National Party voters, it becomes ever easier for small-government, classical liberals—like me—to resist its allure. Nigel Farage once advocated flat taxes, drug decriminalisation and spending cuts. Now his party has dropped the flat tax, opposes zero-hours contracts, is hostile to gay marriage and talks about subsidising farmers and growing the defence budget.

To be clear, there are some libertarians involved in UKIP, and more supporting it from the sidelines. The party’s antipathy toward the political elite certainly has a libertarian flavor to it, as do a few of its individual policies. But UKIP has always been an uncomfortable alliance of libertarianism and populist nationalism. And in recent years, it is very much the populist nationalism that has come to the fore. Now, as Dr Matthew Goodwin, co-author of Revolt on the Rightputs it:

UKIP are winning over the “Left Behind” groups in British society… These are voters who hold a very different set of values to the professional, middle-class majority: they are far more nationalist, Eurosceptic, fiercely opposed to immigration and feel like they have no voice in politics. They look out at a country they neither recognize nor want to be a part of.

In this context, it is hard to see a UKIP electoral victory striking much of a blow for individual freedom. It may represent a kick in the face for an out-of-touch political class, but—alas—it isn’t libertarians doing the kicking.

UKIP may once have been a libertarian political force. But for me, that label has been out-of-date since at least 2010, when the party ran its UK general election campaign on a virulently anti-immigration platform. Since then, the party has been beating an ever-more reactionary path. Libertarians still cheering its rising fortunes should perhaps be careful what they wish for.

Originally published at Reason.com.

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Do the European Elections Matter?

Historically, elections to the European Parliament haven’t mattered much, even to Europeans. Their main role has been to give disgruntled voters a chance to deliver a good shellacking to the parties in charge of national governments. Like mid-terms, then, but with little potential to alter the balance of power or sway the course of policy. The fundamental indifference of Europe’s voters has been reflected in turnout percentages, which have fallen at every election since the European Parliament was established in 1979. Most expect turnout to reach a new low this year, falling below the 43 percent figure from 2009.

To a certain extent, this lack of enthusiasm is hard-wired into the structure of the European Union (E.U.). For starters, the European Parliament has not traditionally had much power. It still can’t initiate legislation, which is the sole preserve of the European Commission, the EU’s permanent bureaucracy. What’s more, the European Parliament—which houses representatives from more than 100 national parties, grouped into 12 European parties, and then grouped again into seven different alliances—feels very remote to most voters. What power the European Parliament does have is often exercised through back-room deals concluded by politicians the voters don’t know, on behalf of parties and alliances they’ve never heard of. A vibrant democracy this most certainly is not.

And yet the 2014 elections—which begin on Thursday in the UK and the Netherlands—may be different. For one thing, the 2009 Lisbon Treaty extended the European Parliament’s power to approve, amend, or block legislation to 40 additional areas of policy. It also gave the European Parliament a greater say on the EU budget, as well as a range of international agreements (including, for example, the proposed U.S.–E.U. trade deal). Legislators have not been shy about exercising their new powers: The Financial Timesnotes that they now wield more influence than their limited constitutional role would suggest.

The latest power-grab involves each parliamentary group nominating a “lead candidate” in the elections, and demanding that the victor be made president of the European Commission. It remains to be seen whether the European Council—consisting of the heads of the E.U.’s 28 national governments—will accept this usurpation of its authority, but if it does, the consequences for E.U. policy could be significant. The European Commission has traditionally been a force for liberalization and market competition; the European Parliament, by contrast, tends to prefer regulation and protectionism.

This matters because the E.U. is at an important crossroads in policy terms. The eurozone crisis may have abated for now, but growth remains sluggish, unemployment is shockingly high, and a Japanese-style “lost decade” looms on the horizon. And that’s to say nothing of renewed geopolitical instability in the E.U.’s own backyard. Europe desperately needs to liberalize its labor and consumer markets, strengthen its trade links with other economies (not least the U.S.), and develop an energy policy that doesn’t leave it reliant on the Kremlin to keep the lights on. For better or worse, the European election results will go some way to determining whether any of this is possible.

One crucial factor will be the electoral performance of Europe’s insurgent populist parties, which may end up controlling more than a quarter of the seats in parliament. These parties do not constitute an homogenous political force—Italy’s anti-establishment but relatively liberal Five Star Movement has little in common with Greece’s neofascist Golden Dawn, for instance. But for the most part, Europe’s populists are skeptical of European integration, suspicious of globalization, and hostile to immigration. The most extreme among them can be downright nativist. Their rise to prominence gives libertarians precious little to cheer: The result can only be a Europe that is more illiberal and less free market.

So do the European elections matter? In so far as they give some indication of the economic prospects of the world’s biggest market, the fate of the U.S.–E.U. trade deal, and the future complexion of a political union serving more than 500 million people, the answer to that question must be “yes.”

Originally published at Reason.com.

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New European Union Rules Will Hold Back Tobacco Harm Reduction

On Wednesday, February 26, the European Parliament voted to approve a new Tobacco Products Directive. The text adopted by the Parliament is expected to be rubberstamped by the Council of the European Union when it meets on March 14. Once it enters into force, EU member states will have two years to bring national laws into compliance with the terms of the directive.

The new directive contains all the illiberal strictures we have come to expect from such legislation: health warnings must cover 65% of the front and back of each cigarette pack and must be printed in black Helvetica bold type on a white background; cigarette packs much be cuboid in shape and contain no fewer than 20 cigarettes; all characterizing flavors—including menthol—must be banned.

But worse than these measures, which relate to traditional cigarettes, are the directive’s new rules on electronic cigarettes, which deliver vaporized nicotine without tobacco or smoke. A growing body of research indicates that these “e-cigarettes” are safer for users than traditional cigarettes, pose no health risk to non-users, and help habitual smokers to give up dangerous, combustible tobacco. Some analysts have predicted that e-cigarette sales will exceed sales of tobacco cigarettes by 2021.

But rather than welcome e-cigarettes as a route to harm reduction, the new Tobacco Products Directive seeks to undermine this fast-growing market. First, the directive introduces a new strength limit for nicotine-containing liquid of 20mg/ml. As Clive Bates notes:

… 25-30% of users use liquids stronger than this, and there is no health or internal market basis for preventing the trade in these products. The stronger liquids are important to heavier smokers and to people as they make their first switch into e-cigarettes. The result of this limit will be less switching and more relapse to smoking. The result of that: more disease and premature death.

Second, the directive prohibits print, radio and audiovisual communications “with the aim or direct or indirect effect of promoting electronic cigarettes and refill containers.” In other words, e-cigarette manufacturers are not allowed to tell consumers about their product. For an emerging technology seeking to disrupt a long-established industry, this is disastrous. The prohibition of advertising makes it hard for e-cigarette producers to dislodge market incumbents (i.e., traditional tobacco brands) and blunts their market incentive to come up with newer, better e-cigarettes. Why bother, when companies can’t promote new products to consumers?

Third, the directive seeks to tie the e-cigarette industry in so much bureaucratic red tape that it is all but guaranteed to reduce competition and retard innovation. Smaller, independent e-cigarette brands will be particularly hard hit by requirements that they must submit to the “competent authorities” detailed notification of all new products six months before they are placed on the market. The same goes for demands that manufacturers and importers make comprehensive annual submissions on “sales volumes,” “the preferences of various consumer groups, including young people, non-smokers and the main types of current users,” and “the mode of sale of the products.”

The only way around these regulations, according to the directive, is for e-cigarettes to be recognized by national governments as “medicinal” or “medical devices.” But such categorization comes with its own heavy regulatory burden. To put it bluntly: heads you win, tails I lose. And e-cigarette producers aren’t the only losers here. Ultimately, it is to Europe’s smokers, whose lives could be longer and healthier if they switched to vapor, that the European Parliament has done the greatest disservice.

Originally published at Reason.com.

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In Defence of the Rehabilitation Revolution

There is a real problem at the heart of the government’s “Transforming Rehabilitation” programme: nearly half of those released from prison reoffend within a year. Given that we spend more than £3 billion annually on prisons, this represents a poor return on investment. It also highlights the human tragedy at the centre of our criminal justice system: too many offenders are stuck in a vicious cycle of crime from which they are unable to escape.

The goal of “Transforming Rehabilitation” is to break this cycle by implementing two complementary policies. The first is to extend statutory rehabilitation services to all those leaving prison and to ensure that they are given continuous “through the gate” support. This could mean helping released offenders to find housing, overcome substance abuse and mental health problems, or address deficits in their eduction and training. It could  mean helping them to get identification, sign up for benefits, or apply for jobs. It could even mean counseling them on how to improve their family relationships

The second policy is designed to ensure that this approach yields the best possible results without increasing costs to the taxpayer. It involves opening up the provision of rehabilitation services to competing private and voluntary sector organizations, and then paying them based on their success keeping offenders out of trouble. If these new providers achieve lower reoffending rates than the existing system, they will make money; if not, they stand to lose out. This means they will be motivated to find and develop better ways of reducing recidivism, without spending more money.

This aspect of the reforms is about more than just creating the right financial incentives, however. It is also about driving a cultural shift in the criminal justice system, moving us away from a focus on retribution and towards an emphasis on reintegration—that is, towards helping people to turn their lives around and become productive members of society. Such a dramatic change in priorities is difficult to achieve without the fresh thinking and innovative management that new, independent providers bring to the table. And that is why private and voluntary sector involvement is central to the government’s criminal justice reforms.

That these plans are typically described as “privatising the probation service” conceals as much as it illuminates. This is not the kind of privatisation that Margaret Thatcher pursued in the 1980s. It is not part of an ideological battle over the commanding heights of the economy. Nor is it an exercise in rolling back the frontiers of the state. In fact, “Transforming Rehabilitation” is about something much more commonplace and mundane than that: the well-established use of performance-based contracting as a tool to make government more efficient and effective.

How well this works has much to do with the efficacy of procurement and contract management processes. And it is on these unglamorous grounds that the government’s “Transforming Rehabilitation” plan will ultimately be judged. The intention behind the plan is admirable, and the idea underlying it is sound. Yet, as always, the devil is in the detail. The government should certainly move ahead with its rehabilitation revolution, but it must do so with great care and attention.

Originally published by The House Magazine.

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The Benefits of Right-to-Work

In his latest Economic Freedom Roundup, Jordan Bruneau of the Charles Koch Institute compares right-to-work (RTW) states with non-right-to-work states. His findings are instructive.

First, the 2012 unemployment rate in RTW states was half-a-percent lower than in non-RTW states – at 7.0 percent versus 7.5 percent. Indeed, unemployment has been lower in in RTW states in each of the last 23 years.

Second, when you adjust real median incomes for the cost of living, households in RTW states had higher average incomes in 2012 than their non-RTW counterparts: $51,345 versus $46,084.

Third, governments in RTW states spent and taxed less per capita than their non-RTW counterparts. Bruneau suggests a reason for this disparity, which has persisted over the past three decades: “unions, which are stronger in non-RTW states, are usually tied to sectors and industries that are close to the government and therefore better able to bid up government spending – and the resulting taxation necessary to fund it.”

Finally, people appear to be voting with their feet in favor of RTW states. Between April 2010 and July 2012, “809,000 American residents moved into RTW states. At the same time, 823,000 American residents left non-RTW states.” With less unemployment, higher cost-of-living adjusted incomes, and lower taxes, who can blame them?

The lesson here for state policymakers is that right-to-work laws have the potential to bring real economic benefits. And with many states still struggling to bounce back from the economic downturn, right-to-work should be a compelling proposition.

You can sign up for future editions of the Economic Freedom Roundup by emailing jordan.bruneau@charleskochinstitute.org. Bruneau’s regular analysis is well worth reading.

Originally published at Reason.org

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Pioneering Social Impact Bonds in the United Kingdom

Interview with Jane Newman, International Director at Social Finance UK.

One of the most interesting trends in public-private partnerships (PPPs) is performance-based contracting—also known as payment-by-results—in which part of the contracting service provider’s remuneration is tied to the achievement of particular performance targets specified in the contract.

One relatively new—and increasingly popular—type of performance-based PPP is the “social impact bond,” a construct that brings together government, which decides on a problem to be tackled, an intermediary, which finds investors to provide funds and hires service providers to deliver a targeted intervention, and an evaluator, who determines how successful that intervention has been.

Put simply, the private and third sectors finance and implement new social service delivery models on behalf of government under a pay-for-success model. If the interventions improve outcomes and save public funds, investors receive success payments from government that generate a return on their investment. If outcomes do not improve, government pays nothing and investors lose money.

In the U.S., social impact bonds are already moving forward in Massachusetts, New York City and Fresno, California, and are on the horizon in several other states, counties and municipalities. More information can be found in Reason Foundation’s Annual Privatization Report 2013.

The nonprofit organization Social Finance UK pioneered the social impact bond concept in the United Kingdom. In 2010 it raised $7.8 million from 17 investors to fund the first social impact bond pilot project, which aimed to reduce recidivism amongst prisoners in one British prison: HMP Peterborough. In June 2013, Reason Foundation Managing Editor Tom Clougherty sat down with Jane Newman, International Director at Social Finance UK, to learn more. Continue reading

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