In the 2020 campaign for Labour leadership, Keir Starmer promised to put rail, mail, energy, and water into "common ownership"...

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In the 2020 campaign for the Labour Party leadership, Keir Starmer promised to put rail, mail, energy and water into “common ownership”. Starmer has since abandoned every one of the Corbyn-lite ten pledges in the name of electability, including the demand for nationalisation.

Perhaps Starmer was put off by the immense cost, which would have to be paid through public spending cuts, higher taxes or more borrowing. Taxpayers would have to fork out an astonishing £90 billion just to nationalise the water industry – or otherwise expropriate the assets and risk turning Britain into a banana republic.

The prospect of state takeovers remains. The near-collapse of Thames Water in recent weeks led to reports about emergency plans for nationalisation. The immediate crisis has passed, with the water and sewage company securing emergency financing.

More broadly, industry critics still claim that financial engineering – taking out large loans to pay dividends to shareholders – has combined with underinvestment to result in sewage dumping across Britain's beaches and rivers.

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But, as I argue in my City AM column this week ([link removed]) , nationalisation is no panacea. It’s unlikely that the UK’s cash-strapped government will put up the necessary cash to modernise our Victorian-era water and sewage system. The government would likely be highly inefficient, resulting in higher bills and poorer quality service.

Nor has privatisation entirely been a failure. There has been £160bn invested, two-thirds of beaches are now classed as excellent (up from less than one-third), and wildlife has returned to rivers that were once considered “biologically dead”. Water bills are lower in real terms than a decade ago.

For the IEA Podcast this week, I spoke to Professor Steve Hanke, (which eagle-eyed readers might recognise as a co-author of the IEA’s recent Covid lockdowns paper ([link removed]) ). Steve has researched water management issues since the 1960s and recently wrote to the FT ([link removed]) about how the UK could learn from a French-style franchising system. This would mean better-specified requirements and more oversight than the UK’s lacklustre Ofwat regulatory model.

Over the coming years, it will be essential to not only reiterate the case for privatisation but also think about how it can be improved to deliver even better for the public.

Matthew Lesh

Director of Public Policy and Communications
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** Should water be renationalised? ([link removed])
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Director of Public Policy and Communications Matthew Lesh and Professor Steve Hanke, IEA Podcast

An alternative model… On this week’s podcast, Matthew and Professor Hanke discussed the pitfalls of nationalisation and explored alternative water delivery models which don’t require a state takeover.
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** Hot off the press
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Economic Affairs’ June edition out now

In collaboration with our partners at the University of Buckingham, the IEA releases its own quarterly journal containing cutting edge original research, discussion pieces, and review articles. Edited by the IEA’s Editorial and Research Fellow Professor Len Shackleton, Economic Affairs remains at the forefront of free market thought and June 2023’s edition ([link removed]) is no different.

Original articles

The evolution of the Swedish market model ([link removed]) by Nima Sanandaji, Viktor Strom, Mounda Esmaeilzadeh, and Saied Esmaeilzadeh

If ‘money matters’, what about the monetary base? ([link removed]) By Tim Congdon

Debt and currency value during COVID-19 in the Global South ([link removed]) by Behrooz Gharleghi

Currency under War Communism: An example of Gresham's Law? ([link removed]) by Cristobal Matar

The relationship between economic freedom and peace ([link removed]) by Alexander Jelloian

The impact of rising EU Allowance prices on core inflation in the Eurozone ([link removed]) by Hideki Nishigaki

Discussions

The UK's net neutrality regulation helps neither consumers nor innovators ([link removed]) by Roslyn Layton

Are electric vehicles really green? ([link removed]) By Richard Kish

Review article

Paul Sagar's contentious interpretation of Adam Smith ([link removed]) by Alberto Mingardi

Book reviews

Hayek: A Life,1899–1950 By Bruce Caldwell and Hansjörg Klausinger ([link removed]) by Pedro Schwartz

Rethinking economics as social theory By Richard E. Wagner, Edward Elgar ([link removed]) by Eric Jones

The fiscal theory of the price level. By John H Cochrane ([link removed]) by Michael Ben-Gad

Better money:Gold, fiat, or Bitcoin? By Lawrence H White ([link removed]) by Geoffrey Wood

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Nima Sanandaji, Viktor Strom, Mounda Esmaeilzadeh, and Saied Esmaeilzadeh have collaborated on an article debunking common misconceptions about Sweden’s market model.

Their article explores Sweden’s long history as a pioneer of the key institutions which promote economic development, from modern banking to allowing women equal property rights and legal protections.

Last month, co-author Nima Sanandaji discussed Sweden’s economic past, present, and future in the IEA podcast with Director of Communications and Public Policy Matthew Lesh.

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As inflation and interest rates continue to dominate the news cycle, economist Tim Congdon argues that monetarists should reconsider their heavy emphasis on the monetary base and update their ideas for the cashless era.

A new perspective… as the post-Cold War international order continues to be upended, Alexander Jelloian’s article re-examines the classical liberal idea that trade fosters peace.
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The People’s money… Cristobal Matar takes us back to the early USSR, analysing the Soviet monetary system and disorder caused by the widespread use of three different currencies.
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That’s not all… June’s copy of Economic Affairs has something for every type of free marketer, from Behrooz Gharleghi’s timely analysis of debt and currency vulnerability in the Global South to Hideki Nishigaki's analysis of the impact of EU emissions policy on inflation, and much much more.

IEA Latest.
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** It’s time we were told the impact economic policies have on growth ([link removed])
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Director General Mark Littlewood, The Times ([link removed])

Go for growth… The current economic climate is challenging, with high inflation, heavy taxes, increasing debt, and stagnant productivity. Mark argued that we need a paradigm shift to put growth at the heart of policymaking.
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** The couples who decided ‘dual income, no kids’ is too good to give up ([link removed])
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Head of Political Economy Kristian Niemietz,

The Daily Telegraph ([link removed])

DINKY dilemma … An increasing number of couples in the UK are choosing a lifestyle of "dual income, no kids" (DINKYs). Kristian argued that cultural changes are not the only force at play, with high housing and childcare costs caused by government regulation, taking choice away from many would-be parents.
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** The NHS fails healthcare workers and taxpayers ([link removed])
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Communications Officer Reem Ibrahim,

BBC Politics Live ([link removed])

A bureaucratic black hole… Reem appeared on Politics Live to discuss a wide range of topics from the public sector pay dispute to inflation and intergenerational inequality. Discussing NHS reform, Reem said:

“Clearly the NHS isn’t working, we’ve got over 7.3 million people on waiting lists…the solution isn’t just more of our taxpayer money being thrown into a bureaucratic black hole, what we need instead is to actually think about what other systems we could seek to emulate in the United Kingdom,”
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** How governments oppress women ([link removed])
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Communications Officer Reem Ibrahim interviews

Sarah Little, IEA YouTube Channel ([link removed])

Freedom fighters... Authoritarian regimes subject women to severe restrictions, including the requirement to wear a hijab and needing permission from male guardians to leave the house. Reem and Sarah discuss these archaic rules and if its possible to overcome them.
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** Growth is hard work but it’s only way out of Britain’s grim situation ([link removed])
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IEA Economics Fellow Julian Jessop, The Express ([link removed])

Spur economic growth… The recent contraction in the UK economy demands immediate action to enhance productivity. Streamlining taxes, revamping the planning system, and implementing structural reforms are crucial for sustained wage growth and improved public services. Choosing not to do so will only turn the UK into the sick man of Europe.
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** Oxfam is up to its old anti-capitalist tricks again… ([link removed])
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Editorial and Research Fellow Prof. Len Shackleton, CapX ([link removed])

An uncharitable argument... After Oxfam released a report claiming that big business ‘windfalls’ have topped $1 trillion, Len wrote in CapX critiquing the report’s methodology and Oxfam’s advocacy of punitive windfall taxes without a viable collection and distribution mechanism.

IEA Insider.


** Learning from the past, building for the future
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Future Thought Leaders… Over the past two weeks, two sets of 40 Sixth Formers visited the IEA Offices to participate in our highly-competitive Future Thought Leaders’ programme. Throughout the programme, they were introduced to foundational economic concepts, discussed current affairs issues, and explored ideas beyond the A Level exam curriculum. We received some of the best feedback to date for this programme and hope the students not only found the week enriching but enjoyable!
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Realities of socialism… The IEA is delighted to continue our partnership with the Fraser Institute’s Realities of Socialism project. This week, the communications team focused on promoting the project’s case study on the economic history of Poland during periods under fascist, communist, and liberal democratic systems. IEA Communications Officer Harrison Griffiths and Head of Political Economy Kristian Niemietz discussed the research for our YouTube channel ([link removed]) this week.
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