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Adam Smith Institute

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Adam Smith Institute
AbbreviationASI
Formation1977
TypeFree market public policy think tank
Headquarters23 Great Smith Street, London, United Kingdom
President
Director		Madsen Pirie
Eamonn Butler
Websitewww.adamsmith.org

The Adam Smith Institute, abbreviated to ASI, is a think tank based in the United Kingdom, named after one of the founders of modern economics, Adam Smith. It espouses free market and classical liberal views, in particular by creating radical policy options in the light of public choice theory, which politicians can then develop. Its president, Madsen Pirie, has said "We propose things which people regard as being on the edge of lunacy. The next thing you know, they're on the edge of policy".

It was the primary intellectual force behind privatisation in the Thatcher era, and, with the Centre for Policy Studies and Institute of Economic Affairs, drove Thatcherite policy on privatisation, taxation, education, and health. Several of the Institute's policies have been adopted by the Major and Blair governments, and the ASI has also served in an advisory capacity to governments overseas.

The Institute currently advocates the free market by publishing books and policy proposals, advising foreign governments, calculating the British Tax Freedom Day, hosting speaker events for young people, and publishing a popular blog.

History

Foundation

Madsen Pirie, President of the ASI, is widely seen as the architect of Thatcher's privatisation policy.

Dr Madsen Pirie, and brothers Eamonn & Stuart Butler were students together at the University of St Andrews in Scotland, and delegates of the university's Conservative Association to the 1971 Conservative Party Conference. In 1973, they left Scotland to work with Edwin Feulner, who became co-founder of the free-market think tank The Heritage Foundation. After their apprenticeship in the United States, Pirie and Eamonn Butler returned to Scotland in 1977 to found their own think tank, the Adam Smith Institute, set up with the help of Antony Fisher of the Institute of Economic Affairs. Stuart Butler is a conservative activist in Washington, D.C., remaining at the Heritage Foundation.

The ASI recruited Douglas Mason, another St Andrews alumnus and member of the university's Conservative Association, who did his most influential work for the Institute. Mason became one of its regular authors, and, in 1982, led the ASI's Omega Project report, which argued in favour of the compulsory contracting-out of most local services such as refuse collection, the replacement of the welfare state by private insurance, and further privatisation of public sector services and industries, including aspects of the police force.

Thatcher's inner circle

The Thatcher era was the high water mark for the think tank movement, and with the Institute of Economic Affairs (IEA) and the Centre for Policy Studies (CPS), the ASI was one of three relied upon by the Thatcher government for policy. Unlike the CPS, which had been established by Thatcher and Keith Joseph, and the IEA, which focused on more theoretical matters, the ASI was well-placed to produce bold and direct policies. Despite this role, the Adam Smith Institute developed an iconoclastic reputation, cynical about politicians, but enthusiastic to engage with them. The Institute's relationship with Thatcher was not without troubles. Although Madsen Pirie was the architect of much of the privatisation policy, he had no emotional ties to Thatcher, nor did the ASI propose policies on a range of social issues, despite its Thatcherite reputation.

A proposal for the sale of the UK's social housing stock claimed that the "perpetual search for profitability" of private-sector owners would " them to discover and produce what the consumer wants" and that, in this way, the market was "more genuinely democratic than the public sector, involving the decisions of far more individuals and at much more frequent intervals". The report's proposed scrapping of the existing local-government tax in favour of a per-capita charge was later implemented by the Prime Minister, Margaret Thatcher, whose government introduced the poll tax in Scotland in 1989, and in England and Wales in 1990. The poll tax was disastrous for the Thatcher government and is widely seen as a complete failure which precipitated the downfall of her leadership.

Other policy recommendations for which Mason was responsible included the privatisation of the Royal Mail (The Last Post −1991); the introduction of charges in British public libraries (Ex Libris – 1986); the privatisation of the Forestry Commission; the complete removal of arts subsidies (Expounding The Arts – 1987); and the abolition of restrictions on drinking (Time To Call Time – 1986).

ASI after Thatcher

In 1992, the Institute founded a consulting company, Adam Smith International Ltd, which was "charged with overseeing the overseas work of the institute... an attempt to capitalise on the growing international trend towards economic liberalization and marketization". While Eamonn Butler and Madsen Pirie were, as of 1998, members of the management board of both organisations, the management team of Adam Smith International and the Adam Smith Institute is now separate.

In November 1994, the Institute began a review of welfare reform, called 'Operation Underclass', aimed at methods of creating jobs for the long-term unemployed. Some elements of the programme were adopted by the government within months.

The ejection of the Conservative government in 1997 did not have as dramatic an effect on the ASI as some had anticipated. The Institute praised the government's welfare-to-work programmes, describing it as 'the most successful policy initiative of this century', while a month into the Labour government, during which time Labour had implemented the long-held ASI aim of an independent Bank of England, Madsen Pirie gave it a nine out of ten for performance. Eamonn Butler has ascribed this flexibility to who is in power to their role not being 'to be political or shout slogans', but to be 'policy engineers'.

Activities

Tax Freedom Day

The Adam Smith Institute publishes the British version of Tax Freedom Day, the day in the year when the average person has earned enough to pay his or her annual tax bill. The Institute calculates the figure using a range of statistics, including the macroeconomic health of the economy, foreign and domestic investment, and tax policy. The ASI uses Tax Freedom Day to call attention to UK tax rates and fiscal policy.

The Next Generation

The Adam Smith Institute facilitates regular meetings of young people who have interests in free markets. These 16- to 30-year olds form a group called The Next Generation (TNG). MPs and prominent media figures are typical guest speakers at monthly meetings of The Next Generation. The Liberty League, an affiliated network for freedom-loving groups across the UK, was founded by members of the TNG Committee.

Influence

In January 2009 Foreign Policy and the University of Pennsylvania named the Adam Smith Institute among the top 10 think-tanks in the world outside of the US. The Institute is highly influential in UK public policy, and was "a pioneer of privatisation" in the UK and elsewhere. Early Institute papers proposed the outsourcing of local government services (1980), the fundamentals of the poll tax (1981–1985), and the deregulation and privatisation of transportation (1980). The privatisation of British Rail in 1997 was also based on a plan suggested by the Institute. Other influences include the UK's cutting of the highest rate of income tax from 83% to 40% in the late 1980s, and its liberalisation of alcohol licensing laws.

The Institute has released a series of Roadmap to Reform papers, calling for shifts in public policy in Health, Deregulation and Europe. In 2006, the Institute released a paper calling for a rethink of Britain's countryside policy.

Public Sector Reform

Internal Markets – ASI proposed that the National Health Service establish an internal market with hospitals buying the use of facilities from other districts and from the private sector. Internal markets are now NHS policy.

ASI also recommended an internal market system for UK schools that would have state funds to follow students to independently run academic institutions. This approach to school funding is now Conservative policy.

National Government – ASI proposed that QUANGOs be reduced in number and subject to increased scrutiny. QUANGOs were subsequently cut by 20 percent and put under parliamentary review.

Local Government – Following the Institute's call for the use of private businesses by local governments, many local services, such as waste collection and cleaning, were contracted out. Additionally, local governments are now required to solicit competitive bids for local services

Welfare – ASI called for a radical shake-up of welfare policy, which would make work requirements absolutely central to the benefits system. Many of ASI's proposals subsequently became Tory policy, and some even found favour among Labour MPs.

Health – ASI lobbied for a change in VAT regulations to facilitate the outsourcing of ancillary hospital services. The government now requires a solicitation of bids from private contractors for cleaning and catering services. VAT regulations have been modified to put in-house work and outside tenders on an equal basis. It is estimated that these actions saves £100 million per annum.

Education – The Education Reform Act 1988 reflected many policy changes proposed by ASI including increasing representation of parents on state school governing boards, shifting control of state schools from the local authority to the board and head teachers, abolishing fixed school catchment areas.

Transport – Urban and local bus services have been deregulated and the National Bus Company has been privatized into more than 60 companies following ASI's suggestion that the National Bus Company be broken up and urban and local bus services be opened to competition and choice.

Justice – In accordance with ASI's proposals, the government resolved to experiment with privately contracted prisons and electronic tracking tags for low-security prisoners.

Tax Reform

Tax Rates – As recommended by the Adam Smith Institute, the top tax rate was reduced from 60% to 40% in Margaret Thatcher's 1988 budget.

Personal Allowance – Prior to the Exchequer's 2008 pre-budget report, ASI made a case for the personal income tax allowance to be raised to £12,000 (from the current £6,035 allowance) for all UK taxpayers. Such a policy would take 7 million people out of the tax system, and low-income earners would not pay at all. The ASI calculated that this reform would be equivalent to giving the average worker an extra £1,730 per year in gross pay, making them £100 per month better off. The cost to the Exchequer would be £18.9 billion.

Flat Tax – A 2005 paper by the Institute proposed a flat-rate income tax of 22% for UK taxpayers, with the above-referenced tax-free personal allowance of £12,000. City AM editor Allister Heath said of this report, "rarely has a think-tank publication been this influential so quickly. Its arguments have been dissected by the UK Treasury, are well known among the Shadow Treasury Team, have had an influence on some parts of the Liberal Democrats and were even adopted by several minor political parties". The ASI continues to campaign for a flat tax.

Publications

Books

Reports & Briefings

Topics:

See also

Footnotes

  1. Rusbridger, Alan (22 December 1987). "Adam Smith Institute's sense and nonsense". The Guardian. p. 30. Retrieved 19 January 2010.
  2. "Private Ayes". The Dallas Morning News. 5 January 1986. p. 38.
  3. "Britain weighs pleas to cut capital-gains and inheritance taxes". The Wall Street Journal. 6 February 1989.
  4. "Menem asks Adam Smith Institute for privatisation advice". The Guardian. 13 November 1989.
  5. ^ Denham, Andrew; Garnett, Mark (January 1999). "Influence without responsibility? Think-tanks in Britain". Parliamentary Affairs. 51 (1): 46–57. doi:10.1093/pa/52.1.46.{{cite journal}}: CS1 maint: year (link)
  6. ^ Brookes, Warren T. (4 May 1988). "Is Margaret Thatcher leading the way in education reform?". San Francisco Chronicle.
  7. Denham, Andrew and Garnett, Mark (1998). British Thinktanks and the Climate of Opinion, London: UCL Press, p. 155
  8. Butler, Eamonn (14 December 2004). "Douglas Mason: local councillor known as the 'father of the poll tax'". The Guardian. Retrieved 19 January 2010.
  9. Singleton, Alex (16 December 2004). "Douglas Mason: an engineer of the Thatcher revolution and 'father of the poll tax'". The Guardian. Retrieved 19 January 2010.
  10. Kavanagh, Dennis (1987). Thatcherism and British politics: the end of consensus?, Oxford University Press, p. 88)
  11. Denham and Garnett (1998), p. 157
  12. South, Nigel (1988). Policing for profit: the private security sector, London: Sage Publishing, p. 153)
  13. Pearce, Ed (19 April 1993). "The prophet of private profit – Dr Madsen Pirie". The Guardian.
  14. Denham and Garnett (1998), p. 158
  15. Butler (2004)
  16. ^ Denham and Garnett (1998), p. 153
  17. adamsmithinternational.com
  18. ^ "Replacing the welfare state". The Wall Street Journal. 16 February 1995.
  19. "Help for long-term unemployed urged". Financial Times. 7 November 1994.
  20. Atkinson, Mark (16 February 1998). "Rightwing think-tank applauds Blair on welfare-to-work". The Guardian. p. 3.
  21. Pirie, Madsen (15 June 1997). "Why Britain's best-known right-wing think tank is enjoying working with Tony Blair". Scotland on Sunday. p. 19.
  22. Campbell, Denis (15 June 1997). "Thatcherite guru gives Blair 9 out of 10 for performance". Scotland on Sunday. p. 1.
  23. Smith, David (1 May 1998). "Think tanks – who's hot (and who's not)". Management Today.
  24. ^ Hill, Debbie (17 May 1998). "147 days at work foots the tax bill". The Sunday Times.
  25. foreignpolicy.com
  26. The Influence of the Adam Smith Institute, Philip Morris, c 1994
  27. BBC News: 'Woods and homes' green belt call, BBC News, 17 April 2006
  28. Open Access for UK Schools: What Britain Can Learn from Swedish Education Reform
  29. A Flat Tax for the UK – a Practical Reality
  30. Flat Tax – Towards a British Model Alistair Heath, 2006 p.104

References

  • Denham, Andrew (1998). British Think-tanks and the Climate of Opinion. London: UCL Press. ISBN 978-1-85728-497-3. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)

External links

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