It's not every day that an award competition ends in a tie, but that's what happened last night at this year's International Policy Network's Bastiat Dinner in New York, where IPN announces the winner of its Frederic Bastiat journalism prize, "to encourage, recognise and reward writers around the world whose published works elucidate the institutions of a free society." This year two writers shared first prize, Tim Harford of the Financial Times, and Jamie Whyte, a freelance writer for his contributions to The Times. Third place went to Rakesh Wadhwa of Nepal’s Himalayan Times. Following are some samples of the articles for which they won. In “Trade deficit with a babysitter,” Tim Harford points out the silliness of the very concept of trade deficits. He tells of “Sally” a babysitter he and his wife have hired.
“Family Harford runs a substantial bilateral trade deficit with Sally…We spend $100 a week on service exports from Sally, and we earn nothing at all from her. That’s a yawning bilateral trade deficit, but we’re happy enough with it...If politicians were in charge of Family Harford trade policy they would bully Sally to raise her hourly rates, so that trade would take place on a ‘fairer’ basis. The politicians in charge of Sally’s trade policy would refuse.”
In another article, “Yes, we have bananas—we just can’t ship them,” he looks at a more concrete example of how politics distorts trade.
“The Group of 20, comprised of developing countries like Argentina, Brazil, China and India, has been pushing hardest of all for an end to rich countries’ agricultural subsidies and tariffs. Paradoxically, some of the most vocal members of the group impose regulatory barriers that are just as crippling to exporters in their own countries.”
And in “How the government can quit an oppressive habit,” he proposes a novel idea for smokers who want to quit.
“My proposal is simplicity itself. Any smoker who wants to quit can call a government hotline or log on to a website and buy ‘Quitter’s Bonds.’”
These bonds will be financial assets with “an unusual feature.”
“They will pay no interest and will not be redeemable except by the original purchaser. In order to cash in her Quitter’s Bonds she will have to pass a year of random blood tests to demonstrate that she has stubbed out the habit. Until then, the money is an interest-free loan to a hard-hearted government with unlimited reserves of moral superiority.”
Jamie Whyte has a similarly innovative idea, though the reasoning behind this one is to show up some politicians’ twisted logic, this time regarding risk-based pricing. In “Genetics is a risky business,” he cites Sir John Hulston, vice-chairman of Britain’s Human Genetics Commission, who decries the idea that insurers would charge higher premiums to customers whose genetic history would place them in higher risk groups.
“I plan to get rich by helping. If the Government takes Sir John’s advice and bans discounts for genetically low-risk customers, I will start an insurance company serving British customers but based offshore, perhaps in the Cayman Islands.”
Free from UK regulations, Whyte's company “will serve only those who can produce documentary evidence that they are genetically low risk."
"This will allow it to charge much lower premiums that its British competitors, who will be legally obliged to serve both high-risk and low-risk customers at the same price.”
As low-risk customers switched to Whyte’s Caymans-based venture, UK insurers will be “left with nothing but high-risk customers who will therefore have to pay the full cost of their insurance.” In “I’ll take the cash not the ‘free’ gift,” Whyte follows this political willfulness to ignore costs to a similar conclusion.
“Suppose [British Chancellor of the Exchequer] Gordon Brown were to make a legal reality out of the rights he proclaims at Labour Party conferences. Suppose he guaranteed everyone ‘the highest standard of free healthcare,’ ‘the best start in life and all the rest. To ears reddened by Mr. Brown’s rhetorical style, this may sound like Utopia. In fact, it would be serfdom. The highest standard of medical care would alone cost so much that funding it would require taxes to be 100 pecent of GDP.”
Runner-up Rakesh Wadhwa’s writings follow a theme—South Asians’ propensity for success, but only away from home. In “Profits generate capital,” he notes:
“The success of the recently concluded ‘NRN’ [Non-Resident Nepali] conference shows how well Nepalese have done outside their own country. The reason is that Nepal makes earning profits far more difficult than most other countries. Entrepreneurial activity is practically non-existent, such are the disincentives for people who want to do something.”
And when they face the right incentives, success can be great. In “Steel and mobile Mittals,” he notes that steel magnate, Lakshmi Mittal, “the richest Indian,” still “retains his Indian passport. He had to, however, shift out of India to make his fortune.” Yet South Asians shouldn’t have to move to prosper. In “Do foreigners exploit us?” he urges his countrymen:
“It is time to shed our paranoia of foreigners. It is time to open our markets for trade, investment, and tourism. It is time to globalize and be freed from restrictions in our dealings with people of other nations.”
Wise words—for developed nations as well as for developing ones. Congratulations to IPN for a successful Bastiat Dinner, and to Messrs. Harford, Wadhwa, and Whyte for their well deserved honors.
- Ivan Osorio
