Today is Malcolm Small’s funeral and I – and I hope others – will be descending on Bath this evening for the service and the wake.
I didn’t know Malcolm well, I knew him badly. We quarrelled a lot, as some friends do; but I miss him very intensely – for he was an idealist and a great lover of liberty.
Most of the arguments we had lately were about the freedom to do what you want with your pension. Malcolm railed against the need to take advice on DB transfers and is I am sure shaking his fist at the FCA for threatening to ban contingent fees.
We recently has a stand up row in the Legal and General boardroom, after which we went for a glass of good wine and agreed both of us were right and wrong! Malcolm was the only person I ever disagreed with totally – and adored!
Why libertarianism gets in the way of liberty.
Libertarianism is a dogma and, as such, dangerous. It assumes that freedom and choice are always in people’s interests. Let me give some recent examples that Malcolm and I disagreed on.
Auto-enrolment; Malcolm did not believe that employers should be compelled to participate. He is right, in a good world, they would choose to offer workplace pensions and fund them properly. I think the DWP are right to place this burden on employers as we live in a bad world.
PPI; Malcolm saw the reason for PPI and the right of organisations to nudge people into paying for it. He was a great opportunist with an eye for the main chance. However Malcolm and I agreed that the outcomes of PPI were poor – we never quite agreed about the compensation culture that’s followed – I suspect Malcolm was deep down appalled.
CDC- Malcolm did not like collective solutions, they smacked of the nanny-state; I like CDC and I like defaults and I would like to see CDC adopted as the default decumulator for many workplace schemes. We could not have been further apart on this.
Infact, Malcolm’s position is well argued by Will Aitken in this debate on CDC with Kevin Wesbroom. You can listen to the Podcast here
I guess where I diverge from Malcom (and Will) is in a kind of benevolent paternalism which is a hangover from my Dad. Despite being a liberal , my Dad was not a libertarian and did not subscribe to the free market economics of Mrs Thatcher.
My Dad saw the damage that people could do to themselves and how easily an unregulated market could lead to “consumer detriment”.
Malcolm saw the good people could do for themselves by taking responsibility for their own actions,
And I suppose that if you put Will Aitken and Malcom Small and me and my Dad in a room together, we would end up agreeing to disagree and drinking a glass of good wine.
Which is what I hope to do tonight, before getting back on the train.
Great piece HT: )
Henry Thank you for the tribute to a free thinker.
One of the fatal flaws in the argument for DB is that the life expectancy of the sponsoring company is far less than the expectancy of the member and with the passage of time this just gets worse.
So a good argument can be made for a University scheme where the institution last for 800+ years but for a technology startup, the counterparty may not exist after a short period.
The member education needs to be addressed so that the member understands how “Gold Standard” the individual scheme is.
On average the model may look good but then average is no measure For example your body temperature might be average on closer inspection with your head in the oven and your feet in the fridge you might not be so comfortable with your situation
I’m not sure you can say libertarianism is dogma.
Society needs rules, but all libertarians would ask is that they’re kept to a minimum.
The existence of no rules at all is like a clean slate, a blank canvas.
To apply anything to it is the act of authoritarians.
How can the fundamental empty initial state be considered a dogma?
I think it’s fair to say that I believe an individual has, needs, and benefits from the potential to make good and bad decisions.
This is the fundamental method of learning and adaptation to a fundamentally chaotic environment.
I do believe in societal safety nets, like the state pension, the nhs, the uk armed forces etc.
But I don’t believe in AE, CDC, or PPI claims.
If the state feels society needs these protections, offer them directly.
Providing opportunity for business to provide these services, with profit, and state sponsored back-stops for when they don’t make profits, doesn’t seem to be anything except authoritarianism with a sprinkle of cronyism.