John Blundell in The Business comments on the 2005 UK general election

I SAT out the UK general election in a cabin on a mountain top in West Virginia. Consequently, I think I can claim to have seen Britain a bit more clearly from a few thousand miles away.

Three main groups jostled for our votes by, broadly, promising the usual cocktail of promises…”free” health care, “free” schools, “free” police and jails and “free” roads. These generosities were laced with a few familiar fears…the MRSA bug haunting the NHS’s wards, Asylum seekers troubling the Home Secretary, and a wide misgiving that despite the worn mantra of “education, education, education” a high proportion of the “schooled” seem not to be able to read, write or count.

There is a body of economic analysis termed Public Choice Theory which tries to examine both the behaviour of politicians and of voters. Nominally MPs and ministers are anxious to serve their nation. Nominally we want wise and judicious politicians. But just below the surface something else is going on too.

I think I chuckle as much on hearing the well tried joke “A camel is a horse designed by a committee” as I did when I first heard it. Like all good jests it includes a strong dose of truth. The behaviour of committees is worth study.

A scholar who got little reward for his efforts was the Scots economist Duncan Black. He tried to see how committees reach their decisions. Calm deliberation is exceedingly rare. Informally matters are about the distribution of power amongst the participants. Black’s work has been refined and extended. James Buchanan got his Nobel Prize in 1986 for elucidating what it is that politicians really get up to…and why we vote, or don’t vote for them.

The results of this work are in one sense heavily conservative. Most vote-seeking behaviour is performed by promising to extend public provision of goods and services. In short our politicians are “captured” in a sense by the diverse producer groups. We saw how the electorate-wooing of the last few weeks deviated very little from the standard promises to spend more on schools and hospitals.

If a candidate were to offer more specific bribes he would break the law but also break the spirit in which the game is played. Eighteenth Century scoundrel politicians used to offer a bottle of gin and a fine steak pie for any Rotten Borough elector who put his cross in the right place. The modern politician could not offer a free new conservatory or even a set of cutlery if we voted for him. Yet it is not only legitimate but near obligatory to demonstrate your compassion and moderation by promising ever more to the client groups of the State.

The comedy of “Yes, Minister” and “Yes, Prime Minister” are very good primers in Public Choice Theory. We can see Jim Hacker behave as we know politicians behave…seeking out good publicity and evading controversy. We see Sir Humphrey as an authentic echo of the entire public sector…anxious for status, budget, awards and security or as economists coldly term such behaviour “rent-seeking”.

We all acquiesce in the polite friction the civil service is dedicated to the commonwealth and “good administration” where as the blunt truth is it entirely lacks the feedback of the marketplace. A retailer, or any trader, has to respond to his or her market. The entire public sector is immune from price information and usually from alternative provision.

One of my favourite maxims is that if subsidies have to be deployed subsidise the customer not the supplier. For example, the British school system would be utterly transformed if vouchers or credits up to the current spending levels were given to each parent rather than to the LEAs. Parents, with the power to choose, would give municipal schools a great jolt. Some would prosper. Some would improve rapidly.Others would fold. As matters stand education supplied by local monopolists is plainly flawed but as it is notionally a “free” service the politicians are reluctant to relinquish control.

Just occasionally a political force will emerge to break the consensual nature of politics. Richard Cobden and his Anti-Corn Law League agitated to break up the collusion between the State and the major landowners In the first Victorian decade. Margaret Thatcher fractured the assumption services such as gas, electricity, water and phones could only be supplied from a single source. In both these cases the electorate was able to discern a vivid self interest in reform…far cheaper bread in the 1840s…far better services in the 1990s. Votes moved.

Tony Blair and some of his courtiers sometimes seem alert to the dud nature of too many “public services” yet they dare do little. Schools and hospitals drown in petty directives and instructions from the Whitehall Departments but neither patients nor parents can be granted real choices.

Public Choice analysis throws up some subversive and unhappy conclusions. For example it seems orphaned children are kept from affectionate family living as local authorities prefer having them as dependent. The wave of young single mothers are often subtly ( and rationally ) trading their pregnancies for better municipal flats. Farmers respond, rationally, to the subsidy regimes to produce foods nobody wants.

I think it easy to determine how we came to be duped into all these “free” services. From the 1870s, as the right to vote was extended it was only entrepreneurial of politicians to offer “free” social insurance, education and medical care. The franchise was extended to every male and then to every female so the impetus to offer more of these splendid freebies was enhanced.

I think I detect that this historic tide has reached its upper limits and will now recede. Note how much of political discourse is about trying to emulate markets They are still too frightened to let the customers choose but NHS Trusts are attempting to copy market behaviour. Schools ministers burble about choice but can’t deliver it. Even now David Blunkett has been told to open up pension provision as State supply is seen to be strangely inadequate and monstrously expensive.

Frederic Bastiat the French author of the 1830’s was sage when he observed that, with ever more people getting the vote, “The State is that device by which we all try to live at other people’s expense”.

Patient study of committees shows them to be wildly irrational. This scarcely matters in a tennis club. In the Cabinet it is getting serious.

John Blundell is director general of the Institute of Economic Affairs.