The publication of the Meyer memoirs has reopened questions about the proper relationship between the civil service and the government. This is an important question with possible implications for the style and form of government we have.

Below the fold, I set out to demolish five common fallacies about the role of the civil service.

• Fallacy one: Civil servants should be able to tell their side of the story.
• Fallacy two: The civil service has been politicized; there are too many Special Advisers with too much power.
• Fallacy three: Civil servants owe a separate duty to Parliament, the public or the press.
• Fallacy four: Civil servants should enforce the Ministerial code.
• Fallacy five: Civil servants should have a monopoly on providing advice to the Government.

Fallacy one: Civil servants should be able to tell their side of the story.

Meyer told Andrew Marr on 13 November 2005 that because politicians and special advisers are writing books about their experiences, civil servants should be able to do the same:

“there is a succession of ministers who have either just left office, in one case while still in office, publishing really quite extensive memoirs of what they did in government, which of course embraces exchanges with civil servants. Now I think, against the background of a kind of spew of books, by former ministers, special advisors, that the civil servants are now put in a position of disadvantage. I would like to see a new dispensation with clarity and, above all, consistency across the board on these issues.”

Meyer’s argument is nonsense for several reasons:

• – Most books by special advisers and Ministers are pretty careful not to name or expose or embarrass the civil servants involved. (Alan Clark’s diaries were a notably rare exception to this.) So there is no need for civil servants to defend themselves.
• – Ministers are elected, and are accountable to parliament and the public. Civil servants are not elected: our accountability is to the government of the day and our contractual commitments. Ministers are not only entitled to explain themselves, arguably they have a duty to do so. Civil servants have neither reason nor duty to do so; and the notion that they are thereby “disadvantaged” is nonsense.
• – Ministers have to be able to trust civil servants to be discreet; otherwise the UK will go down the path of the American Government in which politicians feel the need to surround themselves with political appointees whose main virtue is their loyalty. That would be bad for the effective functioning of government.

Fallacy two: The civil service has been politicized; there are too many Special Advisers with too much power.

There are about 70 Special Advisers (listed here) and about half a million civil servants. With these numbers, is hard to imagine that the political appointees are swamping the official machine. Far from harming civil servants, the existence of special advisers benefits and protects civil servants. Special advisers enable civil servants to avoid inappropriate tasks (such as writing political speeches). Furthermore, special advisers help civil servants by providing an intelligent customer – a sounding board to test the political viability of different possible approaches, and with whom to discuss how best to tackle particular problems within the Minister’s political framework.

We should not be regretful that politics plays an important role in decision-making. Governments are elected on a political platform, and it is right that they should have access to effective, politically-oriented advice as well as the more impartial advice of the government machine. Special Advisers work effectively with civil servants, and it is a relationship of mutual benefit, not a matter of regret.

Fallacy three: Civil servants owe a separate duty to Parliament, the public or the press

Christopher Meyer, for example, has claimed that civil servants have a role to play in helping the public to hold ministers to account:

politicians are elected officials, they’re chosen by us in elections. I think it is legitimate and reasonable to be able to describe, in some detail, not in total detail, how they perform their job when they go abroad.

It has also sometimes been claimed that civil servants owe loyalty directly to Parliament or the public, and that they should exercise judgment about that loyalty independent of the decisions of the Minister.

Civil servants are technically servants of the Crown. In most circumstances the executive powers of the Crown are exercised by Ministers, who are in turn answerable to Parliament or the National Assembly. The Civil Service therefore has no constitutional responsibility separate to their responsibility to the Government of the day.

The duty of the individual civil servant is first and foremost to the Minister of the Crown who is in charge of the Department concerned. Of course, civil servants should obey the law, and they should not deceive or knowingly mislead Ministers, Parliament, the National Assembly or the public. But it is Ministers, not civil servants, who make decisions and who are responsible and accountable to Parliament.

(Note that there are limited, very specific circumstances in which particular civil servants do have direct obligations to Parliament – particularly if they are an Accounting Officer. But those are exceptions.)

Fallacy four: Civil servants should enforce the Ministerial code

I have commented elsewhere on the strange and recent idea that it is the job of the Cabinet Secretary, or any other Civil Servant, to judge whether the Code of Conduct for Ministers has been breached. Civil servants have neither the mandate nor the resources to hold Ministers accountable for their actions. That is the job of Parliament and, ultimately, the electorate. It distorts the entire relationship to have civil servants sitting in judgement on Ministers.

Fallacy five: Civil servants should have a monopoly on providing advice to the Government.

Civil servants are, and should be, just one source of advice for Ministers. Others include their political colleagues and parties, political advisers, academics, think-tanks, professionals and lots of other sources of opinion. Ministers are entitled to know that the advice they get from civil servants is independent, expert, evidence-based, realistic and private. They are entitled to take or leave that advice. They should not be criticised – by civil servants or anyone else – for making an independent judgement: that is the whole point of having Ministers. Conversely, Ministers should not blame civil servants for mistakes.

Conclusion

The publication of Meyer’s book has been greeted with enthusiasm by a press hungry for gossip and tittle-tattle. But it is a bad day for the government of the UK if Government ministers do not feel in future that they can be open and honest with the civil servants who work closely with them, in case their thoughts appear in memoirs shortly afterwards. Sir Christopher Meyer has done us all a disservice.

Links
See the Civil Service Code

Usually when a firm increases its value, that’s good for the economy.  Inventing a new product, or finding a way to produce using fewer inputs, increases the value of the firm and also increases the wealth of the economy and makes everyone better off.

But some ways of increasing a firm’s value are not good for the economy as a whole – for example, if they merely transfer surplus from consumers to producers, reduce efficiency by reducing competition, or exploit negative externalities.

Does the economy as a whole benefit from an increase in brand value? Or do brands just increase benefits to the producer at the expense of the consumer?  What are the economic benefits of brands?

Brands serve a number of purposes:

1. They enable firms to extract rents from consumers; brands reduce price competition, by differentiating between similar products on the basis of something other than price (i.e. brand ‘values’).

2. They deter new entrants from competing in the market, by increasing the cost of entry for new firms; this can make some markets hard to contest.

3. In game theory terms, they signal to possible entrants that the firm has invested a great deal in the brand and is therefore likely to defend its position; this signalling is designed to deter entry by competitors.

4. They signal to consumers that the firm has invested in the reputation of the brand, and is therefore more likely to provide high quality products and good service; this may create an incentive for firms to provide good products and service.

5. They provide some information to consumers (eg Duracell last longer than Eveready).

6. They may provide some psychological benefit to consumers, who apparently like associating themselves with particular brands (presumably there is a benefit to consumers, or they wouldn’t buy branded goods).

What is striking about this list is that few of these effects create additional value to the economy, as opposed to transferring value from consumers to producers.

(1) is a transfer within the economy from consumers to producers. (2) and (3) transfer from consumers to producers and reduce total welfare by reducing competition. (4) and (5) may create incentives for better products, which is good. (6) is perhaps a benefit because it increases overall welfare, though arguably it creates and fulfils an artificial need, and is beneficial only in the same sense as a heroin dealer is beneficial to the welfare of his customers.

Branding is an inefficient way to achieve the narrow objective of increasing consumer information; most brand marketing has no information content; and much of the information is inaccurate (for example, Special K is sold as if it were healthier than other cereals but it is not). Mandatory government labelling, or support for consumer magazines, could achieve the information benefits of branding much more cheaply.

It is hard to guess what the total cost to the economy is of activity to create and promote brands. The total US advertising budget is about $150 billion a year, but that does not include a lot of activities by firms related to designing and promoting brands, ranging from research to packaging. I’d guess we are looking at activity worth at least $500 billion a year in the US, or about 4% of total GDP. This spending is effectively the dissipation of economic value through rent-seeking. There is almost no value added to the economy as a result of the activity. Furthermore, the welfare costs to the economy of the reduction in competition that results from investment in brands must be large – I guess at least twice as large as the direct costs.

Overall, then, the creation and protection of brand value, which is central to the activities of many businesses, is predominantly an exercise in rent-seeking. It has huge direct costs, in terms of economic activity with little value to the economy, and it has huge indirect welfare costs resulting from reduced competition.

What should we do about it?  My starting point would be a hefty tax on advertising and marketing, reflecting the substantial cost that it imposes on the economy. In general, we should be aiming to shift the burden of tax from good things, like working and saving, to taxing behaviour with negative effects – such as polluting the environment or rent-seeking through brand-building.