Adam Smith Institute

Foundation

Madsen Pirie and brothers Eamonn and Stuart Butler were students together at the University of St Andrews in Scotland.^[12] Pirie left in 1974 to work for the Republican Study Committee in Washington, D.C., and then took up a professorship in Philosophy at Hillsdale College. He was joined there by Stuart Butler while Eamonn Butler went to work with Edwin Feulner, who became co-founder and director of the free-market think tank The Heritage Foundation.

After their experience in the United States, they returned to the United Kingdom in 1977 to found their own think tank, called the Adam Smith Institute. After a year, Stuart Butler returned to the United States as Vice President of the Heritage in charge of domestic policy while Eamonn Butler remained with Madsen Pirie as co-directors of the institute.

One of their St Andrews friends, Douglas Mason,^[13] who had been active in the university's Conservative Association, did his most influential research and writing for the institute. Mason became one of its regular authors.

The ASI's Omega Project (1981–1983) led by Peter Young produced a series of 19 papers shadowing each Department of State and advocated such things as the compulsory contracting-out of most local services such as refuse collection, the replacement of much of the welfare state by private insurance and further privatisation of public sector services and industries, including aspects of police services.^[14][15][16]

Thatcher's inner circle

The Margaret Thatcher era saw the think tank movement come of age and achieve influence and with the Centre for Policy Studies (CPS) and the Institute of Economic Affairs (IEA) and the ASI was one of three relied upon by the Thatcher government for policy.^[8] 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.^[8] Despite this role, the Institute developed an iconoclastic reputation, cynical about politicians, but enthusiastic to engage with them.^[8] The institute's relationship with Thatcher was not without troubles. Although Madsen Pirie was the architect of much of the privatisation policy,^[11] he had no emotional ties to Thatcher, nor did the ASI propose policies on a range of social issues despite its Thatcherite reputation.^[17]

The ASI took the view that the market was "more genuinely democratic than the public sector, involving the decisions of far more individuals and at much more frequent intervals".^[18] The Institute published Douglas Mason's recommendation that local government rates (the local government tax) should be replaced by a per-capita charge. A version of this was later implemented by the Conservative government introducing the Community Charge in Scotland in 1989 and in England and Wales in 1990. It brought unpopularity for the Thatcher government and was seen by some^[who?] as being one of the things that weakened her political hand ahead of her departure from office.^{[citation needed]}

Other policy recommendations which Douglas Mason published with the ASI 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;^[19] the complete removal of arts subsidies (Expounding The Arts – 1987); and the abolition of restrictions on drinking (Time To Call Time – 1986).

After Thatcher

In November 1994, the Institute began a review of welfare reform called Operation Underclass,^[20] aimed at methods of creating jobs for the long-term unemployed.^[21] Some elements of the programme were adopted by the government within months.^[20]

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 Blair government's welfare-to-work programmes, describing it as "the most successful policy initiative of this century".^[22] The ASI publicly welcomed the news that Labour had implemented the long-held ASI aim of an independent Bank of England,^[23] Madsen Pirie gave it a nine out of ten for performance.^[24] 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".^[25]

The ASI then collaborated with the MORI organisation on a series of opinion polls to measure such things as the goals of young people and students, and public attitudes to state services.

The ASI's libertarian label was officially changed to neoliberal on 10 October 2016.^[26][27]

In February 2022, the ASI wrote a paper arguing that the Moon should be privatized to eliminate poverty on Earth. The paper argued that the Moon's land should be divided and given to different countries that would then be rented to companies in order to increase economic growth through space tourism and exploration. The Outer Space Treaty of 1967 prohibits individuals and countries from owning property in space.^[28] According to The Guardian, the report received an "outraged online reaction".^[29]

International work

In 1992, the Institute founded a consulting company, Adam Smith International Ltd, which was "charged with overseeing the overseas work of the institute [in] an attempt to capitalise on the growing international trend towards economic liberalization and marketization".^[30] While Eamonn Butler and Madsen Pirie were as of 1998 members of the management board of both organisations,^[30] the management teams of Adam Smith International and the Institute are now separate.^[31]

Investigated for breaches of charities rules

In December 2018, the institute, which consists of at least three different legal entities (a British company, a British charity and an American non-profit foundation), was reported to be under investigation by the Charity Commission for improper use of funds. Charities in England and Wales are required to be genuinely independent from other entities, and cannot perform political campaigning. Contributors giving £1,000 a year were offered "opportunities to attend power lunches and patrons dinners with influential figures, including politicians, ministers, journalists and academics."^[38]

Tax Freedom Day

The 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.^[39] The Institute calculates the figure by expressing the government's take of the economy as a percentage of the year, including all forms of taxation, direct and indirect, national and local.^[39]

The Next Generation

The Liberty League was a United Kingdom student organisation in the early 2010s, was founded by members of the Next Generation Committee (James Lawson, William Hamilton and Anton Howes). It aimed to support classical liberalism. Its annual Freedom Forum conference was transferred to the institute.^{[40][41][42][43]}

Tax reform

A 2005 paper by the Institute proposed a flat-rate income tax of 22% for United Kingdom taxpayers, with the above-referenced tax-free personal allowance of £12,000.^[49] City A.M. editor Allister Heath said of this report that "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".^[50] The ASI continues to campaign for a flat tax.

Public sector reform

Rail privatisation

With its author Kenneth Irvine, the ASI says it pioneered the privatisation of British Rail with private companies competing for franchises on a separately owned national network (The Right Lines – 1987). This policy was enacted by John Major's government.^[52]

Green belt

The ASI has written extensively about the effect the green belt has had on house prices by restricting where houses can be built. In its paper The Green Noose, the Institute wrote that "simply removing restrictions on land 10 minutes’ walk of a railway station would allow the development of 1 million more homes within the Green Belt surrounding London alone". The ASI believes that instead of simply putting a blanket ban on building in the areas surrounding cities, planning permission should be granted based on the environmental, historic and scientific value of the land.^[54]

Rail policy

Amid ongoing debate about the railways, the ASI has been an advocate of the privatised system, writing that much of the rise in passenger numbers since privatisation cannot be attributed to other factors. It has called for increased competition through the use of open access operators or having two operators sharing a franchise and competing with each other.^[52]