The Adam Smith Institute has developed important policy initiatives to solve some of the problems which emerge in a modern economy. Its work was applied first in Britain, and then increasingly in other countries. Its innovations, created in the light of Public Choice Theory, have done much to re-establish market economics, individual incentives and choices, and economic flexibility in the place of state direction and control.
The ASI pioneered many of the techniques used in privatization. Its research stressed the importance of involving various interest groups, including employees and customers, in the privatization process. It has been involved in developing successful privatization programmes in many countries, and has set out the lessons learned from practical experience. Its work has led to the transformation of loss-making state industries and utilities into profitable and high quality private enterprises. The Institute was an early advocate of the use of private firms to perform public work under contract to both local and national governments, and has helped cities and governments across the world to secure better value and better quality services for their electors.
In the case of human services such as state education and health services, the Adam Smith Institute developed the concept of an internal market, allowing the choices of state customers to dictate where the resources are deployed. The Institute's ideas played a key role in the 1980s reforms of the British education and health services, turning them from centralized systems planned from the top by bureaucracy into services led by choices made from below. The ASI's analysis suggested that uniform provision should be replaced by variety, with local independence for institutions such as schools and hospitals. Choices by parents and children, and by doctors and patients, mean that the institutions must compete to attract resources.
For services which remain in the public sector, the Institute pioneered the notion that their users, even though paying through the tax system rather than directly, are still customers entitled to be treated as such. This analysis, expressed in the Citizen's Charter, requires all public services to publish promised performance targets, to be subject to independent monitoring of output, and to have redress mechanisms for their users when they fail to deliver the quality of service promised. As with internal markets, the result is to give recipients of public services a much greater input, and to make public services more conscious of the wants and needs of their customers. The result is a cultural change in the public sector bureaucracy.
The ASI has championed the cause of deregulation, bringing innovative techniques to reducing the burdens upon business which regulation imposes. The Institute's work brought about huge reductions in the number of bureaucratic committees (quangos) in Britain, and in the powers of inspectors to enter and seize private property. The ASI helped to develop the ideas which underlie successful enterprise zones and freeports, and which led to their establishment in Britain and other countries. When utilities are privatized, the ASI developed the principle that competition is the best regulator, and it has worked to establish regulatory regimes which incorporate it.
The Institute has established a track record on the conversion of tax-financed pensions and welfare systems into fully funded systems based on personal savings accounts. These Fortune Accounts are the property of the saver, and represent the fund from which future benefits will be drawn. Unlike the tax-financed pay-as-you-go systems, they achieve capital growth, and make no claims upon future taxpayers. They also achieve a huge increase in the funds available for investment, and the proportion of a country's wealth which is owned by its ordinary citizens.
The Adam Smith Institute has an unparalleled record in the origination and implementation of market reform programmes. Teams from the ASI have developed and launched such programmes in many countries, and have been praised for the practicality and the political sensitivity of their work. The Institute holds a pre-eminent position in the organization of training seminars and conferences to enable personnel from previously state-controlled industries to operate in a market environment. This is especially true in the previously Socialist countries, including the former Soviet Union.
The Institute occupies a unique position at the cutting edge of policy innovation. It honours the memory and achievement of Adam Smith, the Eighteenth Century economist after whom it is named, and lives up to its by-line: Making Ideas Change the World.
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