The Beecroft report (pdf) is drivel. By this, I don't mean that I disagree with it; I also disagree with the TPA's single income tax report, but I can at least see that is a serious piece of work. What I mean is that Beecroft make no attempt to engage with the serious research on the subject. It is, says David Renton, "puff" with "no expertise". Rick says it contains "no data at all" but"quack remedies."
This poses the question: why ever did the government think that such sloppy stool-water is an adequate basis for policy-making?
I suspect, though, that something else is happening. Beecroft continues a theme which was common under Blair and Brown - of believing that successful businessmen are somehow well-placed to review policy. Blair, for example, asked David Freud to review welfare to work policies even though, by his own admission, he "didn't know anything about welfare at all."
But why have such faith in businessmen? The answer, I fear, lies in the outcome bias. It's natural to see success and infer that some kind of skill lies behind it. So politicians see rich businessmen and think: "if you're so rich you must be smart."
But it ain't necessarily so, as this wonderful paper by Bjorn-Christopher Witte shows. He describes how, under some circumstances, competition will select not the most skilful, clever and hard-working, but rather the lucky chancer:
Under competitive conditions that favor riskseeking behavior, the importance of skill decreases because actual outcomes are determined mostly by chance. In the extreme case, survivors are not the most skilled but simply the luckiest risk-seekers.
He discusses this in terms of fund managers, but I suspect his point generalizes.
In this sense, we should be grateful to Beecroft. The slovenliness of his report has served a useful function. It highlights how competition does not necessarily favour the smart and rational, and how politicians' deference to the wealthy is founded upon cognitive error.