The Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), an activist group in America, has condemned the use of supermarket loyalty cards due to their intrusion into personal lives. Yet it seems to me that loyalty cards are not very worrying. As Declan McCullagh notes, "Nobody is forcing shoppers to sign up to discount cards; they do it because the perceived benefits outweigh the perceived costs." Information surrendered typically concerns the number people in the household, the number of children, the typical weekly spend on groceries etc. I am happy for a supermarket to have this information: it helps the supermarket tell me about products I am likely to be interested in.

Rather than worrying about businesses using data in order to make their shopping experience more tailored to individual customers, we should be worrying about the number of civil servants allowed to snoop on their fellow citizens. According to the Foundation for Information Policy Research police and other officials are making around a million requests for access to data held by net and telephone companies each year. Customs and Excise have 200 staff authorised to use the snooping authority and had sought access 35000 times in the last year. The Inland Revenue accessing such data a further 11700 times in the last year. Do we allow too much snooping, or is it important for fighting crime?

Not everyone has heard of Ludwig von Mises (1881-1973), but he was a seminal economist - taking on the mistakes of traditional textbook economics - and great advocate of the market economy.

I wrote a book on Mises a while back, and another one on wage and price controls, so the great sage popped into my thoughts this week when I read of a report from some transport quango saying that bus fares should be kept down through regulation. Mises explained the error of this back in the 1930s.

Why not control the price of milk, he says, and help mothers and children who need it? Well, because the lower price prompts people to buy more milk, but makes milk production less attractive. So there is less milk going on to the shop shelves, and it leaves them faster: there is less milk around, even for those who we wanted to help.

To meet this problem, you might try rationing. But it still doesn't cure the problem that you now have less milk than before.

Or you might try to make production more attractive by legislating down the price of fodder for milk herds. But the same happens: the demand for fodder rises, but the supply dries up. So what prices can you hold down to make it more attractive to grow fodder... And so on.

In other words, when a government tries to keep down the price of one thing, it finds itself drawn into more and more controls, until (to quote Mises):

...it will finally arrive at a point where all prices, all wage rates, all interest rates, in short everthing in the whole economic system, is determined by the government. And this, clearly, is socialism.

"The average man is both better informed and less corruptible when buying in the marketplace than when voting in political elections" - Ludwig von Mises (1881-1973)

The idea of "Social Enterprise" has become rather prominent recently. Unfortunately it's a bit of a nebulous concept. The underlying idea might be encapsulated as "running a business with the primary aim not being to make a profit for the owners, but to effect a social goal". It's supposed to be half-way between the worlds of charity and business. The most famous examples are probably The Big Issue, John Lewis, and the various "fair trade" organizations. The trading arms of charities (such as Oxfam) are also often cited as prominent examples, as are mutual insurers, building societies, credit unions and so on.

Many social enterprises are really charities by another name. When you or I buy something from our local Oxfam shop, we know that we're really giving money to charity - just as when we see someone selling the Big Issue on the street we know that buying it from them is an act of charity. The same can be said of buying Fair Trade products - it's conceptually no different than buying some normal coffee at the market price and giving money to a charity simultaneously.

Once we distinguish between "social enterprise" and charity, it becomes clear that all businesses are really social enterprises. Their aim is to create wealth - a social goal - and the action of the market usually ensures that consumers benefit from innovation and efficiency gains. What's more, since no-one is forced to buy goods from them, they must ensure that they meet the demands of their customers as effectively as they can - another social goal.

Consider the position in financial services. The social function which building societies provide is to offer customers lower loan rates and higher savings rates. But banks, run for a profit, can benefit from economies of scale and good access to the well-developed capital markets and often offer better deals than the building and mutual societies. Through competition and participating in the market, they are providing the same social function more effectively - and yet few people would consider calling a bank a "social enterprise". The real mechanism providing the social function is competition in the market. By participating in the competitive market, all the players, building societies and banks, become social enterprises.

Critics of capitalism charge that while it has winners, there also are losers. Figures are produced for many countries, including the UK, claiming that a tiny proportion of the people own the vast bulk of the wealth. In fact most UK citizens hold wealth in the form of housing, pensions and other entitlements which are usually excluded from the figures.

When a society is really poor, everyone is equally subject to poverty, deprivation and disease. If a government is added, a contrast is seen between rich politicians and bureaucrats and the rest mired in poverty. If an aristocracy emerges, there is a sharp contrast between the land-owning rich and the dirt-poor many. When economic growth begins, some people become very rich quickly and widen the gap between rich and poor even as the society grows wealthier. In longer-established rich countries the income gap narrows as more sections of the community grow wealthier. This can be seen from the Gini coefficients which measure income disparities. Prof. Paul Ormerod has shown that the income gap diminishes in the more developed countries.

Capitalism can bestow handsome rewards on those who build up successful businesses which anticipate and meet demand. These are among its winners. But the consumers also win who gain access to quality low-cost products which extend choices and opportunities. Society wins as extra wealth becomes available for civic improvement and the extension of education and the arts. Even those unable to market effectively their skills and labour benefit from living in a society wealthy enough to help them.

Arthur Shenfield eloquently described the contrasts in different types of society in his Myth & Reality in Economic Systems:

Thus in capitalism the inequality of condition is little more than the difference between the Cadillac and the Chevrolet, the Parisian couturier's model and the excellent mass-produced copies of it, caviar and the equally nutritious cod's roe.

In pre-capitalist societies it was the difference between the mansion and the hovel, between silks and rags, between exquisite luxury and frequent famine.

In socialist societies it is between the luxurious country villa and the miserable worker's flat, between the special shops carrying the high quality goods imported from capitalist countries reserved for the Party elite and the endless queueing for the shoddy products of socialist industry imposed on the masses.

Frederic Bastiat famously argued that:

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

We see what Bastiat wrote about all around us. When the UK Department of Trade and Industry gave a subsidy to Rover Cars in 1998, it saved jobs. How many more jobs would have been created had that money been left in the hands of taxpayers and used for more productive uses?

When the US government introduced steel tariffs in 2002, it ended up saving 5000 jobs. But 26,000 jobs were lost elsewhere in the economy as a result.

The losers of protectionism and subsidy are often dispersed wide throughout the economy and throughout a range of industries. It is therefore more difficult to see the losers than the winners. But just because the losers are not as visible - or not as politically connected - useful economic analysis must remember to factor them in.

At present, if I buy a newly built house from a construction company, I will probably not have to pay VAT on it (the company from which I buy it has the 'Option to Tax' which means that they can recover VAT on the supplies they bought if they in turn charge VAT on the end product; but in practice it's not very common for them to take this option up). This is a nice tax break for the construction industry and is meant to be a bit of an incentive for housing construction.

There has been concern for some time now about lack of housing in various forms; terms like 'key worker', 'affordable housing' and so on have now entered the political lexicon - alongside the older terms 'brownfield' and 'greenfield' sites. Part of the problem is that there are lots of houses which are in very bad states of repair - some estimates put this at over 2 million houses in the UK. At present, repairs, maintenance and improvements (RMI) do attract VAT. This uneven playing field means that there is a sizeable cost advantage for developers to build on greenfield sites, rather than redevelop brownfield sites. A report published with the 2004 Budget looking at this issue proposed that VAT be imposed on new houses in order to solve this problem. On the face of it this sounds like a good solution - we'll have more brownfield development, regenerating inner cities where buildings are falling down and saving the green belt from further intrusion - and at the same time the Treasury will net a bit more money to pay for its borrowing.

But there is another - better - solution. In 2000, the European Commission changed the rules governing VAT to allow Governments to experiment with reduced rates of VAT on RMI. Many other European countries, notably France and the Netherlands tried this. The results were very positive. According to the Federation of Master Builders, when France cut the VAT on RMI from 19.5% to 5.5% it led to a reduction in 'cowboy practices' (since the amounts by which unscrupulous builders could undercut legitimate builders was reduced significantly), increased domestic market turnover by £1 billion, and created 40,000 jobs in construction. This policy also has broad support from interested groups - as ePolitix notes.

The Budget's Barker review on housing supply did reject the option of imposing VAT on new builds. But it did not suggest the obvious alternative either, claiming that cutting VAT on RMI would not be effective - it would only benefit those who would carry out the work anyway. In the absence of any better solutions, and given the empirical evidence of the experience on the continent, maybe the Government should look again.

From The Idea Shop, a blog by Andrew David Chamberlain:

Imagine walking into the department of licensing to open a sandwich shop.

After filling out 10 forms and waiting 47 days in line, the guy behind the counter forks over a bill - for half your annual income.

Sounds crazy, right?

Unfortunately, that's about average for most countries. At least that's according to a a World Bank survey of legal "entry costs" in 85 countries. On average, 10 procedures, 47 days, and half of annual per capita income is required to register a start-up.

Some places are beyond bad. It takes 152 days for a business license in Madagascar. In the Dominican Republic, license fees are five times annual income - plus 21 bureaucratic steps.

This truly is the invisible foot of government hard at work, stopping people from climbing out of poverty.

Last week the Passenger Transport Executive Group - the trade-union for Britain's local transport quangos - published a report, saying that the local bus operators were doing a rotten job. But what made the report remarkable was the PTEs' insistence that, as a result of this, the PTEs should be given power to say who should run what buses over what routes, to what timetables, and for how much.

The local bureaucrats have been seething ever since buses were privatized and deregulated in 1985 - when choice and competition at last replaced three decades of public-sector managed decline. Now the EU is floating a Regulation, continental-style, to give 'competent authorities' the power to control bus operations, the PTEs have seized their moment.

We used to think that if the state wanted to run a business, it had to own it. To compensate the shareholders and move civil-servants onto the board.

Now, the state has realized that it doesn't need to pay for a business to control it. You just impose regulatory powers on it, so that the private owners have to run it the way you want it run. Former Trade Secretary Stephen Byers discovered that with the railways: regulating Railtrack into receivership and then setting up his own quango to run things. Now the quangos themselves have learnt the trick.

This is bad for rail, and for buses - which was awful, and got worse, when the state ran them. It's even worse for the concept of ownership and property. Why bother to save and invest to build up a company, if the state can then dictate how you run it and determine what you do with your assets - your own property? Western economies are founded on encouraging people to create and build up wealth by letting them enjoy its fruits. This new system discourages wealth-creation by turning its creators into serfs.

Speculators have a bad press. People can see what growers and manufacturers do, even shippers and retailers, but the speculators seem to do very little real work and make their gains by gambling on events. When they make gains, it seems to be at the expense of producers and consumers engaging in 'real' economic activity.

It is interesting to reflect that the same was once said of merchants and shopkeepers. They were despised as 'middlemen' who took a cut without adding value. We now see convenience as a service, and happily buy from shops even though we might get lower prices if we trekked off to the makers.

Speculators provide us with risk management. Farmers might not want to chance everything upon the weather, and prefer to sell in advance to the speculator. They might make less than they would have done if prices turn out high, but more if they turn out low. Someone else has taken the risk.

If speculators buy something anticipating a shortage, they make profits if they are right, and have a supply to sell into that shortage. If they are wrong, they lose. Customers gain because risks are evened out, striking less suddenly and less severely. If speculators sell now, expecting a price drop later, part of that price fall occurs now. If they buy expecting a shortage, they bring on part of the price rise. Their effect is to even out risk and to spread it, making economic activity more manageable for others.

Instead of being seen as parasites who suck substance from the efforts of others, speculators should be seen as people whose risk-taking skills serve to oil the wheels of the economy and make it run more smoothly.

Prof. Philip Stott, writing in the Times, argues that the decision whether to recycle needs to take into account both the economic and environmental costs:

...much recycling is ideological rubbish, a monumental waste of effort. And this is not just the view of free-market economists who see such "socialised systems of residual management" (rubbish collection to you and me) as market distortions. Both Valfrid Paulsson, the green guru and former director-general of Sweden's environmental protection agency, and Soren Norrby, the former campaign manager for Keep Sweden Tidy, argue that the whole concept of recycling household rubbish is a mistake.

They observe that "protection of the environment can mean economic sacrifices, but to maintain the credibility of environmental politics the environmental gains must be worth the sacrifice". Used bottles and glass cost twice as much as the raw materials, while recycling plastics is not only uneconomic, especially when oil prices are low, but often impossible - plastics coming in so many different chemical guises. Even paper recycling uses valuable energy and chemicals, with a strict limit on the number of times fibres can be recycled.

On a similar vein, Prof. Julian Morris argues in Spiked that where the invisible hand of the market is allowed to function, it is rather good at reducing waste. Letting the invisible foot of government take charge tends to increase waste.

Many people believe that Social Security in the USA, and National Insurance in the UK, are separate from general government expenditure. After all, in the US, Social Security has its own 'trust fund' from which it is supposed to pay for benefits. Similarly, in the UK, the National Insurance Fund is supposed to take care of benefits. Both at present show heavy surpluses, but are expected to 'run out' by the middle of the century. The surpluses have prompted some people (notably pensioners' groups) to campaign for the money to be spent on bigger benefits for the beneficiaries. See for example this article in the New York Times about how the US Social Security Trust Fund is "going to run out".

The problem is that these "surpluses" are no more than an accounting trick. The money in the funds is in invested in Government bonds, and so it represents simultaneously both an asset and a liability - the government borrows money from itself, and promises to pay itself back later (from revenues it gets in general taxation of course). It's completely meaningless. The 1% rise in National Insurance Contributions was 'to pay for the NHS', but what actually happened to the money was that half of the extra revenue was spent on the NHS; the other half of it simply went to reduce the amount Gordon Brown was borrowing by buying the government's own bonds.

This kind of thing is almost exactly what Enron and Worldcom did in the private sector. If a private company does it, it is at the very least dodgy and likely illegal. Why do we let the government continue to get away with it?

The imposition of the United States steel tariffs in March 2002 was a misguided attempt to save jobs and boost the American economy. As any good economist could have predicted, the rise in steel prices caused by the tariffs resulted in a net loss of jobs. Five thousand jobs were saved in the steel producing industry, a mere 21,000 less than those lost in steel dependent industries. In effect, the tariffs only served to move the job loss from one sector to another and delay the inevitable.

Now that the tariffs have been repealed, steel manufacturers will be forced to increase efficiency to stay in the market. The increase in competition and efficiency will drive down the price of steel. The decrease in the price of steel will carry over into steel dependent sectors and Americans will soon find that cars and machinery will be less expensive. One can forecast that the fall in the price of steel goods will result in lower prices industries dependent on cars and machinery. This pattern will continue until the average American finds a small drop in the prices of everyday commodities. Thus, the dollar will stretch further and consumers will either increase spending or invest, resulting in a stronger economy.

TransportBlog looks at transport policy from a free-market perspective, often putting forward radical solutions to the problems in the world's transport systems. It is edited by Patrick Crozier, Transport Spokesman of the Libertarian Alliance. Recent posts include the comparative safety of different types of transport, and an indication of how rail privatization has lead to rail companies focusing on the little details of making a journey more pleasant.

Coca-Cola's UK launch of Dasani, its bottled water, faced two hiccups. Firstly, it was widely reported in the press that the water was not spring water, merely tap water put through a water filter. That put off many people straight away, beliving that the price was not justified by the quality.

Secondly, and even worse news for Dasani, it was found that the product contained illegal quantities of bromate. Coca-Cola immediately pulled the product off supermarket shelves. Now it has decided not to reintroduce the product to the UK for the forseeable future.

What we have witnessed is the power of brands in conveying information. Companies would like their brands to convey positive information, but they are also very good at conveying negative information. Far from forcing us to buy bad products, they help us to avoid them.

No Logo author Naomi Klein refers to the "corporate Goliaths that have gathered to form our de facto global government". Yet it is a funny sort of 'government' that corporations are supposed to be running. In reality, the anti-capitalists see us chosing the products of multinational companies and think we must be oppressed into making those purchases. But, as the Dasani incident shows, it is individuals who have the power.

When US gangster Willie Sutton was asked why he robbed banks he replied "because that's where the money is." This is why grave-robbers plundered Pharaoh's tombs, and why thieves went after the crown jewels. Like wasps to a marmalade pot, criminals are attracted by wealth. Because there is money in TV quiz shows, some will be fixed. Because fortunes can be made on the music charts, people will try to rig them. Gambling and horse-racing, too; shysters go where the money is.

Capitalism is the greatest wealth generating engine the world has ever seen. Its awesome power to create wealth has lifted large sections of humankind out of squalor, disease, and back-breaking toil. It spreads its benefits more widely each year. Wealth on this scale attracts criminals just as it does everywhere.

Every stock market boom carries with it a coterie of crooks who have falsified figures, lied about prospects, or found other ways in which to enrich themselves with monies entrusted to them. While markets are rising and people are happily making money, the crooks tend to pass unnoticed amid the general optimism. It is when markets turn that the mood sours, the figures are examined more carefully, and the holes cannot be plugged as smoothly. This is when many corporate scandals are exposed. While WorldCom and Enron were riding high, their dubious accounting practices could pass; it was when their shares faltered that the questions and recrimination began.

Each time this happens it is billed as a 'new crisis for capitalism,' but it is not. It is just another chapter in the catalogue of wickedness. New rules will have to be imposed, old ones tightened and new checks put in place. Has the balance swung too much to directors? Then give shareholders more power. Has secrecy concealed deceit? Then demand new levels of transparency. With new safeguards in place, the market picks itself up and goes on. After the next boom there will emerge evidence of new crimes, calling forth new remedies.

Does this mean that the invisible hand is a failure? It does many things, but it won't cure baldness, give you a clear-looking skin, or firm up your buttocks. For that matter it doesn't cure crime either. What it does is to direct someone seeking personal advancement to provide goods and services that people want to buy and at prices they are prepared to pay. Participants serve themselves by serving others.

Criminals don't play this game. They lie and cheat and steal and undermine in the real market the trust which helps it to work. They are not participants but parasites. To root them out requires a different kind of hand altogether: one righteously armed by society.

The University of Nottingham is setting up a new university campus in China, and already has one in Malaysia. Similarly, Dulwich College, a London independent school, is creating a chain of schools in China, based on the original. This follows the success of Dulwich International College in Thailand.

These educational establishments are able to set up chains because they have excellent reputations. People overseas know their children will get a decent education. If we want to improve school standards in Britain, maybe there is a role for chains to play within the our system too?

In the mid-1990s, Greenpeace ran a campaign to stop Shell from scuttling the Brent Spar oil platform at sea. It got great press coverage - particularly memorable were the images of activists attempting to board the platform and being fought back with water-canon. Towards the end of the campaign, once several activists had boarded the platform amid a climate where it seemed that no-one was going to back down, Greenpeace produced an amazing factoid: they claimed that the platform still contained over 5,500 tonnes of oil, despite Shell's estimate that it was almost empty.

This lent extra credibility to their campaign in the press at a key point in time. Shell was eventually forced to recycle the oil rig onshore.

The only problem was that this startling revelation was simply not true. Greenpeace had made a mistake, and Shell's estimates turned out to be correct after all. In Greenpeace's defence, the estimate wasn't a material part of their argument for stopping the "dumping" of the oil platform. But the point was that it had given the rest of their argument additional credibility; it was the straw that broke the camel's back.

More recently, we've had the campaign waged by Friends of the Earth to stop several US navy ships from being broken up in Hartlepool. It was waged in a very similar manner - this time through the local press, who bought the arguments which were based on bad premises and scare tactics. See this piece in the Telegraph's City Comment section. The only difference is that this time Greenpeace was right and Friends of the Earth was wrong.

High profile cases like this should lead us to an important question. Why do we (and our journalists) continue to believe the information environmentalist pressure groups give us without checking the facts first?

Price controls sometimes seem attractive for policymakers. As Walter Williams discusses, the Virginia Senate has just passed a law preventing companies from selling "any necessary goods and services at an unconscionable price within the area for which the state of emergency is declared."

The impetus for the new law was Hurricane Isabel. Virginian politicians want to ease the pain if a hurricane strikes in the future by preventing prices from increasing. Yet the policy is misguided. As Williams points out, the market price has an important role: "It's a signal saying that there are unmet human wants, leading people to strive to meet those wants. It stimulates the supply response to a disaster."

What price fixing will actually mean is that in the event of another hurricane strike, there won't be many businesses elsewhere prepared to travel to the disaster area to work round the clock – including nights and weekends - to get the work done. Preventing price rises may make politicians feel good, but it is no help for society.

When developing countries are as rich as we are now and we are even richer, I doubt we'll be any happier. People will always find reasons to be unhappy, whether it be from the breakdown of a relationship or dissatisfaction with their appearance. It will be progress, though, if they are no longer unhappy because their child died of cholera. Economic growth can remove some of the unnecessary sources of unhappiness, including hunger, deprivation and disease.

People in poorer countries want economic growth, and have no wish to be preserved as poverty theme parks to be visited by rich liberals praising their 'authentic' way of life. Yet anti-growth sentiment is as powerful as it is patronizing. Growth Fetish is the latest book to call for us to live more simply. It reminded me very much of Herbert Marcuse, with talk of deluded consumers backing up the doctrine of false needs.

A review of it by Daniel Ben-Ami is worth reading. It rather reinforces those who point to three basic human drives: the need to survive, to procreate, and to force others to live as you think they should instead of the way they want to live.

Most people can see the point in rich countries offshoring manufacturing jobs. Rich countries can instead concentrate on higher-value service sector jobs. But now that call centres and even software programming is getting offshored to India letting jobs be offshored seems - to many - rather unwise.

In an article in USA Today, Kevin Maney writes why America should support offshoring, using the economist David Ricardo as his support:

Let's say the USA is really good at two different things, software programming and creating innovative technology. And let's say India is also good at both. Because Indians don't get paid nearly as much as Americans, India can do each job at a far lower cost compared with the USA.

A big fear is that if trade is free and open, the USA would lose both those pieces of its economy, because lower costs win. Then our standard of living would fall, while the Indians could increasingly buy Porsches and plasma TVs.

But that fear, Ricardo would say, is misplaced.

Why? India's schools churn out loads of programmers, but the country has little venture capital and other infrastructure to help drive innovation. So even though India can do both for less than we can, inside India, the cost of doing programming is relatively little while the cost of starting companies is relatively high. India is "most best" - to use the language of economists and many 3-year-olds - at programming.

In the USA, we pay programmers very well. We also have a well-oiled, technology-creating innovation machine. Inside our country, it has become relatively expensive to our society to do programming; and relatively cheap to innovate in technology. Our "most best" is innovation.

Part of the fear about offshoring the service sector is the belief that the manufacturing sector and the service sector are the two separate parts of any economy. It is the belief that we've lost manufacturing, now we're losing services. There's nowhere to go. In reality, all we've ever been doing is moving to things we're "most best" at doing. Offshoring is not a new phenomenon. As Netscape founder Marc Andreessen says: "The system works so amazingly well that it's a wonder anyone doubts it, and yet, of course, people do."

A Tony Blair speech delivered in the USA is reported in Tuesday's Times. It seems that the tide of ideas has been flowing around him. The report says:

He called on countries to embrace globalisation and make it work. The alternative, he said, was to try to thwart it. That was the choice hanging over the next round of world trade talks. "Properly conducted, trade is an activity in which both sides can and do win."

Mr Blair said there were basic rules - macro stability, competitive tax rates, flexibility and free trade - that were clear. "Break them and your economy suffers. They used to be more naturally associated with right-wing politics. Today they are part of the agenda of a modern progressive centre-left."

It seems that Margaret Thatcher has cast a long shadow, though we've yet to hear her hailed as a paragon of the 'modern progressive centre-left.'

When Gordon Brown delivers his budget and pre-budget speeches, he has recently been starting with some glib remark about how well the economy is doing and how he is breaking all records. Normally it's pretty boring. In 2003, he prided himself on being the first chancellor to give a budget speech during military conflict for 50 years. Budget 2002 saw the "lowest inflation and lowest interest rates since the 1960s", a repeat of the story In 2001. In 2000 he prided himself on having the economy grow by 2 per cent "instead of the recession that many forecast".

This year he said "Britain is enjoying its longest period of sustained economic growth for more than 200 years... the longest period of sustained growth since the beginning of the industrial revolution". It sounds like an impressive claim. Is Britain really now better managed than during the huge economic advances of the 19th century?

Stephen King, managing director of economics at HSBC wrote an interesting piece in the Independent in which he attempted to answer that question. "In truth," he writes, "the fact that the UK economy has avoided the odd quarter of contraction here and there is not a real test of lasting economic health". He argues that in fact, productivity growth would be a much more useful measure of how well we are doing; and in this respect the US far outstrips the UK despite the fact that it briefly dipped into recession early in the 21st century.

This is a very brave article by the Labour MP Frank Field. I think he should be complimented on it. Why are so many people in the UK alarmed about using the private sector to deliver healthcare, when on the continent of Europe, and indeed in most other countries except Canada, a mixture of public and private provision is the norm?

The fact is that contracting-out the service works, as Field shows. The private providers can think more innovatively (mobile cataract operating theatres, for example, as Field says), without the politicization and bureaucracy that plagues public-sector provision. They know that if they don't provide a good, quick, patient-focused service, they will lose their contract. Public providers don't face that threat.

Sure, let's have a large measure of public funding, so that we can ensure everyone has access to healthcare, however rich or poor. But that doesn't mean that the government has to own all the hospitals and employ all the doctors and nurses. And as we are now discovering, it's better if they don't.

Usually a UK Budget generates excitement, and fills newspapers with pages of how the average family will be better or worse off. Not this time. On March 17th the Chancellor Gordon Brown raised taxes, already high, a little higher. He made borrowing, already steep, a little steeper. He made running a small business, already hard, a little harder. There was not much else.

He tended to raise his revenue from fiscal drag, which lets growth pull more people into higher tax brackets, and from technical changes to make tax more difficult to avoid. And he is gambling that increased revenues from sturdy economic growth will be there to repay the borrowing when he needs to.

The spending spree on public services, most of which went on wages rather than improved output, is to be reined back, and the new watchwords are 'efficiency savings.' Like the Tories, he plans to save money by economizing on bureaucrats. Certainly, he has created enough new ones at both national and local level to provide many saving opportunities.

Insiders say the real lesson of the Budget is that the Labour Party intends to fight the next election as New Labour again, with a consolidating and conservative approach rather than a radical one. Socialism is to be kept locked in its cupboard, where it may already have died.

What makes us uneasy is that if we are taking this much in taxation and borrowing out of an economy doing relatively well, what on earth are we going to do when it slows down?

A few non-economists have named 1976 as the year in which the quality of life in Britain reached its highest. Any progress since then has been deceptive, they tell us.

In the mid seventies, Britain was the sick man of Europe. Its goods were a laughing stock not only for their low quality, but for the inability to keep any kind of delivery dates. The top rate of income tax was 98 percent. This was 83 percent on earned income, plus a punitive 15 percent on top of that for those stupid enough to invest in creating wealth and jobs in Britain.

The trade unions were in command. They had seen off the attempts of two governments to bring them within the law, and they went on strike over trivial issues, giving Britain the worst industrial relations in Europe (3 million working days lost in the year).

Britain had slid down the league table and was near the bottom of the productivity league among our European partners. Wages struggled to keep pace with inflation of nearly 17 percent and rising. Public services were a joke, but no-one felt like laughing. The government ran most things, including the telephone service where there was a waiting list of many months to be allowed to rent a handset designed in the 1930s. You couldn't buy a phone. The showrooms for the state industry's gas appliances had unlisted phone numbers, so customers couldn't bother them.

For many years afterwards buyers avoided cars made during those years because of their poor quality. This even included Rolls Royce and Jaguar.

British food was thought among the worst in the world. Typical restaurants would serve frozen mixed vegetables and main course salads whose protein consisted of a slice of processed cheese.

In fashion it was the naffest decade of all time. Kids today dress up in 70s gear to ridicule the absurdities of that decade. Hairstyles were embarrassing. Electrical appliances came without plugs, and everyone paid more for goods in Britain, even though they earned less.

The Soviet Empire was set on world conquest and it looked unstoppable. This could explain why left-wing extremists look back wistfully to those days. It was the worst of times, and many people thought things could only decline further. Then at the end of the decade, Margaret Thatcher became Prime Minister.

Has the Prime Minister lost all sense of history? I watched Tony Blair's speech on Saturday morning when he uttered this real gem:

New Labour means showing that values the Tories claim are in opposition to each other are actually in partnership.

- Self interest and the interests of society as a whole.
- Wealth creation and the ending of poverty.
- Enterprise and fairness.

Blair is right that these things go together. Yet it is the Tories - certainly the Thatcherites - who have the track record of putting forward this argument. They were the ones in the 1980s who said that self-interest benefitted society as a whole, while Labour was attacking the profit motive. The Tories talked of using wealth creation to solve poverty, much to the dislike of Labour. The Tories argued having an enterprise economy was the best way of securing fairness. It was always Labour that argued that these things were in conflict. There are legitimate things the Tories can be criticised for, but this attack flies in the face of all the evidence.

The Conservatives have proposed a schools 'passport' - the idea being that parents can choose which school they want their children to go to, and then the government's money follows that choice. This is certainly better than the present system, where state money is allocated by various layers of bureaucrats and parents have very little real choice.

Of course, critics argue that the 'passport' idea would give aid to rich families who use private schools already. If everyone gets 'passport' cash, and if it can be used in non-state schools as well as state schools, then hard-pressed taxpayers end up helping toffs pay their school fees.

So there are signs that the Tories are bottling out, and thinking of restricting the 'passports' to state schools only. Whatever use is that?

In theory, parents can already choose between state schools - though local authorities are expert at thwarting that choice. If a 'passport' simply gives you the right to move within the state system, what's new?

The whole point of passports is to evoke new supply. In Sweden, where the idea was introduced recently, many hundreds of new, independent schools have sprung up, knowing that the government's money will follow the choices made by parents. So these new schools - many of them founded by fed-up parents and teachers - make sure they are attractive to parents by providing a good education on the lines that parents want their kids to have. That in turn has put a strong competitive pressure on municipal schools to improve.

Sure, if you give every parent a 'passport' and allow them to put some of its value towards independent school fees, you will be subsidizing a few people who already use private education. But at last you are giving an escape route to all the millions who don't because they can't presently afford it. That sounds like a good deal. The rest of Europe - Sweden, Denmark, the Netherlands - aren't hung up on this and all allow parents to take state money into non-state schooling. Why should we be frightened of it?

Yesterday (11 March) the board of the Food Standards Agency was to discuss how to combat obesity. The advertising of "unhealthy" foods is, naturally, a prime target. The board's briefing paper is a masterpiece of spin that flies in the face of the evidence.

Very few foods are actually "unhealthy" per se. If one is concerned about obesity, then calorie content should be seen as the key factor, as obesity is caused by consuming more energy in calorie terms than is expended by exercise. Yet, on this basis, foods which might be seen as classic "unhealthy" examples cannot fairly come in for criticism. Coca-Cola, for example, has approximately the same calorie content as unsweetened orange juice. To take another example, sugar coated cereals are no more "unhealthy" than their unsweetened cousins which we then sweeten from the sugar bowl.

Of course we should also all know that healthy eating means having a balanced diet. Consumed in excess, anything – burgers, carrots, even water – can be unhealthy or even dangerous.

The FSA seems to have decided on its position and only then looked for facts to support the idea that regulating advertising is a panacea as far as obesity is concerned. Despite 12 months of searching, it has produced at best insubstantial evidence that advertising affects categories of consumption, and still less evidence that advertising affects diets. Where advertising does affect consumption, the evidence is only that it affects choice of brands. Worse, their technique for pre-selecting experts to lend "academic" credibility to their attack on advertising leaves much to be desired – see this LBS paper.

The various suggestions include micro-managing the timings and length of food advertising during children's television programming and balancing times for healthy and unhealthy foods. Of course, they have not considered who would pay for the advertisements they decide should run.

Obesity is a serious condition, and we should be concerned as a nation about the apparent rise in obesity. But the clear desire of the FSA to expand into a fully-fledged Food Regulator - OFFOOD, perhaps - is not only unwanted, but unwarranted. We cannot allow the FSA to subvert this serious issue to its own purpose of expanding its role and influence.

Tim Ambler is a Senior Fellow at London Business School.

The European Commission's new Directive, which insists that men and women should be treated equally by insurance companies, sounds reasonable enough. Why should insurers be allowed to discriminate?

Unfortunately, it is just daft. Men and women are... how shall we put it?... just different. Women tend to live longer, for example. So if a woman wants to take out a pension annuity, it costs more. Discrimination? No, the price of the annuity reflects the real cost to the insurer. Sell a pension to a woman, and it is likely to cost you more, because you will be paying out the benefits for longer. And if the state says you can't charge the woman more than the man, why bother trying to sell to women? So what you do is to skew your marketing - making your advertising appeal to men rather than women, for example - and then women find it harder to get pensions. That's just great: the opposite of what you wanted to achieve.

It's worse with motor insurance. Let's face it, women are much safer drivers than men. Especially young men, who are notoriously bad and dangerous drivers, on the whole. So if insurers are not allowed to charge women lower premiums than men, but have to set a common premium, what happens? Simple.

More young men now find that they can afford motor insurance. So more young men can get behind the wheel without paying the true cost of the extra risk they impose on road users and pedestrians. Which means that the roads are full of drivers who are higher-risk - and, to the rest of us in the general road-using population, more dangerous. Again, not what the bureaucrats in the Commission wanted to achieve.

I'm sure there are 1001 other cases where, as a result of this daft Directive, the public is going to be exposed to higher risk, or women (in particular) are going to find themselves unable to get insurance at all. A victory for fairness? I don't think so.

Not content with taking over track maintenance, Network Rail now wants to take over the management of 2,500 stations in addition to the 18 big city stations that it already runs.

Their argument is that train operators spend too little on stations because they have only a seven-year franchise to run them. This is questionable: the latest National Passenger Satisfaction Survey shows that passenger satisfaction with stations (including information levels, staff friendliness etc) is at an all-time high.

The operating companies are interested in people's whole journey, and it is for them to decide the balance of investment between stations (where people spend only a short time) and train services (where passengers spend much longer). Even if there is a fault in the franchise system, the solution is surely to reform that, and change the incentives on the operators rather, than go back to state ownership.

Railtrack was forced into receivership for want of an £890m government grant; but now, Network Rail is asking taxpayers to shell out £22,200m over the next five years, £7,000m more than the regulator thinks necessary. It is clear that cost-control has vanished from the railways. A take-over of the stations would simply provide further proof. State 'ownership' does not, unfortunately, mean state 'control'.

The Government has agreed an increased taxpayer-funded subsidy for Network Rail again, for upgrades and maintenance of the rail network. The costs of rail travel if we include such Government subsidies would seem to be higher than road (where Vehicle Excise Duty and Fuel Duty cover the costs many times over) and air travel for many journeys. Could it be that rail may simply be a less economically sensible form of transport?

Given the shortfall in the Chancellor's finances, he has three main alternatives: he can raise taxes, increase borrowing, or cut spending. He is likely to do a combination of the first and third.

He could announce civil service savings to be achieved by streamlining and efficiencies, mainly by manpower reductions.

He will probably give the most optimistic figure for economic growth, enabling him to claim that growth in tax revenues will help fill the gap.

Mainly he could put through a mass of technical changes in the small print, raising the Treasury's total tax take, without apparently raising rates. By failing to index thresholds in line with inflation and growth, he will take many more taxpayers into the higher rate, and many more home-owners into stamp duty. By changes in the way other taxes are levied and collected he will increase the tax burden without appearing to do so.

He will call this 'closing loopholes,' but in reality it takes more out of business and individual pockets in stealthy ways. The devil will be in the detail.

GDP is sometimes criticised as a way of measuring wealth. It doesn't take into account the number of birds in the environment, whether people are happy, or whether people are living spiritual lives. It is argued, therefore, that GDP paints too rosy a picture. We need a measure that takes into account non-economic factors too.

Of course, it's tricky to measure "happiness". But many of the supposed problems with economic growth are not quite what they seem. The convential wisdom is that as GDP increases, the environment is harmed. Yet in most of the rich countries, the environment is getting cleaner and better. It is true that in the early stages of economic development, the environment gets more dirty, because people place more value on getting rich than on clean air. But as wealth increases, people place increasing value on clean environments. Additionally, when people are richer in terms of GDP, they tend to spend more time on leisure activities. Working conditions increase as GDP increases.

It is these sort of effects that are examined by an article, Off the Books, in Reason magazine. The authors argue that GDP - far from being an overestimation - actually underestimates growth.