I'm just back from being on Britain's Channel Four News where I was discussing the Fairtrade scheme. The Fairtrade Foundation is calling on the public to "Check out Fairtrade". I agree entirely. Here are some key facts:

• We do not have free trade in farming. Rich countries engage in unfree trade. Developing country farmers are held back by unfree trade, not free trade.

• Fairtrade appeals to a minority of buyers. Only 1% of the world's coffee is Fairtrade. Most people buy according to price and quality.

• Fairtrade helps relieve middle-class guilt. By so doing, it takes the emphasis away from the real problem: Europe's agricultural policies.

• Mechanization means that only a small proportion of the world's coffee producers are actually needed. In Brazil five people and a machine produce the same amount of coffee as 500 people in Guatemala. We should help people adapt, not encourage them to stay in outdated jobs.

• Coffee prices are low because there is too much being produced, not because of the actions of multinational companies. Companies like Starbucks have helped increase consumption of coffee, which is good for producers.

• 25% of the world's Fairtrade coffee comes from Mexico, a relatively affluent country where the average income is $9000 (compared with $700 for Ethiopia). Mexico enjoys free trade agreements with the USA and Europe, and most of its jobs are industrial and service sector jobs. By helping Mexicans stay in the market, the Fairtrade scheme keeps the world price of coffee down and takes business away from poor coffee producers.

• Markets convey information through prices. The low price of coffee tells producers to produce more cheaply or exit the market. At the end of the day, too much coffee is being produced.

If you hang around computer geeks, you might have heard them rave about something called "RSS". What is this thing? RSS stands for Really Simple Syndication. It is a way of reading the articles on most blogs and good news websites in - theoretically - a more convenient way.

If you ever enjoy finding it a pain to load a blog only to find there isn't any new content, RSS may be for you. A plethora of programs are available that run on your computer and show you which of your favourite blogs have been updated and how many unread articles there are. One such program is Thunderbird which combines reading e-mail with reading blogs. Thunderbird is available on Mac, Windows and Linux.

The picture (top right) shows how it lists your e-mail mailboxes with your favourite blogs underneath. It tells you if there are unread blogs for you to read - so if the blog hasn't been updated, you don't waste time going and looking. You can click on a blog and it will give you a list of headlines, and selecting a headline gives you the article.

Websites offering an "RSS feed" normally say so with a button or words like "Syndicate this site". If you are using the Firefox web browser, a small orange icon will appear in the bottom right of the browser window.

Britain's largest energy companies -- and the unions working in them – are telling the government that the lights could be going out in just three years' time unless there is a change in its policy.

Basically, the government hasn't made up its mind what environmental standards it is going to impose on gas and coal power stations. So new investment in plant has dried up. There's no point in building, extending, or upgrading a power station today if the government is going to declare it illegal tomorrow.

And even so, the legislation which the government has been mulling over is the toughest in Europe. And if the rules make UK power stations uneconomic, the large power groups might just conclude that they would be better off leaving Britain to it and choosing to invest elsewhere.

Hence the industry's agitation. But there is another problem that could lead to power cuts in a few years too. The government decided to run down Britain's nuclear capacity. But the idea that wind and wave power can fill the gap is just plain daft. (And many protestors are now pointing out that ugly wind farms in rural areas and the pylons needed to transport their energy are hardly environmentally friendly either.) Frankly, unless we start thinking about new nuclear build -- and clear the planning blight from coal and gas generation -- it's going to be a cold, dark winter in 2008.

I'm in a London Airport on the way to the Adam Smith Institute's "Future of European Rail" conference in Rome. I've a short wait so I devour the free newspapers left out by those nice people at British Airways. And in the robustly anti-free-market Observer, I spot a headline story that private-sector radiology scans, contracted out to the private sector by the state-run NHS, have experienced lots of delays which have, of course, inconvenienced NHS patients. Does this prove that only state healthcare can actually deliver?

Hardly. The very reason why the NHS is now contracting out so much - X-rays, hip operations, replacement corneas, you name it - is because the private sector is doing such a good job for it. Some providers, especially those from overseas who haven't been corrupted by our lackadaisical way of delivering healthcare, are showing that they can do the same procedures as the NHS but eight times cheaper, and faster too.

The radiology problem is that X-ray pictures have been sent overseas for analysis, where language difficulties and other snags have caused delays. Of course, the NHS would never have dreamt of using overseas labour itself; the unions would never have allowed it. And no doubt the supplier will overcome these snags: it's still early days, after all. And there's another crucial point. If the NHS thinks its suppliers are failing, it can go to someone else. That alone should be enough to keep suppliers on their toes. You don't get that kind of useful pressure in the parts of the NHS that are still run by the government and delivered by public-sector monopoly staff.

When a major computer virus starts to spead, providers of anti-virus software issue alerts and update their products. Television and radio news, along with the newspapers, tell the public about it. Sophos, an anti-virus company, offers a free service where it e-mails members of the public with virus alerts. The creators of Norton Antivirus let you syndicate the latest virus threats on your own website, also free of charge.

So I'm delighted that Hazel Blears MP, a Home Office Minister, has come up with a way of making taxpayers pay to replicate what is already provided free of charge by the private sector. She's launched a new government website which will enable you to receive e-mail warnings of new viruses. There doesn't appear to be much information up on the site yet apart from her photo. Perhaps the Home Office should give up and stick to doing things like justice?

Timothy Garton Ash in today's Guardian argues that President Bush's trip to Europe this week highlights the need for more European integration. He says that Bush has met too many different European politicians, and would prefer in future for the US president to merely meet to EU figures, rather than national government ones.

But perhaps it is healthy for EU member countries to have their own voice internationally. Why take twenty-five voices and reduce them on the international stage to just one? When EU members disagree isn't it a good thing that those dissenting voices get heard?

Ultimately, it comes down to whether you prefer competition or consensus. In the competition model, different governments pursue different policies and then we can go and see which policies work best. Similarly, businesses follow different strategies and product lines, some win the marketplace, others lose. In the consensus model, governments collude together and pursue the same policies. Similarly, businesses collude as an industry together, fix prices and get protection from the government. I favour competition - both in governments and in business.

Companies and individuals in Romania now pay a single tax rate of just 16 percent. But it's just the latest of a long list - Estonia, Latvia, Lithuania, Ukraine, Russia, Serbia, Slovakia - to adopt the Flat Tax idea. Opposition parties want the same in Poland and the Czech Republic.

This, says a Newsweek International article by William Underhill, is the 'new orthodoxy' on taxation. And Old Europe is worried. "There is discussion all over the EU," says Katinka Barysch, of the Centre for European Reform in London. "People are asking, if the Slovaks can have such a beautiful and simple system then why can't we?"

The Flat Tax is simple, and there's less reason to avoid or evade it. "Set the rate low enough and it just isn't worth going criminal," says the ASI's Madsen Pirie, quoted in the piece. The Belgian entrepreneur paying 50 percent on the top slice of his income might be tempted to hide his cash offshore; not so his Slovakian equivalent.

It may take a while for Old Europe to budge. But competition from the low-tax East will see to it. When it comes to capitalism, says Underhill, New Europe may have something to teach the Old.

UK Conservative leader Michael Howard MP says that if elected, his party would cut Council Tax for pensioners by up to £500.

Council Tax is an unfair tax, and pensioners are among those who are worst affected. The tax is rising fast. In 1993, the average charge per household was under £600. Now it is nearly £1200. People on fixed incomes find that difficult to afford. On the state pension, it's almost impossible to afford.

Council Tax is a property tax, charged according to the value of your house. So when their family has grown up an left, many pensioners find themselves living in the family home that they have occupied all their years, and frankly they don't want to move, away from their friends and relations. They may be asset rich, but they are too income poor to stump up a big property tax. And property values are going to be reassessed soon - so if they happen to live in a popular area, the Tax could shoot up even more.

Helping pensioners is a good but piecemeal solution. Better is to scrap the tax entirely. Make local people pay for the local services they want, rather than have three-quarters of the budget subsidized by central government (which of course then imposes its own agenda on councils). Let them raise the money through fairer means, like sales taxes - a solution which Douglas Carswell argued for in his ASI report Paying for Localism.

Governments are periodically keen to deal with the regional inequalities in the UK. Basically, a huge chunk of Britain's jobs and economy are in the south-east of England, near the capital. Government policies to readdress this have been of limited long-term success.

Here in Westminster, many of the office blocks are taken up by civil servants. A small number of civil servants need to be near central government, such as people working on policy who need to interact with Ministers. But for the vast majority of jobs, it wouldn't matter if they were in Liverpool, Aberdeen, Wigan, Stoke-on-Trent, Sheffield, Gwent, Grimethorpe, or Grimsby. Telephone, internet and videoconferencing would ensure they could keep in good contact with London.

Moving out most civil service jobs from London would promote economic development in the rest of the country, and it would help relieve pressure off London's property prices. Such a move would reduce the cost of government, as the offices would be cheaper and the civil servants would not need to receive a London weighting to cover the expensive cost of living in the capital.

The government has been doing this in a minor way. Now it should go the full hog.

People I spoke to in Brussels last weekend seemed under no illusion that much of any use would come from George W Bush's visit. Smiles, platitudes, as if 'Old Europe' had never been said. But deep down the EU still hates America and the Americans think Europe is a bunch of wimps.

Right. My Brussels newspaper reported 'growing concern' that Tony Blair's planned London conference on Palestinian reform 'could damage the EU's standing in the Middle East peace process'. Excuse me: what 'standing'? When did the EU ever do anything positive and useful to promote peace, either in the Middle East, in Africa (where France still supports thug dictators in its ex-colonies), or in the former Yugoslavia?

If you make people richer, and get them to respect the rule of law, property rights, and democracy; if you get them trading freely with others; if you give their people the security they need to invest in shops and factories; well, then you have a hope of getting folk to live in peace. Rich, democratic countries don't go to war with each other. Their citizens won't support it - they have too much riding on peace, too much to lose.

That's where Britain is trying to get to by helping Palestine and other Middle East countries to restructure their economy and government. The EU has no 'standing' in the process because its dithering 'foreign policy' has simply delayed change and helped perpetuate the very evils that we need to excise from the world.

In Brussels for the CNE Capitalist Ball this weekend, I found a copy of European Voice laid out prominently in my hotel. At first I thought this was more insidious taxpayer-funded propaganda, but in fact it seems quite sound.

Indeed, I thrilled at the headline 'Get your coat, Mr Blair - you've just been asked to leave the EU'. Sadly it wasn't a news report, rather a piece by Charles Grant of the Centre for European Reform saying what might happen if Britain votes 'No' on the Constitution referendum.

Spain, of course, has just voted hugely in favour (though on a mere 40% turn-out, it means that less than a third of eligible voters actually came out to support the Constitution).

Any country could destabilize the Constitution. If it were a founding EU member, like France, the whole enterprise could be lost. If a Denmark or a Czech Republic voted it down, they'd probably be asked to vote again until they got the answer right. But the Brits are too bloody-minded for that treatment. And yet Britain is another mere latecomer, as far below the salt at the EU table as Estonia or Latvia, so if we voted 'No' we'd probably be booted out and offered some Norway- or Leichetenstein- or Iceland-style arrangement - in the European Economic Area but not members of the EU.

Of course, Norway, Leichtenstein and Iceland are stinking rich countries, so you might wonder: what's wrong with that? I'm certainly beginning to.

The UK government has announced that its monopoly letter carrier the Royal Mail is to face full competition starting January 2006. There has long been an intention of stepping up competition - partly in response to EU moves to open up the letter monopolies of Member States, and partly because the Royal Mail is such a basket case - but this is a full year earlier than expected.

It's a victory for those of us - like our late friend Douglas Mason in his influential ASI reports The Last Post and Privatizing the Post - who have long called for competition in this sector. The work of Douglas and others like Ian Senior (author of ASI's Consigned to Oblivion) showed how competition could be introduced and the benefits it would bring, and emboldened past governments to introduce a measure of competition by licensing other carriers for parcels and for higher-cost letters. But this is something of a breakthrough.

About time, though. Other countries, including some of our European neighbours, have already introduced competition, and have seen prices fall and service quality rise. Britain, which led the way in so much privatization, should have got there long before them.

Of course, the Royal Mail still has 99% of the letter market, so there is a long way to go before competitors can erode its dominance. But just as new ideas and technologies are coming into telephones, healthcare, and other state monopolies that are being opened up, so they will in the mail sector. It's been a lot of work over many years to get the argument across - but soon we will see the benefit.

New European Union rules now make airlines compensate passengers when they cancel flights. There are fixed rates, ranging from £173 for short flights, £276 for medium-haul and £415 for long-haul flights. And if passengers are delayed more than five hours they can claim a refund. And they must be given refreshments and overnight accommodation for longer delays.

Of course, if there are huge storms or massive air traffic control foul-ups, no compensation is due. So you might think these rules are only fair.

But some of the low-cost airlines are taking the EU to court over them. They say that when passengers pay only £10 for their tickets - and Easyjet flew a million passengers last year at that price - a £173 penalty is a disproportionate amount of compensation.

Passenger lobby groups counter that a cancellation can cost you far more than the price of your ticket. You may have to re-schedule other travel or book yourself into a hotel.

The airlines retort that they fly over different countries whose air traffic systems have different levels of reliability, and through many and varied weather patterns. Apportioning blame for delays and cancellatiosn is no easy matter. So why should they carry all the risk?

Furthermore, fares may have to rise - and disproportionately more for the low-fare airlines. That means fewer low-income people will be able to fly. Or they will go by road, where accident rates are higher. And if airlines face persistent problems with particular destinations, they might well decide to shut the route entirely. Some 'benefit' for passengers!

I think that companies should deliver what they promise, or compensate their customers for the inconvenience. And getting your £10 back doesn't cut it. But on balance I oppose the new rules. If people are happy to carry the risk of cancellation in return for cheaper fares, why shouldn't they have that option? If an airline does not give its passengers good value and treat them decently, it's not going to survive long. So why do we need inflexible one-size-fits-all regulations?

Britain's 800,000 local-government workers are threatening to strike over the government's plan to raise their pension age from 60 to 65. Welcome to the real world, guys.

Most UK public-sector workers have unfunded pensions - instead of lifetime contributions being invested in order to fund future benefits, the pensions are simply paid out of taxation as we go along. But at the rate things are going, say actuaries at Watson Wyatt, this scheme will be £690,000,000,000 in the red within a decade. That's twice the national debt.

But the unions have a case. They negotiated to get generous pensions at age 60 - indeed, many civil-service pensions are index-linked, which is fabulously generous (and expensive). And now the government is trying to renege (just as it has done with tax concessions on private pension funds).

But cutting the pension age isn't the answer. A better solution is simply to issue government debt to cover the pension liabilities and then invest the cash on the world's investment markets. The boost from those investments would soon reduce the burden.

Even better, securitize the debt. Promise a private consortium what we're paying in taxes now, and tell them to raise the investment needed. In other words, take the government out of it and privatize public sector pensions. Then workers get the extra benefit of those investments, the government does not need to pay so much to maintain the same level of benefits, and the capital is all managed much better because it's being managed by professional private-sector investors. Simple!

Lord Birt, the BBC's former director-general, has called for the end of the BBC's exclusive right to the TV Licence Fee (a tax on television use). Instead, other broadcasters should be permitted to bid for a slice of the cash.

This is significant because Birt is working for the British Prime Minister as a "blue skies" adviser. The idea is one long advocated by the Adam Smith Institute: if there is going to be state funding of public service broadcasting, it ought to allocated in a competitive way.

I was at this week's Edinburgh conference on public services, organized by Tory MSPs David McLetchie and Brian Montieth, who seem to be pretty far-sighted on the issue of reform.

Scotland, they tell me, spends 14% more on its National Health Service than does the rest of the UK. Its spending is actually above the European average. Does that means it has the enviable lack of waiting lists that you find in France, Germany, or Switzerland?

Er, no. In fact 40,000 fewer patients are being treated now compared with 1997. Patients now wait 9 days longer for outpatient treatment and 21 days longer for inpatient stays. And recent reports have showed that many of Scotland's clinical outcomes trail badly behind those of England & Wales.

Is more money the answer? Well, Scotland clearly shows it isn't, and spending more than England has not produced a better NHS. Reform might be the answer, with choice and competition... but I can't imagine the socialist Parliament in Holyrood admitting that for a long time.

Today Madsen Pirie appeared in the Financial Times. His article demonstrates that it is not only small or undeveloped economies that can benefit from a flat tax system. He argues that there would also be many benefits for countries like the UK and USA.

The Change to a flat tax would be the chance to sweep away the debris tha has built up within the system over the generations, just as privatisation enabled distortions and bad practices to be discarded from our state industries.

Flat tax, although set at a lower rate than the current high bands of tax, would provide more tax revenue as there is less incentive for top earners to dodge or avoid taxes.

You can find his article here.

A couple of years ago I attended a conference in Iceland at which various speakers from different countries talked about the enormous potential unleashed if you bring choice and diversity into the provision of education - unlike America and Britain, for example, where schools are almost all run by the government.

One of the most heartening experiences was that from Sweden, described by my friend Mikael Sandstrom of the Swedish Moderate Party. Long a socialist paradise, Sweden a few years back realized it just couldn't pay its way, nor deal with the enormous demand for state-subsidized services, so set about a programme of (piecemeal) reform. In 2001, for example, a new law allowed people - corporations, non-profit groups, charities and others - to start their own schools if they thought the local municipal schools were not serving parents.

Back in my Reykjavik conference, we were all amazed to learn that some 270 new non-state schools had been created under this legislation. That is nothing, it seems. Yesterday, at a seminar in Edinburgh, Mikael told me that there were now more than 1000 independent schools. Quite a growth. But it shows the depth of parental demand for better education.

Indeed, after initial scepticism, some 90% of parents now say they support school choice. About 52% of the new schools are non-profit arrangments (often started by parents and teachers), and 15% are charitable. But there are companies too which are developing distinctive 'brands' and working methods across many schools. Vittra now has 25, for example, and Kunskapsskolan 20.

It seems a simple way to get real choice and innovation into education: just stand back and let people do it!

From the Guardian:

Residents of Croydon, south London, have been told that the microchips being inserted into their new wheely bins may well be adapted so that the council can judge whether they are producing too much rubbish.

If the technology suggests that they are, errant residents may be visited by officials bearing advice on how they might "manage their rubbish more effectively".

In the shorter term the microchips will be used to tell council officers how many of the borough's 100,000 bins the refuse collectors have emptied and how many have been missed.

Let's look at the background: Croydon taxpayers are being fleeced by Croydon Council. Taxpayers have been given some of Britain's largest council tax rises. In 2003 alone, council tax rose by 27.3%. The council has shown it loves expensive projects. This is another project that will raise council tax.

It's a legitimate aim for the council to know how many bins haven't been emptied. After all, they choose which company gets the contract to do rubbish collection. Then again, having a single, monopoly provider of domestic waste collection is not the most efficient way of collecting rubbish. It is vastly better than pre-1980s state monopoly system, and the current system was the result of a publication by the Adam Smith Institute arguing for contracting out of local government services. But it has been shown in the USA that the best system is to have competing rubbish collection companies from which individuals select.

The really worrying aspect about Croydon Council's idea is that the technology will be used to spy on and lecture people about the amount of rubbish they produce. Using the price mechanism to reduce waste would be much less intrusive. For example, Westminster City Council charges businesses for each binbag used. A system for domestic waste which charged people based on the quantity of their waste would also have the benefit of being the most equitable way of charging for rubbish.

(Found via White Rose.)

Road Map to Reform is a new series of reports looking into different areas of government activity. The first of this series is Deregulation.

The report argues that EU rules should be applied equally across all member countries, utilities should no longer have to pick up the cost of customers who cannot pay their bills, and small firms should have to deal with only one official on all aspects of business and workplace regulation.

Senior Fellow of London Business School Tim Ambler and economic consultant Keith Boyfield also demand that the 16,000 pages of EU laws must be radically boiled down, that new regulations should expire automatically after three years, and that the official consumer watchdogs should be wound up.

"Over-regulation depresses corporate profits, consumes valuable management time and saps entrepreneurial morale," say the authors. "It makes the UK less attractive to investors and destroys the wealth creation on which the whole of government depends."

There are three big sources of red tape - the EU, Whitehall, and the regulatory offices like Ofcom and Ofwat. For each one, we need to make sure that fewer new regulations are created, that existing ones are rationalized, and that enforcement does not become over-zealous.

Download PDF of the report

Scotland reminds you of what life under socialism was really like.

The Scots never embraced the Thatcherite revolution, so when England's water utilities were privatized, Scotland's remained in state control. It shows.

Scottish Water have been building a new coastal sewer system in Arran, but have ridden roughshod over local concerns. The work would scar the place over two holiday seasons; the seafront would be disfigured by ugly pump houses; outflow would go into the bay rather than further out to sea. Consultation? Forget it! And now that the work is in progress, pipe-laying has left the roads in the worst state I've seen anywhere in the UK.

No English water company could treat people this way. The regulator, Ofwat, would be down on them like a ton of bricks, and wouldn't alienate their own customers like this anyway. Only a 'public' company can treat the public with disdain. That is what life is like under socialism: perhaps Scotland should arrange package trips so the rest of the world can re-experience it.

This Thursday, London's congestion charging scheme will have been successfully operating for a year. It is just the start in the plans for various road user charging schemes across the UK.

The next step must be integration - of the user proposition, the data that the scheme collects, and the technology used. Otherwise, drivers will be confused and road-management benefits will be lost.

The various charging or tolling facilities currently operating in the UK use incompatible technologies. The in-vehicle tags used to pay electronically for the Severn River Crossing do not work on the new M6 Toll road. How can we get to a joined-up road user charging scheme like that?

Data too. If we collect the overall data about traffic movements that can be generated by road pricing schemes, then we can manage traffic and avoid congestion much more easily. It's time for Britain's politicians to admit they were wrong, admit that road pricing works, and move the whole road network onto user charging and away from arbitrary fuel and vehicle taxation.

The Fairtrade scheme has come under criticism by Britain's Transport and General Workers' Union for not promoting "union rights". While all the major multinational coffee producers are unionized, none of the major Fairtrade producers (Cafedirect, Clipper, Green & Blacks and Day Chocolate) are unionized or have a recognition contract with a union.

According to the T&GWU, "We organise members across the food manufacturing sector and cannot differentiate between members in different firms. We certainly cannot promote fair trade when they don't use union labour - especially against companies that do recognise unions and engage in collective bargaining."

Michael Howard, the leader of the UK's Conservative Party, has withdrawn his party's support for identity cards. According to ePolitix:

[The Conservative Party] insisted it still backed the scheme in principle, even though it was not voting in favour of it during third reading in the Commons.

Shadow home secretary David Davis said ministers had failed to answer "serious questions about practical issues to make this ID system work".

"They have not even answered the questions of the all party joint committee on human rights who described their failure to respond as 'deeply unsatisfactory'.

The cards have come under considerable criticism from the more libertarian members of the Conservative Party, including Peter Lilley, a prominent former Secretary of State. When the House of Commons voted on a previous reading of the bill, Bill Cash, a prominent Tory, brandished a copy of George Orwell's Nineteen Eighty-Four and said ID cards would bring a "sea change" in the relationship between state and citizens. 70 Conservative MPs were absent or voted against the bill. Campaign group no2id says 41 of those have gone on record to express their hostility toward ID cards.

Alan Greenspan - the Chairman of the US Federal Research - gave the Adam Smith Lecture in Kirkcaldy at the weekend. You can read the full text here. In his speech, he praised Adam Smith's contribution to, and support of, free-market economics:

Perhaps if the Wealth of Nations had never been written, the Industrial Revolution would still have proceeded into the nineteenth century at an impressive pace. But without Smith's demonstration of the inherent stability and growth of what we now term free-market capitalism, the remarkable advance of material well-being for whole nations might well have been quashed.

As Aristotle once said "Hope is a waking dream", so it appears with French MPs due to vote on abolishing the maximum 35 hour working week.

There is so much wrong with this law. It is based on the fallacy that there is only so much work to go around. The policy has hurt the French economy, curtailing entrepreneurship, reducing investment and decreasing output. Also, it assumes that it is the place of the Government to tell people how to live their lives. Instead, it should be up to workers if they wish to trade leisure time for more time at work (and hence a higher salary).

The fact this issue is even being discussed should be welcomed. The hope of dismantling France's socialist employment laws that are so damaging to firms and people alike has not passed.

Is there a deal on development? Gordon Brown tells us there is, but it seems vague on detail. He took a commendable lead in pushing poverty up the world's agenda, and there is a new commitment by rich countries to do something. But they cannot agree on what to do. This is why they promise 'up to' 100% debt relief, and on a 'case by case' basis, falling short of an historic and sweeping commitment to end poverty.

Gordon Brown touted an International Finance Facility to raise cash by selling bonds, enabling future aid to be given now. The US, Canada and Japan were skeptical. He wanted the IMF gold reserves revalued and sold to help write of debts, which the US and Germany apparently did not support (perhaps along with people whose portfolios include gold).

The disagreement over methods has been concealed by an agreement to study the various proposals put forward, including the no-chance French proposal for an international tax on aviation fuel. As Times economic editor Gary Duncan put it,

…while the G7 now agree that something must be done about Africa, they remain deeply divided over what. Saturday's communiqué embraces the need to take action and to provide more resources. But it fails to even hint at a deal by which these objectives can be achieved. It merely papers over the diverse positions of the different G7 members by committing them to look at every idea cast upon the table: British, American, Japanese, and French. There is no consensus and much conflict. Like the separate realities of Africa and the West, the competing approaches taken by G7 members remain worlds apart.

The Adam Smith Institute has long advocated debt relief, coupled with measures to prevent new unproductive debt being incurred. We have supported humanitarian aid on projects to fight AIDS, conquer malaria and provide clean water. But the biggest help will be to open our markets and to stop subsidizing our industries in competition. As more and more people are recognizing, it isn’t about sharing our wealth with them, but about helping them to create their own. Yes, let’s be generous because we can. But the aim must be to make them independent of that generosity.

From the print edition of The Times (London):

Adam Smith Institute Blog
www.adamsmith.org/blog

This think-tank's blog implies that state ownership is as evil as ritually sacrificing babies but it provides interesting and chucklesome views on public services. Cool pop culture are embraced, with one post on work-shy postmen headlined "The public sector loves Ferris Bueller". Geddit? Public sector works just adore those days off.

A new report published by the Centre for Economic Policy Research finds that the American economy reacts faster and further than the eurozone economies. Even though the US downturns are a quarter bigger, the US gets the benefit of expansion and growth earlier, and its booms last 50% longer than the eurozone's. This is the up-side of flexibility. Even in the downturns, the US consumers can maintain their living standards better because they can borrow more. Furthermore, the shocks are usually brief, and have a beneficial side in speeding economic adaptation.

Graham Serjeant, financial editor of the Times, amusingly compares the two types of economy to different dishes:

If economies were rated as food, America's would be a soufflé and the eurozone's would be stodgy old-fashioned Christmas pudding. America’s flexible go-getting economy responds eagerly to cycles and shocks, rising and falling faster and farther in response to any change in the economic temperature. The eurozone, by contrast, has a tendency only to stay where it is. Its stolid mass is slower to expand or contract, varies less either way and takes up to ten years longer than the US to respond fully to external shocks such as the worldwide web or dear oil.

If there is a moral, it seems to be that those who opt for a quiet, smooth life do less well than those prepared to ride its peaks and troughs.

US Federal Reserve Chairman Alan Greenspan spoke about Adam Smith at his lecture yesterday at St Bryce Church in Kirkcaldy. In his speech he said that Smith's account of economic processes "does appear to adequately describe today's determinants of world commerce and the wealth of nations."

"More than two centuries of economic thought have added little to those insights," he added. Smith's ideas had become "the sole remaining effective paradigm for economic organization."

The shortlist of intellectuals who have materially advanced the betterment of civilization unquestionably includes Adam Smith.

And The Wealth of Nations itself was "one of the greatest achievements in human intellectual history," and had led to "changes that were to measurably enhance world standards of living."

UK Chancellor Gordon Brown described Dr Greenspan's speech as "the most optimistic (about this world at least) ever delivered from a Church of Scotland pulpit." Media coverage of it includes the Times, Telegraph and Herald.

Brian Micklethwait says asset stripping is good:

"When economic resources are tied up in activities with an insufficient economic future to justify their use in this way, it makes perfect sense for someone to unbundle them and release them into the wild, separately. That there are people who specialise in doing this, who are always on the look-out to ply their trade, injects huge vitality into the economy of the world. Asset strippers ensure that existing resource uses are always questioned, and that the future, when it does emerge unmistakably, is not smothered by the past."

The present UK government seems insensitive to the rules and traditions which evolved to protect our liberties. This is as evident in tax avoidance as elsewhere. Tax evasion, which means failure to pay the tax due, is illegal. Avoidance, which means taking steps to lower one's exposure to tax, is perfectly legal. Indeed, for a company you could argue that it constitutes an obligation to protect shareholders' funds.

Lord Tomlin, in a 1935 case involving the Duke of Westminster, said "Every man is entitled, if he can, to order his affairs so that the tax attaching is less than it would otherwise be." Despite this and other equally clear legal pronouncements, the current Treasury puts avoidance in the same bag as evasion, and treats it as immoral, using bad law against it.

For example, new government rules require advance disclosure of avoidance advice by tax professionals. Forget about client confidentiality; the Revenue wants to know.

A further blow at liberty is the resort to retro-active legislation, which imposes tax penalties on activities which were quite legal when they were performed. James Quarmby, head of international tax at Thomas Eggar, comments in an FT (subscription) piece on the Previously Owned Assets Tax:

For example, if you set up a trust perfectly legally in 1987, from this April you may be liable to a punitive annual income tax charge. You probably won't even be aware of your liability, which means further financial penalties and interest when the revenue catches up with you.

Legislation is made 'on the hoof' in response to new ways by which people try to minimize their tax liability. In many cases it is poorly drafted, and insufficient time is allowed for it to be examined and its faults pointed out and corrected. The state is over-reacting with an authoritarian and aggressive response to quite normal economic activity. As Quarmby points out, we might choose to invest in a racehorse instead of antique furniture because the latter incurs capital gains tax and the former does not. This is tax avoidance and there is nothing wrong with it.

What seems to have escaped the government's notice is that its relentless drive to fill its coffers has sent its coach and six roughshod over yet more of the principles by which liberty is maintained. There are quite a few already trampled in its wake.

"Britons are lucky people, and complacent ones. The liberties they take for granted have evolved over a thousand years or so. The idea that any one government should seriously undermine them seems implausible. It isn't."

- The Economist

It is predictable that those who like big government have scorned President Bush's plan to privatize part of social security - or state pensions as we call it in Britain. But it's disappointing that they've lied about it too.

They say that pension privatization in Britain was a failure, pension funds have cheated their customers, plans have gone bust, and privatization has condemned the Brits to retire in poverty.

Ignorant drivel. Britain still has a state pension system. It was supposed to see you alright in old age. But politicians proved very good at raising the taxes, very bad at raising the pay-outs. So the state pension now leaves you in poverty. If you relied on it, you have to go on welfare.

So people didn't rely on it. Companies set up pension plans for their employees. Individuals saved for themselves in tax-assisted personal plans. That way, you keep what you save, and don't have to rely on the promises of future politicians. It was a huge success: in 1996 Brits had investments of nearly £1 trillion in their private pensions - more than the rest of Europe put together.

But now company plans are closing and fewer people are saving. Why? Because in 1997 the New Labour Chancellor, Gordon Brown, figured (correctly) that most people don't understand investments and he could sneak a new £5-billion a year tax on the pension funds without anyone noticing. So now those same funds are facing shortfalls - of almost exactly the £35 billion he has lifted from them so far. And bookloads of new regulation have raised their costs even more. Meanwhile, Brown's raising of welfare pay-outs has made more people figure there's no point in saving anyway. Any wonder that people aren't saving, and firms are closing their retirement plans to new workers?

Britain's pension system was a success. The state system was a swindle, but people had private or company pensions instead. Because they could be invested anywhere in the world, they gave savers much higher returns for their money than the state ever could.

Then the politicians interfered and... the rest you know.

Nearly 70 people attended the ASI last night to mark 100 years since the birth of Ayn Rand. She was a fiction author and philosopher whose book Atlas Shrugged has been rated the second most influential book in America. Andrew Medworth gave an introduction to her life and works, Kenneth Irvine spoke on her moral case for capitalism, Dr Elaine Sternberg spoke on her philosophy and Tom Burroughes spoke on her conception of art. After a Q&A session, the event finished off with a champagne reception.

Tom Burroughes with libertarian rocker Andrew Dodge.

Philosophers Dr Elaine Sternberg and Prof. Antony Flew

On the way to work this morning I noticed an EDF Energy van proudly advertising its support for London's 2012 Olympic Games bid. Not many Londoners realize this, but EDF - which swallowed up London Electricity - is short for Electricité de France. It is owned by the French government. Rather ironic considering the French are trying to get Paris to host the games.

Professor Steven Nickel is a member of the UK's Monetary Policy Committee which sets interest rates. In a January 13th paper to the Bank of England