They say hard work never killed anyone, but why take the risk?

It seems the European Court of Justice (ECJ) is going to have to rule on the great case of whether the Marks & Spencer chocolate teacake is in fact a cake or a biscuit. HM Customs & Excise say it's a chocolate-covered biscuit, in which case M&S owes them £3.5m in Value Added Tax (VAT). M&S say don't be daft, it's a cake, which makes it zero-rated.

This stupendous waste of public money and time arises out of the sheer stupidity of the VAT laws. VAT in Britain puts a whopping 17.5% on the cost of what you buy, so in order to show how much they care about deserving groups, the politicians exempted some items such as food, domestic (and, for some reason, aviation) fuel, and children's clothing. Later the tax was extended to hot take-away food, so if you buy a hamburger and salad, I guess one has VAT on and the other doesn't.

I'm certainly confused, like M&S and the Excise. But I suppose the origin of this dispute is that chocolate biscuits are considered a luxury and are taxed, while chocolate cakes are considered food and are exempt. We have seen the same disputes over Jaffa Cakes and gingerbread men.

Such things are the hallmark of a bad tax. We used to have just the same absurdities with the old Purchase Tax, which had various rates. So a dish with indentations to put your cigarette on was classed as an ash tray and taxed as a luxury, while the identical dish with a flat rim was classed as a peanut bowl, which being a food container attracted less tax. Not surprisingly, pub ashtrays became universally flat-rimmed, and you still see many of them around today.

It's surely a principle of taxation that it should apply evenly rather than haphazardly. If you're going to have VAT (and it's a very bad, complicated, and costly tax we could well do without), you should apply it to everything and cut the rate. If that means needy people can't then afford clothes for their children, then deal with that problem separately. But don't complicate a tax so much that you have to go right up to the ECJ to define a teacake.

A man walked into a pharmacy. "Do you have anything that would help me?" he enquired. "I seem to have lost my voice."
"Good morning, sir," said the pharmacist. "How can I help you?"

The Guardian newspaper reports that one of Britain’s teacher unions – the Professional Association of Teachers – says that the single-speed comprehensive school system (under which most pupils in mainland Britain are educated) should be scrapped and replaced with academic selection for all pupils from the age of 11.

Significantly, this comes just a day or two after The Times story that thousands of parents in Northern Ireland appealed to the government to reverse its plans to end academic selection there.

Northern Ireland is proud of its selective (‘grammar’) schools, and boasts a better academic record than the mainland. Last year 69.4% of GCSE results were in the top A*-C range, as opposed to just 59.2% across Britain. At A-Level, 30% of Northern Ireland’s students gained A grades, compared to just 22.4% across Britain.

The question is why politicians are daft enough to maintain the comprehensive system. This one-size-fits-all approach means (as Chris Lambert says in his report Access to Achievement) that schools are not properly tailored to the needs of each student – whether academically gifted or not. Parents don’t like it, for that reason. It has created huge unwieldy, unresponsive schools. And it produces significantly poorer results (not just, I think, in terms of academic performance).

Oh, but silly me, I forgot: it has nothing to do with real outputs of course, and still less to do with what parents actually want. It’s all about the ideological bent of the ‘education experts’ who run the state school monopoly. I doubt that anything parents and teachers say will make much of a dent on that.

This week's environment agreement between the US and five Asia-Pacific states sets a strong alternative to Kyoto. The surprise deal includes China and India, whose output is largely unaffected by Kyoto. The six countries in the new deal, China, India, South Korea, Japan, Australia and the US account for nearly half of world greenhouse gas emissions.

The pact will use new technology to cut greenhouse gases, and will see its signatories sharing cleaner technology with each other. Each country will set goals for emission reduction, and while there is no enforcement mechanism, neither are there measures which will threaten economic growth and employment. The BBC reminds us that

Both the US and Australia have refused to ratify Kyoto, which came into effect earlier this year, partly, they say, because big developing countries like India and China escape emissions limits. They have also made clear their concern that climate change should only be addressed without harming development or economic growth.

Thanks to a US-led initiative, there is now a valid alternative to the expensive and anti-growth policies enshrined in the Kyoto Protocol. This is exactly why the NGOs and the environmental lobby are already up in arms against it. Their agenda is essentially anti-technology, anti-business and anti-growth. One of its aims is to force us to 'live more simply.' The use of technological solutions by-passes their objectives.

It is now an easy prediction to make that this approach will dominate. Kyoto is unlikely to be renewed post 2012. In its place will be the rapid development and spread of innovative solutions which cut emissions and enable development to occur much more cleanly. The emphasis (and the rewards) will be for cleaner energy, with the result that nations will achieve emission cuts far deeper than the Kyoto targets, and at far less cost.

The doctor told me to slow down, quit smoking, drink less, and give up the women. But he did at least say he envied the life I was leading.

On this day two hundred years ago, in Paris, Alexis de Tocqueville, was born. He is remembered today as a great historian, a leading exponent of liberal ideas, and the chronicler of democracy in America.

De Tocqueville (1805-1859), was born into an aristocratic family, but came to question the role of the aristocracy in the government of France. After the July Revolution of 1830, when power changed from the Bourbon to the Orleans family, de Tocqueville sensed the spirit of democracy that was rising in France, and set off to study how it worked in America.

In 1835 he published the first part of Democracy in America, a very positive account of American government. The second part, published in 1840, was much less positive, with strong warnings for France about the risks of centralized and despotic government.

De Tocqueville stood unsuccessfully for election to the Chamber of Deputies in 1837, but after being raised to the Legion of Honour for his book, he did win election, in 1839, and rose further through government, briefly serving as foreign minister.

His books are still read widely today, and stand out for his insights on freedom and democracy. Here's a sample:

Trade is the natural enemy of all violent passions. Trade loves moderation, delights in compromise, and is most careful to avoid anger. It is patient, supple, and insinuating, only resorting to extreme measures in cases of absolute necessity. Trade makes men independent of one another and gives them a high idea of their personal importance: it leads them to want to manage their own affairs and teaches them to succeed therein. Hence it makes them inclined to liberty and disinclined to revolution.

Happy birthday, Alexis!

John Kay says in the Financial Times that President Bush is right regarding his assertions on climate at the recent G8 meeting at Gleneagles. Bush emphasized uncertainties on the science and the economics: Kyoto has large costs and negligible benefits for the US. Greenhouse gas controls that exclude developing countries are ineffective; while research and development on new technologies should take priority over emissions reduction targets.

Hopefully this heralds the beginning of the end for Consensus Science which might excusably be mistaken for conspiracy. Forecasts of catastrophic warming derive from contested computer models. Although some warming at the end of the 20 Century is observed in surface samples, weather satellites and balloons recorded cooling between 1940 and the mid seventies, leading popular scientists to warn of a new and overdue Ice Age. There has been no clear trend since.

Recent forecasts of rapid warming favoured by the Consensus depend on the hypothetical hockey stick which was used by the IPCC [2001] as evidence for anthropogenic global warming. It showed. a sharp recent temperature rise in the Northern hemisphere after a relatively flat trend for 1000 years. This model is now discredited. McIntyre and McKitrick [MM-2003] found the data had been manipulated. When MM recalculated temperatures with corrected data (but retaining the same methodology), they obtained quite a different temperature history, bearing no resemblance to the hockey stick (which can be fitted to random data). This debate has affected respected journals like Science and Nature, which are no longer willing to provide a forum for conflicting views.

Meanwhile the original data from which the hockey stick was derived cannot be extracted. Washington is currently split by the Congressional attempt to establish if research supported by public funds should be available to other scientists for independent verification.

The recent [6 July] but largely overlooked report on climate by the Economic Affairs Committee of Britain's House of Lords explains how science can be conflated with politics and so-called consensus used to justify advocacy. Once scientists lose their reputation for impartiality, the outlook is truly bleak.

Our 100th joke of the day was made by President Ronald Reagan.

He defined a taxpayer as someone who works for the federal government but doesn't have to take the civil service examination.

Twenty-five years ago tomorrow, Mrs Thatcher's government created seven new 'enterprise zones'. The idea was to show what free enterprise could do if only bureaucrats and tax-collectors would keep out of the way.

The idea went back as far as 1978, when Sir Keith Joseph hinted to a meeting of the St. James Society in London that, if elected, the Tories were minded to create areas where "the queen's writ did not run". But few local politicians were minded to give up their powers, and the enterprise zone proposal was gradually diluted.

But then, in conversation with ministers, the Adam Smith Institute realized that the government held large areas of land around ports and airports which would make ideal bases for the 'freeports' that existed in many other countries. It came up with a list of proposed sites which might have a second go at the enterprise zone idea, this time as freeports.

As we reported later, the freeport experiment was a mixed success. It did show that enterprise and trade could be released if the conditions were right. But officials, in particular those at H M Customs & Excise, proved very reluctant to loosen their regulations as part of the test. They suspected, correctly, that once some areas had enjoyed this freedom, others would want the same.

All of this means that we are still working on our hidden agenda of the time - to turn the whole country into one vast freeport where the writ of regulation fusspots and tax inquisitors does not run!

One of the constant writing habits to guard against, if you are an economic liberal like most of us who write for this blog, is the tendency to complain all the time. Before writing this post I looked back through the last dozen or so postings here. By the time you read this it may have changed, but at that particular time, a comfortable – if that's the word – majority of recent postings either included or simply were complaints of one kind or another, about bad government, and about bad ideas about how there should be yet more bad government.

Good. It is good to complain about badness. But, a balance should be struck, if only to avoid demoralising both ourselves and all our readers.

And we economic liberals do have plenty of good news to celebrate. Capitalism, the myriad attacks on which make us so gloomy, now produces, despite all the attacks, a never-ending stream of wondrous new products and services.

For me, one the most delightful recent products of capitalism has been digital photography. Hardly a week now goes by without me having digital camera fun of some kind, often bloggably so.

My current camera, a Canon S1 IS, is my best yet. It has an "image stablizer", which is invaluable, and it has a mega powerful (10x!) optical zoom lens, ditto.

But my buying brief was: the best cheap digital camera that I could fit into my jacket pocket, and fitting my Canon S1 IS into some pockets is a tight squeeze. The problem is that zoom lens. If Canon could, Canon would just love fit it into a camera the size of a cigarette packet. But, Canon can't.

Only a few weeks ago, a friend patiently explained to me that optical zoom lenses – such is the nature of the universe – cannot stick out any less than they now do. But the universe, it seems, has just changed its nature:

Québec City, May 18, 2005 – Scientists from Université Laval's Faculty of Sciences and Engineering have invented a lens five times thinner than a sheet of paper that is able to zoom in and out without mechanical parts. Tigran Galstian and Vladimir Presnyakov present this amazing piece of optical instrumentation in the latest issue of the Journal of Applied Physics.

"There are several possible applications for such a lens. We believe one of its most promising developments could be in camera-embedded cell phones," says Galstian. "Our opto-electrical zoom lens would be of much higher quality than the ones that currently equip these phones."

This won't just make small cellphone cameras far better; it will make better cameras, like mine, far smaller. Superb. Obviously there is much further work to be done before this magic can be sold in the high street, so: patience. But: superb.

I only learned of this latest capitalist triumph by reading the August 2005 issue of Digital Camera Shopper, which I only bought because it has a review of the Canon S2 IS, which is my camera only better. (Dead tree publications have their uses.) The story I then googled my way to is over two months old.

But that's the thing about good capitalist news. It's easy to miss.

(Brian Micklethwait also writes here.)

Britain's celebrity chef Jamie Oliver has complained that government uttered "a lot of headline-grabbing words" instead of delivering more nutritious school meals. His TV series Jamie’s School Dinners sparked off a campaign to replace junk food with balanced nutrition.

While government announced a cash award of £280m for healthier meals, it turned out that this was not extra money, and that some of it was lottery cash. Helen Rumbelow (Times) reports Jamie Oliver's comments that "Our friends across the world are amazed that a proud country such as ours can have so little regard for the health and wellbeing of its children."

Mr Oliver said that on a recent visit to South Africa he went to the poorest township in Johannesburg and found that school meals were better than in Britain. He said: "It completely astounded me that in a place of unbelievable poverty, the love and care put into childrens' meals was greater than in Inner London — and resulted in a more nutritionally balanced lunch."

Mr Oliver thought that his superbly-conducted campaign had been successful, as did many observers. They had reckoned without the government's propensity to announce bold new innovations, to set up task forces, to unveil initiatives, and then not to do anything. This is a government which likes the headlines, and the praise which promised action brings. It is less keen on the hard work required to implement real change and improvement. It is also very ready to castigate others for its lack of progress; and this time it looks as though the schools and the parents are to be blamed for their unreadiness to accept the required changes.

'If stupidity got us into this mess, why can't it get us out?'

- Will Rogers

The figures have shown falls in UK house prices, which might threaten people's sense of affluence and their readiness to borrow and spend. However, as we have said before, a change in pension rules presages a tidal wave of new money into housing, money which, in the absence of new supply, can only raise prices.

The rule is for self-invested personal pensions (SIPPS). From April 6th next year, people will be able to include residential housing, including principal or second homes, plus buy-to-let housing, into their SIPP, where they had previously been limited to commercial property. Christine Seib runs the story in the Times, citing a survey by Hargreaves Lansdown.

Hargreaves Lansdown found that 37 per cent of its existing Sipps clients planned to buy a residential property with their pensions. If this percentage is extrapolated from the 140,000 people who own a Sipp, there would be more than 50,000 people willing to take advantage of the new rules.

The average Sipp property purchase is expected to be worth £195,000, which means that savers are likely to spend £10 billion on new properties, £8.5 billion of which would be spent in Britain — equivalent to about 5 per cent of the value of the UK property market.

This is a wall of money, and it may well be a considerable underestimate. If the wheels were coming off the Chancellor's economy (as the falling growth rate suggests), this could keep them turning a little longer by sustaining consumer demand. If there were to be an eventual collapse in the housing market, though, it could hit the value of people's pensions as well as their property assets. By then, of course, the Chancellor might have moved house himself, and it would be someone else's problem.

Jack performed well in his interview for a job as a "Problem Solver", which offered a salary of £150,000. "Great! You've got the job!" said the interviewer. "Any questions?"
"Well," said Jack, "this seems to be quite a small company. How can you afford to pay people £150,000?"
"We can't" said the interviewer. "But that's your problem."

There has to be a Harry Potter post, doesn’t there?

Greenpeace International is asking readers to boycott the US version of the latest tome and purchase the Canadian version instead. Encouraging the breach of copyright doesn’t sound all that friendly, nor does the idea that instead of buying books that have been trucked about in bulk one should insist upon a personal delivery from another country. Have these people never heard of book miles? The reason given is:

However, not all publishers are following this trend. Less progressive Harry Potter publishers like Scholastic in the USA have not responded to the challenge, and in fact ignored the 12,400 emails from customers who asked it to print 'Harry Potter and the Half Blood Prince' on ancient forest friendly paper. It seems they haven't been using Professor Trelawney's crystal ball enough.

"The US publisher Scholastic is one of the largest Harry Potter publishers globally," said our resident book wizard Judy Rodrigues. "If they had printed the book on 100 percent recycled paper, like Raincoast, its 10.8 million print run could have saved 217,475 mature trees."

Leave aside, for a moment, the fact that most virgin paper is made from trees especially grown for that use. Think, rather, about the wider issue of the use of resources. Would the use of recycled paper have meant the use of less resources in total than the use of virgin paper? How can we actually work this out? The best system we have, indeed the only method of working out such a complex calculation, is to look at prices, for markets do exactly that, tell us whether we are using resources in the most efficient manner possible.

As the National Geographic report on the matter states:

Markets Initiative says that it cost Raincoast some 5 percent more in production costs to use recycled paper—a cost that may be reflected in the Canadian edition's higher cover price.

The cost of paper is only one of the total production costs so we can be certain that the price difference between recycled and virgin paper is greater than 5 percent. Ergo, the use of recycled paper is a waste of wealth and resources.

So, Greenpeace International is urging us all to waste resources, become marginally poorer, in pursuit of their particular vision of the world. How nice of them to do that for us.

(Tim Worstall writes here.)

Richard Morrison in his Times column amusingly describes a repeat story in which an outsider, sent in to overhaul some venerable cultural institution, resigns a year or so later amid acrimony and recrimination. He gives the template of the recurring story.

The world of British pottery/knitting/morris-dancing was rocked last night by the shock resignation of X after just two years/two months/two days at the helm of the beleaguered (name of institution). When X was appointed after a brilliant career running the whelks/futons/ball-bearings marketing board in Tasmania/Canada/Singapore, he was expected to make sweeping reforms to deal with a deficit now running at £10 million/billion.

Morrison points that he could retire comfortably if someone gave him £10 for each time the story has appeared in the past 25 years. Others spring to mind which are no less frequent. How about "Government Appoints X Tsar," in which the UK government appoints a supremo to deal with the growing problem of X, and to report directly to the Prime Minister?

There is also "Chancellor Revises Treasury Figures," in which the UK’s Chancellor changes the official definition of the inflation rate/growth rate/exchange rate/unemployment rate/business cycle, showing that under the revised figures the economy is still on track and within his forecast.

Readers may care to suggest other repeat stories which spring readily to mind.

The Institute for Public Policy Research has caught the headlines by suggesting that the pension age in Britain should be raised from 65 to 67. That's great. We were saying the same back in the 1980s and 1990s. People are living longer and keeping in better health, so it seems natural that the pension age should reflect this. At the moment, the whole state pension system - supported by the taxpayer - is suffering under the strain of having to pay benefits to so many people for so long.

Perhaps now that such philosophically different think-tanks as IPPR and ASI are both saying we need to change the pension age, it might even happen. Certainly the ground is more fertile. When the Major government, in the 1995 Pensions Act, proposed raising the female pension age from 60 to 65 to match that of men, it expected huge public resistance - but in fact it was stunned by the lack of criticism. Indeed, they rather wished they had moved both to age 67, as we were proposing at the time and which was in common debate.

People seem to have accepted the fact that longer, healthier lives should mean a later retirement age. It is just that politicians have never been brave enough to suggest such a thing in public. Perhaps they will now.

McTavish had just moved down to London and his mother called to find out how he was getting on in his new apartment.
"It's a bit odd," said McTavish. "On one side of me there's a man who keeps banging his head against the wall, and upstairs there's a woman who just lies on the floor moaning all the time."
"The English are strange," said his mother. "You should keep yourself to yourself."
"Oh, I do," replied McTavish. "I just stay in all day and play my bagpipes."

Part of Tony Blair's response to the London bombing incidents was entirely predictable. He called in various 'leaders' of the 'Muslim community' to chat about it, then set up a 'taskforce'. One of those invited, Kishwer Falkner (a LibDem peer, pictured) was not impressed. It was the "usual suspects" in the Muslim establishment, she reported: a knight or two, half a dozen peers, Muslim MPs.

One of the MPs, at least, pointed out that Muslims were not a homogeneous group, and told Blair that any such set of 'leaders' trying to 'solve the problems of religion and alienation' was doomed to fail. But within the hour, the Prime Minister told them all he was setting it up anyway. The Big Conversation just got bigger. Falkner goes on:

What is needed now is not a quick-fix taskforce, with well-meaning Establishment figures embarked on a road-show around the country to have our own "conversation" with young Muslims.

There's a case, she says, for a genuine, long-term investigation of why some communities in the UK are so segregated that they don't even share the common language, far less shared values; of why religion is being distorted to such devastating effect; and how we can square diversity with harmony.

But of course the important thing for governments - particularly this government - is to be seen to be doing something whenever any problem arises. Call everyone in. Set up a commission. Whether any of all this highly visible and 'inclusive' spinning actually does anything useful seems to be of far lesser importance to them. Sad.

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.

- Ayn Rand

British interviewer: "President Chavez: you have set Venezuela on the path to socialism. In a word, how would you say the Venezuelan economy is now going?"
Chavez: "In a word? Good."
Interviewer: "Er, Mr President, 'in a word' is just an English expression. You're allowed to elaborate a little."
Chavez: "I see. Not good."

Britain's health system regulator, the Healthcare Commission, says that (thanks to an injection of tens of billions a year) the state-run National Health Service is now meeting lots of its targets, but is failing to treat taxpaying patients as customers. One figure I saw is that 25% of patients say they are treated 'as if they are not there'.

It is this, more than anything else, which defines the failure of state-run healthcare. Sure, when you look at the statistics, you find that some things the NHS does are actually very good, while others (like our performance on killer diseases like cancer and stroke) are pretty poor compared to other countries'. But what the statistics don't pick up is how people are treated as people.

A couple of years back I spent a good deal of time around one of Britain's 'flagship' hospitals, during the last illness of an elderly relative. Since then I've been determined never to set foot in the place again if I can help it. It was filthy, of course: one expects that. But the staff were also stressed out and frankly hadn't the time, or weren't well-managed enough, to handle their elderly patients with the dignity that any of us have a right to expect. There was no joined-up liaison with the family doctor, so my relative was not given an essential medicine, with disastrous results. She lost her wedding ring (very precious to her) but the ward had no system to deal with lost property. There was no plan to provide care for her when she went back home from the hospital. And so on. It was awful, and inhumane.

I don't believe that any amount of money will change this. Yes, it might mean that more women get breast screening or that family doctors can give you an appointment within the week. But it won't mean that patients are treated like valued customers, because in our system they are not. Only if we can devise a system in which the providers are paid solely on the basis of the patients' own choices will we ever do that.

A seminar about regulating advertising took place recently here in the UK. I'm not sure why the regulation of advertising should require a whole seminar, since I guess the general principles of honesty and decency could be scribbled on the back of a playing care; but there we are.

One of the speakers was a senior Eurocrat who was fussing about the "problem" that the electronic media were escaping from Brussels' control -- especially "viral advertising" (people talking to each other about a prodct or service, but inspired to do so by deliberate commercial instigation). A new Directive, we are told, will be devised to control this "problem".

Afterwards, a friend of mine was overheard suggesting to him that the sensible thing would be to extend this Directive to control all personal communications. The Eurocrat pondered the idea, explaining that he thought this might prove to be rather difficult to achieve. It seemed to take him quite a while to figure out that my friend was taking the Mickey!

You couldn't make it up. The Eurocrat mind is a strange thing. Worryingly so.

When broadcasters are checking interviewees' microphones for sound level, they invariably ask what you had for breakfast. The charismatic American conservative Stan Evans must have shocked some sound technician with his (undoubtedly truthful) reply: "For breakfast, I always have coffee and cigarettes. Some people say they have no time for breakfast. I say make time. It's the most important meal of the day!"

Britain's government is making millions by encouraging people to call expensive 0870 numbers - which can cost twice as much as a national-rate call - when they need help.

The Daily Telegraph reported that the Driving Standards Agency made £1.5m from this device last year, while the Driver and Vehicle Licensing Agency made £1.3m. The Home Office, even the police, the Environment Agency, the Land Registry, and dozens of other government bodies use the 0870 numbers.

But opposition to these numbers is growing. People were outraged when an 0870 number was used as the helpline for people enquiring about the recent London bombings: though the authorities said this was actually the best mechanism to handle the many hundreds of calls that came in. The Department of Health banned family doctors from using income-generating numbers this year, though it still uses one for its NHS Response Unit.

However, it’s remarkable that the public should be charged for calling to get information to which they are entitled anyway, and which they pay for through taxation. Well, maybe not so remarkable. Just another stealth tax.

Doctor: "You have a highly contagious disease. You must go into isolation, and you’ll have to eat only pancakes and pizza.”
Patient: "Will pancakes and pizza cure the disease?"
Doctor: "No, but we can't slip anything else under the door."

I see that Russia will soon enact a new law ending inheritance tax and cancelling tax on gifts between close relatives. That's good. Russians today can pay up to 40% tax on inheritance - the same rate that a growing number of Brits pay today (since the price of a house in London or the South-East of England can now easily take you into the inheritance tax net.

In the ASI report Free Wills, tax economist Dr Barry Bracwell-Milnes says that death taxes have probably produced a net loss for the UK Treasury for the whole of their century-plus existence. This is because people shuffle their assets into less productive uses in order to avoid the tax. They spend away their fortune, rather than see tax collectors get it. And they waste money on lawyers and accountants to devise complicated avoidance schemes. Meanwhile the government has to maintain a large bureaucracy to collect the tax.

Inheritance tax hits people at exactly the worst time - when a close friend or relative has died. It demands lots of bureaucracy, from the government and by executors of estates. It doesn't even hit its target. People with very large estates know how to avoid it. And a growing number of people with only modest assets end up paying the bulk of it. That's unfair.

But tax competition is a wonderful thing. Estonia brought in a flat-rate income tax but is now lowering it because of the competition from even lower-rate flat tax countries (like Russia). Perhaps the same domino effect will work on inheritance and gift taxes. It's time Britain too realized that inheritance tax is a bad tax, followed Russia's example, and scrapped it.

Measuring – and thereby rewarding and attaining – success is a subtle art, as many Soviet era jokes testified. If you measure the success of a nail factory, for instance, entirely by measuring the weight of the nails produced, you are liable to end up with ten ton nails, triumphantly wheeled out of the factory like giant pieces of sculpture. Clearly, size of nail matters too, as does quality of nail, as does degree to which the various nails produced match the needs of those being supplied with them. How do you get the balance right?

The answer is: profit. The profit motive is often denounced as the ultimate in one-dimensional crudity, but it is anything but that. Profit is what keeps shops clean, and attractive, and conveniently laid out, and well stocked, and courteously staffed, and the right size, and sited in the right places, and lots of other equally good things known only to shopkeepers, and all at the same time. Profit drives perpetual juggling acts beyond counting, without the politicians having to do anything except a bit of law enforcement.

The above thoughts were prompted by this article, by Denise Winterman of the BBC, about railway stations.

Britain's railwaymen have been directed by the politicians to run their trains safely and on time. But railway stations have mostly been shockingly neglected. It's not that the railway workers have been incompetent or insubordinate. On the contrary, they have done what they have been told to do. So now, really quite nice new trains deliver and collect passengers with genuine efficiency, to and from stations where the only people thinking about aesthetics are the graffiti artists.

Ms. Winterman writes about a station in Manchester which the passengers have been beautifying themselves. They fear that if they don't show the world how much they love their station, it will be closed. But as she is well aware, this is the exception that proves the rule.

The young employee went to his boss asking for a raise, saying that several other companies were after him.
"What companies are those?" asked the boss.
"The gas company, the electricity, the phone company," the employee admitted, sheepishly.

Prof. Sir Liam Donaldson, the Chief Medical Officer, has called for a change in the allowed personal imports of cigarettes from other EU countries. The full report (pdf) states:

In 2002, the indicative limits on cross-border shopping to the UK from the European Union were increased following pressure from the European Commission. An individual can now bring 3,200 cigarettes or 3 kg of hand-rolling tobacco into the UK without paying any UK tax or duty.

And makes the recommendation:

The Government should use its influence within the European Commission and with other Member States to address cross-border shopping for tobacco products,with the aim of reducing the limits to 200 cigarettes or 250g of handrolling tobacco.

The aim is, of course, to raise the price of tobacco products in the UK and thus reduce smoking.

Unfortunately Sir Liam is working with a gross misunderstanding of the law. We all have a right, an unlimited right, to make personal imports into the UK of items upon which we have paid duty and VAT in other EU countries. (There are certain limitations from the 10 new entrants, but none from the other members of the EU-15.) This is the cornerstone of the Single Market, that such cross border shopping is allowed as of right, not as a series or permissions or allowances.

The indicative limits to which he refers are exactly that, indicative. Anything below them is to be regarded as a personal import, unless there is other compelling evidence (say, three trips a day across the Channel by the same person) that the materials are for resale. It is still entirely legal to bring in larger amounts if one can convince Customs that they are for personal use. For example, one can take a pantechnicon of champagne through Dover (with an HGV license, of course) if the guest list for your daughter’s wedding proves to be compelling evidence.

A reduction in such indicative limits would make no difference whatsoever to our right to make personal imports of larger amounts. They would just lead to more time showing Customs that one is indeed a smoker.

The value of technical experts in the bureaucracy is said to be that they are able to look at the larger picture, make recommendations without being constrained by day to day political pressures. Yet when one of that august number misunderstands the law, then makes policy recommendations based on that ignorance, what hope for the rest of us?

(Tim Worstall writes here.)

There was a very good launch party on Tuesday for the Globalisation Institute. In addition to Alex Singleton and some of the GI's writers and researchers, there was a huge crowd of mostly-young achievers. Many of them were people who make things happen, and it was a much livelier mix than many of the political receptions hosted at this time.

Alex and the GI have made a real mark very rapidly, putting the case for free trade, and against tariffs, quotas and subsidies, and achieving wide media coverage. The case the GI makes is increasingly listened to by governments.

The GI was welcomed in a speech by Bill Emmott, editor of the Economist, who congratulated Alex on his achievement. Then Alan Beattie, world trade editor of the Financial Times, spoke about the lack of economic sense by many of the NGOs involved in globalization issues.

You can read these speeches and see more about the event on the Globalisation Institute's own site.

Donald remarked that he hadn't spoken to his wife for eighteen months. He just didn't want to interrupt her.

The public sector has become so big that it now overshadows everything else in public debate. Take the debate on choice.

In most parts of the economy, people have choices, not just among physical things like soap or shoes, but for services like phone or TV packages. So the public sector's 'universal service' - that is, take it or leave it – now looks decidedly dowdy, which is why politicians have started to talk about giving people choice in public services too.

Great. But then opponents complain that to give people a choice, you need 'spare capacity' - two hospitals or schools where before you needed only one. Isn't that hugely wasteful duplication?

Er, no. Look at supermarkets. There is plenty of choice, but very little wasted capacity. Competition, and the threat of unsatisfied customers leaving, means supermarkets are run very efficiently, with far less waste than our no-choice public services.

'Spare capacity' works at the margin. In a competitive world, new small enterprises can start up (and shut down) at any time, depending on the local demand. New lines can be tested, and abandoned if they don't appeal. The state, of course, only thinks in megalith terms. Public servants believe that to give people choice you need to build yet another giant school or hospital alongside the existing one, leaving both half-used. Daft.

The distressing thing is the amount of intellectual energy they put into debating such garbage. It was a constant, carping theme among the mandarins at the Audit Commission lecture last week. Why don't they just stand aside and let the market deliver public services? Then they would see just how much wasted capacity' that has been under their noses.

Last week I met Stephen Goldsmith, former mayor of Indianapolis, who's just produced a book called Governing by Network.

His thesis is that government needs to do fewer things itself, and use networks to deliver its services. That is because the services it delivers must be tailored to the individual if they are to work. Governments are not good at the complexity this implies.

Government had no problem when welfare was just a benefit cheque, says Goldsmith. But welfare cheques don't get people off welfare. So the US turned instead to a work-based system - trying to help needy people by re-integrating them back into the workforce. That means building a whole variety of services around each individual - not just the job itself, but childcare, transport, and much else.

In a dynamic world, government is too static for that job. It thinks about inputs, when it should focus on outputs - outputs that can be provided in a huge variety of ways using competing or collaborating providers. Today's technology makes that sort of network provision feasible, since information can now be shared quickly and cheaply across wide arrays of different provider groups.

"We have horizontal problems, but hierarchical government," concludes Goldsmith. His solution? "Government needs to do fewer things itself, and use networks to deliver today's very complex services." And that's from someone who actually made it work.

What do you call a blind fish?

Answer: FSH

..and what do you call a blind deer?

Answer: No idea.

UK deputy prime minister John Prescott is reported to be considering a development land tax. Charles Clover (Telegraph) tells us:

He told a conference yesterday [July 13th] that the Government was looking seriously at the Planning Gain Supplement, a tax paid on the difference between the average price of agricultural land and the average price of development land, which is far higher.

This looks ominous. The original proposals for the tax were ONLY designed for residential housing on greenfield land, which would be much more straightforward in determining the value uplift with the grant of planning permission. The same doesn’t apply to commercial sites on brownfield sites in need of expensive remediation or already high priced central London properties. (This would be a valuers’ field day!)

Unfortunately, some people are indicating that the Treasury wants this to be a levy on ALL development and the fear is that it will be a central government tax designed to help fill Brown’s coffers, rather than a local tax collected and spent locally. A central tax would remove any benefit that a local levy would bring to communities and would act as a disincentive for local communities to support development.

The Government is probably going to make developers pay ‘mitigation’ taxes regardless, but a better alternative might be a fixed planning tariff similar to what Milton Keynes has implemented with its roof tax. This way, at least, developers will be operating within a transparent system as opposed to the current system of backroom deals through what is called Section 106 agreements. (From the 1990 Planning Act). S106 is an ad hoc charge and is always uncertain which makes getting finance difficult because a developer never knows how much it will cost, and makes it impossible to plan finance for schemes.

At the very least a tariff would give certainty, and if there has to be one, it should be local, not central.