Adam Smith Institute

A useful point to make about the Reverend Malthus: he was right about all of human history until his own time. Similar remarks could be made about other oeconomical ideas: those of Marx perhaps?

If you're interested in peer reviewed scientific papers which take issue with the tenets of climate change, here's a (non-exhaustive although long) list.

On which subject, a climate scientist takes issue with Nicholas Stern's latest pronouncements on the immediate and catastrophic nature of the problem.

Further evidence that wind power might not be all that much of a solution to any problems.

The Conservative Homies choose their book of the year.

One way to eradicate poverty: if sending them aid doesn't work, why not let them come here?

And finally, the Ban Darling Campaign seems to be getting some results.

A report in The Times on how rural land values are soaring:

Farmers have seen their land values soar by 30 per cent in a year. With markets in turbulence and surging global food prices making agriculture profitable, land is now seen as a safe haven for cash and pension funds.

City institutions, led by Blackrock, UBS and Schroders, are setting up funds to invest in land and agribusiness. Other hedge funds are exploring the market. They are in competition with British farmers and businessmen from Ireland, Denmark and the Netherlands, where land is even more expensive.

Well, yes, but there's something else going on as well, it's not just the usual interaction of supply and demand. There's subsidy as well.

The Common Agricultural Policy (spawn of the very devil that it is) has recently undergone some changes. Instead of subsidy being based upon production, it is now linked simply to the acreage (actually hectarage but forgive this traditionalist his little pleasures) of land held. It's not quite in one leap though: over a period of years it moves from the historical amount based on past production to the flat per acre payment. That change is having its obvious effect: previously you had to actually farm the land, get something out of it. Now you just have to own the land to get the cheque.

That obvious effect being of course that the price of land will rise, as David Ricardo woud have pointed out. The subsidy is now simply an additional rent to the property, one which will simply feed through into increased capital values. It's a little difficult to work out exactly what the subsidy actually is (come on, this is the EU we're talking about) but £100 an acre or so looks like a reasonable estimate. Taking a 5% interest rate (or return upon capital, your choice) we would thus expect the subsidy to increase the value of land by some £2,000 per acre (ignoring the effect that the earlier subsidy system had on such land).

£3,500 Price of an average acre of farmland a year ago
£5,000 Price that an acre is close to fetching today

Ah. So, that's what the CAP does, increases the wealth of those already owning land and making future farmers require more capital to enter the business. Not, perhaps, the desired outcome. Which brings me to my perpetual and oft asked question about the European Union itself.

Can we leave yet?

96. "Private sector health and education cream off the very best in resources and personnel from the state sector."

When people pay for private health and education, they save the state money because it no longer has to provide facilities for them. Furthermore, the money they spend for themselves means that the total expenditure on health and education is increased. And because the private sector has to be responsive to what consumers seek, it gives the public sector some idea of what it is that people want. It is not true that it drains away state service personnel; only a tiny fraction of those going to work in private healthcare come from the state sector.

Private health and education do not take resources away from the public sector; they give it more to spend per head. They may, by providing more flexible conditions, attract some of the most talented personnel. But they also improve conditions in the state sector by taking away some of its workload; and there may always be those who prefer to work in the state sector. Machines bought for use in private medicine increase the total supply of health equipment and the supply of equipment per head for the population. Their use enables waiting times for NHS equipment to be cut.

The private sector often acts as pacemaker for the public sector, making advances in services and techniques which the public sector can follow. Some of the innovative treatments are available first in the private sector, and spread over into the state sector once their value and efficacy have been established. In both health and education it is not so much the financial rewards which draw people to the private sector; it is the attitudes and conditions they find there. The weight of bureaucratic compliance and the endless form-filling are absent, and personnel have more time to interact with those they are serving. The parallel private services do not undermine the state services; they bring about their improvement.
 

My top read this week is Squandered: How New Labour are Wasting Over One Trillion Pounds of Our Money, by David Craig (£7.64 + postage).

The UK government has increased our taxes by around £1000 billion over the last decade (that's an extra £50,000 per household). And what have we got for it? Slick, world-class health and education? A welfare system that really helps people back into work? Or a bigger, fatter, self-serving bureaucracy?

Silly question, really. David Craig's new book shows how the tsunami of extra cash (our extra cash to be precise) has been squandered by department after department. It's a triple whammy of f incompetence, cover-up and cuts. Craig exposes a story of woeful mismanagement that has produced more bureaucracy rather than better service, squandered astonishing amounts of our money, damaged our life and rewarded the person responsible with the keys to Number Ten. Would be comic if it weren't so tragic.

Learn more and buy it here.

Behavioural economists tell us that humans aren't rational and thus that carefully crafted regulation can be better than laissez faire. Possibly so, but then public choice economics tells us that "carefully crafted" ain't what regulation ever is. The idea is thus rather better than the reality.

How addicted do drug users get? Not very according to the latest figures: even with crystal meth only 5% of users actually become addicts.

Ripples of the credit crunch or how you can now buy (certain) airline tickets with PayPal.

On airlines, those limits upon liquids or gels in baggage: are these by volume or weight?

Greenhouse gas efficiency is indeed increasing.

A very efficient (if rare) method of making money.

And finally, how modern political reporting would have covered one of the great political debates of the past.

Our Senior Fellow in Transport, Professor John Hibbs OBE, alerts me to a new extension of regulation in the bus industry. The Certificate of Professional Competence is already a requirement for any business engaged in public road passenger transport, but from September it will be made a requirement for drivers too.

At a cost of £240, new drivers will be required to take a four-hour theory test, even though that will cover the NVQ that many companies already demand of their drivers, and naturally (since this regulation emanates from Brussels) it will cover not just safety but subjects such as 'customer care', 'transport in the economic context' and 'role in the company'. Existing drivers will have to undergo 'periodic training', involving 35 hours attendance to meet the same criteria.

Well, I love the idea that my bus driver should be trained to drive safely, but this seems to be over-egging it. It won't improve on what responsible operators already do. What it will do is load the industry with extra costs, which the large groups will be able to bear but smaller operators will not be. So new competition will be thwarted, and today's legions of perfectly well qualified part-time drivers will find themselves out of work because their hours don't justify all the cost and training. The impact will be most severe for the small firms, usually personal or family businesses, that today provide private hire and contract services of various kinds, who (thanks to current fuel prices and of course taxes, work on tight margins already.

95. "The economy offers too much choice. It wastes resources and confuses people."

Some commentators say that there are too many varieties of items such as lipstick, colours of toilet paper, and types of milk on offer. They suggest that this leaves shoppers not knowing which to choose, and that it represents a waste of resources.

But these resources are not wasted if people want them. To some people they may seem wasteful, but not to the consumers. Some people prefer full fat milk. Others choose semi-skimmed or 2 pecent fat. Still more opt for goat's or sheep's milk, and some for soy milk. People have their reasons for making these choices. In many cases they express a taste preference by their purchase. Others might consider health or nutritional factors. The supermarket shelves offering their variety of milk might confuse some, but they are simply responding to customer preferences. The same is true with other products

Markets respond to demand. They supply the goods people want in the forms and varieties that are sought. Those who are good at this have resources directed their way. Those who are bad at it find themselves struggling. Henry Ford famously offered his Model-T in "any colour you like, so long as it's black."  He lost market share to rivals who offered the different colours buyers wanted.

In a planned economy one could commit the production of shoes to purple sandals of size ten. In the absence of any other footwear, people would buy them and one could point to the lack of waste in not producing different styles, colours and sizes. But the consumers would not have gained the products that satisfied their preferences.

Those who call product differentiation wasteful are those who would have the economy produce the priorities they thought appropriate and sufficient, rather than the ones which emerged from free choices by the population. Choice is the hallmark of free societies.

"Why has the London election, which seemed a few weeks ago to be on the point of capturing the public imagination, degenerated into a dull Punch and Judy show that even London's local papers can scarcely bring themselves to report?"

That's how Anatole Kaletsky began an excellent article in Thursday's Times. It's a good question to ask. Is it down to the cynicism of the media, who are only interested in "the personalities of the candidates and their gaffes?" Well, perhaps. The Newsnight 'debate' was appallingly handled by Jeremy Paxman, who seemed entirely uninterested in getting the candidates to set out their stall, preferring to provoke constant interruptions and arguments. The same criticism can be levelled at much of the coverage.

But there's more to it than that. As Kaletsky points out, the London Mayor's areas of responsibility – transport and congestion; crime and policing; pollution, housing and urban planning – are things voters really care about. So you would expect a lot more interest in the election than there is. Kaletsky diagnoses the cause of this apathy correctly: Britain'se endemic over-centralization.

The London Mayor is really only an agent of central government. His job basically comes down to spending a big budget, and nothing more. It doesn’t matter who wins – they will still be dependent on the national government for any major policy shifts. That's why so many people just don't seem to care.

I'd like to see a radical decentralization of political power. London and the English counties could have the same responsibilities as the Scottish Parliament, and raise all the money they spend themselves. Greater accountability to voters would be one advantage. Competition between local government areas would be another: there would be more experimentation in public policy and the 'exit option' (people could move if they didn't like their area's services or tax rates) would serve to drive standards up and taxes down.

It's a win-win, in my opinion. But it will take a brave national politician to give up that much control.
 

We've been holding regular events with bloggers and print journalists for about five years now. Since then I have detected a marked change in the fortunes of each side:

Year 1: The bloggers sat at the back and the print journalists asked who they were.

Year 2: The print journalists told us that blogging was utterly insignificant.

Year 3: The print journalists admitted that blogging had spread but it was all rubbish.

Year 4: The print journalists agreed that yes, blogging was becoming important.

Year 5: The print journalists sat at the back and the bloggers asked who they were.

Ronald Reagan really did have it right about government. The banks here seem to have gone through the whole cycle in only seven years.

An example of the government's expertise at creating value added regulation.

The costs and benefits of climate change: do we really want to go back to1988?

Guido's not to blame: the fake and leaked emails have come from another source and wouldn't it be interesting to know who and why?

Today's statistical games are to do with drinking and breast cancer risks. If all women in the country ceased drinking completely there would be very little reduction in deaths.

More on the effects of immigration: what effect that there is on reducing wages seems to occur to the previous generation or wave of immigrants.

And finally, something of a blunder from the BBC.

Despite the obvious monetary-induced stresses that have emerged since mid-2007, few economics commentators have questioned the role that monetary policy has played in causing this situation. In fact, monetary policy has everything to do with where we are today. The low levels of interest rates that were maintained on both sides of the Atlantic between 2002 and 2004 are the main reason why there was a surge in debt-financed activity, undertaken by financial businesses, households and government.

In the UK, inflation targeting has failed to create the conditions necessary for sustainable growth. Indeed, it has more than failed; it has actually been a significant cause of the credit boom. The problem with all static policy targets, whether they are for monetary variables, the currency or inflation, is that they work only so long as they remain consistent with longer-term equilibrium between supply and demand. Inevitably, however, they are framed by politicians and civil servants looking into the rear-view mirror.

Had it been in place earlier, inflation targeting inflation might have prevented some previous acts of economic vandalism. But it is hard to establish a rigid policy framework capable of accommodating future changes in the economic environment. Worse than that: the goal of monetary policy becomes solely to achieve the target; policy makers become blind to other evidence that suggests a change of course might be appropriate. The problem in the UK has been that the inflation target was not designed to accommodate a situation in which there was excess domestic demand at the same time as significant downwards pressure on inflation.

Because the policy framework established by Gordon Brown in 1997 was so narrow, the MPC was encouraged, if not mandated, to ignore obvious signs of overheating in the economy. The result was that the policy signal became stuck on Go.

The MPC should be given a broader remit. This may still have inflation at its heart, but it should also be made clear that policy must be formulated to ensure that the UK is on a sustainable growth path. Sometimes this may mean that inflation deviates from an explicit target – but on the basis that this is consistent with a wider balance being maintained in the economy.

Richard Jeffrey is Head of Securities at Ingenious and is a member of the ASI's regulatory action group.

94. "Business doesn't care about consumer safety, and cuts corners by economizing on safe conditions for its workers."

What private business wants most of all are satisfied customers who will not only come back, but tell their friends. A reputation for unsafe products is the last thing a business needs. A toy company with a reputation for products which injure children is not going to sell many toys. An airline with a bad crash record tends to be avoided by travellers, as does a railway company, state or private, which kills its passengers.

It is often a good thing to have industry-wide safety standards. They help impart general confidence and inform on how safety is best maintained. Best practice can become the norm. The industry itself should be consulted on this, however, because they know better than any outside inspector can. In many cases a voluntary code policed by the industry itself is satisfactory. In others, legislation incorporating their advice may be needed. But the notion that they don't care about product safety is profoundly wrong. And the notion that some bureaucrat sitting in Whitehall or Brussels with no knowledge of the industry is the best person to lay down rules for product safety is equally wrong.

It is also true that a contented, motivated workforce tends to be more productive and less prone to disruption. It is not in the interest of business to have casualties among its workers. Again, it is good to have the industry's input into safety standards, because they know the conditions. As the economy becomes more prosperous, and as technology advances, it becomes possible to achieve and insist upon ever higher safety standards.

State industries in the UK and abroad are not safer for customers or employees than are private businesses. If anything, it is the prosperous private industries which can afford better safety standards, just as it is the rich economies which can do so.
 

I'm suffering from an overdose of headlines again.

This time, the scare is vitamin tablets. A Copenhagen University among 230,000 people, we're told, says that taking vitamin pills might not do you any good and might actually do you positive harm. Really?

Well, I'm no biochemist, and not even in the pay of any pill producers. But the headline sounded pretty daft to me. And I've never really trusted Danish science after the way they beat up Bjorn Lomborg so mercilessly instead of getting to grips with his arguments. Yet the story was so well-spun by its promoters that I had to read quite a long way down the coverage before I could get a balanced picture.

It took a lot of reading to discover that even the spinners of this story aren't saying that a daily multivitamin pill will do you any harm. They're talking about people taking really big doses of a single supplement - Vitamin A, E, C, Beta-Carotene and Selenium. I discovered that the researchers had started by reviewing 815 (some reports say just 467) clinical trials. But a lot of these were studies on very sick people, whose experience is probably not very relevant to the rest of us. Then, it seems, the reviewers eliminated all but 68 because they showed no deaths. Yes, well that would skew things a bit, wouldn't it? By the time they had eliminated the Selenium studies (which showed a reduction in deaths), they were down to less than half a dozen studies, on which the scary headlines are based.

Well, scary headlines sell newspapers and a balanced appraisal of complicated science doesn't. Ask Bjorn Lomborg.