Adam Smith Institute

Will Hutton makes a good point here :

The state and market are in a symbiotic relationship of mutual need. Regulation delivers public good. And private markets and corporations are the better because of it.

We now need a social-democratic Keynesian government.

...an activist US government took over Continental Illinois bank in the Eighties.

The situation was in fact eeriely similar. A bank with few retail deposits decides to expand by tapping the wholesale markets to borrow short and lend long. When those markets worry about the quality of lending, those wholesale funds can no longer be rolled over and the bank faces a liquidity crunch. Sound familiar yet? What do the authorities do? Well, first, they guarantee all deposits: yes, all, disregarding the previous statutory limits on deposit insurance. They extend assistance through the Fed's discount window. They guarantee to provide any liquidity needs Continental might have. (This is sounding, well, more recent, isn't it?) Then they fiddle around for a couple of months seeing whether anyone would like to take over the bank. That doesn't work, so then, well, do they nationalise it? In a sense I suppose, for the next part was that the Fed bought a chunk of the bank's bad loans ($4.5 billion) and then invested $1 billion in capital by purchasing preferred stock.

This gave them 80 percent of the equity and the bank survived, being taken over a decade later by another bank. With, for some time, continued liquidity support. 

No, I don't know whether this is the best solution for Northern Rock or not. I just rather like pointing out that Will Hutton is telling us all that we must be more socially democratic, more Keynesian, must follow the Continental Illinois path: when what we've been following for the past few months is exactly that Continental Illinois path, the one pioneered by the decidedly monetarist and free market America of the 1980s.

A friend working for a French-based bank was asked by a French colleague about holidays. The conversation went as follows:

French colleague: "How many holidays a year do you have?"

UK Friend: "23 days. How about you?"

French colleague: "I am embarrassed to tell you."

UK Friend: "No, go on."

French colleague: "I have 10 weeks off."

UK Friend: "10 weeks!"

French colleague: "But you have public holidays, of course, as well."

UK Friend: "Don't you have Bastille Day, Christmas Day, Easter holiday and so on?"

French colleague (with a shrug): "Everyone has those."

In fact the French have 11 public holidays a year, compared to 8 in the UK. The above conversation really took place, and is not a 'joke of the day.' It does, though, raise the question of why the French economy is not a bigger joke than it is.

Introducing Kip's Law : "Every advocate of central planning always - always - envisions himself as the central planner."

About such planning : would you drive more safely with a seat belt on or with a dagger in the steering wheel? 

And when such planning and regulation is applied to the agricultural sector, who benefits ? 

Another possible application of incentives : to beat welfare fraud, what if being caught meant that you could never apply for that benefit again? 

There's an idea being floated that we should abolish prisons altogether. But then what do you do with sociopaths ? 

 Gordon Brown doesn't look at opinion polls ? Good grief! The man's a politician!

And finally , what Ian Smith would do and Robert Mugabe would not, plus, an added bonus , the worst book title ever. 

As we know, Gordon Brown has announced that we're all about to be free from the great plastic bag tyranny. No longer will great gobbets of oil be used to manufacture them, emissions will fall and we'll all be ushered onwards to the Gaian Nirvana.

Except, at least if Dominic Lawson is correct here, that's not what will actually happen : 

The only problem with that is that plastic bags, though undeniably irritating when left lying around, are essentially the by-product, rather than the cause, of fossil fuel generation. Approximately 98 per cent of every barrel of oil, once refined, is consumed as petrol or diesel. If the remaining two per cent of naphtha was not used for packaging, it would almost certainly be flared off – which is pure waste.

Ah, so we're going to get the emissions anyway, without the convenience of the plastic bags, plus we'll get the emissions from whatever we all use instead: paper or perhaps sturdier reusable cotton or something. This really doesn't sound like something that's going to be beneficial to the environment, however well it might play to certain sections of the voting public.

I'm reminded of the phrase "Don't just do something, stand there!" For whenever people in government do have these bright ideas about what do about climate change, as with bio-fuels , they manage to make the problem worse, act entirely counter-productively.

A lady was picking through the frozen turkeys at the supermarket, but couldn't find one bug enough for her family. She asked the young male assistant, "Do these Turkeys get any bigger?"

"No ma'am," he replied, "they're dead." 

There may well come a time in the future when parents who choose to have children become stigmatised. Imagine the scene at an "Islington" dinner party some years from now when someone around the table mentions that their partner is pregnant. Cutlery is dropped onto plates heaving under the weight of the locally grown organic vegetables and the person is admonished for being "selfish beyond comprehension". How dare they not think of the global impact of that child. Some though are already thinking along these lines and are sterilising themselves against the possibility of lumping the world with what could be a climate tipping pile of carbon emissions, otherwise known as a child.

The right over one's womb is of course beyond question, and I do not, in any way, suggest that it should be taken from them. It is the fact that the rest of the rational population will ultimately need protecting against possible demands for legislation to be passed. We are probably not far from a world where we have to undertake "carbon awareness training" if we wish to reproduce and how to offset the carbon of the child we bring into the world. Currently many of us would laugh at such a suggestion, but I suspect if you raised that idea in environmentalist circles they would all think it brilliant and seek to implement it.

Caring for the planet through this course of action (self-sterlisation) raises a valid question though: How to reduce the carbon footprint further so as to alleviate the level of one's guilt to zero? There is a course of action that I could suggest that these people take, but I don’t think they’d like the consequences.

It was no great surprise to hear from the Transport Secretary Ruth Kelly this week that consultations are to begin on proposals for the expansion of Heathrow airport. Among the options to be examined are proposals for a 2,200m third runway and a sixth terminal.

The announcement that consultations are to begin on the expansion of Heathrow Airport has reignited the old debate between those who seek to defend the countryside and those who favour the benefits of increased air travel. These plans – which include the destruction of an entire village to make way for terminal six– have proved particularly controversial.

The issue is a difficult one. On the one hand, good airport infrastructure is vital in a globalized economy. A lack of capacity can prove damaging to economic competitiveness, whereas greater air travel can aid growth. On the other hand, the rights of property owners and communities in rural areas deserve protection.

Ultimately, the flaw lies in the premise of the debate – that this is a matter for the government to negotiate a compromise on. Indeed, the very existence of such a heated argument is a result of the decision lying in politically motivated planners’ hands.

It should be up to the airport to negotiate with local residents and landowners to try and find a solution that works for all concerned. Their interests cannot possibly be understood or represented by disconnected Westminster politicians. Where agreement cannot be reached, it should be for the common law to ensure fair and just compensation for parties affected by the expansion. Judges are far better at balancing the competing claims of neighbours than government.

Protection... takes from one man's pocket, and allows him to compensate himself by taking an equivalent from another man's pocket, and if that goes on in a circle through the whole community, it is only a clumsy process of robbing all to enrich none, and simply has this effect, that it ties up the hands of industry in all directions.

- Richard Cobden, nineteenth century free trade campaigner 

One perhaps for the more econ geeky amongst us (warning, heavy math ahead!): is the minimum wage an even more silly idea than....?

An introduction to a most interesting idea: modern societies are not more unequal than historical ones, but they have the possibility of being so. So why aren't they ? 

On the subject of equality and wealth: it seems that insisting upon greater equality really does depress wealth . 

An interesting idea on how to break the Hollywood writers' strike , if that's the sort of thing you want to do. 

Nothing comes without a cost: Social Security might indeed be a good thing, but it still has its costs . 

One way of getting rid of the remainder pile, to be sure . 

And finally , it appears that the West Lothian question has now been comprehensively solved. 

I've been waiting, with bated breath, for that delightful example of bureaucratic competence, the losing of 25 million records, to be used as an example of how ID cards were even more important. Not just important, necessary even, for, in some magical manner, the fact that the information on them will be much more important, means that the possibility of normal levels of bureaucratic competence is simply impossible.

Lo and behold, we actually have this argument being made by David Blunkett in a letter to The Times. On first reading my favourite part was this:

The first, as I have discovered in the three years since I was Home Secretary — including as the honorary chair of the Information Systems Security Association Advisory Group — is the astonishing lack of understanding about the necessity of security in the transfer of data.

Perhaps I'm being picky but shouldn't we be choosing our Home Secretaries from the pool of people who already understand these basic facts before their appointment, rather than those who find them out after their resignation? 

As the day went on I found Dizzy's refutation of his points on security. ID cards will be plagued with exactly the same problems for the system will still contain that most fallible of instruments, human beings. Mr. Blunkett's testament here is, in Dizzy's view, testes.

I then found Mr. Eugenides who has something else very interesting to point out. Mr. Blunkett is a paid advisor to a company which operates ID card systems and that company has registered an interest in contracting for parts of the UK one.

So the thought of said Mr. Blunkett telling us all that the ID card system will be quite different, indeed, super-secure, so much so in fact that the recent gobsmackingly awful security shambles shows just how vital it is that we get cracking on the new system toot sweet, doesn't surprise me.

As the risk of getting all Mandy Rice-Davies on you, well, he would, wouldn't he? 

The position of most US presidential candidates on illegal immigration seems to be, "We don't want you here, but once you're in we'll help you out." Most of them, except for the far-left Denis Kucinich, voted for the security fence along the southern border, while Edwards, Obama, and McCain have supported bills to let illegal immigrants in-state tuition at state universities. Most candidates have also voted for President Bush's guest worker programme, which would allow current illegal immigrants to come out into the open, work seasonal jobs and then return home. But apart from this guest-worker programme, most of the policies supported by the candidates are the opposite of what America needs.

If we are to treat the labour market like any other market, workers should be able to cross borders just like any other good in a free trade system. Workers come to America to pick up jobs that the nation requires, like fruit picking, but have been priced out of the American labour market by the minimum wage. The construction of a fence or other measures to curtail this practice mean that the symbiotic relationship between American industries and illegal workers has begun to break down, with the possibility of harming the American economy more than most people realize.

However, this economic thinking is far from the mindset of most Americans, who fear the threat of illegal immigrants both in terms of national security and their own jobs. Granted, workers function a bit differently than goods like bananas or car parts, possibly demanding health care, education, and other social services. But the reactionary position of most Americans toward immigrants means our candidates support policies in line with similar thinking, no matter the economic story. In reality, their position should be, "we do want you here to take those jobs that we don't want, but we won't help you out if you choose to come and then can't support yourself." Assuming that the workers cross the border to gain better employment than they could at home, a policy like this would benefit all parties involved.

You need to read this book - even though it hurts. The Bumper Book of Government Waste 2008 by Matthew Elliott and Lee Rotherham (£5.99 + postage) is, sadly, even bigger than the last edition - because there's even more waste. £101bn of it in fact. That's enough of your pennies to stretch to the moon and back. Five times.

How can a government possibly spend £280,000 on a conference on value for money in the public services? Or £100,000 in assessing whether £400,000 spent on modern art in hospitals was a good buy?

Buy it here from the ASI bookshop. 

It would appear that trying to do an AS level these days marks you out as a terrorist . Perhaps the elitism of trying to get ahead is what bothers so?

And if an AS level is such a sign, then when do they start burning all of the bookshops that stock the revision textbooks? 

An interesting little story of how a blogger was asked to help a newspaper set up a story...and ended up in Private Eye . 

This shouldn't be a surprise perhaps: more government produces more corruption . As PJ O'Rourke pointed out, when the legislators get to decide what is bought and sold the first thing to be bought and sold will be the legislators.

There's nothing quite so publically a good as a public toilet: but they don't apparently have to be provided publically . 

Yes, why not? Let's really make it the England team . 

And finally ,  a metaphor for government perhaps. Extremely complex, frequently ramshackle and doesn't actually achieve very much.