Adam Smith Institute

There are two rules for success: 

1) Don't tell all you know...

David Cameron has been getting some flak for suggesting that those who are on benefits and who refuse to take jobs or training when offered might lose some of their benefits. That, disaster, there might be time limits on how long they can continue to claim even. What puzzles me is not the idea, but the flak, the horror that the idea has engendered in some quarters.

For what he's actually done is exactly what everyone claims they want to happen, he's embraced bipartisanship. A few years back (in 2000 to be precise) Richard Layard and others presented a report* with a foreword by Tony Blair, who fully endorsed it. Here's one of their two crucial recommendations:

It should not be possible for a person to continue in unemployment year after year, living on benefit. Instead there should be a system of mutual obligation. The state should have the duty to secure offers of work or training for everybody within one year of becoming unemployed. And in return the individual should have the obligation to take advantage of these offers.

So, that's sorted then, this isn't some nasty right wing idea to bash the proles, it's the considered opinion of one who is both a Labour Peer and one of the leading labour market economists in the country.

Oh, and the second major recommendation?

The other key requirement is greater flexibility of wages, especially as between regions. (...) So there have to be mechanisms which allow wages to grow less fast in the high unemployment regions. In most cases the mechanism will involve a greater decentralisation of wage-setting.

* To be boringly accurate, they were talking about the EU as a whole but there's nothing in their analysis which excludes the same conclusions from being applied to the UK. 

Every American child has the chance to become President, so the saying goes. Not if their parents have anything to do with it though: let my child become anything, a janitor or a used car salesman, rather than a politician.

A stunning statistic: only 300 titles a year are translated into Arabic. Fortunately, there'll soon be another 100, including Milton Friedman's "Capitalism and Freedom". That might shake a few things up. 

If you're going to run a campaign calling for "fair pay" for everyone, shouldn't you actually pay those running the campaign for you? 

More news of dirty goings on in the US mortgage market but this time on the sales to investor side, not the lending.

That Vioxx settlement: did the plaintiff's lawyers actually have a decent case or was it a shakedown? 

The UN has passed a resolution calling for the respect for the value systems of all religions. The voting list either side is interesting. 

And finally, in entirely unrelated news governments are not handing over enough money to the UN so they are asking that (giggle) private companies might like to fund the UN.

2. "When the state gives us rights, we have responsibilities to it in return."

The state doesn't give us any rights; we give the state some powers. The rights we enjoy are not political ones given to us by some gracious authority; they are ones we owe to each other as human beings. Each right has its corresponding duty. One person's right to life corresponds to the obligation upon others not to take that life. One's right to property translates into another's duty not to steal.

We choose governments for our convenience, although some less fortunate people have them imposed by violence. They derive from our rights rather than constituting the source of them. In a free society, for our convenience we might choose to delegate our right to justice to an impartial authority of our peers. We might choose to band together for our joint defence against hostile intrusion. This is how the powers which government wields come about.

We owe responsibilities to each other. Most importantly we owe to others the obligation to respect their rights. But we do not owe responsibilities to the state; it owes to us the responsibility to carry out fairly and properly the tasks we have assigned to it. Government is not our master, to keep us in line and occasionally give us some rights for ourselves. It is our servant, employed by us to perform as instructed.

The English common law tradition recognizes that people can do whatever the law does not specifically forbid, but in the continental Napoleonic Code tradition, people can only do what the law specifically allows. This leads people falsely to suppose that the state is giving them these rights, when it would be more accurate to say that the state is recognizing those rights. Our responsibility to behave fairly and decently is something we owe to other people, not to government.

 Those that forget the pasta are doomed to reheat it.

In the New York Times, John Tierney's first column of the year gets off on the right foot, rebuffing some of the abject lunacy surrounding the subject of climate change. Hopefully this is the first sign of a changing of the tide, with the celebrity of the moment, Al Gore, cast adrift in his ship of fools, preaching his ego-driven environmental evangelicalism into the gentle breeze.

Last year, it was distressing to read and listen to the constant rhetorical allusions by Gore and others of their climate agenda to the horrors of the Holocaust. This blinkered dogmatism of the environmentalist herd can be charted back to 1989, and yes, to Al Gore when he wrote an article for the New York Times entitled "An Ecological Kristallnacht", in which he used Holocaust tragedy to defend his contentious scaremongering.

Last year's award to Gore of the Nobel Peace Prize was especially grating because one of the many deserving candidates was Irena Sendler, a 97-year-old Polish woman who personally saved around 2500 Jewish children from certain death in the Warsaw concentration camps. Having stood up against the fascist state, she continued to suffer suspicion under the communist one, devoting herself to looking after children, a life truly deserving of the Prize.

To put Gore's position in context one only needs to look at his argument. The 1989 article mentioned above rests upon his assurance to us that temperatures would rise by five degrees within our lifetimes. This doomsday prediction was as preposterous then as the current apocalyptic revelations are now. To compare such unsubstantiated nonsense with the devastating events of the holocaust is nothing short of inhumane.

With Barack Obama's resounding victory in the Iowa Democratic caucus, Hillary Clinton's presidential nomination no longer looks so inevitable. Indeed, if Obama can follow through with a victory in the New Hampshire primary next week, he will replace Clinton as clear favourite for the Democratic nomination. Watching Obama's victory speech, it is hard not to be impressed, even inspired:

He is a remarkable speaker – more reminiscent of the presidents of Hollywood blockbusters than of the incumbent – and his appeals to hope, change and unity are what have brought so many young people, independents, and even disillusioned Republicans to the polls in his favour.

But being a good president requires more than just rhetoric, and now that Obama is no longer an underdog, he will need to firm up his policy positions if he wants to make it all the way to the White House. That said, he would be a very tough candidate for the Republicans to beat. A Hillary nomination would give them a much better chance of hanging on to the White House.

US politics is going to be fascinating to watch in 2008.

We'd just like to point out that you are currently reading Britain's number 1 economics blog. (Yes yes yes, it's a tendentious measurement method, not very accurate and we don't always talk about economics. But we're still number 1! Hurrah!)

On a much sadder note, Andrew Olmstead, an American blogger and US Army Major, was killed in Iraq. He left a blog to be posted if....do read it.

Greenpeace were for biofuels before they were against them . Indeed, we could say that we're spending fortunes on biofuels because Greenpeace were for them before the scientists started pointing out they should be against them.

Shades of the European Union here, who famously pay Friends of the Earth to lobby the European Union. The expansion of big government is driven at least in part by the government funding of lobbyists whose job is to campaign for more government spending.  

And Dizzy has another update on where all that money being spent goes: try not to wince as you read it. 

Some seem to think that Adam Smith and John Nash were on opposite sides of the question. Not so.

And finally , the loneliest Lenin in the world. 

[This is the first in a new series of blogs to be published over the coming months. Each piece will look at a common error people make about free markets and the free societiy, and explain why they are mistaken. We hope readers of this blog will be able to make use of these arguments themselves, and in doing so convince others of the overwhleming case for liberty - Ed.]

1. "Only the guilty have anything to fear from surveillance or police searches."

The cry of oppressive and intrusive authority has always been that "only the guilty have anything to fear." It isn't true. Even the innocent have to fear an over-mighty and intrusive state. It has always been the case in free societies that each individual has a private domain which he or she is allowed to keep private. It's not that it holds guilty secrets, but that it holds private things that are no-one else's business.

Why should the state be allowed to open our mail, to snoop on our electronic communications, to tap our phones and to spy on us with its cameras? We are right to wonder why an innocent state would want such information about us. The mere possession of such information poses, in itself, the risk of abuse. Those with access to it are put in positions of power over others; the information could be used to blackmail or intimidate. It need not be about illegal activity, merely that which would cause embarrassment if it were known.

In free societies we put limits on the law. We deny it the right to snoop on the off-chance of finding guilt, but require it to show good cause for its investigation. We demand that it states what crime is suspected, rather than allowing it general warrants to see what it might find. We are not servants and underlings to be ordered about and kept in place by a mighty state: rather are we free citizens who sustain that state to serve us. It has no right to powers beyond those we accord it, and we do not choose to give it the right to know more about us than it needs to know in order to serve and protect us. 

Now that Mike Huckabee has actually won something in his quest to be the next President of the United States it's time to have a look at one or two of his economic and taxation ideas. As the basic one is the "Fair Tax", why not that? This is the idea that all other Federal taxes will be swept away and replaced by a 23% sales tax.

This is, to put it kindly, insane. Don't just take my word for it though, for detailed reasons as to why it is try Bruce Bartlett. 

The idea's been around for a few years now and from writings elsewhere I've had my share of ALL CAPS emails berating me when I've tried to point out the obvious errors in the idea. 

Even if the rate proposed is correct (it isn't, it'll be much higher) the idea of collecting the entire tax take at the point of the retail transaction simply won't work. We're all well aware of small traders offering two rates for the job, cash and on the books. We've now extended that to the entire economy, as we don't have the chain of people adding VAT on each part of the value they add: only on that final sale to the consumer.

Not that there's any chance of Congress enacting such a tax system, whoever becomes President, but it is slightly alarming that the Republican front-runner at this point is advocating such a system. Which of the two alternative explanations for the advocacy of the idea you find more alarming is up to you: that Huckabee doesn't know the problems with the scheme or does and is still proposing it. 

My true love sent to me: twelve drummers drumming. It probably means the twelve points of doctrine in the Apostle's Creed. The number of Gordon Brown's apostles is subsiding daily, after the sound of the election drums back in October proved a false alarm. Had he called an election then, he could have won it, though it might have been close. Now, I agree with Trevor Kavenagh of The Sun - he can never win an election again.

That's a good reason to suppose that the next UK general election will be as late as it possibly can be - in the first half of 2010. But I met Sir Robert Worcester the other day and he's still staking money on June 4, 2009, arguing that what goes down must come up, a year's a long time in politics, etc. Anyway, the prospect of overweening politicians losing their seats is always something to look forward to, whenever it comes.

Iain Dale gets a most disturbing email from Kenya . Yes it is as bad, if not worse, than you are already imagining.

Pity poor Jeremy Leggett. The man arguing for greater subsidy of renewable energy technologies manages to prove that subsidies are not needed.

Interested in winning $100? Know anything about anthropology? Willing to learn something about it to win $100? Try this essay competition. 

To prove that Netsmith is not a train spotting policy wonk type, we bring you station blogging. 

The true problem with weather alarmism (which is the practice of using any weather anomaly to prove the existence of climate change). 

Germany isn't racing towards the smoking ban quite like other European countries. Wonder why? 

And finally , if only all politicial commentary were this cogent and well argued. 

A really rather interesting result here. Various of the Great and Good are asked what they changed their minds upon over the couse of 2007. Daniel Kahneman says:

The most dramatic result is that when the entire range of human living standards is considered, the effects of income on a measure of life satisfaction (the "ladder of life") are not small at all.  We had thought income effects are small because we were looking within countries.  The GDP differences between countries are enormous, and highly predictive of differences in life satisfaction.  In a sample of over 130,000 people from 126 countries, the correlation between the life satisfaction of individuals and the GDP of the country in which they live was over .40 – an exceptionally high value in social science.

The positional competition may not be doing you any good directly, but if it raises national GDP, it will indirectly help you, and everyone else in the country.