State of the nation

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Remember the days, just a decade ago, when the UK was reckoned to be the world's 4th most competitive economy? Well, the World Economic Forum (or 'Davos' as it's known, from its annual conference in the Swiss resort) had downgraded it yet again, from 12th last year to 13th now. They cite the UK's enormous and chronic public-sector debts as just one of the many causes for Britain's gloomy report card.

As they might. International economists figure that Britain is running a 'structural' deficit of around £100 billion. That's nothing to do with the crunch, and the bank bailouts, and the recession – it's the amount by which the government is spending beyond its means, year upon year upon year. And £100 bn is a big wedge of moolah. It's nearly 7% of the nation's income. You couldn't run your household by borrowing every year – you would soon run out of dough, and you would be eating bread, not spending it. And you can't run a country like that either.

So how to get back on an even keel? Britain could simply renege on its debts: but that's hardly a way to get investors and customers to trust you. It could print money and pay everyone back in worthless, inflated currency: but that creates just as many enemies, and messes up your economy to boot. We could raise taxes: but that would stifle any recovery. Or we could cut public spending: which would be uncomfortable for politicians.

If you figure that an extra penny on income tax might raise £5 billion, you see how deep the hole is. Taxes are already high (as Davos complains), and raising them enough to fill the borrowing gap is just impossible. No, the brute fact is that, just as a household in debt has to cut back on its spending, a government in debt has to cut back on its public expenditure – which has ballooned so much that it absorbs nearly half of everything we earn.

Already, Chancellor Alistair Darling has started to mutter that there are 'hard choices' ahead. Well, the time for those hard choices is now. That is why the Confederation of British Industry will publish its own proposals to slash public spending next week. Let us hope it will bolster the Chancellor's resolve. And let's hope that the Conservatives' finance team gets more realistic on this question too. Otherwise, we will emerge from a General Election with all kinds of spending promises, and no plans worked out for reducing the costs of the public sector in ways that are as painless as they can be.

To save or not to save

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to-save-or-not-to-save

The Obama administration is divided on more than just its healthcare policy. The name Obama has been synonymous with spending since he first took office in a misguided effort to stimulate economic growth. While the Obama spending program for government is no secret, it has also aimed to entice consumers to spend more money in the hurting economy through government tax credits and rebates. However, now President Obama wants to create incentives for the American people to save more money.

I am not in anyway opposed to saving, but what exactly does the Obama administration want people to do? If the American people save all the money they receive in tax incentives and government rebates then the money spent by government to stimulate the economy would have zero effect. Not only does Obama’s proposed saving program give incentives for individuals to save, but it also creates incentives for companies to donate into employees savings as well. It is as if the government is trying to counteract all of its spending measures to stimulate growth. Perhaps Obama would have more success if his right hand knew what the left was doing.

Scans for all

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scans-for-all

To put it bluntly the Society of Radiographers are a bunch of scare mongerers! Tesco, via their Clubcard, and in conjunction with a company called Lifescan, are offering vouchers that can be put towards the cost of having a CT scan. The Society of Radiographers believe this to be a danger to Tesco's customers. Stating that the low-levels of radiation are detrimental to people's health and that this promotion will create hordes of 'worried-well' people cluttering up doctors' waiting rooms. Tesco's customers should be grateful that their shop of choice thinks highly of them and offers them this deal.

The reasoning that the SoR uses for wanting this offer ended is weak and unfounded. The radiation levels are entirely safe, otherwise the company wouldn't be allowed to use the equipment it does. If people find that they've something wrong from this, and it's caught early enough then the treatment costs are lowered. Of course, having a scan would mean that many within the SoR wouldn't have an ill patient to scan in the future. Perhaps this competition concerns them. They should be encouraging this service, twith some warning about the low levels of radiation, rather than seeking its prohibition.

It's certain that Tesco would want to keep its customers alive for as long as possible and offering them the chance of an 'MOT', as they term it, is a visionary way of ensuring customer loyalty and longevity. It also saves the taxpayer money by discovering illnesses that can be treated a lot cheaper if found early. Scans for all, should be Tescos next venture, rather than books for schools.

The joy of forgetting

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the-joy-of-forgetting

The British Medical Association wants to see higher prices and advertising bans for alcohol. Meanwhile, American doctors have been praising alcohol, saying that despite the risks of over-indulging, it can stave off Alzheimer's. This doesn't strike me as good news: frankly, I don't want to remember all the stupid things I did when I was drunk.

A rubbish idea

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Yesterday saw the start of a new trial in the Royal Borough of Windsor and Maidenhead designed to encourage recycling.

Under this scheme, households will ‘earn’ vouchers to be used in local stores with each kilogram of waste that they recycle. 3,800 bins have been fitted with microchips in order to weigh household trash. There are several reasons why this trial seems somewhat idiotic.

Firstly, the council is trying to encourage its occupants to act in a ‘socially useful’ way, yet the scheme could well promote the opposite. By rewarding people for recycling as much as possible, it lowers the incentive for people to choose goods with less packaging. This distorts the market signals sent to shops and manufacturers that prompt them to cut down on unnecessary wrapping. If this were adopted nationwide, it would limit the way in which society reduces waste directly.

Such a system can be easily exploited by the placement of heavy, non-recyclable objects inside the chipped bin. While a spokesman for the trail claimed “rewards are much more effective than fines, which are complicated and expensive to administer", the council still needs to monitor the programme, which it proposes to do with on the spot checks and the withdrawal of access to vouchers - which is likely to be costly and unproductive.

This leads on to another issue: the cost of it all. Where is the funding for this scheme coming from? Landfill tax stands at £40 a tonne and a household can earn up to £130 a year through this trial, and so the setup, maintenance and payouts of the scheme can hardly be achieved through the reduction in rubbish arriving in landfill.

No, the answer is that the money will be coming out of council tax, so in effect households will be rewarding themselves for their own good behaviour. In fact, some will be rewarding the daily life of others; those with less recycling to be done such as the elderly will be subsidising payouts to families who inevitably consume and therefore throw out more.

Once you add this to the fact that the scheme forces the residents of Windsor & Maidenhead to have their recycling movements stored on an online database (what will we have monitored next, the frequency of our showers to reduce water consumption?), it can be seen that this scheme basically stinks.

BNP and the left

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bnp-and-the-left

"Labour has been forced to drop its policy of not sharing a platform with the BNP after the BBC confirmed that it is to invite Nick Griffin to appear on Question Time....Although Gordon Brown is understood to have been angered by the decision, Downing Street made no comment yesterday. Instead it was left to Labour sources to confirm that the party would field a senior figure to appear alongside Mr Griffin." (Article here)

Nothing could be more damaging to the left than for the public to hear the words, "I totally agree with you". Unfortunately it could well be uttered by Nick Griffin more than once.

Here's a few BNP polices that many on the left would be "proud of":

• The protection of British companies from unfair foreign imports
• The renationalisation of monopoly utilities and services
• Bring hospital cleaning back in-house and make high cleanliness a top priority
• More emphasis must be placed on healthy living with greater understanding of sickness prevention through physical exercise, a healthier environment and improved diets
• Develop renewable energy sources such as off-shore wind farms, wave, tidal and solar energy
• The introduction of a system of workfare for those in unemployment benefit for more than six months with compulsory work and training in return for decent payment
• Take all privatised social housing stock back under local democratically controlled council ownership

All from the policy pages of the BNP's website, if you want to scare yourself witless at the prohibitive costs of all this then click here. The BNP: the left's wolf in a red cloak.

National literacy day

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To put into context the worthlessness of marking the UN mandated National Literacy Day, the same institution puts Cuba top of the tree in its ranking of world literacy at 98.8%. Having lived in Havana for a number of months, I can categorically deny the validity of this, based upon the simple fact that a worryingly large number of the people I met were unable even to write their own name. Given that this was the major city, I hold little hope for real rates of literacy in the countryside.

Interestingly though, many of the poorest in Havana were able to speak a plethora of different languages, learnt not in the classroom but on the streets: essential in selling all manner of black market product and disreputable service to tourist so they can get hold of those precious greenbacks. The moral of the story? If you really want your children to learn foreign languages, dump them on the streets of Havana. Perhaps not. But it does go to show that human ingenuity adapts even in a heavily distorted market.

Rather than to simply celebrate literacy and condemn illiteracy, the key point to consider is how it is achieved. It certainly helps if economic development is at a point where literacy is itself as essential to being able to function as having German, French and English as second, third and fourth languages is on the streets of Havana. However, we also need a good and competitive education system, especially for the poorest in our country. The former we have, but the latter we don’t; and this accounts for the embarrassingly high levels of illiteracy among UK adults, because of – not in spite of – government interference.

For a proper understanding of literacy and all matters related to education, you could do no better than to peruse the excellent work coming out of the E.G. West Centre based at the University of Newcastle. They also have blog that can be accessed here.

Would a department by any other name...

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would-a-department-by-any-other-name

Trying to discover the government’s procedures for forecasting the impact of new regulation, I recently googled “regulatory risk assessment."

The number one result is this. Entitled “The framework for regulatory risk assessment in the Department of Trade and Industry", it’s found on the website of the Department for Business, Enterprise and Regulatory Reform, and topped by the logo of the Department for Business Innovation and Skills.

The DTI was abolished in 2007, and BERR in June this year. Brown’s endless bureaucratic rejigging has clearly proved too much for the governmental webmasters…

A failure of government

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a-failure-of-government

Click here to find out more about the latest publication from the IEA by Charles K. Rowley and Nathanael Smith of the Locke Institute.

In the Afterword to this work, Richard E. Wagner quotes Adam Smith:

“What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom."

Never a truer word...

It's not the amount of money you spend, it's the way that you spend it

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I've not normally got a lot of time for Professor Julian Le Grand but this point about NHS reforms leapt out at me:

During the same period that we examined waiting times in England in our study, Scotland and Wales, which both explicitly rejected market-driven reforms, have spent more per patient but have seen much smaller decreases in waiting times.

People like me don't run around screaming that we've got to use market mechanisms because that's what Nanny beat into us nor because we are paid agents for international capital: no, we do so because most of the time (and I certainly am willing to acknowledge that this isn't always true) the use of market mechanisms is more efficient. We get more of whatever it is that we want from the resources available by using markets than through any other method we've yet managed to come up with.

That the English system of more markets reduces waiting times (and also, as the Professor notes, increases equitable access at the same time) produces better results than the not market but more expensive Scots or Welsh systems should come as no surprise to those who remember water privatisation. England got for profit private companies, Wales a not for profit mutual, Scotland a government run company and Northern Ireland direct government supply. In terms of cheapness of supply, higher purity of that supply and lower environmental damage from that supply a decade later the best to worst in order was England, Wales, Scotland, Northern Ireland.

This will of course be the most delicious part of both devolution and of the even more fashionable localism that is being promoted. Precisely because different places will try different structures we'll see which of those structures works best in each and every different field. Forgive me if I crow and point out that yes, even in such basics as water and health care, markets seem to work better than not-markets.