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"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice" - Adam Smith

Tractor production in the Soviet Union

Written by David Rawcliffe | Saturday 26 September 2009

The Department for Environment, Food and Rural Affairs has just published a 48-page strategy document called Safeguarding our Soils. The driving concern behind the document, as Hilary Benn explains, is that: “good quality soils are essential to achieve Defra’s goals of a thriving farming sector and a sustainable, healthy food supply".

The government plans to sort things out by “improving our evidence base, providing information and guidance to those who are actively managing our soils, and using regulation and incentives". Rarely will you find a worse example of governmental idiocy, arrogance, meddling and incompetence.

It is idiotic because farmers do not need regulation and incentives to encourage them to look after their soil. They have a pretty good reason to do so already – because they have to grow stuff in it.

It is arrogant because the government feign to know more about soil than farmers themselves. Farmers are in the best position to determine the optimal usage of their land, bearing in mind the costs and benefits of different strategies in particular circumstances. If further research is needed, then the farmers who stand to benefit will fund it.

It is meddlesome because the government have no right to tell landowners what to do with their land. If I want to dig up all the fertile, healthy soil in my field and replace it with salty, lifeless dust then that’s my business alone.

And it is incompetent because the farming regulations are an insanely complicated bureaucratic muddle. This new strategy comes on top of the EU Thematic Strategy on Soil Protection, CAP cross compliance, Environmental Stewardship, the England Catchment Sensitive Farming Delivery Initiative and the new Code of Good Agricultural Practice.

Central planning of food production failed in Soviet Russia, it failed in Maoist China and it fails today in Stalinist North Korea. The best thing the government can do to safeguard our soil is to do nothing at all, and in the words of Arthur Young, let “the magic of property turn sand to gold".

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3 years and 9 months for Ramsay Scott

Written by David Rawcliffe | Friday 25 September 2009

Take pity on Ramsay Scott, a 21 year-old man sentenced on Wednesday to 3 years and 9 months in prison for firearms possession. The student, who has been diagnosed as suffering from Asperger’s Syndrome or a schizoid personality disorder, had bought £20,000 worth of gun components on the internet, and amassed a collection including pistols, sub-machine gun parts and ammunition.

There is no evidence whatsoever that Scott had ever harmed anyone else with these weapons, nor that he had any intention of doing so. As Lord Uist remarked to the High Court in Edinburgh on sentencing him:

It is probably impossible to say what, if anything, you would have done with the weapons had the police not intervened.

He explained that Scott was guilty not because he had actually hurt someone else, but because:

There must have been at least the possibility that you would have used them to cause injury to others.

The law that supports this judgment is grossly unfair in three respects.

Firstly, no free society should lock up its citizens unless it can prove that they have harmed, or intend to harm, others. It is not enough for politicians and judges to talk about the ‘danger of guns’ or the ‘good of society’; they must justify making a free individual, Ramsay Scott, a man who has harmed no one, into a captive of the state for almost four years. If this principle is lost, then many of our freedoms go with it.

Secondly, if the government is going to lock up people for owning harmful objects, it should arrest anyone who has a carving knife, a petrol can or a pair of fists. It is not enough to argue that guns are ‘weapons’ or ‘designed to kill’: the evidence suggests that to Scott they were nothing more than a hobby; they were no more a weapon than his cricket bat.

Thirdly, the punishment is far severer than those handed down to terrible men who have actually harmed others. On the same day as Scott received his sentence, an unnamed 15-year old boy was sentenced to two years by Sheffield Crown Court after punching a man and killing him for not giving him a cigarette, while in Northern Ireland, Ciaran McFall was jailed for three years and 6 months by Antrim Crown Court for sexually assaulting a 13-year old girl.

The Firearms Act should be repealed.

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Property taxes

Written by David Rawcliffe | Tuesday 22 September 2009

As Tom commented here yesterday, ahead of his party conference speech, Vince Cable announced that the Lib Dems' plans for a 0.5% annual levy on homes worth more than £1m.

No-one explains why this is such a terrible idea as well as the Lib Dems themselves, who have long campaigned against a Council Tax based on property values. As their own website convincingly argues:

The tax "is based on value of your home and takes no account of a person's income and their ability to pay," whereas “fair taxation is based on ability to pay or income."

The argument applies just as well here. A levy on expensive homes would not target those most able to pay. It would target those who happen to live in London and the South East. It would target those who get caught up in property booms, and feel no positive effect from a rise in the nominal value of their house. It would target those who have previously worked hard and prefer to stay in their lifelong homes after they retire. It would target those who choose to live in larger houses with an extended family. And inevitably, it would force some of these people out of their homes.

More generally, the question we should ask is this: should home-owners, who have paid taxes on their income throughout their lives, and who will pay tax on their estate when they die, be made to pay a yearly sum to remain in their own homes? The Lib Dems' website is right: of course they shouldn't.

What's more, according to the Lib Dems, the tax "is costly to collect and administer."

In order for the tax to be levied, homes must be regularly and accurately valued, a laborious and expensive process. Valuations would have to be made for many homes that would not even reach the threshold, and could at best be an informed guess of what a home would really fetch on the market. Protestations and appeals over valuations would no doubt be commonplace. The Lib Dems are quite right: property taxes are deeply unfair and extremely costly. They would do well to listen to themselves, and drop the idea.

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The economic facts

Written by David Rawcliffe | Thursday 17 September 2009

Anyone who thought Gordon was the last person in Britain to recognise the desperate need for cuts should pick up a copy of Wednesday’s Guardian. Yes, there is someone left behind, someone even more deaf to the truth, someone even more pig-headedly allied to their big-state creed, someone even more hopelessly set against the surge of public opinion, and, yes, it’s Polly Toynbee.

Her latest column “Spend now, pay later" (sadly not a DFS advert) tells us that:

  1. “There is no urgent rush to pay down a deficit."
  2. “There is no danger of not sustaining our triple A-rated debt."
  3. “Low inflation makes [the debt] relatively cheap to run."
  4. “Rapid cuts are not necessary, while there are tax rises that would be less painful."

Let’s look at the facts:

1. The National Debt currently stands at £800bn, that’s £32,000 for every family in Britain. It stands to increase to £1,400bn by 2014. We’ve also got £1,120bn of pension promises to pay, and £1,500bn of liabilities through the nationalized banks.

2. Britain’s AAA rating was only saved by Conservative promises to cut spending, and would be in jeopardy if cuts were abandoned.

3. Even at historically low rates, government debt will cost more to service than we spend on education. Given the inflationary time-bomb set by printing £175bn to fund spending, holding interest rates at record lows, and forcing banks to extend credit, this is only going to increase.

4. The average tax burden is already 37% of income. The state spends 44% of GDP and directly employs one in four of the British workforce. Firms and individuals are already fleeing high-taxes to more competitive nations abroad.

The British state is a clumsy giant, suffocating the private sector under enormous taxation and regulation. It feeds its enormous gut by borrowing on our behalf, building up debt for our children and grandchildren, and spewing money aimlessly and unproductively across the economy. It has never been so urgent to cut spending, to let the private sector prosper, to pay off this enormous debt, and to allow the growth that will bring better times.

You can’t borrow your way out of a recession, and you can’t tax your way to growth. The only cure to our economic woes is a drastic reduction in the size of the public sector. Adam Smith knew this, Cameron has caught on earlier this year, and even Brown’s starting to get it. When will Tonybee realise she’s wrong?

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A creative department

Written by David Rawcliffe | Tuesday 15 September 2009

As an example of dodgy government statistics, the Taking Part Survey* by the Department for Culture, Media and Sport takes some beating. In an effort to prove their success at encouraging participation, they’ve come up with some gems of creative terminology:

  • ‘Attending an art event’ stretches to seeing “street arts (art in everyday surroundings like parks, streets or shopping centres)".
  •  'Visiting a historic site is as easy as going to “a city or town with historic character".
  •  It counts as using a public library if one “used a computer outside the library to view the website".
  • The most popular way for Britons to participate in an arts activity in 2007 was by “buying original/handmade crafts".
  • The list of “active sports" includes snooker.

Shameless.

*Technical Note PSA21: Indicator 6", “annual data 2006/07", “Final assessment of progress on PSA3: complete estimates from year three, 2007/08." All published since May 2008.

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The council housing debate

Written by David Rawcliffe | Saturday 12 September 2009

Wednesday saw both a government promise to build 2,000 new council houses across England, and a critical report from the Audit Commission explaining that there has been too much focus on building council houses, at the cost of maintaining the existing stock.

The response from the main parties has been one of predictable point-scoring, with the Government declaring that they, “reject any claims that there is too much emphasis on new house building," while the Conservatives were sure that, “there is a powerful case for renovating rather than demolishing rundown housing stock," and the Lib Dems complained that Labour was, “denying councils the money they desperately need to improve local housing."

Bickering over how best to provide housing, no-one pointed out the obvious: that no government, however well-intentioned, well-managed and well-resourced, can possibly hope to run something so complicated as the provision of housing for two million people. The political parties don’t send out press releases telling us how they think it’s best to provide bananas, or cars, or holidays, so why do they think they know what to do with houses?

The moment that government realises the arrogance and the folly of Soviet-style central administration of low-cost housing, is the moment the lives of those stuck in council houses will start to improve. Council houses should be sold off and the government should build no more.

So what instead? In the long-term, we should abandon the failed welfare, education and economic policies that generate state dependency, but in the short-term we should look to the system of housing allowances which give the consumer the choice of where they want to live, and leave provision to the market.

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Would a department by any other name...

Written by David Rawcliffe | Tuesday 08 September 2009

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…

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Time for forward-looking policies

Written by David Rawcliffe | Monday 07 September 2009

As the signals intensify that the recession may be coming to an end, we have a chance to take stock of the damage done to the economy. At first glance the figures look pretty unpleasant, but before we despair, it’s worth stepping back and taking a broader view over the last sixty-five years:

 
The graph shows the total output of the UK economy in each quarter between 1955 and today, adjusted for the seasons and changing prices. Even the current recession, the steepest and deepest of the period, seems relatively insignificant in this context – the economy is still bigger than at any time before 2005.

Of course, the recent contraction has not been evenly spread across regions or industries, and the hardship for many has been terrible, but the bigger picture is clear: the recent crisis has been little more than a hiccup in decades of sustained growth.

We should maintain this sense of perspective not only in assessing the harm wrought by this recession, but in developing policy for the future. The living standards of the next generation will not be chiefly determined by the severity of cyclical fluctuations, but by the long-term rate of growth in the intervening years.

In responding to the current crisis, and to the wider ills of society, a brave and forward-thinking government will bear this in mind, and pursue goals that do not simply address the problems of today, but recognise that economic growth offers the best solutions to the problems of tomorrow. It will accept that short-term sacrifices are necessary for long-term gains. It will encourage competition and innovation; it will reduce taxation and spending, and eliminate subsidy. It will ensure a productive workforce by educating and training the workers of the future, liberalising the labour market, and demolishing the benefits trap. And it will stimulate investment through price stability and fiscal prudence.

Or perhaps, as ever, it will succumb to the temptations of short-term, politically-motivated policy.  

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Scrapped for cash

Written by David Rawcliffe | Saturday 05 September 2009

The SMMT (the motor industry’s lobbying group) has this week been selling the ‘success’ of the government’s scrappage scheme for old vehicles, with the news that sales are up 6% on a year ago.

Readers (and the BBC which reports the story) should cast a more critical eye over the scheme. Setting aside the senseless waste of destroying tens of thousands of roadworthy cars and the catastrophic damage to the used car market, the real outrage is that the vast majority of the £300m allocated to the scheme ends up in the hands of foreign firms and workers. Of the top ten cars sold in Britain in August, only the Vauxhall Astra (in 7th place) is built here. None of the manufacturers are British.

As we struggle through the recession, Brown and Darling are happily dancing to the tune of the lobbyists, taking money from British firms and workers and dishing it out abroad. More of their stimulus? No thank you.

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Why greed is good

Written by David Rawcliffe | Wednesday 02 September 2009

FSA chief Lord Turner, interviewed recently in Prospect magazine, calls much of the banking industry “socially useless", attacking its “excessive activity and profits." The City’s response to these criticisms has been sensible, but bankers have been afraid to make explicit the crucial counterargument: that making money is, in itself, socially useful.

The argument is so simple as to be trivial: firms, provided they are subject to laws preventing theft and violence, can only gain revenue by selling things that people want; they can only make a profit if they sell these things for more than they cost to produce; and in the process of production they employ people who prefer that job to any other they could find. That is, profit-making firms create wealth (in the broadest sense of the word) for their customers, owners, and employees. They take wealth from no-one.

Turner talks vaguely of the banks failing to be ‘socially useful’. The truth is this: any industry that makes money is ‘socially useful’, in the very concrete sense that it makes all those involved better off. Banks made enormous amounts of money over the last decade because they promised something extremely useful: the efficient distribution of capital and risk. The wealth they created was found in the share prices and dividends of banks, the welfare of their customers, the pockets of their employees, and the coffers of the exchequer.

This is not to say that the usefulness of an activity should be judged solely by the profit it makes, nor that people never behave recklessly and make costly mistakes. It’s true that bankers’ remuneration packages were ill-designed, some financial instruments were poorly understood, and the financial sector grew larger than proved to be viable. But the problem with the banks was not that they sought income, nor that they made profits, but that they made poor decisions, and eventually suffered huge losses. In regulating the banks, the government will make a huge mistake if it sees profits as the enemy rather than the goal. The government should ignore Turner’s suggestion to “reduce the size of [the banking] sector or apply special taxes to its pre-remuneration profit," and instead allow it to seek profit, through intelligent regulation, disposal of nationalised firms, and minimal taxation.

The desire to generate profit has long driven men and women to find mutually beneficial trades, to innovate, to compete, to generate wealth and to better the lot of society. We must harness this desire, not constrain it. “The point is," in the memorable words of Gordon Gekko, “that greed -- for lack of a better word -- is good." This fact lies at the heart of capitalist society, its truth is evidenced by our prosperity, and we must not shy away from defending it in these difficult times.

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