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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

Inciting violence

Written by Philip Salter | Saturday 16 January 2010

It is common parlance to hear that we should be free to speak, excepting of course if we incite violence. This has been especially common in the case of Islam4uk, where their defense rests principally upon the fact they have not been involved in promoting violence. Despite its ubiquity, I have never been entirely convinced by this position.

I would suggest that the promotion of violence is arguably not a valid excuse with which governments should be allowed to infringe upon someone’s freedom of association and speech. My objection is both deontological and based on the consequences of banning these freedoms. It is objectionable on deontological grounds because in a free society, people should simply be free to associate and speak freely. Instead of pulling people up for the possible results of their actions, their active part in or association with real violence against others should be the litmus test for infringing upon their liberty.

However, not everyone desires a free society, so perhaps my consequentialist objections could carry more weight. Firstly, it far from clear that there is less violence as a result of people being banned from inciting violence. This might seem counter-intuitive, but by forcing views (however abhorrent) underground, it is possible that more violence might result. It would thus be illogical to ban such groups. Secondly, as history teaches us, there are occasions where violence (particularly against those in political power) was morally defensible. As such, inciting violence is not always morally wrong and it is perhaps best left out of the hands of politicians to decide when it is and isn't.

This is difficult issue, so I would be interested to hear any thought for or against this position.

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Climate change and energy efficiency

Written by Alexander Ulrich | Saturday 16 January 2010

Whether you believe in man made climate change or not, you probably think that energy efficiency is a good thing. And luckily in this respect, the goals of most climate change fanatics (a couple of Guardian columnists excepting) are compatible withd the interests of businesses. However, most tend to ignore this fact and go on advocating for sanctions on businesses, despite the fact that the primary goal of both interest groups is best met in another way.

So how can this goal be achieved? One solution which has been tried  is to hold a meeting between the world's political leaders and let them 'almost' come to an agreement committing them to strangle their domestic industries in order to achieve some arbitrary goal in the reduction of CO2.

The other solution is for governments to let businesses use their profits to invent and invest in technological improvements through a more business friendly tax system. Would all of the profit then go to technological progress? A great deal would, because it is a core interest of companies to develop more efficient ways of using energy to stay ahead.

The current tax levels force companies to stay inefficient because they either can’t afford to innovate. Giving companies an incentive to survive by letting them compete in the global market would lead to more efficient ways of producing goods and would drive less efficient producers out of the market. This would lead to lower energy usage, which is essentially the common goal. Thus competition, not cooperation is the key to decreasing energy use.

So what are these government leaders waiting for? The answer is that many leaders (particularly in the West) have bought into the idea that businesses are essentially evil. We have a saying in Denmark that is fitting: 'It’s hard to escape if you have painted yourself into a corner while painting the floor'. It looses something in the translation, but I hope you get the point.

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Islam4Uk: An issue of freedom

Written by Charlotte Bowyer | Friday 15 January 2010

As of today, Islam4Uk and its various guises have become illegal organizations, thanks to the discretion of Alan Johnson and 2000 Terrorism Act. Johnson’s justification for proscription is that that the group “unlawfully glorify the commission or preparation of acts of terrorism." In essence, the group openly takes a positive view of terrorism. Although members of the group’s previous incarnations have gone on to commit acts of terrorism, no member of Islam4Uk itself has been linked to any crimes of this sort.

The group’s main wrongdoing, and the justification for their proscription, has been to hold particular beliefs and to express them in such a way that the extreme majority of the UK are shocked, offended and appalled by them.

This should not be a crime. "If the group or individuals break the law, they should be prosecuted; but to proscribe the group as a preventive measure flies in the face of free speech. If we were able to ban organizations simply because we didn’t like their professed end goals, surely enough support could see the Labour party driven underground. Besides, banning an organization does nothing to change the attitude of its members.

An alternative way to deal with Isalm4Uk would have been to remove the income support that a number of the group appeared to live off, namely welfare. This would make sure that less public money was put towards enabling the group to have the time and means to propagate views that the vast majority of the nation find repugnant.

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A collectivist you might agree with

Written by Wordsmith | Friday 15 January 2010

Freedom, morality, and the human dignity of the individual consists precisely in this; that he does good not because he is forced to do so, but because he freely conceives it, wants it, and loves it.

Mikhail Bakunin

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Competing schools

Written by Philip Salter | Thursday 14 January 2010

I stopped reading The Economist a while back, but yesterday by chance I happened upon a blog on their website that reminded me why I was so keen to cancel that subscription.

It is on education and gives undue credit to a thesis set out in the abstract of this paper and endorsed by Matthew Yglesias in a blog here. It is perhaps best summed up in the following statement by Mr Yglesias’:

Colleges and universities compete with one another largely by trying to attract the best applicants. That lets you screen and have the best students. Which then helps ensure that your students go on to be successful, thus improving your reputation. Missing from the circle of life is any thought that you might have to actually do a good job of improving the skills of your students.

And so, for Mr Yglesias, the solution is to limit school choice. The Economist follows this logic stating that:

One tricky part about introducing competition into schooling is in setting up the market to reward high quality teaching rather than reputation.

And goes on to argue that:

We want teachers to do their best. But if the most important thing in education is to be around the right people in the right place, then parents with the financial ability to do so will opt out of the system, reducing the average ability of the students remaining in the system, and making teachers' task harder.

The principal mistake is these authors’ failures to acknowledge that we currently have the very problem that they are wishing to avoid. An education system with profound social, economic and qualitative differences of schooling, determined by a postcode lottery. Thus, positing the fear that a free market will lead to these problems is misleading. As such, the question needs instead to be asked would a free market be less or more equal than the current system (if equality is your aim).

Also, in dealing with the issue, no consideration is taken as to why teachers in schools don’t teach well. The chief answer is an absence of competition. The key to creating this does not lie in another distorted market that will invariably bring its own unintended consequences, but to set schools and parents free.

For this we can turn to Adam Smith. Although he was in favour of some taxation to help fund schools, let it not be forgotten that he also endorsed and saw the merit of parents additionally paying school fees directly to teachers to ensure that teachers' positions and careers are garnered, secured and advanced by the quality of what goes on inside the classroom.

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Stepek, booms and the President of Georgia

Written by Dr Eamonn Butler | Wednesday 13 January 2010

I was interested to see this remark by the hugely intelligent John Stepek of Money Week, in one of his morning bulletins:

Every government, authoritarian or democratic, is terrified of growth slowing. Why? Because they’ll lose their jobs. Whether that’s at the end of a rope or more benignly at the ballot box doesn’t make any practical difference in economic terms. The fact is that the people in power will always do their damndest to keep a boom going for as long as possible. And that’s what ultimately does the economic damage.

Absolutely spot on. For some time, particularly following the credit boom-and-bust, I have wondered (rather worrying) if democracy is our problem – that politicians simply have to keep promising higher spending and lower taxes to win elections. But even ministers in authoritarian governments have told me that they face the same sorts of problems. Maybe they don't bother with elections, but they still have to cultivate some kind of public acceptance. And of course the public want booms because everyone seems to benefit from them. The inevitable downturn, you can blame on someone else – greedy bankers, American imperialists, whoever – so few people actually make the connection.

Now, though, is a good time for governments to make the connection. I would like to see the UK and US in particular fess up to the fact that big over-expansions are what produces big crashes. Once they do fess up, then we can do something about it. Like have some kind of constitutional limits to government spending, borrowing, debt, and tax levels. This is exactly what the President of Georgia – one of the fastest-growing countries in the world, following its economic liberalisations – wants to do. His Liberty Act would amend the constitution to cap government expenditure at 30% of GDP (two-thirds of ours), budget deficits at 3% (a quarter of ours) and public debt at 60% (about a sixth of ours, if you take all the under-the-counter debts into consideration). And he is coming to London to explain it to the Adam Smith Institute, on Friday 12 February at 6.30pm.

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The CRC should be scrapped

Written by Dr Eamonn Butler | Wednesday 13 January 2010

I got one of those phone calls from a PR agency, asking a series of questions on how I (as a 'stakeholder', whatever that is) view their client. Often these calls aim partly to give us 'stakeholders' a subliminal message ('how aware are you that XYZ Corp helps old folk/ loves cats/befriends orphans/sponsors charities/improves nutrition...sort of thing). But for the most part, they are just trying to find out what 'opinion leaders' actually think of them.

Well, in this case the client was the Commission for Rural Communities (CRC), and my answer to that question was 'not much'. I was appalled when I got this quango's first report – a real door-stopper of a publication, complete with its own DVD, and hand delivered no doubt to all of the Westminster think-tanks as well as MPs, journos and who knows who else. It must have cost a fortune. And last year they produced another 49 separate publications, a few of them on the same sort of scale.

Mind you, the rural affairs department DEFRA gives them £6.7m of our money, so they're not pinching pennies, and with a staff of 80 they have plenty of people. Their motto is 'tackling rural disadvantage', and they see themselves (so their PR person said) as a 'voice for rural people and buisnesses', an 'expert adviser to government and others' and yet, paradoxically, 'an independent watchdog'.

Independent my bahookie. This is a quango set up by Blair & Co in 2005 after they had been shocked by the scale of the Countryside Alliance marchea on London in response to the proposed foxhunting ban, particularly the enormous 2002 rally. The 407,791 protestors – the largest civil-rights march in UK history – argued that Blair's effete metropolitan government didn't have the faintest understanding of countryside issues. The CRC was the government's attempt to show its concern – at our expense. Naturally, like all quangos, it has grown in budget, personnel, and remit. Unelected, it pushes its own agenda on rural communities, while claiming to understand and empathise with them.

The CRC should be closed down. Saturday 10 July would be a good day to send out the redundancy notices, the anniversary of the first (120,000- strong) Countryside Alliance march in 1997. It wouldn't just be taxpayers who rejoiced.

See Dr Butler's new Alternative Manifesto here.

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Wind generation – A fair weather friend?

Written by Nigel Hawkins | Wednesday 13 January 2010

The Daily Telegraph letters’ page is normally dominated by either the eclectic or by the disgusted of Tunbridge Wells brigade.

However, a letter by one Dave Cooper published last Saturday struck me. Writing from Callander in Scotland - famous as the location of Tannochbrae in the BBC’s classic Dr Finlay’s Casebook series - Mr Cooper confirmed that, after a very cold night, not one of the 20 odd windmills visible through his windows was working.

Meanwhile, the Prime Minister - in true Dad’s Army style - was telling the electorate ‘don’t panic’ about the availability of gas supplies, although the UK’s storage capacity is minimal. Furthermore, the Government has just launched Round 3 of its ultra-ambitious off-shore wind generation programme. This Round seeks to raise off-shore wind generation capacity by 32,000 MW, with the potential for 6,400 turbines to be installed.

With the EU’s top two utilities – EdF and E.On – weighed down by a combined net debt of £70 billion, notwithstanding the heavy investment requirements in their domestic markets, the chances of these targets being achieved within a decade are minimal. Indeed, in the words of Dad’s Army commander, Captain Mainwaring, ‘we are branching into the realms of fantasy’.

What is paramount for the UK is new base-load generating capacity. Hence, every effort must be made to persuade the UK’s big six integrated suppliers – EdF, E.On, RWE, Iberdrola, Scottish and Southern Energy and Centrica – to invest in new nuclear-builds.

As set out in last year’s ASI publication – Re-energizing Britain - long-term off-take contracts created by the imposition of a Low Carbon Obligation on electricity suppliers, a Treasury debt indemnity to reduce the cost of capital and pro-active efforts by the Government to minimise planning delays are key.

Incidentally, have any bloggers, like Mr Cooper, seen non-operational wind turbines during the recent cold spell?

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Old ways

Written by Tom Clougherty | Tuesday 12 January 2010

I’m currently reading a biography of Gladstone, the 19th Century Liberal prime minister, by Philip Magnus. It was first published in 1954 and is currently out of print. Nevertheless, it’s a fascinating read, and is fairly easy to pick up second hand on the internet.

One tidbit I picked up on this morning is that when Gladstone was Chancellor of the Exchequer, it was the practice to make every tax contained in the budget the subject of a separate bill in Parliament, to be debated and voted on by both houses, rather than just approved in one go by the ruling party.

Such a system certainly has advantages: it would ensure a far greater degree of budget scrutiny, and would also place a roadblock in the way of unpopular tax rises. Forcing MPs to vote on each particular tax would also make it very clear to their constituents where they stood on fiscal issues, and increase accountability.

So perhaps it would be a good idea to return to such a system. On the other hand, I can easily imagine some downsides: such a budgetary process would probably be seized upon by special interest groups, who would distort it to their own ends. Political horse-trading and pork-barrel politics might increase as government whips struggled to secure support for individual measures, and principled reform of the tax system might be made that much harder.

What do readers think? Are the old ways the best?

P.S. A few pages on, and I discover that it was actually Gladstone who introduced the consolidated finance bill, in order to get the repeal of the paper duty through the Lords in 1861... 

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In place of a thousand words

Written by Tom Clougherty | Tuesday 12 January 2010

This graph says a lot about Gordon Brown's management of the economy. Starting in 2000 (the last time we had a budget surplus) and continuing to the present financial year, it shows public sector net debt (purple), public spending (red), tax revenues (bliue), and the deficit (green) as percentages of GDP. The two big shifts were (1) after Labour's second election victory in 2001, when spending started to outstrip tax revenues and the budget deficit hovered around 4 percent, and (2) when the financial crisis struck and the country moved towards recession, with falling tax revenues, rising spending, and a ballooning deficit.

One interesting thing to note is that tax revenues have remained fairly constant as a percentage of GDP, averaging just under 36 percent over the last decade, within a range of 34-37 percent. It seems to follow that - even assuming government continues to do the things it currently does - it ought not to spend more than 36 percent of GDP. That's still too high for my tastes, but from where we're starting it would be a sensible target for an incoming government to aim for.

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