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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

Blog Review 682

Written by Netsmith | Thursday 07 August 2008

More on that windfall tax idea: it, amongst many other things, breaches natural justice.

The "anticommons" is one of those hot new ideas we get occasionally. It may be hot but it's not so new. A great introduction to it here.

We used to say that with great power came great responsibility. Pity no one's told Ed Balls really.

This Olympic stuff: might not be the wisest investment of public money ever.

Sadly all too close to the truth: how your council views recycling.

Ringing the changes on the Desert Island Discs format.

And finally, this is how politicians are created.

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Rearranging the furniture

Written by Tom Clougherty | Thursday 07 August 2008

I'm generally opposed to the pointless Whitehall re-organizations the governments periodically like to carry out – they bring significant disruption and tend to generate a lot of waste. Plus, you end up with department names like "Department for Children, Schools and Families", which always makes me feel slightly sick. Does anyone remember when the Department for Trade and Industry was renamed the Department for Productivity, Energy and Industry, only to revert to its original moniker within a week? Such is the depth of thinking that Whitehall reorganisations tend to be based on.

However, this idea is not such a bad one. Gordon Brown has apparently told Cabinet Office officials to draw up plans for merging the Scotland, Wales and Northern Ireland Offices into a single Department for Nations (another awful name, but there you go). Following devolution, there is little reason to maintain three separate departments, nor is there any reason for each nation to continue to have explicit representation in the Cabinet. Streamlining the old offices into one new department with one secretary of state could even generate some useful efficiency savings.

Since we're rearranging the furniture though, I would urge the government to go a little further. They should move the housing responsibilities of the Department for Communities and Local Government back to the Environment Department, and then merge what remained with the Scotland, Wales and Northern Ireland Offices, creating a Department for Devolution and Local Government.
It's brief should be twofold. First of all, the department would liaise with devolved authorities and local councils where necessary, and represent their views in Cabinet. More importantly though, the new department should be tasked with driving power away from Whitehall. Most politicians profess enthusiasm for localism and devolution, but so far a coherent policy approach has been distinctly lacking. Making decentralization someone's job would help get the ball rolling.

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What's in store?

Written by Yohan Sanmugam | Thursday 07 August 2008

With political analysts already suggesting that David Cameron is a PM-in-waiting, most Brits are eager for change. A change from the stealth taxes, over-centralization and onslaught on civil liberties that have summed up Labour, and more noticeably, Gordon Brown.

Another crucial issue will be the EU. And to this, Cameron will bring change too.  Much of his policy towards this institution is to be commended. In July 2006 he helped to found the Movement for European Reform together with the Czech Civic Democrats. This will work towards the removal of protectionism (particularly dismantling the CAP) and usher in a free-trade platform that the EU no doubt needs to embrace. If they were to succeed, such reforms would not only alleviate the poverty of excluded agriculturalists but would also allow food prices to fall as supply increases (not to mention helping to reduce taxes).

So all is good? Well, up to a point. Trouble could actually stem from the deep-seated euroscepticism of many of his MPs. Their aversion to the EU will likely breed lethargy and leave the British government simply moaning about Europe without ever engaging or accomplishing significant reform. And as our report Eutopia argued, if we're going to be in the EU then we might as well fight our corner properly.

It will be interesting to see on which side of this line David Cameron decides to walk.

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To breed, or not to breed?

Written by Cate Schafer | Thursday 07 August 2008

Australia has had a dramatic increase in the national fertility rate, putting it at its highest rate since the 1980’s. A report from the Australian Productivity Comission said on Tuesday that that while "in a safe zone" now in terms of fertility rate, any further increases could damage the economy. An article in the (Australian) Daily Telegraph reviews the report, saying that having more children will "shift women out of the workforce while they care for babies, depressing labour supply and reducing the taxation base" – factors that could potentially hurt the economy. Further on it states, "the women having the babies would be exacerbating the financial impacts of the government".
What this article fails to mention is that more and more women are now having children and working outside the home. So, yes, there is the time they take where they are not contributing to GDP, but shortly after they are back in the workplace. Also, it puts far too much emphasis on the short-term outcome, rather than highlighting the long-term benefits of a replenished population. A growing labour force is one of the requirements of growth. While they are growing up, children are, technically, a drain on funds, but the end result of a larger labour base more than overcomes this through increased productivity in the long-run.

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Poor Gordon...

Written by Wordsmith | Thursday 07 August 2008

As for the Prime Minister himself, reports from the bunker are mixed. Civil servants who see him in his fouler moods report shouting, emails fired off in block capital letters, and the hurling of staplers at those who bring him bad news. The most recent story is that he stapled his own hand after punching the stapler in a blind fury...

Fraser Nelson in The Spectator

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Blog Review 681

Written by Netsmith | Wednesday 06 August 2008

You know, maybe there's a pattern to these things? The distribution of Olympic medals looks very much like the distribution of incomes.

Analysing the latest green report. It doesn't in fact prove what people say it proves: it assumes it.

Another analysis: those public transport systems aren't in fact (necessarily) less polluting or better for the planet than cars.

Sticking with greenery: a lecturer in journalism (yes, journalism!) recently called for censorship of climate change scepticism.

Guess what? Wealth inequality might be rising, income inequality might be rising, but happiness inequality is falling. Maybe be all actually like wealth and income inequality?

Not just for lame Vietnam movies any more: the we had to kill them to save them line apparently applies to the War on Drugs as well.

And finally, how an economist really thinks.

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Marriage and the tax system

Written by Tom Clougherty | Wednesday 06 August 2008

According to The Times' Rachel Sylvester, David Cameron, the Leader of the Opposition, and George Osborne, his shadow chancellor, fundamentally disagree over one aspect of policy – the Tories' promise to recognise marriage in the tax system.

Put simply, Cameron wants the tax system to reward people for getting married (or entering into a civil partnership), probably through the return of the married couples tax allowance. Essentially that would mean spouses could combine their personal allowances for tax purposes. This is an example of the 'nudge' economics that everyone's talking about: government believes marriage is a good thing, so they create a stronger incentive towards it.

Osborne's position is different, Sylvester says: "For him, it is not the State's job to tell people how to live their lives. He would prefer to use scarce Treasury resources to support parents, whatever family structure they are in, than to reward a childless millionaire hedge fund manager who happens to be married to a lady who likes to lunch." My guess is that he would prefer to adopt something like the proposal in Lord Forsyth's Tax Reform Commission report to "introduce a transferable allowance for couples with a child aged five or under".

Libertarians might take a third position, saying the tax system ought to be completely neutral and non-discriminatory. Each individual should be assessed in precisely the same way, without complex credits and allowances designed to reward some taxpayers at the expense of others. Single, childless people might argue that they already do enough to support families (their taxes pay for schools and healthcare, and so on) and would rather not foot yet more of the bill.

It's a tricky area, and one fraught with political pitfalls. Personally, I'd like to replace our whole tax code with a simple, individually assessed flat tax, with a high personal allowance and no added complexities. Failing that though, I would I would prefer Osborne's position to Cameron's, and either of them to the status quo, with its perverse incentives that penalize committed relationships and actually encourage family breakdown.

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Fight the fat

Written by Cate Schafer | Wednesday 06 August 2008

Yesterday The Guardian reported on the Department of Health's plan that starting next month parents will be sent letters that contain their children’s heights, weights and whether they are underweight, a healthy weight, overweight or very overweight. This plan is an attempt to address England’s expanding obesity problem. 

If you were visiting friends and noticed that their little Sally was a couple stones heavier than your little Billy you most likely wouldn't say, "Harriet, Sally is looking a little heavy. Don't you think you should put her on a diet?" It is not your job, and certainly not the government's job to tell parents when their child is fat, mainly because it is an issue of personal responsibility for the parents to look after a child's health. They should not rely on public services to alert them to when their child is overweight, nor should we encourage that behaviour by providing the service.

The initiative is also frustrating because how could parents not notice that their 8-year-old child outweighs comparable children by 10 kg. It seems suspect if the child in question seems to be carrying around almost 2 bowling bowls in extra body weight. The Department of Health is basically giving parents an easy way out by allowing them to plead ignorance to their child's rotundness.

Putting the creation of the program aside – if the letters are going to be sent they might as well be to the point and forceful. Ministers are worried about stigmatising children and so have decided to avoid the words "fat" and "obese". If you want parents to react to these letters they need to be convinced or otherwise the children will become stigmatised because they'll hear it everyday in the playground. And the 4 categories that ministers did approve of aren’t convincing at all. By combining "obese" into "very overweight" it softens the message parents receive and it won't make them notice or be more proactive, especially if they haven't noticed the obesity in the first place.

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Quote of the day

Written by Wordsmith | Wednesday 06 August 2008

Our 1991 report Why Not Work? is now available online. Here's a small sample of its wisdom:

To offer people the chance to work and contribute their bit to the community must be better than trapping them in a depressing state of enforced idleness that leaves them less and less able to get back to work.

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Blog Review 680

Written by Netsmith | Tuesday 05 August 2008

A long post (and to be continued) but if you'd like to know what went wrong with Fannie Mae this is an excellent place to start. Yes, there were indeed faults with the incentives both faced by and set by politicians (Surprise!).

A trailer for a BBC series: Netsmith would make the point that this shows exactly why we don't wantto reduce what some call "hypermobility": it's essential to the way we live, not some undesirable add on.

And interesting question: how is that that avowed lefties can write such capitalist dramas? Without perhaps even realising it?

Asking what is the value added of the World Bank: not a lot seems to be the answer.

Another fascinating question: what would FDR think of today's Social Security system?

One contender for the best passage from Solzhenitsyn's works.

And finally, a worthy image for a poster perhaps?

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