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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 649

Written by Netsmith | Saturday 05 July 2008

More on the unveiling of that statue (what do you mean "which statue"?). And more here and photos too!

It's possible to be over-enamoured with Bob Geldof at times, then he comes up with a speech like this:

Liberty is always dangerous, but it is the safest thing we have.

On the subject of liberty: looks like the War on Drugs is still failing.

The government running databases of the citizenry doesn't seem to work all that well either.

Amartya Sen got his Nobel in part for pointing this out: famines often aren't about a shortage of food, they're about a shortage of purchasing power.

Yes, we really do need to use cost benefit analysis in measuring matters environmental.

And finally, protecting the American mud hut building industry.

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Consumption Inequality

Written by Tim Worstall | Saturday 05 July 2008

These figures relate to the US rather than the UK, but I think it's likely that the effects of Tesco's and China have been similar:

Inflation differentials between the rich and poor dramatically change our view of the evolution of inequality in America. Inflation of the richest 10 percent of American households has been 6 percentage points higher than that of the poorest 10 percent over the period 1994 – 2005. This means that real inequality in America, if you measure it correctly, has been roughly unchanged. And the reason is just as dramatic as the result. Why has inflation for the poor been lower than that for the rich? In large part it is because of China and Wal-Mart!

Part of the reasoning is that the richer you are the more of your income is used to purchase services rather than goods: and goods are more likely to be traded internationally and thus to have come down in price as a result of globalisation. There is also another point, Baumol's one that we would expect services to be rising in price relative to manufactures anyway, given the difference in the way that labour productivity can be increased in each.

These different inflation rates do, as mentioned, have an effect on inequality. This means that once again we should not be measuring inequality as a function of income, rather as a matter of consumption. If we do measure that inequality correctly, it's effects on the actual living standards of real people, then we find that globalisation isn't increasing it at all.

Which leads to an interesting thought about that Joseph Rowntree Foundation figure on the amount needed to be not poor in the UK. If we really let globalisation rip, if we tore down the remaining trade barriers, we might actually find that the further cheapening of goods would reduce that amount, the income necessary to reach a particular level of consumption.

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From bad teeth to no teeth

Written by Jason Jones | Saturday 05 July 2008

Back in the old days, dentists were paid a fee for each type of treatment they provided. After a contract change, dentists started receiving their income by doing a certain amount of work, known as “units of dental activity."

You can imagine the dentist: “I need to do 15 procedures to meet my weekly quota. I could fill all those cavities… but that takes a long time and requires numbing and filling materials. Or I could just pull the tooth out. It takes no time at all and requires no medicine or precious metals."

The NHS did not think about all this before implementing the new contract. But a damning new report from an influential MP’s committee shows how bad the situation is.

Dentists are extracting patients’ teeth rather than carrying out more complex repair work because NHS reforms have failed… The number of tooth extractions, many of them unnecessary, experts say, has risen since the new contract was introduced. At the same time, the volume of more complex work such as crowns, bridges and dentures has fallen by more than half.

The solution is not to reform the contract again, but to eliminate it altogether. We deserve health care that gets us the best treatment for our needs, but NHS contracts distort the incentive structure in such a way that dentistry works against patients. The NHS being inefficient, working against patients, and distorting the markets? Must be a slow news day if this is news.

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Eroded liberties 13

Written by Dr Madsen Pirie | Saturday 05 July 2008

The development of liberties in English law is very much the story of limits being placed upon state power. One element of those liberties is that there should be limits placed on the information which the state can demand from its citizens and keep on its files. ID cards are one major infringement of that principle, and a DNA database is another. The police have been empowered to collect and hold DNA samples from people who have not been convicted of any crime. Even suspicion can be deemed sufficient, and over-zealous police forces have developed the practice of taking DNA samples for quite trivial offences.

Some police officers have said that they wish the DNA database to include as many as possible, and some forces even have DNA samples held on file for thousands of children not even accused, much less convicted, of any crime. Our DNA contains much evidence about our lives, including our vulnerability to specific diseases, and even aspects of personality that is no business of the authorities. The widespread collection and retention of such information is an abuse of state power, and should be stopped. It is part of the creeping erosion of our liberties that police feel entitled to treat citizens as potential criminals, and collect and hold information on innocent people that they have no business with.

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Quote of the day

Written by Wordsmith | Saturday 05 July 2008

The true danger is when Liberty is nibbled away, for expedients.

Edmund Burke (1899)

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Blog Review 648

Written by Netsmith | Friday 04 July 2008

As below, the statue was unveiled today and here's a report of the debate that preceded that last night. And another report from the unveiling.

A slightly odd (but possibly valid in a way) theory that our loss of civil liberties is all to do with gun control.

An alternative (although not mutually exclusive) explanation: that it's badly drafted legislation rushed through in a panic that is to blame.

No, it's not very good but the real question is, is it art?

Reasons not to join the Pigou Club.

People not buying SUVs isn't a problem: it's the market helping to solve the problem.

And finally, imagining Gordon Brown in alternative occupations.

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Adam Smith statue unveiled today

Written by Tom Clougherty | Friday 04 July 2008

 

The Adam Smith Institute is pleased to announce the completion of its project to erect the World's first public monument to Adam Smith – the great Scottish economist, philosopher, and author of The Wealth of Nations.

The monument, which takes the form of a 10-foot bronze statue on a massive stone plinth, will be unveiled today on Edinburgh's Royal Mile – right in the heart of Scotland's capital city, where Adam Smith worked and died. The statue was created by Alexander Stoddart, Scotland's leading monumental sculptor, and will be unveiled by Nobel Laureate Economist Vernon Lomax Smith.

The statue's position – in an ancient marketplace – could hardly be more appropriate. The monument is within view of the recent statue of Smith’s friend David Hume, looking downhill to the Canongate (where Smith is lived and is buried), towards the harbour of Leith (with its connotations of trade and commerce), and over the sea to the county of Fife, where Smith was born.

Dr Eamonn Butler, director of the ASI, said:

This honour is long overdue. As author of The Wealth of Nations (1776), Adam Smith was the pioneer of what today we call economics. He championed the benefits of specialization and free trade, creating the very idea of the modern market economy that dominates the free world today.

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The poverty level and tax

Written by Tim Worstall | Friday 04 July 2008

Following on from Madsen's welcoming of the  Joseph Rowntree  Foundations report on the poverty level, one more thing that should be pointed out I think.

Yes, we've got a figure for a single person of £13,400 a year: below that and they don't have the minimum level of both material goods and the ability to participate fully in society. Excellent: but it does need to be noted that this is a pre-tax figure. The report looks at what is necessary in disposable income and then upgrades that by the tax that would be paid to give us this total figure.

Further, we might note that someone working full time on the minimum wage does not in fact earn this sum: so does that mean that said minimum wage should be raised? Leave aside for a moment all of the usual objections (true though they are) to such minimum wages and ponder just for a moment. What we desire to do is raise the disposable income to the level the Foundation says is needed and we can do that in one of two ways. We can increase the gross income or we can reduce the deductions made from that gross income.

On £13,400 a year the total tax and NI bill is some £2,345 a year leaving a nett income of £11,055. Someone who works 37 hours a week for 52 weeks of the year (yes, they will get holiday pay) on the current minimum wage of £5.52 an hour will earn gross £10,620 (or on the higher wage coming in in October £11,024). They will then pay £1,483 (or £1609) in tax and NI on that sum.

Now we can ask ourselves the interesting question. Why is it that those working full time on the minimum wage fall short of the amount the report states is necessary to live out of poverty? The answer that leaps out at me is that it's the tax system, stupid.

That minimum wage worker earns gross, from October, £11,024 and this is as near as dangnit the £11,055 needed to live without poverty. So why on earth are we sucking 18% of the incomes of the poor off to pay for the exigencies of the State? Surely it would be better to simply change the tax systyem so that the poor were not paying in the first place?

Strangely, I seem to remember that a think tank did suggest this, that we should raise the personal allowance to £12,000 or so. Might people start listening now?

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Eroded liberties 12

Written by Dr Madsen Pirie | Friday 04 July 2008

It is good for the freedom of individuals if there are strict limits on the information the state is allowed to hold on them.. In the first place it is no business of the state to keep tabs on the private dealings of citizens who have not been charged or convicted of crimes. Secondly, the mere possession of such information is open to abuse by those who have access to it. In the third place, the centralized collection of information is itself a hazard, with the possibility of such information being released inadvertently, or targetted criminally.

The collection of information on ordinary citizens alters the balance between citizen and state, casting the state into a superior, perhaps threatening role, rather than its proper role as our servant. It is there to do our bidding, and should have access to no more information about us than it needs to carry out our mandate. The proposed ID cards with access to vast data records on individuals do not sit easily with a free society. World War II identity cards were abolished postwar precisely because they were felt to be an intolerable intrusion into the lives of free citizens. The same is true today.

Of course the case is made that they are "to fight terrorism," as it is for eroding other liberties. In fact terrorists will equip themselves with forged ID cards as readily as they do with fake passports. ID cards should be seen instead as just another device for government to control the lives of its citizenry, and should be resisted accordingly.

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Quote of the day

Written by Wordsmith | Friday 04 July 2008

There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him

Robert Heinlein

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