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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

Quote of the week

Written by Wordsmith | Sunday 15 June 2008

To be governed… is to be watched, inspected, directed, indoctrinated, numbered, estimated, regulated, commanded, controlled, law-driven, preached at, spied upon, censured, checked, valued, enrolled – by creatures who have neither the right, nor the wisdom, nor the virtue to do so.

Pierre-Joseph Proudhon

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Blog Review 628

Written by Netsmith | Saturday 14 June 2008

A slight bop on the nose for Paul Krugman. If you're going to claim that the gutting of the food inspection bureaucracy has led to rampant food poisoning, it would help if, following said gutting, food poisoning had actually risen.

Playing with numbers: true, there are only 3 million registered Irish voters: but their voice is perhaps louder than those of Europe's 9,225 legislators? Or perhaps should be?

The Charity Commission believes that blogs are not educational. (More here.) From that we might conclude that the Charities Commission in incapable of recognising what is in fact educational....which raises the question of why they are ruling on the tax breaks that educational charities should or should not get?

How to have very low administrative costs like Medicare: don't do any administrating.

There are indeed always unintended consequences. Just another example of why planning an economy or its manpower doesn't work.

As is said, if this lot are against it (whatever it is) there's almost certainly something to be said for it.

And finally, perhaps not the best product design of all time and bringing home the full horror of the housing crash.

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It's intensely annoying...

Written by Tim Worstall | Saturday 14 June 2008

To have to keep making the same obvious point and find it being continually ignored. Still gird the loins and keep stating the truth I tell myself.

Europe's biodiesel producers will today urge the European commission to levy punitive duties on US rivals after Brussels launched formal anti-subsidy and anti-dumping investigations into imports from America.

I've said it often enough before: if someone is willing to gouge their own taxpayers in order to provide us with cheaper goods then the correct response is to say thank you. Followed by an invitation for them to do the same tomorrow as well. To do otherwise is to be protectionist: protectionist of the interests of business above those of the consumers and that really isn't the way we're supposed to be playing the game. But in this report we see it even more nakedly:

Garofalo said that "splash and dash" accounted for only 10-15% of the biodiesel imported into the EU. "The real problem remains US biodiesel producers," he said. "Changing the rules to stop splash and dash doesn't change a lot as export subsidies will be maintained for US producers and that's precisely what we want to stop."

Garofalo is the head of the European Biodiesel Board, the trade organisation for producers. It is exactly as Adam Smith said all those years ago:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

There it is, plain as day. Garofalo wants you to be barred from purchasing the best offer so that his members might make more profit. That US taxpayers are subsidising that best offer is an irrelevance to your and my interests. The correct response to someone offering us subsidy in this manner is thank you, please call again.

Whatever the interests of Garofalo, the EBB and the producers.


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The benefits of failure

Written by Dr Eamonn Butler | Saturday 14 June 2008

Capitalism is based on failure. But that's no problem, since life is based on failure. That's the view of Professor Paul Ormerod, who outlined the idea at an Economic Research Council meeting I attended in London.

Ormerod points out that over 99.99% of all known species are dead. And roughly 10% of all US companies disappear each year too. Even when things are booming, you get extiction: in 1469, Venice boasted twelve firms engaged in the dotcom boom of its day – printing. By 1474, nine of them had failed. Sound familiar? Some 995 of the 2000 US firms making cars in 1900 disappeared. Of the world's 100 top companies in 1912, just over half survive, but only 19 are still in the top 100 – and most of those have changed beyond recognition.

Yet it's amazing how many people hark back to Marx, complaining that capitalism produces more and more concentration. John Kenneth Galbraith played the same tune in his book The New Industrial State. But by then, big-company America was at its zenith: from there on, it has been a story of the proliferation of new, small companies.

And it's that proliferation – that constant innovation coming from new, small firms – that makes free-market systems so vibrant, productive, and beneficial to humanity. Just as the small mammals proliferated when the dinosaurs declined, so so new small businesses spring up and become larger businesses. America's commitment to (relatively) low taxation and (relatively) light regulation and its (relatively) strong commitment to personal freedom is, I think, the main reason why it consistently outperforms statist backwaters like Europe. The biosphere and the economic sphere change constantly. You have to adapt and innovate. And decentralized, market systems are a lot better at adapting and innovating than socialist ones.

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The good news about oil prices

Written by Jason Jones | Saturday 14 June 2008

An excellent article in Business Week explains why bubble markets aren’t all bad.

"The stuff built during infrastructure bubbles—housing and telegraph wires, fiber-optic cable and railroads—doesn't get plowed under when its owners go bankrupt," writes Daniel Gross in Pop! Why Bubbles Are Great for the Economy. "It gets reused—and quickly—by entrepreneurs with new business plans, lower cost bases, and better capital structures. And when new services and businesses are rolled out over the new infrastructure, entrepreneurs can tap into the legions of users who were coaxed into the market during the bubble."

For example, this happened during the late 1990s. Speculators predicted that the growth of the Internet would necessitate huge increases in fibre-optic cable. The predictions were incorrect and much more cable was laid than necessary for the intended purposes, but after, business used the cable in an even more beneficial way (see The World is Flat, the steroids part of the ten flatteners section for more on that). The high oil prices hit us where it hurts the most—our wallets. But this too shall pass, and when it does, we will all be better off because of it:

As the "hot money" is flowing in, the investment is building ever tighter and stronger economic ties between the developed and developing economies, creating wealth at an unprecedented rate, building bridges that will strengthen in coming decades. And it's the growing economic vigor of a vastly healthier global economy that is pushing up the price of commodities. These higher prices are encouraging enormous increases in investment in alternative energy and increased agricultural production.

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And another thing...

Written by Junksmith | Saturday 14 June 2008

Good news for Canadians: their Tax Freedom Day comes four days earlier this year

Bad news for Canadians: Tax Freedom Day is today, June 14, which means they've spent the last 165 days working for the state.

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Thank you, Ireland!

Written by Blog Administrator | Friday 13 June 2008


PIcture from Guido Fawkes

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Blog Review 627

Written by Netsmith | Friday 13 June 2008

Further (as if it were needed) evidence that The Guardian really doesn't understand this liberal capitalism thing as yet. Well, yes, big surprise, eh?

Yes, this is the US rather than the 42 days here, but the Supreme Court makes the point that habeas corpus idea really is about what the State may not do to the citizenry. Security from terrorists isn't the point: it's security from those who would rule us. (How 42 days was reached here.)

More on that disconnect between the Westminster Village (as the saying goes, there's an awful lot of villages across the country that have lost their own idiots) and the general population.

No, this really isn't all that much of a surprise. What, you thought bureaucracies were there to aid you rather than control?

This bureaucracy seems a little less malevolent but the basic structure is similar.

Netsmith is going out a little on a limb here but it is at least arguable that there have only ever been three major inventions. Agriculture, the scientific method and the limited liability corporation.

And finally, yes, Wellesley really is different than Vassar for as the man said, if all the students at Vassar were laid end to end no one would be at all surprised.

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In defence of liberty

Written by Tom Bowman | Friday 13 June 2008

If you haven't seen David Davis' brilliant resignation speech yet, you should click below to watch it. In the wake of the commons' vote to extend pre-trial detention without charge to 42 days, Davis has resigned as Shadow Home Secretary and quit Parliament, and will now fight a by-election purely on the issue of civil liberties.

This is a remarkable display of political courage, and it is wonderful to see a politician take a real stand on a matter of principle. In the short-term, this may not be a wonderful development for his party, with some in the media unfairly characterizing it as the product of internal strife. But regardless of party politics, Davis' decision put the current government's appalling record on civil liberties directly to the public could not be more welcome.

Davis is not just standing on the issue of detention without charge, but against a whole raft of illiberal policies, from restrictions on free speech, to surveillance, ID cards and the database state. With luck Davis' 'nuclear option' could mark a turning point in the national debate.

Winston Churchill once campaigned under the slogan "Set the people free!" David Davis could do worse than adopt the same rallying cry.

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Power lunch with David Lidington MP

Written by Dr Eamonn Butler | Friday 13 June 2008

David Lidington MP, Shadow Foreign Minister, was our guest at a Power Lunch in Westminster this week. With oil now more than $130 a barrel, and half the world's cranes busy building new hotels and apartments in Dubai, it was no surprise that much of the discussion focused on the Middle East. Lidington, of course, is expert on the subject, and had recently come back from a top-level visit to the region.

The discussion was off the record, so I can't go into the details of who said what, but it does seem that the main concerns in the region have changed, from primarily strategic (notably issues around Israel and America's interests) to economic. Middle-Eastern countries see themselves as developing rapidly – on a par with China as the future economic powerhouse of the world. And yet, outside a few countries, the region's political structures have not developed fast enough to give this new, market economy the framework to really grow. The Gulf region imports 90% of its food; water is in short supply for agriculture as for much else; and Egypt has had bread riots. But when you try to fix the price of bread as Egypt does – so you can make more money selling it for animal fodder than human food – what would any economist really expect?

And economic development itself will pile up the political pressure. Economic development has allowed education to expand, and in particular more women are now getting an education. That will stoke up rising expectations in the region's predominantly young population. We can't expect that overnight there will be American-style constitutions, free elections and bright new democrats bursting into the majority. But I would say the UK needs to do more to help political reform by encouraging the understanding and discussion of democratic culture and institutions, and in particular the rule of law. Britain is, of course, the home of those principles. But since our nanny state is tearing them up at home these days, one cannot be optimistic that we will make much of a job of exporting them abroad.

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