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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

Jack the Ripper and moralising capitalism

Written by Jason Jones | Monday 02 June 2008

The other day I took a tour of the area where Jack the Ripper killed five women. The tour guide began by saying, “The City of London was the seat of the largest empire the world had ever seen and the richest square mile in the world. The East End was the polar opposite, with those exploited by unchecked capitalism crammed into the worst conditions imaginable."

Say what? Unchecked capitalism to blame? There were plenty of problems with the government at that time, but why are so many quick to blame capitalism for poverty?

French President Nicolas Sarkozy is driven to “moralise capitalism." Seems France has been at it for decades by instituting 35 hour work weeks, creating useless projects, high taxes, and building the Concorde. The result? Low GDP growth, a low GDP per capita, and unemployment at almost 8%.

In a new development, the French government is now threatening to pass legislation to curb the pay of company executives and use its EU presidency to clamp down across the EU. Business executives are paid well because of what is at stake. Companies have to compete and the companies that invest the most will get the best. Executives that fail will be fired or demoted.

If Sarkozy really wants to moralise capitalism, he should leave it be. 

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Book of the week

Written by Booksmith | Monday 02 June 2008

This is unashamedly another plug for Junk Medicine: Doctors, Lies and the Addiction Bureaucracy by iconoclastic doc Theodore Dalrymple, which I first reviewed back in January, and which our medi-blogger Dr Fred Hanson mentioned in his piece a few days ago.

Almost everything you know about heroin addiction is wrong, Dalrymple says. Heroin is not highly addictive; withdrawal from it is not medically serious; addicts do not become criminals to feed their habit; addicts do not need any medical assistance to stop taking heroin; and heroin addiction is more about mentality than biology. It's great stuff. And we've got it on special offer, well below the sticker price, for Adam Smith blog readers. You save nearly £4 off the bookshop price if you buy it from our online bookstore.

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And another thing...

Written by Junksmith | Monday 02 June 2008

New green, clean low-carbon transportation between China and Hong Kong. Sadly it is a 300-metre long zip line and illegal.

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Blog Review 615

Written by Netsmith | Sunday 01 June 2008

Would those campaigning against vaccines please ask themselves, quite seriously, whether they would really like to return to this world?

As so often happens, the best retorts occur to you after the retortee is no longer listening.

My word, this is a turn up for the books! Variations in exchange rates affect trade deficits. Have to rewrite all the textbooks.

An extremely harsh measure but who knows, it might actually work.

Business advice to those running Yahoo. Similarly harsh but again, it might work.

In the debate upon MPs pay there seems to be one politician at least who "gets it".

And finally, a quixotic quest concerning male secondary sexual characteristics.

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On those university fees

Written by Tim Worstall | Sunday 01 June 2008

Angela Phillips is concerned about the possibility that the cap on universtiy fees might be raised

Should our world-class universities be allowed to operate like football clubs and raise entry fees in order to pay the higher wages it takes to attract the Beckhams of the academic establishment?

I for one would welcome an influx of monosyllabic academics who were actually good at what they do, yes, and if raising tuition fees is the only way to achieve it then I'm all for that plan. A little more seriously:

Are we really ready to contemplate the possibility that education is not about social justice and that we should save the best minds in the world to educate a bunch of bankers and lawyers? Because that what we are talking about if we allow a market to develop in higher education.

No, education isn't about social justice: it might be a means of achieving some but that's a by product. The aim of education is, as the very word itself implies, to educate people, no, not just for the economic value of their subsequent output, but in the sense of aiding in the development of the full and rounded personality. The liberation of the whole human being if you wish. However, before I get accused of being a little too New Age in my outlook, this doesn't mean that fees should not be uncapped.

The people who benefit from the higher education system are those who go through it: not just in the higher rewards that some of them get in the jobs market, but in that greater appreciation of life which a rounded education will aid. Just as it should be the polluter who pays, so should it be those who benefit who pay. In this case the soon-to-be graduates should pay for the costs of the system which provides then with the benefits that graduation will bring.

The only alternative is that higher education be paid for from the tax system - and it's very difficult to see a moral argument that those who do not benefit from having graduated should have to pay the costs of the system which benefits those who do.

Free the fees and not just allow but encourage a market to develop in higher education. As I've said before, there are things which are simply to important for them to be excluded from the market.

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Greenbacks and the Emerald Isle

Written by Dr Eamonn Butler | Sunday 01 June 2008

There are a lot of smug faces in Frankfurt right now. Shortly after the Euro was launched, it pitched into the sand, down to US$0.90, and some economists thought it was on the way out. But political economists knew that too much political capital had been invested in the Euro for the EU to let it fail. And, indeed, now it seems to be riding high.

A lot of that is of course because the dollar is languishing due the effects of terrorism, wars, China and the inevitable hangover that follows a credit-led boom. The pound too, if less so. The Euro has become the currency of choice for all those who are nervous about leaving their money in America. And while America and Britain's prospects look grim, the European economies in general seem to be doing OK.

Europe and the Euro may be on the up, but the fundamental problems of the Euro remain. A single currency, along with a single exchange rate, can never be right for all the peoples of Europe all the time. Inflation in Ireland is now 5%, well outside the European Central Bank's 2% target, and inflation in Spain is not far behind. Meanwhile, these economies are not doing well. They got a huge boost from low Euro interest rates during the early years of this decade, and how they too are suffering a hangover. Property prices in Dublin are off by 20% and more, unemployment is creeping back, and people are talking again of stagflation.

The strong Euro does Ireland, in particular, no favours. Its main customers are the UK and America after all, with whom it has strong cultural, linguistic and ethnic ties. A lot of people presume that Ireland's boom was due to its membership of the EU, of EU subsidies and cheap credit thanks to Euro membership. In fact, Ireland's real growth was pushed off by an enlightened tax policy that drew business to Ireland, and certainly, access to the wider European market and some infrastructure grants certainly helped, as did changing social patterns and the participation of more women in the workforce. But that real boom was compounded by an inflationary boom that was down to Euro membership. In the long term, the Irish would have been better without it. And that hasn't changed.

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Party to a fall

Written by Philip Salter | Sunday 01 June 2008

A YouGov poll taken out between 27 and 29 May shows that Labour and Gordon Brown’s popularity has hit a record low since polling began. The Conservatives are ahead on 47 points, Labour on 23 points, with the Liberal Democrats on 18 points.

The poll showed that people regard David Cameron to be a better candidate for prime minister than Mr Brown and that the Conservatives would be better at running the economy than Labour. Crucially the poll shows that 72 per cent of those surveyed felt that the tax burden was too much.

Gordon Brown should take these results as a sharp slap from the electorate. A warning that if he does not cut taxes he will not only be defeated in 2010, but utterly trounced. His MPs know this. According to the Independent, a group of MPs (including five former ministers) have told him that he needs to cut taxes. As Sally Keeble, Labour MP for Northampton North, remarks: "The tax system provides the most powerful means of convincing this new electorate we're on their side."

However, even if Gordon Brown wanted to move to the right, he is being pulled in the opposite direction by the unions. The Labour Party is £24 million in debt. They have five weeks to find almost £7.5m or be declared bankrupt. A number of unions have promised to bail them out if their policies take a turn to the left.

It’s a catch 22 for Brown. Turn right and go bust, turn left and fail.

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Weird quote of the year

Written by Junksmith | Sunday 01 June 2008

When I was in college, we used to take a popcorn popper - because that was the only thing they would let us use in the dorm - and we would fry squirrels.

Mike Huckabee, charming voters at the start of 2008.

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Blog Review 614

Written by Netsmith | Saturday 31 May 2008

Yes, more on that sea temperature drop in the 1940s. Turns out it was just a data collection error and yes, that news is now spreading. But the much more important question is, what other errors are there in the temperature records? More here again.

On slightly different matters environmental: yes, the profit motive is a very powerful incentive for people to reduce resource consumption, even WalMart.

And Oxford Colleges, those forcing houses for the intellectually gifted, seem to have problems with environmental matters.

Who can take seriously a political journalist who knows nothing of (or at least ignores) public choice economics?

Of course, not all economics is quite so important. The professor who worked out the economics of scrabble, for example, was consistently beaten at the game by his wife, who cared nothing for such abstractions.

The perils of blogging....sometimes the message escapes.

And finally, well, and finally really.

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Fruit market

Written by Dr Eamonn Butler | Saturday 31 May 2008

Britain is eating more fresh fruit. So should ministers be congratulating themselves that their 'five a day' campaign, backed by all those NHS 'five a day officers' is really, er, bearing fruit? Or that the public money being spent on including more fruit and vegetables in school lunches has made kids swap Golden Wonder for Golden Delicious?

Probably not. Certainly, people are more health conscious than they were – partly because they are living longer and the reality of illness is more apparent to them. And they figure that eating fresh fruit is healthier than snacking on scones. But there is no clear evidence that the government's campaign has made the difference.

No, there are other, supply and demand, effects at work here. On the demand side, one reason why the UK is eating more fruit is that there are more of us to eat it. The population is growing, and the country is eating more of anything. Much of the population increase is due to immigration, and much of that has been from Africa, the Middle East, and Asia, where people tend to eat more fruit than native Brits because it is cheaper and more accessible: and the habit survives when they migrate here. Another reason is the fact that we are all getting richer, and so we can afford luxuries like imported fruit. No longer need we wait for the short British summer before we can enjoy our fruit.

In the 1950s and 1906s when I was growing up, we always had strawberries on my father's birthday in June. It was the first time of the year that they were available. We gorged ourselves on them, because a few weeks later the season would be over, and we would have to wait almost another year for them to return. But then early strawberries started coming in from Jersey, or they were grown under glass and polythene cloches, and the season extended.

What made the real difference on the supply side, though, was the spread of the jumbo jet. Under its vast cabin lies a vast cargo space. And when you're flying 400 tonnes of aircraft down to Chile, Florida, South Africa or New Zealand, it really costs hardly anything to bring back a tonne or two of blueberries, oranges, mangoes or kiwi fruit in the hold. That made new kinds of exotic fruit available to people who were fed up with Britain's own apples and pears. It meant that soft fruits like strawberries became available all year round. And economic development in places like Chile in particular made fruit production more efficient. So fresh fruit became that much cheaper and more affordable.

The result is that we're enjoying more fruit more often, which must be a good thing. But it's not down to ministers. It's down to the market.

Dr Eamonn Butler is author of The Best Book on the Market (Capstone, 2008)

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