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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

Digging holes and kicking trees

Written by Jason Jones | Friday 23 May 2008

The Times reports today that the EU may suspend subsidies to farmers that don’t go green. Various bureaucracies hope subsidies will solve overproduction, the impact of farming on flowers and bird habitats, worldwide food shortage, watercourses, and the use of pesticides. Here’s a better idea: don’t stop there!

The good news, however, is that the European Commission will no longer pay farmers to leave 8% of their fields empty. But that leaves the question: What Einstein had the idea to pay farmers for production, and then to avoid the overproduction caused in part by subsidies themselves, pay them even more to leave part of their fields empty?

I had a flatmate once who tried the same techniques to woo various women over the course of several months, but to no avail. After being rejected dozens of times, he said, “I guess if I try the same things over and over and get the same result, I should try something else."

Touché. How many times will our governments try the same old things and expect different results? Supply. Demand. Prices. Free markets. Same old things that always result in economic growth. Subsidies, government planning, market manipulation, and regulation? Take a wild guess…

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Brown’s legacy

Written by Philip Salter | Friday 23 May 2008

It is not often that I agree with our incumbent Prime Minister, but on the rare occasion it happens, it is certainly worth mentioning. On Wednesday, Gordon Brown called for the UK’s G8 partners to find a way to break down trade barriers and implement a world trade deal.

Speaking in the House of Commons, Brown stated:

I'll be working very hard with our G8 (Group of Eight) partners and others in the hope that in this 11th hour, where we need a trade deal now or it will be delayed for a great deal of time, we can make urgent progress in the next few days.

Earlier this week at the Google Zeitgeist Conference he spoke along the similar lines. Coming down strongly against protectionism he argued once more for free trade:

The two great protected industries of the moment are the two industries that are causing us the greatest problems today: the oil industry, with a cartel run by Opec; and the food industry, with high levels of subsidy.

It is well known that one of Brown’s personal concerns is poverty. He is absolutely correct in highlighting the iniquity of protectionism, and that it is holding back the economic development of the world.

Brown’s concern is timely. Following President Bush’s departure there is a strong risk that a protectionist Democrat will take the White House. With his growing unpopularity Brown may also be out of office before too long, but if he is capable of leading the world towards a free trade deal, he will leave office having done at something to be proud of.

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And another thing...

Written by Junksmith | Friday 23 May 2008

Oil above $135 per barrel and burgers up to $175 per barrel!

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Blog Review 605

Written by Netsmith | Thursday 22 May 2008

If you would like to see a true outrage, a gross use of "earmarks", try this little story from the Cato Institute.

Another twisting of the regulatory process: nuclear plants are not able to take part in the carbon offsets schems. Why ever not?

If you would like to try something useful in cutting carbon emissions, try this contrarian list: first thing, shun organic milk.

What a wonderful phrase: a derangement of legislators. Links to more comments here.

How the State claims it is saving money: by moving the goalposts, of course.

It simply boggles the mind that this keeps being deleted from the Guardian website.

And finally, an email that never did receive an answer.


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Taxes should be slashed by half

Written by Philip Salter | Thursday 22 May 2008

There was a terrific article in yesterday’s Times by the philosopher Jamie Whyte entitled, ‘Why taxes should be slashed by half’. Arguing against the still-indecisive Conservative tax policy, Whyte claims that we are miles past the acceptable limit of taxation because politicians lack an understanding of the basic business concept of “cost of funds".

When a company considers investing in a project, they first have to determine how much it will cost them to raise the funds. As Whyte explains, a company will keep raising money until its cost exceeds the return from spending it. Whyte suggests that such logic should apply to government spending:

The Government should raise taxes until the cost (to society) of doing so exceeds the benefit (to society) of the spending it funds.

Due to the combination of administration, compliance, avoidance, and deadweight costs, this equates to the need for the government to deliver a return of more than 20 per cent upon the taxpayer’s investment. Of course, almost all government spending fails by any objective standards to deliver on this investment. Just take a look at education, healthcare, housing, unemployment insurance and pensions.

Whyte concludes:

Given the politically sacred status of “public services", eliminating this spending and taxation will not sound like a very nice idea. And Mr Cameron is determined to make the Conservatives seem nice. But imposing pointless costs on society is not really a nice thing to do.

Taxes slashed by half? It would certainly get my vote.

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New tires, please

Written by Jessica May | Thursday 22 May 2008

The past two days have certainly been heated ones in Parliament.  MP’s have been voting on amendments proposed to the Human Fertilisation and Embryology Bill. On Monday, I attended an event held by the Progress Education Trust entitled Half-truths? The Science, Politics and Morality of Hybrid Embryos.

Three panellists debated the topic: John Burn, Clinical Geneticist at Newcastle Hospitals NHS Foundation Trust and Professor at Newcastle University, (in support of the embryos); Josephine Quintavalle, Co-founder of Comment on Reproductive Ethics, (against); and Brenda Almond, Emiritus Professor of Moral and Social Philosophy at the University of Hull, (explaining the ethics of the bill).

Several examples why “closing some roads" would harm science in the future were provided from the audience:

  • IVF was highly debated in the past and is now a common technique for many people.
  • Organ transplantation initially provoked much public scrutiny, but today many people benefit from this practice.
  • Not enough adult stem cells could be obtained to replace the amount of tissue harmed by a heart attack affecting 25% of the left ventricle.
  • Far more animal DNA would exist in a human with a heart valve replacement supplied from a cow or pig than these cells would have if grown into a heart valve.
  • Only the mitochondria (energy providers for the cells) in the cell contain any animal DNA.
  • This issue was about a small clump of cells in a dish that will be prevented from becoming a full organism at day 14.

Ms. Almond described old definitions and proposed these ‘embryos’ be called “pseudo embryos", as they are not true embryos. Ultimately, this debate was less about the embryos and more about the government telling scientists what they may or may not do.  Luckily MP’s recognised the need not to close the book on this topic. My favourite quote from the evening was from Prof. Burn comparing stem cells with replacing tires on his car: “ I don’t want retreads (adult stem cells), I want new ones (embryonic stem cells)!"

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Religious arguments

Written by Jason Jones | Thursday 22 May 2008

Religious-political institutions around the world are criticizing the British Parliament for yesterday’s vote to no longer require doctors to include "the need for a father" when administering fertilization treatment. The argument that Judeo-Christian values, or any religious ideology, necessitate pro-family legislation automatically caters the legal system to a faction of society at the expense of those who believe differently. After criticising Barack Obama last week, I’ll praise his advice to religious political institutions:

What [pluralistic democracy] demands is that the religiously motivated translate their concerns into universal, rather than religion-specific, values. [For example,] those opposed to abortion cannot simply invoke God's will--they have to explain why abortion violates some principle that is accessible to people of all faiths, [or those of no faith]. (The Audacity of Hope).

If for some reason fertilization treatment for lesbians were indeed bad for society, the arguments should be based on scientific and empirical facts, not religious doctrine. They ought to remember what Abraham Lincoln said: “Certainly there is no contending against the Will of God; but still there is some difficulty in ascertaining, and applying it, to particular cases."

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And another thing...

Written by Junksmith | Thursday 22 May 2008

"In response to climate change, Barack Obama said we can't drive our SUVs, keep our houses at 72 degrees, and eat all we want. When Al Gore heard we can't eat all we want, he called Obama a global warming fanatic! He's an environmental nut case!"

Jay Leno

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Blog Review 604

Written by Netsmith | Wednesday 21 May 2008

Tomorrow is of course the by-election. Guido and The Englishman team up to show us which is the toff in this particular contest.

The costs and economics of the various possible ways in which emissions might be controlled. There are also political science problems with cap and trade systems.

With food miles, given the difficulty of the calculations, market prices are probably more accurate. Not that the government seems to agree.

An interesting variation on the usual Laffer Curve arguments.

If a doctor is allowed (nay, encouraged!) to speak to the child of an economist in private, shouldn't the economist be allowed to instruct the child of the doctor again in private?

A rather Keynesian argument, but some merit still. With the constuction market in a slump, why not get on with necessary infrastructure?

And finally, shouldn't Congress now sue itself?

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Lib Dem liberalism

Written by Tom Clougherty | Wednesday 21 May 2008

In a speech at Policy Exchange yesterday, Nick Clegg said:

When Labour came to power in 1997, the Government took three hundred billion pounds a year in tax. This year the Government will take nearly double that. They take one thousand seven hundred million pounds of our money every single day of the year. That’s more than £18,000 a second.

Indeed – and isn't that a great way to put it? The whole speech is pretty interesting actually, as it marks a definite departure from the tax and spend, social democrat stance of the party – which characterized its last two general election campaigns – and a shift towards old-fashioned liberalism. Clegg says he wants to break the consensus on ever-higher spending and claims he " would not be interested in spending a single penny of people’s money unless I knew it was going to give a greater benefit than leaving it in their pockets". Which is excellent.

But while I don't doubt Clegg's conviction – it's always been clear that he is much more free market than most Lib Dem activists – I suspect this speech is more the result of a political realization than an economic one. The Lib Dems know that most of their key election battles in 2010 are going to be against the Conservatives, and are positioning themselves accordingly.

In either case, this is good news for British politics. When the Lib Dems position themselves on the left, it drags the centre of political gravity in that direction, pulling the terms of debate with it. Hopefully the Lib Dems' explicit embrace of freer markets, lower taxes and greater decentralization will have the opposite effect.

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