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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

Jason Jones joins the ASI

Written by Tom Clougherty | Wednesday 07 May 2008

Jason is a fourth year political science student at Brigham Young University, focusing on international relations. He will start law school after completing his undergraduate studies next April.

Throughout the last few years, Jason has worked in various jobs relating to politics and economics. During the last year, he worked as an international relations teaching assistant, as the legislative intern with the Governor of Utah, and as a research aide. He also spent two years in Brazil from 2004-2006.

His interests include travelling and sports, mainly basketball and American football, although he developed a love for the beautiful game while living in Brazil.

He looks forward to promoting the free-market principles of the ASI.
 

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Blog Review 589

Written by Netsmith | Tuesday 06 May 2008

Looking at the glorious attention to detail of the UK press. Dizzy and Croydonian note that Johann Hari seems not to know much about London. Tim Worstall (of this ilk) gets sweary about a diffferent mistake.

So, just what is your view of government then? Knowing that will lead you to a decision about its correct size.

Introducing a new word: ecophobia. More on those new light bulbs too.

Why we really don't want regulation of the airwaves, well, other than regulation of the property rights to them.

Extraordinarily bad policy responses department. This'll help the food shortages, won't it, removing the ability of farmers to insure the prices they will receive for their crops?

Translating the things said in financial markets.

And finally, at last! A Labour Minister with the right idea about the unemployed.

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A small idea for the Prime Minister

Written by Tim Worstall | Tuesday 06 May 2008

Dear Prime Minister,

Might I suggest a little something on a subject dear to your heart? We are all waiting for your expected announcement this week on the likely classification of cannabis, should it be upgraded to a Class B drug from the current Class C? We're waiting breathlessly, of course (those of us who indulge perhaps more breathlessly than others) to see whether you're going to ignore the advice of your own hand picked advisors, whether you have bought the entirely spurious arguments about increased drug-induced psychosis and indeed whether you think the higher THC contents in modern 'erb make it more dangerous than previously. That last really confuses me I'm afraid: we've long had alcohol that comes in varying strengths, from beer to wine to whiskey, and consumers seem not to unintentionally down pints of whisky nor purchase beer by the 25ml shot, so I'm not sure what anyone thinks the problem is here.

But anyway, on to my suggestion. Might we try the Dutch solution?

"Coffee shops", where small amounts of cannabis have been legally bought and smoked since 1972, have become a major industry and a popular tourist attraction in cities such as Amsterdam.

Tax on the 265,000kg of soft drugs sold last year in the 730 cafés netted the government £315 million.

Rounding out our numbers, and ignoring the point that we have many more people than Holland, currently that £300 million in tax revenue would keep the governmental machine running for an entire five hours! A small enough contribution you might think, but every little counts, does it not? We might also think of the spending savings: the upgrade will raise the possible sentence from 2.5 years to five in jail for simple possession. Given the 3 million regular tokers we are thought to have, do your finances actually contain enough money to cover that potential 7.5 million man years of jail space you might need?

I mention it only as an option, of course: I do understand that you "wish to send a message". It's just that, well, to send a message, umm, don't you know anyone in the advertising industry? I'm sure they'd be delighted to help at considerably lower cost.

yours etc.

Tim Worstall

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Making matters worse

Written by Steve Bettison | Tuesday 06 May 2008

The US economy, as a whole, is just staving off recession yet there are some states that seem intent on making their own localised versions of the downturn worse by excluding the very people who could help. It appears that in many states lawmakers facing tight budgets are fishing for income amongst those who own private planes or yachts via use tax laws. For example, in Maine if your private choice of transport is in the state for longer than 20 days then you are charged at 5 percent of the purchase price (only for the year post purchase) and if their judgement relates to a previous year then there's interest to be added. The quote from Mr Khan (who is being asked for $25,000 relating to 2003) sums up how people will act, "I know of half a dozen pilots who have cancelled their vacations to Maine and are going to some other state where they feel welcome. It's definitely going to hurt their business."

Maine isn't alone in shooting itself in the foot, other states with similar laws include Florida, Illinois and Washington, and due to the downturn they are all replicating Maine's actions. Whilst the US is in this precarious position states should not be turning visitors away. They should be encouraging the wealthy to visit in order to aid growth and redistribute wealth in the natural way rather than through the use of legislation and the threat of inhibiting people's freedom. The money that the state will take from a handful of people may cover up some revenue shortage, but after it has leeched through the state government the people of Maine will not benefit as much as had the wealthy been allowed to spend it has they saw fit.

The legislators in Maine have just ensured that their State's downturn will be slightly worse; other states though are opening their arms and welcoming the wealthy and the benefits they will bring to their communities.
 

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Quote of the day

Written by Wordsmith | Tuesday 06 May 2008

Society exists for the benefit of its members – not the members for the benefit of society.

Herbert Spencer

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Blog Review 588

Written by Netsmith | Monday 05 May 2008

So we're getting the actual numbers in now. No, the current global food problems are not as a result of India and China getting richer, no, they're not a result of more meat eating. Nope, sorry Greenies, people are indeed starving and rioting because some bright sparks thought we should put food into cars. Well done!

It does look like the Great Moderation continues: what recession?

Evidence again that public subsidies to things that can be done by markets unaided might not be the very bestest use of resources.

Further evidence that the profit motive does indeed get things done: even when governments don't want that thing done.

And how about evidence that those who run governments are sometimes driven by the thought of personal profit?

Vintage Boris: there are at least some aspects of American life which (despite his actually having been born there) he won't be importing into London.

And finally, if even Ezra Klein thinks you're being a condescending elitist git then it's a fairly safe bet that you are indeed being a condescending elitist git. Even in a restaurant review.

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Sending me back to think again

Written by Tim Worstall | Monday 05 May 2008

Jim Manzi has managed to get me to at least rethink one of my long held beliefs about climate chaange and what we should do about it. Rethink still, not quite change my mind.

My basic position has always been that climate change is indeed happening and that we now need to look at the economics of the situation: it's not, as many insist, either an immediate or catastrophic problem, rather a low level and chronic one. Thus I reject the Gore and other catastrophists (including the Stern Review) thoughts that we need swinging carbon taxes (or cap and trade agreements) now: I'm rather more inclined to the Nordhaus view that low carbon taxes now, with a road map for their gradual rise over the decades, will provide the incentives for the necessary changes. Such taxation being, of course, revenue neutral, so that other taxes should fall as they are imposed. One thing that rather underlies my complacency about such taxation is that on things like air travel and oil we already have the necessary levels of green taxation recommended: not just by Nordhaus, but by Stern. So we've already done what we needed to do, we just need to wait the time that such changes in relative prices will take to influence behaviour as the stock of cars, heating systems and the like is replaced.

I'm also aware of the Hayek point: that we can't actually know what, exactly, the correct level of such taxation should be, but again, low and gradually rising taxation doesn't worry me all that much, not over decades.

However, Manzi goes further and makes me think that quite possibly I'm wrong in all of the above. That is, that the political system is so disfunctional, so appallingly corrupted by special interest pleading, that it will never be possible to roll out such carbon taxation across the economy without the price soaring above any possible benefits. If he's right, and he is indeed very convincing, then that leaves only one path we can possibly logically follow.

Technological development and whatever adaptation we need to do to fill in the gaps. I can't say that that worries me either really: my day job is on the fringes of said technological development and the one thing we really do know about human beings is that we adapt pretty well.

All of that said, I do urge you to read Manzi's post. Perhaps this is another of these problems which is simply too important to be left to politics?

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What now for Gordon Brown?

Written by Tom Clougherty | Monday 05 May 2008

Last week's local elections were pretty disastrous for the prime minister, Gordon Brown, and his ruling Labour Party. They lost hundreds of council seats – not just in marginal areas, but in the Labour heartlands too – and were beaten into third place in the popular vote by the Liberal Democrats. Even worse, Labour lost the London Mayoralty to Tory Boris Johnson – and the support of the capital city is correctly regarded as a pre-requisite for any general election success. All in all, these were the worst local election results Labour has endured since the 1960s, so I'd say 10 Downing Street is not a happy place to be right now.

Yet it remains very unlikely that Gordon Brown's leadership will be challenged. The Parliamentary Labour Party are much less prone to coups than their Conservative counterparts and, besides, there is not yet anyone who can realistically challenge the prime minister. On the Blairite side, David Miliband is not sufficiently established, Alan Johnson not sufficiently ambitious, and Charles Clarke not sufficiently popular. If there is trouble, it is more likely to come from the left of the party – John McDonnell, perhaps – who think old-fashioned socialism is the best route to electoral success. It isn't, of course, and most of the Labour Party knows it, so Brown should be safe for now.

The question remains though, what should he do with his leadership? On this front, it is vital that he is seen to be bold and decisive. He needs to set out a clear direction for his party, make radical policy proposals and then stick with them. How about this – in order to fight poverty, he should take the poor out of the tax system altogether and eliminate the absurd marginal tax rates which condemn millions to a life of state handouts. And in order to reduce inequality, he should reform public services, so that everyone is free to exercise consumer choice – and not just the rich who can afford to go private.

No, come to think of it, I can't see that happening either.
 

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High salaries win out at the Oxford Union

Written by Dr Madsen Pirie | Monday 05 May 2008

I was in Oxford last week for a Union debate. The motion was "This House believes City pay is indefensible in light of growing social inequality." Naturally I was in opposition, along with the Telegraph’s Damian Reece. I put the case that it mattered more to have a richer society than a more equal one. When a country becomes richer, it often happens that income disparities increase, because some can manage wealth creation faster than others. Modern China is an obvious example. Fortunately, unless the rich store their money in brass pots in the garden, it circulates. What they save or invest provides capital pools to create more economic expansion; what they spend creates jobs, be it in the auto or travel industries, in services such as restaurants, or in areas like interior design.

Furthermore, with capital and talent never more mobile, attempts to limit rewards in London would simply drive both to more amenable surroundings, with loss to the UK of the economic success they bring. I don’t know if our eloquence won through, or whether the Oxford students were looking to the rewards of their own future careers, but the motion was defeated, as the house voted not to criticize the high salaries.
 

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And another thing...

Written by Junksmith | Monday 05 May 2008

Boy, it is hard to keep up with all these crises we have in America. Remember last week, when everybody in America was obese? Remember that? This week there's a food shortage. What happened over the weekend? Did we pig out and eat all the food?

Jay Leno

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