Thrift, waste and reform

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Unsurprisingly, in response to the dreadful state of public finances, David Cameron has promised an age of 'thrift' if brought to power.

However, his polices (though welcome) are still somewhat thin on the ground:

  • shame overpaid civil servants, with a "people's right to know" scheme
  • publish all items of public spending over £25,000 on a website
  • publish all public sector salaries over £150,000

Cameron is at present focusing on the clearly evident problem of government waste, and of course a ‘Phibbs List’ approach to all areas of government would be very welcome; however, in truth a peek here shows that without radical reform, the public purse will stay firmly in the red indefinitely (with or without tax rises). Principally, pensions and health care need structural reform if the overheads of government are to be cut back.

The next government needs to be reminded of the proven benefits of free markets. As Milton and Rose Friedman argue in their classic book Free to Choose, there are only four ways to spend money:

  1. Spend money on yourself
  2. Spend money on other people
  3. Spend other people’s money on yourself
  4. Spend other people’s money on other people

Now you don’t need to be an economist to know which is the most efficient.

The confiscation of passports and driving licences

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Citizens having their identification confiscated by unelected government officials for failing to complying with the state – It’s the type of scene we might expect from an old war movie set in Nazi Germany. But if the government gets its way, these authoritarian stamps on our liberty will could soon become reality in 21st century Britain.

Under current plans the government would give power to the Child Support Agency (and their impending successor the Child Maintenance and Enforcement Commission) to confiscate the passports and driving licences of parents refusing to pay child support. Initially, the Conservatives objected the move, but it will now be included in the Welfare Reform Bill.

The fact that the state feels it has the right to encroach upon an individual’s freedom to the extent of removing their driving licence is madness and ill thought out, while the significance of the driving licence is an obscure aspect to the legislation. A worrying aspect of the plans is that private firms could also be given the power to remove passports without a court order.

This blows the rule of law, accountability, democracy and liberty out of the water. This legislation would usurp and bypass the age-old notion of a fair trial by jury to the unelected.

We can only hope that the Lords Constitution Committee rejects this legislation and that the next government we have understands the meaning of freedom.

Peter Huber's prudent policies

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Peter Huber has brilliantly put together all the arguments of a prudent carbon policy.

First of all we have to acknowledge the fact that we are unable to control the global mobilization of carbon-based energy because 80% of fossil oil worth $ 40 trillion is under the control of 'nasty' people. Secondly, the anti-nuclear bias of the greens after Chernobyl has increased the pollution of our planet because the coal industry was the main beneficiary. Thirdly, developing countries are sitting on trillions of cheap coal that they will use regardless of the West’s obsession with de-carbonizing the planet. Fourthly, 1.2 billion people of the industrialized West don’t even control the demand for carbon anymore, the 5 billion poor people that are meanwhile emitting 80% of greenhouse gases have taken over and their per-capita emissions are rising much faster than ours can possibly fall using de-carbonizing technology. As a result and fifth it is plainly absurd that the planet can be saved with just 1 or 2 % of the world economy.

On wind power, Huber accurately states:

Windmills are now 50-story skyscrapers. Yet one windmill generates a piddling 2 to 3 megawatts. A jumbo jet needs 100 megawatts to get off the ground; Google is building 100-megawatt server farms (in Lithuania with 78 % nuclear electricity production, FH). Meeting New York City’s total energy demand would require 13,000 of those skyscrapers spinning at top speed, which would require scattering about 50,000 of them across the state, to make sure that you always hit enough windy spots.

The worst thing we should do is sharply increase the cost for coal-based electricity. For using this to power our passenger cars would actually lower carbon emissions because these big power plants are much more efficient in burning carbon than individual gasoline engines. And finally Huber makes a very good case for sequestration of carbon on the inescapable assumption that in our 21st century economies carbon emissions will keep growing. But focusing on better land use and reforestation worldwide over the next 50 years will do.

Blog Review 943

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Here's the big question. Just where did all the money go?

And will a million voters sign up to tell Gordon where he needs to go as a result?

An interesting point. For a bank to get TARP funds requires filling out a 4 page form. To give that same money back requires 16 pages...

Everyone likes blaming the securitization of loans for the problems: but without a revival in that market the problem just isn't going to get solved.

More on credit: to those politicians who think that credit card companies charge too much. Why aren't you launching your own credit card and cleaning up by competing?

Yet more evidence that the environment is a luxury good. As we get richer we use less of it.

And finally, how little Republicans are made.

The cost of bureaucracy

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I always knew that this was true, true at least to my own prejudices, but someone's now gone and actually proven it. We're often told that bureaucracy in hte spending of public money is neccessary, and essential manner of protecting the taxpayers' funds. But it can be that the  cost of the bureaucracy doing the protecting is higher than the value of the protection:

...we show that the $40,000 (Canadian) cost of preparation for a grant application and rejection by peer review in 2007 exceeded that of giving every qualified investigator a direct baseline discovery grant of $30,000 (average grant).

The bureaucracy used to filter the funds to those researchers deemed worth exceeds the costs of simply giving the money to all researchers that apply.

Which leads to an interesting game that can be played. What we see here is that the cost of administration is higher than the produce of that administration. We're not saying that "frontline services" need to be cut, not at all. We're purely stating that at times and in places the cost of selecting who gets the public money and how is so high that we can simply dole it out without doing any such selecting. We'll get, in fact, more front line servies (in this case research) for the same money. The only people who would lose are the administrators themselvesand we'll all weep a bitter tear for them now, won't we?

The game is of course to see which other similar bureaucracies we think we could abolish and get this benefit from. More services for the same money?

As a start I would propose the Regional Assemblies.  Large numbers of the quangos (The Dairy marketing bods for example, the Arts Council maybe?). Much of the NHS oversight panels and management boards. The BERR.

Well, make your own lists, this really could be a game for all the family. Which parts of the bureaucracy would make us better off by their abolishment?

Politics: cut it out

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In an article for the Independent Vince Cable calls on David Cameron to admit what public services he will cut. Mr Cable writes:

This is a time for grown-up debate. The deficit is too big and the public is too cynical of politicians to be taken in by vague, unspecific, promises. The only way forward is to identify, explicitly, areas of government activity which will have to be cut right back. My party has already identified several specific cuts – like the ID card scheme; the NHS IT project; "baby bonds"; refusing unlimited taxpayer subsidies for nuclear power. We believe that there now has to be a serious debate about how to scale back the reach of tax credits; ballooning public sector pension commitments, especially to "fat cats" (like MPs); gross military overstretch; the promise of access to universities for half of all young people; and much else.

In order to have Mr Cable’s grownup debate, first the people of this country need to be treated like adults. As Tom Cloughrety convincingly argued on this blog last month, the country could be run effectively for £70 billion per year.

In truth Mr Cable is part of this political machine that needs dismantling. His positioning against the Conservatives is just not convincing. Does he want the Conservatives to cut public services or does he want them to say that they will cut public services?

The political parties talk to the people like poisonous divorced parents manipulating, bribing and failing the child at every turn. We of course need a different type of politics, but much better would be just less of it.

Blog Review 942

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We have evidence of Laffer Effects stemming from tax rates here. Rates over 40% seem to lead to slowing growth in tax revenues.

On the strange case of Braxton Bragg and the perils of corporatism.

It's finally happened, we can now openly and legally call MPs thieves.

It is apparently government policy that only one shag per week should be subsidised. Including, bizzarely, if you are colour blind.

There is no suich thing as "fair pay".

Why you might be happier living in Al Capone's prison cell than your modern home.

And finally, interesting graphics.

 

The way we're ruled today

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I realise that not everyone shares my distaste of the European Union  nor my deep and abiding suspicion of all who sail in that ship of state.  However, a little story about why all should be worried.

One of the problems we have with the State itself, the very conception of it, is that  if it is possible for it to dole out benefits to favoured groups then those who would benefit pay attention and lobby to become favoured groups. Such benefits will be concentrated and the losses will be, to each person outside the favoured group, small. Thus there will be little pressure for the favours not to be granted.

This becomes even worse when the losses will be, in Bastiat's phrase, those things which are not seen. People are pretty good at spotting the loss of something they once had and terrible at spotting what they never got.

Having two layers of the State just makes such problems worse of course. The European Parliament has just voted to extend copyrights on sound recordings:

Performers and record producers could enjoy increased royalties after European lawmakers yesterday voted in favour of an extension of copyright protection from 50 to 70 years.

Leave aside the rights and wrongs of copyright itself, that's a story for another day. Leave aside the rights and wrongs of this extension as well. And consider solely that this very proposal was considered, carefully, in this country as recently as 2006. In the Gowers Report. And soundly rejected as an unwarranted enrichment of some to the impoverishment of others. This was a benefit that should not be doled out to such a favoured group. Copyright is a mechanism to increase the amount of innovation and given that no musician ever has declined to record a piece of music because they won't be getting royalties 50 years later the extension would not increase innovation. But it would limit what later artists could do with earlier recordings, thus in fact reducing innovation.

But now that we have this double layer of law making, this pair of chances for lobbyists to gain access to the purses of the citizenry, we are simply and obviously going to see more such successful attempts.

As I say, I know that not everyone shares my dislike of the EU either as it stands or even in principle. But doesn't the fact that the favoured ones now have a twice over chance to dip your pockets engender at least some unease?