Blog Review 918

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Oh my, American politicians really do seem to have problems paying the taxes they impose on others, don´t they?

No, really, a subsidy to replace clunkers with new cars really isn´t sensible.

Nor is this method of splurging taxpayers´ money a clever one.

If we refuse their products we´re just going to get the people themselves flooding in. Trade sounds better, doesn´t it?

Interesting: indie musician shows that he understands the scalping problem perfectly.

Which is more economics than the World Wildlife Fund seems to grasp.

And finally, a new word game to play.

Financial crisis coincidences

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The UK's financial crisis was, by common consent, partly caused by poor regulation. Some of us would contend that it was far more a question of lack of implementation than the regulations themselves. In other words, poor regulators, rather than a shortage of regulation. 

Who better then to make a dispassionate and independent report on the financial crisis than the chief regulator himself: Adair Turner? The report weighs in at 122 pages. The FSA was able to respond to this report the very same day with 215 pages. If this were not coincidence enough, the FSA was able to agree fully with the Turner Report, with Turner being Chairman of the FSA yet another coincidence.

The main finding, which coincides with Gordon Brown's view, is that little if any of this can be blamed on the UK: the international community is at fault. In short, no one should be criticised, it is just a string of coincidences.

The age of stupid or the age of gullible?

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With most people's attention understandably on the economic situation and the G20 summit, let's not forget what environmentalists are doing. Among the various protest groups having their say in London this week, there is a general understanding that the future world they want to live in will be green and fair as well as being devoid of greedy capitalists. We have also had the "people's premiere" of "The Age of Stupid", a film brought to you by the makers of McLibel.

Whereas Al Gore's invaluable contributions to the debate have at least dealt with factual evidence (cherry-picked to tell a particular story, but still largely factual), the new film is a dramatic look back from a post-Apocalypse future at what went wrong. Not surprisingly, there are clear-cut heroes and villains, with the overall message that it's all been our fault. This message has been reinforced over the last week by Rowan Williams' lecture on responsibility in York Minster. In this, he summed up the belief of many (whether Christian or not) that the environment has been changed "appallingly for the worse". This, I suggest, goes against the experience of most people lucky enough to live in the industrialised world.

Rather than living currently in the Age of Stupid, when mankind wantonly destroys the planet, it seems more likely that we are actually in the Age of Gullible, when the majority of opinion formers, the media and intellectuals are willing to place unquestioning belief in the dire predictions of environmentalists.

Martin Livermore is the Director of The Scientific Alliance

How to defend freedom

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Despite the current downturn, the world's income must be about $60,000,000m. If you added up the budgets of all the free-market policy think-tanks in the world, I don't think you'd make it close to $600m, absolute tops. So I figure the world spends 0.00001% of its income defending the source of that income. Thanks, guys, but you could do better. Why not give online or mail a cheque to the Adam Smith Institute today?

Blog Review 917

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An excellent blog from Cuba, well worth having a read around it. for example, what it´s like to be independent when the whole of society is regimented.

This is what unions do, create monopolies for their own members, but is this actually something we want anyone to be doing?

Taking apart the President´s plans for the auto industry.

How to create the Common Agricultural Policy.

The scary holes in the local authority pension schemes.

If you think we´re all being spied on a little too much already, just you wait.

And finally, a political alphabet.

 

Bloggers Bash 2009

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Tomorrow we are hosting our now esablished annual Bloggers Bash. This will certainly be a great one, with John Redwood MP, Alex Barker of the FT and Guido Fawkes speaking on Politics and the Blog (not to mention the two small kegs of award winning ale).

Details of the event can be found here.

If you are intersted in attending, simply email events@old.adamsmith.org so we can put you on the guest list.

Scrap the IMF

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G20 participants like global stuff, and there are plans afoot to beef up the International Monetary Fund. Actually, we shouldn't be beefing up the IMF any more than we should be beefing up (at considerable expense) the Financial Services Authority. Both should be put in a sack and quietly thrown in a pond.

The IMF is a clapped-out postwar body, set up in a world where trade was a thirtieth of what it is now, and when exchange rates were fixed. Once currencies started floating, in the 1970s, it had no clear role – so carved out another one for itself, doling out advice and cash to poor countries. But today it has few customers: many poor countries have at last embraced the world trading system, and most of the rest don't want the strings that come with IMF funding.

Furthermore, as recent events show, the days when something like the IMF could save the world from a global crisis are over. Even if it had been ten times the size, it could not have halted the enormous forces that were unleashed last year. The IMF's resources were indeed hundreds of billions of dollars. But The bank bailouts in Britain and America alone have amounted to trillions, not billions. Indeed, having an implicit guarantor around in the shape of an IMF is probably as dangerous to the global economy as having the implicit guarantee of a government bailout is to the domestic financial sector – just encouraging people to take more risks because nobody fears the downside any more.

The IMF is a body without a role. It carries too much past baggage to be given a new one. Rather than boost it just because it sounds nicely global, we really should be throwing it into the deep water.

This is the road to hell

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One of Brown’s plans to boost the economy and his poll ratings, sooner rather than later, regardless of the costs, is the “biggest financial stimulus the world has ever seen". Few think Britain is in the right shape for a stimulus. Mervyn King has warned against it, markets warned too, and voters will only support it in the hope that the economy will recover.

It seems Brown will undertake any frantic measure available to boost the economy during his term, without regard for future burdens. He is playing a political and irresponsible game, inconsistent with his supposed focus on economic stability.

To make things worse, it is not even clear that the fiscal stimulus is a viable method of addressing this recession. To ‘stimulate’ Gordon must tax, borrow, or print.

If he taxes, he takes with the left hand, and dishes out with the right: a mere transfer. There may be positive multipliers on government spending, but there is a negative multiplier on all the lost private spending. As government investment is less efficient than that undertaken privately, the net effect will be negative.

If he borrows, then our debt burden will balloon into a debt bombshell of mass economic destruction. Borrowing will also take funds out of the market for loanable funds, and thus may limit the private sector’s access to funds. People will also make some adjustments in light of eventual future pain, further negating any positive elements.

If he prints, then he starts a very risky game. The private sector’s changed expectations in light of monetary inflation will mitigate the stimulus. This would then lead to redistribution rather than growth. Inflated money supply may also lead to overshoot and severe inflation, and even if that is avoided, if it is excessive it will almost certainly create the conditions for the next money-fuelled bubble.

Brown should stop trying to get the economy to a quick fix ‘boom’ for political gains, and think more about long-term stability. One hopes his G20 counterparts have restraint, and block him following what Topolanek the EU president called, the “road to hell".

Win a copy of The Rotten State of Britain

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You still have time to win a copy of The Rotten State of Britain over at the Liberal England blog. All you need to do is answer the following questions:

1. In which town was Adam Smith born?

2. Which Scottish Football League team plays its home games there?

3. Who was arrested outside the entrance to Downing Street on 18 June 2006 for carrying a placard saying: "In a time of universal deceit, telling the truth is a revolutionary act"?

4. What is the name of the proposed government database that will hold details of every child in England?

5. Who was appointed to head the Better Hospital Food project in 2000? (Correct spelling please.)

Click here to find out more.