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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

America's tax freedom

Written by Dr Eamonn Butler | Monday 31 March 2008

I keep an eye out for web mentions of Tax Freedom Day – that day in the year when we at last stop working for the tax authorities and at last start working for ourselves. And over the last couple of weeks, I've spotted lots and lots of mentions, because Tax Freedom Day arrives this month.

If you're an American, that is. The Tax Foundation has calculated that Tax Freedom Day this year will fall on April 23. That's three days earlier than in 2007, thanks to President Bush's tax rebates, designed to kick-start the US economy. But it's still later than it was during the whole of the 1980s (thanks, Mr Reagan) and the early years of the George W Bush administration.

None of this is any consolation to hard-pressed British taxpayers, though. Tax Freedom Day doesn't come in the UK until June 2 this year. That's also a little earlier than last year, but the general trend has been upwards in the UK for some long time.

So as the Americans are heading off to the beach to celebrate their liberation from taxes on April 23, we Brits will still be slaving away for the benefit of HM Revenue & Customs. Slaving for nearly another six weeks, in fact. Isn't that just too long to be in thrall to our political masters?

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Quote of the day

Written by Wordsmith | Monday 31 March 2008

It's no accident that capitalism has brought with it progress, not merely in production but also in knowledge. Egoism and competition are, alas, stronger forces than public spirit and sense of duty.

Albert Einstein

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Blog Review 552

Written by Netsmith | Sunday 30 March 2008

Clearly something is amiss when a Liberian Imam knows more about statistical testing than an English County Council.

This isn't illegal (yet) although it is highly amusing. 

Lord of the Rings is really a discourse upon property righs. You didn't know that, did you? 

Some backpedalling upon the immediate and catastrophic part of climate change. The most remakable part of the whole subject is the way in which what the scientists are saying and what the politicians are saying has diverged in recent years.

The obligatory Ban Darling update. 

Markets really do work better than bureaucracies. 

And finally, yes, prediction is very difficult, especially about the future. They even missed the idea of a blog post dedicated to 404 error pages. 

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Compensating the Losers from Trade

Written by Tim Worstall | Sunday 30 March 2008

Free Exchange, a blog from The Economist, looks at how to compensate those who lose their jobs as a result of a change in either the flows or restrictions upon trade. Retraining seems like a reasonable response. However, this opens up the question of whether we do in fact owe compensation to those affected by trade: I would say not. Oh, as a political matter, certainly it makes sense, that those who will be negatively affected know that they won't be thrown on the scrap heap and thus oppose a reduction in restrictions, but as a moral matter?

I'm specifically thinking of those insisting that they should be compensated for a removal of a tariff or quota and thus likely to be driven out of business by increased competition. The demand is usually that there should be lump sum compensation from those who will benefit (ie, consumers) to those who will lose (those about to be out of work producers). And I don't, as I say, think this is either morally or logically justified.

For the removal of said tariff or other restriction is what is going to cause the loss to those producers. Which means that the imposition of it has been of benefit to those very same producers all the years it has been extant. And what we haven't been seeing all of those years are lump sum transfers from those producers to the consumers to compensate, from the benefits being gained, to cover the losses from not trading. 

It is, if you like, another example of what some accuse certain financiers currently of doing: the privatisation of profits and the socialisation of losses. 

I have absolutely no doubt that such things as retraining grants and the rest are a useful political response to peoples' worries over the structural changes brought about by changes in trade restrictions. It's just that I don't see the moral case: they're not been paying us out of the profits they make from the restrictions upon us, so when those restrictions are lifted, why should we pay them? 

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Common Error No. 76

Written by Dr Madsen Pirie | Sunday 30 March 2008

76. "If state industries are opened up to competition, private firms cream off the lucrative trade, leaving the poor and outlying regions without adequate service."

This argument exists only on the fiction shelves of libraries. In practice the private sector shows a remarkable ability to make profits on what were loss-making services for the state. Examples are plentiful. State airline routes abandoned as loss-makers are taken over by private airlines and run at a profit.

Deregulation of US airlines was widely predicted to cut services to outlying areas. The reverse happened. Instead of "cowboys" engaging in their customary "creaming off" of the large and heavily used services, there was an increase in small airlines serving smaller towns. The private sector is more innovative. It introduced the "hub and spoke" system of air traffic, for example. It uses smaller planes and buses. It brings in the ‘no frills’ economy services which have proved so popular. It uses unfashionable airports. It brings in new types of service and uses up-to-date technology.

Private firms have the incentives state ones do not. They seek customers because that is where profits can be made. They do not impose a national standard, as state bureaucracies tend to do, but vary their output according to the conditions and needs of different areas and sectors. This has happened in mail services, in telephones, in freight and package delivery. Far from just losing their loss-making state services, people gained viable and innovative alternatives.

In rare cases where private business cannot manage to provide service for outlying areas, society will get a better deal if private firms are invited to bid on the basis of least subsidy needed. That way we get competition and consumer pressure, and the incentive to operate efficiently, none of which are normally to be found in state monopolies.

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And another thing...

Written by Junksmith | Sunday 30 March 2008

Hillary now says that she just made an honest mistake when she said she had to duck sniper fire in Bosnia. There was no hostile fire of any kind. Although, ironically, while she was away, Bill Clinton did see some action.

Jay Leno

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Blog Review 551

Written by Netsmith | Saturday 29 March 2008

The Freedom of Speech apparently nowadays means the freedom to say what the government approves of. Further details here: that enlightenment thing, so old hat, don't you think?

Freedom of information appears to be suffering similarly. 

Another example of an old economic favourite: how much is your time worth? 

As with this morning's blog: biofuels simply don't work. 

Although this rather wonderful idea actually might work: attatching a kite to a ship. 

Yes, we know, you've been waiting for the update on the Ban Darling campaign. Further sightings, a competition winner and this rather stirring song to sing (tune: Wild Rover):

I've been your new Chancellor for not quite a year
But I've taxed all your money from whiskey and beer,
And now in the coffers there's no gold in store
And I never will pay off the lenders no more.

And finally, the weather has been declared Muslim. 

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The effects of the smoking ban

Written by Tim Worstall | Saturday 29 March 2008

I'm sure there was supposed to be a massive increase in the pub trade as a result of the smoking ban. Absolutely certain of it in fact. For there was that huge pent up demand, wasn't there, all those non-smokers who were denied their right to a social pint or two without reeking like an ashtray?

I'm not imagining such things, am I?

The deal - known as a "pre-pack" administration - saw Laurel put into administration prior to 293 of the 383 pubs and restaurants being purchased by newly formed companies. Laurel, which had been hit by the smoking ban and consumer slowdown, has now ceased to trade.


Since then, trading across the pub sector has been hit by the extension of a smoking ban from Scotland to England and Wales.

Or more locally:

Paramount’s managing director Mark Greig said: “The pub trade is going through troubled times thanks to last year’s poor summer, the smoking ban and fears of a recession.

So, umm, pubs are going bust left right and centre as that heaving mob of non-smokers desperate for a watering hole turns out not to exist, to have been a figment of some fevered imagination.

Gosh, whatever next? Our Lords and Masters making decisions upon incomplete information? Misleading us perhaps?

Dearie me, no, say it isn't so!

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Common Error No. 75

Written by Dr Madsen Pirie | Saturday 29 March 2008

75. "Democracy is a sham with no real choice because all the major parties basically support the system."

This is an argument popular among those whose views find little support. They say that choice in our free elections is illusory because Conservative and Labour, Republicans and Democrats, are all committed to continuing with the established system, making only minor changes. A really radical party stands little chance.

The reason that major parties support the current system is because most people prefer it that way. The parties seek votes, and that is where they are to be found. Parties which come along with radical alternatives generally attract little support. People are suspicious of the untried and untested. Sometimes, though, a new party with new ideas can emerge as a major player. It takes time for the electorate to assess their competence and to trust them. This is how the Labour Party emerged in Britain.

Sometimes the times call for radical action and the electorate backs it. This is how the post-war Atlee government was returned with a mandate to build a new, radical and modern Britain. It is how a radicalized Conservative Party was elected under Margaret Thatcher to break the post-war consensus.

To say that a similarity of party outlooks denies choice is to sidestep the whole point of democratic elections, which is the ability to change a government peacefully. Even if our parties were the same, which they are not, at least we could still change the people. The important thing is that we can throw out governments we do not like. It is the knowledge that they can be thrown out that keeps our governments reasonably responsive to the needs and wishes of the people. Very often we have seen governments which have been in office too long become complacent and bankrupt of ideas. In a democracy the people can replace them with new and untainted leaders to do things differently.

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Time to kill crop-derived biofuels

Written by Tom Bowman | Saturday 29 March 2008

ethanolpic.jpgYet another prominent scientist has joined the chorus against crop-derived biofuels, as Lewis Page reports.

Dr Richard Pike, chief of the Royal Society of Chemistry, has said that biofuels are a "dead end" and "extremely inefficient", and that the government was wrong to impose a requirement for 5 per cent biofuel content in motor fuel by 2010.

Dr Pike points out that "the 80 tonnes of kerosene used for a one-way commercial flight to New York is equivalent to the annual biofuel yield from an area of approximately 30 football pitches." At this rate it would take the whole of Britain's farmland just to run Heathrow.

It really is time to stop this nonsense. To produce these crops people are farming intensively, using more fertilizers and pesticides. In poorer countries people are cutting down virgin rainforest to plant biofuel crops. Poor people are finding corn and wheat priced out of their market, and the tanks of 4x4s are taking the food from the plates of poor families.

This is very straightforward. Biofuels are bad for the environment and bad for poor people. Like much so-called environmentalism they are based on bad science and ill-thought out consequences. They are popular with legislators and agri-businesses for rent-seeking reasons. The case against biofuels has been made overwhelmingly, and they should now be stopped. If we can derive fuel from waste biomass or algae, or from genetically engineered organisms, we should revisit biofuels. But until and unless that happens we should immediately withdraw the commitment to biofuel targets. This is tokenism gone mad and should be stopped and replaced by more useful and less damaging activity.

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