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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

John Hutton at ASI conference

Written by Dr Eamonn Butler | Tuesday 11 March 2008

john_hutton.jpegThe UK government wants to ensure that all new fossil fuel plants are prepared for carbon capture. The plan was announced by business secretary John Hutton (pictured) at a packed Adam Smith Institute conference on The Future of Utilities this week. Much to the dismay of the enviro-lobbyists present, Hutton also confirmed that the government was sticking with its plans to boost clean coal technology.

"Fossil fuels will continue to play an important role in ensuring the flexibility of the electricity generation system," Hutton told us. "Electricity demand fluctuates continually, but the fluctuations can be very pronounced during winter, requiring rapid short-term increases in production. Neither wind nor nuclear can fulfil this role. We therefore will continue to need this back up from fossil fuels, with coal a key source of that flexibility,"

Ah well, the penny seems to have dropped there, at least. And it continues: the government has already declared its support for new nuclear power to replace (or even expand) the 20 percent or so of electricity generation that currently comes from Britain's elderly reactors. Which makes sense, given that the government is trying to balance the need for secure energy with its commitment to cut carbon dioxide emissions (by 60 percent from 1990 levels, by 2050).

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And another thing...

Written by Junksmith | Tuesday 11 March 2008

Proving that the Archbishop of Canterbury does not have a monopoly on stupid ideas,  Mgr Gianfranco Girotti, a senior adviser to the Pope, has come up with an updated list of the seven deadly sins: genetic modification, carrying out experiments on humans, polluting the environment, causing social injustice, causing poverty, becoming obscenely wealthy, and taking drugs.

Junksmith prefers the Telegraph's take:

Allow us to suggest our own list of Seven Vices Best Avoided in Ecclesiastical Pronouncements: prissiness, moralising, over-familiarity, self-righteousness, babyishness, cant and, above all, banality.

Hat-tip to Tim Montgomerie at

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Blog Review 532

Written by Netsmith | Monday 10 March 2008

What signs can tell you. For example, a place that has signs up asking that you not assault the staff must be assuming that there's something about the customer service which makes you likely to make said assault, doesn't it?

One reason that you see Laffer effects in the higher ranges of taxation. But will tobacco actually grow in the UK? 

Continuing the statistical analysis of MPs' expense claims. One employing more staff (or, ahem, one claiming more expenses for doing so) should be better at answering constituents' questions, shouldn't they? 

Quite, if reflexology actually worked, we'd all have terrible health problems from walking down the street. Or be cured of them all perhaps? 

The mockery that follows a particularly stupid piece of public sector advertising. 

That new deal on GPs' hours explained in detail. 

And finally, scamming the scammers. A glorious escapade with one of the 419'ers. 

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The trouble with tax simplification

Written by Tom Clougherty | Monday 10 March 2008

There seems to be a consensus among economists and policy experts that the UK needs a more conservative fiscal policy. And not before time either, given that we have been operating a cyclical budget deficit for the past five or six years, despite years of uninterrupted economic growth and low unemployment. Unfortunately there is also a consensus that the state of the public finances will not allow for much radicalism.

The policy response being adopted by both opposition parties is, at a basic level, quite similar. Neither the Conservatives or the LibDems are promising up-front tax cuts, but both are committed to making the tax system simpler, fairer and flatter and to shifting the burden of taxation away from production (taxes on income and profits) towards consumption (more specifically, taxes on pollution).

As long as the proceeds of green taxes are really used to bring down taxes in other areas, I have no problem with them. All things being equal, we want to encourage production and discourage pollution, so the policy makes sense. And of course, the ASI has been campaigning for tax simplification for years, so any moves in the direction would be very welcome.

However, even simplifying taxes can turn out to be harder than expected. The trouble is that the winners from simplification tend to be ungrateful and the losers tend to be aggrieved. And if you're not cutting taxes overall there are always going to be losers from simplification. That probably means you need a very clear manifesto commitment to simpler taxes, especially if you're going to have a small majority (almost inevitable after the next election).

Another option is to introduce lower, simpler taxes through an alternative, opt-in tax system like the one advocated by Fred Thompson in his ill-fated US presidential bid. People could opt-out of PAYE and into a self-assessed flat tax system instead. Over time most people would probably opt for the simpler system, and we would end up with a much better tax system without having to fight major battles over the removal of popular complexities.

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Common Error No. 57

Written by Dr Madsen Pirie | Monday 10 March 2008

57. "Children should be taken into care at the slightest hint of any parental abuse."

Some child abuse campaigners broaden the definition to make it seem more prevalent than it is. 'Child abuse' used to mean physical violence or sexual abuse, but campaigners try to include parents who might smack a naughty child, or even verbally assail one in an intimidating manner. This broad definition devalues the seriousness of horrific acts by putting them on a par with verbal or mild physical chastisement. On this definition, most children are abused.

On the more serious definitions of abuse, there are obviously cases where the only way to protect a child from an abusive parent is to remove the child to a safe place. But even in cases of real abuse, there are often better ways of protecting the child than by taking it into care. The best environment for a child is reckoned to be a family home, whatever type of family. When abused children are asked what they want to happen, most do not want to be taken into care; they want the abuse to stop.

When a child is taken into care, it sets back their potential development and achievement. Children in care, particularly those in institutions, do not fare as well on average than those who remain with their families. Obviously a balance has to be struck, and if alternative remedies like supervision, counselling and therapy prove effective, they are to be preferred to care orders.

In the notorious Cleveland case, many children were taken from their parents on the evidence of a child abuse 'expert' acting on a crackpot theory of abuse. There were similar cases allegedly involving devil-worshipping cults in the Scottish islands which also turned out to be the obsessions of officials rather than real abuse. These cases illustrate the dangers of giving officials too much power, and of the need for children's courts to keep tight rein on their powers.

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Those John Lewis bonuses

Written by Tim Worstall | Monday 10 March 2008

The bonuses announced by the John Lewis Partnership on friday were excellent

Across the nation, at around 9.30am, extra-large envelopes containing the percentage of the partners' annual salary that staff will receive as bonuses were opened.
The figure of 20pc was the highest handout in a decade on the back of a 19pc jump in pre-tax profits for the UK's largest department-store chain and Waitrose to £379.8m.

Which brings me to one of my favourite points. There's rather a large difference between "capitalism" and "free markets" (with the caveat that no market is ever entirely free, correctly it should be "freer" markets). Capitalism defines a system of ownership, markets a method of exchange. Capitalism, whatever your view of it, should not be confused with the other. For here we have a decidedly non-capitalist organisation, a workers' co-operative in fact, working and thriving in a free market milieu. And good luck to them too, as with all and any other method of ownership or organisation that people might want to try. Those who want the certainty of a steady wage in a large corporation, those who prefer the risks of self-employment, the workers' co-operative, even those who would drop out and live in a yurt in Wales.

And it's those markets that provide the freedom for each to make their own choices for, yes, there are markets in ownership systems just as much as there are in anything else.


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Quote of the day

Written by Wordsmith | Monday 10 March 2008

Everything government touches turns to crap.

Ringo Starr

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Blog Review 531

Written by Netsmith | Sunday 09 March 2008

An interesting idea for making schools better: increasing the number of children in a class.

An extraordinarily bad idea about schools from California: 

A primary purpose of the educational system is to train school children in good citizenship, patriotism and loyalty to the state.

Meaning that there is no constitutional right to home schooling.

The London Development Agency seems to be about everything (indeed anything) except economic development.

The secret of real development is now known: The Age of Friedman has been good to the world.

Just how badly has Cuba done over the decades?

And just what are the "right safeguards " on the information the government keeps on us?

And finally, an accurate definition of "politics".

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Know no economics

Written by Tim Worstall | Sunday 09 March 2008

We love the new economics foundation around here. No, really, we do, how can you not take to your heart those suffering from the Great Capitals Shortage of the Noughties? Further, how can you not have affection for those who, while attempting to believe in "economics as if people and the planet matter" find it so difficult to get the most basic grasp on the subject?

Andrew Simms, one of the nef's wonks, has a piece over at CiF arguing that the UK should have something like Norway's Oil Fund. Instead of spending the revenues from North Sea oil on the concerns of the present, as we do through the Treasury, he suggests it should be an investment fund. The money saved and used for the future sort of thing. That part is at least arguably a good idea or a bad one, although I don't see the current crew of drunken spendthrifts being all that keen on allowing a cashflow to escape their clutches.

However, where the idea rather falls over is in what he wants the fund to spend the money upon:

An Oil Legacy Fund could for example, be used to invest in a fund for
innovation; development and the promotion of micro, small and
medium-scale renewable energy technologies; help for local planning
authorities with the complexities of managing new, decentralised
renewable energy services and technologies; expanding the use of school
buses to tackle both congestion and energy-inefficient private-vehicle
use on the school run; lowering the age for free public transport, and
allowing adults with children to go free on public transport, making
household-energy-monitoring devices available in order to increase
awareness of current energy use and to make people aware of
opportunities to improve; tackling fuel poverty, and much, much more.

That last is especially note worthy: we should subsidise those we have driven into poverty by the taxation we impose upon them. But much more important than that, Simms has missed the vital point about the Norwegian fund (and indeed, others around the world, like all those soveriegn wealth funds): they don't invest at home.

The fund invests all its money abroad to avoid stoking the

Somewhat sad, isn't it? Vaulting ambition brought back down to earth by a trivial point. The major point of such tax funds is to isolate the natural resource revenue from the domestic economy so as to avoid the pitfalls of the Dutch Disease. It's this sort of thing that makes the nef such a favourite with us: rather like a particularly cross-eyed kitten really. Ineffably cute and when they launch themselves off into the void their vision makes it impossible for them to land upon the intended target. Yes, cute, but also very funny.

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Common Error No. 56

Written by Dr Madsen Pirie | Sunday 09 March 2008

56. "Maximum working hours are needed to protect workers' health and fitness."

It surprises many to learn that health and fitness go with wealth; the more money you have, the more you are likely to be fit and well. By limiting working hours we are denying people in the lower economic strata the chance to improve their lot by working more.

In the lower economic bands people are paid by the hour and earn more by working more. It is not as true of many middle class jobs, where people can be required to work late without consequential increases in salary. A working hours limit is not what it seems, either. It rarely puts a limit on the actual hours worked; more commonly it requires that all hours worked beyond a set level shall be paid at overtime rates. This, in turn, can make employers less ready to offer those extra hours, since they can cost too much.

The result of a maximum working hours limit is to restrict the income that people can earn, which matters most to those lower down the economic scale. Of course, most people will choose to achieve a sensible work/life balance, allowing appropriate time for rest, leisure activities, and family life. It should be their choice where possible, however, because they know their own circumstances and priorities more than outsiders can. Employers, too, have an interest in ensuring that the hours worked do not undermine the safety and efficiency of their employees.

A working hours limit increases the costs of business and the price of its goods and services. It can mean that extra staff are required, which involves the extra administrative costs and benefits required for each extra employee. And it can require a trade off between extra job opportunities and lower productivity, resulting in less successful and even less viable businesses.

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