Blog Review 922

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It appears that the gay vote leans Conservative. Something of a change, certainly, but then as is said, a pretty natural consistency for a message of personal liberty.

Who knew that the tax cut multiplier was so large?

If it is that large then all this fuss about tax havens is irrelevant.

It´s all of the time or none of the time, not just when it suits your particular cause, no?

Whisper it gently, but many banks are simply getting on with solving their problems without government intervention.

No, we don´t get faced by too many choices. Not if you look at what people actually do, that is.

And finally, yes, Mother is always right.

More power to the regulators

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Isn't that the current war cry? That more power must be given to the regulators to make sure that markets won't drive us into another crazed spiral of boom and bust? That only if we hand over to the bureaucrats then children will be able to gambol happily under a shining sky and all will be well with the world?

This is such a strong current at the moment that I'm a little surprised not to have been told that regulation will make my teeth whiter as well. For there is, in this messy real world that we inhabit, a small problem with thinking that regulators will provide that pony for everyone.

Although I know I shouldn't laugh I couldn't help an involuntary snigger when perusing the background section of the report about the Icelandic economy. The MPs quoted an "expert" body from June 2007 which said at the time: "The medium-term prospects for the Icelandic economy remain enviable."......The experts in question? No less than the International Monetary Fund (IMF), which on Thursday was granted a trebling of its resources by the G20 as part of its $1.1 trillion (£750bn) economic aid package.

You see the problem there, don't you? Those that are being proferred to us as the omniscient and benevolent regulators might well be benevolent but they're certainly not omniscient. They were just as wrong as everybody else in recent years.

Well, actually, not quite just as wrong as everyone else. They were even more wrong than one particular group. The hedge funds, the short sellers. People like John Paulson. George Soros perhaps. These people did in fact get the fragility of the banks right and made a great deal of money by doing so.

Logically then we should be arguing that those who got it right sould be doing our regulating for us, not those like the IMF who got it wrong. Sadly, logic has very little to do with politics: we're banning the hedge funds from making short sales and thus removing their major method of regulating.

Ho hum....

 

The BBC, Ofcom and the Sachsgate affair

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So, we have finally received the findings of the Ofcom investigation into the whole BBC ‘Sachsgate’ affair. Unsurprisingly, the results are notably underwhelming.
 
The BBC has been fined £150,000 in total. £70,000 was for broadcasting offensive materials and £80,000 for invading the privacy of members of the public. This fine of £150,000 may sound adequate, but bare in mind that whilst Ross was publicly embarrassing us, he was earning £6m per year.
 
The Ofcom report into the debacle reveals a little of the extent of public waste at the BBC. For example, after a previous incident, Russell Brand’s broadcasting had already been classified as ‘high risk’ by senior management, yet he was still given a prime-time show on Radio 2.
 
Regulation acts as a cost to industries at the best of times - but there is something askew when a government regulator fines a public body. Essentially, the government has admitted it has failed in this instance, so has decided to fine itself at nobody’s cost but the taxpayer. We wouldn’t let a criminal decide their own sentence in court. The broadcasting regulatory system here smacks of double standards. The regulatory rules state that a private broadcasting company can be fined 5% of its revenue for breaches of the rules on any occasion. By contrast, the BBC can only be fined £250,000 for an identical failing. Why should the BBC be allowed so much more leniency and freedom than other private companies? If anything, as a national public institution they should be held under much greater scrutiny.
 
There is an ironic parody here – just like Ms Baillie, the taxpayer has been shafted by the BBC, and both of us have received comical apologies.

The G-20 and our discontents

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“The era of bank secrecy is over," said Gordon Brown during the G20 conference on Thursday. The conference agreed upon imposing stricter regulations on financial markets, in addition to regulating hedge funds. The bonus crisis was also touched upon in their decision to strictly regulate executive pay. Furthermore, the final statement encourages the IMF and the World Bank to lend to poorer countries by pledging $250 billion.

What Gordon Brown really meant to say is that the era of privacy is over. Now the government will have their nose in every area of bank operation, imposing regulations and removing growth incentives for smaller firms and hedge funds, not to mention the pay incentives for executives. The rest of the measures taken will have questionable effects on the world market. More money is being pumped into the grinder, but until when?

The key question not being asked by many in the media is can we solve the problem with more spending and regulation?

Blog Review 921

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Just a gentle little reminder of where the money goes. Aren´t you much happier about paying your taxes now?

A handy hint about not trusting statistics....they don´t mean nothing without the causation being explained.

Companies don´t suddenly become greedy. There´s another reason for rising prices than that.

For those planning bailouts, nationalisations, confiscations and the like. Do remember that there is something called the law to constrain you.

To warm the cockles of your heart: putting the boot into a Nobel Laureate.

A reminder that defending free speech means defending vile speech.

And finally, economic wisdom in a cartoon strip.

Mindboggling

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Camilla Cavendish made the following quite mindboggling assertion in her Times column:

The theory of comparative advantage, which has underpinned trade for 200 years, is fraying.

Eh? How so?

The argument was that everyone would gain because emerging economies would take over low-wage jobs and rich countries would gain new markets for high-end services.

Ah, whatever it is that she's talking about there it's not comparative advantage. A precis of which is that, whether we're talking about me and my kid brother, two companies or many countries, we should each do what we're least bad at and swap the resulting production.

That's the way that we get maximum production at our current level of technology and resources and thus have the maximum amount of things to swap with each other: a reasonable definition of being as wealthy as we can be is that we have that maximal amount of stuff to share, no?

And once we've got the idea properly stated it then becomes apparent that there is no threat, no possible fraying of the theory, because other people move up the value chain, other people become more productive:

But India is already better at high-end technology than the West, and is filing an increasing number of patent applications. Western politicians make glib statements about the need to improve education. But the globalisation of innovation should shake them to the core. That's why many G20 countries talk up trade while implementing protectionism.

If people in India invent cool new things then that's just more cool things for us all to swap and share. If Indian, or Chinese, or Martian (and yes, if they do indeed exist we will indeed trade with them), workers become more productive then that's just more production that we can share.

This idea that other people, companies or countries, because they start doing high wage, high value things, are some sort of a threat to us or our way of life is entirely arse about face. We want their labour to be worth more, we want them to be as productive as they can be, we want all of the many billions across the Earth to be adding the most value they can, creating the most from the sweat of their brow.

For as they do so they'll be creating more things, more stuff, more goods and services, more goodies which we can all partake of by the simple method of trading what we make for what they do.

The "globalisation of innovation" isn't a threat. It's a blessing, a joy to be welcomed rapturously. Good grief, do you want a few hundred million already rich people thinking about how to make your life better or all of humanity, all 6 or 7 billion of them, feverishly beavering away in attempts to satiate your every desire?

 

The future of the BBC

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A new report by Martin le Jueune entitled To inform, educate and entertain? British broadcasting in the twenty-first century has been published by the CPS. It goes some way in offering a realistic way forward for reform, but alas, falls short of calling for the disestablishment of the BBC.

The report is right in arguing that “The next Government should be prepared to face down élitism disguised as a concern for standards". However, the idea that the next government should also “build a system that really meets the needs of British consumers, voters and society" draws inspiration from the same ideological scripture that he criticises.

Politicians should leave the media well alone. The report suggests the government should regulate that the BBC so it provides:“Impartial news and current affairs, factual and documentary programming, children’s television, classical music, speech radio – and little more."

  • Impartial news and current affairs? A panacea.
  • Factual and documentary programmes in the private sector? Take a look at how HBO can do it.
  • Children’s television? No thanks. Good and bad children’s programming is spread evenly across the channels.
  • Classical music? Classic FM already exists. With the BBC taken out of the market, others would come into the market.
  • Little more? Nothing more.

As I have written before, the BBC should be privatized through BBC Worldwide. Given there are a fair number of people who would agree with Martin le Jueune that the BBC should provide these ‘public goods’ the BBC could also be made into a charity. This would allow those that believe in it to voluntarily decide to support its work and leave the rest of us as free as Jacqui Smith's husband to spend our money on other things.

Cycles for London

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altTransport for London doesn’t offer the best of service. I’m sure most people who live or work in the capital have lost count of the number of times they have been have been late for an engagement or told their service is not running. This is mainly because the complex task of keeping the city moving is controlled by politcians who indulge in grand, top-down schemes. This creates a culture of misdirection and mismanagement.
 
The scheme recently launched by TfL to provide 6,000 new ‘hire bikes’ to the capital looked optimistic at first. A fairly simple, yet effective way to relieve congestion on the roads, free-up public transport and cut carbon emissions. Only the public sector could find a way to turn this straight-forward idea into a farce. And they have - spectacularly.
 
They have now announced that none of the bikes will not be given padlocks and anybody supplying their own padlock will be fined £150. A deposit will be paid before a bike can be hired, and will naturally be unredeemable if the bike is stolen. So effectively TfL is denying the cyclists the right to protect their money. If people cannot lock their hired bikes, they are simply not going to use the scheme.

What's all this then?

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Having written a new book, The Rotten State of Britain, to show what a police state we have descended into, I seem to have become a victim of it myself.

This morning I was doing an interview with a Canadian TV crew on the outcome of the G20 at my office just underneath the Church of England's headquarters in Westminster. After I'd told them that capitalism was still alive and well and that the mess we're in was a failure of government policy rather than banks or markets, they decided they would like some set-up shots outside.

So the cameraman lugged his enormous camera and tripod onto Great Smith Street and I started doing my stage walk towards the office door. Whereupon a red police car, lights flashing, screeched up and two officers rushed out, in full body armour, to confront the cameraman and the interviewer and ask them what they were up to.

The cameraman suggested that it was pretty obvious what they were up to – setting up a TV interview. The police officers took out their notebooks. The cameraman ventured that this was not really necessary, but the police replied that under Home Office guidelines – the department run by the keeper of the nation's morals, Jacquie Smith, of course – they had to report that the crew had been stopped. And since we were under the gaze of at least ten CCTV cameras (five on the Schools department and even more on BERR), they had to go through the paperwork. They stopped anyone 'behaving suspiciously' around 'sensitive buildings'. Is the Church of England's headquarters really so sensitive? Am I worried about them taking pictures of my office, when it was me they were photographing?

So the crew had to provide identity and state their date of birth, their height, and even their ethnicity and were duly given their yellow copies of the stop and search form.

It really does underline the fact that we are now living in a police state, which is exactly why I wrote The Rotten State of Britain. One smart comment or false move and we could all have been arrested and held for 21 days as terrorist suspects. It's exactly why I wrote the book. The police used to be our servants. Now they're our masters. No doubt they get a bonus for everyone they stop; senior officers certainly do get a bonus for everyone they caution or charge. Fortunately, the police are drowning in paperwork so they can't do too much harm. But I wish they were out there catching burglars rather than stopping people from doing their job.