Innovations of economic value

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An extremely puzzling argument over whether certain industries, like fashion, produce innovations which provide economic value. Puzzling because we're presented with arguments that fashion does increase productivity for example.

Eh? Productivity isn't the point of the economy at all (however much rising productivity is desirable). No, the purpose and function of all production is consumption. We should not and do not justify an industry on whether it innovates, whether it provides economic value by this definition, or raises productivity in doing so, we justify an industry or activity if consumers desire (desire sufficiently that they will consume) said production.

If it makes some people happier to have four seasons of fashions each and every year then by all means, let's have them for those that want them. If some want ice cream named after dead drug addict guitarists, equally so. If other prefer clothes that last decades then that too can be provided in a market economy, as can ice cream not named after dead drug addict guitarists.

The justification for any industry, for any production, is that what they provide adds to the sum of human happiness. Nothing else is required as such a justification.

 

Tax havens are safe havens

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Gordon Brown is apparently stalking Europe, attempting to persuade G20 leaders that global action needs to be taken on clamping down on so-called ‘tax-havens’. This course of action is understandable as the bills for the bailouts mount up and the income from tax revenues falls there will be a deficit. From Switzerland to the Cayman Islands the money is out there and it is this wealth that has escaped the clutches of the parasitic classes that Brown, Obama et al are setting their sights on.

Recent campaigns by the Guardian*, the Tax Justice Network and an edition of Panorama have highlighted a problem: they can’t get their hands on all of the wealth that has been created. Dennis MacShane raises an interesting fact, relating to privacy in banking in the Guardian, “This is not a wicked scheme to get the world's dirty money but dates from 1934, when German Jews fleeing the Nazis wanted to get their money out as well as their families." Indeed the Panorama programme, and the TJN revered the Liechtenstein banker who breached contract and divulged secrets of depositors at the LGT Bank.

A new mode of plundering needs to be found to fund the fulsome promises pronounced by politicians. Rather than chasing money across the globe that politicians wrongly believe is theirs, they should be producing policies that attract wealth to a country, not cause it to take flight. They need to be in competition with these nations, but alas they believe that what is mine is in fact theirs. Until that mindset changes there are many states across the world who’s sovereignty will be sorely tested over the coming years.

 *And for insight in how The Guardian avoids paying taxes click here.
 

Man is born free...

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It will be interesting to read the two independent reports on the ID cards scheme that the government have now been forced to publish. Despite its best efforts, our leaders have failed to suppress the reports, and so within 28 days both reports will be available.

On Friday the Information Tribunal ruled: "First, there is an undoubted debate as to the merits of the scheme, second, there are the practicalities involved and third, there is the history as to the decision-making which underlies the scheme and which continues even today."

Access to these reports has been a long time coming. It was as long ago as January 2005 when Mark Dziecielewski of NO2ID made an FOI request to see them. The Office of Government Commerce (OGC) was ordered to publish the documents back in 2006 but following an appeal it has taken until now to get the reports in the public domain.

With Labour down in the poles and the opposition firmly against the scheme, it is time that the government puts the whole of this nonsense on hold. ID cards, the databases and the wanton sharing of our personal information with anyone with a badge needs to stop now and for good.

Blog Review 878

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If you're going to try and work out whether fiscal stimulus shortened the Great Depression then the two most important questions are, was there a fiscal stimulus and if so, did it shorten the Great Depression?

If you're going to talk about the unemployment rate worth making sure that you know what it actually is.

Yet more bad ideas: self sufficiency.

What really happens at industry conferences.

Something to ponder about the US: "the important fact that the origins of the United States rest on the economic consequences of unjust government policy. We are a country founded on a tax revolt...."

There's a serious problem with make work jobs.

And finally, what do we tell the children about the world before the internet?

 

From the department of truly appalling ideas

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Those who would govern us seem to have some very odd ideas about the proper remit of government.

Lady Warsi, the shadow minister for community cohesion, said there had been a "failure" to take polygamy seriously. She urged the government to consider the mandatory registration of all religious marriages to stop men in Britain from marrying more than one woman.

Whether someone enters into a "religious marriage" is nothing to do with the State at all. Whether someone wishes to enter into a polygamous (polygynic, polyandrous, polyamorous, no matter) religious arrangement is similarly no matter for governance.

It is true that we have something called "marriage", which the State treats as a contract, a contract the terms of which the State itself decides. It is also true that this contract is considered so important that it is held in our courts to over ride all previous contracts (one reason why pre nuptial contracts do not work in England and Wales). But that contract is something very different indeed from a religious marriage, just as all such matters religious are outside the proper remit of the State.

Just as an example of quite how ill thought out this is, in the church I was raised in it is a commonplace that nuns do, by their vows, marry Christ himself. A strict interpretation of Lady Warsi's suggestion would thus mean that we could only have one Catholic nun in the country at any one time.

Fortunately I don't think the Baroness was being serious in her suggestion, merely straining for a soundbite.

Rattled by the Rush: America’s Response to Economic Crisis

The second measure is allocation, and it may be the most important factor. Where the funds are actually allocated will be a crucial determinant in the effectiveness of the package. If the funds are not properly allocated within appropriate areas of education, public infrastructure, and companies then the package may fail to stimulate growth for the economy. Just one example of where the funding could be misappropriated is in the educational sector. Arne Duncan, the recently appointed secretary of education, will be held accountable for dispensing $100 billion to America’s public schools and universities. Until now, the department of education was not responsible for funding schools with anything close to this amount. Former Secretary of Education Margaret Spellings was quoted on the issue as saying, “The point is, it’s never been done before, and as much confidence as I have in Arne Duncan, there’s an awesome opportunity for slippage with that much money moving through the meat grinder." Also, until last month Arne Duncan was only responsible for public schools in the city of Chicago. This is a major responsibility to fulfil, and it is possible that neither the department of education nor Duncan, who up until now oversaw one school district, will be able to handle such a responsibility in due time.

The third measure of the package deals with external effects, and this means the effects that it will have on our international relations. Much to the rest of the world’s dismay, some “Buy American" policies will surely be included in the stimulus package. This upsets the rest of the world [especially developing countries] at a time when they are dependent on foreign countries [particularly the United States] for trade to jump-start their economies. The negative effects include future reduced trade for America with areas such as the European Union, who even threatened to retaliate against such protectionist measures. Reduced trade in the future will stunt the growth of American industry in the long run, causing the recession to linger for longer than it should.

Overall, it is quite important for this stimulus package to adhere to such criteria in order to stimulate growth for the American economy. The world has seen failed stimulus packages before. Just for comparison, one can look at Japan’s response to economic crisis in the 1990s. Ten major stimulus packages totalling more than 100 trillion yen (or 1.1 trillion dollars) were implemented in the 1990s, and it is generally accepted that these packages were ineffective due to poor timing and allocation. All America can do is hope that their government is carefully administering this plan, from the federal to local levels, being mindful of the egg they are carrying on a spoon.

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Barack Obama’s stimulus package finally passed through legislation last week, and there are many question as to whether this will bring praises of joy or pain in regards to the ailing US economy. Rattled by the shock of the credit-bubble bust, the United States [and the rest of the world alike] is striving to boost commerce at a time when there is minimal activity. Although the intentions of the plan are aligned with rebuilding the economy, it is important to consider the possible effects or lack of effects that such a package can have. Sadly the overall plan is reminiscent of failed recovery methods used by countries [the US included] to shoot themselves out of major recessions in the past.

It is very optimistic to think that pumping money into a national economy will automatically fix every problem under that red white and blue banner. An exploration of three very important variables that could make or break this package should be helpful in its analysis. The variables may seem quite simple and obvious, but hopefully the American Government thinks so too.

If a government decides that a stimulus package is absolutely necessary the three major controls that should be accounted for are timing, allocation, and external effects. The first measure, timing, means that a government needs to respond quickly with their spending if they hope to effectively achieve their goals. Although this stimulus package was recently passed by congress and signed by Obama, it will be months before schools, companies, and other state facilities are funded by the package. In many cases, the funding will have to meet approval through federal then state then local municipalities before schools receive aid or public workers are hired. Since timing is such an important factor in federal aid, it may be too late for much of the money to complete its intended task. [Cont'd - click 'Read More']

Judge, jury, and executioner

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This government seems determined to rid of our basic rights and freedoms. They have tried large scale changes such as the introduction of ID cards, the 42 day detention of terrorist suspects and the abolition of the double jeopardy rule.

They have ripped up the rulebook which protects the British public and was once an integral part of its identity. There was a time when Britain was a beacon of justice in the world. The latest erosion of our rights comes with the announcement that the police will be given the power to issue on-the-spot fines for ‘careless’ driving without the proceedings ever being taken to court. What happened to the principles of being innocent until proven guilty and the right to a fair trial?

Other issues can be raised from this absurd new piece of legislation. For example, there are no set guidelines for what constitutes careless driving, the judgement is entirely left to the judgement of the police officer – a police officer acting as judge, jury, and executioner – whatever happened to a separation of powers?

Leaving aside the fundamental intrusions of this new rule, its efficacy will be questionable to say the least. The most efficient way to help people drive more safely is not by forcing and tightening the rules and regulations upon them, but instead to relax the rules, allowing them to drive safely and concentration solely on the road. A scheme that has removed all the road signs, has been piloted in the German town of Bohmte with great success.

Blog Review 877

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So, does foreign aid actually work or not? Depends upon what you mean by "work".

Not photographing or identifying policemen? How is this going to interact with social media then?

Many say that the solution to the banking problems is to turn them into cooperatives, mutuals. But what is the problem here that mutualisation will solve?

Or bank nationalisation. Is anyone in power actually getting the importance of process here?

Grand Auto Theft. It's not just a computer game you know.

While true, this rallying cry might need further polishing: "Mr Obama, give me back my wallet"

And finally, Allen Stanford, daft bastard.

 

Jacqui Smith and Public Choice Theory

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Public Choice Theory seeks to study individuals in the model of self-seeking utility maximizers. It is an eclectic approach that can incorporate many definitions of self-interest, from the material to the psychological.

Jacqui Smith’s case fits slap bang in the material. She has claimed a plum load of money in very questionable circumstances. Her case reminds me of those benefit fraud cases where the father is supposed to be split from the mother while he is in fact living in the family home. Don’t they often end up in prison?

Of course, politics is riddled with such petty corruption across both Houses; the political process is oriented towards the betterment of its participants: it is an elite private club and we pay the membership fees.

Sadly, short of revolution, we are going to have politicians around for a few more years. As such, it makes a lot of sense to fully open up the Pandora’s box of their sordid behaviour to public scrutiny. We can then shamefully parade them across the inside pages of the tabloid press, before gently pushing them into early retirement and a lifetime of being vaguely remembered by the public as petty crooks on obscure reality TV shows.

Thanks to the iconoclastic efforts of the likes of Guido in the UK and Drudge over the pond, transparency is being forced upon politicians by this unservile new media. A simplification of political perks combined with a clear and present public statement of all external interests is essential in making their task easier. As a child who keeps getting hurt by a hot plate, in time the politicians will learn that they just can’t get away with it and will eventually stop being so naughty.