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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

The tangled web of the welfare state

Written by Steve Bettison | Friday 01 February 2008

crackbaby.jpgAt the beginning of the week the Family, Drug and Alcohol Court opened. It is a £1.3 million pilot scheme being run jointly by three London Boroughs, Westminster, Camden and Islington (part-funded by both the Ministry of Justice and Department for Children, School and Families) that has been set up to attempt to ensure that children remain with their parents despite any addictions the parent might have.

Yet to accomplish anything judicially it has, however, allowed another true cost of the welfare state to be exposed. There are obvious costs to the taxpayer, such as the set up costs shared unevenly between central and local government, but this court has revealed some unwelcome negative externalities created by the welfare state.

Specialist court judge Nick Crichton said, "We are routinely taking into care the fourth, fifth or sixth child from the same birth family" (this in relation to the removal of 14 children into care from one mother). It is not hard to see the perverse logic that the welfare state has created in the minds of these drug users. Despite the drug use, they have recognized a secure income stream that can feed their habit: children. The blame for this culture lies squarely at the doors of government (both shades) for the implementation of child benefit to its current high levels.

The welfare state as the abuser is no surprise. It has distorted incentives since its inception and will continue to do so via its warped perception of 'caring'. The socialist state has turned children into nothing more than inanimate objects, their value being no more than a hit to a drug addict.

If only the politicians were forced to live with the unintended consequences of their actions, they might rethink some of their most damaging policies.

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The world's first electric car network

Written by Dr Fred Hansen | Friday 01 February 2008

The Project Better Place is a joint venture by Israeli-American entrepreneur Shai Agassi and the Israeli government. With the aim to reduce significantly Israels dependence on foreign oil from undemocratic regimes, a nationwide network of electric cars will be available by 2011 if everything runs on schedule. Nissan and Renault will build the cars and the government will offer tax incentives to purchasers.

The innovative model, developed by Agassi, would provide consumers with inexpensive cars, and they would pay a monthly fee for expected mileage, like minutes on a cellphone plan. Project Better Place will provide infrastructure including parking meter-like plugs on city streets or service stations along highways at which batteries can be replaced.

This annoucement coincides with a rebirth of electric vehicles, thanks to a breakthourgh in energy storage based on nanotechnology. New Lithium batteries are developed from a family of different chemical combinations and have enabled new features such as charging cycles in excess of 20,000 while still retaining 85 percent of their capacity. The time required for recharing has been cut down to only 10 minutes, instead of many hours previously. Most importantly, the new batteries can store four times more electric energy than conventional ones and operate safely from -50° C to 75° C. With 3,000 charging cycles a battery would provide enough energy for a car to do 150,000 miles at 80 percent capacity.

Two years ago a Japanese team built a car called Eliica, short for Electric Lithium-Ion battery Car. This eight-wheeled, 600kW rocket served as proof that electric cars can be fast and fun. It boasts a neck-snapping 0-100kmh time of just four seconds and a 0-160kmh time of seven seconds - faster than a Porsche 911 Turbo. And for our American readers, the attractive new Teslasports car, built in Northern California, is now being marketed for $100k.

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Keep going Shell

Written by Dr Madsen Pirie | Friday 01 February 2008

shell.jpg I was on BBC radio on Thursday, commenting on the record profits announced by Shell. I said it was very good news because it meant the thousands of jobs which Shell sustains in Britain are safe. It's also good to see a world class British company doing so well. I pointed out that Shell is devoting huge resources to the development of cleaner technologies and alternative fuels, which it can afford to do thanks to its healthy profits. I said we should all be celebrating the good news. 

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Blog Review 493

Written by Netsmith | Thursday 31 January 2008

Just who is paying whom and for what? Giudo finds a journalist defending Ken Livingstone who had worked on a writing project that Ken Livingstone disbursed the taxpayer's money for. As, Netsmith recalls, did Polly T get £7,000 for such a project.

It really does seem that no one has thought this ID card idea through as yet. Some will have to pay £ thousands to travel just to get their barcodes. 

On which subject, the Freedom of Information Act seems to obscure more than it reveals. 

Danny Finkelstein really doesn't get the modern order. Yes, of course it's only left whingers who are allowed to have insights. Tsk, it's obvious, isn't it?

EU news: The EU Parliament won't have to worry about pesky journalists for much longer, they're going to report on themselves. Futher, yes, they did vote to ban patio heaters today. 

Someone's found a new mapping tool. Here, changes in the distribution of the world population. 

And finally, just what would Hugo Chavez' Facebook page look like? 

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It's a funny old game

Written by Philip Salter | Thursday 31 January 2008

nashat_akram.jpgThe arbitrariness of the Home Office work permit system is exposed by the decision to deny the footballer Nashat Akram the chance to play for Manchester City. The rejection came because Nashat is Iraqi, and Iraq is rated 72nd in the world rankings. Permits are only given to players from international teams in the top 70. This decision was made despite Nashat's remarkable performances in Iraq's surprise triumph in the Asia Cup, all the more remarkable given the disorder in his home country.

It is also not the first time the Home Office has been in the news over footballer's work permits. Jason Scotland (Trinidad and Tobago) and Mark González (Chile) were both denied permits, with latter being a deal worth £2.35 million. Perhaps the government is best left out of such decisions; at least until the mandarins at the Home Office can meet the fan's demand by scoring goals like Akram (see here and here).

As it would happen, Philippe Legrain, author of "Immigrants: Your Country Needs Them" will be arguing along these lines tonight at the Adam Smith Institute. If you would like to come, please contact Steve at or us call on 020 7222 4995.

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Common Error No. 22

Written by Dr Madsen Pirie | Thursday 31 January 2008

22. "The free market is unfair because we do not all have equal votes as we do in a democracy."

ballot_paper.jpgThe argument is that people with more resources unfairly have more market power than others, whereas in a democracy everyone counts equally. We would think it absurd if everyone voted on what kind of MP3 player people should have, and everyone received the one which gained the majority vote; yet this is how democracies work.

In a market we can all choose what type of MP3 player we want, and receive the one we choose, even if it is not the one preferred by a majority. This makes the market a source of greater freedom than a democracy. In a democracy we have to settle for the majority choice on a large package of issue taken together. In a market we can pick and choose to satisfy our preferences on individual items. We can take Apple for some products and Sony for others. We cannot in our government choose different parties for different policy areas.

People do not have the same buying power. Some people can offer goods and services worth more than those of other people. Older people might have more savings or command higher salaries than younger people. Those with more education and skills might become wealthier than others as a result, and the same applies to those with special talents, such as footballers, musicians, or entrepreneurs.

It means that some people can afford more or better goods and services in their market choices. This is because they offer more valuable service to others, and it is what spurs others to try and do likewise. If the rewards were allocated by equal votes, a majority could vote themselves a large share of the total, and make entrepreneurial activity no longer worthwhile. The economy would stagnate and no-one would benefit. This is not the kind of "fairness" that is worth having.

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A very stupid idea

Written by Tom Clougherty | Thursday 31 January 2008

sky_news.gifI was interviewed on Sky News yesterday morning, giving my take on the European Parliament's plan to prohibit the sale patio heaters. Unlike the other guest, Friends of the Earth's Tony Juniper, I thought this was a ridiculous idea.

First of all, the only reason so many people are using patio heaters is the smoking ban. Attempting to outlaw patio heaters is a classic example of one ill-conceived and illiberal piece of legislation having to follow another, with little thought for the unintended consequences. In this case, the pub industry thinks it could lose as much as £250 million pounds a year in lost trade if outdoor heaters were banned.

My second point was that no one actually believes banning patio heaters would make the slightest bit of difference to the global climate anyway. Yes, these heaters are inefficient, but their emissions are miniscule in the grand scheme of things. Tony Juniper said we should lead the world by example, but it didn't think our banning patio heaters would really make much difference to the Chinese. They're going to build a coal-fired power station every week for the next ten years anyway.

Patio heaters are just the latest symbolic thing for environmentalists to get worked up about, like food miles or budget airlines. It's not about being practical, or actually improving the environment, it is just another way to tell people that they should stop being so wicked and 'live more simply'.

I suggested that instead of banning outdoor heaters, the EU should focus on reforming its emissions trading scheme so that it actually works, encouraging the development of clean technologies. And since agriculture contributes 17 percent of global emissions, they might like to abolish the common agricultural policy too. The developing world would certainly thank them for it.

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Quote of the day

Written by Wordsmith | Thursday 31 January 2008

It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first.

– Ronald Reagan

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Blog Review 492

Written by Netsmith | Wednesday 30 January 2008

Given the tendency of us wonks here to have great faces for radio we're happy to outsource these videos on the Laffer Curve to the George Clooney of the free market movement (self-described we note). We give you Dan Mitchell.

Yes, Netsmith knows that these people are lefties, but more joy in heaven over one sinner that repenteth etc. Finally, a Nanny State regulation not even they like.

Not good news at all: productivity in the NHS continues to fall. Proof once again that it's not how much money you spend, it's how you spend it that's important. 

Long and detailed but useful for those who want to try and understand part of the American mortgage market and its current turmoils. The final paragraph simply emphasises that Heinlein was right: TANSTAAFL.

It would appear that it is not only our own, home grown, media which is at times innumerate. 

On South Africa's energy problems: it seems that, apart from coal, the entire mining industry is shut down. 

And finally, technological changes have uncertain effects. Who knew that mobile phones and wristwatches were substitutes? 

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Common Error No. 21

Written by Dr Madsen Pirie | Wednesday 30 January 2008

21. We are using up resources for the future; we should all learn to live more simply.

oil_well.jpgAlthough it might seem obvious that the supply of resources is limited, and that they grow more scarce as we use them up, this is not in fact true. It costs money to locate reserves of scarce resources, so we tend to search for more as the price rises. In other words, as they grow scarce, we can often establish more supplies.

Furthermore, as materials grow scarce, the price rises and it becomes more economic to mine marginal reserves. Not only that, it becomes cheaper in some cases to use or develop substitutes. As supplies appear to dwindle, so does the rate of use. Instead of the world suddenly waking up one morning to find the last ounce of aluminium gone, it turns gradually to glass filaments and to carbon fibre as substitutes. New methods of extraction and reclamation become economically viable. The question is whether our development of new sources and substitutes is faster than our use of resources.

There is one reliable indicator. No one knows what new sources will be developed, or how fast our use will be. We do know, however, that price is a guide to the ability of supply to meet demand. Over many years the real price of most commodities (excluding oil) has been going down. This means that they have been becoming progressively more available, and that our relative supply has been increasing rather than diminishing.

We do not have to live more simply. On the contrary, we have to keep on developing new technology to make better use of our resources and to extract from more difficult locations. In this way our relative supply of them will continue to increase. If we start to "live more simply" we may lose the ability to economize on them and replace them.

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