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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

Power lunch with Professor Ian Fells

Written by Dr Eamonn Butler | Thursday 13 December 2007

fells.jpgNewcastle's Professor Ian Fells was our guest at a Power Lunch here yesterday. As an engineer and energy expert, he's flabbergasted at this week's announcement from the government that every home in Britain will be fed by wind energy by 2020, thanks to a new 25-gigawatt wave of offshore wind turbines. Fells points out that most government announcements on energy since around 2000 have been - well, confused, to put it politely.

Quite so. The chance of the UK reaching their targets of 20 percent renewable energy by 2020, or a 60 percent cut in CO2 by 2050 are roughly zero. Presently we have about 1500 wind turbines generating just 1 percent of our electricity. You will need a lot of new turbines to increase that significantly. And when you do build them, remember that you will also have to strengthen parts of the national grid to cope. And planing authorities don't much like the idea of lots of new pylons crossing the landscape.

When it comes to offshore wind power, the costs are largely unknown, and the kit needed to build on that scale doesn't exist. The trouble with wind power is that quite often, the wind isn't blowing; and when it is, it isn't blowing hard enough to make turbines work at peak efficiency. So you need more turbines than you think to generate the power you need. Fells reckons it means erecting ten turbines a day to meet the government targets, and he can't see how that is feasible. After all, they are each bigger than the London Eye, and that took years to build.

Turbines are great for pumping water in Australia, or charging your batteries in Antarctica. But as a power source for an industrialized country that is completely dependent on electricity – the computers, the waterworks, the tills, the rail signals and just about everything else goes off when the power fails – it's hardly something we can rely on. So why are we making such grand commitments? Well, politicians want to seem green. And with nine different energy ministers in the last decade, it's probably that none of them really understand the costings and engineering. So they throw £1bn of our money each year on renewables that wouldn't exist without that largesse. We should concentrate on security of supply (and new nuclear capacity is probably the cheapest way of doing that) - then the rest will follow.

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Quote of the day

Written by Wordsmith | Thursday 13 December 2007

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.

– Groucho Marx 

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Blog Review 444

Written by Netsmith | Wednesday 12 December 2007

This is rather a grenade being thrown into the crowded climate change room. Climate change isn't happening at all! (Just to note, Netsmith himself is dubious of many of the plans put forward to combat the problem, but not quite this dubious that the problem doesn't exist.)

For example , taxing the externalities of children seems a little over the top (although taxing those who don't keep the little darlin's quiet has its temptations). 

The latest theory about the sub-prime mess gets blown out of the water before it has a chance to spread, thankfully

This piece of lunacy (quite literally lunatic) will fortunately garner a great deal less support in the first place. 

More interestingly lunatic ideas: the supermarkets have just been fined fo conspiring to raise the prices they pay to their suppliers. So, umm, what is the difference between what they were doing and Fair Trade

The entire fund management industry destroyed in one blog post

And finally , this is colloquially known as taking the piss. 

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Thoughts on red tape

Written by Dr Eamonn Butler | Wednesday 12 December 2007

redtape.jpgOne of the delights of our Power Lunches in Westminster is that you can chat informally and off the record with folk who are prominent in the policy world, and pick up all sorts of insights. A couple of ideas that have sprung up in recent weeks concern regulation. I'm getting more interested in this theme, because we are setting up a new regulatory policy campaign to scrutinize EU and UK regulation to see how it can be streamlined and reduced, It will involve participation by regulators and key regulated industries, and will publish policy agenda reports on how we can actually do what governments say they want to do - cut red tape.

The first thing that came to me, talking to an ex regulator, is how the government now actually has more control over essential industries - such as telephones, rail, water, gas, electricity - than it ever did when they were in public ownership. Before privatization, governments thought that it controlled these great sectors and was running them for the benefit of the public. In fact, they were run by the trade unions for the benefit of their members. Now, however, they are all privatized companies, and better run. When the government, or the regulator, tell them to do something, they might complain, but it still gets done. In the old days, nothing got done and the industry just carried on regardless.

This change is great if you think that governments really do promote the public interest. It's not great if you think they have their own interests to serve, like winning votes. And now, of course, they can get privatized companies to pick up the bill for their social policies and other pet schemes, because they have the regulatory muscle to force them. Indeed, rather than strengthening competition, they have strengthened regulation. And that's my second insight: when you look back, we have less competition in the privatized industries than we had ten years ago - or in the case of some like rail and electricity, less than just five years ago. Competition policy is not going in the right direction.

The third thing that occurred to me is how we all get sucked into this regulatory quicksand. Actually, it's quite easy. Brussels (it usually starts there) proposes some great new all-embracing regulatory initiative. Everyone affected (national governments or companies in the sector) raise their eyes to heaven, but feel that if they just told the Commission to get lost, they'd be regarded as Bad Europeans, so they simply try to water down the proposals as much as possible. The watered down proposals are adopted, so a regulatory and enforcement regime is put into place. That of course likes to justify its own existence, and proposes stiffening the regulations. Those in Brussels who wanted stronger regulation anyway go along with this. How can we ever stop circling the drain?

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Joke of the Day

Written by Jokesmith | Wednesday 12 December 2007

An architect, a surgeon, and an economist were discussing their place in the universe.

The surgeon said, 'Look, we're the most important. God's a surgeon because the very first thing God did was to extract Eve from Adam's rib.'

The architect said, 'No, wait a minute, God is an architect. God made the world in seven days out of chaos.'

The economist smiled, 'And who made the chaos?'

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Climate change and the WHO

Written by Tom Bowman | Wednesday 12 December 2007

The Campaign for Fighting Diseases, run by Philip Stevens (formerly of the ASI), does excellent work on health policy issues in the developing world. Most recently, they have been pointing out the flaws in the World Health Organization's approach to climate change.

Although WHO claims that climate change is responsible for all manner of health threats to the developing world, the evidence suggests this is not the case. Take malaria – contrary to NGO claims the geographical incidence of malaria seems to have little to do with climate, relating more to the wealth of a country than to its temperature. Malaria existed in Europe throughout most of history, and it was not a change in temperature than eradicated it, but economic development and its consequent change in land use.

Another example is natural disasters. We are always hearing that climate change is going to cause more natural disasters and kill lots of people (particularly in the developing world), but deaths from climate related natural disasters have in fact fallen dramatically since the 1920s. This is purely the result of economic growth and the technological advances it has brought.

The point is clear: rising wealth will reduce the incidence of malaria and lessen the human cost of natural disasters in the developing world, regardless of climate change. You would think, then, that the WHO would be doing everything it could to promote the economic development of poor countries. Yet the global emissions caps they advocate would undoubtedly hurt the poor by retarding their economic growth.

The WHO should forget environmentalism and focus on the real barriers to good health in poor countries. The taxes and tariffs many governments impose on medicines would be a good place to start.

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IHS academic writing competition

Written by Dr Madsen Pirie | Wednesday 12 December 2007

The Institute for Humane Studies has launched an essay contest for full-time undergraduate and graduate students.The deadline for submissions is January 31st 2008.

Essays must be a maximum of 2,500 words on any topic that addresses "the conditions essential for prosperity, progress and human flourishing." The prizes are as follows:

First place: $1,000

Second place: $500

Third place: $250

There are separate awards for graduates and undergraduates, and the total prize money will be $4,000. Details at www.TheIHS.org/essays.

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Blog Review 443

Written by Netsmith | Tuesday 11 December 2007

These public lists of sex offenders . It's always been pretty obvious that things like this will happen, hasn't it?

Note to Guardianistas : this is how you deal with inequality. 

Some both useful and accurate estimates of the costs and benefits of legalising ecstacy. It's not just this freedom and liberty lark, it's that we'd be better off.

Giudo continues to follow the Sith Smith Institute story. Just what was Ed Balls being paid so much money to do?

The latest American move on climate change . We'll change the law so as to insist on the physically impossible say distinguished Solons. 

Jimmy Carter doesn't seem to have spent the 27 years since he left office reading up on economics. Pity really , as he appeared a little under-educated in the subject way back then.

And finally , quite possibly the most stupid question of the year and a better one asking the meaning of profit

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Rethinking the Union

Written by Tom Clougherty | Tuesday 11 December 2007

In advance of his trip to Edinburgh yesterday to speak to Scottish Conservatives and businesspeople, David Cameron gave an interview to The Telegraph in which he set out his position on the Union, devolution, and the West Lothian question. The following statement sums it up fairly well:

[A]n imperfect Union is better than anything that threatens it. The Union always comes first.

Personally, I am not so sure. If Scotland actually wants to be independent, then why not let them? With the English subsidy tap turned off, the Scottish government would be forced to abandon their socialist tendencies and follow Ireland's low tax route to success (something Alex Salmond, the SNP first minister, has said he wants to do). A recent ASI briefing paper by international economist Gabriel Stein argued that ten years after adopting Irish tax levels, the average Scot would be £6,000 a year better off than his counterparts in the rest of the UK, whereas today the average Scot is £1,700 behind.

That assumes no changes in what remains of the UK. It's a fair bet, however, that with tax competition from north of the border, the Westminster government would start cutting taxes too, boosting economic growth and improving the living standards of their citizens as well. In tax and government, as in all other things, competition is a very good thing.

Of course, we don't actually need Scotland to be independent for any of this too happen. Scotland could become fiscally autonomous within the union (an idea that's becoming increasingly popular), setting their own tax rates and raising the money they spend. Indeed, if we devolved the power to set and collect income tax, corporation tax, VAT, local taxes and other charges and duties, they could easily cover their devolved expenditure right away.

My main worry with Cameron's position is that it may rule out such a course of action on the grounds that it 'threatens the union' – regardless of the benefits it could bring.

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Joke of the Day

Written by Jokesmith | Tuesday 11 December 2007

Are you allowed to kiss a nun?

Yes, but don't get into the habit.

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