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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

I have to say that this fills me with a great deal of confidence about dietary advice

Written by Tim Worstall | Saturday 08 March 2014

As I mentioned yesterday the WHO has come out with a couple of little recommendations about the amount of sugar we eat. Don't swill too much around your moth because of caries and do remember that sugar does indeed have caloties. Too many calories, compared to your activity levels, makes you fat. That is indeed what they said. So today we have one of those campaigning prodnoses in The Mail:

On Wednesday, for instance, no less an authority than the UN’s World Health Organisation came out with the firm recommendation that we should all be aiming to cut our sugar intake by half and that children should not be given fizzy drinks at all.

No, that isn't what they said at all.

That came just one day after Dame Sally Davies, the Government’s Chief Medical Officer, proposed that a sugar tax needed to be introduced if we wanted to cut sugar intake and reduce obesity.

She did indeed say that but there doesn't seem to be any evidence to back it up.

And it came on the same day that an eminent New York cardiovascular research scientist warned that the long-running demonisation of fats, and saturated fats in particular, could be entirely misplaced. The real killer, according to Dr James DaNicolantio, particularly when it comes to heart disease and Type 2 diabetes — those two scourges of the modern age — is sugar.

And isn't that just wondrous? Absolutely everything we have been told about diet and health for the past 50 years turns out to be, in your words, untrue. So we should immediately abandon that 50 years of advice and hop aboard your bandwagon?

It doesn't really have the ring of confidence around it this idea, does it?

Oh, and here's a little challenge. If you can find those doctors who tell us that eating as much fat as we like, including those saturated ones, if just absolutely fine for us, indeed that pig lard is better for us than sugar, then we might start taking this all a tad more seriously. Indeed, we would, if this were true, we certainly should if this were true, find Action On Sugar telling us to fill up on beef dripping.

Which, amazingly, they ain't so clearly not even they believe the tosh they're spouting. In which case why should any of us believe it?

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Five intriguing papers I discovered this week

Written by Ben Southwood | Friday 07 March 2014

In what might become a recurring feature, I am going to summarise the findings of a few research papers, potentially of interest to ASI blog readers, that were either first released this week, first published this week, or first come upon by me this week.

1. Fernandes, D., Lynch, J. G., and Netemeyer, R. G., "Financial Literacy, Financial Education and Downstream Financial Behaviors" (Jan 2014)

This paper is a large meta-analysis of 168 other papers, which in turn refer to 201 different studies and experiments. They find that at least 99.9% of financial behaviour in life cannot be explained by differences in financial education, or conversely at most 0.1% of the difference in people's financial decision-making and choices is down to education interventions designed to improve their financial literacy. In the words of their abstract: "even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention".

While other correlational studies appear to show some relationship between financial behaviour and educational schemes (i.e. one explaining more than 0.1% of the variance between individuals) they explain that this is only because those typically getting financial education already have various psychological traits associated with careful management of finances. They therefore suggest that big schemes designed to improve lifetime financial decisionmaking are futile and a waste of money; the best we can hope for is "just in time" interventions, perhaps at the point of financial transactions, that are more likely to be taken in and not forgotten.

2. Wang, M-T., Eccles, J. S., and Kenny, S., "Not Lack of Ability but More Choice: Individual and Gender Differences in Choice of Careers in Science, Technology, Engineering, and Mathematics" (May 2013)

In this paper the authors find that a substantial fraction of the male-female "gap" in STEM (Science, Technology, Engineering and Medicine) fields can be explained by the fact that women who are talented at maths tend to also have high verbal skills, skills that mathematically talented men are much more likely to lack. This means they have a wider range of choices available to them, and also possibly identify less closely with maths as part of their personality, and it is this choice not to pursue STEM further that drives the gap, rather than, for example, discrimination in the area or a perceived unfriendly atmosphere.

3. Liu, S., Huang, J. L., and Wang, M., "Effectiveness of Job Search Interventions: A Meta-Analytic Review" (Mar 2014)

Liu, Huang and Wang found, reviewing 47 different experiments testing if schemes "teaching job search skills, improving self-presentation, boosting self-efficacy, encouraging proactivity, promoting goal setting, and enlisting social support" could boost the unemployed's chances of getting a job. In fact, on average those in the treatment groups—i.e. those actually subject to the intervention, and not in the control group—were 2.67 times more likely to get a job. Since the studies all used randomness of quasi-randomness to assign treatment, this suggests, they say, that schemes that develop skills and self-motivation can be effective. However, the schemes were more likely to help the young than the old, the short-term unemployed than the long-term unemployed, and job-seekers with special needs, as compared to the population at large.

4. Karwowski, M., and Lebuda, I., "Digit ratio predicts eminence of Polish actor" (Jul 2014)

In a slightly surprising study, the two authors looked at 98 Polish actors, both male and female, and compared the ratio between their second and fourth digits on their hand (a measure of prenatal testosterone exposure) and their productivity and fame. For both men and women, even controlling for age, a higher ratio predicted more pre-eminence.

5. Aisen, A., and Veiga, F. J., "How Does Political Instability Affect Economic Growth?" (Jan 2011)

In a classic example where economists do extensive research to tell us what we already know, this IMF paper from 2011 shows us how bad political instability is for economic growth. Actually, the paper is a great one because it allows us to estimate the size of the impact of different political elements on instability and then the size of instability's own impact on economic aggregates.

Their findings are highly interesting: whereas primary school enrolment has a pitifully small impact on economic growth, and the impact of investment, economic freedom and the security of property rights comes out quite small, violence, political instability and cabinet changes have substantial negative effects, as does, surprisingly, population growth. And while the most productive regions in Europe are the most ethnically diverse, in this study ethnic homogeneity is very strongly associated with growth. Of course, the conclusions of the paper—that countries should address the root causes of political instability—are much easier said than done!

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The WHO is actually quite reasonable on sugar

Written by Tim Worstall | Friday 07 March 2014

You'll have seen the signs of a demonisation campaign going on. That sugar is addictive, that it has no nutritional value (as if calories are not nutrition), that we must tax it, or possibly ban certain uses, that AHHHRGH! we're all gonna die! and so on.

And then we get the actual sciency bit from the World Health Organisation which looks just fine to me:

Free sugars contribute to the overall energy density of diets. Ensuring energy balance is critical to maintaining healthy body weight and ensuring optimal nutrient intake. There is increasing concern that consumption of free sugars, particularly in the form of sugar-sweetened beverages, may result in both reduced intake of foods containing more nutritionally adequate calories and an increase in total caloric intake, leading to an unhealthy diet, weight gain and increased risk of noncommunicable diseases (NCDs). Also of great concern is the role free sugars play in the development of dental diseases, particularly dental caries.

Sugar has calories, too many calories can be bad for you and sugar can, if swilled around the mouth, rot your teeth. There's nothing here that we've not all known for decades if not centuries.

And it really is worth our noting that this is the sciency bit. The WHO is not saying that sugar is addictive. It's not stating that fructose is worse than sucrose or glucose. It's not insisting that we're all being hooked on it by the dastardly food manufacturers. All of these are inventions by the public health campaigners interfering prodnoses who would rule our lives and diets for no better reason than that they enjoy doing so.

The importance of noting ths is of course that we cannot allow said prodnoses to now start telling us that the WHO has indeed backed up all of their phantastical claims. The actual advice is don't eat too much and remember to brush your teeth. Which is the sort of nannying which most of us can manage to put up with. And to hell with those who want to insist upon more such nannying.

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Freedom Forum 2014

Written by Anonymous | Thursday 06 March 2014

It's that time of year again- building on last year's fantastic conference, Liberty League Freedom Forum 2014 is only a month away!

Put the 11th- 13th April in your diaries, and head down the the UCL Institute of Child Health for a weekend of seminars, workshops and socialising with liberty-minded individuals.

The line up for this year's Freedom Forum is looking the be the best yet, with speakers coming from across the world. Amongst those confirmed are Cody Wilson, creator of the 3D-printed gun and bitcoin annonymising DarkWallet, and fellow American and serial liberty-promoter Dr Tom G. Palmer. There's also world expert on the universal basic income Phillipe Van Parjis, Detlev Schlichter, author of Paper Money Collapse, director-general of the IEA Mark Littlewood, and pro-drug law reform ex-cop Tom Lloyd, with loads more to be announced - and of course, there's the ASI's own Sam Bowman. 

Seminars cover topics from lifestyle freedoms to macroeconomic policy, immigration to the age-old question: But who will build the roads? Plus, there's workshops in journalism from City AM's Mark Sidwell, public speaking from Peter Botting, and an entrepreneurial session curated by The Entrepreneurs Network. 

All of the above, plus meals, drinks and evening events from only £29- and accommodation tickets a mere £39.

To find out more visit the Liberty League website, and book your tickets here.

Event: Liberty League Freedom Forum 2014
Date: Friday 11th April (7pm) to Sunday 13th (5pm)
Location: UCL Institute of Child Health, and Clink78 Hostel

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Unwinding the Energiewende

Written by David Homer | Thursday 06 March 2014

The Energiewende or “energy transition” in Germany is a cautionary tale in many respects not least the unintended consequences of policy.

The German energy policy has been guided by three European directives. A target for reduction in carbon emissions, an effort to increase energy efficiency and critically a target for renewables in the energy mix. The desire to cut carbon emissions may be laudable if somewhat ineffective if China and India continue to increase their output of CO2, and a push to reduce energy efficiency seems sensible. However it is the third of the EU directives that has possibly led to most harm. A target for renewables in the energy mix has forced EU governments to pick and support the only technologies that are scalable within the present timescale, regardless of cost. So Germany has offered large subsidies for solar and wind which has led to a huge increase in German energy prices but then had to offer subsidies to German heavy industry to shield them from the increasing costs of power. But then these energy subsidies to industry have in turn been challenged by the EU. Furthermore, the German government’s stance on energy includes decommissioning its nuclear power stations. This combined with an increase in renewables which by their nature provide intermittent power and which have priority access to feed the grid has destabilized the energy market. Gas plants previously providing base load power are now only used to balance renewables making them uncompetitive and leading to the bizarre consequence that Germany is now building new lignite coal power stations to provide this back up generation capacity for its large renewable sector.

So the end result is that due to the skewed policy response caused by EU energy policy, Germany is locked into very heavily subsidized solar and wind production causing energy prices to rise whilst at the same time building more coal fired capacity to back up the intermittency of its large renewable sector which negates the central plank of EU policy to reduce carbon emissions. And the increasing price of energy is seeing large German energy users turning to the US to invest in new plant and further carbon leakage to the developing nations

All this is in stark contrast with the US.  Cheap and abundant shale gas has pushed much of the  dirtier coal energy production out of the energy mix, so without heavy market intervention the US has dramatically reduced its CO2 emissions whilst slashing its energy costs. And whilst once the energy debate in the EU was in part characterized by showing the world how policy directives could lead the way in effective CO2 reduction the result seems to prove the exact opposite.

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It's the usual piggies squealing about business rates

Written by Tim Worstall | Thursday 06 March 2014

There's a lot of squealing going on about the system of business rates at present, most of it coming from the usual little pigs. The oinks are actually loud enough and coordinated enough to be considered a campaign to get the basics of the system changed. Which would be a bad idea given that rates are actually one of the better parts of our current taxation system:

Business rates are not fit for purpose and need a complete overhaul, MPs say in a report on Tuesday. Joining a chorus of critics, they call for the Government review into the future of business rates to be extended to consider whether retail taxes should be based on sales rather than the rateable value of a property. The MPs want the review, set up by Chancellor George Osborne, to look at the merits of giving retail its own business taxation system.

The first and most obvious point to be made is that we don't want to give any segment of business its own taxation system. We want all business to be competing upon exactly the same level playing field. For the obvious reason that we want not just new businesses to open, but also people to cross the boundaries of the various sectors as technology and incentives change. We certainly don't want people either being confined by their tax treatment to one sector, nor are we all that keen on people arbitraging across parts of the tax system.

But as to rates being one of the good parts of the tax system: they're a tax on using expensively located property. That is, they're akin to a land value tax (not entirely, but close) and are thus among the least distortionary taxes possible. This is, we should note, a Good Thing.

The real background to this is that those currently operating physical retail stores find their lunches being eaten by those who retail online. They want to pull some of the load off those physical locations and onto the drab warehouses round the back of town that we increasingly get our goods from. And you might think that that's fair: they're both doing retail after all, so why not tax equality?

But that's to misunderstand what is happening with the online retail revolution. We have found that we can , now, with better logistics and the internet itself, serve peoples' retail desires while using rather less of an expensive input: that high value retail space. This is a technological change that makes us all richer: for it frees up ever more of that high value urban property to be used for other things. Offices perhaps, burger bars or, if anyone's willing to get the planning system right, rather more of those houses and flats that we're all told we've such a short supply of.

We want to tax scarce things: precisely because it makes people more efficient in their use of that scarcity. Which is why, as I say, business rates are a rather good part of the tax system. And we shouldn't change it just because those getting the mucky end of the current stick are whining about it.

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Think piece: Bitcoin and the English legal system

Written by Blog Editor | Wednesday 05 March 2014

Commercial lawyer and ASI Fellow Preston J. Byrne explains why, despite the cries of his inner libertarian, more government involvement in Bitcoin would be a step forward for the cryptocurrency-cum-payment-system, rather than its end.

When Mt. Gox went offline last week, taking half a billion dollars’ worth of bitcoin with it, many of the cryptocurrency’s public advocates – some of whom lost “life-changing” sums –  moved swiftly to its defence. Erik Voorhees’ rallying cry, in particular, was a standout piece of Austrian rhetoric, warning against the near-universal social-democratic impulse to “cry out for Leviathan’s intercession” to remedy every petty inequity and misfortune.

This reaction should not be a surprise. Many early adopters, and practically all bitcoin users I know personally, are libertarians (Roger Ver, in his video-recorded post-Gox appeal for calm, can even be seen wearing a voluntaryist lapel pin). Many are mathematicians; few are lawyers. From this outside perspective, I’ve therefore arrived at a conclusion with which most of them will disagree.

To achieve its full potential, cryptocurrency needs a legal system in the traditional sense. It therefore needs a state.*

Read the whole thing.

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I fear that Theresa May is deluded about modern slavery

Written by Tim Worstall | Wednesday 05 March 2014

As I noted yesterday there's a disturbing campaign going on to make the purchase of sex illegal. The argument being, the false argument being, that there's some appreciable amount of slavery among sex workers and that this is the only way that we can deal with the problem. That the original proposal came from the usual suspects worried me a little. That we then get ths from Theresa May which is much worse:

Modern slavery is an evil which is happening around the world today – including here in Britain. Across this country in restaurants, shops, brothels, nail bars and on illegal drugs farms are women, men and children, being held against their will, and forced into a life of slavery and abuse.

As I pointed out yesterday we have absolutely no evidence at all that there are any slaves, modern or not, in any brothels anywhere in the land. Indeed, when we actively went looking for such we couldn't find any. And the reason for this is actually quite simple. There are sufficient people entirely willing to sell sex at the prices currently on offer for it not to be worth the bother of trying to enslave someone to do it.

So, given that we don't have slavery happening in brothels we do have to wonder why Ms. May is so ill informed here. And we can diagnose that, at least in part, from something else she says here. That's that reference to "nail bars". Which is a ludicrous scare story that started here:

But it turns out that there may be another, far darker reason for the rise of the affordable manicure in the UK of late. A report by the Sunday Times (paywalled link) this week presented evidence about nail salons staffed by illegal immigrants, specifically from Vietnam. According to the report, industry insiders estimate that there are 100,000 Vietnamese manicurists working in the UK, despite only 29,000 Vietnamese-born migrants officially being registered in census data. [Questions raised below by commenters over these figures have been addressed in our Reality Check blog – see footnote.] It alleges that some of these illegal migrants are victims of "what appears to be a human-trafficking network" and that they are sometimes forced to work as prostitutes as well as manicurists.

"Industry insiders", may, possibly, allied with just entirely insane numbers do not proof of anything make. For a start there's estimated to be only 80,000 prostitutes in the country: we are really not going to start claiming that all of them are enslaved in Vietnamese nail bars, are we? Or that one in 200 women of fertile age in the country are in fact working illegally out of Vietnamese nail bars, or are Vietnamese themselves? This is actually such an absurd set of numbers that The Guardian itself had to investigate:

According to the latest statistics from January to March 2013, it is true that Vietnam is one of the top countries of concern, having the highest number of NRM cases after Albania, Nigeria and Poland. While even one case of human trafficking is one too many, the raw numbers do cast doubt on the implication that there are thousands of Vietnamese victims in the UK – 32 Vietnamese nationals were identified as potential victims in those three months.

32 people being abused is of course 32 people too many. But it's a rather different figure from 100,000.

At heart our problem here is simple. We've all cottoned on to the fact that the Socialist Calculation problem is intractable. It's simply not possible to have sufficient information to be able to plan the economy. But what we've not quite grasped, as yet, is that ths is not just a matter of economics. As above we've a scare story running about the country being infested with nail file wielding Vietnamese tarts and the government is proposing to legislate based on this most absurd of stories. But the information that the government is proposing to act upon is simply untrue. Obviously, clearly on the face of it, garglingly nonsensical. We simply do not have more Vietnamese women enslaved into prostitution than we do the total number of prostitutes in the country.

So what on earth is Theresa May doing? She is, God Save Us All, after all the Home Secretary. She has an entire department of people to tell her what is what, whch pieces of information are correct and those which are the fabrications of campaigners with an axe to grind. Why in heck isn't she listening to them?

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The deluded idea of making sex illegal to buy

Written by Tim Worstall | Tuesday 04 March 2014

There are times that I look upon those who would rule us and wonder where the collective IQ leaked out to. This is one such time: they're proposing that it should be made illegal to purchase sex in the United Kingdom.

Britain will today take a significant step towards reforming prostitution laws as the first cross-party report for almost 20 years recommends that only pimps and punters should be jailed or fined. The MPs and peers will recommend that the UK adopts a system whereby soliciting is no longer a punishable offence, but anyone who pays for sex is committing a crime. Prostitutes who are caught loitering on streets plying their trade should be given anti-social behaviour orders rather than being prosecuted, the group will say.

The Independent covers the same story:

What the All Party Parliamentary Group on Prostitution broadly proposes is Nordic-style reform, which is what the European Parliament also backed last week. This would shift the burden of prosecution from mostly women sellers to mostly male buyers and pimps. MPs are right to say that one of the root problems with Britain’s laws on the sex trade is that they send conflicting messages about who is in the wrong. If trafficked women, especially, are to be helped, they must be assured that the law is on their side. It is why the MPs want the mass of current legislation consolidated into a single Act, which makes it clear that only those who purchase sex will feel the rigours of the law.

One minor lunacy is the idea of ASBOs instead of criminal punishment. But an ASBO is only a way station to a criminal punishment anyway. Effectively it's a sentence that if you do that again you'll be jailed. Which, given that under the current law no one is jailed for being a prostitute seems to be an increase, not a decrease, in punishment.

But what's truly nonsensical, delusional even, is the basic philosophy at the heart of all of this. That many people don't like the fact that prostitution exists is true. But then I don't like Simon Cowell's existence either and no one at all claims that this gives me the right to ban him. The only possible claim that can be made in favour of the banning of prostitution, or even of the declaration that it is something wrong that we would like to minimise, is that it represents some form of slavery in which people are forced to do things they do not agree to doing voluntarily.

And that is indeed the claim that is being made, see that reference to "trafficking" in the Independent. However, the one thing that we do in fact know about the "slavery" in prostitution is that it doesn't, in this country at least, actually exist. For we had a plan whereby every single police force in the country went out looking for people who were indeed sex slaves. People who were being forced, against their will, into prostitution (ie, repeatedly raped, a vile crime). And when they had a look through all of the brothels, working flats, saunas and street walkers they could find not one single police force was able to come up with sufficient evidence to charge anyone at all with the crime of holding someone in such sex slavery. Operation Pentameter it was called and it's the biggest refutation of the hysterical case about trafficking that could possibly have been devised.

The vision some have of people being forced onto the game is simply untrue. What we do in fact have is consenting adults deciding to offer such services as they wish to offer for the cash being proferred to them. And this isn't something that requires customers to be made into criminals: nor is it something that requires suppliers to be made into criminals either. It's just not something that requires anyone at all to be made into a criminal. It's consenting adults deciding what to do with their own bodies.

The only laws which should (apart, perhaps, from a little bit of zoning and planning law) apply to commercial sex are those that apply to non-commercial sex. Consent, age, these sorts of thngs, and nowt else.

This entire suggestion to adopt the "Nordic Way" is based upon a delusion. That there is some amount of sex slavery which the innocent must be protected from being sucked into. But given that we cannot find any evidence of the existence of sex slavery that is indeed a delusion. It's simply nonsensical piffle and those who would rule us should be ashamed of offering up such an idiotic policy.

Instead I would propose an Act making bansturbation illegal. Bansturbators being those who get sexual pleasure from banning one or more behaviours of others. There's definitely too many of those around and unfortunately they seem to be in control of the legislature at present.

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Bonuses: RBS vs. John Lewis

Written by Dr. Eamonn Butler | Monday 03 March 2014

Staff at John Lewis are looking forward to bonuses totalling £200m this year. Everyone thinks this is wonderful, of course, as John Lewis is supposedly a fine example of a 'mutual', a 'partnership' that is owned by the people who work in the organisation.

Staff at the Royal Bank of Scotland, meanwhile, are getting bonuses of £576m. Everyone thinks this is terrible, as the banks are thought 'greedy', not to mention mean to customers who want business loans.

The RBS bonus pot is just over twice that of the John Lewis bonus pot. But RBS has a turnover around 15 times that of John Lewis, £19.7bn compared to just £1.4bn. In terms of the size of the organisation, therefore, RBS bonuses are pretty trifling.

Which is how it should be, given the bank's losses this year. Of course, not all parts of the business make losses, and it is reasonable that staff in the profitable bits should be paid proportionately. Even if some divisions are losing money, you might still want to keep paying them well, depending on how you think things will go in the future, and how much of an investment you have made in hiring and training up those staff members – not to mention keeping them out of the clutches of your competitors.

Bonuses are actually a good way for an up-and-down business like a bank to manage their remuneration. Instead of paying high basic wages and having to lay skilled staff off when things go bad, you can simply slim their bonus, knowing that many or most will hang on in the hope of getting larger bonuses when things turn up again.

But it is interesting that a bank can pay bonuses of less than a thirtieth of its turnover and everyone thinks it's wicked, and a 'partnership' can pay bonuses of a seventh of its turnover and everyone thinks it's a national treasure. Shows you how this argument is all about politics rather than economic and business reality.

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