Kyoto derailed by financial crisis


I always wondered how environmental policies were able to escape the inevitable watering down in political horse-trading. For decades the over ambitious Kyoto targets for cutting carbon emissions have survived unblemished – thanks to powerful green lobbying. Yet finally this exception of the rule seems to be fading.

Firstly, many European countries, among them the United Kingdom, are trying to water down their Kyoto targets. They want to raise their allowance for offsetting emissions reductions under the Clean Development Mechanism (CDM) by purchasing carbon credits from developing countries from 30 percent to 50 percent. However, the CDM is already regarded as dodgy because some cheat with the technology transfer to developing countries, which earns them credit points under Kyoto. For it sometimes counts investments that would have been done anyway and are only relabeled under Kyoto, achieving no CO2 savings whatsoever. According to the BBC:

Various reports suggest that between 20 percent and 60 percent of CDM projects do not save additional CO2.

Secondly, a recent revolt against the Kyoto targets has emerged from eight European countries, led by Catholic Italy and Poland. It seems the global financial crisis, as The Times reported, may be achieving what sound arguments against poor efficiency of cap and trade de-carbonizing of our economy failed to do. The whole European climate change push seems now in disarray.

Plans for binding European legislation by December were dropped as the EU watered down the carbon dioxide blueprint that it had announced with a fanfare 18 months ago.

And it is unlikely that the rotating French EU presidency will be able to sort out the mess until before 1 January 2009 when one of the most outspoken opponents of Kyoto policies, Czech president Vaclav Klaus will take over Sarkozy’s job. Oh well...

A timely reminder...


Common Error 26: "Government must 'prime the pump' by stimulating demand through increased public spending."

Some urge that when the economy slows, and people are not spending or investing as much, government should step in with projects of its own to boost demand with public spending. In fact when government does this it destroys private sector jobs by taking away the resources which would have sustained them. Taxes are higher than they might otherwise be, leaving less to be invested in private business and to spend on its products.

Moreover, government uses those resources inefficiently. The administrative costs of sustaining each job are higher in the public sector, and the funds themselves are used less effectively. "Priming the pump" often means spending on infrastructure and civil engineering projects, all capital-intensive and less productive of jobs.

Even in labour-intensive areas, such as the public services, most of the extra money it puts in is swallowed up by increases in the public sector rate of inflation. It simply puts in more cash for public employees to bid for. This happened with the huge sums pumped into UK public services in the post-2000 budgets. All of the money was swallowed, but service improvements were not remotely commensurate with the enormous increases in spending. Indeed, some things became worse.

Private money goes where economic factors signal it should, but government cash follows political demands which are not as commercially viable or as sensible.

It takes a lot of money to sustain each public sector job. The private sector employs more people for the money. "Priming the pump" is a now discredited notion from Keynesian days. It creates a temporary and artificially high demand in certain sectors at the expense of others, followed thereafter by massive dislocation and unemployment when that artificial demand ceases. It tempts government to create artificial short-term 'booms' ahead of elections, with the consequences coming after they have been safely re-elected.

[This blog is part of a series of 101 'Common Errors' we published at the beginning of 2008. They were subsequently republished in book format as Freedom 101, which you can buy here]

Blog Review 754


An extremely good idea indeed. Supporting the Drinkers Alliance. Indeed, we'll drink to that.

This financial market thing: maybe it was nothing to do with banks or houses at all?

Certainly, it wasn't a falure of unregulated capitalism as we've not had such recently.

Anyway, it's not unfettered markets that anyone one asks for: just a better set of fetters.

Here in the UK it was just the non-London banks that had problems: perhaps institutional experience matters?

This is the sort of economic research that wins Nobels. The problems of intersteallar trade and interest rates under near light travel speeds and the associated time dilation.

And finally, instead of a pop video that mimics the lyrics, lyrics rewritten to mimic the video.

Fight for freedom


The front-page of yesterday’s Sunday Times revealed that the government intends to require the production of a passport by anyone purchasing a mobile phone. The reason? They want to know who owns every phone used in the UK, so that they can electronically track all of us, all of the time.

Even when no call is being made, mobile phones send out a signal to the nearest telephone masts, making it possible to work out the phone’s location. The government intends to link this information with the DVLA’s car registration database and the police’s automatic license plate identification system, to make keeping tabs on us that little bit easier. The government also intends to create a new database which will store the details of every single electronic communication made in the UK.

It really makes me wonder what kind of a country we are living in. Will the current government ever realize the George Orwell did NOT intend 1984 to be used as an instruction manual? Somehow, I suspect not.

Instead, the government is bound to say that only the guilty have anything to fear and that unless we have something to hide, we should all march (or should that be goose-step) happily down the road to electronically-tagged serfdom , safe in the knowledge that Big Brother is on the side of the angels. That’s the excuse that all tyrants use, and I don’t expect our ones to be any different.

The problem is that it isn’t true. The very existence of that kind of information and that degree of centralized power is a threat – regardless of the intentions that lie behind it. These powers will be abused and the data’s security will be compromised. It is so predictable that you would be a fool not to see it coming.

Everyone who values freedom, regardless of their political affiliation, should fight these proposals and others like them every step of the way. It is not just a matter of practicality or expense: liberty matters in and of itself. We are not the possessions of government, and it’s high time we reminded them of that.

Hat-tip to Chris Weston, the comic-strip artist behind the fantastic image accompanying this blog.

Costs and benefits, costs and benefits


I think we'd all like to have a little more evidence based policy, no? Fewer courses of action based upon the spoutings of ideologues, yes? Which means that I get to return, boringly as ever, to my pet subject of cost benefit analysis studies.

A government report that found old-fashioned reusable nappies damage the environment more than disposables has been hushed up because ministers are embarrassed by its findings.

The Department for Environment, Food and Rural Affairs (Defra) has instructed civil servants not to publicise the conclusions of the £50,000 nappy research project and to adopt a “defensive" stance towards its conclusions.

The thing is though, there's no point is us just doing the research into what is the correct course of action, we also need to communicate our results. If it turns out that using real nappies simply boils Gaia then we need to tell the hippie dippies that they should get with the program and start throwing things into landfills. If they start complaining that this is simply burying resources we can point out that while this is true, it takes 100 years or more for a nappy to disintegrate and carbon sequestration is something we're all in favour of.

Still, now that we've got our result, that disposable nappies are better, what should we do with it? Banning real nappies would be most illiberal, as would insisting upon the use of none at all. (Weirdly, there is a really hippie dippy movement to use no nappies at all. Seriously, there is.) The best thing to do would be perhaps to just push the information out there and let people decide for themselves.

Oh, one other thing, we can stop paying for Real Nappy Officers, which would be a blessing for the taxpayer in these hard pressed times. Hmm, perhaps the report was suppressed because the real nappy officers are in fact the Illuminati?

Too much testing


Alice Thompson, writing in The Times, thinks that standardized testing in schools should be abolished. Noting that English children are formally tested 70 times by the age of 16, she makes a very good case:

Our four-year-old must be assessed on everything from personal hygiene to knowing what a phonome is. By 7, my eldest son was expected to meet a series of “attainment targets" in 14 areas, from religious studies to citizenship as well as sitting his SATs. These range from “creating and performing dances using simple movement patterns, including those from different times and cultures", to realising “that family and friends should care for each other", to being able to “record calculations, using the symbols +, -, x , ÷ and = correctly"... By Key Stage Four, at the age of 14 to 16, the curriculum resembles a giant boa constrictor wrapped around schools, squeezing the life out of them.

Once you consider the lunacy of this whole system, it's really no wonder that Britain has slipped so far down the OECD's education rankings (from 3rd to 13th) since the 1980s. The astonishing degree of over-testing is indicative of a service that is not run in the interests of its customers – the pupils and their parents – but rather to serve the purpose of its political masters. As the old saying goes, "He who pays the piper calls the tune." In this instance, the government pays, the schools play their tune, and then the children have to suffer through it.

The solution is pretty simple. All schools should be independent and self-governing, free to set their own curricula, choose the exams their pupils will sit and pick the qualifications they will be entered for from the wide range of competing options already on the market. Ultimately, what matters is that schools are made accountable to parents, rather than to the state.

Blog Review 753


Netsmith was going to blast this terribly silly report from the New Scientist but the Angry Economist has done it much better.

Strangely, attempting to manipulate a prediction market simply makes the predictions more accurate.

How to improve the education system by someone who actually works in that education system. Most unlike the suggestions of those that administer the education system.

Who is behind the latest incredibly stupid piece of security theatre?

One problem with increased bank regulation is going to be that the US doesn't have even national banking regulation: nor, to a great extent, a national banking system.

Evolution's not over yet, not while medical technologies continue to improve.

And finally, credit crunch jokes in the comments section.

Crime and Punishment


Fascinating stuff this, like a press release from the Howard League on how we should treat criminals.

I'm sitting in Oslo having lunch with the director general of the Norwegian prison service – Kristin Bolgen Bronebakk – and we are discussing "Scandinavian exceptionalism". In other words, why is it that Finland, Sweden and Norway in particular, have much lower rates of imprisonment than other European countries?

Isn't that wonderful? They've managed to design a system where those who employ their rapacity upon their fellow citizens do not end up warehoused, locked in a cell for 23 hours a day, in a Victorian building. Perhaps there's something we might learn from this system, how do they do it?

Oslo had the highest rate per person in Scandinavia in terms of reported crimes, with 90 reported crimes per 1,000.

Copenhagen had 50 crimes reported per 1,000 and Stockholm had 79.

In New York, there were 22 reported crimes per 1,000 inhabitants.

As economists have endlessly pointed out, it's not just punishment for crime that reduces crime. It's a combination of the severity of the sentence, the conditions of serving it plus the liklihood of detection and conviction. All those together add up to the expected punishment for a particular action.

And whatever else the Norwegian version of social democracy might have to tell us here it seems clear that not locking up criminals does not reduce crime.

So that's one more thing that we know not to do then.

You like the Red Skelton painting?


Simon Jenkins is quite possibly the most engaging journalist around. His book Thatcher and Sons is certainly one of the best critiques of modern politics as it is practiced today. However, his recent article in The Guardian shows that, like self-proclaimed 'non-libertarian' David Cameron, he is not a libertarian.

In fact there are many similarities between the Tory leader and Jenkins in this article. We have of course the inevitable rant against people being paid too much, but we also have echoes of Cameron's argument last year that it is the job of politicians to make people happier. Jenkins writes:

We might even see a resurgence of the "happiness" movement of the early 1970s; of Schumacher's "small is beautiful" economic theory. We might find a new appreciation for the king of Bhutan's edict on the importance of "gross national happiness", and for John Ralston Saul's remark that the American mission of "life, liberty and the pursuit of happiness" was nothing to do with money. Saul called for a more subtle understanding of contentment, "to escape the 20th-century idea that you should smile because you're at Disneyland".

Of course, Disneyland is not for everyone, especially it seems members of the Canadian Intelligentsia such as John Ralston Saul. Much better a night at Toronto's Opera House, I presume. Yet such judgements are limited. Better that everyone is free to enjoy their lives without the judgement of others; especially the judgement of the King of Bhutan, living in exquisite luxury, while his underlings just survive.

Jenkins writes that Britain might even "inch up the University of Michigan's world happiness survey from its present miserable ranking of 21st, below Mexico and the US". I thought all this nonsense about happiness had gone away. Any attempt politicians make to turn this into policy will result in incursions upon our freedom as well as being destined to fail.

Freedom is what matters when it comes to happiness, because happiness comes in many shapes and sizes. To quote the great Dennis Miller: "You like the Red Skelton painting? Buy the Red Skelton painting. You like "Home Improvement"? Tape it and go over it like the Zapruder film. It's your life; live it on your terms".