Blog Review 737

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If you think that things are bad here in the financial markets take a gander at this report on the Russian ones.

Looking at the other financial crisis, the government books, quite how much do we need to cut spending so that we can cut taxes?

Imagine that someone proposed a law to make it illegal to wash your car in your own drive. Do you think that The International Carwash Association would support it?

Do he rich have too much economic power? Well, compared to what? Congress has much greater economic power, no?

An excellent letter to our friends on the left, explaining what's been going wrong and what we might do about it.

Asking the really important economic question. Trend growth in the US has been about 1.8% per annum for, well, forever really, since there was a US. What is that magic bit that has made this so when many other parts of the world simply cannot manage that?

And finally, liveblogging the VP debate.

Taming leviathan

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taming-leviathan

Daniel Finkelstein had a great article in The Times yesterday, talking about how the "vast jamboree of special interest groups" present at the party conferences demonstrate the "malignant growth" of the state:

"All around the fringe can be found... public sector organisations holding meetings to persuade taxpayers to give them more money, meetings that are - here's the good bit - paid for by the taxpayers that are being lobbied. Paid for by you, in other words, in order to persuade yourself."

He goes on to list some of the organisations that he came across at the Conservative conference. It takes a full four paragraphs, and that's just a start. As he says:

"I am attempting instead to show how big and complicated the State has become, and just how many parts of it are now involved in protecting their own existence..."

The implication of all this, which Finkelstein realizes, is that talk of government 'tightening its belt' will never amount to much. You need to work out what the government is for, and then get rid of surplus functions.

So what should the British government be doing? For me, it's not a long list:

  • Law and order: the state should protect individuals against direct harm from others, and enforce contracts.
  • Defence and security: emphasis on the word defence, as opposed to costly foreign intervention.
  • Public health: i.e. sanitation and preventing the spread of communicable diseases, not telling people they can't smoke, drink, or whatever.
  • Infrastructure: ensuring adequate transport and energy supplies (but leaving provision to the market as much as possible).
  • Funding schools: but not running them.
  • Welfare: get people to contribute as much as they can, but guarantee a basic income and minimum standard of healthcare.
  • Social services: make sure the young, the old and the mad are looked after.
  • Sound money: I've lost faith in central bankers so – short of competing currencies – maybe a return to the gold standard would be a good idea.

Confine government to those activities (which are still more extensive than many would like) and I suspect you could get rid of almost all QUANGOs and regulators, half the government departments, and a very sizeable chunk of public spending.

Regulators in paralysis

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regulators-in-paralysis

Perhaps one should be relieved to learn that regulators have failed to come up with any plans on how to use their new powers granted by the Regulatory Enforcement & Sanctions Act that came into force yesterday.

The Financial Times reports that BERR – the Dept for Business, Enterprise & Regulation – had received no plans yet from the 27 national regulators allowed additional powers under this new legislation. Originally intended to streamline business regulation across the board, the Act actually provides powers for regulators to impose hefty fines on those who do not conform to a raft of regulations.

Ben Summers, a partner with Peters & Peters, a law firm specialising in regulation, told the FT that research by his firm revealed little sign of regulators making moves to implement the Act. "Given the new regime which the act heralds and the expectation which the government clearly has of it, there is a surprising lack of proposals from any of the national regulators", observes Summers.

Ominously, BERR says that it is having ‘constructive discussions’ with the 27 regulators that fall within the Act’s remit. If the new statute goes some way towards consolidating regulatory overlap it is to be welcomed, but in the meantime the jury remains out.

REG will monitor developments closely. If readers have any personal experience of the new Act as implemented, please get in touch with us at info@old.adamsmith.org.

Keith Boyfield is the chairman of REG, the ASI's regulatory evaluation group. For more articles on regulation, please visit our Regulatory Monitor webpage.

Reshuffle advice for the PM

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reshuffle-advice-for-the-pm

Gordon Brown's rumoured cabinet reshuffle will no doubt bring interesting results after the events of the past few months.

It was rumoured yesterday that John Hutton may be moved from his position at the Department for Business, Enterprise, and Regulatory Reform (BERR). He was one of Blair’s closest allies before 2007, and recently failed to condemn backbench rebels. So you can see why Brown might have an issue with him.

But it would be a crime against good sense if Hutton were demoted – he's one of the few decent ministers in the cabinet. In his current role he has proved popular with business and unpopular with the unions (often a good sign), and won a few admirers at the ASI when he heavily criticised the Windfall Tax on energy firms.

Here's a better idea for Brown. Abolish BERR (is it really worth £5bn a year?) and give Hutton a better job. After all, right now Brown’s ‘government of all the talents’ seems to be facing one major hitch: there's not much talent on offer.

Blog Review 736

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blog-review-736

There is a problem with these calls for greater regulation you know. The problem being the regulators.

This is probably a useful loosening of the regulations at the moment.

The latest theory on what went wrong. Apparently porn is to blame.

It's not only the financial world that has problems of course. The music industry really seems to have lost the plot as well.

Given the Government's propensity to take dystopian novels as instruction manuals there are a few we might not want them to read.

(Swearing alert!) Meet the new Leader of Scottish Labour.

And finally, journalism is a craft, one that not everyone immediately grasps the essence of.

A missed opportunity

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a-missed-opportunity

In his big speech at the Tory conference yesterday, David Cameron said, "Freedom can too easily turn into the idea that we all have the right to do whatever we want, regardless of the effect on others. That is libertarian, not Conservative..."

No, David, it's not. Libertarianism is a political philosophy based on individual rights, personal responsibility, free markets, and limited government. In no way does it imply a lack of concern for others, or legitimate harming them to serve your own interest. Indeed, the paramount importance that libertarians attach to the protection of the individual renders Cameron's statement absurd.

And I suspect he knows it too. After all, back in 2001, he wrote: " I am an instinctive libertarian who abhors state prohibitions and tends to be sceptical of most government action". Now, that sounds like my kind of Conservative. 
 
The rest of the speech? Well, it seems to have been well received. There was good stuff on reforming education, restoring sound money, cutting government waste and reducing corporation tax by three percent. In terms of making him look like a serious man for serious times, it did the job. On the downside, I didn’t like his praise for the NHS and thought using the death of one of his constituents to score a political point was mawkishly tasteless.

Overall: a decent enough speech, but by no means a great one.

All your bodies are belong to us

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all-your-bodies-are-belong-to-us

The NHS is aiming to recruit a major new supplier of body parts and blood. Namely: our children. Schools Secretary Ed Balls is looking to indoctrinate educate school children in the benefits of organ and blood donation. Current benefits include cups of tea and loss of life, and an over bearing sense of self-worth with which you can bore your friends to death with.

Due to current shortages in the market of donors, the government can find no effective way of harvesting the 8,000 organs that are currently needed. This is despite there already being 15.7 million people registered.

What is most alarming about the incorporation of this into the curriculum is the subtle way that the government's attempt to nationalize our bodies is exposed by the 'lax' comments of John Dunford, General Secretary of the Association of School and College Leaders who said donation was a "crucial issue" that "must be addressed in schools" followed by: "I think it's good to encourage young people to become donors. I hope they'll encourage their parents to do the same."

And there we have it: the inescapable establishment of the Spies (the youth organization from 1984). Children are to become the mouthpieces of the state, to further pressure adults to act in the ways and forms the government requires. If the government had an iota of intelligence, they allow the financial compensation for people donating either body parts or body content (undertaken in only a minority of incidents). But alas they don’t. It seems that the government brain cell has been donated. I pity the recipient.

Regulators in paralysis

Perhaps one should be relieved to learn that regulators have failed to come up with any plans on how to use their new powers granted by the Regulatory Enforcement & Sanctions Act that came into force yesterday.

The Financial Times reports that BERR – the Dept for Business, Enterprise & Regulation – had received no plans yet from the 27 national regulators allowed additional powers under this new legislation. Originally intended to streamline business regulation across the board, the Act actually provides powers for regulators to impose hefty fines on those who do not conform to a raft of regulations.

Ben Summers, a partner with Peters & Peters, a law firm specialising in regulation, told the FT that research by his firm revealed little sign of regulators making moves to implement the Act. “Given the new regime which the act heralds and the expectation which the government clearly has of it, there is a surprising lack of proposals from any of the national regulators”, observes Summers.

Ominously, BERR says that it is having ‘constructive discussions’ with the 27 regulators that fall within the Act’s remit. If the new statute goes some way towards consolidating regulatory overlap it is to be welcomed, but in the meantime the jury remains out.

REG will monitor developments closely. If readers have any personal experience of the new Act as implemented, please get in touch with us at info@old.adamsmith.org.

Keith Boyfield is the chairman of REG, the ASI’s regulatory evaluation group.

Blog Review 735

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blog-review-735

You know, amongst all this panic, it really does seem that this loan securitisation thing did what it was supposed to. Put the risk amongst those who could afford it.

With all this talk of more regulation...might we hope that the current regulators stop working entirely at loggerheads?

Netsmith (for the value of Netsmith's opinion) rather likes this outline of what actually happened and who might be to blame.

A reminder that you really do want to beware those bearing statistics.

This is something that you might want to join in with. Take a photo of our free and pleasant land....

A rather better example of what makes this a free and pleasant land...

And finally, what credit crisis and great research reports of our time.

Corrupt power

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corrupt-power

We used to have state institutions and rules that restrained our leaders. Our basic liberties had been fought for, and built up, over hundreds of years – since at least Magna Carta in 1215. Yet within just two decades, and at an accelerating pace, almost all these restraints have been sidelined or swept away. All in the name of efficiency, or defeating terrorism, or what 'the people' want. But now these restraints have gone, there is nothing left to protect us against our political leaders. And those leaders have shown every willingness to harass, bully, spy on, arrest and imprison us without trial if it squares with their view of what’s best for us.

Parliament, for instance, has been neutered. There's a ‘payroll vote’ or around 120 ministers, whips and others, so you can’t expect many complaints from them.The Cabinet, once a forum for heated debates on policy – remember Michael Heseltine striding out over the Westland helicopter affair? – is now  more of a brief weekly chat about general issues. And the civil service is now completely politicized, stuffed full of political appointees. Armies of spin-doctors quieten another potential source of opposition, the media. They reward favourable coverage with interviews, tip-offs leaks and exclusives ­– using public information as if it were private property – and punish criticism with silence.

For years, even the Opposition didn't present much opposition. They were so divided that they focused mainly on opposing themselves. The government did not need to win any arguments. It is no wonder that its power grew so rapidly, and that so much bad legislation was simply nodded through.

And that, perhaps, is a challenging point for the Conservatives. Will they, in power, be prepared to raise the quality of their legislation by encouraging strong debate on it? Will they protect the long-term interest of the public by accepting restraints upon themselves? Will they save themselves from hubris by welcoming public scrutiny of their actions?