The age of stupid or the age of gullible?

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With most people's attention understandably on the economic situation and the G20 summit, let's not forget what environmentalists are doing. Among the various protest groups having their say in London this week, there is a general understanding that the future world they want to live in will be green and fair as well as being devoid of greedy capitalists. We have also had the "people's premiere" of "The Age of Stupid", a film brought to you by the makers of McLibel.

Whereas Al Gore's invaluable contributions to the debate have at least dealt with factual evidence (cherry-picked to tell a particular story, but still largely factual), the new film is a dramatic look back from a post-Apocalypse future at what went wrong. Not surprisingly, there are clear-cut heroes and villains, with the overall message that it's all been our fault. This message has been reinforced over the last week by Rowan Williams' lecture on responsibility in York Minster. In this, he summed up the belief of many (whether Christian or not) that the environment has been changed "appallingly for the worse". This, I suggest, goes against the experience of most people lucky enough to live in the industrialised world.

Rather than living currently in the Age of Stupid, when mankind wantonly destroys the planet, it seems more likely that we are actually in the Age of Gullible, when the majority of opinion formers, the media and intellectuals are willing to place unquestioning belief in the dire predictions of environmentalists.

Martin Livermore is the Director of The Scientific Alliance

Jamie Oliveoil recipe for EU agriculture fudge

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A great video has been produced by The Taxpayers Alliance showing the lunacy of the EU's Common Agricultural Policy. Click here if you have not seen it.

How to defend freedom

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Despite the current downturn, the world's income must be about $60,000,000m. If you added up the budgets of all the free-market policy think-tanks in the world, I don't think you'd make it close to $600m, absolute tops. So I figure the world spends 0.00001% of its income defending the source of that income. Thanks, guys, but you could do better. Why not give online or mail a cheque to the Adam Smith Institute today?

Blog Review 917

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An excellent blog from Cuba, well worth having a read around it. for example, what it´s like to be independent when the whole of society is regimented.

This is what unions do, create monopolies for their own members, but is this actually something we want anyone to be doing?

Taking apart the President´s plans for the auto industry.

How to create the Common Agricultural Policy.

The scary holes in the local authority pension schemes.

If you think we´re all being spied on a little too much already, just you wait.

And finally, a political alphabet.

Bloggers Bash 2009

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Tomorrow we are hosting our now esablished annual Bloggers Bash. This will certainly be a great one, with John Redwood MP, Alex Barker of the FT and Guido Fawkes speaking on Politics and the Blog (not to mention the two small kegs of award winning ale).

Details of the event can be found here.

If you are intersted in attending, simply email events@old.adamsmith.org so we can put you on the guest list.

Scrap the IMF

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G20 participants like global stuff, and there are plans afoot to beef up the International Monetary Fund. Actually, we shouldn't be beefing up the IMF any more than we should be beefing up (at considerable expense) the Financial Services Authority. Both should be put in a sack and quietly thrown in a pond.

The IMF is a clapped-out postwar body, set up in a world where trade was a thirtieth of what it is now, and when exchange rates were fixed. Once currencies started floating, in the 1970s, it had no clear role – so carved out another one for itself, doling out advice and cash to poor countries. But today it has few customers: many poor countries have at last embraced the world trading system, and most of the rest don't want the strings that come with IMF funding.

Furthermore, as recent events show, the days when something like the IMF could save the world from a global crisis are over. Even if it had been ten times the size, it could not have halted the enormous forces that were unleashed last year. The IMF's resources were indeed hundreds of billions of dollars. But The bank bailouts in Britain and America alone have amounted to trillions, not billions. Indeed, having an implicit guarantor around in the shape of an IMF is probably as dangerous to the global economy as having the implicit guarantee of a government bailout is to the domestic financial sector – just encouraging people to take more risks because nobody fears the downside any more.

The IMF is a body without a role. It carries too much past baggage to be given a new one. Rather than boost it just because it sounds nicely global, we really should be throwing it into the deep water.

This is the road to hell

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One of Brown’s plans to boost the economy and his poll ratings, sooner rather than later, regardless of the costs, is the “biggest financial stimulus the world has ever seen". Few think Britain is in the right shape for a stimulus. Mervyn King has warned against it, markets warned too, and voters will only support it in the hope that the economy will recover.

It seems Brown will undertake any frantic measure available to boost the economy during his term, without regard for future burdens. He is playing a political and irresponsible game, inconsistent with his supposed focus on economic stability.

To make things worse, it is not even clear that the fiscal stimulus is a viable method of addressing this recession. To ‘stimulate’ Gordon must tax, borrow, or print.

If he taxes, he takes with the left hand, and dishes out with the right: a mere transfer. There may be positive multipliers on government spending, but there is a negative multiplier on all the lost private spending. As government investment is less efficient than that undertaken privately, the net effect will be negative.

If he borrows, then our debt burden will balloon into a debt bombshell of mass economic destruction. Borrowing will also take funds out of the market for loanable funds, and thus may limit the private sector’s access to funds. People will also make some adjustments in light of eventual future pain, further negating any positive elements.

If he prints, then he starts a very risky game. The private sector’s changed expectations in light of monetary inflation will mitigate the stimulus. This would then lead to redistribution rather than growth. Inflated money supply may also lead to overshoot and severe inflation, and even if that is avoided, if it is excessive it will almost certainly create the conditions for the next money-fuelled bubble.

Brown should stop trying to get the economy to a quick fix ‘boom’ for political gains, and think more about long-term stability. One hopes his G20 counterparts have restraint, and block him following what Topolanek the EU president called, the “road to hell".

Win a copy of The Rotten State of Britain

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You still have time to win a copy of The Rotten State of Britain over at the Liberal England blog. All you need to do is answer the following questions:

1. In which town was Adam Smith born?

2. Which Scottish Football League team plays its home games there?

3. Who was arrested outside the entrance to Downing Street on 18 June 2006 for carrying a placard saying: "In a time of universal deceit, telling the truth is a revolutionary act"?

4. What is the name of the proposed government database that will hold details of every child in England?

5. Who was appointed to head the Better Hospital Food project in 2000? (Correct spelling please.)

Click here to find out more.

G20: What can be achieved?

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I don't know what the G20 world leaders expect to achieve in under five hours of talking. My only hope is that they do as little harm as possible. But I'm not optimistic that they will succeed.

The one good thing is that there's going to be no agreement on hare-brained Keynesian spending packages. Countries like Germany feel they're quite indebted enough, and have no wish to borrow more. And for all the G20 leaders, the needs of voters at home are more pressing than Gordon Brown's need to be seen producing some agreed wheeze to 'save the world'. So I'm glad, because government job-creation plans actually cost jobs. They take money from where the market says it should be and put it to where politicians think that, possibly, it might give the appearance of doing good. And a bit disappears into the pockets of the civil-servants along the way. The Keynesian multiplier is really a minus.

But you can't stage a big event like this, with 10,000 extra police shifts and vast other costs, without having something to show at the end of it. So there will be agreement to look at global regulation. With luck, it won't go much beyond looking, because the last big regulatory initiative, Basel II, was ten years in the making but proved worse than useless – adding to the banks' problems – on its first outing. If our regulators had actually enforced the existing rules, we'd have been better off than we will be with lots of new ones.

And they'll agree that tax havens have to go. Which is a pity, because it means the end of effective tax competition between governments. The fact that people can shift their capital somewhere else is a good discipline on governments to run a tight ship. If they're trapped, because every state is a high-tax state, then the politicians can all relax. And that's not healthy.

I suppose there is a twenty percent chance that our world leaders might do one thing that would help us out of this pit they've dug for us, and that is to re-commit to the Doha free trade round. Global export markets have plummeted in this recession – exports are risky and hard to finance, especially now – and protectionism is rising. Easier world trade won't solve our problems, but it will certainly help, and help the developing countries in particular. But I suppose there's only a one percent chance of that twenty percent chance actually happening.

Dr Eamonn Butler's new book The Rotten State of Britain is published this month. Click here to find out more.

Blog Review 916

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One to watch: is there really one rule for them and another for the rest of us? Just what will the Vice President's daughter get for taking cocaine?

A ringing declaration of what it is to be a liberal. The sadness is that all too many of those proclaiming themselves liberals are no such thing.

Now the free movement of capital is being blamed. But please do compare the effects of it (if true) to not having the free movement of capital.

This late in the day it's simply appalling how many don't understand the simplest things about capital markets.

The true meaning of that Dan Hannan video.

Hurrah! A decent idea for government.

And finally, a decent piece of conceptual art (is that even possible?).