Tim Worstall
Well, no, John Harris does have a point here
Well, no, John Harris does have a point here
Tim Worstall
Just to remind, there has been no austerity
Just to remind, there has been no austerity
Tim Worstall
Of course Boris can't vote without ID - don't ...
Of course Boris can't vote without ID - don't be silly
Tim Worstall
One of those George Monbiot questions we can ...
One of those George Monbiot questions we can answer
Tim Worstall
Onwards to knowledge
Onwards to knowledge

Blog Review 950

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Does the US really need a car industry? And if it does, is supporting Chrysler and GM the best way to have one?

Good news on those "toxic assets". Prices are higher than many had thought.

If Netsmith were able to bash just one point into the heads of idiot lefties it would be this one. That markets are not inherently rightish things, they work for all regardless of ideology.

There's a nasty whiff of something not right about this case of Master Ferry. 4 months remand and no charges brought?

And there's more than a whiff of demonisation of those owners of Chrysler debt who, umm, insisted that such debt was in fact their property,

This just has to be made into a film. Just has to be.

And finally, why the police should not be using loudhailers.

 

Making use of a good crisis

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It's the greatest of political sins, to fail to make use of a good crisis. One example of those trying to do so might be the recent EU report on financial market regulations. Hedge funds and private equity are to be brought under tighter control despite their having nothing whatsoever to do with the current problems.

Another attempt which is unfolding under our very eyes is the attempt to portray this swine flu as being an example of the evils of industrial farming.

The Mexican swine flu, a genetic chimera probably conceived in the faecal mire of an industrial pigsty, suddenly threatens to give the whole world a fever.

It's not a chimera, of course, as that would be mixed DNA rather than mutated. It's also an interesting thought for that's not really how we expect zoonoses to arise. For a disease to spread from one species to another, to become cross infectious, we actually think we need to have the two species living in close proximity. Like the Hong Kong bird flu of 68 came from the way in which small holding farmers in that at the time poor country lived cheek by jowl with their birds. Or SARS from Vietnam from the similarly close proximity of stock and human. (No, Spanish flu was not thought to come from humans associating too closely with Spaniards.) That is, we expect such diseases, and we've seen that they do historically, to come not from industrial farming, but from small scale peasant farming. Sleeping above the stock (rather than, erm, with it) is the cause, not having tens of thousands of stock that have little inter species contact.

But of course this should not get in the way of using a good crisis to get whatever it is that you've already decided you want, as Caroline Lucas shows us: 

More research is urgently needed to explore the potential link between industrialised animal farming, and the spread of disease. Some elements of the Mexican media are already pointing to the potential role of intensive pig farming in Mexico, which has grown substantially in recent years, with some giant operations raising tens of thousands of pigs at a time.

Very well, let us have some more research. How about a bit of empiricism, some collection of relevant facts?

But agricultural in­spec­tion officials say there is no swine flu virus among the pigs at these farms.

So theory says we wouldn't expect large single species farms to produce zoonoses and the facts say that it didn't. Another glorious theory ruined by those pesky facts perhaps? But unfortunately I doubt that will be enough to drown out the siren voices desirous of making good use of this crisis.

Swine flu and the financial crisis

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I guess that Swine Flu is a bit like the financial crisis, in a way. One started in the US on the back of bad policy – forcing banks to lend to minorities who couldn't repay, bad regulation, the government creating lenders who were too big to fail – and the other came from Mexico, with bad farming practices.

They both infected other countries with alarming speed, thanks in one case to modern electronic communications and in the other to daily international air travel. They remind us what a small, interconnected global village we now live in.

They are both things we have not seen before, since 1933 in one case and 1918 in the other, and since then, things have changed (financial institutions and trade, viral strains). So we don't really know how to cure them.

They've both caused panics which seem disproportionate to the reality. As ASI author Terence O'Halloran pointed out in a letter to the Daily Telegraph on Friday, 36,000 people a year routinely die of seasonal flu in the United States, but there was hysteria over a single death from Swine Flu. And both have a real impact on the economy and on output.

Ultimately it will not be elaborate technologies that defeat them, but basic, sound, common sense. Keynesian makework programmes, massive borrowing and quantitative easing will not cure the financial problem. Only sound money, freer trade, lower tax and regulatory burdens on business and better (not more) regulation on the banks will cure the financial problem. And sound hygiene, and putting infected people (like infected assets) into isolation will have more effect on Swine Flu than any of the latest anti-virals.

And we will learn that, just as the human body has amazing powers of fighting infection and recuperating from it, so does market capitalism have amazing powers to restore itself to health. Provided that the policy doctors let it, of course.

Blog Review 949

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We have myriad problems about pensions, both public and private, at present. But the root cause of all of them is actually something to celebrate: we're all living longer.

Anna Schwartz blamed the Fed for the last disaster, in the 30s, and she was right. Now she's blaming the Fed for the current problems: is she right again?

No, Somalian anarchy is not the perfect state. But amazingly, the absence of government is better than the presence of some governments.

The secret to understanding Adam Smith. He describes meticulously that which is - and not so much that which should be.

The universal first rule of politics:

Every politician really, sincerely, and truly wants what is best for the nation ... as his or her second priority, after doing whatever it takes to get elected or re-elected.

The language here is shocking but then perhaps justifiably so. The lies and contortions are simply fantastical.

And finally, celebrating May Day.

This is a political problem, not an economic one

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Keynesianism that is, or the management of the economy through fiscal policy. Allow us, for a moment, to pretend, and assume that we've found ourselves miraculously in agreement with all and every of Keynes' tenets. We will even agree that borrowing £175 billion in the coming year is a good idea (and that no, it doesn't matter what we spend it on) because we really could do with some fiscal stimulus.

So, where does this leave us? Well, we're saying that we need this fiscal stimulus because there are unused resources in the economy and that growth is going to be below trend. Right, but as the IFS points out, this gives us something of a problem. For if we are below trend now it's fairly easy to show that in recent years we were above trend. As indeed the IFS points out.

Now remember that we have drunk the Keynesian Kool Aid in its entirety. Just as we believe in fiscal stimulus when growth is below trend, we also believe in fiscal contraction when growth is above it. And can anyone see that happening in recent years?

Such a contraction would have meant raising more in taxes than was being spent by government. Instead of public borrowing, we would have had debt repayment. And can anyone really believe that was going to happen? When you've Polly Toynbee screaming that we can and must abolish child poverty for only a few billion more? When every policy panhandler is pronouncing on how this or that evil of the world can be solved for just a little more taxpayers' cash and anyway, isn't this what a Labour government is for?

Well, quite. The failure of the system is thus a political one at the very least. Whether it works as an economic system is for others to determine but if it's politically impossible to have fiscal contraction when the theory says that there must be fiscal contraction then it's not all that useful a theory, is it?

Changing our ways

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I haven't yet heard anyone yet say that Swine Flu means we must abandon the acquisitive society and all learn to live more simply, but I have no doubt at all that I will. I anticipate this because the mantra is used every time anything of significance happens, and even when insignificant things do. There are always people who yearn for a simpler life when people were nicer neighbours and the Hovis boy pushed his bike up that sepia cobbled hill. Things were under control more in those days.

Now they wail that everything has gone manic with people pushing and shoving and trying to improve themselves. The spread and speed of our interaction with others has led to a world which cannot be controlled and which occasionally seems to run wild.There are just so many interactions that no directing brain can hope to slow it down and make it behave as some idealists would like it to.

In despair over these developments, and over their failure to persuade the world to behave differently, they clutch at each new development as a sign of the imminent collapse of the modern world, and the emergence of a quieter one in which people have more limited ambitions and know their place. They rather parallel the environmentalists who hail any weather that happens as evidence of coming catastrophe.

It is true that the world faces a series of challenges and shocks; it always has. It is also true that modern speed and interconnectivity can highlight and intensify some of those challenges. But there is another side to that coin: it is that the speed of scientific and technical advance, and the rapid transmission of information, mean that humans can respond more quickly and more effectively. Our ability to deal with crises has increased, too.

It is unlikely that Swine Flu will overwhelm us. Humankind will rise to its challenge and emerge from its threat, just as it does from the others. And no, it will not abandon its quest for self-improvement, or the speed and range of its reach. But its success will not prevent some people hailing the next crisis as the one to curtail our unlimited ambitions.

Tax Freedom Day 2009 falls on 14 May

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But you'll have to work until June 25 to pay off Brown's borrowing binge.

Tax Freedom Day, the day in the year when the average Briton has earned enough to pay his annual tax bill, will fall on 14 May this year. This means that for 135 days of the year, every penny earned by the average UK resident will have been taken to support government expenditures.

This is the earliest Tax Freedom Day since 1973 – on the face of it, good news for taxpayers. But there is a downside: the traditional Tax Freedom Day measure only reflects the money actually raised by the government in taxes, not the full amount it spends. If the government deficit is factored in, Tax Freedom Day does not come until 25 June (the worst figure since 1984).

This gap between Tax Freedom Day based on actual revenues and Tax Freedom Day based on government spending is now the widest it has been since the early 1970s – and possibly since World War II.

These figures indicate a bleak future for British taxpayers. Running up deficits can be described as a form of deferred taxation. The effect will be that when the economy recovers – as it eventually will – the UK tax burden is likely to rise much faster than would otherwise have been the case and Tax Freedom Day is likely to creep later and later in the year.

Moreover, the reason that Tax Freedom Day will arrive so early in 2009 is not so much that the tax burden has been dramatically reduced – although the temporary reduction in VAT is certainly significant – as it is that tax revenues have collapsed due to the sharp downturn in the economy.

Overall, our research doesn't give much cause for optimism. Under Gordon Brown's stewardship of the economy, the government's annual deficit went from near-balance in 1998 to more than 3% in 2007. And that was with the UK economy was growing strongly. Now the Chancellor is forecasting a 13.3% deficit. We'll be carrying the burden of these mistakes for years to come.

Click here for more information about Tax Freedom Day.