Are restaurants supersizing us all?

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Yes, yes, we've all heard about how those awful, nasty, fast food restuarants are making us all so fat we'll keel over from the cholesterol before we hit 35. Even that this generation will be the first in modern times to live shorter lives than their parents. That the NHS is about to buckle under the weight of lard butts demanding treatment so we must immediately impose the Big Mac Tax.

The problems with this narrative are numerous: not least that people dying young from being porkers saves the tax system money, not costs it. But the first question we really need to ask ourselves is, is it true that fast food restaurants, or indeed restaurants of any kind, actually lead to the observed increased whaleness of the nation's shape?

While many researchers and policymakers infer from correlations between eating out and body weight that restaurants are a leading cause of obesity, a basic identification problem challenges these conclusions. We design a natural experiment using highways in rural areas to exploit exogenous variation in the effective price of restaurants and examine the impact on body mass. We find no causal link between restaurant consumption and obesity. Analysis of food-intake micro-data suggests that consumers offset calories from restaurant meals by eating less at other times. We conclude that regulation targeting restaurants is unlikely to reduce obesity but could decrease consumer welfare.

Well, no, it appears that the restaurants aren't in fact the problem. After gorging at a restaurant we all seem to eat less next time, when not at a restaurant. Meaning that our targetting of those restaurants won't in fact cure whatever ills we diagnose as coming from the undoubted rise in weights that is going on.

Meaning also that the problem lies elsewhere: but good luck to the government that tries to deal with that. There aren't all that many votes in saying "You're fat because you're greedy" now, are there?

John Redwood Seminar

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On the 14th October, John Redwood MP gave a seminar at the ASI based upon a publication he has just written for us, Credit Crunch: The anatomy of a crisis.

Published one year on from the part-nationalizations of Lloyds-HBOS and RBS, this report by John Redwood MP pins the blame for the financial crisis squarely on bad monetary policy from the Bank of England and misguided regulation and inadequate crisis management by the UK government. Redwood attacks the notion that the UK economy was well run in the period leading up to the crisis, and that its problems were imported from the US, making clear that while Britain's crisis may have had much in common with America's, it was in fact very much home grown. In addition to analyzing the financial crisis and its causes, Redwood also makes a series of recommendations for the future of the banking sector, as well the broader economic policies of the next government.

See the video of the event below:

Dangerous substance

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A friend of the ASI sent us a letter that he had received from a company after purchasing a product. It opened as follows:

You have recently ordered product(s) from XXXX which are subject to the Chemicals (Hazard Information and Packaging) Regulations 1993. Where a product is classified as containing hazardous chemicals under CHIP legislation and the product is to be used in the workplace, XXXX is obliged to provide a safety data sheet on the first occasion a customer orders the product. Please ensure that the enclosed sheet(s) are held in a safe place for future reference by any staff using the product(s).

What follows are five sheets of ‘Product Safety Data Sheets’. Here are some extracts that might give you a clue as to the nature of this ‘dangerous substance:

• “Prolonged skin contact may defat and dry skin leading to possible irritation and dermatitis. Eye contact may cause smarting and irritation."
• “If contact of any material with the eye occurs, irrigate the area affected thoroughly with cold water."
• "Skin contact: wash affected area thoroughly with cold water."
• “If confined to the mouth, do not swallow; wash out the mouth with water… If swallowed, drink plenty of water and medical advice."
• “Protective equipment is not normally necessary. Gloves should be worn where repeated or prolonged contact can occur. Avoid contact with eyes. Safety glasses should be worn".

At the end of five pages we learn that “this product data sheet was prepared in compliance with Commission Directive 91/155/EEC, 67/548/EEC and 1999/45/EV as well as their relevant amendments, on the approximation of laws, regulations and administrative provisions relative to the classification, packaging and labeling of dangerous substances and preparations".

So what is this dangerous substance that requires the full bureaucratic force of Brussels? Answer, Blu-Tack. Typical!

Steyn on the Britain

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I keep getting e-mails saying, "People will reach a tipping point and they'll no longer put up with this stuff." I doubt it. Right now the way to bet is that once free societies will retreat incrementally, one trivial step after another, into a totalitarian hell.

Mark Steyn, 'The Nationalization of Your Children' NRO

New banks

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Amazing, isn't it? A year after Gordon Brown forced the merger of Lloyds Bank and HBOS, in order to stem an online run on the latter, now the government is planning to break the banks up again. It could see the return to the High Street of names such as TSB, the old Trustee Savings Bank bought by Lloyds, and Williams & Glyn's, a 1970s name bought up by the Royal Bank of Scotland. Northern Rock, rescued by taxpayers two years ago, will be broken into two.

The episode shows how mixed-up markets become when politicians start interfering. For years, policy has favoured giantism in the banking sector. Then in no time flat, everyone has to restructure again. It's no way to run a railroad: nor a bank, a mail system, a healthcare service, or schools, for that matter. It's only happening because the EU competition commissioner, Neelie Kroes, insists. The Treaty of Rome is a very pro-competition document, after all.

I'm very much in favour of having more, and smaller banks. Our problem has been, and is, the lack of competition in the sector. Banks have merged and grown then merged and grown again. Without competition, the banks have been able to drift into risky forms of business that their customers don't want, and to pay themselves huge salaries and bonuses for not very much useful public service. They've become so big that government cannot possibly let them fail, lest the entire monopoly financial edifice comes tumbling down.

But what has made the banks so big and bloated? Regulation is the answer. Lots and lots of it. Regulators crawl over every aspect of a bank's operation, right down to how quickly they answer the phone. It costs a fortune. You cannot run a bank without hiring a huge compliance team to keep you within in the rules. So smaller banks cannot survive, and have to merge to create bigger banks. Bigger, less competitive, more profligate banks. Yes, this is entirely a problem of government's own making. And if the government is being forced to break up the banks, it should lighten the regulatory burden on them at the same time. Otherwise, they will not survive.

The call for a new economics

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George Soros has decided to find an institute looking for a new economics. And as two Nobel Laureates (Stiglitz and Ackerloff) suggest this is a very good idea. For example:

Economics has generated a wealth of ideas, many of which argue that markets are not necessarily either efficient or stable, or that the economy, and our society, is not well described by the standard models of competitive equilibrium used by a majority of economists.(...) Similarly, modern information economics shows that even if markets are competitive, they are almost never efficient when information is imperfect or asymmetric (some people know something that others do not, as in the recent financial debacle) – that is, always .

These are, as they stand, true statements: there is however a certain amount of nuance not being described there. For the question isn't really are markets efficient or stable, even when competitive. It's are markets more efficient, more stable, or less so that the other possible arrangements for that sector of the economy and life? There are times when they're clearly not and times when they clearly are.

But that isn't the most important part of what I hope this new institute will do. That is that instead of purely looking for a new economics, to revisit the old economics and see what has been, in the modern world, either forgotten or simply languishes unregarded. Take for example this new book, After Adam Smith. The essence of which is to look at how what Smith actually thought and said about things has been constantly and consistently reinterpreted, often to the point of obscuring the original insight.

For example, as above, there are those who think that the use of markets, the desirability of them, depends upon their efficiency, asymmetry of information or even their stability and Adam Smith is often invoked as as proof of these contentions. But that wasn't his view at all:

On the contrary, when the idea of perfect liberty in commercial relations was introduced by Smith it was because he saw it as being best suited to the development of the division of labour - that is, to increases in the wealth of the nation. It is to its effects on the rate of productivity growth that one should turn to Smith's case for fostering it, not to some putative ability of competition efficiently to allocate a given set of resources. To put it simply, the case for capitalism was that it was best suited to promote innovation and technological progress - a claim that might plausibly find some basis in the historical evidence of the last two hundred years. Freedom of international trade, too, was not advocated because it would lead to a more efficient allocation of global resources, but because Smith claimed that wihout it the division of labour would be limited by the extent of the market.

Looking for a new economics is just fine and dandy: as long as part of that effort is also to rescue what we already know from the often woeful misinterpretations of it. Markets could be inefficient, plagued with asymmetries, hugely unstable and even lead to what some might consider unjust distributions of production: but we should still be using them for they are still what make us rich as a whole, by fostering the innovation and technological advances which produce that very wealth.

Green is the colour of climate jealousy

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There are still some people out there who do not share in the belief that the world's climate is changing. A plan was required to stimulate them into marching along to the same drum, and it was of course required yesterday. Its urgency was predicated on the rising tides, scorching heat of winter and the choking fug of poisoned skies. Obviously the children are the key to all the left foists upon us and what better way getting the little angels into spying on their parents than by blaming them for the drowning of their cherished pets. If you can't get people to join you in your quest for simple living then why not fall back on blackmail.

The radical environmentalism of this age is one that could be construed as being fundamentally driven by jealousy. Imagine a world where a majority of people, resist the call for restrictions on business and forge onwards embracing new technologies in an almost 'Randian Fountainhead' type way. Leaving the pulse and lentil brigade to self-flagellate in their humble wattle and daub dwellings and occasionally drowning their pets as a warning to their children about leaving the candle burning for too long. Why should they force themselves to live in that manner based on their requirements to not leave a footprint on Mother Gaia while the rest of us carry on with our natural desire to improve our lives. The environmentalists continue to call in the heavyweight violence of governments to impose restrictions on progress: the upcoming meeting in Copenhagen is just another example of how hard they are trying.

Unfortunately for us, and the nature of taxes in the UK, the output of the symphorphilia film department in DEFRA will continue. Expect more children to be tugging on the sleeves of their parents. "Why didn't you turn the lights off daddy?" "Because I don't want you living in a cave, wearing a sack and gnawing on pulses." Try explaining that to a scared child.

NB: The author is not a 'climate change denier'. He's simply proposes that we do nothing. We got this far by doing nothing and simply relying on our distinctly natural instincts of adaptability. Let's adapt not infringe.

It was Climate Fools Day on the 28th October, read about it here.

It's the way that you tell em'

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The era of big government is over.

Bill Clinton, State of the Union Address, January 23, 1996

Children of the state

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We have all heard the old adage, ‘It takes a village to raise a child’, but the government has taken the village to mean the state. Unfortunately we live in a world where there are people who seek out children to exploit children, but does it take the government raising our children in order to prevent it from ever happening? The government has now taken steps to ban parents from entering play areas, and in some cases even banned parents watching their own children play, unless they have been vetted.

It feels as if we elected nannies instead of public officials. First parents were banned from ferrying their children to sports activities and then two police women almost lost their jobs over sharing child minding duties. Now parents can’t even watch their own children play without submitting to criminal background checks. How long will it be before you have to submit to a background check before you allowed to have a child? I know it sounds outlandish now, but if you told my parents 15 years ago that they couldn’t watch me while I played in a playground they would have thought you were crazy.

We have already given up so many of our natural rights to government that we almost don’t notice when we lose another. The real danger is that we are allowing our children to grow up under government control. Children will grow up thinking that ‘government knows best’ if they continually see their own parents undermined by government regulation and intervention. The government is practically teaching children that they need to be protected from their parents. If public-run institutions are any indication of how well things turn out under government control, then I’m afraid families don’t stand a chance.

Spencer Aland blogs regularly here.

England's lost liberty

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A couple of weekends ago I read an old paper I found on the Libertarian Alliance’s website – ‘How English liberty was created by accident and custom – and then destroyed by liberals’, which was written by Sean Gabb in 1998. I found its thesis fascinating.

To simplify somewhat, Sean contends that even as English liberalism reached its zenith in the Victorian era, it was being undermined from within. The reason for this was that English liberalism was not based on liberal philosophy so much as it was the fortunate result of a historical and cultural accident – the ‘administrative vacuum’ of the 18th Century, which followed the Glorious Revolution of 1688.

During this period, any growth of government was severely hindered by strict adherence to traditional customs and the rule of law, which allowed for no administrative discretion, and no assertion of administrative necessity. As Sean points out, England did not, at this stage, even have a professional civil service. Certainly, plenty of people were granted sinecures and fancy titles – but they didn’t actually do anything. It was, he says, close to ‘administrative anarchy’. The English people have never been freer.

The thing that brought an end to all this was that the late 19th Century liberals, in rationalizing and harmonizing the laws and administration of England, effectively undermining the reverence of common law and custom and the absence of administration that had sustained liberty for so long. In a sense, they created government as we know it today, and in doing so they unleashed “the greatest illustration that history affords of public choice economics". Government, once it had the means to do so at its disposal, started to grow. It hasn’t stopped since.

This error, Sean says, was compounded by three defects in the liberals’ reasoning: (1) they relied too much on economic arguments, and thus allowed liberalism to be caricatured as heartless and calculating; (2) the labour theory of value that Smith and Ricardo subscribed to played straight into collectivist hands; and (3) they were too quick to make exceptions to the general rule of laissez-faire.

I’m not a historian, so I’m not in a position to critically assess Sean’s analysis of 18th and 19th Century political history. Suffice it to say that I found his arguments convincing as I encountered them. I’d certainly recommend reading the whole paper.