The Dyson Ball™ is not a crystal ball

The first is that it seeks to tinker with a machine that is fundamentally flawed. Of course Sir James is correct that it is madness to herd high-calibre graduates back onto aeroplanes as soon as their degrees are finished. But the solution is not to grant an extra few thousand places to the chosen ones. We should not be deporting (or denying access to) anybody who wishes to work in the United Kingdom. Similarly, Capital Gains Tax that discourages investment should be relaxed, not just for those investing in high-tech, long-term projects, but for industry as a whole. Car manufacturers and steel works are as susceptible to the effects of Capital Gains Tax as inventors.

The second is that Sir James is falling into the trap of thinking that he knows specifically what the economy requires. However, Sir James is no more able to predict the specific needs of an economy than the Government or a guest blogger at a think tank. Sir James may be right that UK needs to invest more in innovation and welcome more numerate graduates, but he may equally be wrong. Recent events have demonstrated the danger of assuming that current trends will continue into the long term. The UK may in fact need infrastructure rather than innovation; or it may require linguists more than mathematicians. Rather than creating distortions in the market, the government would be better letting the market perform its discovery process.

As for incentivising (forgive me!) long-term investment, there is a very simple and non-distortionary means of doing this: raise interest rates. Interest rates represent the return on investment: if they are low, long-term investment carries little reward; if they are high, long term investment is very rewarding. Austrian economists would argue that these, too, should be set by the market, so that they correctly reflect the time-preference of society (do we want to consume what we have today or a larger amount in the future?).

It is understandable that Sir James would like to promote an innovative Britain. A man who invested £2,000 and created a company worth £500m could be forgiven for thinking that projects like his are the future. But the future is not yet written, and a 25,000,000 per cent return should be incentive enough for anyone.

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James Dyson is a quintessentially British hero. I use “hero" loosely, here, in the way that the Red Tops call people who defeat the Australians at cricket “heroes", rather than the plunging-into-a-burning-building-to-save-a-baby meaning of “hero". Nonetheless, we love him. There is something of the Wallis (be it of the Barnes or Gromit variety) about a man who beavers away in his shed making vacuum cleaners that don’t need bags but do glide on a beach ball. He has made the hand-dryers in toilets tolerable, and has now invented the fan without blades. I am convinced he has patches on the elbows of his tweed jacket, and I love him for it.

Opposition political parties like to recruit high profile non-politicians to assist them. Sir James has been leading a “technology task force" for the Conservatives (having previously been close to, and later alienated from, Labour). His recommendations, according to the Financial Times, are likely to include “tax breaks for high-tech investment and preferential residency rules for scientists and engineers."

Sir James told the Financial Times that the City needed better incentives to invest in technology start-ups. “Developing technology is a slow process and the risks are high. We need to encourage people to understand that, if you invest long-term, you can make enormous gains." The entrepreneur, whose wealth is estimated at more than £500m by rich list compilers, said: “I invested £2,000 in Dyson [the appliances business] and it is now worth a lot more than that."

Specifically, he is mooting reduced Capital Gains Tax for companies that invest over 20 per cent in high-tech ventures and extended leave to remain for foreign graduates from numerate disciplines. Which all sounds well-and-good, but to my mind it raises two issues.

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Marriage privatization

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The debate over the whether or not homosexuals should have the opportunity to marry has been greatly debated in the past year – especially in America with the passing of proposition 8 banning gay marriage in California. The problem inherently found within both arguments is that neither side will ever give in to the other regardless of future government rulings on the matter. If gay marriage is made legal, all the institutions and individuals that opposed it today will continue to oppose it after the fact. This is similar to what we see in the debate over abortion. The problem within the debate is not with the debaters, but with the moderator. What right does government have to regulate marriage; better yet, do we really want government telling us what is moral and what is not? Morality is private, and unless there is the risk of immediate harm to others, government should stay out.

When western governments decided to remove themselves from religion it was a great step forward for both religion and the general public. Religious beliefs are extremely personal and in many cases private. If individuals decide to unite themselves with a specific religious assembly that group may have guide lines or rules that they expect those individuals to follow. These are essentially private contracts and they have worked very well among religions, and government has been able to remain completely neutral. Marriage for most people is a religious affair and is also a very personal matter. The government should not have the right to issue licenses for marriage. A private marketplace where individuals are able to enter into private contracts with each other would be optimal. Religious institutions will have the right to apply specific clauses or articles to those contracts if the marriage is to be conducted under the authority of that church, therefore providing for all religious beliefs within marriage.

The privatization of marriage would essentially end the debate over gay marriage because any institution in opposition to it will not be forced to recognize them or perform them. State incentives to marry would disappear and therefore allow individuals to enter into marriage for legitimate reasons reducing fraud. Some studies have even found that the rise in state sanctioned marriages correlates with government expansion over time. The argument for privatization is neither for or against gay marriage; it is an argument against government regulating morality.

Spencer Aland blogs regularly here.

More philosophy in politics

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Matthew Parris spoke at the London launch party for Dr Madsen Pirie's new book, 101 Great Philosophers. He spoke of the importance of philosophy and wished that more politicians would study it and learn a little about it. He pointed out that if they did, they would be less likely to fall into some of the obvious errors which they do commit. 

Dr John Campbell, the historian and biographer, spoke of how a coherent philosophy had enabled the Adam Smith Institute to help mould a new reality out of the ruins of the consensus which had prevailed before it arrived on the scene.

Dr Madsen Pirie, the author, expressed his conviction that philosophy enabled people to make sense of their physical world and its moral convictions. His aim in writing the book, he said, was to encapsulate the main ideas of all of philosophy's leading thinkers into a single volume which could introduce people to its world of ideas.
 

Blanchflower's blather

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Just reflate the debt away. Moderate inflation would lift people out of negative housing equity. A few years of inflation of roughly 5 per cent or so would be very attractive right now. Maintain the monetary stimulus and if necessary expand it further for the foreseeable future, and keep the fiscal stimulus going. Too much is better than too little. And, for goodness' sake, don't start paying back the public debt until we are well out of recession.

David Blanchflower, 'What’s so bad about inflation?' New Statesman

When should children start school?

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Children are being attacked from all sides these days. Firstly there is a recommendation that children should not start "formal" education until they are six. As someone who started school at four, I can't imagine waiting so late, but obviously others take a different line.

Dame Gillian Pugh, review author, said, "four and five-year-olds tended to be at a stage where they were just "tuning in" to learning and that they could be "turned off" if they were made to follow too formal a curriculum, too early on." Perhaps, but not for all children. The mandated age for children to enter school is questionable as the parents should decide, an issue Douglas Carswell eloquently puts forward here.

On top of this, or indeed in direct competition to it, the European People's Party believes that children should be given lessons in the benefits of the European Union from the earliest of ages. Of course, some would question how long a lesson it would be.

They claim that, "knowing and understanding, from a young age, the principles, the procedures and the successful history of the European Union, the generations of tomorrow will be immune to any distortion of the perception of the role of the EU and will much better embrace the advantages of this unique project of voluntary sharing of sovereignty." They want to 'instruct' young children in the "benefits" of the EU before they have a chance to formulate their own opinions on the institution.

Clearly both of these examples highlight why government needs to stand aside in the provision of education. The temptation to meddle and mould children's minds to be in sync with the government thinking of the time is too great. Free enterprise in schooling is best for parents, the taxpayer and the children themselves.

Fatism

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Campaigners from the Size Acceptance Movement have approached BoJo in an attempt to make discrimination against fat people a hate crime. Such campaigners believe that pointing out a particularly fine pair of thunder-thighs is the equivalent of racism, and feel the UK should follow the route of ‘fat-friendly’ San Francisco, where doctors cannot press patients to loose weight.

Apparently fatism is widespread, as surveys show 93% of employers would rather employ a thinner person than a fatter one even if they are equally qualified. This could be for sound economic reasons; employers obviously believe that there are benefits to employing a thinner person. Perhaps they believe an overweight worker sends out a negative, sloth-like image of a company. Maybe they believe that a fat person may have heavier breathing, which could be off-putting in an office environment. Whatever the reason, the fact is that employers frequently make choices about applicants based on appearance and personal judgement; it helps them pick the best workers for their organisation.

Being fat is not even like being of a certain age, gender or race - such things are unavoidable. Much more often than not, a person is overweight because of their own lifestyle choices and habits. If ‘fatism’ is to be miraculously eliminated by the imposition of more legislation, then obviously all body shapes must be protected from criticism and ‘discrimination’ by law. Complaints about emaciated models must also be banned in case their feelings are hurt.

The overweight should not be forced by the government or by doctors to lose weight; what they do to their bodies is their own choice. Fat people are just like any other person, and as such should learn to live in a society where not everyone may like what they do or how they look. Private lifestyle choices should be neither prohibited nor protected by the law. People should of course be able to eat as many cream cakes as they like, but it shouldn’t be illegal for others to laugh when they walk in a funny way because of it.

Debating capitalism at Durham

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I was up at Durham on Friday proposing the motion in the Student Union that "Only Capitalism Can Save the World."  The Durham debating society has a high reputation, which it certainly lived up to on Friday.  The chamber was completely packed, with people sitting on the floor at the front and in the aisles, and standing at the back. It was a lively debate with a high level of floor speeches.

My case was that capitalism generates wealth. When people exchange, each gains something they value more highly that what they currently have. Thus both parties gain and wealth is created. Capitalism expands the opportunities for production, specialization and exchange, creating wealth in the process. It is this which has lifted more people out of poverty than ever before in human history.

My second point is that wealth can enable problems to be solved. My dictum was this: "There are few problems in the world so big that they can't be solved by chucking money at them." Again and again in history, the equation has been that if humanity wants it enough and will pay for it, they will probably get it. 

It is not by eschewing economic growth and living more simply that the world's problems will be solved, but through a combination of wealth, will and technology.  I predicted that humanity will conquer Alzheimer's and cancer as it is currently engaged in conquering Aids and malaria and as it has already conquered polio and smallpox. 

The drive for clean power and clean travel requires more wealth, not less. Capitalism creates wealth, and wealth gives us the wherewithal to solve our problems. The motion that only capitalism can save the world was carried. 

Check out Dr Madsen Pirie's new book, "101 Great Philosophers."
 

Realizing Freedom

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Yesterday, the Institute of Economic Affairs hosted a lunch in honor of Dr. Tom G. Palmer, the Vice President of International Programs for the Atlas Economic Research Foundation and General Director of the Atlas Global Initiative for Free Trade, Peace, and Prosperity.  Dr. Palmer has worked for many years promoting peace and individual rights through the use and implementation of classical liberal ideas such as free trade and open markets.

As part of the event Dr. Palmer spoke on “Realizing Freedom" and the more practical means of increasing freedom among struggling countries. Many of Dr. Palmer’s points are outlined in his book “Realizing Freedom: Libertarian Theory, History, and Practice". Dr. Palmer cites the lack of property rights, and personal liberties, as the primary causes for nations being unable to develop economically. He also stated that in order to establish basic freedoms and private property rights, countries must create political institutions designed to protect those rights and convince governments that a richer people equates to a richer government.

These institutions must be founded upon their own cultural and historical understandings so as to create a sense of belonging and allegiance among the people. By rooting these institutions within culture Dr. Palmer argues that private property rights will be more abundant and rational expectations among actors will result in increased freedoms and economic stimulation.

You can purchase Dr. Palmer's book here.

The free radical

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To anyone who holds freedom as sacred, the most urgent problem facing this country is the vile anti-individual philosophies of collectivism and statism that have given rise to this relentless onslaught of the government's violation of individual rights, which includes the proliferation of intrusive, politically correct, government agencies charged with the 'responsibility' of fixing all our problems.

Chris Lewis in The Free Radical