Politicians against science


The Home Secretary has been displaying some rather statist behavior of late (see here & here). However, his latest attempt to stifle debate and research contradicting government policy is particularly authoritarian.

As a distinguished scientist, Dr Nutt has proven been unafraid to speak out about the findings of drug research. In this way, he has been able to provide the public with more information on the actual risks of illegal and legal drug-related choices. Yesterday's defense of his position is clear and logical, even if does not call for the legalization and medicalization of currently illegal drugs.

This is not the first time the government has ignored expertise on this matter. The Advisory Council on the Misuse of Drugs' recommendation not to reclassify cannabis was contradicred by Jacqui Smith. Dr Nutt was also forced to apologize for remarks made comparing the risk of ecstasy to horse-riding. Lucky he did, else the government might have crimanalized that too.

What passes for debate and grown-up discussion of the issues of drugs is pitiful. It is only when the myths are swept away, that reasoned policy will emerge. Close-minded, hypocritical and cowardly; our politicians have a long way to go.

EU're bang wrong: A history of lies!


Nothing is set in stone, especially when it comes to the world of politicians. Their mission is to govern, and to govern down to the minutiae of each of us. A prime example of this is the ever expanding wasteline of EU law and regulations. The European Union will never be a simple single market place where people can freely trade due entirely to the nature of the politicians and civil servants in Europe. It will become a federalist state with extremely high barriers to trade: where people are licensed to trade, outside goods are allowed only under exorbitant tariffs and exports are heavily subsidized.

Reading the original Treaty of Rome and comparing it to what it has become clearly defines the natural advancements of a relatively simple idea corrupted by the poisoned hands of politicians. But then a politician's idea of a market place is radically different from a rational person's. What was it that we were signed up for? In the Conservative Party manifesto of 1970 Europe was only mentioned three times and then in respect to negotiations. Yet Heath signed us up to the Treaty Rome without asking. Wilson's referendum of 1975 was built on the renegotiations of entry that had taken place over the previous year. Yet reading a Labour Party pamphlet of that time exposes the fabrications and limited knowledge of trade that politicians had (and continue to have).

The modern era is tainted with lies and obfuscation from all sides. A Labour party that reneged on its manifesto pledge for a referendum and a Conservative party leader purposively muddying the waters via convoluted English. Conservative Home's analysis suggests that the Tories are unlikely to offer a referendum on the Lisbon Treaty. The party will instead seek renegotiations. Since Chamberlain returned from continental Europe with a piece of paper in his hand, that is all the politicians of this country ever come back with. Unfortunately for us that piece of paper is regularly stamped with, "WE HAVE GLADLY SURRENDERED TO EU".

Are restaurants supersizing us all?


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


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


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!

New banks


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


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


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.