Mob rules


altIt seems that Mr Finklestein, over at The Times, has been unsettled by the current feelings of animosity being shown by everyone towards MPs. He claims that he can't join in with the heckling of MPs, and is unable to comprehend how we can be fomented into a baying mob by some common-or-garden theft. Especially when it's balanced up against all the so-called 'good' work our humble MPs do for us. Or compared to the suffering of those in Zimbabwe or Darfur.

Why are we angry? A natural reaction to seeing a wrong committed is the hope that  the transgressor is punished in some way; hopefully so that they do not undertake a similar action on another occasion. In the case of the MPs we, the taxpayers, have quite simply been stolen from, lied to and are sure that justice will be stopped from taking it's natural course. We are all feeling cheated and also impotent.

In any organization there is a desire to construct a collective identity that reflects the moral worth of the assembled individuals. In this case tarring all MPs with the same brush is fair. After all they wrote the rules by which they are now being judged, and they also had multiple opportunities to punish those who were abusing the expenses system. But alas they were all 'on the take' in one way or another, the organization itself was morally bankrupt, and it seems that it had an effective hold over any new entrants.

The taxpayers feelings have coalesced around the issue of the breech of the bond of trust that we hold with politicians. Trust  is something that we can and should always show in each other, unless, of course,  someone transgresses against us. In this instance we have all had our trust broken as the baying mob shows.

Dan Ikenson at the Adam Smith Institute


Dan Ikenson of the Cato Institute was the featured guest speaker at 23 Great Smith Street this Thursday. The lunchtime seminar was co-hosted by the Adam Smith Institute and the International Policy Network. Mr. Ikenson drew from his study of global supply chains as he spoke about the blurring of national boundaries in the new global economy.

International shipping and communication costs are at an all-time low, and trade, finance, and political barriers are decreasingly restrictive. Under these circumstances, production facilities are no longer confined by walls—factories, not just corporations, have gone multinational.

President Obama’s call to “buy American" highlights the lack of clearly defined borders in international trade. What is an American product? Is it one sold by an American-owned company? Is it one produced in America? Is a product still American if some of its components are made in China?

The automobile and steel industries are replete with American companies that produce their goods abroad and non-American companies that have manufacturing facilities in the US. Final goods now represent value-added for several countries, not just the nation ini which the producer is headquartered. As governments accept this new economic reality, they have begun to relax trade barriers, but trade policies still lag behind the changing marketplace.

Policymakers insist on measuring success in terms of the performance of one nation’s producers relative to those of another. As a result, protectionism still abounds. Rather than working to improve access for their producers abroad or limit access for foreign producers at home, governments should strive to increase the number and size of high value-added industries within their respective nations. They can do this by improving infrastructure while scaling back regulatory and administrative barriers.

Blog Review 976


This is simply shameless. The proof that the oceans are warming comes from data entered into models...the data being estimates coming from the same models.

An interesting video on the subject of global warming.

A new theory of everything: it's amazing how often such things end up detailing simply the pre-extant prejudices of the author.

On the man in the wardrobe fallacy.

You know that financial crisis caused by an absence of regulation? Well, looks like the regulators actually caused at least some of it.

No, no, say it isn't true?

And finally, when the readers bite back.

£ vs. €


altThe pound seems finally to be struggling up from the floor, rising above $1.60 for the first time since November. It even maanged to rise to €1.15, and speculators are betting it will hit €1.25 by the middle of the summer – providing a welcome boon to the few British travellers who are venturing abroad this year. Time to raise a cheer?

Well, maybe. There are some encouraging statistics – the number of mortgage approvals rose last month, housing rents are strengthening, and some of the more optimistic experts say we're through the worst of this crisis. But most of the pound's consolidation is actually due to the fact that America is in just as big a fix as we are, with a comparable mountain of public debt and a beaten-up financial services sector. And the Eurozone is worse off than everyone thought. It didn't suffer the financial shock that we did because its finance industry is smaller and more conservative. But now that the Brits and Americans are putting off their European holidays and purchases of BMWs and washing machines, the Eurozone is suffering.

Still, the cheapness of British exports is beginning to have a visible effect on our balance of trade, far earlier than most economists thought. The belief was that the low value of the pound would only help us in a year or two, once the world was buying again. So that's lucky. And it's more than luck – it's good judgement, and you have to admit that it's Gordon Brown's good judgement – that we're not in the Eurozone. Then we would be unable to adjust in the wake of an economic shock like the one we've had. As the likes of Italy and Spain now realize.

Tube strikes


altI have written before about the failure of the Mayor of London to face up to the RMT Union. Now we are seeing the repercussions of that initial weakness with news that the RMT have voted to strike over pay, working conditions and some 3,000 jobs feared to be at risk.

Workers will begin a 48-hour strike at 1859 BST on 9 June. The response from TfL has been swift and non-conciliatory:

The RMT leadership has failed to engage in any meaningful talks on pay, instead submitting a wildly unrealistic claim - demanding a 5% pay rise for fewer hours in the middle of a recession. On jobs, the RMT leadership knows full well we are seeking to end the duplication of back office jobs and that no front line staff will be affected. Our offer guarantees real wage increases for the next five years. Very few Londoners have that level of certainty for the future.

The battle lines are drawn. If the RMT does not back down, nor should the Mayor. One thing is for sure: Londoners would be near-unanimous in their support for confrontation.

In truth, the fight will not be won until the London Underground is privatized. This is certainly easier said than done; it is the case for most industries that once they have been touched by the inefficiencies of government, putting them back on the straight and narrow is a long and often painful road. Nevertheless it is the only way out of the mess we are in and it should not stop Boris doing the right thing. Let it not forgotten that before his makeover, he was a disciple of Thatcherism. If he could just follow his intellectual instincts as opposed to his political ones, there is no reason why he could not be the person to revolutionize London’s ailing underground system.

Blog Review 975


It's hardly a surprise that unions attempt to use the law to make life easier for their members now, is it?

Is California broke because it doesn't raise enough in taxes? Or because it spends too much money?

Best comment so far on the upcoming elections.

At last! An economic explanation for why modern art sucks.

Although it has to be said, some economists can have some odd thoughts at times.

Zimbabwe's problems: no, not caused by colonialism, drought or anything else except appalling policy.

And finally, did we domesticate cats or did they domesticate us?

A good time to die


altThe US state of New Hampshire has as its motto, “Live Free or Die." The US taxpayer may soon adopt a similar “Live Tax-free or Die" mantra when a provision in US tax laws causes a massive jump in the federal estate tax rate.

During his first election campaign, George W. Bush railed against the so-called “death tax." Soon after taking office, Bush and a Republican-led Congress introduced sweeping tax reforms, including a programme that would gradually reduce, and ultimately eliminate, the estate tax.

The American estate tax system sets a flat rate at which estates in excess of a specified value will be taxed upon the death of the estate holder. That rate has decreased for each of the last nine years, and in the 2010, the estate tax will be eliminated altogether. The estate tax reprieve is only temporary, however. In 2011, the reduction expires, and the estate tax rate returns to the original fifty-five percent level.

Many cynical observers speculate that 2010 will bring there will be a spike in the deaths among wealthy estate holders who hope to avoid the estate tax. Perhaps not wanting to see a sudden depletion of the nation’s wealthiest citizens (and most capable campaign fund contributors), the US Senate recently voted to reduce the 2011 estate tax rate to thirty-five percent. Notwithstanding the Senate’s willingness to compromise, estate holders who die in 2010 will be able to pass on one-third more of their estate to their heirs than those who die in 2011.

Americans are renowned for their tax aversion, but in 2010, the world will find out just how far wealthy US taxpayers are willing to go to remain estate tax-free.