Money talks


In this case money tells us a little about Robert Mugabe and a lot about centrally planned economies. The hundred trillion dollar note is literally not worth the paper it's printed on, and the city authorities in Harare had to put up notices in the loos forbidding people to use banknotes in the toilets (since they are cheaper than tissue, albeit still, by comparison, 'hard' currency).

The quantitative easing practised by the Mugabe regime made money worthless, except to collectors such as myself. They have now abandoned the currency entirely, with the result that a market in foodstuffs and other goods has begin to re-emerge, provided you pay in anything other than barrowloads of the local money.

Gresham's Law famously says that bad money drives out good, meaning that people pay in the devalued coin and hoard the good stuff. But this only applies where 'legal tender' applies. If you cannot be forced to take the bad stuff, Gresham's Law is reversed, and good money drives out bad (because no-one will take it unless they are forced to). In Zimbabwe, the moment they allowed people to trade in other currencies, the local money was abandoned. Perversely, it gained in value as a collector's item and a reminder of the follies into which socialism can lead…

Afterthought:  A friend, hearing about the note, asked if it were from Zimbabwe or England in 2012.  Funny, but scary…


IPN: 2009 Bastiat prize for journalism


altInternational Policy Network (IPN) is now accepting submissions for the 2009 Bastiat Prize for Journalism. The Prize is open to writers anywhere in the world whose published articles eloquently and wittily explain, promote and defend the principles and institutions of the free society. Submissions must be received on or before 30 June, 2009.

This year, IPN will award two prizes. In addition to the Bastiat Prize for Journalism (First - $10,000; Second - $4,000; Third - $1,000), they will award a Bastiat Prize for Online Journalism (one winner only, $3,000).

Click here to find out more.

Blog Review 965


Who would have thought it? The technology used depends upon the relative price of inputs?

If you think we've got some meddlesome health bureaucrats over here, check out this guy from New York City.

Sadly, people swtill misunderstand what happened to unemployment in the Great Depression.

Although by the end of the Dperession Hoover was pretty clear about the dangers of the supposed cures.

Strange though is seems, the Bush Administration did at times try to do the right thing. Things now being reversed by the new Administration, of course.

No, we really do not want to just depend upon machines in our judicial system.

And finally, Gordon Brown explains his expenses claims.

Where next for Labour?


altIf and when Labour loses the May 2010 election, they will be in even greater turmoil. The Old Labour dream died with Thatcher. The New Labour vision has been ailing for a while, but this time its death was self inflicted. What comes next?

Clearly, the leader will change. Who might win is a matter of mere speculation, since there seems to be a shortage of good candidates. Whoever it is could well find that Old Labour will rebound internally, shifting the party to the left, and back to its old ways. In opposition (perhaps still the largest party) they will focus their efforts on attacking those Conservative measures which cut spending, reduce debt, and try to rebuild.

This approach might bring short-term rewards, and perhaps the difficulties the Conservatives must face will keep Labour alive. Such an approach is inadequate, however, as a long-term strategy.  After the mess in which they left the nation, they must redefine their brand, as the Conservatives did. Like them, they cannot just rely on their core support. They must become Newer New Labour. They must break the confining chains of socialism, and recognize that free markets are the best way to advance the interests of ordinary people.

In practical terms, Labour could never become a true party of the free market; it would tear them apart. What  they could do, however, is to take a more Scandinavian approach, treading down the road of social democracy. It would reduce their chances of obliteration; it would give them room to differentiate; and it would allow them to espouse a positive vision. Moving towards the free market need not be taxing because in practice it spreads benefits to far more than the ‘evil’ entrepreneurs – those who generate the wealth and enlarge the economic cake for the benefit of all. Radical policies such as flat taxes, school vouchers, and restoring civil liberties, all bring benefits and choices to lower income groups, and there is a rich mine of votes to be tapped by the party that embraces such ideas.

Frankly, Labour has dissipated all their goodwill, and done little of late to merit sympathy. Now the choice before them is stark, and will be even starker if the electorate react as expected. It is that they must change or die. They had that choice late last century and they chose to change. Can they do it again?

Sexting: A grown up approach


Teenagers will be teenagers, and during that period of their lives their hormones are rampant and the opportunity to explore takes on attractive new levels. Throughout this time there are many dangers and one of which seems to have taken hold of the media's imagination is the apparent craze of 'sexting'. This is the new mode of communicating juvenile lust, whereby the sender of a text attaches anything from, titillating to pornographic pictures of themselves and then presses send. The recipient usually being the latest crush. In the United States there have recently been some high profile cases of teens being arrested and charged with child pornography and shackled with the tag of being sex offenders.

But as highlighted by this article there are two very different approaches to dealing with teens just being teens. In the first the district attorney in Pennsylvania offers the offenders the chance to attend a six month educational course that would help them understand their actions better. The second is the legislative approach taken by Vermont that reduces the crime to a misdemeanor when done between two consenting 13-18 year olds.

Both of these are rationale approaches (even if parents of three of the teens in the first example don't seem to think so) and should be considered if this problem be broached by politicians here. The teens are acting in a consensual way, there is little harm being done (but to themselves should the pictures spread further than the intended recipient) and their natural behaviour, in conjunction with modern times, should not land them with a criminal record.

The right to surf


The European Parliament has declared that access to the internet is "a right" and not merely a nice thing to have, reports.

"Recognising internet access as a fundamental right, the Commission said that "any measures taken regarding access to or use of services and applications through electronic communications networks must respect the fundamental rights and freedoms of citizens, including in relation to privacy, freedom of expression and access to information and education, as well as due process".."

Now there is no word on what that "access" has to entail. It does not go as far as to say that people have the right to broadband anywhere they might live. Those who are keen on so-called "net-neutrality" will be enboldened by this move. Of course, in reality the bill will be an excuse for even more regulation on the already burdened ISP sector. We shall wait to see how they react should this legislation go through as its planned.

Blog Review 964


The real problem with Keynesian stimulus is that there's never the required rolling back of the State in the good times.

Ypou knew they'd get there in the end. How to blame Margaret Thatcher for the expenses guzzling.

Yes, they seriously are arguing that they should get a pay rise as a solution.

One good thing is coming from all of this, retail sales are holding up.

If the new really were better than the old then there'd be no need for the authorities to ban the old to induce use of the new now, would there?

The problem with everyone being "qualified" for their job.

And finally, the six ages of women.


The Rhineland model


There are various possible models of what we might loosley call capitalism. Say, our own Anglo Saxon vaguely free market one (anyone who says that we currently have anything close to "free markets" is of course deluded). There's also the Nordic model which, while it has eyewateringly high income tax rates, does get some things right. Business is taxed very lightly and almost never protected, being left to get on with creating the high paying jobs that can then be taxed to pay for the welfare state. A third alternative is what is known as Rhineland capitalism.

Instead of those secondary markets in shares and bonds (the "locusts and vultures" of the City) the banks are the primary source of finance. Decisions are long term, big business, big labour and big government plans things out so that all is for the best in an orderly manner. This is roughly the model that Will Hutton is always proposing.

Germany's economy shrank by 3.8pc in the first three months of the year - a record contraction that is almost double the fall of Britain's gross domestic product in the first quarter........The export-reliant country has been hit hard as world trade nose-dived in the latter months of last year. Charles Dumas of Lombard Street Research said: "German economic policy is bankrupt, and the Mediterranean countries stuck in EMU are also condemned to ongoing economic collapse. "Already we have real GDP levels that are up only about 3pc from 2000 in Germany and Italy – ie growth has been only a little over ¼pc a year – making this a lost decade for much of continental Europe on a worse scale than Japan in the 1990s."

Yes, yes, I know, something must be done and something must be seen to be done because we are, after all, in a recession. But why is it that people can, with a straight face, seriously propose that we move from our current system to a worse one? One like Rhineland capitalism, that produces less growth in the good times and a greater contraction of growth in the bad?

It would be absurd, wouldn't it? To insist that there must be more regulation, more central direction of the economy, more "planning", when the result is that there is less economic growth and thus less wealth to share around. Well, unless you were one of those who expected to be occupying the planning suites and the regulatory palaces of course.

Ahh, yes, that might be it.