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.

Who should be the next speaker?


One of the only positives to come out of the whole expenses scandal is the exposure that nobody (both in and out of Westminster) has faith left in the speaker of the House of Commons. Douglas Carswell MP has made the bold and brave first-step of calling for a motion of confidence in the Speaker – this should pick up speed next week when the headlines lose focus on the greed of individual MPs.

The speaker has to go if we are to help save any dying shreds of accountability or democracy within British politics. He has a track record of bias, dishonesty and incompetence. The current problems within our parliament cannot be solved if the figurehead, and coordinator are at their root.

Iain Dale conducted a poll on his blog with some conclusive results. 95% of those polled thought Martin should ‘step down now’, whilst only 1% thought he was doing an ‘excellent’ job. Those are the types of figures which should prompt swift and decisive actions within a democracy, but this may not happen under our current system.

The Speaker will have to leave eventually, and the appointment of his successor will have to play a central role in cleaning up Westminster. The next speaker will almost certainly be an older stalwart of Parliament who can control and command the respect of all. Amongst the names being thrown into the ring, Frank Field, Ming Campbell and Dennis Skinner seem to be frontrunners. Personally I feel an ex-party leader would not be suitable for the job, having already carved a strong personality within the media and public perception. Whoever is chosen, the next Speaker will need to wipe the slate clean and promote a new age of transparency within politics beyond expenses. They will need to be careful, Michael Martin has tarnished the role heavily, their first slip-up, bias or dishonesty will be pounced upon and not forgotten easily.

Blog Review 963


Translating tax freedom day into hours in the day. You work for Gordon until after lunch each and every day.

It's not so much that Austrian theory explains the crash, it's that it explains the boom that led to the crash.

Economic geography comes back into fashion: although this time the limitation is the speed of light.

Amazing to find a government spending program actually even more expensive than welfare, isn't it?

On the different treatment for those who break the rules and those who break the law.

Inter generational mobility: maybe it's all in the genes anyway?

And finally, matters economic come full circle


Country by country reporting and arms length transactions


Out on the wilder lefty shores of the blogosphere there is this idea that if only multinationals reported their results on a country by country basis then everything would be right with the world. You know the thing, mice would smile when caught by kittens because kittens are, after all, cute. I have to admit that I'm somewhat unconvinced for the idea depends upon another: that each and every transaction within a company should be valued and priced as if it was an arms' length transaction.

Which rather goes against Ronald Coases' justification for the existence of companies in the first place: transaction costs.

Put simply, the argument for which he won the Nobel Prize* was that the reason to have one organisation was that sometimes that is cheaper than having many. The cost of writing, monitoring, justifying, contracts is, or at least can be, substantial. So also can be the cost of having one organisation, there will be overheads and inefficiencies, after all. So, companies will exist when those contractual costs exceed the benefits of a more nebulous network of hirees, and that network will exist when the central costs outweigh the benefits.

But this idea that a company should be taxed as if it were not a company violates these Coasean assumptions. We've agreed that the company exists because it is cheaper for it to exist than to have arms length transactions: so why would we tax it as if it were composed of arms length transactions?

I fear that yet another bright idea from the left is refuted by the real world.

Odd how often that happens, eh?


*Yes, we know, not a real one, Swedish Bank in honour of and no, we don't care.

The Austrian counter-attack


altThe IEA has this week fired a huge salvo into the idea that the current crisis resulted from a failure of free markets and an excess of unregulated greed. "Verdict on the Crash" is by a group of heavyweight authors who take apart, piece by piece and line by line, the idea that lenders, bankers, hedge funds and short-sellers ran amok and brought ruin down on all of us. On the contrary, the authors lay the blame squarely on the shoulders of governments with their central banks and regulators.

Central banks flooded the market with money and easy credit, fuelling an asset bubble and sending false signals to business. They distorted risk assessment through their regulatory approach, leading financial institutions to create ever more complex derivatives. Governments and their agencies (like Fannie Mae and Freddie Mac) pushed lending to those at high risk of non-repayment, while their tax and regulatory regimes encouraged complex and opaque methods of increased gearing. They created the illusion that regulation could replace trust and reputation in oiling the wheels of credit.

The IEA's book has deservedly received huge coverage. Its importance is that the powers that be (G20 and downwards) seem determined to misinterpret events and bring in more of the controls, regulations and interventions that lay behind the crisis in the first place. It is very important that the case should be made that this was a failure of governance, not of markets, and the IEA has done us all a favour by putting that case so convincingly. Their report and its summary are accessible on line.