Transparent taxation

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The Freedom of Information Act is supposed to make government accountable. But in order to make it work, you have to know what information needs to be eked out, and you have to have the stamina to go through the process of putting in FOI requests – often against strong bureaucratic resistance.

I suggest, instead, that every cheque that government bodies issue, and every contract they sign, should go straight up on the web. Not just for departments of state and Parliament, but for local authorities, education authorities, NHS boards, even school governors' boards. Yes, it would be a mass of disjointed information. But it would be the raw material by which newspapers and the concerned public could spot corruption and waste.

It would encourage a wider range of people to stand for election to public bodies like local councils: many people, looking at where the money goes, might well conclude that they could spend it more wisely. And when they are elected, they would be much keener on taking responsibility for the spending, rather than just letting the hired professionals get on with it. After all, their decisions would be in the spotlight.

Perks, and contracts to 'friendly' suppliers, would be exposed. If we want to root out corruption in other governments, we should lead by example and expose it in our own. And businesspeople too, could look at how much public bodies pay for things and tell them – or us – if they could be bought a lot cheaper. So government contracting would become much more competitive.

At last we could see, openly, exactly where our money is going, which councillors are awarding contracts to their friends, and how much of our cash goes on MPs' perks. Isn't that a better, more honest way to run government than making people fight for such information?

Dr Eamonn Butler's new book, The Rotten State of Britain, is published later this month.

The best of both worlds

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Vince Cable is often portrayed as the economic guru of the Commons. However, his latest speech to the Lib Dem spring conference has left me unsure of his opinions.

I find myself agreeing with him on a number of issues. For example, civil servants should not ‘expect’ a bonus, even if they perform poorly. At the moment, if they perform well, they are given bonuses in reward, and if they fail to meet targets, they are given bonuses as incentives to do better. This is clearly absurd and counterproductive, reinforcing an inefficient public sector workforce.

However, I don’t agree that high earners within private companies should have their salaries disclosed. Firstly, a person’s salary is a private arrangement between themselves and their employers – the government has no right intruding into this aspect of our lives. Also, if every ‘high’ earner were forced to disclose their earnings, they would have even more of an incentive to hide their wealth abroad, resulting in a net loss for our economy.

Fundamentally, there is big difference between working in the private and public sectors, although of late these lines have become merged. Public sector workers enjoy job security, public sector pensions and the opportunity to serve the public, while private sector workers do not enjoy such similar graces, as many are currently discovering. Top civil servants should not be allowed to enjoy the benefits of both worlds – if they are continue to enjoy private sector bonuses they should face similar risks.

Environmentalism fueled bushfires

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Ben O'Neill has written a superb piece on the excellent Von Mises website about the Victorian Bushfires. Here is a brief synopsis of his arguments. Click here to read the full paper.

Australia last month experienced its most devastating bushfires in history. Fires raged in the state of Victoria on an unprecedented scale, killing over 200 people and destroying 1,834 homes. By comparison the 1983 “Ash Wednesday" bushfire killed 75 people and back in 1939 on “Black Friday" 71 people died. In fact, in all previous such fires - since reporting of bushfires started in the 17th century - a total of 642 have perished.

The immediate possible causes of the fires include arson, discarded cigarette butts, faulty power lines and lightning strikes. However, these minor events escalated into infernos only because of extremely high fuel loads throughout the state's bushland. The reason?

For years, local governments have neglected to manage fire hazards on their land in order to be faithful to the principles of environmentalism — a philosophy that contends that nature has intrinsic value that must be preserved, regardless of any use it has to man. The result has been that people have sacrificed their prosperity and even survival in an attempt to preserve the unspoiled sanctity of nature.

Expect Change4Life

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It seems TIGA, the European game makers association, is a might peeved with a campaign by the UK government called Change4Life. The first advert from these people shows a child with a gamepad in its hand to highlight "health risks" of game playing. Sega and Atari are both asking for the government to defend the advert's claims. Both TIGA and the MCV have filed a complaint with the advertising standards commission over the advertisement.

 In the complaint TIGA has stated the following:

In contrast, many video games are mentally stimulating, potentially educational and social and some involve physical exercise. Brain Training, Wii Fit, Civilisation, Singstar and Buzz are cases in point.

Considering the game industry is one of the few things still doing fairly well in the UK, it's odd that the Government is trying to hurt the industry's sales by such shock tactics. Is this yet another case of one government department (Health), not clearing something with the other (BERR) first?

Considering the exodus of UK firms away from the high taxation of Brown's government, another incentive like this one isn't exactly well timed.

Blog Review 894

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This is one of the really annoying things about civil liberties. If you're going to take them seriously then you have to support them for even those people you disagree with.

On the theory and value of swearblogging.

One Nobel Laureate asks "Do we actually want to become French?"

It isn't necessarily true that governments can borrow more cheaply than companies. Look at the interest on marginal borrowing rather than average it over total borrowing.

This is really most unkind to Mrs. Dromey.

If a charity is funded by government and acts like politicians do, is it really fair to still call it a charity?

And finally, unfair if amusing.

New Zealand: A beacon of hope

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At last, a politician you can believe in. Here are a few key quotes from Prime Minister John Key in an interview with Mary Kissel of the Wall Street Journal:

On the global recession:

We don't tell New Zealanders we can stop the global recession, because we can't..

On the stimulus packages:

That's risky …You've saddled future generations with an enormous amount of debt that then they have to repay…There is actually a limit to what governments can do.

On the end of capitalism:

Nonsense!

On the former socialist policies in New Zealand:

We have been on a slippery slope,…So we need to lift those per-capita wages, and the only way to really do that is through productivity growth driving efficiency in the country.

On cutting income tax:

We just think it's good tax policy to lower and flatten your tax curve,…People will move in labor markets and they look at their after-tax incomes.

On cutting corporate tax rates:

If you really are out of whack with the prevailing corporate tax rates, and there's been a global shift toward countries lowering their corporate tax rate, then you're not likely to attract capital, or you're likely to lose capital.

On emissions:

Half of all of our emissions come from agriculture,…burping and farting. We don't have an answer to that. So at the moment, we either become more expensive or we cut production. And neither of those options are terribly attractive…New Zealand needs to balance its environmental responsibilities with its economic opportunities, because the risk is that if you don't do that - and you want to lead the world - then you might end up getting unintended consequences.

On the future:

What we do tell them is we can use this time to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with.

Now how can I emigrate to New Zealand?

Aid and development

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Perhaps it is serendipity, but Dambisa Moyo is on every channel and newspaper that passes before my eyes. Her current media presence is on the back of her popular new book, Dead Aid, a sustained indictment of aid as a route to development. The fact that Dambisa Moyo was born in Zambia are perhaps giving these arguments more publicity than previous criticisms of development aid. Though previous criticisms of aid are no less true, her media skills bring a vibrancy to the defence of free markets and trade at a much needed time.

Digging out a copy of Eat the Rich by the idiosyncratic P. J. O’Rourke, and turning to the chapter on Tanzania, the futility of aid is laid bare:

Tanzania has been smothered in help. It has received loans, grants, programs. Projects, an entire railroad from the Chinese government (running 1,200 miles to nowhere in particular), and just plain cash. In 1994, by World Bank tally, foreign aid made up 29.1 percent of the Tanzanian GDP, more than the budget of the Tanzanian government.

O’Rourke was writing of a time before the government rejected the socialism of ujamaa in favour of elements of market liberalization. As a direct consequence, its GDP has grown dramatically. Dambisa Moyo in this interview on the BBC makes the point that African countries do not need to do anything special, just copy policies that have led other countries to profound economic growth. As the ASI’s President, Dr Madsen Pirie, wrote last year as part of the popular Common Error series:

The unusual condition is wealth. This is what changes things. We should ask what are the causes of wealth and try to recreate and reproduce them. When you ask the wrong question, "What causes poverty," you end up with wrong answers. People fall into the trap of thinking that the wealth of some causes the poverty in others, as if there were a fixed amount of wealth in the world and that rich people had seized too large a share of it.

Believers in free markets are fighting back

Free market theories have been under scrutiny lately, many believe it is what caused the credit crunch and thus, the recession. However, Dr Eamonn Butler, underlines that this is not the case and that the free market thinkers will not go down with out a fight.

“If you bound the arms and legs of gold-medal swimmer Michael Phelps, weighed him down with chains, threw him in a pool and he sank, you wouldn’t call it a ‘failure of swimming’. So, when markets have been weighted down by inept and excessive regulation, why call this a ‘failure of capitalism’?”

That view, expressed by the George Mason University professor Peter Boettke, found much favour among the free-market eggheads who assembled in New York this weekend to discuss the financial crisis. Up to now the Keynesians have made the running. Greed, they say, has brought down the world economy. Only massive public spending can revive it. And with the Masters of the Universe now gasping on the floor, the G20 summit in April will give them a final kick in the tax havens. That’ll teach them.

But now the believers in free markets and small government have regrouped. The meeting was called by the Mont Pelerin Society, founded in 1947 to preserve liberal ideas. Early members included Milton Friedman, F.A. Hayek and George Stigler. Their view – as expressed by The Ascent of Money author Niall Ferguson – is that capitalism isn’t dead, though the global banking regulations embodied in Basle 2 should be. It took regulators ten years to perfect Basle 2, but far from making things safer for bank customers, it pushed banks to the brink of ruin.

When the banks discovered that their “assets” were riddled with junk, everyone ran scared. Nobody knew exactly how “toxic” it all was, so the banks couldn’t unload it on to anyone. Their “assets” became worthless. Under the Basle rules, they had to stop lending. Hello, credit crunch.

“This is a balance-sheet crisis,” the billionaire and former presidential candidate Steve Forbes told the gathering. “If you had to sell your house today, you wouldn’t get much for it. That doesn’t mean it’s worthless.” Banks are largely solvent – it’s regulation that threatens to bankrupt them.

“We need to sell off, split up or close down the zombie banks,” says Bill Beach, senior policy boffin at Washington’s Heritage Foundation. Next, he says, we need to encourage business, not load it, like Michael Phelps, with burdens. That means lower taxes, particularly business taxes, and less of the regulation that discouraged firms employing people.

Occasional crises are the cost of the prosperity that entrepreneurial capitalism brings. Try to eliminate risk, and you eliminate entrepreneurship itself.

The Rotten State of Britain: A fork in the road

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On the back of the much talked about Rotten State of Britain, Dr Eamonn Butler has been inundated with media requests. It would appear the subject matter is striking a resonance with the people of this country.

For example, The Telegraph's Christopher Hope has written on Dr Butler's analysis of bureaucratic and authoritarian state. While in The Times Dr Butler writes on how the believers in free markets are fighting back.

The Rotten State of Britain will hopefully prove to be the first obituary for a type the government that we were able to stop before it was too late. Let us hope it does not turn out to be a record of the end of this country's freedom. We will see...

Either way, it can and should be purchased by clicking here.