Monday 31 May 2010

Why did David Laws claim the £40,000?

Gerald Warner has nicely expressed some of my thoughts on the David Laws scandal (emphasis mine):

It is fortunate that we are dealing here with a good and honourable man, otherwise some people might put an uncharitable construction on those facts. Cameron went on to say in his reply to Laws: “I am sure that, throughout, you have been motivated by wanting to protect your privacy rather than anything else.” Reading that and the similar drivel that has cascaded out of the establishment over the past 24 hours, one would think that Laws was under some compelling duress to take £40,000 of taxpayers’ money in order to protect his privacy. On the contrary, his privacy was only invaded because he had taken public money.

Once an individual claims any kind of state subsidy, his privacy is forfeit: the humblest benefits recipient could confirm that. The one certain way to have preserved his privacy was for Laws to have claimed no money – as he could easily have afforded to do. Laws is a multi-millionaire as a result of his previous career in banking: he was a vice-president of J P Morgan and then the managing director of Barclays de Zoete Wedd, before he was 30. That an MP with that kind of personal wealth elected to take more than £40,000 from the taxpayer says it all about politicians’ sense of entitlement.

Laws may have been a talented individual with the courage to drastically slash public spending. I doubt he'd have gone far enough, fast enough, but we'll never know. What is clear from this affair is that he was a typical old-school politician, who felt no shame at abusing taxpayers' money.

"New politics" won't do. It's time for The Death of Politics.

Saturday 29 May 2010

Simon Heffer on the immorality of CGT

Via Anglo Austria I discovered a Telegraph article by Simon Heffer:

One of the worst features of Leftists – such as Vince Cable, the Business Secretary and inventor of the idiotic proposal to raise capital gains tax (CGT) – is that they believe people with assets exist purely to be taxed. Furthermore, they seem to believe that the so-called rich (in other words, anyone who has been putting money away regularly for his or her retirement) will not only not mind this happening, but will be in some way grateful to have their guilt at being "rich" assuaged by being kicked in this way. They could not be more wrong.

The whole principle of CGT – even at the existing level of 18 per cent – is unacceptable. Most people who make a capital gain these days do so using money they have earned, and which has already been taxed. They have often made capital gains by investing in the stock market, and therefore putting their money to the service of helping another enterprise to grow, and to create prosperity. Unless we create prosperity, other people won't have jobs, but will instead have to throw themselves on the mercy of the state; and if they don't have jobs, they don't pay income tax, which means a shrinking pool of those in work must fund everything society deems it needs: hospitals, schools, pensions and the rest. More to the point, encouraging people to save for their long-term future is entirely sensible because of the burdens it removes from the state. So why decide to punish such positive behaviour?

Excessively taxing people's thrift, enterprise and hard work is not only morally offensive: it is also bad for the financial health of our country, and for our ability to raise our standards of living for the future.

I think it is shameful that a Conservative chancellor is going along with these plans. They would be immoral and counterproductive at the best of times, but it is especially galling that the Capital Gains Tax rise is being contemplated while there is still so much waste in the public sector.

Heffer concludes his piece on the politics of envy with thoughts on redistribution, with which I wholeheartedly agree:

Dr Vince poses as a man who understands economics, but at heart he is a redistributionist. The only redistribution we need at the moment, however, is of the public's money back into their wallets.
Unfortunately, Heffer then goes on to demonstrate the worst kind of authoritarian biases on drugs and prostitution. It's amazing that traditional Conseratives can speak so much sense on taxation, and so much rubbish on social issues.

Last words on the 2010 election

Thought I'm not quite as sceptical about the coalition as he is, I'm going to give the last word on the 2010 election to Norman Tebbit:
There is a perfectly good argument that the very difficult things that need to be done in the national interest are better done by a coalition than by a single party government. It is an interesting argument. But it is not an argument which was advanced before polling day. And it rests upon the assumption that unless he was included in the Government, Mr. Clegg would have led his MPs to vote against measures which he knew were in the national interest. Nor was it an argument which appealed to Margaret Thatcher who also faced some difficult and controversial decisions in 1979.

It is sometimes now forgotten that as late as the autumn of 1979, Jim Callaghan, a man with far greater popular appeal than Mr. Brown, had been favourite to hold on to power. In the event, the Conservatives led by Margaret Thatcher, polled 13.7 million votes, Labour scored 11.5 million and the Liberals 4.3 million. More remarkably, eight years later, she was returned with 13.8 million votes against Labour’s 10 million and the Alliance’s 7.8 million. In the disaster of 1997, Blair led NuLab into office with 13.5 million votes, John Major’s Tories (who no one in their right mind would describe as right wing xenophobic extremists) crashed to 9.6 million and the Lib Dems to 5.2 million. After eight years of NuLab, Blair could muster only 9.5 million votes, but the Conservative vote was still only 8.8 million, and the Lib Dems only 6.0 million.
Tebbit continues,

Against that history of recent elections, this year’s figures are deeply depressing to anyone who has any affection for our Parliamentary democracy. Cameron’s Conservatives struggled up to 10.7 million votes, still more than 3million less than Thatcher in ‘87, only just better than Major’s 9.6 million in his defeat at the hands of Blair in ‘97. NuLab sank to Labour’s second lowest total for 75 years [8.6 million], and the wonder kid Clegg [at 6,836,824] was 500,000 short of the Alliance vote nearly thirty years ago.

Mr. Cameron is Prime Minister not because the voters turned out for him, as they had done for Thatcher and Major, but because Labour’s vote collapsed. These were truly awful figures for all three main parties, and even more when we bear in mind the population increase since 1979. How could it have been that in the face of the worst government we have seen for many, many years, the Conservative vote was so low?
It's a question oft repeated by Tebbit, and it is a good one.

Still, we are where we are, and we have to make the best of it. And unlike Tebbit, I'm not a fan of old school Conservatism. There is at least a chance that some of the positive features of the Liberal Democrats will lead to a better outcome than we would have seen with a Conservatve majority government, especially if Daniel Hannan is right that "Lib Dems are often better than Tories at grasping the difference between being pro-market and being pro-business."

Early moves on Capital Gains Tax are Europe are deeply concerning, but there is still a glimmer of hope.

Friday 28 May 2010

Power 2010 is not what it seems

I voted for various Power 2010 proposals when the opportunity for a public vote arose, so I now receive emails encouraging further activism.

Here's the latest breathless exhortation from Pam Giddy:
Dear Friend,

172 new Lords.

That is how many may be appointed in the coming weeks.

172 more peers who are unelected and unaccountable to the people they are meant to serve.

To be frank - this is unacceptable.

Join me in calling for a stop to this antiquated practice - write to the three party leaders and demand that no more Lords be appointed.

The new coalition government has said it will bring forward proposals for a wholly or mainly elected upper chamber. But it simply isn't credible for parties to talk about cleaning up politics and creating a more democratic upper chamber while at the same time preparing to appoint over 100 new Lords.

The House of Lords is outdated, unjust, and unfair. It shouldn't be growing!

That's why I need you to write to the party leaders and demand that they put a stop to this right now.

Tell the party leaders you want no more Lords:

http://www.power2010.org.uk/172newlords

Thank you, and best wishes,

Pam Giddy
Director
POWER2010

The coalition's plan to flood the House of Lords with 172 new peers does strike me as dodgy. However, I can't get excited about it, and I won't be supporting Pam's campaign, because the Power 2010 team excluded the most important political question facing the UK: our membership in the European Union.

According to their website, the issues for which Power 2010 are now campaigning were decided by a multi-step process:
  1. "Over 4000" ideas were submitted by the public between 15 September and 30 November 2009
  2. Academics at Southampton University distilled this to a list of 58, for which they provided some background
  3. "On the weekend of 9th-10th January 2010, a scientific sample of 130 citizens from across the UK, selected by YouGov to be representative of the population as a whole gathered in London for a two-day deliberative event." The representatives reduced the list from 58 to 29.
  4. These 29 choices were put to a public vote, in which I participated; the top 5 became campaign issues
The proposal to "Hold a referendum on Britain’s membership of the European Union" was rejected in step 3 (ranked 33rd out of 58; 4 places shy of the cut-off for the public vote). Meanwhile, the proposal to "Hold a referendum on introducing the Euro" was accepted (ranked 12th).

This result goes against every poll I've ever seen on these issues. A 2009 BBC poll, for example, found that 55% of the public believe that "Britain should leave the EU but maintain close trading links", while 64% rejected the proposition that "The current economic crisis has made me more likely to support Britain joining the Euro".

The background document had this to say about Europe:
A referendum would allow citizens of the UK to have a say, for the first time since 1975, on whether they want the Government to negotiate withdrawal from the European Union.

Unlike the demands for electoral reform, the referendum – giving people a say – is central to the majority of these ideas. Some called for a referendum on membership of the EU, others for a referendum on the Lisbon Treaty or the Euro. Some others merely demanded immediate withdrawal.

Arguments in favour
  • It is costly and bureaucratic: the UK makes a net contribution of around £4 billion a year to the EU (after rebates and grants), which could be spent on other things.
  • The EU started as an economic organisation but has expanded its role to cover other areas such as justice, home affairs and foreign policy. It is undemocratic for these decisions to be taken by politicians and unelected bureaucrats in Europe instead of by elected representatives in the UK.
  • The free movement of labour has led to an inflow of immigrants from Eastern Europe, which can place a strain on housing and other amenities.
  • The UK could retain the benefits of free trade with the EU, even if it left. For example, Norway is not in EU but benefits from EU trade.
  • Even those people who support the UK’s continued membership should support the democratic right of the people to have a say on whether they want the EU to exercise these powers.
Issues / arguments against
  • The UK’s net contribution to the EU is relatively small as a percentage of Government spending and the UK has benefitted greatly from inward investment and increased trade (67% of UK trade is with the EU).
  • The UK benefits from the free movement of labour and people: immigrants take various undesirable jobs in the labour market and UK citizens are able to travel and work in European countries, without restrictions.
  • The EU gives the UK more power and influence on the global stage, for example in trade talks or in negotiations on how to tackle climate change.
  • In many ways EU institutions, such as the European Parliament, are more democratic and transparent than the UK and they are accountable to national electorates.
  • A referendum would be an unnecessary and costly distraction from more important issues facing the country.
Reference: http://www.hm-treasury.gov.uk/d/european_community_finances_2008.pdf
To a casual observer, this may appear balanced, but most eurosceptics would be able to provide far stronger arguments against EU membership.

For example:
  • There is no mention of the CAP or CFP.
  • There is no mention of the free trade opportunities elsewhere in the world that we forsake on account of EU membership.
  • The £4bn net contribution figure will soon jump to £6.4bn because Tony Blair surrendered the rebate that Margaret Thatcher negotiated in 1984.
  • Net contribution figures give a misleading impression of value, because EU projects in the UK are determined according to European priorities; the money is spent in Britain, but not the way the British people would choose to spend it. As Daniel Hannan notes, it's like arguing that you don't actually pay any tax, on the grounds that everything you hand over to the government is paid back in public services. Our gross contribution is over £12 billion, and rising.
  • Even the gross contribution underestimates the costs, because we suffer under burdensome regulations, and food prices are inflated by the subsidies and duties imposed by the CAP
  • It may be technically true that EU institutions are "in many ways ... more democratic and transparent" than our own political institutions, but this statement is deeply biased. The European Commission is the ultimate quango: "twenty-seven unelected Commissioners with a monopoly on the right to propose new legislation".
  • There is no mention of the contempt for democracy that the Eurocrats have shown in pushing through the Lisbon Treaty.
  • The suggestion that "The EU gives the UK more power and influence on the global stage" is ridiculous; instead, our voice is drowned out by the dominant powers on the continent, whose interests often run counter to our own.
  • Qualified Majority Voting, extended by the Lisbon Treaty, makes it easier than ever for British interests to be overruled.
So if you are on the Power 2010 campaign spam list, beware. As the EU referendum example shows, this is not a grass roots movement fighting for democracy; it is a carefully engineered astroturf pressure group, with a clear political bias.

Thursday 27 May 2010

Sean Gabb calls for Tesco boycot

A few days ago I wrote about Tesco's highly suspect endorsement of the government's proposals for minimum pricing for alcohol.

I've just discovered a press release from the Libertarian Alliance on that same day. Sean Gabb is never one to mince his words, and his statement here is a classic:
"The Government's proposal, and the welcome given it by Tesco's, amount to an attack on the poor. The ruling class politicians who continually whine about alcohol will not be affected by minimum pricing or the abolition of special offers. I might add that none of them can be affected by such laws. Income aside, anyone who lies his way into Parliament can look forward to round the clock drinking in the Palace of Westminster of untaxed alcohol.

"But the measures will hurt poor people, for whom alcohol will become cripplingly expensive and hard to find. They have the same right to drink as the rest of us. Bearing in mind the problems willed on them by our exploitative ruling class, they often have a greater need to drink.

"The claim that drinking 'causes' public disorder is nonsense. Alcohol does not run about the streets. People do. If people are making nuisances of themselves, the police should be reminded that they are no longer New Labour's equivalent of the Iranian Revolutionary Guard and told to start protecting life and property again.

"But, going back to Tesco's, this is also another attempt by a joint stock limited liability corporation - which has no right to exist - to limit competition and raise profits. We have no doubt the Company will use the good publicity got from supporting this wicked policy to win planning permission appeals to build more superstores. The incidental misery into which millions of our poorest fellow citizens will be thrown never crosses their privileged, high-salaried minds.

"On behalf of the Libertarian Alliance, I call on all progressive people of good will to boycott Tesco until it stops supporting this attack on the poor and on free competition.

"Drinking is not just for the rich."
As on so many issues, the Libertarian Alliance perspective is uncompromising. They believe:
  • That all the licensing laws should be repealed;
  • That all controls on the marketing of alcohol should be repealed;
  • That alcohol taxes should be reduced to the same level as the lowest in the European Union, and that there should be no increase in other taxes;
  • That not a penny of the taxpayers' money should be given to any organisation arguing against the above.
It's refreshing to see such a principled stance, and I want to believe that a society based on these principles could also succeed on utilitarian grounds.

Gerald Warner, authoritarianism, and abortion

The latest post from Gerald Warner starts out beautifully:

It is time we recognised the true character of the European financial crisis, which is growing more ominous by the hour. It is not, at bottom, an economic meltdown: it is a political debacle. Its origin lies in two disastrous developments of the post-War years: the arrogation to itself of excessive power by the state and the manic drive towards synthetic unification of totally incompatible European nation states.

The power of the state is now the largest single burden on humanity in the developed nations. The British state began its totalitarian encroachment on citizens’ lives under the Attlee government. It appeared acceptable, even natural, to a country that had become accustomed for six years to all-embracing government control during the emergency of the Second World War. Extending that control into peacetime blighted Britain’s prospects for more than half a century.

Before long, though, his religious prejudices surface:
What is the point of denationalising industries if the nation’s children have been nationalised? If a schoolgirl can be pressured into having an abortion by the agencies of the state, without her parents’ knowledge? Their grandchild has been destroyed with the complicity of the authorities and they are not even aware of the fact.
Abortion isn't an easy moral issue, even for those of us unencumbered by spiritual baggage. There is a good libertarian argument for removing state provision of abortions, despite the obvious utilitarian benefits. Whatever I may think about how the rights of a pregnant woman compare with the rights of the foetus inside her, it is wrong that taxpayers like Warner, who are morally opposed to abortion, should be forced to subsidise it. I fear, however, that Mr Warner would go further, and actually outlaw privately-funded abortions.

A commenter has asked him this very question. I will post an update if he replies.

Having strayed into firmly Traditional Tory territory, Warner concludes with three paragraphs on which cynical libertarians and cynical conservatives can agree:

Glutted with illegitimate power, the political class needed an even stronger fix. Ruling despotically over any single nation could no longer satisfy the power lust of the European nomenklatura, so it dedicated itself to creating a European super-state. It was an absurdity from the start, made even more ludicrous by the artificial imposition of a single currency. Even before creating the monstrosity of the European Union the constituent governments had been appropriating exorbitant proportions of their citizens’ income. That could eventually have become politically dangerous, as people working hard for appropriate salaries saw their just rewards being swallowed up in the maw of the state through penal taxation.

So, governments reassured their citizens that, without constraining themselves, Victorian-style, to deferred gratification, they could enjoy large houses, high-tech gadgets, expensive cars and foreign holidays by imitating the example of government and borrowing far beyond their means. Britain’s sovereign debt crisis has lately masked the more serious problem of private indebtedness: in that respect, Italy is in better shape than the UK. The pincer of sovereign/private debt now threatens the economies and living standards of Europe.

But it is the 60-year-long escalation in state power that has created this crisis, its ultimate exemplar being the leviathan in Brussels. The deluded incompetents of the EU are now trying to prescribe more of the same – closer integration as the supposed remedy for the crisis which that infatuated aspiration has provoked. It will blow up in their faces. It is not only the eurozone that is in denial: £5.7bn of “cuts” as the proposed sticking plaster to cure Britain’s life-threatening condition testifies to that. The only consolation is that the ultimate casualty of the coming cataclysm will be the overweening power of the state, which has led us to this disaster.



On this last point, at least, let us hope he is right.

Conway: Is Europe heading for a meltdown?

I don't share Edmund Conway's views on how to resolve our financial woes, but I do share his fear that the worst is still to come:
Mervyn King, the Bank of England Governor, summed it up best: "Dealing with a banking crisis was difficult enough," he said the other week, "but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there's no backstop."
...
The European financial crisis may look and smell rather different to the American banking crisis of a couple of years ago, but strip away the details – the breakdown of the euro, the crumbling of the Spanish banking system to take just two – and what you are left with is the next leg of a global financial crisis. Politicians temporarily "solved" the sub-prime crisis of 2007 and 2008 by nationalising billions of pounds' worth of bank debt. While this helped reinject a little confidence into markets, the real upshot was merely to transfer that debt on to public-sector balance sheets.

This kind of card-shuffle trick has a long-established pedigree: after the dotcom bust, Alan Greenspan slashed US interest rates to (then) unprecedented lows, which helped dull the pain, but only at the cost of generating the housing bubble that fed sub-prime. It is not so different to the Ponzi scheme carried out by Bernard Madoff, except that unlike his hedge fund fraud, this one is being carried out in full public view.
Conway goes on to explain the unsustainable nature of our boom-time borrowing and spending:
The Club Med nations – and in many senses Britain – were not so different to sub-prime households: they borrowed cheap in order to raise their standards of living, ignoring the question of whether they could afford to take on so much debt. But, as King points out, sub-prime households – and the banks that lent to them – can usually be bailed out. The International Monetary Fund simply does not have enough cash to bail out a major economy like Spain, Italy or, heaven forfend, Britain. So, again, we find ourselves in unknown territory.
Later in the article, Conway gets closer than ever to understanding the true horror of our predicament:
The problem is not merely that holders of Greek government debt would dump their investments, or even that they would ditch their Spanish and Portuguese bonds while they were at it. It is that government debt is the very bedrock of the financial system: should Greek government bonds collapse, the country's banking system would become insolvent overnight. In fact, banks throughout the euro area would be at risk, given that they tend to hold so much of their neighbours' government debt.
But despite these insights, Conway still clings to the Keynesian illusion that prosperity can be achieved through increased consumption:
Spain and Italy are, rightly, inflicting severe cuts on their budgets, but so is Germany, which ought, according to a host of economists including Mervyn King, to be spending more, not less.
On the contrary, real wealth is generated by deferred gratification, savings and investment.

Dark times lie ahead.

Marijuana Legalization in California

Jeffrey Miron, writing for The Harvard Crimson:

In November 2010, California voters will consider a ballot initiative that would legalize marijuana in the state. The proposed law includes restrictions on sale and use, such as a minimum purchase age of 21, but the bill gives marijuana roughly the same legal status as alcohol. Early polls suggest the measure will pass, although full-scale debate has not yet occurred.

Marijuana legalization is a far bigger step than decriminalization or medicalization, which have already occurred in California and other states. Decriminalization legalizes possession of small amounts of marijuana, but it does not eliminate the underground market or permit easy taxation. Medicalization is closer to legalization, but it still leaves producers and consumers in a legal gray area and collects less revenue than legalization.

Should California, or the country, legalize marijuana? Yes, for a multitude of reasons.

If you have any doubt that legalisation is a good idea, I suggest you read the whole article.

"EU observers" highlight the changing nature of the European Beast

According to the BBC,
EU observers have criticised Ethiopia's election, as Prime Minister Meles Zenawi held a victory rally attended by tens of thousands of people.
...

Mr Berman praised the elections for being peaceful and well organised but said the EU had received numerous reports of harassment and intimidation which were "of concern".

However, the head of the 170-strong EU team said these shortcomings did not necessarily affect the overall outcome.

Electoral fraud in Africa is nothing new; it was the "EU observers" that struck me as noteworthy. This wasn't a team of 'European' observers, representing their respective nations; it was an EU project, led by "EU mission chief" Thijs Berman.

As a report from eubusiness.com explains,
The EU had deployed around 160 observers and the African Union 60.

Writing in June 2007, Daniel Hannan observed
The EU currently possesses many of the attributes and trappings of nationhood: a parliament, a supreme court, a passport, a currency, a national anthem, a flag, external borders. There are, though, four more pieces to slot into the jigsaw before the EU can properly call itself a sovereign polity.

First, a head of state. Second, a foreign policy, complete with a foreign minister, a diplomatic corps and accredited embassies. Third, a system of criminal justice, including a European Public Prosecutor and a police force. Fourth, the "legal personality" of an independent government, which confers treaty-making powers and the right to sit in international associations.

All these things are in the draft "Reform Treaty" – along with the Charter of Fundamental Rights, the abolition of some 40 national vetoes, new powers for the European Parliament and a 30 per cent reduction in Britain’s ability to block new initiatives.

With the passage of the Lisbon Treaty, the EU now has a President: Herman Van Rompuy. It also has a High Representative, in charge of foreign policy: Baroness Ashton. It has ambassadors and embassies, responsible for "more than trade and aid".

Article 69 E of the treaty provides for the post of European Public Prosecutor, with authority to combat "crimes affecting the financial interests of the Union" and other "serious crime having a cross-border dimension".

The EU is independently represented in various international organisations. A chap called Knud Erik Jørgensen has even produced a book with "eight case studies of the EU, including its role within the UN, WTO, NATO, and the ICC".

The EU today is far more than a Common Market. A referendum on our membership of this emerging superstate is long overdue.

The folly of Capital Gains Tax increases

All taxes are bad, but some have worse effects on the economy than others. In difficult times, soak-the-rich taxation can be good politics, but it is never good economics. The team at Critical Reaction have produced two good articles on the folly of increasing Capital Gains Tax.

Graham Riddick writes

Frequently budding entrepreneurs take monumental risks to start a new business. They give up their secure jobs. They re-mortgage their homes to the hilt. They invest their life’s savings in their untested new enterprise. They pay themselves nothing while they establish their businesses. In some cases they stretch their mental and physical health to breaking point. Why? For all sorts of reasons, but the main one is to create a valuable enterprise from which they and their families will benefit in years to come. Yes, they hope to become millionaires and why not? For many entrepreneurs that is one of the things which drives them on and makes the sacrifices worthwhile.

Tax these entrepreneurs at 40% or 50% and the Government will kill the incentive to create wealth. And that is what will happen despite Government protestations that entrepreneurs will be protected from any CGT increase.
As Riddick observes,
It is ironic that even Gordon Brown understood the need for enterprise and effectively kept CGT at levels well below the rates of income tax. He needed the wealth-creators to do their bit so that in time he could fleece them with other taxes.
Barry Legg highlights the risk that "capital allocation solidifies and loses its dynamism":
the investments which offer the highest returns for the future will find it more difficult to obtain capital with adverse consequences for jobs and profits ... The public sector deficit cannot be controlled unless the economy is able to benefit from the dynamics of capitalism.
Dynamism is a word that has been horribly abused by marketing types, but it is an important principle. Free markets are highly dynamic, constantly reallocating capital and human resources to best meet the needs of consumers, with greater efficiency than a central planner could ever manage. Government taxation and regulation creates friction, disrupting and discouraging beneficial transactions. Jamie Whyte's article on the deadweight costs of taxation is well worth reading.

Government intervention causes entrepreneurs to spend less time and energy satisfying the needs of customers, and more effort gaming the system. A key concern is tax avoidance, as Riddick explains:
If CGT rates go up to 40 or 50%, the UK will have the highest rates of capital gains tax anywhere in the world. This is not a message that a Conservative led Government should be sending out. The Government is right to target deficit reduction but higher CGT rates will not yield any more cash for HMRC. People will delay the sale of assets to avoid paying the higher rates and we can be sure that the accountants and tax lawyers are gearing up for a major advertising campaign. Tax avoidance will once again become a growth industry.
Legg concludes:
The Osborne proposals for CGT ... attack the many small shareholders who invest in British enterprise, they encourage consumption over investment and they make the alternative for successful British investors of seeking overseas tax residence that much more attractive. Under Labour in the 1970s there was a brain drain, under Cameron, Clegg and Osborne in the 2010s there will be a wealth drain.
Let us hope the Coalition sees sense.

The Register: 'Being fat is no worse for you than being a woman'

Good news from The Register:
The widely-discredited Body Mass Index (BMI) method of measuring how fat a person is took another hammering today. Scientists in the USA have announced a study showing that an "overweight" BMI is not linked to poor health at all, and even an "obese" rating seems to be nothing to worry about for under-40s.
...

British and American health authorities class someone as "overweight" if their BMI lies between 25 and 30, and "obese" after that. BMI statistics underlie the vast majority of "obesity epidemic" headlines, and are often used by the healthcare industry to justify soaring costs.

But according to Jarrett, "overweight" people don't get ill or require medical treatment any more often than "normal" ones. Even the "obese" show no difference until past the age of 40.

...
In fact, normal-BMI US women over 40 are almost as likely to be on medication as obese-BMI men: the proportions are 57 and 61 per cent respectively. It would seem that simply being female is pretty much as bad for you - and as expensive for society to pay for - as being a fat man.
There you have it.

Wednesday 26 May 2010

Hannan: there will be winners

Daniel Hannan writes:

Last night, Toby [Young] appeared on Newsnight with the former Schools Secretary, Ed Balls. When the comprehensive-educated journalist outlined his plans to set up an independent but free school in his borough, the privately-educated Labour politician responded revealingly: “The trouble with that approach is that there will be winners”.

Yes, there will, Ed. That’s rather the point.

For 13 years, Labour education ministers favoured equality over quality: better ten “bog standard comprehensives” than nine excellent academies and one sink school. But their policy failed in its own terms. Children from our top 20 per cent of Local Education Authorities get twice as many good GCSE passes as children from our bottom twenty per cent. Twice as many!

Hannan goes on to explain that education is not a zero sum game:

LEA bureaucrats oppose parental choice because not all parents will exercise it. It’s all very well for the sharp-elbowed bourgeoisie, they say; but what about the children whose parents don’t care?

Well, here’s the thing. Pushy parents raise standards across the board. Think of, say, supermarkets. No LEAs regulate them, no one sets their prices. And yet a Tesco in Northampton sells roughly the same things, at roughly the same prices, as a Tesco in Southampton. Why? Because competition ensures standards, in a way that legislation can’t. Shoppers like me, who have little idea of what they should be buying, and only the haziest notion of prices, are guaranteed a certain level of service by the discernment of more demanding customers.

No system is perfect. Freedom includes the freedom to fail. But at least, under Michael Gove’s proposals, parents could do something about it. A failed school would be allowed to close. Perhaps a visionary deputy head from nearby, or a Toby Young-style parental posse, might take over the premises. But it is surely better that poor schools should be allowed to fold than that they should remain open, blighting the life chances of successive generations.

The only people who fear competition are vested interests who realise they provide sub-standard service. If those employed in state schools want to keep their jobs, they must keep their students, and that means upping their game. If Gove introduces real freedom to the education system, the best teachers will be properly rewarded, and many good teachers who left the profession will return to it. The union dinosaurs, meanwhile, will finally go extinct.

Freedom to keep their jobs

Michael Gove was interviewed on BBC Breakfast this morning about his 'free schools' proposals.

Towards the end of the discussion, Bill Turnbull expressed concerns that the switch may involve job losses. Gove was evasive, and spoke about the freedoms teachers would enjoy under the new system. Turnbull pressed him: "What about the freedom to keep their jobs?"

Staggering. Keeping one's job is not a freedom, it is a privilege, earned by hard work. Teachers would be free to pursue jobs in the new schools, but that isn't enough for the unions, who seem to think that the education system exists to provide jobs for teachers, rather than to educate our children.

Tuesday 25 May 2010

Warner on Higher education 'cuts'

An excellent article by Gerald Warner on the sorry state of higher education in the UK and the ridiculous suggestion that this great money sink is due to suffer 'cuts':
Of the supposedly punitive “cuts” announced yesterday by George Osborne, al fresco in the Treasury courtyard, few will provoke more howls of outrage than the alleged reduction in the higher education budget. Expect a procession of vice-chancellors through television studios, warning that Britain is being plunged into intellectual darkness and that our competitiveness will be destroyed.

All of which is fantasy, because these “cuts” actually disguise an increase in expenditure that betrays a Liberal-Conservative administration deeply in denial in the face of economic meltdown. The headlines shriek about a £200m cut in higher education spending and a reduction of 10,000 university places. But the reality is a £70m increase in spending and the creation of 10,000 new and completely superfluous student places.

It is the oldest trick in the book. Routinely, government “cuts” turn out not to be a reduction in existing expenditure but a decrease in projected future additional spending. So it is in this instance. Two months ago the Labour government allocated an extra £270m to universities for 2010-2011, with the intention of creating 20,000 new university places. All that has now happened is that Dave and Co have reduced that handout by £200m and committed themselves to just 10,000 new university places (8,000 full-time undergraduates and 2,000 part-time) next academic year.

Only a politician or other interested party could represent £70m of additional spending and 10,000 new students as a “cut”. What makes this smoke-and-mirrors exercise especially reprehensible is that we already have far too many students – and universities. Higher education is the one area where massive cuts could be made to the benefit, not the disadvantage, of society. The Labour dogma (now adhered to by the Conservatives and Liberal Democrats) is that ever increasing numbers of young people should go to university, in the name of equality, “widening access” and, of course, “fairness”.
I would argue that there are many areas where massive cuts would be "to the benefit, not the disadvantage, of society", but he's certainly right about this one.

Warner highlights the appalling drop-out rate, and concludes with characteristic common sense:
With a 22 per cent wastage rate, we should be reducing university provision by around that figure, thereby making enormous savings in taxpayers’ money. Beyond that, we should be making even larger savings by closing down sink universities whose under-performance is notorious. How, exactly, will our international competitiveness be impaired by denying young Darren two years of getting paralytic in the students’ union bar before he drops out? There is an unconscionable amount of po-faced nonsense talked about expanded access to university: it is predicated not on academic but on political and social engineering imperatives.

The Chancellor is pretending to have taken a scalpel to higher education when in fact he has continued complicit in its relentless and damaging expansion. With a budget deficit of £156bn, over 11 per cent of GDP, and a National Debt so astronomic that this year’s interest on it will amount to almost £43bn, the pretence that net cuts of £5.7bn represent a robust response to financial crisis is ludicrous. The markets will surely conclude that Dave and Nick are having a laugh. If the rest of this token package is as illusory as the higher education “cuts”, heaven help Britain.
I thoroughly recommend the whole article.

The Queen's Speech 2010 - Good, Bad, and Ugly

From 11:30 to 11:42 this morning, the Queen set out the objectives of our New Government.

The full text is available in the Hansard.

The Good

My Lords and Members of the House of Commons, my Government’s legislative programme will be based upon the principles of freedom, fairness and responsibility.
'Fairness' can be tricky, but freedom and responsibility are unquestionably good.

The first priority is to reduce the deficit and restore economic growth.
This must be the priority, and we must not stop until we have turned the deficit into a surplus, and used it to pay off the national debt. Thereafter, we need laws that prevent politicians from raising taxes, running up debts, or printing money without the explicit consent of the people.

The tax and benefits system will be made fairer and simpler. Changes to National Insurance will safeguard jobs and support the economy. People will be supported into work with sanctions for those who refuse available jobs and the timetable for increasing the State Pension Age will be reviewed.
We will have to await the details, but this all sounds positive to me. To avoid horrendous compliance costs, deadweight costs, and unjustified invasion of privacy, tax reform is urgently needed. Let us hope these are not empty words.

The best way to simplify taxes is to eliminate some altogether. To promote growth, those that remain should be as low as possible, and engineered to minimise disruption of the free market. Employers' NI should be abolished, and employees' NI should be rolled into Income Tax until such time as that can be abolished.

As for benefits, it is imperative that we break the welfare trap. Work should always pay; pregnancy should never pay.

State pensions are a farce, as well as a dangerous liability. I'm certainly not counting on receiving one.

My Government will seek to build a strong and fair society by reforming public services and encouraging individual and social responsibility.
Responsibility is good, but the devil is in the details. The only thing the government needs to do to encourage individual and social responsibility is to step back. From his past comments, we must fear that Cameron has a much more interventionist approach in mind.

Legislation will be introduced to enable more schools to achieve academy status, give teachers greater freedom over the curriculum and allow new providers to run state schools.
Greater freedom is good, and so is the introduction of new providers, but I fear the reforms won't go far enough, and that the government won't be able to resist meddling.

It's a difficult problem, because there are definite positive externalities to an educated workforce, and early equality of opportunity is the only sort of equality that deserves any consideration, but I don't trust the government to educate our children, and nor do I want taxpayers' money going to madrassas.

It will be interesting to see how this develops.

Constituents will be given the right to recall their Members of Parliament where they are guilty of serious wrongdoing.
This is certainly a step in the right direction. The trouble is that it will be politicians who decide whether serious wrongdoing has occurred.

I'd suggest that citizens should be able to force a by-election at any time, for any reason, through a simple-majority referendum, triggered by the collection of sufficient signatures. The trouble with this idea is a problem inherent in democracy: the people may resist good changes as well as bad.

Proposals will be brought forward for a reformed second House that is wholly or mainly elected on the basis of proportional representation.
Assuming this is true proportional representation (not AV, AV Plus, or STV), I think this would be a good move. The current system of appointments is hopelessly corrupt.

Legislation will be brought forward to restore freedoms and civil liberties, through the abolition of Identity Cards and repeal of unnecessary laws.
This is unquestionably good, though they will not go far enough.

My Government will introduce legislation to implement recommendations from the Final Report of the Commission of Scottish Devolution and is committed to a referendum on additional powers for the National Assembly of Wales.
A federal structure sounds like the right answer to me. Let us end the transfer payments, and let the Scottish and the Welsh fund their own socialist programmes. It is the only way they will see the light, and recover their pride.

My Lords and Members of the House of Commons, my Government will introduce legislation to ensure that in future this Parliament and the British people have their say on any proposed transfer of powers to the European Union.
Good, but not enough. We need an In or Out referendum.

The Bad

Legislation will reform financial services regulation to learn from the financial crisis and to make fair and transparent payments to Equitable Life policy holders.
Our financial system is badly in need of reform, but the changes we're likely to see won't address the fundamental problems, and will probably make things worse.

Taxpayers' money should never be used to bail out private policy holders.

My Government will support investment in new high-speed broadband internet connections, enable the construction of a high-speed railway network and reform the economic regulation of airports to benefit passengers.
High speed rail is closer to genuine 'investment' than most government spending, but it is still an illegitimate use of confiscated wealth.

Investment in broadband internet is unnecessary, and represents an unjustifiable wealth transfer from city dwellers to those who choose to live in the countryside.

My Government will limit the number of non-European Union economic migrants entering the United Kingdom and end the detention of children for immigration purposes.
I don't have much faith in the ability of bureaucrats to determine who will make a contribution to our society. They should simply require that migrants have a job, and ensure that they receive no state subsidy, either directly, or indirectly through the translation of government documents into foreign languages.

The same policy should apply to EU migrants. If that cannot be negotiated, it is yet another reason we are better off out.

Legislation will be introduced to improve energy efficiency in homes and businesses, to promote low carbon energy production and to secure energy supplies.
...
My Government will seek effective global collaboration to sustain economic recovery and to combat climate change, including at the climate change conference in Mexico later this year.
The risks of Anthropogenic Global Warming have been greatly overplayed, and in any case we are better off adapting to climate change, rather than burning billions trying in vain efforts to prevent it. At a time of economic crisis, the last thing we need is burdensome 'green' regulations and wasteful environmental projects.

What environmental laws we have should focus on genuine local problems, such as air and water quality, not exaggerated and intractable global problems.

My Government will remove barriers to flexible working and promote equal pay.
Government attempts to institute "equal pay" will always be heavy-handed and unfair, as it is very difficult in practice to determine "equal work". Even if this were achievable, the government should have no say in the remuneration programmes of private firms; those companies who fail to attract the best workers will suffer, and that is enough. Likewise, nobody has a right to flexible working.

My Government looks forward to an enhanced partnership with India.
...
My Government is committed to spend nought point seven per cent of gross national income in development aid from 2013.
All aid to India must cease. A country that can afford a space programme does not need financial assistance from us. Other development aid goes on similarly dubious projects by highly corrupt governments. If nothing else, it is ridiculous that we are borrowing in order to give. The best thing we can do to support the developing world is to engage in free trade. We can only do this by leaving the EU.

The Ugly

My Lords and Members of the House of Commons, I pray that the blessing of Almighty God may rest upon your counsels.
Centuries of tradition and official Establishment notwithstanding, God has no business in politics.

Times: MEPs get £4m taste for Apple iPad

The Times reports:

THEY are renowned for never knowingly missing a perk. Now MEPs have decided that, financial crisis or not, they will snaffle a taxpayer-funded Apple iPad for every member once the latest computer must-have is launched on the European market.

The European parliament’s bureau, its administrative office, has earmarked £4.3m for an “IT mobility project”.

Bad as the financial crisis may be, the bureau has decided that all 736 MEPs need to become more “connected” and that the iPad, a portable tablet computer, is just the device to enable them to do more on the move.
...
Although MEPs have recently been equipped with new Hewlett-Packard laptops, some have told the bureau they find them cumbersome in comparison with the iPad.
The iPads themselves will represent a small proportion of the £4.3 million sum, which is itself trivial compared to our deficit black hole and our debt mountain, but all these projects add up, and the overall cost of our EU membership runs to tens of billions.

The significance of this story, though, is that MEPs in their Brussels bubble have no taste for the austerity that hundreds of millions of Europeans will face in the coming years. While politicians are making symbolic sacrifices in the UK, by restricting first class rail travel, it's business as usual for the Eurocrats.

Hannan: all that matters, for now, is cutting the deficit

From Daniel Hannan today:

No one pretends that trimming six billion pounds from the deficit is more than a statement of intent. To grasp how paltry the saving is, have a look at Guido’s graphic.

Gordon Brown’s talk of “paying down the deficit” deliberately fudged the distinction between debt (how much we owe) and deficit (the rate at which we’re getting deeper into debt). These cuts will mean that our national debt will rise by £153 billion this year instead of £159 billion. The government will still be borrowing a pound in every four it spends.

Still, statements of intent are important. Symbols matter. The new government has semaphored to the markets and, more important, to the electorate, that it intends to put spending on a downward trend. It is signaling that it will tilt the balance back from the public sector (which consumes wealth) to the private sector (which creates it). Hence the importance of including, in these first cuts, the elimination of quangos and a civil service recruitment freeze – a device which Margaret Thatcher used in her first years to save colossal sums.

The graphic he links to is worth reproducing here:


£6 billion is a drop in the ocean. A rounding error. Statistical noise. The sooner we can get on with some real cuts, the better. All it would take is returning public spending to 2002 levels. The more politicians pretend that saving £6 billion will be difficult, the harder they'll find it to sell the real cuts when they come along in a few months' time.

There's an interesting mix of comments comments over at the BBC; many people recognise the need for cuts, but some are in deep denial.

Monday 24 May 2010

Further enlargement of the EU

As expected, the official Lib-Con coalition agreement contains no commitment for an In/Out referendum on the EU, promising only that
We will amend the 1972 European Communities Act so that any proposed future treaty that transferred areas of power, or competences, would be subject to a referendum on that treaty – a ‘referendum lock’. We will amend the 1972 European Communities Act so that the use of any passerelle would require primary legislation
They also declare
We support the further enlargement of the EU.
What sort of enlargement is in the cards? Let's hear it from the horse's mouth:

A gradual and carefully managed enlargement policy is in the interest of the EU. Future enlargements will concern the countries of south-eastern Europe. These countries are at various stages on their road towards the EU.

Croatia and Turkey are candidate countries. They started accession negotiations on 3 October 2005. In December 2005, the European Council granted the former Yugoslav Republic of Macedonia the status of a candidate country; accession negotiations have not started.

All the other Western Balkan countries are potential candidates: Albania, Bosnia and Herzegovina, Montenegro, Serbia as well as Kosovo under UN Security Council Resolution 1244/99. The EU has repeatedly reaffirmed at the highest level its commitment for the European perspective of the Western Balkans, provided they fulfill the accession criteria.

Iceland recently submitted an application for membership on 23 July 2009.


Quite why the Icelanders are interested, I can't imagine. Perhaps, as Daniel Hannan speculates, there is more enthusiasm for the prospect among their political class than the general public.

Hopefully the whole sordid project will implode before the Eurocrats can do further damage.

Friday 21 May 2010

The right to strike

The BBC reports:
Fresh BA strikes are set to go ahead next week after a panel of judges overturned a ban on industrial action.

BA was granted an injunction on Monday after the High Court ruled that the Unite union had not reported results of its strike ballot correctly to members.
I don't have much sympathy for the BA cabin crew, or for union members in general, and union bosses are about as vile creatures as you'll find anywhere on the planet, but everyone should have the right to refuse to work, either individually or collectively, provided they don't interfere with those who are willing to work.

The problem at the moment is that we have laws in place to protect striking workers. The days when we had need for labour laws have long since passed. Let the BA cabin crew strike if they want to, and let BA sack them if they do. In the absence of coercion, there's no need or justification for government involvement on either side.

A minimum price for alcohol? Yes please, says Tesco

The War on Alcohol progresses, and the BBC report that Tesco are only too happy to help:

In an exclusive BBC interview, Lucy Neville-Rolfe, Tesco's director for corporate affairs, says in the absence of government action they have to compete on price.

"As a result there is lots of cheap alcohol, so we thought lets ask the government to look at should there be a minimum price for alcohol, or should there be a ban on low cost selling."


Wouldn't want any of that pesky competition, would we?

Thursday 20 May 2010

Tebbit: The scandal of the 1922 Committee putsch

Norman Tebbit writes:

So we have entered the era of the Big Society, New Politics, consensus, decentralisation and power to the people. Everywhere, that is, except in the Conservative Party.

The 1922 Committee has a long and important history. Its rules have been clear. It is not for Ministers. The Prime Minister was not a member of the original 1922 Committee. Nor were other Ministers, or Whips. It was a forum for the backbenchers.

Mr Cameron did not like that arrangement. He was perfectly entitled to take the view that it should be changed. I think that he was wrong to do so, but then I have not been a Member of the Commons for nearly 20 years, and much has changed since that time. What has not changed, however, are the rules of natural justice.

For Mr Cameron to bounce the Parliamentary Party into a vote to change the rules to allow Minister and Whips (the payroll vote) to become voting members of the 1922 Committee is one thing. But to announce that he has unilaterally changed the rules to give them votes in an ballot to decide if they should have membership and votes in the 1922 is another.

I'd never heard of the 1922 committee until a couple of days ago, but following on from the plan to plump up the House of Lords, and the 55% rule, this move provides further evidence of Cameron's dictatorial instinct.

Let us hope he is a benevolent dictator ...

Graham Stewart on the Lib-Con Lords 'outrage'

Graham Stewart of Critical Reaction considers the Lib-Con plan to create over 170 new peers a 'constitutional outrage':
Seasoned Westminster observers have long advised that when it comes to reforming the House of Lords the least bad option is to ‘leave well alone.’ But if ever the case for root and branch reform needed publicity, then the headlines about the proposed packing of the upper chamber with hundreds of new appointees perfectly illustrates how the existing system can be abused by government.

The Times reports that the Con-Lib coalition is preparing to create over a hundred new peerages in order to steamroller legislation through the House of Lords. The excuse for this blatant form of vote-rigging is that there are now too many Labour peers in the revising chamber and that, therefore, a mass-ennoblement programme will ensure the upper house more closely replicates the balance of forces in the lower house.

I don’t remember the Conservatives finding it offensive that democratically elected Labour administrations had to contend with what used to be the massive inbuilt Tory majority in the house of peers. Yet, somehow, and often with much tribulation, Labour managed to govern. What is so special about the Con-Lib administration that the hurdles in the way of its legislative programme must be swept away in this cavalier fashion?
As I've noted previously, this is a truly audacious move. Sean Gabb would be proud, except that we have reason to doubt that Cameron's endgame is noble.

New Labour showed us how quickly a determined government can take this country down the road to ruin. George Osborne's capitulation to the EU on the issue of Alternative Investment Funds suggests one treacherous path our bold New Government may take us hurtling down.

Wednesday 19 May 2010

Osborne: “I’m not coming to bang the table”

The FT reports "EU relief as Osborne treads softly"
“I’m not coming to bang the table,” said George Osborne, addressing what promised to be a bruising first encounter in Brussels between the new chancellor and his European colleagues. “That’s not how I want to do business.”

The relief round the table was palpable. For weeks diplomats have been braced for the likely election of a Conservative government in Britain, with a bust-up about hedge fund regulation expected then swiftly to top the agenda.

Under Britain’s “new politics”, it seems that the Conservatives are not just being nice to their new Liberal Democrat partners in government but constructive also in their approach to the European Union.
...
The Con-Lib coalition agreement has given the Tory leadership an excuse to ditch surplus Eurosceptic baggage, with Mr Cameron quietly dropping his plan to seek the repatriation of various powers from Brussels.
It's the opposite of the approach that Daniel Hannan and I had hoped for.

Mr Clegg wants input from the public on "which laws [we] think should go" as they "tear through the statute book".

In addition to the obvious candidates (Race Relations Act, Sex Discrimination Act, Disability Discrimination Act, Equality Act, Racial and Religious Hatred Act, Human Rights Act), I suggest one more: the European Communities Act 1972.

Tuesday 18 May 2010

CBC: Ottawa gives thumbs-down to bank tax

The CBC reports:
Canada launched a full-court press against the idea of a global bank tax Tuesday, as the prime minister and four senior cabinet members came out strongly against a proposal that's gathering global steam.

Prime Minister Stephen Harper said a proposed international bank tax would unfairly penalize well-regulated Canadian financial institutions that survived the global economic meltdown.

"You can't tax an economy into prosperity; likewise you can't tax a financial sector into stability," Harper said Tuesday.

The prime minister told a G8 and G20 youth forum on Parliament Hill that Canada's banks didn't have to be bailed out during the global financial crisis and shouldn't be saddled with the proposed levy.
Silly basketball metaphors aside [1], it's an interesting article, and the quote from Harper is a classic. I haven't seen any coverage of it recently in the UK, but it seems that plans for the Robin Hood Tax are proceeding. What I can't understand is why the Canadians are bothering to discuss the issue. What would they lose by simply refusing to participate in the tax?

Back over here, a quick visit to robinhoodtax.org.uk turns up distressing quotes from our New Leaders ...

Cameron:
We will create a safer banking system that serves the needs of the economy and protects us all from future crises. In the run-up to the financial crisis, British banks became amongst the most indebted and leveraged in the world - with disastrous consequences for us all. We will put in place a levy on banks. We are prepared to act unilaterally if necessary, but there is emerging international agreement on this approach in Europe and the US. Thanks to the efforts of the Robin Hood Tax Campaign's supporters, the campaign is going from strength to strength and is playing a crucial part in ensuring we reform the finance sector for the better of all of us.
Clegg:
Although we understand that it would be technically possible to levy a small transaction tax on sterling transactions alone, it would be much better to have a common approach by leading financial centres including the US, German, French and Swiss governments - so that we can ensure that the levy does indeed raise revenue and isn't simply avoided. The proceeds from such a tax could provide a modest source of revenue to be used for funding overseas development.
It does sound like we are well and truly doomed.

[1] I'd forgive ice hockey metaphors, but whatever they say about James Naismith, basketball is an American game.

£1000 prize offered by Cobden Centre

Toby Baxendale of The Cobden Centre has offered a £1000 prize to anyone who can prove that his proposal for banking reform is logically unworkable (rather than simply politically difficult).

It will be interesting to see what comes in. Personally, I hope the prize goes unclaimed, as if Toby is right, there is a much bigger prize available for all of us: freedom from the national debt, and a tax cut to boot.

It still seems a little too good to be true. If you can prove why, go and claim your prize.

Fear the sausage, says BBC

The BBC reports that 'Sausage not steak' increases heart disease risk:
A Harvard University team which looked at studies involving over one million people found just 50g of processed meat a day also raised the risk of diabetes.

But there was no such risk from eating even twice as much unprocessed meat, such as beef, lamb or pork.
...
On average, each 50g serving of processed meat per day - the equivalent of a sausage or a couple of rashers of bacon - was associated with a 42% higher chance of developing coronary heart disease and a 19% higher risk of diabetes.
Completely absent from the report was any indication of the baseline risk of coronary heart disease and diabetes, the usual age for onset of these conditions, and how the risk compares with that of other tragic curtailments to our existence, such as car accidents and suicide.

I'm off now for a cooked breakfast.

Hannan on ignoring the EU

I've thought for a while now that Cameron's best bet is to unilaterally disregard any legislation from Brussels that goes against our national interest, as the French have done in the past. If that strains relations to the point where an In/Out EU referendum is required, so much the better.

It was great to find Daniel Hannan arguing for exactly that response, should the financial services directive go ahead:

I have made the case against the Alternative Investment Fund Managers over and over again, and I won’t bore you by repeating it. Let me instead address the issue of what to do if we are outvoted.

How about this: why not ignore the directive altogether? Why not do as the French did when they were told to admit British beef, or the Italians are doing now when told to change their rules on media ownership? Why not simply announce that this is a red line issue for us, as agriculture is for France, and that we will not jeopardise our recovery by condemning the City?

There is a chance that, faced with a flinty refusal to back down, the rest of the EU might compromise. But if it doesn’t, if the directive is driven through despite Britain’s citing of essential national interests, we should simply announce our non-compliance.

If Brussels were to call our bluff and fine us, the highest sum that could be levied, under European law, is 280 million euros a year. Split this up among the affected funds and call it a “fee”, and it would be a tiny fraction of the compliance costs. More important, non-application of the AIFM directive would indicate that the new government is starting as it intends to go on, placing the British interest before the claims of our competitors.

Monday 17 May 2010

What to do about the BBC?

I think the BBC produces some of the best television in the world — perhaps the best the world has ever seen.

Tonight's Panorama, though, was a classic example of why I think it must be disbanded.

Title: The Cuts — Can you fight back?

Theme song
: Who do you think you are kidding Mr. Hitler?

Threatened services
: money-losing swimming pools, free music lessons, under-used community centres

Advice
: "make a nuisance of yourself"

Presenter
: (Scottish)

Where do these people think the money comes from?

Why do they think they are entitled to it?

Why do we fund BBC propaganda?

I fear this will end not just in tears, but with bloodshed.

More Lords, just what this country needs

The Times reports:
David Cameron and Nick Clegg will create more than 100 peers to ensure that controversial legislation gets through Parliament.

The coalition government has agreed to reshape the House of Lords, which is currently dominated by Labour, to be “reflective of the vote” at the general election. That saw the Tories and the Liberal Democrats together get 59 per cent.

None of Labour’s 211 existing peers can be removed, so the coalition must appoint dozens of its own to rebalance the upper chamber. Lib Dem estimates suggest that the number of Tory peers would need to rise from 186 to 263 and Lib Dem peers from 72 to 167.

The first wave is expected soon, to enable additional ministerial appointments to take place, with further announcements within the parliament.
Alan Travis at The Guardian has picked up on this too. The most interesting bit of his coverage is the historical note:
David Lloyd George may have threatened to create 250 new peers after the Lords blocked the 1909 People's budget but it did not prove necessary in the end. Mind you, as a result of Lloyd George's reforms, the Cameron-Clegg coalition cannot now find their most controversial measures – the tax rises and budget cuts needed to deal with the deficit – challenged by the House of Lords.
No doubt we'll see plenty of informed comment on this issue over the coming days, but here are my initial thoughts:
  • this move is even more cynical than the proposed 55% rule;
  • however, Labour are in no position to criticise the new coalition for playing fast and loose with the constitution;
  • a truly proportionally elected upper house might be a good idea;
  • an upper house that reflects the portion of the votes earned by the major parties at the last general election is something quite different;
  • it is hard to conceive of a worse system for assembling an upper house than allowing politicians to appoint their cronies;
  • a system that allows them to appoint as many cronies as they like seems especially daft;
  • even hereditary peers are preferable to sycophants on sinecure;
  • representatives of the church should have no place in the House of Lords;
  • thanks to The Parliament Act, our upper house has been impotent for a long time now, capable only of slowing legislation down;
  • a better system might be to force a referendum on any issue where the Parliament Act would otherwise be invoked;
  • such a reform might make it difficult to reshape our country on libertarian lines;
  • we already have over 700 peers, which seems like far too many;
  • on the other hand, I expect their total salaries and expenses represent a negligible portion of national expenditure;
  • considering the supremacy of the House of Commons, and the inability of a government to bind its successor, it is not at all clear to me why "none of Labour’s 211 existing peers can be removed";
  • my opinions on this issue are woefully uninformed;
  • so will be the opinions expressed in the mainstream media, and they will have an agenda;
  • "more than 100" is an interesting way of saying 172 [ (263-186)+(167-72) ];
  • any feature of our political system can be changed by the people if they get angry enough (just ask the French);
  • revolution in my lifetime looks increasingly likely

Halligan: will the History Boys show courage?

Like me, Liam Halligan is impatient for realism and resolve from our new coalition government:
the coalition agreement, while it makes clear the new government wants to cut borrowing earlier and more aggressively than Labour had proposed, says nothing of any real substance. Some £6bn will be taken from planned spending on "non-frontline" public services this year, as the Conservatives wanted. But some of this, the agreement says, "can be used to support jobs" – meaning it could be spent again, rather than being used to cut the deficit.
...
The Tories' pre-coalition plans, such as they are, imply a tightening of 4.7pc of GDP by 2015-16 according to the Institute for Fiscal Studies. But even if these proposals end up halving the UK's huge annual deficit over the next five years, the overall stock of national debt still doubles from around £750bn to £1,500bn, resulting in ever-rising sums of taxpayers' money being wasted on interest payments. Coupled with that, of course, there's more than £1,000bn of additional liabilities parked off-balance sheet, related to public sector pensions and the grotesque private finance initiative.
We don't need an emergency budget to tell us how desperate our situation is. As Halligan rightly notes, "spending reductions of £6bn amount to rounding errors". He reckons the public can handle the truth: "the British people are not fantasists – but that's how our politicians treat us". I don't have a huge amount of faith in the wisdom of the masses, but you don't need a degree in economics to see that we've been living beyond our means, and that this cannot continue (indeed, a degree in economics seems to be one of the best blindfolds to economic reality).
Those at the top of this "historic coalition" need to stop playing political parlour games and display the courage and determination to take tough, decisive action. The five-year agreement is hopefully a precursor to this. Much rests on the shoulders of the Business Secretary, Vince Cable, and Chief Secretary to the Treasury, David Laws – two of the Lib Dems now in the Cabinet. Both men of genuine integrity and intellect, I'm pleased they're in government. The reality is, though, that the party they represent is still spouting Keynesian tosh.

During the election campaign, Brown used one line more than any other. "We need to maintain government support, or we will threaten the recovery," our then Prime Minister endlessly repeated. Yet "keeping the money in", as the Labour campaign crib sheet instructed, simply amounts to taking on even more state debt – at a time when extra borrowing could tip the UK's finances over the edge, sparking a sovereign default.

Such an outcome is far from impossible. It's where we're heading unless we take radical steps. The result would be spiralling interest rates and a fully-blown economic collapse – an outcome involving not only higher economy-wide borrowing costs for a decade and huge loss of national prestige, but also a great deal of human misery and dangers of serious social unrest.
As terrible as it sounds, sovereign default might be a better option than the alternatives (though if we're going that route, we should do it immediately). Attempts to inflate away the debt through renewed money-printing would be even more disastrous. Increases in overt taxation would be more honest, but equally dangerous and immoral.

Instead, if David Cameron is serious about revitalising the private sector, we need an immediate reduction in overall taxation, coupled with an immediate and dramatic reduction in public spending. Simply scaling back to the 'austerity' of 2002 would save hundreds of billions of pounds, and even accounting for increases in welfare costs, it would be enough to take us from deficit to surplus, allowing us to finally begin repaying the debt.



Accounting for inflation (the ultimate stealth tax), we still see hundreds of billions of pounds worth of potential savings, simply by rolling back the clock:



This should be a no-brainer, but the cuts will require courage, and Halligan fears that this may be lacking:
For all the back-slapping and "chemistry" between our two new leaders, neither have any professional experience beyond politics. A few years in public relations is the sum total of their time outside the world of soft-budget constraints. That's why, despite my support and high hopes for this coalition, I fear this Con-Lib alliance won't break free from habits of old. I sincerely hope that I'm proved wrong.

Sunday 16 May 2010

Should Lib Dem voters feel betrayed?

Yesterday I watched the 13 May episode of Question Time, featuring Michael Heseltine, Charles Falconer, Simon Hughes, Melanie Phillips, and Mehdi Hasan. Even in this company, Hasan stood out as a vile.

Much discussion focused on the question of whether Liberal Democrat voters should feel betrayed. It's a bizarre idea, since their party has long supported proportional representation, which — for better or for worse — would make coalition governments commonplace. And with coalition governments, compromise is inevitable — even more so than usual, manifesto commitments will be broken.

I imagine the 'betrayed' Lib Dem voters fall into three categories:
  1. those who hoped for a coalition with Labour
  2. those who hoped to remain in principled opposition
  3. those who thought the Lib Dems could win a majority
I doubt there were very many in the third category. I have no sympathy for those in the first. As for those who would prefer to remain independent, I think they should reflect on quite what a good deal they've got. For the first time in decades, they will be able to influence major areas of government policy. It is an opportunity they would be foolish to pass up.

According to today's report from the BBC, it seems that the assembled party activists have recognised this:
Lib Dem activists have "overwhelmingly" backed leader Nick Clegg's coalition deal with the Conservatives.
...
The new deputy prime minister is reported to have received a standing ovation from Lib Dem activists at Birmingham's NEC. Party sources said no more than a dozen of the 2,000 delegates opposed the deal in a show of hands.

David Cameron the Liberal Conservative

David Cameron, in an interview with Andrew Marr this morning:
We do believe between us that there needs to be more freedom in our society, and the state has got too big and too bossy ... I've always described myself as a liberal conservative, liberal because I believe in freedom and human rights, but conservative — I'm sceptical of great schemes to remake the world.
'Liberal' is one of those words that has been terribly abused over the last few decades, and like 'progressive', it now has some very bad connotations. We must wait and see by his actions how David Cameron interprets these terms.

The talk of 'human rights', however, is not promising. I'd like to see a clear statement from David Cameron that 'negative rights' are the only legitimate ones, but I'm not sure he really believes this, and I certainly don't expect him to openly declare it.

Again, we must wait and judge him by his actions.

Friday 14 May 2010

Bye bye DCSF

The work of the Lib-Con coalition so far has been mixed, but at least they've had the sense to ditch the creepy "Department for Children, Schools and Families" and rebrand it back to "Department for Education".

If you visit http://www.dcsf.gov.uk/ you'll be redirected to http://www.education.gov.uk/


As the BBC reports:
Out goes the rainbow logo and touchy-feely graphics; in comes a sober blue colour scheme and a stern warning to the casual web browser: "All statutory guidance and legislation linked to from this site continues to reflect the current legal position unless indicated otherwise, but may not reflect Government policy."
Now if only they'd do something about the "Department of Energy and Climate Change"

Seems unlikely with Huhne at the helm.

When should life mean life?

From the BBC:
Mr Justice Keith, sitting in London, gave Hardy a whole life order, meaning he will die in jail.
...
"This is one of those exceptionally rare cases in which life should mean life."
Oh dear.

NY Times: The Twilight of the Welfare State?

The New York Times has an interesting discussion piece:
The debt crisis in Greece may have been temporarily eased by the European Union’s infusion of aid, but many analysts think that Europe’s debt problems and America’s are just beginning. Several analysts have noted that the welfare states in Greece, Spain and Portugal were greatly expanded in the 1990’s, leading to an extraordinary rise in the standards of living in those countries but also unsustainable spending. David Leonhardt of The Times and Robert Samuelson of The Washington Post this week compared the welfare state obligations in Europe to the entitlement burden in the United States.

How much should Americans fear the national debt as an aging population demands more services? What’s to be learned from the Greek experience, if anything?
As usual for their "Room for Debate" pieces, they have input from a number of economists with varying perspectives, so we're treated to some dangerous Socialist-Keynesian nonsense from James K. Galbraith:
the national debt is not a “burden.” By accounting, public debt is private wealth. Relabel that debt clock the “savings clock” –- penny for penny the numbers would be the same.
But this is counterbalanced by some useful insights from Jeffrey Miron:
The debt crisis initiated by Greece’s near default has subsided for the moment because of a trillion dollar bailout package from the European Union and the International Monetary Fund.

This is only a temporary respite, however; debt crises will recur soon, in more virulent fashion, and they will affect not just Greece and the other less economically robust countries of Europe but the United States, the rest of Europe, and high-income countries like Japan.

The fundamental problems are the interactions between demographics, technological progress in medicine, and entitlement programs.

The demographic “problem” is that life expectancy is increasing in rich countries while birth rates are low. So the fraction of the population receiving retirement benefits and subsidized health care is growing relative to the fraction that is paying taxes to support these benefits.

The technological “problem” is that medical innovation continues apace, but new medicines, devices, and procedures are expensive. So if policy provides state-of-the-art care to everyone at taxpayer expense, government health expenditure will grow without bound.

The retirement and health policies in rich countries are thus not sustainable over the long term, making debt crises inevitable.

Tax increases will not fix things, moreover, because they will mainly generate evasion and retard economic growth. Only major cutbacks in entitlements can avoid fiscal collapse.