Wednesday, 30 June 2010

Do prisons work?

Daniel Hannan writes:
Prison, any Lower Sixth debater will tell you, serves three functions: retribution, deterrence and reformation. In truth, it fails at all three: 40 per cent of offenders are reconvicted.
It is surely worth exploring more effective alternatives. A police superintendent in my constituency, for whom I have enormous respect, thinks that the key is to stop pretending that punishment and rehabilitation can be combined. He wants to give criminals a short stretch of hard labour, complete with bawling drill sergeants, the sole purpose of which would be to make the convict think: “I never want to come back here again”. Once the explicitly penal part of the sentence had been completed, the emphasis would be on imparting skills and equipping the prisoner for gainful employment, a process that would not require 24-hour incarceration except where justified on grounds of crime-prevention.
I have to say this makes a lot of sense to me, although solitary confinement also appeals. Do we really want criminals mingling with other criminals, in whose company they will enjoy an alternative and debased normality? Far better to have them feel that they have been cut off from human society, and then conditionally welcomed back (there are some who should be cut off forever, either on account of the seriousness of their initial offence, or persistent reoffending).

There are many possible systems; what is clear is that the current one isn't working.

Characteristically, Hannan recommends localism:
Let sheriffs set local sentencing guidelines, and let convicts serve their time as “guests” of the local sheriff. Once you forge a direct link between local tax rates and sentencing policy, you create downward pressure on costs.

There might be asymmetries in consequence: an intrinsic quality of localism. The Sheriff of Kent might decide that shoplifters should serve custodial sentences, while the Sheriff of Surrey favoured alternative penalties. One of two things would then happen. Either Kentish crooks (and crooks of Kent) would flood across the county border in such numbers that the people of Surrey elected a tougher sheriff. Or the people of Kent would get sick of funding the requisite number of prison places. At which point, their sheriff might decide on more imaginative solutions. He might, for example, decree that shoplifters should stand outside Bluewater with a placard saying “Shoplifter”. I don’t know what people would choose: that’s the essence of localism. But I do know one thing: best practice would quickly spread, as people found cheapest and most effective ways to cut crime.

Tuesday, 29 June 2010

iOS 4: Places for photos

The iPhone has been storing location data in photos for some time now, but iOS 4 has a nice feature that exposes this information:

The locations in the photos are only as good as the GPS / cell triangulation, and one of my photos from a wedding in Cambridge showed up down the road in Bury St. Edmunds. It's a shame the iPhone doesn't let you see and edit the location data for a particular photo (e.g. replace location information for one photo with location information copied from another). Perhaps iPhoto and/or Aperture support this, or at least allow you to edit the raw GPS coordinates. I'll see what tools are available.

Suboptimal, but cool nevertheless! I'm easily excited by such things, so I reckon iOS 4 was worth the installation pain.

Miron on Keynesian spending programmes

Another excellent piece from Jeffrey Miron:
At the recently concluded G-20 summit of the world's leading economies, the U.S. found itself at odds with other nations over the path of government spending. The U.S. believes high spending is still necessary to prevent a renewed recession, but other nations believe spending must fall to reign in unsustainable deficits and debt.

Who's right?

The U.S. position relies on the textbook Keynesian model of business cycles, which suggests that government spending can reduce or shorten recessions. According to the model, recessions occur due to a lack of demand for the economy's good and services. Government can remedy this shortfall by increasing its own demand, say by building highways, purchasing military aircraft, or funding research. Or, government can increase demand from consumers and firms by cutting taxes or increasing transfer payments like unemployment insurance, Medicaid, or Social Security.
Miron notes that
Although the Keynesian model is widely taught and utilized, it remains controversial as a justification for government spending.

The crucial problem is that, according to the model, any kind of spending can increase demand and help the economy recover from a recession. So if the government pays people to dig ditches and fill them up, the Keynesian model says this spending is beneficial.
This is not an exaggeration. Ditch-digging and broken windows; war and disease; empty cities; all can boost your GDP! As Miron rightly observes, few people would recommend such obviously wasteful enterprises:
instead advocates of Keynesian spending assume that government has plenty of "good" projects available, such as extending unemployment benefits, building more roads, funding research on green energy, or transferring money to states so they can avoid teacher layoffs.

The claim that Keynesian spending can focus on good projects, however, is problematic. Government spending to moderate recessions needs fast turnaround, yet identifying good projects, planning them appropriately, and implementing them effectively takes time. So spending can easily kick in after a recession has passed.

The timing problem is not disastrous if all spending is for good projects, but that raises the second difficulty. While some government spending on roads, research, or education makes sense, more is not always better since the benefits of extra spending eventually hit "diminishing returns." Considerable evidence suggests that many aspects of government in modern economies have gone well beyond the appropriate balance.
Miron argues that tax cuts are a better way to stimulate the economy:
These concerns about Keynesian spending are especially worrying because empirical support for the Keynesian model is far from compelling. The model implies that the impact of increased spending should be greater than the impact of tax cuts, but the existing evidence suggests more like the opposite. Indeed, some empirical evidence finds minimal impacts of spending, while most research finds a robust impact of tax cuts.
So much the better if these tax cuts are permanent.

I recommend the whole article.

Corrigan: The Captains and the Kings Depart

At the Cobden Centre today there is a masterpiece from Sean Corrigan. It is a story of occupation, inspired by a quote by H.L. Mencken:

[Government] is apprehended, not as a committee of citizens chosen to carry on the communal business of the whole population, but as a separate and autonomous corporation, mainly devoted to exploiting the population of the benefit of its own members… The intelligent man, when he pays taxes, certainly does not feel he is making a prudent investment of his money; on the contrary, he feels he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him

Corrigan's parable considers the obvious downsides to occupation by a foreign power — even a relatively benign one which gives work to local tradesmen — and the joy that the people would feel once free of their oppressors. We would likewise rejoice to be rid of a state of domestically-imposed martial law, once the threat of foreign invasion had passed. But how free are we today?

So, if you are with me this far, tell me why it is any different when the Home Army carries few actual arms and when most of those who fill its ranks wear no obvious uniform, or bear no fluttering pennons, but whose stormtroopers and Sonderkommandos nonetheless boss us and direct us; telling us what we can and cannot do; relieving us of a good portion of our income to pay their keep and to enact their schemes of domination; and hemming in our natural rights to property with rules and regulations which we ourselves pay for them to conjure up and to impose upon us?

What if this occupying army is in service to – nay, if it actually constitutes – the government itself?

What if comprises a host grown fat and bloated and officious as it siphons off the best milk from our herds and swipes the choicest fruit from our orchards in order to satiate its vast, pestilential, multi-million array – its troops of tax-gatherers and health-and-safety tinpots; its platoons of permit peddlers and planning panjandrums; its ranks of red-tapers, rubber-stampers, and rubbish recycling-bin riflers; its columns of closed-circuit televoyeurs and carbon credit cozeners; its divisions of dole deceivers and disability dissemblers; its junta of jobsworths, Jacks-in-Office, and gender outreach counsellors; its cohorts of Cultural Marxist commissars, and clipboard commandants; its echelons of egalitarian engineers, its squadrons of subsidy-suckers – and all the other plunderers who make up this Legion of the Damnable?
Why, then, should we listen to the hand-wringing of the punditocracy when they tell us that to disband even the most ineffective and ill-disciplined section of this rapacious army of permanent occupation is somehow to condemn ourselves to ruin?

Why should we heed the brow-beating of the leader writers when they insist that to reduce even some of the country’s unsustainable deficit – not even, you will note, to try to eradicate the whole of the annual shortfall, much less to address the noxious legacy of debt accumulated over long years of easy profligacy – is for the Emperor to condemn all of us to his former nakedness if foregoes his customary non-attire (one cut by his charlatan couturiers from the virtual cloth of spending what he routinely does not earn) and dons, in its place, a debilitating hair shirt of ‘austerity’ ?
Nor should we be persuaded that, without the reckless dollops of Other People’s Money which the vote-buying minions of the State dish out in all their counter-productive billions, the real economy will crumble and blow away in the wind: that shops will empty and factories shutter; that the lights of enterprise will dim, and flicker, and fade – any more than they would if a foreign conqueror were to relinquish his pitiless hold upon those who own them and allow them to take charge, once more, of their own destinies.

Rather, we should steel ourselves for the challenge ahead in a frame of resolute self-reliance and, to show our true intent, we should first make plain our utter rejection of the doom-mongers’ vision of a people grown too servile and enervated under the heels of the horde which strangles their growth and saps their strength that they dare not greet their own liberation with the utmost, unqualified, clarion jubilation.

Brilliant stuff. I recommend the whole article.

Coconuts and other nuts

Also on the news this morning was the case of Shirley Brown:
A councillor has been found guilty of racial harassment after she called a political opponent a "coconut".

Liberal Democrat Shirley Brown called Asian Conservative Jay Jethwa a "coconut" during a debate at Bristol City Council in February 2009.
The term coconut has been used to accuse someone of betraying their race or culture by implying that, like a coconut, they are brown on the outside but white on the inside.

Brown, who is black, had pleaded not guilty to the charge.
I cannot begin to describe how insane this is. Though her sentence was light, Shirley Brown is the victim of some very dangerous laws (perhaps the sort she herself would have voted for). It is not much comfort that black women can be prosecuted under such laws, as well as white men.

The approach of outlawing discrimination has been tried on both sides of the Atlantic. Jeffrey Miron recently wrote a good piece for Cato Unbound about Title II of the American Civil Rights Act, which prohibits discrimination by private businesses:
Title II was bad policy because it generated a range of undesired consequences that libertarians presumably abhor.

By violating the principle that private property is private, Title II created a precedent for other policies that violate property rights and have far less justification than Title II.

One example is smoking bans in restaurants. If the law views these establishments as entirely the property of their owners, it is hard to defend laws that ban smoking since non-smoking customers are not required to frequent any particular restaurant. If the law turns restaurants into “public accommodations,” however, then restaurants become places where the law can impose public health concerns and where customers have “rights,” other than just choosing not to frequent the restaurants they do not like.

Similar considerations apply to occupational health and safety regulation. So long as any workplace is the private property of the owner, it is difficult to defend rules about safety equipment, hours of work, and so on. These are concerns only for employers and their employees. Once workplaces are somehow “public,” the door is open for the state to pursue various goals that libertarians find objectionable. Mandatory maternity leave is a good example.
Some of those pushing for anti-discrimination legislation may be well-intentioned, but it is folly to violate fundamental principles of free speech and free association in the pursuit of social harmony.

We do not need anti-discrimination laws. If a businessman is bigoted, his business will suffer. If a councillor is racially insensitive, she jeopardises her chances of re-election. But nobody has a right to be served, and nobody has a right not to be offended.

20 mph limit for all built-up areas?

Today's fascist on the BBC Breakfast soapbox was Joanna Bailey from Brake, calling for the speed limit to be reduced from 30 to 20 in all built up areas.

The car-hating Oxford council introduced 20 limits across much of the city a few months ago. It's a ridiculous policy, as I've noted previously:
Responsible drivers already did 20 where it was appropriate. Irresponsible drivers continue to drive irresponsibly despite the lower limits. We now have the added harm caused by a minority of obedient citizens following the 20 limits in areas where they are completely inappropriate. Congestion increases; zombie driving is encouraged; overtaking cyclists is more difficult; and countless innocent people are delayed and enraged.
Bailey's argument was that children sometimes come running out into the road without notice, but the onus should really be on parents to teach their children road safety. And even if we can save lives by reducing the limit, that has to be weighed against the massive inconvenience to millions of drivers.

In an article back in 2008, Jamie Whyte approached this theme with characteristic rationality:

“No amount of entertainment is worth the life of a child!” This is perfect political rhetoric, guaranteed to get the Question Time studio audience clapping their support. But it also explains why that same audience is beset by so much “nanny state gone mad” regulation. What's more, it is wrong. Anyone who thinks that no amount entertainment is worth the life of a child either overvalues children or undervalues entertainment.

Start with children. How much is it worth spending to save one? The precise amount is not as important as taking the question seriously. Children are not priceless. In a world of limited resources, nothing is. Any money spent on saving a child is money not spent on something else, including saving other children. Above a certain price, saving a child does more harm than good; the money would be better spent on something else.

The Government agrees, not just about children but about people generally. For example, when deciding whether or not to spend money on improving the safety of Britain's roads, it uses a “value of a statistical life” of about £1.5million. If a road improvement that would save only one person costs more than this, the Department for Transport prefers to let him die. The National Institute for Health and Clinical Excellence (NICE) uses similar reasoning to decide which medical treatments should be offered through the NHS. If a treatment costs more than it is worth in “quality adjusted life years”, we do not get it. If the price is right, nanny is rightly willing to sacrifice her children. She is overprotective not because she cares too much for our lives, but because she cares too little for our fun.

That is the problem with Joanna Bailey and her righteous friends: they care too little for our fun. If we are insufficiently vigilant, they will soon produce a Britain where nobody wants to live.

Monday, 28 June 2010

iOS 4: will it be worth the wait?

My 16GB iPhone 3G is currently crawling its way through the backup phase of the iOS 4 installation process.

Whereas ordinary backups take no more than a couple of minutes, this one has been running for over 2 hours. I actually killed some earlier attempts thinking that the process had hung, so I am grateful to Chris Mercer for his comment in the Apple forums:
Hi all,

FYI I have an iPhone 3G running on the latest version of iTunes on the latest newly-updated version of Mac OS X.

It's been backing up for over an hour.

After a bit of digging I've found that loads of people are having this issue. It actually IS doing something, but either the status bar isn't updating properly or for some reason it is actually going very very slow.

I've found something reassuring, but before you follow any instructions please read them all before doing anything.

To make sure that it is doing something, you can go to finder, and go to this path:

your username
Application Support

Go into List View and order by Date Modified. You'll see a folder with a very recent time there. If you click the disclosure arrow (the arrow to the left of the folder name) you will see a list of files and you will see that stuff is happening.
Armed with the path information (~/Library/Application Support/MobileSync/Backup/), I was able to dip down to the command prompt and use du -shm to keep an eye on progress.

It's still painfully slow (average of 4MB / minute !), but at least I can see it moving ...

Oh, wait: it appears to have crashed. From 1323 MB, back to square one ...

I'll post updates as I learn more, but I suspect some of the slowness for me might be related to the large number of small files: 99.7% of the 13266 files it backed up before crashing were under 1 MB in size; 84% were under 100 KB.

It's been running again now for 20 minutes, and it's got through 450 MB; lets hope it doesn't slow down and die again!

UPDATE: It seems that half of the files are .mdinfo, and the other half .mddata. The .mddata, as you might expect, are the data files; mine average 197 KB [1]. The .mdinfo files are tiny "binary property list" files, less than 280 bytes each.

The latest attempt at a backup has been running for an hour. So far it's backed up 4164 .mddata files totalling 827 MB. I have 2.2 GB of data on my iPhone, so I could be in for a long wait, even if it doesn't crash again.

[1] ls -l | grep '.mddata' | awk '{ SUM += $5; COUNT++} END { print (SUM/1024)/COUNT }')

UPDATE 2: It came time to head home, and the backup still hadn't finished. Predictably, the backup did not survive my Macbook's hibernation.

On the next run, it crashed again at 1323 MB:

Mon 28 Jun 2010 20:40:31 BST
1261 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:41:32 BST
1269 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:42:36 BST
1274 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:43:36 BST
1282 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:44:36 BST
1288 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:45:39 BST
1295 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:46:42 BST
1300 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:47:45 BST
1307 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:48:48 BST
1311 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:49:51 BST
1311 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:50:55 BST
1313 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:51:55 BST
1316 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:53:12 BST
1315 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:54:12 BST
1316 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:55:12 BST
1316 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:56:12 BST
1317 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:57:12 BST
1317 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:58:16 BST
1318 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 20:59:20 BST
1319 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 21:00:23 BST
1322 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 21:01:27 BST
1323 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 21:02:36 BST
1323 10be30bb86703bf73477870fef74387e5ceacae8
Mon 28 Jun 2010 21:03:36 BST
1323 10be30bb86703bf73477870fef74387e5ceacae8
Interestingly, the Status.plist file in the backup directory indicates that the backup was successful
<plist version="1.0">
<key>Backup Success</key>
<true> </true>

UPDATE 3: Success at last! I put the phone in flight mode, and left it running overnight without an impatient human making queries at the command line. I can't say which made the difference. Reading from the directory that the backup is being written to shouldn't upset the process, but who knows.

After the cleanly-completed backup, the directory ended up containing 1297 MB. It looks like music files aren't backed up, which is reasonable enough considering the tight pairing with iTunes. With a bit more command line hackery [2], I got a listing of what's there:

1 ASCII text
33 ASCII text, with no line terminators
1 ASCII text, with very long lines
7 Adaptive Multi-Rate Codec (GSM telephony)
37 Apple binary property list
1 GIF image data, version 89a, 320 x 480
3050 JPEG image data
18 PNG image
15 SQLite 3.x database
11 XML document text
30 XML document text
1931 data
2 empty

The 1931 data files that are opaque to the file command range in size from 168 bytes to 12.2 KB.

The .mddata and .mdinfo files are gone. Filenames are hex without an extension (e.g. 0663015d51be603f533b678e7b635eaacee052ff, 00dec425d314cb97d963bfe0796f6ea4c74e9778). There are also three interesting looking files: Manifest.plist, Manifest.mdbx, and Manifest.mbdb.

When I subsequently reconnected my iPhone, a normal incremental backup completed within a couple of minutes, and brought the total up to 1347 MB. Judging by the timestamps, it touched/created 1470 files out of a total of 10808.

I've only had a couple of minutes to play with it, but initial impressions of iOS 4 are good. The UI feels more responsive, and the message threads in the mail app work well.

GoodReader still works, so I can still gradually work my way through De Soto on the go :-)

[2] (for f in `ls`; file $f; done) > ../index.txt followed by some data cleansing with column, cut, and sed, then some aggregation with sort | uniq -c

Saturday, 26 June 2010

Leaving Afghanistan

Daniel Hannan writes:
I’m delighted that the PM has set a target date for leaving Afghanistan.

We were right to go in in 2001. It is worth recalling that we had been attacked: more British subjects died in the Twin Towers than in any terrorist atrocity in our history – more than at Lockerbie or Omagh. When our soldiers arrived, they found a nest of terrorist training camps containing a surprising number of British passport-holders who, we might reasonably surmise, were being prepared for missions in the United Kingdom. We were right to depose the black-turbaned tyrants who had sheltered al-Qaeda: an objective we had secured within two months.
I too am delighted that we will finally be extricating ourselves from Afghanistan, but I don't share Hannan's enthusiasm for the original invasion.

A group of murderous criminals in a loosely-organised international terror gang perpetrated an act of violence in which Britons were killed. Afghanistan did not attack Britain.

Though I cannot regret the downfall of the Taliban, there are plenty of loathsome regimes around the world. Even if we could morally justify overturning them all, it is a task beyond our capability.

Similarly, though I abhor terrorism, it is folly to assume that we can eradicate it by invading the countries that harbour terrorists. Already al-Qaeda have moved across the border into Pakistan, and to countries across Africa.

I cannot believe that Britain is safer for having invaded Afghanistan. If anything, the resentment incurred by the occupation, together with the Bush-Blair war on Iraq, has made us less safe.

And we should not forget that 15 of the 19 hijackers responsible for the 9/11 attacks were Saudis. If America and her allies were justified in turning up the pressure on a foreign state following the mass murder of 11 September, that state would surely be Saudi Arabia.

Our primary focus, however, should be domestic, as Jeff Randall explained back in October 2009:

The world has plenty of "failed states" with an open door to our enemies.

Reza Aslan, an academic at the University of California, makes the point in his book How To Win A Cosmic War that appears to have been deliberately ignored by Downing Street: "This battle will take place… not in the mountains of Afghanistan but in the suburbs of Paris, the slums of East London, and the cosmopolitan cities of Berlin and New York. It is a battle that will be waged not against men with guns but against boys with computers."

If we are to protect ourselves, we need to confront a domestic embarrassment: we have allowed, indeed encouraged, a radicalised version of Islam to grow within our borders. The bombers who brought devastation to London's public transport system in July 2005 came from Aylesbury, Dewsbury and Leeds. Securing safety at home requires effective policing and round-the-clock focus by intelligence agencies.

We must re-establish authority over who comes to this country. Labour's shameful abandonment of border controls has led to tens of thousands of "undocumented" asylum seekers settling in the United Kingdom. Who are these people? How do we know that they wish us no harm? I'm sure that the vast majority are law-abiding, but it takes only one to create mayhem.

A well-meaning desire to be an open and civilised society has stripped us of powers of self-protection. As The Sunday Telegraph revealed last weekend, dangerous foreign criminals, including killers and sex attackers, cannot be deported, even though the Home Office seeks to do so. They claim that life would be intolerable in their native hell-holes and, thanks to the legal perversion that is the Human Rights Act, we have to put up with them.
Labour's approach was a catastrophic failure: we are less free, but we are not more secure. Ordinary law-abiding citizens are harassed, while dangerous criminals enjoy spurious 'rights'. We must refocus our society on legitimate rights, we must ruthlessly prosecute those in our midst who attack our way of life, and to the greatest degree possible, we should leave other countries to look after their own affairs.

Friday, 25 June 2010

Statutory retirement and age discrimination

There has been discussion in the news recently about removing the statutory retirement laws.

I haven't had a chance to examine the existing laws closely, but the whole argument is misguided.

Everyone should be free to work, if they can find someone willing to employ them. Every employer should be free to reject any candidate they like, for any reason. They should also be free to terminate employment at any time, for any reason (subject to the terms of the contract).

The state has neither right nor duty to intervene, on either side.

Parenthood is a choice, not a right

Perusing the Hansard (as one does), I came across this statement by Huw Irranca-Davies (Ogmore, Labour):
Gingerbread, the charity for single parents, has said that families having a second child could be worse off by up to £1,200 a year. Chief executive Fiona Weir said:
"Having a baby puts the family finances under pressure. These cuts will really hit families with young children hard."

Having a baby can indeed put family finances under pressure. That's a good reason for thinking hard before having a baby. If you do choose to reproduce, you must accept the consequences. For a single parent that means getting a job or finding a partner who can support you, or perhaps relying on the support of family and friends.

In any case, it is not my problem! Pregnancy does not give you any claim to my money. I should not be forced to subsidise your lifestyle choice!

Thursday, 24 June 2010

Dowd: Keynesian policies have brought Britain to the brink of ruin

Kevid Dowd explains the true horror of the situation we face, and despairs that discredited Keynesian arguments are still advanced by some politicians:
The government can’t borrow much more, it can’t spend much more and it can’t tax much more; nor can it grow the economy out of its current mess (as if it ever could!). The only other way to pay off its debts is by massive inflation, which would produce a catastrophe reminiscent of the Weimar Republic after World War One.

The implications are national insolvency down the road and it is against this background – and the failure of Keynesian spend-your-way-out-of-it policies that the historic Emergency Budget must be judged. Keynesian policies of fiscal and monetary excess have brought the country to the brink of ruin and need to be repudiated … again, as they were after the IMF crisis in 1976, before the vampire reawoke.
Dowd notes that "official debt of £772 billion ... [is] utterly dwarfed by the government’s existing pension obligations, which raise the total to £4,771 billion" and if we consider the obligations of the banks (for which the government is liable), we arrive at a true figure of about £6.3 trillion — "over four times UK GDP".

It gets worse:
One hates to add to the general cheeriness, but I would like the suggest that these numbers – though truly frightening, and based on solid sources – are in fact not nearly frightening enough:

1. Most ‘experts’ think that real returns in future will be lower than in the past (lower equity premium, etc) so we should downscale our projections of future real financial returns. This makes the outlook considerably worse.

2. Most projections of pensions obligations ignore longevity risk – the risk of people living longer, unexpectedly, so drawing more from the pension system. (This problem blindsided the supposed experts, the actuaries until post-2000 – think of Equitable Life.) My point is that mortality improvements are much stronger than most people realise and the implications for future pension schemes are very considerable. To give a rough idea, over the next forty years, we might be looking at an increase in pension costs from this factor alone of perhaps 40-50%. Experts are already talking about the ‘toxic tail’ of how many older people will make it to their nineties: this will itself bankrupt many schemes that managed to survive Gordon Brown’s notorious pension fund raids, which wrecked the non-state pension system.

3. Most important of all, the PAYGO pensions/social security nexus is, in essence, just a Ponzi or pyramid-selling scheme. Once one accepts this point, then the rest follows with an unstoppable almost mathematical certainty, i.e. the young get suckered paying ever more into a system that will give them nothing back, the problem gets worse over time, and collapse is inevitable anyway – remember Madoff?

4. One is looking [at] a future of intergenerational warfare, in which the oldsters (who benefited from the system) become more numerous and want ever more entitlements (expensive medical care, etc) for ever longer periods, and expect their children and grandchildren to honour up debt obligations incurred well before they were born. This was always an unpleasant deal but the kitty is now empty. The youngsters meanwhile have their college debts to pay off, can’t get on the housing ladder, face ever more difficult labour market conditions, face higher tax burdens and have none of the economic security (guaranteed pensions, medical care, etc) of their predecessors, which they will have paid for, but won’t get themselves.
I wish I could say he was wrong.

Wednesday, 23 June 2010

Jeffery Miron on the Emergency Budget

Jeffrey Miron, writing at, reckons that Osborne's emergency budget is "an excellent compromise, since an austerity plan based entirely on spending cuts would have had slim odds of adoption":
The U.K. government has just announced an austerity plan designed to restore the nation's fiscal balance. The plan calls for about $145 billion in spending reductions and about $43 billion in tax increases, summed over the first five years. The spending cuts hit welfare, housing, disability, and retirement benefits, as well as public sector salaries. The tax hikes include a rise in the value-added tax and a (risk-adjusted) levy on bank profits.

This plan is about 77% right: the spending cuts are dead on, while the tax increases are unfortunate.

The spending reductions all scale back a system of government support that is far too generous to be sustainable. The U.K., along with every rich nation, must reign in these excesses until their social safety nets protect the truly poor, but no one else.

The tax hikes are unfortunate, but not horrendous. As taxes go, a VAT is one of the least offensive, and a levy on bank balance sheets that penalizes excessive risk can in principle reduce the likelihood of panics.

In practice these tax hikes are still problematic, since evasion and avoidance will limit the revenue gains. The bank levy, in particular, will drive banking activity overseas, and banks will avoid most risk adjustments through accounting sleights-of-hand.
Miron suggests that "even this plan will face tough-sledding", and the hostile coverage I've seen so far from the BBC and Channel 4 leaves no doubt about this. It's a shame, because they produce some good programmes, but I think the only option is to cut the BBC loose, and revoke all subsidies for Channel 4. A taxpayer funded media that toes the government line is dangerous, but one that actively fights the government ridiculous.

Three ways to cut 25% from the public sector

Mark Littlewood was Head of Media for the Liberal Democrats before he left to become Director General of the IEA.

On the 24 March, the day of Alistair Darling's fantasy budget, Littlewood gave a speech entitled The Hole We're In. It is worth reading in full, but this section is particularly salient:
No doubt some money could be saved by sourcing cheaper supplies of paperclips, installing a few more low energy intensive light bulbs and the like; but not much.

The problem is not that the public sector is being run inefficiently; the problem is that the public sector is intrinsically inefficient. Whole swathes of activity need to be moved from the public to the private sector, rather than relying on state bureaucrats under the next government showing a level of productivity on a different qualitative level compared to that displayed in the last ten years.
The 25% cuts that Osborne has called for could come through a combination job losses, pay cuts, and efficiency savings. Anyone who thinks this will have a significant impact on public services should consider that 30% cuts (from £655bn down to £460bn) could be achieved simply by rolling spending back to 2002 levels. I remember 2002, and things weren't so bad.

We could roll back the clock. The sky wouldn't fall. But it would be a missed opportunity, as Littlewood explains:
We need to take dramatic action and make substantial structural changes over the medium term to ensure we guard against the country being driven to the brink of effective bankruptcy again.
We really need to embrace and extend the model of the Canadians, who "stopped government doing things". Whole departments should disappear, not just because they are costly, but because they are doing things that are beyond the proper role of government. Here's just a few:
  • Coal Authority
  • Disability Rights Commission
  • Department for International Development
  • Department for Business, Innovation and Skills
  • Department for Culture, Media and Sport
  • Department of Energy and Climate Change
  • Enterprise and Business Support
  • Equal Opportunities Commission
  • Equality and Human Rights Commission
I expect we could easily achieve 25% cuts in this manner, and it would be the right thing to do even if we had no deficit, and no debt. We could apply this approach in addition to the savings in individual departments, and save 44% overall.

However, the most appealing solution is even more radical:
Let’s not trim, or even slash, a list of specific government programmes. Let’s raze the whole edifice to the ground and start from scratch.

If we did so then it’s hard to imagine that we would countenance a public sector that consumed much more than 30% of GDP.
I suspect that's more turmoil than the public can face at the moment, but let's hope it's coming.

Osborne on public sector job losses

With fiery incredulity, Sian Williams pressed George Osborne this morning about whether "decreasing the public sector headcount" means "job losses".

Mr Osborne's answer was accurate, but weaselly: it's not necessary to sack existing staff, you can just choose not to replace people as they leave or retire.

I would have loved for him instead to have emphasised that public sector employment is part of the problem, not the solution; that people on the dole are cheaper than people in unnecessary jobs; and that those freed from the public sector can find more productive employment in the private sector.

Would those who grumble about public sector job losses really suggest that we can improve our situation by employing more people in the public sector? Or do they think that the current level of public sector employment is exactly right?

Tuesday, 22 June 2010

Hannan: There's nothing regressive about VAT

Daniel Hannan argues, quite reasonably, that there is nothing regressive about VAT:

On the contrary, VAT correlates closely to disposable wealth: rich people pay more, because they tend to spend more. Almost every other type of levy is paid disproportionately by one group or another. Property taxes fall especially heavily on pensioners; income tax isn’t paid at all by around a third of the population; the poll tax hit the working poor. All of us, by contrast, are affected by a sales tax, because we all buy things.

Not that I approve of the VAT rise, you understand. There are plenty of budgets that could have been cut instead. I just don’t understand the Labour Party’s contention that indirect taxes of this kind penalise the worst off.

We'd actually be much better off if VAT were the only tax, though property-tax-only and poll-tax-only regimes also have points in their favour.

Like Hannan, I don't think the VAT rise was necessary. Likewise for the other tax rises. They will harm the economy, and sustain an monstrously bloated state. There was no moral or economic case for these rises; they were pure politics.

Tebbit on the Emergency Budget

Lord T seems reasonably satisfied with the budget:
George Osborne’s first Budget was a curiously low-key occasion. His delivery was rather flat, almost expressionless, with no attempt at humour or drama. Nor was there much animation from the Prime Minister, although he must know that his future rests on the Chancellor’s judgment.

Mr Clegg adopted a grim, mouth-clenched expression and seemed determined to avoid eye contact, especially with those on the Labour benches.

There was not much in the Budget to bring cries of joy or waving of order papers, but that was hardly surprising given the inheritance from the NuLab government. The result was workmanlike rather than inspiring. It is galling for those of us who derided the Osborne/Cameron fantasies of “sharing the growth” of the economy between the bloated public sector and the malnourished wealth-producing sector that it has taken the Tory leadership so long to realise that the public sector was, is and looks likely to be too big regardless of economic growth for years to come.

That apart, and especially considering the need to restrain the Lib Dem tail from wagging the Tory dog, it was as good a budget overall as anyone could sensibly expect.
I have yet to properly examine the details. I expect the budget will be disappointing, but unsurprisingly so. There is no justification for tax rises while the state remains so horribly bloated. On the contrary, what we really need are tax cuts to revitalise the real economy.

Of course, having seen the hostility with which the BBC team grilled Danny Alexander this afternoon, it is clear that even this tame first step was politically difficult. The statist cancer runs deep, and even if we allow ourselves to believe that the Coalition might fight it, we cannot expect them to eradicate it overnight.

Benefits and means testing

James Bartholomew writes:
Whatever else Labour did, they certainly made benefits more complicated.

The Child Poverty Action Group annually publishes the Welfare benefits and tax credits handbook.

How many pages do you need to read to get the picture? Well, I just bought the out-of-date 2009/10 edition because I could buy it much cheaper, second-hand, than its cover price of £37.

The total number of page is 1,601. The benefits system has become ludicrously complex.
I have no trouble believing that Labour made things worse, but I would wager that the system was already far too complicated.

As long as we are committed to a system of benefits, I think the correct approach is a single, unconditional, universal stipend, which recipients would be free to spend as they see fit.

Gerald Warner is wary of universal benefits:
The philosophical argument of the Left approves of social programmes, which apply to the whole of society, but condemns poverty programmes, which apply only to the poor. They point out that the Beveridge Report was opposed to means testing. All this sounds respectable, if wrong-headed; but the reality is that it is camouflage for an agenda of all-embracing state control. The British Left is no longer a primarily socialist movement: it is a totalitarian statist impulse. Improving the lot of the poor does not rate as high a priority as extending the reach of the state.

That is why so-called socialists are perfectly happy to see taxpayers’ money doled out in child benefit to mothers in the same financial bracket as Victoria Beckham. In fact, that gives them much more satisfaction than directing a handout to Tower-block Tracy, the single mother on a sink estate. When a duchess is paid child benefit it signals that no stratum of society is outside the client state: the dependency culture has captured even the super-rich. They are not in any way dependent on it, of course; but the simple fact of the receipt of this state subsidy brings them within the bureaucracy of government philanthropy. It is inclusive.

Labour MPs are quite open about this, about the need to maximise the number of people on the state payroll, even if, in the case of well-off beneficiaries, any benefit will be bled back from them many times over in punitive taxation.
I'd be interested to see examples of Labour MPs being open about this, but the contention that they endorse universal benefits is plausible, as is Warners suggestion that they endorse them for perverse reasons.

I watched Channel 4's How to save £100 billion last night, and I was struck by the sense of entitlement that some audience members had — as if they had a genuine right to other people's money. Child benefit, Winter Fuel Allowance, Free Bus Passes, Higher Education Subsidies — there are a bewildering array of benefits, to which some people are extremely attached. This is exactly the spirit of dependence that the statists wish to promote, and Warner is right to be wary.

However, I don't think means testing is the answer. Wherever it exists, there is a poverty trap — people are discouraged from working more and earning more, for fear of losing their benefits. Even those who recognise that work is in their long term interest can find it difficult to overcome the short term obstacle.

The current swarm of benefits is divisive, pitting young against old, rich against poor, sick against healthy, and parents against those who are disinclined or unable to reproduce. The population is split into so many competing interest groups, each clamouring for handouts, and unwilling to give up those they already enjoy.

A small universal stipend, on the other hand, would apply equally to all. It would guarantee the poorest in society a certain basic standard of living, while ensuring that work always pays. The poor would never have to choose between starvation and criminality, while for the rich the stipend would be equivalent to a tax break.

There will be some who say that even this basic level of redistribution is immoral, and that any handout, however small, is damaging to moral fibre. There are others who argue that poverty relief is a public good, akin to national defence. But anyone who favours small government and personal responsibility should recognise that a single, small, universal benefit would be an improvement on the status quo.

It seems to me that a better ultimate solution would be the direct provision of basic necessities — soup kitchens and hostels available to all, but only used by those who need them (and only for as long as they need them). Ideally these would be supported by private charity, but I would be willing to sacrifice my principles, and countenance a small amount of compulsory redistribution.

Coupled with an abolition of income tax, this system of benefits would mean that the state need know very little about us. I am among those who consider this a Good Thing.

International aid - immoral, irresponsible, wasteful, and counterproductive

Melanie Phillips has written an excellent article on international aid:
When the Conservatives announced that they intended to ring-fence the international aid budget, many eyebrows were raised.

Currently, this country spends about £3 billion every year on such aid. The Coalition has pledged to increase this total to meet the UN target of 0.7per cent of national output by 2013.

Since only the health service is also to be ring-fenced against the draconian spending cuts threatened for the rest of the public sector and expected to be outlined in next Tuesday’s Budget, many have asked how the Government can justify spending even more on humanitarian assistance abroad while causing increasing hardship at home.

Surely a government’s first duty when the country has a £155 billion deficit is to its own people? And why is a Conservative Prime Minister adopting an attitude that is more commonly identified with the Left?

The reason is not the presence in the coalition of the Lib Dems. It is principally because of David Cameron’s driving imperative to transform the image of the Conservative Party from nasty to nice. And a precondition of niceness is that hearts must bleed for the wretched of the earth.
As I see it, there are four main problems with international aid:
  1. Fake charity is immoral. Real charity occurs when an individual voluntarily parts with a portion of his wealth in order to support a cause he believes in. Fake charity occurs when the government confiscates our wealth to spend on humanitarian causes that they believe in.
  2. Borrowing to give is irresponsible. It is bad enough that taxpayers' wealth is confiscated for the government's chosen humanitarian projects, but it is indefensible that they are stealing from future generations. Think of all the good that could be done at home and abroad with the £30 billion we spend each year on debt interest. If we carry on as we are, that figure will soon be £70 billion. This trajectory is not sustainable; our first priority must be to get our own house in order.
  3. International aid is wasteful. As Gerald Warner asks, Why are we giving India £1 billion in aid if it can afford Moon missions?
  4. International aid is counterproductive. It sustains a culture of dependence, fuels overpopulation, and provides support to warlords, terrorists, and tyrants.
Phillips's article focuses on the fourth point:

In Somalia, warlords extracted from the aid agencies as much as 80 per cent of what the aid supplies were worth.

After the 2004 tsunami in Sri Lanka, which left 40,000 dead and displaced 2.5 million people, Dutch relief workers were forced to pay a levy of up to 25 per cent of the aid to the terrorist Tamil Tigers.

In Sudan in the Eighties and Nineties, where two million were slaughtered, the government army that committed these atrocities fed itself on food aid that it stole. The truth is that this aid kept the genocide going.


in Gaza — to which the Cameron government has just committed a £19 million first instalment of a five- year £100 million aid package — UNRWA admitted last year that the Iranian-backed terrorist group Hamas had stolen 3,500 blankets and more than 400 food packages, including 200 tons of rice and flour, that were supposed to be distributed to Gaza residents.

Phillips concludes,

Ultimately, international aid is not about rescuing the starving of the world. Instead, it is all about burnishing the self-image of the person, organisation or government doing the giving. That’s why blind eyes are so resolutely turned to the way aid is used as the life-support system for tyrants and mass murderers.

There is surely a case for saying that, rather than being ring-fenced as Cameron’s government vows to do, the entire international aid programme should be axed — along with the department that administers it.

Failing that, it should be renamed the Department for the Perpetuation of War, Tyranny and Terror. Now that would be transparency.

As for the generous-minded members of the public who want to dip into their pockets to relieve distress, they would be well advised to give the international aid racket a miss and donate to charities caring for the poor, old or disabled in this country instead.

I recommend the whole article.

If we really cared about the plight of millions of people in the third world, we would renounce the CAP, exit the EU, and engage in mutually beneficial free trade.

Thursday, 17 June 2010

Grandmothers, guns, and goldfish

Via LPUK, I found this BBC News story:
A grandmother has been jailed for five years for possessing a "family heirloom" World War II pistol.

Gail Cochrane, 53, had kept the gun for 29 years following the death of her father, who had been in the Royal Navy.

Police found the weapon, a Browning self-loading pistol, during a search of her home in Dundee while looking for her son.

She admitted illegal possession of the firearm, an offence with a minimum five-year jail term under Scots law.

Cochrane told the High Court in Edinburgh that she had never contemplated she might be committing a crime by keeping the gun or that she might need to get a licence for the weapon.
It's hard to believe that Cochrane was ignorant of the law, and in any case it is dangerous to allow ignorance of the law as an excuse, but that principle only works when laws are few and reasonable. Today I'm sure there are thousands of unreasonable laws of which I am ignorant. How could I possibly keep up with New Labour's overeager legislature? Even Baroness Scotland, a Home Office minister, fell foul of Labour's laws on illegal immigration.

Coincidentally, on Russell Howard's Good News last night I saw an interview with another grandmother who has suffered from ridiculous laws, vigorously enforced:
A pet shop owner who was electronically tagged after selling a goldfish to a 15-year-old boy has said she was "stunned" by the sentence.

Joan Higgins, 66, pleaded guilty at Trafford Magistrates' Court to selling an animal to a person under the age of 16 unaccompanied by an adult.
The BBC article goes on to quote Jonathan Coupe, executive councillor at Trafford Council, explaining that
the "main reason we took this prosecution was because the pet shop owner had caused unnecessary suffering to a cockatiel".
Perhaps she did deserve some punishment, but her conviction should surely have been for the cruelty, rather than the sale of the goldfish. It is extremely dangerous when prosecutors have a range of bad laws up their sleeves, ready to throw at those who they have decided are deserving of punishment.

Wednesday, 16 June 2010

Redwood: How much can a government tax?

John Redwood writes:

We now know what Labour thought the answer was to this problem. Over the thirteen years of left of centre government the maximum tax take was in 2007-8, when taxes took 36.4% of all our incomes or GDP. This compared with the Conservative high of 38.2% in 1982-3 when the then Conservative government was tackling the large inherited debt from the previous Labour government, and with the 31.8% low the Conservatives got it down to at a later date. Labour inherited 34% and always charged more than that in their thirteen years.

This is why the new government is right to say we have to cut spending. Spending is running near to 50% of GDP. It needs to be realistic in relation to possible tax levels which are more than 10% of GDP lower. Why should we think suddenly the UK economy can sustain taxes of more than 40% of GDP when no previous government in the last 40 years has thought that possible? Who would stay to pay them? Who would carry on working hard and risking and investing more in such a climate? It’s a very competitive world economy, and our main economic competitors already have income taxes and capital taxes well below ours.

Perspectives on Bloody Sunday

Daniel Hannan writes:

Some commentators opposed the whole idea of reopening the wretched episode. Why such a disproportionate focus on Bloody Sunday? they asked. What about Bloody Friday? What about Birmingham and Warrington and Shankill and Crossmaglen and a hundred other IRA murders? Why should we even consider of prosecuting British Servicemen when we have freed hundreds of Republican and Loyalist paramilitaries?

The answer, surely, is that our soldiers are not to be judged by the same standard as terrorist bombers. They operate according to the rule of law. This is basis of their legitimacy and, indeed, of Britain’s jurisdiction in Northern Ireland. When rules are broken, there must be consequences. It is creditable that we should support British Servicemen. But we do not support them by taking, as it were, an anti-Dreyfusard position, refusing to admit that our soldiers can ever be in the wrong. In any organisation as large as the Army, there are bound to be occasional failures. When we deny those failures, we perpetrate an injustice, and we cheapen ourselves.

A video of Cameron's apology is available here.

While I agree that failures should be acknowledged, I don't buy Hannan's argument that the IRA are less culpable than the British Army. He seems to suggest that terrorists setting out deliberately to murder should be treated more leniently than soldiers who lost composure in front of a hostile mob. If an amnesty has been granted to murderous terrorists, it should certainly be granted to the soldiers sent in to keep the peace — while the IRA amnesty stands, there should be no talk of prosecutions.

Norman Tebbit's take on this is much closer to my own:
After 12 years and £200 million (which made a number of lawyers very, very rich) the Saville Inquiry report landed with an unwelcome thud on the desk of the Prime Minister. Its main conclusions were absolutely clear. First, that there was no policy, plan, conspiracy or plot or premeditation by Ministers, the Army, or others in authority to provoke a massacre or kill those guilty of nothing worse than participation in a prohibited demonstration or a riot. Second, that individual soldiers opened fire without due cause, thereby causing the deaths of 13 civilians.
For my part, I hope that Mr Cameron’s unwillingness to contemplate any more costly open-ended inquiries will not exclude a public inquiry into the Brighton murders at the Conservative Party Conference in 1984. Just as the families of the victims at Londonderry had a right to know whether people in high places had plotted the killings, so the surviving victims and the families of the dead of Brighton deserve to know if the killer Magee acted on his own, or whether the murders were plotted by people in IRA/Sinn Fein – and, if so, who those plotters were.

The victims of Brighton are no less important than those of Londonderry. They should not be treated as second-class victims.
I am constantly amazed by the eagerness with which those on the Left support terror groups, such as the IRA and Hamas. It seems they cannot resist supporting the underdog, however mean a beast it is. As I've noted previously, the Guardianistas have a warped sense of morality, based not on universal principles of right and wrong, but on subjective, historical perspectives of weak and strong.

Tebbit continues:

I think that as we study the details of the Saville Report there will be more pointed questions than those asked in the House of Commons. Although it was not mentioned there today, one of the innocent victims was probably carrying nail bombs, as one does on a peaceful protest. We know, too, that while Saville was able to conclude as a matter of fact that the Army should not have been ordered into the Bogside (a matter of opinion, I would have thought), he was less able to be unequivocal about Mr McGuinness. He, it seems, was present at the scene, but only “probably” carrying a submachine gun, which it was “possible” that he may have fired. (This McGuinness denies.)

On the other hand, Saville was able to conclude without qualification that “we are sure that Mr McGuinness did not engage in any activity which justified the shooting”. I may be a trifle old fashioned about carrying submachine guns around the streets and “possibly” firing them, but it does seem to me a practice which, had it happened, might provoke a sharp reaction from potential targets.

As Mr Cameron made plain, discipline broke down on that day and soldiers opened fire when they should not have done. As was pointed out, however, three RUC police officers had been murdered only two days earlier, which may have contributed to the understandable anxiety of the soldiers not to become victims of men with nail bombs themselves.

Tebbit concludes, as is his custom, with responses to readers' comments:

Lastly, thank you ‘dandelion’ for pointing up the letter from Baroness Scotland making it plain that her government would not use the Anglo-American Extradition Treaty to seek to bring IRA terrorists to justice.

After all, that would be to ask the USA to join us in our fight against our terrorists here in UK, would it not? And we could not have that – least of all today.

We should never forget that the IRA's reign of terror was largely funded by supporters in the USA.

Tuesday, 15 June 2010

Obama compares oil spill to 9/11

Yesterday, The Guardian reported that Barack Obama
risked the wrath of September 11 victim's families by comparing the BP oil spill to the 2001 terrorist attacks, as pressure intensified on the White House to show greater urgency over the crisis.
They quoted from his interview with POLITICO:
"In the same way that our view of our vulnerabilities and our foreign policy was shaped profoundly by 9/11, I think this disaster is going to shape how we think about the environment and energy for many years to come"
There is no doubt that the analogy was carefully chosen, and Gerald Warner's interpretation is highly plausible:
“You never let a serious crisis go to waste,” Rahm Emanuel, Barack Obama’s chief of staff, famously remarked. “And what I mean by that it’s an opportunity to do things you think you could not do before.” The extent to which his master has absorbed this maxim is demonstrated by Obama’s exploitation of the Gulf of Mexico oil spill.

After obsessively demonising “British Petroleum”, as his administration calls BP – a company 40 per cent British and 40 per cent American owned – Obama plumbed new depths this week by comparing the accident to the Twin Towers atrocity in 2001. To equate an environmental accident in which 11 workers tragically lost their lives with a ferocious terrorist attack that killed 2,995 people, 67 of them British, shows the extent to which Obama has lost touch with reality.

His agenda is to exaggerate the significance of the oil spill crisis to massive proportions, for two reasons. The first is that, the more Americans can be persuaded to regard the accident as a monumental, historic disaster, the less his patent impotence in the face of it will appear blameworthy. His second reason is that, in accordance with the Emanuel doctrine, he sees this as an opportunity to breathe new life into his moribund Cap-and-Trade climate change legislation.
At another point in the POLITICO interview,
Obama talked about America’s dependence on fossil fuels and how we could not “transition out of a fossil-fuel-based economy overnight. We can’t do it in five years. We can’t even do it in 10. So we’re going to continue to need to develop domestic oil consumption. We’re going to still need oil exports. And if it’s safe, then offshore drilling can be a part of that.”

He said, however, we have to invest in research and continue development of new resources building on the work that’s already been done on “solar and wind and biodiesel and energy efficiency in cars and buildings.”
It's not that I'm a fan of fossil fuels — personally, I'd much prefer nuclear power plants and hydrogen fuel cells — it's just that I'm wary of Obama's statist approach, with heavy taxation and regulation, and "investment" in favoured technologies. For Obama, it seems, just as for New Labour, the answer to any real or imagined problem is always 'more government'.

Take this artful bit of sophistry:
“I will say that there is a debate that we’ve been having for a long time and we’re going to keep on having in this country about the proper role of government,”
I think it’s fair to say, if six months ago, before this spill had happened, I had gone up to Congress and I had said we need to crack down a lot harder on oil companies, and we need to spend more money on technology to respond in case of a catastrophic spill, there are folks up there, who will not be named, who would have said this is classic, Big Government over-regulation and wasteful spending.”
Obama presents a false dichotomy. He pretends that only Big Government can keep Big Business in check. The reality is that Big Business thrives on Big Government. Both the oil industry and the burgeoning green industry benefit from special government favours. The political class, meanwhile, are happy so long as they can extract ever more wealth and power from the hapless citizenry.

It is clear that Obama will not let this crisis go to waste. The American dystopia presented in Atlas Shrugged, which once seemed far-fetched, grows closer by the day.

Hannan: I was wrong to support Obama

Daniel Hannan has had an epiphany:

In three and a half years of blogging, this has been my single most unpopular post. There’s little point, I know, in reminding readers that my support for Barack Obama was qualified; that I simultaneously endorsed GOP Congressional candidates; that I never saw Obama as a messiah and, indeed, was repelled by the millenarian fervour of his supporters. Nor is there much purpose in rehearsing John McCain’s shortcomings. The fact remains that I backed the Democrat.

I was wrong. Not that Obama is without his good points, obviously. His commitment to school choice is unfeigned. His foreign policy has been a jolly sight cheaper than McCain’s would have been. The election of a mixed-race president who opposed the Iraq war has made the USA slightly more popular.

None of these advantages, however, can make up for the single most important fact of Obama’s presidency, namely that the federal government is 30 per cent larger than it was two years ago

I recommend the whole article.

Should the US punish BP shareholders?

This is the question posed in a recent Room for Debate article for the New York Times. Actually, they asked "Can the U.S. Punish BP’s Shareholders?", but there seems little doubt that they can; the real question is whether they should.

As usual, Jeffrey Miron is the voice of reason:
In an unprecedented move, the Obama administration is calling on BP to abandon the protection of the Oil Pollution Act of 1990, which limits BP’s liability under federal law to $75 million in damages, plus cleanup costs.

As horrible as the damage from the spill might be, abandoning the rule of law, which is what the administration’s proposals imply, is worse. BP has not been convicted of anything yet, nor is the magnitude of damages known, so BP should be free to operate as a legal company in the meantime. This might mean that, when judgments occur in future years, BP will be bankrupt and unable to pay. That is unfortunate, but it is what the rule of law requires.
The rule of law can have unpleasant consequences in specific cases. But abandoning that rule is worse because it means that politicians can reward the business or individuals they like without regard for consistency, fairness or economic efficiency. Businesses operating without rule of law learn that political connections, not good business decisions, are the path to profits.

The U.S. should not fix past mistakes, by government or BP, by punishing BP in inappropriate ways. The way to balance cheap oil and the environment is to hold BP accountable as much as possible under existing policies and then design better policies for the future.

Monday, 14 June 2010

Whyte: Subsidizing Risk

The Cobden Centre has published a characteristically brilliant article from Jamie Whyte:
Industrial subsidies are a bad idea. They replace the judgement of investors risking their own money with the judgement of politicians playing with other people’s money. Not only does this reduce the chance of wise investment, it distracts entrepreneurs from their proper business. They devote themselves to winning the sympathy of the subsidy dispensers rather than producing things that consumers will pay for voluntarily. A planned economy is an economy of political favours.

In the run up to the financial crisis, government subsidies of bank risk-taking ran into the hundreds of billions of dollars. So it is unsurprising that banks took so much risk. It is just another example of the immutable law of economics that if a subsidy is offered, it will be accepted.

The politicians who arranged the subsidy now like to complain about the greed and irresponsibility of the bankers who accepted it. This is like a man who has had his wife murdered protesting in court that he never imagined the hitman would be so wicked as to do what he was paid for.

When it comes to absurdity, however, our politicians’ rhetorical response to the crisis is nothing compared to their policy response. They have not removed the risk subsidy by eliminating the guarantees – perhaps by making it a criminal offence to administer a bailout of bank creditors. On the contrary, they have made the formerly implicit guarantee to wholesale bank creditors explicit.

But do not fear. This time, things will be different. This time the laws of economics will be suspended and the subsidy will not be taken. Financial regulators will come up with rules that prevent bankers from taking excessive risks, even as politicians increase the subsidy for bank risk-taking.

I recommend the whole article.

Sunday, 13 June 2010

Should we all pay the price of alcohol abuse?

The puritans were out in force on The Big Questions this morning to discuss the question "Should we all pay the price of alcohol abuse?".

I was pleased to see the case against price rises represented by Andrew Withers of LPUK. As with the earlier debate on drink driving, the libertarians were pitted against the combined forces of the religious leaders who would save our souls, and the BMA, who want to save our bodies.

The specific proposal discussed was the minimum price of 50p per unit. As Mr Withers capably argued, this would do nothing to prevent 'problem drinking', but would represent "collective punishment" against tens of millions of responsible drinkers.

Withers also highlighted the need for personal responsibility. Even if a minimum price could reduce problem drinking, it would still be the wrong approach. Far better to hold people to account for their actions, whether drunk or sober.

It was disturbing to see how much support there was for minimum pricing in the audience. They were a self-selecting group, and unlikely to be representative of the population as a whole, but this suits the BBC perfectly, for it produces a subtle bias. The creeping denormalisation of alcohol continues.

Saturday, 12 June 2010

Obama's Brit-bashing

From BBC News:
Mr Obama's pithy pledge of finding ass to kick over the environmental disaster, and his pointed references to "British Petroleum", a corporate identity BP has not used in years, have undoubtedly fuelled the impression of deliberate anti-British rhetoric.
My searches on YouTube have yet to turn up a video of Obama himself referring to BP as "British Petroleum", but his Interior Secretary Ken Salazar certainly has:
our job is basically to keep the boot on the neck of British Petroleum to carry out the responsibilities that they have, both under the law and contractually to move forward and to stop this spill.
Norman Tebbit, as usual, did not mince his words:

At least on the other side of the Atlantic the conduct of President Obama over the great oil spill is explicable, even if despicable. The whole might of American wealth and technology is displayed as utterly unable to deal with the disastrous spill – so what more natural than a crude, bigoted, xenophobic display of partisan political presidential petulance against a multinational company?

It is time that our American friends were reminded that they sang a different tune when the American company Union Carbide killed many thousands of Indians at Bhopal. Not to mention when the American company Occidental killed 167 people on a North Sea oil rig in 1988.

At the very least, the president might acknowledge that the company directly responsible for the Gulf disaster was American, not British. He may be holding on to some Democratic Party votes, but he is storing up a great deal of ill will that he might regret at some time.

The Telegraph linked this rhetoric to earlier examples of anti-British sentiment in the Obama administration, which began with snubs against Gordon Brown:
Mr Brown handed over carefully selected gifts, including a pen holder made from the wood of a warship that helped stamp out the slave trade - a sister ship of the vessel from which timbers were taken to build Mr Obama's Oval Office desk. Mr Obama's gift in return, a collection of Hollywood film DVDs that could have been bought from any high street store, looked like the kind of thing the White House might hand out to the visiting head of a minor African state.

The real views of many in Obama administration were laid bare by a State Department official involved in planning the Brown visit, who reacted with fury when questioned by The Sunday Telegraph about why the event was so low-key.

The official dismissed any notion of the special relationship, saying: "There's nothing special about Britain. You're just the same as the other 190 countries in the world. You shouldn't expect special treatment."

A month earlier, The Telegraph reported that Obama had returned a bust of Winston Churchill:
The bronze by Sir Jacob Epstein, worth hundreds of thousands of pounds if it were ever sold on the open market, enjoyed pride of place in the Oval Office during President Bush's tenure.

But when British officials offered to let Mr Obama to hang onto the bust for a further four years, the White House said: "Thanks, but no thanks."
I'm not sure whether the move was calculated to offend, or just the result of casual indifference [1], but it seems to me that the "special relationship" has long benefited America more than it has benefited Britain. I don't begrudge the American politicians for acting in America's interests — that is their job — but I find the hypocrisy distasteful.

I long for the day when international relations are no longer mediated by politicians. As Cobden said,
Peace will come to earth when the people have more to do with each other and governments less.
[1] It is possible, of course, that Obama has carefully-considered objections to Churchill's overall record, which was not spotless. If that were the case, I think he would have done better to explain it.

Neo-Nazis and the Anarchist's Cookbook

As a teenager, in the days before the Internet, I fired up my modem, and dialled in to bulletin boards. In this primitive online world, I enjoyed text-based games, and slow-speed file sharing. A wealth of information was available, including the Anarchist Cookbook.

The Cookbook contained instructions on how to make explosives from diesel and fertilizer, but I was more interested in the harmless smoke bombs that could be produced using sugar and potassium nitrate, and the ease with which North American phone lines could be hijacked using an old phone and alligator clips.

If I were to download The Cookbook again today, my curiosity could land me in jail.

Yesterday, The Telegraph reported that
Michael Heaton, 42, and Trevor Hannington, 58, both ''proud'' neo-Nazis, are accused at Liverpool Crown Court of urging people to kill Jews.
The panel was told that Hannington has already pleaded guilty to possessing information which may be useful to terrorists.

On Wednesday he admitted to owning the Anarchist's Cookbook, Kitchen Complete and The Terrorist Encyclopaedia, all of which are considered useful tools to someone preparing or committing an act of terrorism.
Heaton and Hannington sound like thoroughly unpleasant an misguided characters, but the charges that have been brought against them are concerning. They have not actually committed acts of violence, or even attempted them; they have simply nurtured and expressed violent thoughts.

Tom Paine at The Last Ditch wrote a good article last Februrary, asking whether "egging on" should be a crime:
The very concept of "incitement" is a flawed one. And it is a flawed concept which is in course of being rapidly and dangerously extended. Our legal system believes there are people so dumb that they will hate whole races if "incited" to do so. What tosh. They have the choice to hate or not hate. And if they hate, then they have the choice whether or not to harm the objects of their hatred. I hate Gordon Brown, Harriet Harman and David Blunkett with a veritable passion, but until I act upon it there's no crime involved.
Under New Labour, thoughtcrime was vigorously prosecuted, while real crime went unpunished. I sincerely hope that the Coalition reverses this dangerous trend. There is a good chance that they will repeal some of the more egregious anti-terrorism legislation. Will they have the courage to also repeal anti-discrimination legislation?

Clarke & Dawe: World collapse explained

Via the Cobden Centre I discovered this superb video, which has been making the rounds:

Friday, 11 June 2010

You do not own your bank deposit

Edmund Conway gets ever closer to enlightenment:

The chances are you think that when you deposit your money in your bank account, it is still legally yours. But, and I don’t want to scare you unduly, that is most certainly not the case. In fact, it hasn’t been (in the UK at least) since case law established in 1811 (Carr vs Carr, in case you were wondering) that the money you put in your bank account no longer legally belongs to you – instead, you are lending it to the bank, which in turn is paying interest on the loan.

And yet only one in ten people surveyed recently in an ICM poll commissioned by the Cobden Centre realised this (74pc believed they remained legal owners of money in their current accounts; 16pc thought they shared ownership with the bank).

He goes on to note that
the question of how to restore stability and functionality to the banking system has been conveniently forgotten. This is a real worry. The point is that not merely are we wasting an opportunity to overhaul a mutated banking system, we also risk, by not concentrating hard enough on our reforms, imposing changes that end up causing far greater damage.

Take deposit insurance. Most academics now agree that introducing such insurance can undermine the foundations of banking, by encouraging banks to take greater risks (knowing their money is protected) and ultimately socialising the banking system (since they have to be bailed out when there is a crisis). So why do we have it in this country? The answer is simple – and disturbing. It was only introduced in 1979 as a result of a European directive.
Deposit insurance is a Bad Thing, for exactly the reason that Conway notes, but I had no idea that it was introduced to the UK through a European directive. This suggests that departure from the EU may be essential to proper reform of our banking system.

The death of Nelson Mandela's great-granddaughter in perspective

The BBC reports:
Nelson Mandela's great-granddaughter has been killed in a car crash after a concert on the eve of the World Cup.
It is tragic whenever anyone dies prematurely, and especially painful for friends and family when the death is utterly unexpected.

It is disappointing, albeit predictable, that the death of Mandela's great-granddaughter, who herself has no special claim to fame, will get such disproportionate coverage. Many more worthy people die on the roads of South Africa, and of Great Britain, every day.

I often wish that media reports would remind us of everyday tragedies, to put the highlighted cases in context. Absent commercial pressures, the BBC is ideally placed to do this. Can you imagine a preamble like this?
Yesterday, 1400 British people died. 9 people comitted suicide. 7 people died in transport accidents. 1 person was murdered.
The Guardian has a very good report on the official statistics: How do we die? The latest death rates

Thursday, 10 June 2010

Baroness Warsi vs Baroness Ashton

Daniel Hannan has previously, and quite rightly, heaped scorn on Labour peer Baroness Ashton: "a lifelong quangocrat who has never once been elected to anything".

Today, though, he has written a glowing appraisal of Baroness Warsi, whose peerage appears to me to be equally inexplicable. Here's what Wikipedia has to say about her:
Baroness Warsi was the Conservative Parliamentary Candidate for Dewsbury at the 2005 General Election, becoming the first Muslim woman to be selected by the Conservatives. She lost that election by nearly 5000 votes. She has served as a special adviser to Michael Howard on Community Relations and was appointed by David Cameron as Vice Chairman of the Conservative Party with specific responsibility for cities.

On 2 July 2007 Baroness Warsi was appointed Shadow Minister for Community Cohesion and a working peer. Her peerage was conferred as Baroness Warsi, of Dewsbury in the County of West Yorkshire on 11 October 2007 and gazetted on 26 October 2007. She is, by October 2007, the youngest member of the House of Lords.

I've only seen Sayeeda Warsi once, on Question Time, and I wasn't especially impressed. Perhaps the 39 year old northerner really is a "brilliant individual", as Hannan claims. Personally, I suspect her peerage has less to do with her individual talents, and more to do with her status as a politically-engaged moderate female Muslim who's prepared to associate herself with the Conservative brand.

What a tragedy that Baroness Thatcher, who achieved so much, must share her title with the likes of Warsi and Ashton, who have achieved so little.

The sooner we dispose of these discredited titles, and dispense with the corrupt system of appointments, the better.

BBC: Surge for Dutch anti-Islam Freedom Party

The BBC reports:

The unexpected big winner was the anti-Islam Freedom Party, the PVV, which took its number of seats from nine in the last parliament to 24 - its best-ever finish.

The campaign had been dominated by a debate over the economy, which was thought to have eclipsed immigration as an election issue.

But the strong showing for the Freedom Party, led by the controversial Geert Wilders, is a sign that immigration was still a powerful theme, correspondents say.

Mr Wilders has campaigned to stop the "Islamisation of the Netherlands".

He wants the Koran banned, and has suggested a tax on headscarves worn by Muslim women.

I mentioned Geert Wilders briefly in a previous post. It will be interesting to see how this develops.

Islamism presents a real challenge for believers in freedom. On the one hand, it is difficult for us to countenance censorship and restrictions on headwear. On the other, we face an intolerant foreign ideology, which would severely limit individual freedoms if it were to become dominant. Rational debate is the preferred method for combating flawed ideologies, but this route is closed off when 'faith' is involved.

Wednesday, 9 June 2010

Daniel Hannan on the West Lothian Question

Daniel Hannan's blog post today led me to an old article of his, which is well worth reading:

I have found it: the philosopher's stone of politics, the elixir of life. There really is an answer to the West Lothian Question. Twenty nine years have passed since Tam Dalyell, the stony Old Etonian who then sat for West Lothian, set the conundrum before Parliament. Scottish devolution, he observed, would lead to a constitutional anomaly, as Westminster MPs with Scottish seats would be able to vote on matters affecting English constituencies, but would have no say over such matters in their own constituencies.

Today, the problem is no longer academic. On two occasions -- over foundation hospitals and again over tuition fees -- the votes of Scottish MPs secured the passage of contentious legislation that did not apply north of the border. And the signs are that the English are becoming miffed. An opinion poll in The Daily Telegraph showed that nearly half of English voters object to the idea of a Scottish Prime Minister -- a finding that would have been unthinkable a decade ago.

What, then, is the answer? The only two solutions so far hazarded - a separate English parliament or a wholly independent Scotland - have understandably failed to win widespread support. But there is a third option: localism.

There is no power exercised by the Holyrood legislature under the 1998 Scotland Act that could not, in England, be devolved to a lower level -- either to counties and cities or, better still, to individual citizens.

I recommend the whole article.

As I wrote over at Tim Worstall's blog,

I think the main objection to localism is that councils tend to be even more incompetent than the jokers in Westminster.

I imagine there are two answers to this:

1) As much power as possible would be pushed *below* the level of the county/city councils, ideally to individuals

2) The transfer of power from Westminster to the cities/councils would cause us to choose our representatives in local government more carefully.

Cut expenditure or raise taxes?

Jeffrey Miron has an excellent piece on the best way to reduce government deficits. The principles are universal.
As countries around the world struggle to get their fiscal houses in order, the crucial debate is whether to raise taxes or cut expenditure. Either approach generates winners and losers, so it might seem difficult to choose. Yet tax hikes differ from expenditure cuts in one key respect: tax increases will shrink the economic pie, but expenditure cuts can expand it.

A fundamental conclusion of economic theory, consistent with common sense and mountains of evidence, is that high tax rates are bad for the economy. Taxes on wages or salaries discourage work versus leisure, while taxes on capital income – interest, dividends, and capital gains – discourage savings relative to consumption. The implication is that taxes distort economic decisions, implying a less efficient economy and a lower level of output.

Thus higher tax rates raise revenue for any given amount of output, but this is partially offset by lower output. Research by my colleagues Greg Mankiw and Matthew Weinzerl, for example, suggests that the increased revenue from capital income taxes might be only 50 percent of what would be raised absent the output-depressing effects of these taxes. Mankiw and Weinzerl do not account for tax evasion and avoidance, moreover, which would lower net revenue even more. Large tax hikes can even reduce revenue by moving the economy to the wrong side of the Laffer curve.
The dynamic nature of the economy is appreciated by some in the British mainstream media, but our politicians aren't doing nearly enough to advance this case, as Simon Heffer laments:
They chose not to say to the Keynesians that, indeed, there might be a double-dip if public spending cuts were all that would happen; but that it might be avoided if part of those cuts was used to finance reductions in personal and corporate taxation. These, in turn, might stimulate demand and encourage private enterprise to mop up some of those who risk losing their jobs in a restructuring of the public sector.
Aside from the obvious efficiencies to be gained by shifting employment from the public to the private sector, there is the fact that some public sector work is actively harmful, as Miron explains:
Many other cuts, such as for agricultural subsidies or pork barrel spending, can also improve economic efficiency while shrinking the deficit. Some of these programs are small potatoes, but since they are bad for the economy regardless of the debt, cutting them is a no-brainer. Other significant cuts – in drug prohibition enforcement or the occupations of Iraq and Afghanistan – should also be on the table, although these will be more controversial.
For us, avoiding agricultural subsidies means leaving the EU, but even while we remain in that corrupt club, there are plenty of options for savings, including our own wars on drugs and terror. Gerald Warner highlights another big candidate:
Since the Climate Change Bill in 2008, Britain has been signed up to a mind-boggling expenditure totalling £205bn over the next decade, or £10,000 for each family in the country. This to “fight” a non-existent threat, the great carbon phobia of man-made global warming.
Even if global warming is real, and we are causing it, that does not justify UK government action. Any steps we take will be meaningless unless they are matched by the US, China, and India. In any case, adaptation will be far less expensive than prevention. Left alone, the free market will adapt to changing conditions just fine.

Miron concludes with a message to his fellow Americans, which applies equally well to the entire western world:
A fact everyone must accept is that the United States has made promises to future generations that it cannot keep, so someone has to take a hit to restore fiscal balance. In choosing where to impose this burden, we should recognize that expenditure cuts expand the economic pie, while tax hikes shrink it. That should make the choice easy, from both economic and political perspectives.