An interview with DK's mascot MP

This interview on Cobden Centre Radio gives cause for hope.

I recommend subscribing to the podcast.

Thou shalt not blog

The Register reports,

Canadian-Iranian journalist Hossein Derakhshan has been sentenced to nineteen and a half years in prison for crimes relating to his blog.

Derakhshan, who has been in prison awaiting trial for two years, was found guilty of blasphemy offences, propaganda against the Islamic Republic and collaborating with foreign governments, Al-Jazeera reports.

Let us hope theocracy never comes to Britain.

Savers told to stop moaning and start spending

The Telegraph reports:

Savers should stop complaining about poor returns and start spending to help the economy, a senior Bank of England official warned today.

Older households could afford to suffer because they had benefited from previous property price rises, Charles Bean, the deputy governor, suggested.

They should "not expect" to live off interest, he added, admitting that low returns were part of a strategy.

His remarks are likely to infuriate savers, who are among the biggest victims of the recession. About five million retired people are thought to rely on the interest earned by their nest-eggs. But almost all savings accounts now pay less than inflation.

Indeed.

Ros Altmann, director-general of Saga, said: "Savers are being taken advantage of. They did the right thing and have been let down at the other end of the deal.

"I don't think this is what most people would consider fair."

Dot Gibson, of the National Pensioners Convention, said: "For years we've been told to put money aside for our retirement only to find that interest rates have sunk and now we have to use our savings just to pay the bills."

Jason Riddle, of Save Our Savers, said: "The Bank was aware that there was a lack of saving before the financial crisis, but those who were prudently saving while others spent, are being heavily punished."

The Bank of England has a long history of exploiting ordinary decent people. I recommend these two Cobden Centre articles:

• The violation of Mr Smith - James Tyler
• I'm sure I had another tenner here somewhere - Tim Lucas

I struggle to know how to approach such rampant Keynesian nonsense, so instead I'll reproduce a 1932 letter from F. A. Hayek to The Times, in response to an earlier letter by Keynes himself.

The Times, Wednesday, October 19, 1932 (p10)

SPENDING AND SAVING
PUBLIC WORKS FROM RATES
TO THE EDITOR OF THE TIMES

Sir,— The question whether to save or whether to spend, which has been raised in your columns, is not unambiguous. It involves three separate issues:—(1) Whether to use money or whether to hoard it; (2) whether to spend money or whether to invest it; (3) whether Government investment is on all fours with investment by private individuals. While we do not wish to over-stress the nature of our differences with those of our professional colleagues who have already written to you on these subjects, yet on certain points that difference is sufficiently great to make the expression of an alternative view desirable.

(1) On the first issue—whether to use one’s money or whether to hoard it—there is no important difference between us. It is agreed that hoarding money, whether in cash or in idle balances, is deflationary in its effects. No one thinks that deflation is in itself desirable.

(2) On the question of whether to spend or whether to invest our position is different from that of the signatories of the letter which appeared in your columns on Monday. They appear to hold that it is a matter of indifference as regards the prospects of revival whether money is spent on consumption or on real investment. We, on the contrary, believe that one of the main difficulties of the world to-day is a deficiency of investment—a depression of the industries making for capital extension, &c., rather than of the industries making directly for consumption. Hence we regard a revival of investment as particularly desirable. The signatories of the letter referred to, however, appear to deprecate the purchase of existing securities on the ground that there is no guarantee that money will find its way into real investment. We cannot endorse this view. Under modern conditions the security markets are an indispensable part of the mechanism of investment. A rise in the value of old securities is an indispensable preliminary to the flotation of new issues. The existence of a lag between the revival in old securities and revival elsewhere is not questioned. But we should regard it as little short of a disaster if the public should infer from what has been said that the purchase of existing securities and the placing of deposits in building societies, &c., were at the present time contrary to public interest or that the sale of securities or the withdrawal of such deposits would assist the coming of recovery. It is perilous in the extreme to say anything which may still further weaken the habit of private saving.

But it is perhaps on the third question—the question whether this is an appropriate time for State and municipal authorities to extend their expenditure—that our differences with the signatories of the letter is most acute. On this point we find ourselves in agreement with your leading article on Monday. We are of the opinion that many of the troubles of the world at the present time are due to imprudent borrowing and spending on the part of the public authorities. We do not desire to see a renewal of such practices. At best they mortgage the Budgets of the future, and they tend to drive up the rate of interest—a process which is surely particularly undesirable at this juncture when the revival of the supply of capital to private industry is an admittedly urgent necessity. The depression has abundantly shown that the existence of public debt on a large scale imposes frictions and obstacles to readjustment very much greater than the frictions and obstacles imposed by the existence of private debt. Hence we cannot agree with the signatories of the letter that this is a time for new municipal swimming baths, &c., merely because people “feel they want” such amenities.

If the Government wish to help revival, the right way for them to proceed is, not expenditure, but to abolish those restrictions on trade and the free movement of capital (including restrictions on new issues) which are at present impeding even the beginning of recovery.

We are, Sir, your obedient servants,

T.E. GREGORY, Cassel Professor of Economics,
F. A. VON HAYEK, Tooke Professor of Economic Science and Statistics,
ARNOLD PLANT, Cassel Professor of Commerce,
LIONEL ROBBINS, Professor of Economics

University of London, Oct. 18

Unregulated car washers?

Every once in a while, often in the middle of winter, I give some cash over to an Eastern European bloke in the Sainsbury's carpark, and he washes my car. We both go away happy.

The big shock story on BBC Breakfast this morning was that there are unregulated car washers out there.

Among the factors listed as hampering 'responsible' car washers were the minimum wage and national insurance. This being the BBC, that wasn't the spin of the story.

Is there any enterprise for which they wouldn't support state intervention?

Tebbit on Sweden

Lord Tebbit writes:

The good news however is of the stirrings of revolt across the continent. It is not, as some have called it, the rise of the far right even in Sweden. A yearning to live amongst one’s one countrymen and women and to enjoy one’s own nation’s culture is neither left nor right. It is perfectly healthy. It is only when the authoritarian architects of the greater state use immigration as a way of destroying national identities that extremists may use the immigration issue for their own ends

Like rats leaving a burning quango

Will the Coalition's recently-announced quango cull actually result in smaller, cheaper government? Richard Wellings isn't convinced:

a significant proportion of quangos are very difficult to abolish. Some perform the basic functions of government, such as HM Revenue and Customs and HM Courts Service, while others are effectively required in order to implement European Union directives. It was instructive that the coalition was unable to remove an unnecessary tier of government by abolishing the Regional Development Agencies (RDAs). Instead, it is replacing them with Local Enterprise Partnerships and transferring some of the RDAs' responsibilities to the Department of Business Innovation and Skills.

This pattern is likely to be repeated across government following the CSR. Quangos will certainly be abolished and ministers will speak of radical action being taken to tackle the deficit and reduce the role of the state. But in practice most of the staff and nearly all of the functions will be transferred to other agencies. There appears to be no genuine appetite within the coalition for the kind of attack on red tape necessary to slim down government bureaucracy significantly.

Wellings also echoed the observations of John Redwood:

The fine print of George Osborne's Emergency Budget reveals that government spending in real terms will remain more or less steady over the next five years. Indeed, when ministers speak of cuts, they often mean a reduction in previously planned increases in expenditure. The Treasury's optimistic forecasts for economic growth are the key to the coalition's deficit reduction programme rather than any dramatic scaling back of public services.

According to my calculations, we'd need annual inflation of 2.9% for the 'cuts' to be real. That's actually not looking too unlikely at the moment, and it seems assured if we have another round of quantitative easing, but we lose either way.

Wellings concludes,

The coalition's lack of radicalism may be reassuring to government workers, as well as the millions dependent on welfare benefits, but it also means that policymakers are doing little to create the kind of low-tax, low-regulation environment where entrepreneurship can flourish. The deeper issue of Britain's rapid relative economic decline is not being addressed and as a consequence both public and private sector employees will be poorer in the long run.

The whole article is well worth reading.

Chris Huhne is a dangerous man

In his speech to the Liberal Democrat conference, Chris Huhne managed to speak four and a half sentences of sense:

Conference, we face many challenges.

An unfair tax system.

Withered personal freedoms.

The biggest gap between tax and spending in the top 20 developed economies.

But when we have got the deficit down, and the economy up, when the Freedom Bill is law and millions more low-paid are taken out of tax ...

That sounds like progress! ... A good start ... What next?

Even lower taxes? An even smaller state? Repeal of anti-discrimination legislation? Freedom from the EU? Localism? A written constitution that protects citizens against the state?

No. According to Chris Huhne, the single biggest remaining issue will be ... (drumroll) ... that "we will still face the prospect of runaway climate change".

Oh dear.

Whatever the science says (and it is far from settled), any actions we take here in the UK won't make the blindest bit of difference to global warming. They might, however, have disastrous consequences for our economy.