They aren’t “think tanks”, they’re cartels

Keynesianism is the heroin of economic policies. Those who are hooked rave about the highs it brings and will do anything for their next fix. It sounds simple enough to hear their explanation: inject some taxpayers money into the economy and watch it soar. The trick apparently is in finding the right “vein” to inject it into. So addicts might call for a massive public sector house-building programme, or a new high-speed rail line, or upgrades to the motorway network, or a new airport. There are a host of possibilities and they all have the same appeal: create work and stimulate the economy. It’s taxpayers money, they acknowledge, but it’s going straight back to the taxpayer and it’s making the money supply go round faster thus stimulating the economy.

Does anyone remember the Soviet Union? How short memories are. The state making investment decisions is never a good idea, and under the present climate of incompetence and lack of control it is potentially a disastrous one. To raise the money they want to spend, Keynesians would have to raise taxes by at least as much and in reality substantially more because collecting taxes is an inefficient process. If they wanted to spend say £10 billion on house building, they’d probably have to raise £20 billion to make up for the tax dodging that would be triggered. That £20 billion would be money taken out of taxpayers’ pockets which would result in less spending on other parts of the economy. The money supply would not in fact go round faster, it would slow down.

The truth is, Keynesians are not injecting money into an economy, they’re diverting it away from things the taxpayer was already spending it on: food, clothing, consumer goods, running a car and all the other everyday expenditures they’re already struggling to meet. And it’s not going straight back into taxpayers’ pockets, they’re tying it up in long-term capital projects. Central planning of an economy is always a bad idea. Always. If they really want to stimulate the economy they should leave as much as possible in the pockets of the taxpayer.

Here are some of their proposals examined:

Build more houses

Why won’t that work? Nobody could afford to buy them despite record low interest rates because banks are not making mortgage loans. If they were lending more money, there would be more houses bought and sold. Thousands of perfectly good houses were demolished under Labour’s disastrous Pathfinder scheme, but there are plenty more that could be renovated and returned to use which would happen if people were able to get mortgages to buy them with in the first place.

Build more railways

Why won’t that work? There is a massive amount of investment going on already, with new stations and upgraded lines which is part of the justification for increased fares. But turning stations into improved shopping centres isn’t really addressing the problem: people don’t make decisions on whether to travel by train on the basis of whether the station has a Costa cafe, they decide on the basis of the train fare. Right now fares are rising above the rate of inflation and the plain fact is, people can’t afford them.

Build a new airport

Why won’t that work? Heathrow airport in particular is seriously damaging Britain’s reputation as a place to travel to and to do business with. So Keynesians want to build a new runway, or better yet, an entirely new airport. The problem is, the nightmare that is travelling through Heathrow isn’t because of delays in the air, it’s the hours on the ground spent checking-in and going through security and especially getting through immigration on the inward journey. Spend the money on more immigration officers instead.

Build more roads

Why won’t that work? Everyone gets stuck in traffic, right? And where does that happen? In city centres, at junctions, places like that where traffic merges. And where do they want to build new roads? Out in the open country where there are no traffic jams. So how does that help? It doesn’t, you’re still going to be stuck in traffic jams, you’ll just get to the next one faster. But so will everyone else which means you’ll all sit in it longer. The other problem with the build-more-roads solution is that people can’t afford to drive, it is increasingly expensive to run a car.

To sum it up.

The bottom line is, you can’t buck the markets. Every individual in the market is making their own buying decisions on the basis of what they know they want, not on the basis of some state-mandated five year plan. All the Keynesians end up doing is interfering in the smooth operation of the market and as can easily be demonstrated the real solution to any problem they highlight is often simpler and cheaper – government should get out of the way.

“What happens in Vegas” gets splashed all over the papers

The Sun says it published the photos of a naked Prince Harry because it was in the public interest.

“How do you know it’s in the public interest?” you ask them.

“Cos sales went up, dinnit”

That’s a convincing argument to the Sun. It’s the same one used by the News of the World to justify hacking peoples’ phones. It’s obviously something in the Murdoch corporate culture that they can do whatever they like if it results in extra sales. It’s a completely twisted argument because ‘what the public is interested in’ isn’t the same as ‘what is in the public interest’. For example hacking Milly Dowler’s phone (the teenage girl who was abducted and murdered) amongst the thousands who had their phones hacked in the search for salacious stories was not in the public interest, but finding out who authorised the hacking and how it came to happen most certainly is.

Sensationalism and scandal sells newspapers. We know that. The fact is, there are many genuinely sensational stories out there and many great scandals that should be reported, enough of them in fact to fill a newspaper every day without the need to ‘sex them up’. One such story might indeed be that the third-in-line to the throne had a naked romp in a hotel room in Las Vegas. Okay, let’s talk about that and let’s talk about how his security detail handled the situation, but do we need to see the photos?

“Yeah, we got to see the photos cos it shows the sort of thing sleazy newspapers will print if they get the chance, and therefore that’s why he shudna done it.”

“So you had to publish the photos to show how wrong it would be to publish them?”

“Yeah, summink like that.”

Postscript

The day before the Sun decided to go ahead and publish the real photos it mocked-up the pose of Prince Harry and a naked woman by getting a journalist to stand in as a royal body double and having a naked woman posing behind. The only problem is the naked woman they used was a 21 year-old fashion intern there for work experience. Some experience; “highly unethical” is one quote, and I think “used” is the right term to use here. “Sordid” is another one. Mind you, Sun management issued a statement saying the pair were perfectly happy to strip off, so that’s all right then.

Reports from the Guardian:

The Sun using an intern to strip for ‘nude Prince Harry’ pictures is shameful
Sun denies it pressured intern to strip for Prince Harry front page

Postscript follow-up

It gets more interesting. After the storm of criticism of the Sun for getting an intern to strip naked, it looks to me like she was not naked after all. The photo below is a crop of the Sun’s front page where the picture appeared. You can just make out that she was wearing knickers which have been pixelated-out using Photoshop. You can tell this by the different size of the coloured spots where the knickers are compared with other parts of the body.

Carbon Lifeform Offset

In order to counter the effects of politicians on the environment I am proposing that we introduce a “carbon lifeform offset” by creating a market to trade in carbon lifeforms. The more harmful the lifeform the greater the offset to be earned by “trapping” it.

This would be accomplished by building stockades in remote places where the highest-polluting carbon lifeforms could be rounded up and sent. This will neutralise their harmful effects on the world and generate millions of dollars in offset revenue for companies that trap them. A good place to build these stockades would be in the deserts of Arizona, but we could get off to a good start by locking the gates at Westminster Palace and not letting them out. We would have to be vigilant against attempts to tunnel out, but the chances of them getting themselves organised enough to manage that are frankly slim.

However, where there is a market there will be those who seek to exploit it and so we will need to consider measures to prevent the creation of additional unwanted politicians. This might be accomplished by psychometric profiling to look for anyone with a high self-importance factor combined with a low threshold for humiliation, or by organising “sting” elections where those who enter as candidates self-identify themselves as politicians and can safely be trapped and traded.

This would leave the rest of us free to deal with the real problems facing the world.

To read a little about the inanity of carbon trading, please see this article in the New York Times: Profits on Carbon Credit Drive Output of a Harmful Gas

Next proposal: Bankers’ bonuses to be paid with jars of Marmite

Serious question: Is this country worth fighting for any more?

Is a country that mistreats its armed forces so badly worthy of their continued service and sacrifice?

Consider the government’s recent record in its treatment of the armed forces: Troops on active service have been given redundancy notices at a time when they’re still putting life and limb on the line in Afghanistan, what a kick in the teeth that is. Many have been sacked within a year of qualifying for an immediate pension after 22 years service, forcing them to wait years to qualify for a pension again but saving the government millions. Others are being roped in to cover security blunders for the Olympics when they’ve just come back from the ‘Stan and ought to be enjoying some time with their families.

But it gets worse.

Now we learn of a new policy that means veterans from Commonwealth countries who have completed their service in the British armed forces are being deported, even if they have families here, in stark and unacceptable contrast to how convicted criminals are treated. Murderers, paedophiles and robbers can stay in this country once they have served their time in jail, while soldiers are deported once they have served their time in the armed forces.

The world has been turned upside down, the concepts of right and wrong have been inverted.

“Lance-Corporal Bale Baleiwai, a Fijian, served for 13 years in the Army, including operational tours to Afghanistan, Iraq, Bosnia and Northern Ireland, winning four medals, exemplary reports from his commanding officers and even being used in recruitment adverts.”

He and others like him are being deported.

“In 2011, at least one terrorist – and possibly up to four – was allowed to stay, as well as up to eight killers and rapists. Also among the total were 20 robbers and up to eight paedophiles, plus as many as four people convicted of firearms offences.”

They are not being deported.

Let’s put this in context. The very people L/Cpl Baleiwai was risking his life to fight on our behalf are amongst those allowed to remain in this country while he must be deported.

If that is how we treat our warriors, why do we think this is a country worth fighting for?

Here are the relevant Telegraph reports:

Commonwealth soldiers face deportation
The foreign criminals we don’t try to deport

Stuck in the Keynesian cycle lane

Consider the newspaper industry. An essential source of in-depth news and reportage. Essential because a well-informed populace is the prerequisite for a healthy democracy. In their day, newspapers would sell in vast numbers, most homes would have a daily paper delivered, sometimes two, and many cities had evening newspapers. But now newspapers are struggling to survive and there is much anguish over new business models such as charging for online access, or using celebrity bloggers to pull in the readers while at the same time slashing costs and sacking trained, experienced journalists. The industry is in turmoil and sales of printed papers are a fraction of what they used to be.

How would Keynesians deal with this problem?

Well, first of all, I’m not a Keynesian, and secondly, it’s not a problem. It is simply progress and the natural effect of supply and demand in a free market economy. People aren’t buying newspapers in such great numbers any more because they don’t want to; they have found other sources of news and information. As someone who believes in democracy I am worried about where they are getting that news and information from now, but that’s a different problem. Instead, I want to explore the Keynesian approach because a market fluctuation of this magnitude is something they consider to be a problem and I’d like to examine their solutions because there is a pattern to them.

Keynesians would want to see newspaper production raised to its previous high, to safeguard jobs and to preserve a part of the economy intact in what is, to them, a cyclical event. We would once more see vendors on every street corner shouting “Extra! Extra! Read all about it!”, we would once more have newspapers delivered to every home. They just wouldn’t be bought at the same volumes as before because the consumer has already made his choice. However, since they’re being printed at excessively high volumes there is an unsustainable shortfall in revenue, to pay for which the Keynesians would give the newspaper barons huge subsidies until the market stabilises again.

Is that the problem solved then? Not really. We need to ask, “Where does the money come from?” It’s not free money. It’s not even the government’s money. It’s taxpayers’ money and in the past that fact was obscured by sleight-of-hand, by pretending the government had ‘reserves’ or could reallocated expenditure from one area to another. Taxpayers are getting wise to those old tricks and they are increasingly asking the same question. They know that extra government spending means higher taxes and that means less money in their own pockets. So what do they do to compensate? They cut back on spending, not buying things they would have preferred to spend money on.

Let’s imagine for the sake of argument that everyone cuts back their spending on the same thing. Let’s imagine that up and down the country people stop going to football matches. Every Saturday teams run out onto the pitch and play their games in front of empty stadia, while at home millions of former football fans spurn the subscription fees on television and watch soap operas on freeview instead. The government of the day becomes very unhappy because now instead of talking about football with their friends, everyone is talking about how useless the government is. The government are reminded of bread and circuses, something Roman emperors would only forget at their peril.

So they turn to their Keynesian advisors again, the ones who fixed the newspaper problem, and ask them to fix this problem too. Well, as they say, if all you have is a hammer every problem looks like a nail. So the Keynesians look at this problem and see another business cycle that needs to be hammered flat. So they pummel it with taxpayer subsidies to keep the star players and their WAGS in champagne and tasteless mansions and all is well with the world again. Except for the taxpayer. He now has this subsidy to pay for as well and his taxes go up again and the cycle repeats itself: The taxpayer must make economies in some other area of expenditure. Perhaps bread?

Of course it doesn’t work like that in the real world. In the real world people make individual choices and cut out expenditure that is less important to them. This aggregates across all market sectors and results in a general decline in economic activity proportionate to the money being squandered. It also results in a loss of crowd wisdom in ferreting out obsolete goods or inefficient services because the free market is now being manipulated and distorted for political purposes. We can be sure that whatever part of the economy is impacted by consumers making free market choices, Keynesians will step in with taxpayers’ money to smooth out that particular business cycle.

You can read all about it in the newspapers.

The Folly of Withdrawing Police from the Front Line

Imagine how nice it must be to live in a quiet town where there is so little crime there’s nothing for the police to do, where you can walk about town safe from the threat of mugging, and feel secure at home safe from the danger of burglary. Imagine then the powers-that-be use that as a pretext to get rid of the local bobby and as a direct result, crime surges because criminals realise they can get away with anything now. There’s no-one to deter crime, and those who must respond are too far away.

That’s the nightmare scenario being presented to us by a policy of closing local police stations across England. Something like a third of them have already closed or are scheduled to close despite the concerns of residents’ groups because they are being “under utilised.” And in an attempt to further justify the policy, Paul Scarrott, Assistant Chief Constable of Nottinghamshire Police has said, “We recognise that people now prefer to use other ways to contact the police rather than turning up at a station.”

What an ingenuous piece of claptrap that is. The only reason people ever would have ‘preferred’ turning up at a police station to report a crime was before the age of the telephone when there was no alternative. The point of having a local police station never was to make it easy to report crime, but to make it easy to respond to crime. If reporting crime alone is the prime concern, we must expect to have that function outsourced next to India or some other continent, not just a different town or city.

My concern is that this is all an exercise in reducing front-line police to balance budgets. Budgets that are out of balance not because of cut-backs although they are happening too, but because of inept leadership at the top. The leadership will continue to cull front-line police to the extent where one day we will have a chief constable, a few senior hangers-on and that’s it. They will be consuming so much money in salaries and overheads there won’t be any budget left for actual policemen and women.

As you might surmise from my Didcotman ‘handle’, I do indeed live in Didcot and it’s worth making the point that I’m very happy with policing here. We have a good well-manned police station and a magistrates court that are not under threat, and the result of that is a low crime rate. In my ideal world I would like to see the police have nothing better to do than to wander the streets looking for crime and not finding any. How you report crime, Mr Scarrott, is then a non-issue if there is nothing to report.

Read “End of the Bobby on the Beat” in the Telegraph.

The Jungle Book

Many years ago, I designed a new web site for the Adam Smith Institute and they were slightly bemused by my choice of the jungle theme: “It’s a jungle out there,” I explained. And indeed it is, but that’s lucky for us because a jungle with one species of plant and one species of animal would soon become a very unhealthy place to be. Plus boring. A diversity of species and, crucially, the opportunity for new species to emerge and either thrive or fail is healthy for the jungle and everything in it. Everything in it improves over time.

A case in point would be the Royal Mail. A once state-owned inefficient monopoly it is still state-owned but now struggling against a field of private competitors. But it’s an uneven competition, it’s like you’ve taken the king of the beasts and wired his jaws shut. It is burdened with obligations which its private competitors are not and I think that’s unfair, the law of the jungle should apply to everyone equally otherwise it’s not the fittest that survive. However I think one of their newer competitors is worth a closer look. I’ve used Home Delivery Network several times recently and I have to say I’m impressed with what they do. They took a lot of stick in their early days, poor levels of service and lost or damaged parcels, but they’ve really got to grips with that. And that’s what the jungle does. You improve or you die. Any new organisation has teething troubles and they’ve dealt with those, one of which I’m sure was allegations that Royal Mail staff were kicking and damaging HDNL parcels whenever Royal Mail got to handle them. My latest accomplishment was to buy a new book on Amazon one Sunday and have it delivered the next day for a total cost of £4. Including the book.

Adam Smith might have recognised the jungle analogy. He might have called his book “The Jungle Book”. He warned against monopolies and how bad they were and we know all too well today how a monopoly will abuse its market position to stifle competition with predatory pricing or putting pressure on suppliers. We read about these tricks all the time. Adam Smith offered an alternative which was an “invisible hand” guiding the free market through the self-interest of all those active in it. The difference is that a monopoly has all the power, the consumers have none – it can pursue its self-interest while the consumer is powerless.

I would recommend Adam Smith’s book “The Wealth of Nations” except it is heavy going with a lot of examples couched in 18th century trade terms. Far better, I suggest, is Eamonn Butler’s “Adam Smith: A Primer“, and this is the blurb for it:

Despite his fame, there is still widespread ignorance about the breadth of Adam Smith’s contributions to economics, politics and philosophy. In “Adam Smith: A Primer”, Eamonn Butler provides an authoritative introduction to the life and work of this ‘founder of economics’. The author examines not only “The Wealth of Nations”, with its insights on trade and the division of labour, but also Smith’s less well-known works, such as “The Theory of Moral Sentiments”, his lectures, and his writings on the history of science. Butler therefore provides a comprehensive, but concise, overview of Adam Smith’s intellectual achievements. Whilst earlier writers may have studied economic matters, it is clear that the scope of Smith’s enquiries was remarkable. In relating economic progress to human nature and institutional evolution he provided a completely new understanding of how human society works, and was very much a precursor of later writers such as Hayek and Popper. Indeed, with poor governance, protectionism and social engineering still commonplace, Smith’s arguments are still highly relevant to policymakers today. “Adam Smith: A Primer” includes a foreword by Sir Alan Peacock, an introduction by Gavin Kennedy and a commentary by Craig Smith.

It’s a free-market trifecta – Eamonn’s book; from Amazon; delivered by HDNL – you can’t lose.

I can’t believe what pillocks the Lib Dems are

Once more, the Car Parking Tax is rearing its ugly head as councillors on Bristol City Council plan to introduce a pay-as-you-park levy. All the entirely obvious and predictable issues are being aired and in the face of all logic that says “don’t do it” Lib Dem councillors who form a minority administration in Bristol are forging ahead.

More Motorists Face Work Place Parking Charges

I’d like you to read what I wrote about this eighteen months ago, you won’t believe just how many possible problems there are with such a scheme and I’ve tried to list the more obvious ones. For starters, will Bristol City Council charge its own employees? And if an employer does not pass the charge on to its employees is it a taxable benefit in kind? What if you’re off sick or on holiday? Is the tax payable on visitor spaces? Can a company eliminate all this nonsense by grassing-over its car park? It is a long list.

Car Park Tax – A Jobsworth’s Dream

The Artist vs The Iron Lady

It’s the Oscars again and this is what I think of the main contenders.

I can understand why some people walked out of early screenings of The Artist not understanding it was intended to be a black and white silent movie. The reports seem to blame the audience for being ignorant and philistine. Well, I nearly walked out too. I found it intensely tedious for long stretches, only occasionally leavened with humour or real artistry. There is a reason silent movies died out – sound adds a significant extra dimension and it really isn’t true that if you lose one sense it heightens the others. The point was rather proven when after being told that sound movies were the future, Valentin(o) returns sullenly to his dressing room only to startle himself when he puts down a glass with a clunk which we all hear. Cute, but makes my point.

I thoroughly enjoyed The Iron Lady and while I do have some Tory friends who hated it, I found Meryl Streep’s portrayal sympathetic and utterly convincing. The film gives her due credit for blazing a trail for women in British politics. A nice scene has her standing in an all-male audience listening to her father on stage giving a political talk. A lady sidles up to her and hisses that she is supposed to be collecting tea cups, not standing listening to the debates. The camera pans back to show the kitchen at the back of the hall filled with ladies busy washing up. That part is still true in my recent experience, but at least now the audience and the speakers are likely to be an equal balance of men and women. Margaret Thatcher did that much. I loved the little vignettes of her and Denis enjoying breakfast together, or an evening drink, with Denis only visible to Margaret as he had long since died and she is reported to be suffering from dementia. If she is and that’s what it’s like for her, is it wrong to be happy for her? A little unsettling were the frequent flashbacks of angry mobs assailing her in her prime ministerial car, without any explanation in the film. There were a few highly risible scenes where she is seen sitting imperiously in a comfy chair while all her ministers stand uncomfortably in a huddle before her. That just doesn’t happen.

My special subject is the Falklands War and in that respect I have to say this film traduced her reputation. The scene we are shown where Lord Lewin is telling her he can have the fleet ready to sail in 48 hours doesn’t tell the whole story, and it should have done. All her ministers were telling her there was nothing we could do, that we should roll over and forget the Falklands, the Argies had captured them and it was all over. In walks Lewin and changes history. Yes we can get a fleet to sea, yes we can recover the islands, yes we can liberate the Falkland Islanders. That was just what Thatcher wanted to hear. But my blood boiled over in another scene where we are shown a mock military command centre and everyone telling Thatcher the Belgrano is sailing away from the fleet and heading back to port. This point is laboured in the film in order to add impact to a close-up shot of Thatcher literally snarling “Sink her,” seemingly against all the advice she had been given. The fact is, we knew what the Belgrano was doing, we knew it was a real threat, that it was intending to form a pincer movement with the Argentine aircraft carrier and attack the fleet. We knew it, and the Argentines know we knew it. But that didn’t stop Tony Benn and the rest of the left-wing intelligentsia from immediately then and to this day calling it a war crime. The Argentines never have. I shared a taxi across London a few years later with the gunnery officer who was on board the Belgrano when she was sunk, he never called it a war crime. Meryl Streep should apologise to Margaret Thatcher for that shameless left-wing piece of hate propaganda.

On balance, you would think The Iron Lady should walk away with best film because it is the better of these two. It stars the darling of Hollywood’s left in a film about the darling of Hollywood’s right. It’s like Charlton Heston playing Mahatma Ghandi. But modern Hollywood loves novelty and as we haven’t had a silent movie for almost a century I think on that score The Artist will win out. Next year’s best film will go one further, it will be a tape recording of an old man talking. Actually, think about Orson Welles’ War of the Worlds radio broadcast, now that’s gripping entertainment and it was all sound. That worked far better with sound but no pictures than The Artist did with pictures but no sound.

The Problem With Getting Things Done

Madsen Pirie, president and co-founder of the Adam Smith Institute has written a book about how the think tank was founded. Possibly a dull topic, you might think and you’d be wrong. Founded in 1977, I’ve been a fan of it since at the latest 1986 and possibly earlier because of the influence it had on Margaret Thatcher’s government. She was doing all the right things but I was unaware at the time where some of her best ideas were coming from. I came to understand that in 1986 when I met Madsen.

The value of this book isn’t so much that he tells you how they did it as by reading it you can learn how you can do it yourself. All the obstacles Madsen and his co-founder Eamonn Butler had to overcome are still out there today, throwing a spanner in the works of anyone aspiring to influence government policy. I’m sure David Cameron knows the truth of that all too well. The vested interests, reactionary forces, the not-invented-here syndrome, and sheer inertia, all play a part now as they did back then.

The Adam Smith Institute (ASI) is not what’s known as a “hand shaking agency” that effects introductions for a fee, or what I call a “dating agency” which enables business leaders the opportunity to meet the government minister of their dreams. It’s a policy generator. And it’s unashamedly libertarian, so you know which direction they want to see the country go: less government and more free trade. Less Big Brother and more civil liberty. In short, they want more power for Adam Smith’s Invisible Hand.

You need to start with a clear idea of what you want to achieve, and focus on that. Don’t get bogged down with the obstacles negative people put in your way; that’s what negative people do. Don’t go straight to government and say, “Hey, this is what you should do.” Instead, identify problems and work out solutions. Do your research and publish reports and papers of high academic standard. Draw people in, attract academics and subject specialists, engage with the media and help them do their job, stir up public interest and create a tide of opinion in favour of your proposals. Present them to government as an already popular solution, even if they didn’t realise they had a problem, and do it in such a way they can claim credit. Remember, this isn’t an exercise in vanity, you don’t want the glory, you just want your policies implemented.

I highly recommend this book to you: Think Tank: The Story of the Adam Smith Institute