Adam Smith Institute

An interesting idea for making schools better: increasing the number of children in a class.

An extraordinarily bad idea about schools from California: 

A primary purpose of the educational system is to train school children in good citizenship, patriotism and loyalty to the state.

We love the new economics foundation around here. No, really, we do, how can you not take to your heart those suffering from the Great Capitals Shortage of the Noughties? Further, how can you not have affection for those who, while attempting to believe in "economics as if people and the planet matter" find it so difficult to get the most basic grasp on the subject?

Andrew Simms, one of the nef's wonks, has a piece over at CiF arguing that the UK should have something like Norway's Oil Fund. Instead of spending the revenues from North Sea oil on the concerns of the present, as we do through the Treasury, he suggests it should be an investment fund. The money saved and used for the future sort of thing. That part is at least arguably a good idea or a bad one, although I don't see the current crew of drunken spendthrifts being all that keen on allowing a cashflow to escape their clutches.

However, where the idea rather falls over is in what he wants the fund to spend the money upon:

An Oil Legacy Fund could for example, be used to invest in a fund for innovation; development and the promotion of micro, small and medium-scale renewable energy technologies; help for local planning authorities with the complexities of managing new, decentralised renewable energy services and technologies; expanding the use of school buses to tackle both congestion and energy-inefficient private-vehicle use on the school run; lowering the age for free public transport, and allowing adults with children to go free on public transport, making household-energy-monitoring devices available in order to increase awareness of current energy use and to make people aware of opportunities to improve; tackling fuel poverty, and much, much more.

The fund invests all its money abroad to avoid stoking the economy...

56. "Maximum working hours are needed to protect workers' health and fitness."

It surprises many to learn that health and fitness go with wealth; the more money you have, the more you are likely to be fit and well. By limiting working hours we are denying people in the lower economic strata the chance to improve their lot by working more.

In the lower economic bands people are paid by the hour and earn more by working more. It is not as true of many middle class jobs, where people can be required to work late without consequential increases in salary. A working hours limit is not what it seems, either. It rarely puts a limit on the actual hours worked; more commonly it requires that all hours worked beyond a set level shall be paid at overtime rates. This, in turn, can make employers less ready to offer those extra hours, since they can cost too much.

The result of a maximum working hours limit is to restrict the income that people can earn, which matters most to those lower down the economic scale. Of course, most people will choose to achieve a sensible work/life balance, allowing appropriate time for rest, leisure activities, and family life. It should be their choice where possible, however, because they know their own circumstances and priorities more than outsiders can. Employers, too, have an interest in ensuring that the hours worked do not undermine the safety and efficiency of their employees.

A working hours limit increases the costs of business and the price of its goods and services. It can mean that extra staff are required, which involves the extra administrative costs and benefits required for each extra employee. And it can require a trade off between extra job opportunities and lower productivity, resulting in less successful and even less viable businesses.

... Is that is doesn't exist. That was Mick Hume's take in Friday's Times, and I think he gets it about right:

If there is indeed a problem with our late-night drinking laws, it is that many of us, on the rare occasion we get out, still cannot enjoy a pint after midnight at the weekend. That's what I call antisocial.

It would appear that it will be the Lords, rather than the Prime Minister, who will decide the date of the next General Election.

Inside the bureaucracy. Not a pretty sight.

This is seriously disgusting. What's the point of having an asylum system at all if someone who seriously needs asylum can't get it? 

Another way of disproving the labour theory of value: production which is value subtracting.

Doing serious economics on a blog. This one made Netsmith's brain hurt: perhaps you can do better. 

If baseball were subject to the political rhetoric that trade is. 

And finally, Hillary and Barack negotiate over who should take the VP slot. 

The ASI's latest publication, The Waste of Nations by Gordon Hector (reported here in the Daily Telegraph), calls for the introduction of pay-as-you-throw (PAYT) waste charges as the best way to encourage less waste and more recycling. Research from the US suggests a move to PAYT would reduce landfill by 16-17 percent, increase recycling by 50 percent, and lead to a source reduction in waste of around 16 percent. That would reduce the need for unpopular landfill sites and incinerators and could prompt emissions savings of millions of tonnes a year.

Importantly, the report stresses that PAYT must not be used as a 'bin tax' and that its introduction must be accompanied by a corresponding fall in council tax. Evidence from Holland, Ireland and Germany suggests that PAYT would not increase household bills – rather, it would offer an opportunity to reduce them.

The report also calls for the full liberalization of the refuse collection sector, so that private companies would have to compete for customers. Such a move would keep prices down and increase customer satisfaction. It would also lead to innovation and encourage refuse collectors to recycle more waste.

The final section of the report argues that recycling should be put on a commercial footing. Recycling facilities and providers should be allowed to merge and consolidate, and the free movement and trade of recyclables should be established. This would allow economies of scale to be established, bringing down the cost of recycling and recycled goods, and ensuring a market for commercially viable businesses in the long run.

In recent days, the government has pulled back from its earlier plans to hold widespread trials of PAYT. But the reason the government's proposals for variable waste charging have run into widespread opposition is that they are half-baked and ill thought out, relying on 'punishing' people who don't recycle. The proposals outlined in The Waste of Nations are very different: liberalizing refuse collection and introducing pay-as-you-throw charging would dramatically increase recycling and help the environment, but it would also be an opportunity to reduce taxes, save money, and increase the quality of a vital service.

Download the PDF here.

55. "When people are accused of serious crimes, they should have no right to remain silent."

The reason why people were allowed to remain silent was that one of the law's principles maintained that no person could be forced to testify against themselves. It is a defendant's choice whether to go into the witness box and face cross-examination; they cannot be forced to. The right to silence is part of that principle, and no jury was allowed to count it against an accused if that right were exercised.

The principle is a serious disincentive to torture. If people cannot be forced to make statements or to give evidence, the authorities have much less reason to use torture to make them incriminate themselves. The police in many countries, including ones where torture is banned, have used bullying, intimidating techniques, and what amounts to psychological warfare to secure 'confessions' of dubious value – people will do anything to stop the oppression. The right to silence was an important part of protection against that kind of treatment. If people cannot be required to testify against themselves, it throws suspicion on 'confessions' which might have been extracted under duress.

This right to silence has now been modified to allow prosecutors to invite juries to draw inferences about it. In other words, if people choose to remain silent, it may count against them in court. It crucially modifies the presumption of innocence which has been a cornerstone of justice. By remaining silent, an accused could demand that the prosecution must prove their guilt. Now a jury might be asked to hold it against an accused that they did not choose to prove their innocence.

It also increases police powers to subject innocent people to questioning. Even if they have done nothing, a refusal to answer police questions might subsequently be used against them in some future charge laid against them.

There's been a lot written recently about the world's growing demand for food and the issue of food security. Magnus Linklater wrote about it in the Times last week, and of course Michael Jack MP raised the same subject at our Power Lunch a couple of weeks ago.

Now the new Chief Scientific Adviser to the government, Professor John Beddington, has got in on the act, saying that the middle class are responsible for damaging the planet because they consume more energy-inefficient food such as cheese and meat.

Gimme a break. Where does the government dredge up these platitudinous advisers? My colleague Dr Madsen Pirie has already exploded the 'energy intensive food' argument in his book Freedom 101. Put simply, livestock can be raised on land that's no good for arable crops – look at all that mutton and venison wandering Scottish hillsides that would never sustain even a blade of wheat or barley – so meat and cheese doesn't somehow displace 'energy efficient' crops.

And don't try to make me feel guilty, either. It's not the Western middle classes that are raising the demand for food, it's all the billions in emerging economies who are at last edging out of absolute poverty and starting to consume more food – a point that Michael Jack made to us.

And good luck to those emerging food consumers, I say. I'd like to see them all better fed, even though it does certainly mean that food prices for the rest of us will go up – until, of course, we overcome our enviro-mental block against GM and start using it to increase yields, at least.

From the Daily Telegraph:

'Don't die here'

A french mayor has banned residents from dying in his village unless they own a plot at the cemetary – under threat of 'severe punishment'. The village of Sarpourenx is banned from enlarging its graveyard. 

Another example of the lunacies to which the War on Drugs leads us. The banning of small plastic bags.

On the rise of the minimum wage. It's not actually going to change the income of those on it very much: although it will cost businesses a great deal. 

Wat Tyler attends Parliament. So, just what are they going to do with all those 16-18 year olds who will be subjected to educational conscription? Umm, they haven't worked that out yet. 

As Milton Friedman said, there's nothing so permanent as a temporary government program. 

Government in Romania might be glaringly and obviously rent seeking, but it's only a matter of degree: this happens to some extent everywhere. 

Well, yes, although rent-avoiding rather than seeking might be the phrase here. 

And finally, could this be the reason for the low birth rate in Finland? 

The Government finally took heed of the Adam Smith Institute’s advice and put the former state owned turf accountant – the Tote – up for auction. The Tote enjoys a valuable statutory monopoly of pool betting along with an empire of 450 betting shops across the country.

Originally, the Government was committed to selling the Tote at a knock down price to its own management ‘for the good of racing’, although this curious term was never defined by ministers. In reality, racing has been doing very nicely of late. Indeed, there never been so many racing events held in this country. Meanwhile, many prominent racehorse owners remain as tax exiles, huddled in offshore centres or clustered in the Gulf states. They hardly need a hand-out from the British taxpayer.

Auctioning the Tote offers the first real opportunity to identify precisely how much the business is worth. The sale of the Tote ranks as Gordon Brown’s first privatisation measure. There is likely to be interest shown from various bookies, including Gala Coral, BetFred and Paddy Power.

Neil Goulden, Gala Coral's chief executive, is busy writing a letter to the government confirming its interest. Meanwhile, a clutch of private equity firms are likely to show an interest in the Tote. Currently, one of their main problems is to find a rewarding home for their stockpiles of money – a message underlined at last week’s Super Returns conference held in Munich. Significantly, Gala Coral is itself owned by a consortium of private equity houses comprising Candover Investments, Cinven and Permira. All of them have deep pockets

Gerry Sutcliffe, the minister responsible for the sale, told MPs yesterday that the government would begin taking indicative offers straightaway. So, if you fancy a flutter, give him a call. The guide price is £400 million.


Keith Boyfield is the author of At Odds With Taxpayers: Why a Cosy Deal on the Tote is Bad for Punters and the Public. In 2004 the Adam Smith Institute submitted a formal objection to the European Commission concerning the Government’s proposal to sell the Tote to a Racing Trust for a figure well below its market value. The Commission agreed with our complaint and ruled that the Government’s plan constituted an illegal use of state aid.

54. "The arms trade is immoral."

It is the misuse of arms which can be immoral, not the people who make and deal in them. Every country has the right to protect itself and to have defence forces capable of ensuring its security. Without protection against armed aggression and conquest, all of the rights its people enjoy are empty and risk being overthrown.

The industry and the trade which meet that legitimate need are not immoral. On the contrary, they are helping countries to protect the rights that their citizens enjoy. The tanks, planes and ships which that industry supplies enable countries to protect themselves from armed aggression, and pose a significant deterrent to hostile acts being committed against them.

Further to this, the arms industry in Britain supports hundreds of thousands of jobs. These are in such areas as the manufacture of missiles and warplanes, making tanks and trucks, shipbuilding, and all of the support industries which go with these. The technological advances made in armaments often spill over into improved civilian products which go to help exports, and to give domestic consumers access to better products. Much night vision technology, for example, originally developed for military purposes, is now used by wildlife photographers. GPS systems, once used to locate troop movements, now steer cars and buses too.

There are problems where the arms sold for defensive purposes are used to commit acts of aggression, to wage civil war, or to repress a country's own citizens. The UK policy has been to deal with this by being selective about which governments it will sell arms to, and about what arms are appropriate. It means in practice that countries bent on the immoral or illegal use of arms have to obtain them from other, less scrupulous countries. Control of arms sales through export licences helps to keep the UK at least clear of the moral consequences of unacceptable uses.

Libdem MP Phil Willis was our guest at a Power Lunch this week. As Chair of the Innovations, Universities and Skills Select Committee, he chose to raise the question whether labour (small L that is) was a global commodity or a national asset.

Many politicians think about skills in terms of producing the future skills that Britain will need. But Willis takes the view that we should be producing the skills that the world will need. I think that's a fair point. We live in what my colleague Madsen Pirie in an ASI report called a 'people economy' where your best productive asset is people and their brains and skills - and people are much more mobile than land or factories or machines. So we should think globally about them. Every knows that 600,000 people have migrated to the UK, mostly from Eastern Europe, and joined the workforce in the last year or so. But then there are more than four million Brits working abroad. We get around – and that's quite right.

We don't need to be self-sufficient in skills any more than we need to be self-sufficient in bananas. We can buy skills from the world, and they can buy ours. We're talking about building four new nuclear power plants – but the expertise to build them won't come from the UK alone, they will come from Japan and lots of other places which have the right people with the right skills.

I guess the policy conclusions are first, that we need to develop skills for the global marketplace, not just the skills that we think we need here and now. And second, if we are going to get all these skilled people to come to the UK and undertake the work that we can't do ourselves, we have to make the UK an attractive place to live. That means a relaxed, open, tolerant society, with good public services and low taxation. Unfortunately (as any non-dom will tell you) the present government seems to lack the skills to produce that happy prospect. Back to school for them.