Adam Smith Institute

So the time has come to say goodbye to the Adam Smith Institute and move on to pastures new. After a Christmas that will be centred around friends and family, I will be paying a visit to Moscow, before taking up a new post at the Policy Exchange in January.

I am pleased to have spent this time at the ASI, and have certainly found it challenging. This is an exciting time for anyone involved in politics, and I wish the ASI the best of luck in helping to shape the future agenda.

Something to mull over. Linux shows that Hayek was right?

Highlights from the Scottish political year. 

If Chile is doing better than Venezuela and has been and is more econonimcally liberal, doesn't that show that neo-liberalism is the way to go? 

If the rich pay most of the Federal taxes, then most of the spending benefits the rich, right? No, both the taxation system and the spending are progressive. 

Great economic controversies of our time. Why is there so little sex going on? ("Speak for yourself matey" is a necessary but not sufficient answer to this question.)

Time to update the old rhyme: some are born little libertarians.

And finally, is Hillary Clinton really Honoria Glossop? The unnecessary but sufficient answer of "Yes" would explain a lot.

Dani Rodrik asks an interesting question about the World Trade Organisation. Why does the US actually (eventually, grumbling as it does so) do as the organisation insists it must, while refusing to join or obey other such international ones?

I would love it if somebody would come up with a sensible story as to why the U.S. has ceded so much power in trade, while zealously guarding its sovereignty and right to unilateral action in every other domain.

And the answer is I think quite simple.  The comments allude to several points, like the usefulness of using the WTO to face down internal protectionist pressures, but the most basic one is that the WTO is not in fact a giving up of sovereignty. It's a purely contractual relationship. Upon joining the WTO you agree to a certain course of action: we'll do this and this on trade for example. Everything that you will have to do in the future is spelt out: and those duties cannot be changed without your express agreement, for each and every country has veto power. What this means is that, having joined, a country is not sucked into a further widening of the agreement, the imposition of further duties and responsibilities, without the express agreement of that country.

Compare and contrast this with the European Union, the use of Qualified Majority Voting, the lack of such vetoes in many areas and thus the ever widening remit of the organisation and the imposition of policies that were not agreed at the outset and cannot be refused now.

The general international policy of the US is not to join things organised upon the latter lines, but to do so when they are organised along the former. The lesson to be learned would therefore seem to be that if you want the US to join something, you need to make it something purely contractual, not something that does indeed impinge upon sovereignty by having an ever expanding remit without that veto power.

Something worth remembering as people struggle to create Kyoto II perhaps? 

News this week that a key mental health unit in Surrey is to close is yet another hallmark of a disturbing reality that plagues the National Health Service.

The principle behind the NHS is that politicians motivated by a desire to win elections will have an incentive to provide good healthcare to the public at large. This glib and simplistic and view – typical of the naive school of thought that forged the UK's public sector culture – overlooks a key clash of values between politics and health.

Politics is an industry that is essentially based around popularity, while healthcare is one based around necessity. It is because of this fundamental contradiction in values that the unholy nationalisation of British health has resulted in healthcare priorities being set by ill-informed politician under pressure from a largely ignorant populace. The end result is that a government's performance in health is measured in terms of how much money is spent rather than how much suffering is alleviated. Indeed, health and education must be the only industries on earth where rising costs and falling productivity are considered signs of success.

When healthcare is run by the state and driven by a desire for headlines, it is not surprising that NHS provision of mental healthcare remains shockingly low, with minimal funding and appalling disregard for the needs of the patient.

The government would be better to measure progress in new ways, for no matter how much money they say they have spent, when a priority patient still has to wait up to 3 months to see a psychiatrist it is time to start asking how many vulnerable souls have been allowed to fade from lack of available help.

It is unlikely that any government will be able to prioritise such 'unexciting' areas whilst still keeping up the required level of media-hype to stay popular, so perhaps it is time to consider the ultimate humbling of the NHS – to acknowledge that the present model reeks of failure and that it is time to try something new.

Just throw the book at them...

Last week the French Booksellers' Union won their court-battle. The French people will now have to pay delivery charges for Amazon orders rather than be entitled to free delivery.

This is in order to protect French bookstores from 'unfair' competition. The result surely has to be that Amazon is more expensive for the French. However, customers buy books from Amazon for many good reasons; time, effort and cost; it is one of the most efficient ways of buying books. It is hard to believe that having to pay another 5 Euros is going to drive people onto the freezing streets of France this Christmas in order to patronise their local bookshop.

French people will continue to use Amazon for convenience but pay more for the privilege; if I was a French person – and luckily I'm not – I would be quite irate at the French Booksellers' Union for this early Christmas present. I would exercise this anger by voting against them with my money and continuing to use Amazon.

Clues for the Clueless: Dogbert's Big Book of Manners (£5.69 + postage)

"Lots of things have changed in the millions of years since etiquette was invented. Microwave ovens, for example. And so it seemed like a good time to update the rules of etiquette. Of course, you could buy some other book on etiquette, and in it you might find such useful titbits as what kind of uniiform the upstairs servants should wear, or the proper way to address the Pope when you meet him in person. But if you want practical information - like what to do after you sneeze in your hand - then you have to buy this book. It's the only book that speaks to you as the unwashed heathen that you know you are. Thanks. And I'm not just saying that."

Buy it here, from the ASI bookstore. 

Good sense on the special pleading coming from Bali by the less developed nations. No, you shouldn't get special treatment for your CO2 emissions.

Netsmith knows less about Rawls than he ought to: but is the fact that people play the lottery a refutation of the "Veil of Ignorance" argument? 

Ian Dale's new political magazine: there might be something interesting to this business model you know? 

We haven't been able to stop the absurdity of the European Parliament decamping to Strasbourg every month on cost or rationality grounds: perhaps we can on environmental ? 

This may well be true but the last line tells us why it might not be useful . 

Harriet Harman's ideas on paying for sex are clearly bonkers: but are they also discriminatory ? 

And finally, not something you ever expected to see written: fun Venn Diagrams . 

Are pay-as-you-throw rubbish charges a tax, or not? This is a question that seems to be occupying the Daily Mail at the moment...

The government has been very careful not to refer to the proposed charges as taxes, preferring to term them 'incentives'. But now environment minister Joan Ruddock has apparently told MPs: "I have just been told by that technically these charges are regarded by the Treasury as a form of tax." Unfortunately, she may be right. But that's because the pay-as-you-throw scheme being trialled by the government is not really a pay-as-you-throw scheme at all.

A proper scheme could work as follows: refuse collection is privatized; people choose from a number or competing refuse collection companies; people pay according to how much refuse they have to dispose of; council tax bills are reduced accordingly. Such a system would encourage people to produce less waste, encourage more recycling, and lead to a higher quality of service (if people were not getting enough collections, for instance, they could change to a different company). With lower taxes and competing service providers, you would get better value for money too.

The government's scheme, by contrast, seems to consist of fining people who don't recycle, and (just possibly) giving a limited council tax rebate to people who do 'go green'. It's is another example of politicians getting their hands on an economically sensible idea, messing it up, and making it unpopular with the general public. And that makes it much harder for the original, better idea to be implemented.

Little Johnny watched, fascinated, as his mother gently rubbed cold cream on her face. 'Why are you rubbing cold cream on your face, Mummy? he asked.
'To make myself beautiful.' said his mother.
A few minutes later, she began removing the cream with a tissue.
'What's the matter?' asked Little Johnny. 'Giving up?'

Yes, I know, you'll have seen it too:

People in medieval times were healthier than modern Britons because they did not suffer from cholesterol related diseases, it has been claimed.

While those living in the Roman and Tudor periods faced hazards such as the "pox and plague", it seems that their daily diet lacked foods which could lead to heart disease.

The research also claimed that daily exercise has decreased by at least an average of 96 per cent since Roman and medieval times from eight hours a day to less than 20 minutes due to increasingly sedentary lives.

Or perhaps they were all being worked to death? 

Research by Lloyds pharmacy, the chemist chain, found that the daily diet consumed by Britons in the Roman period of fruit, fish, whole grains, vegetables and olive oil washed down with red wine amounted to approximately 120g of fat, 80g of protein and 600g of carbohydrates.

That is indeed a healthy (and often scrumptious) diet but the most important point is this:

Dr Henderson said: "The Roman diet was healthy provided you were wealthy enough to afford..."

Economic principles being independently (re-) discovered, a la Matthew Parris this morning. Here it's the point that it isn't so much technology, nor innovation, which drives the whole system forward, it's the application of innovations and technologies.

The US Energy Bill is described as "A moment of idiocy, of real idiocy ". As the European Union suggestions reported today are very similar, perhaps we should use the same desscription? 

More climate change. A video from TED about geoengineering . Yes, we know it works, so why don't we try it out? 

The new rules on mobile phones and driving are really rather less than they seem . 

Stuck in the office this week with no work to do? A timewasting game for you. 

Tsk, tsk, welching on a bet really isn't on. Doesn't everyone know that a capitalist economy depends upon trust? 

And finally , infinite recursion, or how Windows may destroy the Universe. 

The European Commission has delayed making a controversial announcement which could see the state health plans of one Member State paying the costs of patients who opt to be treated in another EU country.

The idea of the plan was that British patients, say, could travel to Spain or Hungary for their treatment, as many do - with Britain's National Health Service picking up the tab. Part of the argument for this is that some countries have more efficient healthcare sectors, with shorter waiting times, for example, and EU citizens should be able to benefit from the competition between them. Following the case of Yvonne Watts, who had a hip operation in France and sent the bill to the NHS, Britain's High Court ruled that the NHS should pay for treatment abroad if patients otherwise had to wait too long. Quite right, I would say.

Already UK doctors are whingeing because they know that lots more people would indeed go abroad for treatment if the NHS was forced to pay for it, rather than put up with the sink service they get in the UK. The British Medical Association's Dr Vivienne Nathansan said that if people started travelling for operations there might 'not be enough need' for that treatment in the UK, which could lead to closures. Yes, well that's competition for you, Vivienne.

Meanwhile Nigel Edwards of the NHS Confederation complained that the EU plan was a stalking horse to create a 'free market' in European Healthcare. Oh, if only it were. We're talking about harmonizing state health plans here. If the EU actually created the conditions for a proper, open market in healthcare - one that wasn't dominated by doctors and politicians - I think we'd all be a lot fitter.

Linda, a radical feminist, was getting on a bus to go to work.
As she walked down the aisle to find a seat a man just in front of her got up.
Linda thought to herself. 'Here's another man trying to keep up the customs of a male-dominated society by offering a poor defenceless woman his seat,' and so she pushed him back on to the seat.
A few minutes later, the man tried to get up again.
Linda was further insulted and refused to let him up.
Finally, the flabbergasted man said, 'Look, you've got to let me get up. I'm two miles past my stop already!'

In a speech in Beijing this week, shadow chancellor George Osborne signalled his intention to announce proposals to slash corporation tax in the New Year. Saying a Tory government would offer a "sustained programme of lower taxation" and promising to reduce the tax burden on companies and individuals in every Budget as chancellor, he pointed to Ireland as an example of the correct response to an "intensely competitive global environment". Ireland's corporation tax is 12.5 percent.

That's all very encouraging stuff, and clearly the Conservatives have been emboldened by the popularity of their inheritance tax plans (only millionaires will pay). And corporation tax is a good place to start, given its importance to the UK economy. Even after the 2007 budget has come into force, Britain's headline rate will be 28 percent – 8 percent higher than the OECD average. In a globalized economy, that really matters because companies (and people) can easily relocate to lower tax jurisdictions, taking jobs and capital with them. So if the UK wants to remain competitive, lowering corporation tax is a must.

It isn't just a matter of international comparisons though. Corporation tax is inherently a bad thing, and the less of it we have the better. Reducing corporation tax would create stronger incentives for hard work, innovation and enterprise, increase business investment and, ultimately, lead to higher GDP. Indeed, according to the Taxpayers' Alliance's dynamic model for the UK economy, if we cut corporation tax rates to Irish levels by 2016, GDP would be 8.7 percent higher than it otherwise would have been by 2021. Total employment would be boosted by 8.7 percent and disposable income would be 13.5 percent higher. Economic growth would actually deliver a high overall tax rate too, so everyone wins.

Of course, the Irish 12.5 percent may be a little too much to hope for, even at Christmas. But the Conservatives' own Tax Reform Commission, headed by Lord Forsyth, proposed an immediate cut to 25 percent, with the aim of getting to 20 percent over time. That would certainly be better than a lump of coal.