Adam Smith Institute

Andrew Mitchell, Shadow Secretary of State for International Development, was our guest at a Power Lunch in Westminster this week.

Adam Smith wrote that nothing was necessary to lift a state from the deepest 'barbarism' to an advanced society, other than peace, 'easy taxes' and 'a tolerable administration of justice'. Mitchell too recognizes the importance of conflict resolution in providing the right soil on which economic achievement can grow. States in political and military turmoil don't create or export economic goods – rather,  they export terrorism and desperate migrants. That is why Conservatives are going to integrate foreign, development and security strategies with the creation of the National Security Council. Under this joined-up policy, DfID would be more than just an aid agency: it would be a partner in development, trade and security.

Quite right. Development isn't just about giving people money. The Conservatives also intend to set up an evaluation agency to make sure that UK taxpayers' money is spent effectively and transparently, rather than ending up in the pockets of politicians and officials.

And, thank goodness, they recognize that the engine of growth is trade and enterprise. I feel that they rather like what Peter Mandelson has been saying – that EU farm subsidies and trade restrictions keep people in poor countries impoverished – which is hardly good for traders in the richer countries either. But I think that even with the formidable Mandelson on side, getting the EU to sort out its spaghetti of trade barriers is a pretty tall order.

This week the House of Lords began debating the increase of the pre-charge detention limit to 42 days.  As the reign of the present government, the UK is increasingly coming to resemble a police state. The rights of British citizens are being eroded and the new counter-terrorism bill is a clear example of this.
 
Terrorism is a threat but the government is taking counter-terrorism to an unwarranted and extreme level.  There are no safeguards to protect innocent people. If this bill is implemented, anyone could be accused of being a suspected terrorist and, consequently, not see daylight for 6 weeks. Such a state of affairs is morally wrong.
 
Adding to these concerns, the government has revealed that the increase is not actually necessary at the moment. However, it has stated that the 42-day detention limit may be "needed" in the future. Yet this is not an adequate reason to implement the bill. It is unacceptable that the government are giving the police the authority to detain any citizen on suspicion of suspected terrorism without any hard evidence and when there is no immediate threat.
 
It is widely assumed in Westminster that the government's main objective with 42-days (how exactly did they arrive at that number?) was to make the Conservatives look "soft on terror". Such an abuse of power is shameful.

From the Telegraph website:

Abbie Hawkins, a hotel receptionist, thought her mobile phone was ringing when she felt vibrations coming from her clothes...

"When I was driving to work I felt a slight vibration but I thought it was just my mobile phone in my jacket pocket," she said.

It was not until her lunch break, at midday when she felt a strange movement inside her bra, which had been hanging on her washing line the previous night.

"I plucked up the courage to investigate and I pulled out a little baby bat."

That's right, a bat. I wonder if it was happy to be released back into the wild?

The real news about the G8 summit. This is of course a cut out n'keep guide to all of these international meetings.

A raw (and most depressing) report from the wilds of Glasgow East: yes, this is what the Welfare State has created.

Support for abolishing part of that State from an unexpected but most welcome source.

Again we see that there are some things just too important fo us not to have legal markets in them.

That isn't to say that markets don't have their imperfections.

Counter-intutive but still possibly true. Use the smallest supplier to make sure that the service in question never becomes widespread.

And finally, entrants in the world's shortest short story contest.

David Cameron’s now famous speech in Glasgow on Monday essentially covered two topics: the need to accepting personal responsibility and the government’s role in judging moral behavior.

His first point is dead on. As he said,

Some people who are poor, fat, or addicted to alcohol or drugs have only themselves to blame… We talk about people being ‘at risk of obesity’ instead of talking about people who eat too much and take too little exercise. We talk about people being at risk of poverty, or social exclusion: it’s as if these things… are purely external events like a plague or bad weather. Of course, circumstances… have a huge impact. But social problems are often the consequence of the choices people make.

There is nothing that ensures someone will stay in a miserable state more than blaming someone or something else. Indeed, if the fat, the poor, or the addict does not take responsibility, then why would he or she do anything to fix the problem?

The second point Cameron makes is a bit trickier. He said that “society has been too sensitive in failing to judge the behaviour of others as good or bad, right or wrong, and [it is] time to speak out against moral neutrality.”

This brings up an important question: when should the government make such judgments? Generally, the government should let people live their lives as they choose. However, the welfare and health systems as they are subsidize bad choices and unhealthy behavior. Perhaps it isn’t the government’s job to dictate our moral code, but it is certainly not its place to pay for our bad behavior with heavy social and fiscal costs.

G8 meetings follow a predictable pattern. In the months beforehand, campaigners call for more aid to Africa to fight diseases of poverty such as malaria. G8 leaders make grandiose speeches, commit billions of their citizens’ money, which then pours into the coffers of African governments. The health of Africans stubbornly remains poor. Campaigners accuse the G8 of not giving enough, and so on.

The foreign aid situation is becoming increasingly farcical. As William Easterly, author of The White Man’s Burden put it: “The status quo — large international bureaucracies giving aid to large national government bureaucracies — is not getting money to the poor.” As Prof Easterly intimates, the failure stems from the insistence of OECD government donors to give the lion share of aid directly to governments, who they then rely on to plan, manage and deliver healthcare.

The brutal truth is that most health ministries are not up to the job. They have almost no data to tell them if their work is effective and are riddled with corruption.

Donors, meanwhile, judge their own effectiveness by ‘input’ factors such as the number of bednets or drugs distributed, but they often have no information about whether or not health is improving as a result of their activities.

It’s time to scrap this system which is doing little for patients, other than enriching people lucky enough to have jobs in ministries. 

We could, for instance, insist that all British aid is henceforth spent on output-based competitive contracts for delivering healthcare, open to profit and non-profit groups alike. Where this has been tried, as in Cambodia, it’s been an immense success, and is particularly useful for getting services to groups that have been neglected by government provision, such as the rural poor.

The obvious advantage is that if the contract-holder does not deliver results, they don’t get paid.

DfID is currently moving in the opposite direction, increasing the amounts it pays to subsidise general government healthcare. Its blind optimism is rather touching, were it not taxpayers’ money being wasted.

A government-sponsored report on biofuel policy has concluded that the UK’s current biofuels policy could plunge an additional 10.7 million Indian people into poverty, in addition to hundreds of thousands of people throughout Africa. Biofuel policies drive up demand and prices for food staples, and their environmental credentials are far from pristine. Besides distorting the market for food, government-induced demand for biofuels has led to an increase in the destruction of the rainforest, potentially offsetting most of the positive environmental impacts.  In response to the report, the government plans to slow its planned expansion into biofuels, at least "until controls are in place to prevent food prices from rising."  The plan, it seems, is simply to counteract one government intervention that had unexpectedly bad consequences with another.

Placing controls to artificially keep food prices low will only further distort the market in some of the most crucial commodities for people around the world. Subsidizing farmers in one part of the world will only put others out of business, and price ceilings will only restrict the supply. At the same time, we cannot push for biofuel policies just because they sound nice and clean if the actual impact is starvation and no tangible benefits for real people. Maybe if governments stopped interfering in the market, creating demand that would not otherwise exist for the sake of policies with questionable environmental outcomes, those 10.7 billion people would be a lot better off.

Can hatred (or perhaps mistrust) of the profit motive really stop us from moving to better structures?

Odd fact of the day: the maker of toy cars is now worth more than the maker of real ones.

Odder fact of the day, that the man who came up with this idea is a professional academic.

While this is about the US, it does neatly describe some people's beliefs about the NHS.

The implication of this new research, that changing climate only affects poor countries, is clearly that we should make sure that there are no poor countries by the time the projected climate change happens. Fortunately, the IPCC's research into such climate change explains exactly how to do that.

Quite why anyone is getting upset about Uma Thurman smoking in Pulp Fiction is unknown, given all of the other things that happen in the movie.

And finally, an appalling attack upon Parliament.

Google has caused quite a stir by drastically raising the price it charges for on-site childcare.  No matter that the childcare provided will be state-of-the-art, or even that they will fully subsidize the service for families who show that their income is below a certain threshold; the decision has raised charges that Google is a "corrupt company that does not care about people" and should spend "less time creating elitist daycare centers and more time figuring out how to "scale" day care for everyone, no matter what their salaries."

Google stocks have been falling or the last few months, and someone recently noticed that Google was effectively subsidizing the childcare of each child up to $37,000 per year, well over than the industry average of $12,000.  They still wanted state-of-the-art care and needed to expand their capacity in order to deal with growing waiting lists, and have realized that it is unfair for them to allow their stocks – held by many of their employees, with or without children – to go down while spending excessively.  The solution was simple; they have raised the out-of-pocket cost for parents.

Google pays enviable salaries and provides perks that have made it the stuff of legend. And let’s be honest – is it really "fair" for Google to spend $370,000 on top of salary for one employee with 10 children, while paying his equally ranked but childless coworker the same salary? 

Moreover, the assumption that companies should have on-site childcare misses almost every lesson taught in introductory economics, particularly those about specialization of labour and the advantages of competition. Google is not a childcare company; it is a search-engine company.  The employees don’t have to accept Google’s childcare, and Google does not have to provide it. If businesses do offer on-site childcare, there is no reason to believe that it will be particularly good or cost-effective thanks to its privileged position in the market.  But the fact that companies do provide it, and that they subsidize it for those who really cannot afford it, is a great perk, and likely a useful recruitment tool.

The suggestion that Google is an immoral company for fully subsidizing state-of-the-art child-care only for employees who actually can’t afford it is absurd.

A new government report claims Britons are wasting more than £1 billion a year, and the Cabinet Office inquiry into food policy says the average family wastes £420 worth of food each year. All these numbers have prompted Gordon Brown to ask Britons to stop wasting food.

The numbers, however, don’t quite add up. The UK has 60 million people—meaning the average waste per person is less than £20. If the average family size is 21 people, then it is true that each family wastes £420 each year. If not...

Anyway, encouraging Britons to reduce the amount of wasted food is Brown’s latest brilliant idea:

“If we are to get food prices down, we must do more to deal with unnecessary demands, such as by all of us doing more to reduce our food waste,” he said.

Yeah, and we can reduce greenhouse gasses enough to save the planet by switching our light bulbs. Enough has already been said about agriculture that anymore simply feels redundant. But what do governments really expect when they subsidize bio-fuel production so heavily, and subsidize food production but then pay the same farmers to leave some plots of land empty to prevent overproduction?

Thanks to the deep concern of Britain’s overbearing government racism is now being targeted in nursery schools, not with a focus on teachers, no, no that’s already been done, but on those narrow-minded little 3 to 4 year olds.
 
According to the Telegraph, the National Children’s Bureau, which receives most of its yearly £12 million pounds from the government, has started a new program designed to detect racist attitudes in children as young 3.  The program highlights several ‘potentially racist’ characteristics that teachers and caretakers should watch out for, my favourite being a dislike for spicy foods.

Good thing this policy wasn’t encouraged during my childhood. My revulsion of marinara sauce and garlic in nursery school would’ve alerted my parents to my intense anti-Italianism as a 4-year old. But I applaud the Government for issuing tax money to identify future Nazi’s by their food preferences. It just goes to show that some of the most ludicrous ideas can be the greatest. Or in this case, just downright silly.

Hi! I’m Kat and I've just started a one-week internship at the Adam Smith Institute.

I study Politics, History, French and Drama at Woodhouse College in North London.
 
I enjoy singing – which explains why I have been a member of the Finchley Children’s Music Group for 5 years. On Saturday, we did our last concert of the summer, singing pieces commissioned for us by James Weeks & John Pickard. I love skiing and travelling but, in general, I'm not a big sports fan.

Finally, it is likely that I will take a gap year before going to university to "see the world".

Here's something to annoy the biologists: both Wallace and Darwin got some of their inspiration from Malthus.

That ever longer working week idea: Americans now spend only 28% of their waking hours working as opposed to 61% only a century and a half ago.

The optimal approach to slowing climate change might not in fact be the optimal approach to climate change.

Getting technical on measuring the benefits of trade: Stolper-Samuelson is broken if you consider that ownership of factors of production is shared.

Limiting the new domain names: the morality police would be better off arguing for all the rude words as new domains.

Things are bad when a respectable middle aged lawyer dreams of doing this to the Prime Minister: "would have given the oily little tick a good kicking behind the bike sheds."

And finally, well, just what is the best thing since sliced bread?