Michael Caine explains the laffer curve

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I left for eight years when tax was put up to 82 per cent. The newspapers said: "Michael Caine's leaving: let him go, the stupid, overpaid, loudmouth idiot, who cares where he goes?" Well, you didn't get 82 per cent tax from me for eight years and a quarter of a billion dollars worth of movies were outside this country instead of inside it. Now, that is just one stupid, loudmouth moronic actor. Imagine what happens with companies that disappear.

Sir Michael Caine, via The Spectator's Fraser Nelson

On creative destruction

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A Bronze Age empire stagnated for much the same reason that a nationalized industry stagnates: monopoly rewards caution and discourages experiment, the income is gradually captured by the interests of the producers at the expense of the interests of the consumers, and so on. The list of innovations achieved by the pharaohs is as thin as the list of innovations achieved by British Rail or the US Postal Service.

Matt Ridley, The Rational Optimist.

Hayek and Friedman are just what we need

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Madsen has a letter in today's Sunday Telegraph, responding to a piece by Matthew d'Ancona, and taking issue with his implication that the ideas of Hayek and Friedman are not relevant to modern Britain. On the contrary, says Madsen:

"Their commitment to market forces is precisely what should inspire the Coalition to undertake a bold pro-growth strategy. Cutting public expenditure, especially that which is wasteful, is only part of the story. The burden of taxes and regulation must also be tackled so that growth can be unleashed to create the jobs of the future."

And although Matthew d'Ancona seems to want a soft and cuddly Tory party committed to high public spending, Madsen disagrees:

"If the Tory brand does need more detoxification, this will not be accomplished by positioning them as the party which can best manage a state-directed economy. It will be achieved by presenting the Tories as the party which can restore the nation’s shattered finances and create opportunities for people to better their lives. People will not judge them on whether they relished cutting spending. Instead they will ask if they stopped spending other people’s money recklessly, and managed to let private enterprise and ambition generate the growth it does so well." 

Attack ads from 1800

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Via Reason Magazine's Hit & Run blog. Things were better when politicians spoke their minds about each other rather than treating us like children.

What would a British version look like? Suggestions in the comments section.

Don't encourage teenagers to become career politicians

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Do we really want more politicians? Even worse, do we really want more do-gooder teenagers to aspire to be career politicians? The UK Youth Parliament is one of those things that probably sounded good in theory, but in practice has ended up a bit of an embarrassment to those involved who should know better.

I don’t really object the ‘Members of Youth Parliament’ themselves – it’s all a bit earnest and precocious, but they’re young and it’s hard to justify any strong dislike towards them. But it’s important to recognise that the Youth Parliament isn’t a debating forum – it’s a backslapping ‘youth advocacy’ organization. Having watched part of it today, I can attest that few of the issues discussed are really debated at all.

Few teenagers have heard of the ‘Youth Parliament’ – these ‘MYPs’ are not representative in any way. Frankly, if the ‘MYPs’ were characters from the teen comedy The Inbetweeners, it’s pretty obvious that they would all be Will, the show’s nerdy, self-righteous narrator.

The grown-ups behind the UKYP are railroading these earnest kids into political careers. I think I’d rather that they be encouraged to read a good book and figure out what it is that they believe, rather than allowing them to indulge in their adolescent tantrums about university fees and the like. It’s easy to bash careerist politicians, and with good reason: rather than doing something that people willingly pay for, they rely on coerced taxation to make a living. We should all be so lucky.

To be fair, not all politicians are bad. The good ones usually go into politics after having achieved something in the private sector – that is, after having done something that people are willing to pay for voluntarily. And even many of the clever ones who start off well are ruined by the political system. But the ones who spend their lives working for the state are not the best, and there’s no need to try to make more of them.

Whose idea was it to encourage teenagers to go down this unproductive path, rather than to do something that people value and are willing to pay for voluntarily? If these people are ‘the future’, we may be doomed to another generation of sentimental, poorly-reasoned political representatives. Let's hope they aren't.

Thoughts for the weekend

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The Treasury forecasts 490,000 public job losses as a result of this month's budget measures. But the Office for Budget Responsibility reckons that 1.8m jobs will be created in the private sector.

~

Between 1994 and 1999, Canada, Sweden and the UK each tightened fiscal policy by about 7% of GDP. That made public-sector employment fall by 50,000 in Canada and Sweden, and 294,000 in the UK – but private-sector employment grew by 1.7m in Canada, 250,000 in Sweden and 1.95m in the UK.

~

According to the Office of National Statistics, 308,000 private-sector jobs were created over the summer, more than offsetting the 22,000 that were lost from public-sector bodies.

Via Philip Aldrick.

The efficiency of markets

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From xkcd.

What's in a name?

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Just 14 babies were named 'Gordon' last year – the same number as were named 'Harsh'.

(via Martin Beckford's Twitter.)

A review of the Independent Seminar on the Open Society 2010

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Wednesday was an interesting day in Westminster, because just down the road from the Chancellor’s Comprehensive Spending Review delivery, 200 sixth-form students attended a day of lectures entitled “An Agenda for Reform: Politics, Economics and Society” as part of the ASI’s Independent Seminar on the Open Society (ISOS) programme.

The day began with a speech from the MP for Wycombe Steve Baker, whose speech was entitled “The Ethics of Welfare”. Baker argued that current welfare benefits are highly damaging to the country, regardless of the monetary cost. He pointed out that since 1997 British poverty levels had increased and many millions remain living off of the state, despite (or because of) increases in state handouts. This was coupled with the problem that individuals will always spend their own money more effectively than central governments. Baker praised the Universal Working Credit as a step in the right direction to fixing these problems.

Next was philosopher Jamie Whyte, who discussed the concept of fairness and its application in the public sphere. Students were asked whether a race between Gordon Brown and Usain Bolt was “fair”, and used this thought experiment to show the different impacts that equality of outcomes and equality of rules. Whyte argued that using the government to create equality of outcomes was counterproductive, as it would concern itself with finding the “good life” – an impossible task given that we all have our own disparate desires.

Caroline Boin, from the International Policy Network, spoke about the impact that wealth creation has in protecting the environment. She showed that rich nations had clean rivers and air precisely because they had the wealth and efficient industries to provide this cleanliness. She said that poorer countries would experience the same environmental improvements as they developed – implying that economic growth in the developing world should be the critical issue for environmentalists.

James Tyler finished the lectures with a damning view of the current banking system, showing that regulation and government intervention make banking one of the most governmentally-influenced sectors of the economy, and explaining the importance of money in economics. Tyler gave an Austrian economics-based perspective on the financial crisis, which was particularly valuable for sixth-formers, most of whom had not heard Austrian ideas before.

The day ended with a debate on the topic of trade vs. aid in promoting the interests of the developing world. The students voted overwhelmingly that aid was detrimental to lifting nations out of poverty, with free trade essential to future prosperity.
The day was a success, not simply because it was so interesting, but because it gave a new perspective to students who may not have had a strong exposure to free market ideas before.

The Austrian view of the financial crisis

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This Thursday, one of the world’s leading economists of the Austrian school – if not the world’s leading economist of the Austrian school – will be giving the inaugural Hayek Lecture at the London School of Economics. Jésus Huerta de Soto’s magnum opus is his Money, Bank Credit and Economic Cycles (which you can download here), which along with Mises’ Theory of Money and Credit offers one of the fundamental expositions of the Austrian theory of the business cycle.

Professor Huerta de Soto will be speaking on the causes of the current recession – a timely subject of which the Austrian school offers the most cogent and coherent analysis. The Austrian business cycle theory, developed by Mises and Hayek, says that the government manipulation of the money supply creates systemic artificial bubbles in the economy, which creates the appearance of a boom. But, in time, this bubble bursts, leading to a situation not dissimilar from the one we’re in now. You’ve probably already seen the rap video.

Thursday’s lecture should be interesting. It’s free to the public and tickets are available at the door. You can find full details here.