Weekend notes
Detlev Schlichter is on typically forceful (and, yes, depressing) form over at Paper Money Collapse.
We should accept that deleveraging is ultimately unavoidable. If it comes with a period of deflation – so be it. But we will get neither. The system will be sustained at this stage of arrested collapse for as long as policymakers can get away with it. My outlook is that we will get even bigger central bank balance sheets (forget exit strategies! There is no exit!), we will get no sustained growth but inflation will creep higher.
The noisy advocates of easy money and of government stimulus always pretend to care for Europe’s unemployed youth. It is today’s youth that would have most to gain from a cleansing correction now, and it is those who already made their money and who sit on inflated assets and overstretched balance sheets that have most to gain from the central bank’s policy of extend and pretend. That is, until the whole thing goes pop anyway. Which won’t take too long.
In the meantime, the debasement of paper money continues.
Have you read his book yet? If not, get your copy here.
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Charles Murray's new book 'Coming Apart: The State of White America, 1960-2010' seems to be stirring up a lot of debate. His thesis, as I understand it, is that the gap between a new upper class and new lower class of Americans is growing, but that it has far more to do with diverging values, cultures and behaviours than economics. I haven't read it yet, but David Brooks says he'll be "shocked if there’s another book this year as important". For now, I just like Murray's comment to the FT on the race for the Republican nomination:
I am really unhappy with Obama. I really think he's terrible, but Romney and Santorum as the alternatives? Don't even think about Newt… I'm in despair. I mean, I'm a libertarian. I will take Romney over Santorum. And both of them over Newt. That's not a ringing endorsement, I know, but what can you say about such a field?
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On the other hand, for all his flaws (and they are many) Mitt Romney has at least said something exciting about tax - he plans to cut marginal rates by 20 percent across the board. As Fraser Nelson wrote in the Telegraph last week, Britain's Conservatives should take note. They won't win the next election by chasing opinion polls and running scared from the Left's renewed class warfare. They need to craft an aspirational agenda that is worth getting out of bed to vote for. As it is, all the Tory leadership is talking about is which taxes to raise to provide cover for scrapping the 50p tax rate (which isn't actually raising money anyway). They blame the Liberal Democrats, of course, but the real problem is that they are themselves completely unprincipled.
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In happier news, I was delighted to see the Wall Street Journal's Mary Anastasia O'Grady endorse the legalisation of cannabis on Fox News. Ever so gradually, the tide of opinion is turning against America's deadly, destructive, disastrous war on drugs. There is even talk that Colorado voters will approve a ballot initiative to legalise and regulate the production, sale and consumption of cannabis this November. Now there's something I could bring myself to vote for.
In memoriam: John Marks
Everyone at the Adam Smith Institute is saddened to learn of the death of John Marks, the veteran campaigner for transparency and higher standards in the state school system.
Today it is hard to remember – well, perhaps not so hard – that in the 1960s and 1970s state school teachers consistently refused to make their examination results public. They argued that examination results were only a part of what makes a well-rounded citizen, that parents would not understand what the results meant, and that 'league tables' of school examination performance would stigmatise those performing most poorly.
Whatever small grain of truth there might have been in these claims, the net result was that taxpayers were pouring millions into a school system, with no way of finding out what if anything their money was buying. And parents had absolutely no information on which to judge the quality of their school. When John Marks and colleagues initiated a private survey to gather school examination results, many schools – and indeed entire education authorities – refused to send him any results.
Eventually Margaret Thatcher's administration accepted the need for transparency in school performance measures, and published the 'league tables' – exposing the so-called 'hidden garden' of education and leading to a huge focus on standards, in particular the exposure of bad schools and bad teachers who were ruining the prospects of generations of young people.
A physics teacher at North London Polytechnic, he also exposed the political corruption of the higher education sector, where independent-minded teachers were being sidelined and worn down for standing up to the perversion of the curriculum, and the widespread denial of free speech and debate, that was occurring as a result of the domination of Marxist students, teachers and administrators.
Engineering works
When explaining what think tanks do, their members often quote the words of F A Hayek about "dealers in second-hand ideas." It's a good phrase, because popularizing and explaining the key insights of thinkers such as Hayek, Popper and von Mises is very important.
The Adam Smith Institute does some of this, but chooses a different role as its main activity. We liken ourselves to engineers rather than pure scientists, and the engineering is of policy initiatives. Thinkers such as Newton, Boyle and Kelvin make insights about falling and moving bodies, or about the behaviour of gases under pressure and temperature. But if you sit waiting for a steam engine to appear, you might wait a very long time. It takes a second kind of creativity to craft those breakthroughs of pure science into machines that function on their principles.
Understanding and propagating the principles of economics or public choice is one thing. It is quite another to construct policies that apply those principles. It is a creative process that uses insights into those principles in order to devise policies that will succeed in making the world a better place. Introducing choice, enterprise and opportunity is not achieved by simply putting across the merits of those desirable goals, but by creating policy initiatives that can bring them about.
At the Adam Smith Institute we have always seen ourselves as engineers, creative in a different way to the pure scientists, and quite ready to roll up our sleeves and get the oil of machinery onto our hands.
Madsen's history of the ASI, Think Tank, is available to order now.
Think Tank – the Story of the Adam Smith Institute
This week sees the launch from Biteback Publications of Madsen's book, "Think Tank – the Story of the Adam Smith Institute." Madsen, with Eamonn and Stuart Butler, founded the Adam Smith Institute "to make a difference." They wanted a new type of think tank, one that would deal in policy innovation rather than trying to change economic thought.
Taking a lead from Public Choice Theory as well as from Free Market and Austrian Economics, they sought to develop creative policies that would address the various interest groups, allying them where possible to proposals that would introduce choice and incentives into an economy heavily dependent on state ownership, planning and controls.
"Think Tank" is the story of what they did. It is a very revealing, almost blow by blow account, of the hurdles they faced and how they sought to surmount them. Without major backers, the ASI operated on a shoestring. It used resourcefulness to turn its chronic under-funding to advantage, developing ingenious and innovative ways of ensuring that its message was heard.
Skills and techniques that Madsen and Eamonn developed at St Andrews were used to good effect in giving the ASI a footprint out of all proportion to its actual size. The book is a very engaging story, lighthearted in tone, unpretentious, and with none of the pomposity or self-importance that sometimes characterize political memoirs. It is actually quite a thrilling read, written in an almost chatty style that takes the reader along with it.
Subscribing to the ASI blog
Since moving to our new site, some of you have noticed that your RSS feed subscription has stopped working. I've tried to fix the old one, but to no avail, so readers will need to subscribe to a new, fully-functional RSS feed we've set up.
If you're used to reading the website in a feed reader like Google Reader, Bloglines, Netvibes or something else you'll need to resubscribe to our new feed address: http://feeds.feedburner.com/adamsmithinstitute.
(To those who have no idea what a feed reader is but are curious, I recommend trying out Google Reader - it compiles the text from all of your favourite blogs into a readable, constantly-updated text list of their postings, so you don't have to visit each site individually. It's a great way to stay on top of a lot of blogs.)
If you're used to getting our blogs by email and haven't been getting them in the last few weeks, you'll need to resubscribe as well. You can do this in the box in the right column: simply add your email to that to get the latest posts from the ASI blog as they're published.
I'm sorry for the hassle of resubscribing. Thanks for bearing with us as we iron out kinks like this in the new site.
Happy Chinese New Year!
A happy Chinese New Year to all our readers, and especially to all the Chinese ones! Today starts the Year of the Dragon, which bodes really well. Dragons in Western myth are fierce creatures to be slain by knights and saints, but in China they are symbols of great power and bring good fortune.
Those born in a dragon year are reckoned to be full of energy and bubbling with creativity.
"The Dragon is the mightiest of the signs. Dragons symbolize such character traits as dominance and ambition. Dragons prefer to live by their own rules and if left on their own, are usually successful. They’re driven, unafraid of challenges, and willing to take risks. They’re passionate in all they do and they do things in grand fashion."
Dragons also tend to be natural leaders, and are self-sufficient. They do, however, have quick tempers. Since we have two of them in the ASI, Madsen and Sam, it can get rather messy in the office when they scrap and breathe fire over everything.
Seriously, though, the omens are good for those of an optimistic bent. The year of the Dragon is reckoned to be the year for great deeds, innovative ideas and big projects. At New Year we can put the past behind us and look to the future and the new projects that it brings and the new successes that it promises. A Happy New Year!
Thank you
Every year the Think Tanks and Civil Societies Programme at the University of Pennsylvania compiles its "Global Go To Think Tanks Report", which ranks the leading public policy research organizations in the world. For another year, the Adam Smith Institute has performed exceptionally well:
Top Think Tanks – Worldwide (US and Non-US)
No. 20
Top Think Tanks – Worldwide (Non-US)
No.8
Top Think Tanks in Western Europe
No.9
Top Domestic Economic Policy Think Tanks
No.7
Think Tanks with the Greatest Impact on Public Policy
No.23
Think Tanks with Outstanding Policy-Oriented Public Policy Research Programs
No.17
Top International Economic Policy Think Tanks
No.21
We're thrilled with these results. From everyone here at the ASI, to everybody who has supported us through donations, attending events, writing, reading or spreading the ideas we hold dear: thank you for helping to make this happen. We're determined to build on what we've achieved so far, and make 2012 our best year yet.
Test Blog 1
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2011 Top Fives
Before it's too late, here are my Top Fives for 2011:
Top 5 - Cinema (released in the UK in 2011)
- The Skin I Live In
- Midnight in Paris
- Black Swan
- Tinker Tailor Soldier Spy
- The Kings Speech
Top 5 - TV (aired on UK TV in 2011)
- Mad Men, Season 4
- Boardwalk Empire, Seasons 1 & 2
- Game of Thrones, Season 1
- Bored to Death, Seasons 1 & 2
- Fringe, Season 3