Tim Worstall Tim Worstall

So, how much of this government stuff should we have then?

An interesting if not wholly entire paper looking at how much government is actually necessary. The answer is, which will surprise those to the left of us, not just more than we have. In fact, about 35% of GDP is all that is necessary. Which is, amazingly, about the amount we have and rather less than many of our soon to be no longer confreres in the European Union.

Governments across the rich world squander billions every year on inefficient spending and could slash budgets without harming either services or the economy, new research has found.

Good performance in almost every area, from health and education to infrastructure and economic performance, can be achieved on relatively low levels of spending.

Efficient government can provide the best of both worlds with a budget amounting to less than 35pc of GDP, according to a report from EconPol Europe, a network of universities across the continent.

That paper is here. The reason the paper’s not wholly entire is that it makes certain unwarranted assumptions. Government should be responsible for the financing of health care and education for example. As Singapore shows about health care this isn’t necessary. As most poor countries show with their entirely dire public education systems, that may not even be desirable.

It’s also true that we can have an entirely functioning state - even a generous one - with more like 15 to 20% of GDP. Everything beyond that is tax and redistribution rather than the provision of goods and services. We can even provide a basic safety net within that 20%.

But one point that leaps out at us:

Institutions matter in particular. A country with an effective and less distortionary tax system can finance a bigger government at the same cost as another country might with a less efficient tax system (OECD, 2018). Countries with well-functioning institutions and trust in government can afford a larger government than a country with weak institutions and a tendency to corruption and rent seeking.

As so often we’ve things operating in opposite directions and the trick is to find the optimal point. We’re particularly taken with that “less distortionary tax system”. Having one of those means you can have more government - if that’s what you wish as we don’t - for the same loss in wealth and income caused by having the tax take to pay for more government. Which is interesting.

For we know that wealth taxes, say, are distortionary. We know that high income tax rates are distortionary. We also know that land value taxation is less so, that consumption taxation like a VAT is less so. This is just the old point about the different deadweight costs of varied taxes again. From which we also know that things like a financial transactions tax are hugely distortionary.

That is, if you actually do desire that larger state you need to be arguing against an FTT, wealth and high rates of income taxation. In favour of more VAT, more land taxation. Which isn’t, of course, the way the argument does run. Which means that those engaging in that demand for a larger state through such forms of taxation are misguided, inconsistent or plain just ignorant.

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Matthew Lesh Matthew Lesh

Cross-party group backs ASI's latest paper on drug consumption rooms

A cross-party group of Conservative, Labour, SNP, Green, Liberal Democrat, & Crossbench politicians have written a letter to The Telegraph in support of the Adam Smith Institute’s latest paper on drug consumption rooms.

The letter read as follows:

Reducing drug harm

SIR – Britain’s approach to illicit drug use is failing. Communities are being ripped apart, criminal networks are profiting and thousands of people are dying every year. Drug consumption rooms are an evidence-based harm-reduction intervention, allowing people who use illicit drugs to do so within a medically supervised environment. They help save lives.

A new paper from the Adam Smith Institute finds that drug consumption rooms also relieve the burden on the NHS, and reduce public injection and syringe litter. They engage individuals who are otherwise hard to reach with treatment, counselling, legal advice and housing services. By helping people into treatment, they reduce substance use and therefore undermine the illegal market.

These rooms have proved successful in many countries, including Germany, Canada and Australia. As it stands, they sit in a legal grey zone. It’s time for Britain to catch up with the rest of the world by providing a clear legal framework to trial drug consumption rooms in areas with high levels of drug-related harm.

Crispin Blunt MP (Con)
Chairman, All-Party Parliamentary Group for Drug Policy Reform

Lord Ramsbotham (Crossbench)
Co-chairman, Drugs, Alcohol and Justice Cross-Party Parliamentary Group

Jeff Smith MP (Lab)

Thangam Debbonaire MP (Lab)

Dr Philippa Whitford MP (SNP)

Caroline Lucas MP (Green)

Tom Brake MP (Lib Dem)

Baroness Lister (Lab)

Stuart C McDonald MP (SNP)

Ronnie Cowan (SNP)

Dr Daniel Poulter MP (Con)

Alison Thewliss MP (SNP)







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Madsen Pirie Madsen Pirie

Sverdlovsk anthrax leak

Forty years ago, on April 2nd, 1979, there was a major leak of deadly anthrax spores from the Soviet biological warfare facility at Military Compound 19 on the edge of Sverdlovsk. The strain of the pathogen, Anthrax 836, was the deadliest. For effective military use it was dried to a powder that could be dispersed as aerosols. These could arm warheads for their SS-18 intercontinental missiles to target American cities.

The filters that kept the anthrax dust from leaking into the environment had to be cleaned with the drying machines turned off. A subsequent investigation found that a technician had removed a filter, leaving a note to that effect. The note was not seen when the machines were later switched back on, and it was several hours before the mistake was spotted. During that time, anthrax dust leaked from the plant and was carried by the wind.

Estimates put the number of people killed at over 100, together with unknown numbers of livestock. They were all downwind of the release. Had the wind been blowing in the opposite direction, most of the city’s population could have died. An official cover-up pointed to tainted meat as the cause of the fatalities, but all medical records of those affected were removed.

The existence of the facility was in direct violation of the Biological Weapons Convention, and it was only after the fall of the Soviet Union that the incident was investigated by an international team of inspectors. Their 1992 findings tallied with a release of anthrax downwind from the site.

Despite the events of 40 years ago, the facility still exists, with its work moved underground. Reports say they have made anthrax more deadly still through genetic engineering. Even though the Soviet Union is no more, one of its KGB lieutenant colonels is now Russia’s president, and authorizes continued work on internationally banned biological agents. The poisoning of Sergei Skripal and his daughter by GRU agents in Britain last year with the deadly nerve agent Novichok shows that Russia continues to develop these banned pathogens, and is prepared to release then on civilian populations. A country that shows so little regard for international agreements and conventions should be treated with considerable reserve when treaties are proposed. The West might start by demanding that facilities such as those at Sverdlovsk be dismantled and inspected before any deals can be agreed.

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Tim Worstall Tim Worstall

We seem to have solved that diabetes problem then, no need for more laws

A standard point around here is that the existence of some problem does not justify yet more action to solve that problem. What we should - and need - to be doing is to look at how much of that problem remains after whatever it is we do to reduce it. Only then can we see whether we need to be doing more, less, or just carry on, in our solution to the ailment.

For example, looking at market incomes tells us nothing about how much tax and redistribution should be done to reduce inequality. It is only looking at post-tax and post-benefit incomes, and by preference moving over to looking at consumption not income, that can possibly tell us that more needs to be done or not. Climate change may well mean that we’d prefer there to be fewer coal fired power stations in the future. But that requires our looking at how many such we’re going to have in the future, not assuming that matters will remain as they are. Given that new coal fired investment is plummeting, solar being the new investment of choice in many places, shows that much of what we need to do about climate change has already been done. Inefficiently, possibly we didn’t even need to do anything anyway, but within the terms of the IPCC’s warnings much of it has indeed already been done.

Which brings us to that other terror of the age, the soaring diabetes rate:

The number of diagnoses of type 2 diabetes has fallen in an ‘encouraging’ sign, the charity Diabetes UK has said. Although three people are still being diagnosed every three minutes the equivalent of 552 cases per day, it is 27 cases fewer each day than in 2016 when there were 579 every 24 hours, nearly one person every two minutes.

202,665 people were diagnosed with Type 2 diabetes in England and Wales in 2017, the most recent year for which statistics are available, down from 211,425 in 2016.

The charity Diabetes UK said they did not want to speculate on what the cause of the drop might be, but said they were still concerned about the large numbers of people developing the condition…

Sure, be concerned all you like. But what it shows is that it is possible to lower that rate without a sugar tax, without banning “junk food” adverts, without telling supermarkets how they may lay out their wares. It might even be that just telling people they might die if they don’t curb their consumption works.

You know, we humans might be ignorant - we certainly note there are things we don’t know about - but we’re also rational, we’ll respond to information and incentives.

Maybe it’s even possible that a full pile on to reduce the diabetes rate is justified. But that justification is and can only be valid if we look at what we’re already doing and only then muse upon whether we need to do more.

More importantly, that the diabetes rate is falling before all of those further curtailments of liberty that PHE is insisting upon shows us that we don’t have to give up freedom in order to gain that falling diabetes rate. So, well, let’s not give up liberty then, eh?

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Madsen Pirie Madsen Pirie

April Fools’ Day

April 1st is traditionally a day devoted to pranks. The etiquette suggests that this is a morning thing, and that the pranksters should come clean at noon. There have been many celebrated ones that achieved stardom. In 1957 BBC’s Panorama ran a short film showing spaghetti being allegedly harvested from trees. In 1969 a Netherlands state broadcaster, NTS, ran a feature about detector vans roaming the streets to detect TVs receiving without licences. It said the only way to avoid detection was to wrap the TV set in aluminium foil. Next day all the supermarkets sold out of foil, and record numbers sent in licence payments.

The ASI played one that unfortunately was taken seriously. We sent out a press release condemning the EU’s decision to ban all knives with blades exceeding 10cm, or 4ins, on the grounds that research had established that most knife crimes were committed with blades longer than that.  We quoted the EU health and safety commission, Senator Faporillo, welcoming the new law. We quoted the head of the German Employers’ Association refuting the claim that thousands of new jobs would be created, saying that when this had been tested in a trial German town, the only new jobs it generated were for knife grinders shortening existing blades.

Senator “Faporillo” is, of course, an anagram of April Fool. Our intended giveaway was the comment we added from the UK’s Health and Safety Officer, announcing that the law would be rigorously applied when December 31st, the so-called “night of the short knives,” arrived.

Unfortunately, some of the media took it seriously and did some work on the story. The Mail spent time preparing to denounce the move. The Wall Street Journal rang up to ask, “This is a joke, right?” Worst was the Sun, who had prepared to make this their front-page story. They had telephoned the EU to ask Senator Faporillo for a comment, but were told he was out at lunch, presumably by some secretary unwilling to admit she’d never heard of him. When they asked us for a comment and were told it was a joke, they were angry that we had “wasted their time.” We could only apologize profusely, expressing sincere regret at the trouble we had caused. We had intended to amuse people, not to inconvenience them.

Having learned our lesson, we never again played an April Fools’ joke. The other lesson might be that there is no insanity that people believe the EU to be incapable of perpetrating. Even now I imagine someone deep inside Brussels is probably drafting for real the law we posted about in jest…

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Tim Worstall Tim Worstall

It's amazing what we don't get told at times

Phillip Inman tells us that it’s all very bad indeed, the manner in which “austerity” has been exported from the rich countries to the poor. The thing is, he uses Mozambique as one of his examples:

It is in this atmosphere that the west has turned away from even the most emotional pleading, such as the calls for Mozambique to be supported with a debt write-off following the devastation left by cyclone Idai. According to the IMF, Mozambique is among six out of 35 low-income countries in the region that are in “debt distress” – in default and unable to service outstanding loans.

Well, yes, very poor place, badly hit by that cyclone, very high debts too. Except, except, therre is more to this, something we should know:

Mozambique’s Minister of Economy and Finance, Adriano Maleiane, has said the country’s foreign public debt, until December 31, 2017, was $10.6 billion.

Maleiane said it is to date the highest debt to GDP ratio in Africa.

Speaking in parliament on Thursday, Maleiane said this amount includes bilateral debt, which is 4.6 billion, corresponding to 43 percent of total debt; alongside the multilateral debt contracted with institutions such as the World Bank and the African Development Bank (ADB) which is pegged at $4.2 billion, representing 39 percent.

The minister said the remaining part is commercial debt amounting to $1.8 billion, which the Mozambique admitted as previously undisclosed loans, much of which was spent on building a state tuna-fishing company and enhancing maritime security, a discovery prompted the International Monetary Fund (IMF) and foreign donors to cut off support, triggering a currency collapse and leading to a default.

“We are now only paying multilateral and bilateral debt. The commercial is not being paid, since, since 2016, we are in the process of negotiations.

Bilateral here means government to government. And as to why that commercial debt isn’t being paid?

Mozambique announced on Monday the indictment of 18 individuals in connection to the US$2 billion “tuna bonds” scandal that plunged the country into its worst financial crisis since independence.

The scandal is the borrowing of that $2 billion and the theft of it. What wasn’t directly stolen was entirely wasted. This being that debt which leads to the emotional pleading for a write off.

It’s fairly important to the point, isn’t it?

Sure, it could be argued that it’s an odious debt. The rulers simply stole it therefore the people shouldn’t have to pay it. We’d even be supportive - perhaps - if that was being so argued. But we’d insist upon emphasising the corollary, which is that certain poverty problems really are caused by the oligarchy being kleptocrats, not because we in the rich world are meanies for not sending even more money.

Which isn’t the point Inman is trying to argue at all, presumably why those facts don’t get mentioned.

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Madsen Pirie Madsen Pirie

UNIVAC makes history

On March 31st, 1951, Remington Rand delivered UNIVAC, the first commercial computer produced in the US, to the US Census Bureau. It competed with, and ultimately replaced, punch-card machines. It used about 5,000 vacuum tubes, weighed 16,686 pounds (7.5 tons), consumed 125 kW, and could perform about 1,905 operations per second. It sprang to fame in the 1952 Presidential election when, with a sample of just 1% of the voting population, it went against the pollsters' verdict for Stevenson, and correctly predicted instead a landslide for Eisenhower.

Although it originally sold at $159,000, the UNIVAC's price increased until it reached between $1,250,000 and $1,500,000. A total of 46 of them were eventually built and delivered. No-one foresaw at the time that computers would become so inexpensive, so light, and so powerful. Indeed, many famous people have made wildly inaccurate predictions about the march of technology. Thomas Watson, president of IBM, said in 1943, "I think there is a world market for maybe five computers." He was probably thinking of ones that weighed tons and used thousands of vacuum tubes.

Ken Olsen, founder of Digital Equipment Corporation, remarked in 1977, "There is no reason anyone would want a computer in their home." Yet within a generation, virtually every home in a developed country had one, and a few years later virtually every child in a developed country had one in his or her pocket. There have been just as wrong predictions made by others. In 1998 Nobel laureate Paul Krugman confidently asserted, "By 2005 or so, it will become clear that the Internet’s impact on the economy has been no greater than the fax machine’s." He is as confident and as wrong about most things he writes about in the New York Times.

People today make stark predictions about the likely impact of technological innovations, usually about their effect on jobs. Typewriters reduced the demand for scribes to near zero, and electronic calculators cut the jobs of comptometer operators. No doubt UNIVAC and its successors did away with Hollerith and other punch card machines, together with the experts who operated them.

But always in the past, innovations such as these have created many more jobs than they have cost, and have raised wages and living standards with the increased productivity they make possible. There is no reason to suppose that the advent of Artificial Intelligence, which doomsayers tell us will threaten many jobs, will be any different. It will increase productivity and wealth, and it will lead to new jobs being generated.

If someone doubtfully asks, "What kind of jobs will be created?" The answer is that this is unpredictable. We simply don't know what human tastes and needs will be, or how people will choose to spend their new-found wealth and leisure. Many of today's jobs simply didn't exist a generation or so ago. And many of the future's jobs simply don't exist today.

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Tim Worstall Tim Worstall

Factortame probably did have something to do with Brexit, yes

Factortame was an uninteresting case over who could access fishing quotas. Factortame was also a hugely important case concerning who rules? The answer being that it’s them over there, Brussels, which does. This does indeed have something to do with where we are now with Brexit:

Carl Gardner, a former government lawyer who has negotiated for the UK and defended the government in the European courts, says that while the decision came as a shock to the British legal system, it came as “even more of a shock to the political system”.

He suggests that along with the Maastricht Treaty in the early 90s, the decision in Factortame helped stoke Euroscepticism.

“The experience made politicians more defensive of sovereignty,” he suggests. He also believes the “scars Factortame left” are reflected in the Human Rights Act, which carefully avoided letting judges disapply acts of parliament. “If we’re tempted to think we’ll soon be free of Factortame, we’re wrong,” he says. “Any withdrawal agreement is likely to prevail over our own law.

“I’m not sure we’ll ever hear the last of Factortame, which leaves as permanent a mark on our law and politics as any case ever decided by the court.”

The specific point being:

Crossbench peer and barrister Lord Pannick says that Factortame was “the most significant decision of United Kingdom courts on EU law”. “It brought home to lawyers, politicians and the public in this jurisdiction that EU law really did have supremacy over acts of parliament,” he says.

Before Factortame that fact had not been widely understood, even though it had been decades since the UK had joined the European Economic Community in 1973. After the judgments, says Pannick, there was no longer any excuse for ignorance.

This is a fairly important point, they rule us, not we rule us.

Sure, it’s possible to go on and say that, say, the European Parliament is only a larger us ruling a larger us. But that’s then a Parliament that cannot initiate legislation, really only has the power to delay. That is, rather less power than the House of Lords does in the UK. We usually tend to think we the people should have rather more protection from the executive than that.

But it is true that Factortame brought home to us all that it’s EU law which is paramount, this isn’t simply a treaty or agreement, it’s an imposition of sovereignty, a reduction of our own.

It’s even possible to argue that this is as it should be it’s just that an awful lot of people don’t agree. Which is rather how we got to where we are today.

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Madsen Pirie Madsen Pirie

President Reagan survived a would-be killer

On March 30th, 1981, barely nine weeks after he took office, President Ronald Reagan was shot as he left a meeting at the Washington Hilton Hotel. The would-be assassin fired six shots, wounding three people, but missing the President. One of the shots ricocheted off the limo as Reagan was hustled inside, wounding him in the lung, and missing his heart by one inch. Reagan was close to death as he underwent emergency surgery, but he survived and recovered quickly, returning to applause at the Oval Office within four weeks. Had he not survived, history would have been very different.

Without Reagan there might not have been the tax cuts that revitalized the American economy and ushered in a period of steady growth that saw the average US citizen's standard of living rise. Had he not had his eight years in office, America might not have seen 16 million new jobs created. It might not have seen the inflation rate drop to 2.5 percent.

Surely no other president would have embraced the Strategic Defence Initiative, raising the prospect that deterring Soviet aggression might be replaced by a defensive capability, with the technological ability to intercept and destroy Soviet missiles. Ultimately it precipitated the collapse of the Soviet empire, which could not compete technologically nor militarily with the US.

Reagan was thought to be something of a hawk on foreign policy, giving evil its proper name and standing up to it. To counter the Soviet's SS-20 missiles, he deployed Pershing II and Ground Launched Cruise Missiles in Europe, to bring the USSR to the negotiating table to sign the Intermediate-Range Nuclear Forces Treaty. His strengthening of the US military with modern weapons and equipment is believed to have played a key role in bringing about the final collapse of the Soviet Union and ending the tyranny of Communism. He won the Cold War.

His personality played no small part in reinvigorating and uniting America after years of discord. He was known as the "Great Communicator" for his ability to put ideas across in a jargon-free, non-patronizing way that ordinary Americans could relate to. He unashamedly championed the ideals of the Founding Fathers, including patriotism, and his optimism restored to Americans their faith in themselves and their country.

Had one of the six shots fired that March day been more accurate, the world would have been different. But Reagan was saved, and so was the world's future.

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Tim Worstall Tim Worstall

The problem is that the algos, the robots, the AIs, they should be biased

We’ve a fundamentally flawed movement over there on the left concerning this brave new world of algorithms, robots and artificial intelligences. For there’s an insistence that they must all be coded so as to be non racist, non-discriminatory along any of the currently fashionable axes. This being entirely the wrong idea of course.

The root of the demand is that age old insistence that we can make the world to be something other than it is. As Brecht said, elect another people, or await that New Soviet Man that would actually make socialism work. That’s not actually how human societies work:

For people directly harmed by the fast-moving and largely unregulated deployment of AI in the criminal justice system, education, the financial sector, government surveillance, transportation and other realms of society, the consequences can be dire.

“Algorithms determine who gets housing loans and who doesn’t, who goes to jail and who doesn’t, who gets to go to what school,” said Malkia Devich Cyril, the executive director of the Center for Media Justice. “There is a real risk and real danger to people’s lives and people’s freedom.”

The point being that the AIs and the rest are to be used as tools to aid in managing and operating our society. Thus, far from being pure and unbiased, they must incorporate those biases which exist.

No one in this debate - most especially the people doing the worrying here - is going to try to say that there are no such biases among us humans. Nor that society as currently structured does not incorporate them. But that in turn means that any tools we use must reflect the current society we’re trying to manage, not some some possibly glorious one where humans aren’t humans.

Think on it. To use an algo to describe and manage an unbiased society is going to have that same connection with reality as the Soviet food manager allocating the harvest that the just shot kulaks haven’t collected.

The time to be insisting upon unbiased software is when the society and the people being described are unbiased. Sure, we hope for that too. But coding in what we’re not isn’t going to aid in managing what we are now, is it?

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