Scottish Independence

I'm currently trying to work out if this article is a satire that I don't 'get' or a breathtaking inane waste of space in the Telegraph's Comment section that could have been better used. Still, the fate of the Union is a topic worth returning to.

I'll go over the politics and then the issues - the money and the intangible benefits Scotland takes from the Union.

The politics

The SNP are playing an absolute blinder. Some promises such as subsidising first time buyers and paying off student debt have been abandoned but between freezing council tax and boosting police numbers they've got two tangible and very popular measures in place. Not bad for a minority administration in relatively tough times.

The Scottish Tories are doing alright as well, they handled the budget effectively, but they're a bit player in a fight between the SNP and Scottish Labour in a country with little appetite for Conservative leadership. The Labourites are losing that fight so badly it is embarassing.

In that context, Wendy Alexander's call for a Scottish independence referendum now makes some sense. She shifts the question from "would you rather have the SNP or Labour governing Scotland" to "do you want Scotland to become independent. The Union is currently a lot more popular than Labour so shifting the question in that way could improve her position. While it is always possible that Scottish Labour could screw up a Unionist campaign so badly the Nats win it might well be a risk worth taking to fight an independence referendum now rather than a few years down the line with a Tory government at Westminster and the SNP even more popular.

The money

I don't think the money is as big a deal as people make out.

From the English perspective, the pattern of regional fiscal transfers wouldn't change much if Scotland dissapeared. At the moment the Greater South East sends about 8 per cent of its regional GVA to the rest of the country. Everyone else, to a greater or lesser extent, comes out better off.

If Scotland were removed from the picture then there would be a bit more money to either leave with the South or slosh around the other regions but, in the grand scheme of things, not much would change. Things could even get worse if the Scottish subsidy was simply reallocated to the North of England and increased the extent of all the problems that an excessively large state already creates for the Northern private sector. There are only two ways of significantly reducing harmful (PDF, pages 9-25) regional dependency:

1) The wrong way - start winning seats as the Southern League (you would do ten times as well as the UKIP et. al.).

2) The right way - shrink and decentralise the state.

From the Scottish perspective the money is rather more important fiscally. Even if Scotland takes 90 per cent of North Sea oil revenues (as they probably would) they'll lose around 2.4 per cent of their GVA with independence. That's a lot of money and, combined with transition costs building a new state, will mean the Scots are seriously worse off in the years following independence.

However, that isn't the end of the story. When the Scots try to recover their economic position it seems entirely probable that the first country they'll look to learn from is Ireland. It is the obvious parallel as a former component of the United Kingdom and has been astonishingly successful. As Matthew Elliott, TPA Chief Executive, noted in his opinion piece for City Am yesterday:

"In 1993 Ireland was significantly poorer than the United Kingdom, with income per capita 28% higher in the UK. Its economy then took off, with average real terms economic growth between 1994 and 2006 of 7.4%. In contrast, the UK managed just 2.9% real terms growth in the same period. Today the Irish enjoy income per capita 20% higher than we do in the UK."

If the Scots can replicate that they won't be shedding too many tears over their lost Southern subsidy. In the end, the best way for a region to get rich isn't, thankfully, to try and extract a subsidy from wealthier regions. As an article by Benjamin Powell for the Cato Institute establishes, EU subsidies did little for Irish economic growth. As a result, I don't think the Scots should want to stay a part of the UK just so that they can hold onto subsidies from the South.

It is unfortunate and innapropriate that a debate that should be about national destiny is, so often, fought over the fools gold of state subsidy.

The intangibles

As I've set out before, I think that conservatives should be sad at the passing of a state with the history of the United Kingdom and sceptical that we can do better replacing it with something new.

However, I think it is the Scots, in particular, who would lose out from the United Kingdom being broken up. They would lose a grand stage. At the moment an ambitious Scot (and they're not all dismal Scottish Labour politicians) in business, politics or the arts has a domestic "market" that includes a population of 60 million and an international centre in London. Scottish Independence would make all that "abroad". The intangible, psychological effect would, I think, do damage to the ambition and prospects for greatness of all Scots.

Would Adam Smith have left the same legacy to history if he had not lived in the same country as the government of a great empire that could promote or enforce free trade, in particular, around the world?

So many talented Scots head South to make their mark. Any list of Scottish people who have gone on to great things would, I think, find few of them living in Scotland. That process isn't an accident. It is, I think, pretty common for small communities that their best and brightest must go elsewhere to explore their full potential. The same is true of small towns in the South East - people move to London to make it big. It only becomes a 'loss' to the Scottish nation with independence - when someone moving to London is moving abroad.

Sod off Ramsay

I don't like coffee. The bitterness just doesn't appeal and I've never enjoyed it. Normally, coffee has to be flown in from abroad. I think coffee should be banned.

"Not only [do other drinks] taste better, but it also helps to cut carbon emissions by reducing the number of miles needed to transport [it]."

I walk in to work. If there were no cars around it would be quieter for me. Walking to work might cut carbon emissions. Ban cars.

"Not only [is walking more pleasant], but it also helps to cut carbon emissions by reducing the number of miles [we drive]."

It's quite simple really. Combine an arrogant willingness to impose the choices you prefer, or find convenient, on everyone else for no good reason with an appeal to the global warming omni-justification and you can justify banning anything you vaguely dislike. Gordon Ramsay's call to ban out-of-season produce is illiberal nonsense.

...without a paddle

This, from the Sun, illustrates an important PR lesson:

I'm pretty certain the message most people will take from this isn't "the planet is in trouble, it's warming!" They'll think "these greens are completely batty!"

If you're going to try and communicate with a broad audience don't rely on implicit cues that are obvious to you but won't be to them. You might wind up sending a very different message to the one you meant to.

Drinking on the tube

Really bad reason to oppose Boris's ban on drinking on the tube

From Dave:

"Mayor Johnson, as we know, opposed the smoking ban. His voting history on the issue can be found on TheyWorkForYou.com. The noxious fumes produced by the evil weed were not, it would seem, enough in Mr Johnson’s opinion to warrant an
intrusion on people’s liberty and bar and pub workers would have to lump it; they could, of course, choose to be out of a job at any time if their health was such a big issue.

At Old Street station, there is a sign up announcing that alcohol will be banned from the first of June on public transport. The occasional drunken idiot is now more of a threat than smoking, which the World Health Organisation considers to be behind 26% of male deaths and 9% of female deaths in the developed world."

There is no hypocrisy here. The justification for Boris' ban on alcohol is that it leads to drunks on the tube threatening other people. When that happens the Millian sphere has been violated.


Therefore, the proper comparison isn't deaths from smoking but deaths from passive smoking. Those World Health Organisation figures are entirely irrelevant to this debate. The evidence for the dangers of passive smoking is very weak - see Richard North & Christopher Booker's impeccably sourced book for the full story of how weak.

Really good reason to oppose Boris's ban on drinking on the tube

From DK:

"I gave the example of consuming one beer on the way home; it was very pleasant, since from Southfields to Earl's Court is, like 55% of the Tube, not actually underground. The sun was streaming through the windows, the carriage was about only about half full, my Private Eye was interesting, and the gentle rocking of the train was complemented by my lovely bottle of cool ale.

The ale was all the more welcome since my colleague, who gives me a lift from Ockham to Southfields, needed to drop into the supermarket (where I had bought my beer) to buy his week's supplies and I didn't even get onto the Tube until nearly seven in the evening. With an hour on the Tube ahead of me, the beer really appealed."

I fail to see how banning drinking is easier than banning drunk and disorderly behaviour. Stick to banning drunk and disorderly behaviour. If you do so you'll allow a lot of people a little pleasure having a quiet drink on their way home. Those are the small happinesses that we lose to illiberalism.

Less fuel, less noise

This is the kind of innovation that can really solve problems like noise over the West of London and other urban centres and the huge amount of fuel aviation burns:

It is a creation of universities and private industry. No need for a tax as the rising price of fuel, the private market's response to scarcity, ensures innovation in response. Ordinary jets are becoming more efficient and this concept illustrates just how much more efficient planes can become.

Monbiot's approach to air travel is thoroughly silly:

"While a large commercial airliner cruises at about 900 kilometres per hour, the maximum speed of an airship is roughly 150kph. At an average speed of 130kph, the journey from London to New York would take 43 hours. Airships are more sensitive to wind than aeroplanes, which means that flights are more likely to be delayed."

Utterly unrealistic and not remotely justified by the harms identified by, for example, the IPCC. The only redeeming thing about the article is its brilliant self-parody of a headline:

If there is a God, he's not green. Otherwise airships would take off

...and there I was worshipping the Jolly Green Giant. Perhaps Monbiot is right, his failure to provide suitable blimps does make all the tasty sweetcorn a bit of a hollow pleasure.

The "there will be more scrutiny" conventional wisdom

Andrew Rawnsley repeats the argument put forward by several Labour ministers, that the silver lining for Labour with their dismal election results will be that Tory policy will now face more scrutiny. That's lunacy. One of the biggest problems that the Conservatives have faced for a number of years is that they can't get the public to listen to their policies. That policies become unpopular as soon as they are identified as those of the Conservative Party. If their policies are now taken seriously and subjected to scrutiny that offers them the opportunity to set out a platform for government.

Beyond that, there is good evidence that the more the Tories are in the news the better they do (this is discussed frequently by Mike Smithson). Of course, there are risks for the Tories. If they screw up, as they clearly did with the Quality of Life Policy Group report, then they'll have more to lose and are more likely to be found out. However, unless they never want to form a government this is an upping of the ante that the Conservatives have to be happy about. While things clearly could go wrong and Labour could be offered a way out of their current predicatement, this isn't much of a silver lining for them.

Anyone but Obama

I've always thought that you can tell the quality of an American politician by their attitude to trade. In the States it is so easy, but so unimpressive, for a politician of any ideological stripe to make a populist appeal to protectionist instincts. American protectionism can cause so much harm to both their own prosperity and the world economy but it offers easy wins for a politician willing to pander to the protectionists.

Lawson's excellent article in the Independent yesterday sets out just how dismal Obama has been on this issue:

"Obama is one of three Congressional sponsors of "The Patriot Employer Act", which seeks to give preferential tax status to American companies that choose not to invest overseas. His anti-globalisation rhetoric goes far beyond criticism of free-trade deals such as Nafta. Obama told voters in New Hampshire:"I would stop the import of all toys from China". China supplies 80 per cent of the toys sold in the US, so that's one heck of a pile of embargoed fluffy bunnies."

The risks of the current down turn being turned into something far worse by a return to protectionism couldn't be clearer. A trade war with China could cause untold impoverishment and even be strategically dangerous. His hostility to Nafta would undermine the international drive for new free trade agreements that would do great things for poor and rich countries alike.

Any politician who argues for and sponsors this kind of protectionism is either a dishonest hack or an autarkic socialist. Hopefully Obama is the former - it seems quite plausible - but that would still make President Obama an alarming prospect. As Lawson says:

"The trouble is that Barack Obama has now promised Americans that he will legislate in an attempt to prevent their jobs being lost to foreign competition. If he does not do so as President, they will feel betrayed. If he does so, it will be an even bigger betrayal."

This is an area where McCain has been excellent and taken real political risks. Notably, when he refused to pander to the Iowa corn lobby. I think on those grounds alone we, in the British centre right, should wish him well. Particularly if he is against an opponent who, on this issue and others, promotes truly disastrous policies.

Cross-posted from CentreRight.Com.

The unthinking environmentalist embrace of wind power

It won't come as much of a surprise that I think Tim is right on the money in his treatment of 'unthinking environmentalism'. Most 'green' policies are so poorly constructed they achieve very little at prohibitive cost. Plenty have been actively counterproductive.

Tim is right to give the DDT ban and biofuels subsidies centre stage. The human toll in the developing world is shocking. However, we don't need to look to the poor world to see how dangerous misconceived environmental policies can be.

The Renewables Obligation, CERT and the European Emissions Trading Scheme all increase the cost of energy. They are quietly constituting 8% of a household electricity bill, according to Ofgem (PDF). This hits the poor hardest (Chart 6.1, PDF) and, particularly, the elderly.

In the winter of 2006-07 statistics from the Office for National Statistics (XLS) show that there were 23,900 excess winter deaths in the United Kingdom. Anything that makes it more expensive to turn up the thermostat will increase the number of elderly people who take risks and will kill people.

The Renewables Obligation costs taxpayers and costs lives. The big winners are renewables firms. The Financial Times reported some of the figures earlier this year along with this telling quote:

"Peter Atherton, head utilities analyst at Citi Investment Research, said: “It’s a bonanza. Anyone who can get their nose in the trough is trying to."

What do we get in return for lining the pockets of renewables firms with vast amounts of money taken from the poorest taxpayers?

Even if you judge success by the amount of wind capacity the Renewables Obligation is clearly failing. The amount of wind capacity added in 2007 was about three quarters the amount built in 2006 (see the FT report linked above). That is shocking considering the massive scale of the subsidy. The basic problem is that wind power is doubly inefficient. It is financially and environmentally (in the old fashioned sense of the word) costly. It disrupts a great many landscapes for a given amount of output compared to conventional sources which makes getting planning permission for wind turbines particularly difficult. Short of centralising the planning process there isn't much the Government can do about that and it is stalling the development of UK wind power capacity.

Even if it could be made to work wind power is a deperately poor way of providing for our energy needs. Look at this graph (PDF), by the consultancy PB Power, showing the costs of different types of energy. Even compared to nuclear power (which probably needs something of a subsidy to be economical) onshore wind is twice as expensive and offshore wind is even more costly:

That makes wind a complete non-starter in any thinking energy policy that doesn't aim to massively impoverish the population at large. However, it gets worse, from a BBC report:

"We face many hours a year with more or less no wind," says Martin Fuchs, chief executive of one of Germany's biggest electricity grid operators, E.On Netz. "We can save only a very small number of conventional power stations."

Surges of wind-generated electricity risk overloading the grid, he adds, causing power blackouts."

European wind power turbines typically produce less than 20 per cent of their rated capacity.

It's important to note that too much power is sometimes as much of a problem as not enough. That's the problem with breathless articles like this one from the Telegraph celebrating wind power's 'good' days. Big countries that can't just sell the energy off at a loss like Denmark does risk causing blackouts. The 'rebuttal' from a wind power lobbyist in the next paragraph is very weak. Ordinary power plants don't regularly shut down unless we tell them to.

Serious thinking about energy policy leads you very quickly to one of two conclusions:

1) We aren't in a position to effect a practical transition to non-fossil fuel sources of power right now. Given that Britain produces a tiny proportion of world emissions and China, in particular, shows little willingness to impede its development in the name of restraining emissions our cuts won't achieve much anyway. We should work on adapting to the expected effects of global warming and investing in science to find a better to solution to the problem of providing low carbon dioxide emission power than the ones we have now.

2) We should replace the renewables obligation with an old fashioned non-fossil fuel obligation. This will slash the costs as you can then include nuclear power which is, as can be seen above, pretty cheap compared with the renewable technologies. You could get more low-emission power for much less cost to ordinary consumers and taxpayers.

Cross-posted from CentreRight.Com.

Ben Hur

Along with Gracchi and a few others I was at the Festival Hall last Saturday to see Ben Hur: A Tale of the Christ - the 1925 silent, pre-Heston version - with the London Philharmonic Orchestra providing the score.

The experience was incredible. The live music sucks you into the emotions of the story in a way that a soundtrack will always struggle to. Just like with Metropolis I found the lack of dialogue

very easy to cope with. In some ways it is liberating and allows you to enjoy the visual and musical feast that the film and orchestra provide.

In scale this film is hard to parallel. Gracchi suggests that the cast may number in the tens of thousands and you can well believe it. Even Hero doesn't have the same mass of humanity in crowded scenes and this is long before computer animation provided a substitute for such large numbers of extras. When you see this number of people moving about you realise how far computer graphics still have to come. CG just isn't as credible as actual people even at a distance - I think it is the reduction in variety associated with a CG crowd that does it. Despite being over eighty years old this film felt incredibly tangible compared to many modern, rendered works.

I actually think that the film conveyed its message more effectively, and with less compromise, than Gracchi suggests. He argues that because Marcellus, Ben Hur's nemesis, is killed and his family are cured of leprosy the film has not been able to entirely reconcile itself to the Christian moral message that "forbearance [...] a confidence in eternal justice, [...] meekness, kindness, forgiveness no matter the slight and turning the other cheek" are the right path instead of "the pagan virtues of revenge and anger". I think Gracchi misses the film's message in that synthesis.

While Ben Hur does achieve his revenge over Marcellus it does nothing for him. He is instantly dissatisfied and complaining that his revenge has not brought his family back. Instead, his family are brought back thanks to their "confidence in eternal justice". This is the same way the same message is put across in the Lord of the Rings - not by having someone foresake violence but by showing a character who succeeds in the pagan fashion and finds the victory pyrrhic. I see no reason why this approach compromises the message at all.

Great Article on Colombia in the Washington Post

"There are two important countries at the north of South America. One, Colombia, has a democratic government that, with strong support from the Clinton and Bush administrations, has bravely sought to defeat brutal militias of the left and right and to safeguard human rights. The other, Venezuela, has a repressive government that has undermined media freedoms, forcibly nationalized industries, rallied opposition to the United States and, recent evidence suggests, supported terrorist groups inside Colombia. That U.S. unions, human rights groups and now Democrats would focus their criticism and advocacy on the former, to the benefit of the latter, shows how far they have departed from their own declared principles."

Just like Israel it looks like Colombia is being singled out not because it is particularly in the wrong but because the cause of human rights is being perverted as a means to attack those perceived as on the wrong political 'side'.

Iain Murray has a new blog and a new book

Iain Murray, one of the sharpest thinkers around - has a new book out. It keeps selling out on Amazon.co.uk but I think there are some copies on there now and I've got one ordered. If you're interested in learning about some Real Inconvenient Truths, environmental disasters created by the Left, get yourself a copy.

To discuss the issues raised by the book and to write about British politics Iain is launching his own blog. There are already some excellent posts up - go take a read.

Re: The Independent and biofuels

Peter responds to my charge that food security is a non-issue.  His essential argument is that while we're not going to go hungry there are still serious food security concerns as the price of food imports is likely to go up.

I stand by my statement that Britain had little trouble feeding her population during the war.  Let's consider the basic foodstuff, bread, in the first world war (where we started from smallest agricultural base).  Here's the scenario:

1)  Separated from the Continent and, crucially, Russia - a major grain exporter - that drops out of the world market.

3)  Importing four fifths of our grain at the start of the war.

4)  Submarine warfare making importing from the US difficult.

5)  Huge numbers of men enlisted from the farms into the army - this was the real reason that land girls were needed.

6)  All these conditions lasted for several years.

Did this imperil our security?  Not really.  There was a panic at one point in 1916 when it was feared food was running short which led to temporary rationing of some foods but not bread and there was never a real crunch.  In fact, the Germans - who had aimed for self-sufficiency in food before the war - might have gotten in more trouble as that meant more of their workforce worked in agriculture and, when they were enlisted in the army, that led to shortages (our blockade didn't help).  By contrast, Britain moving men out of manufacturing didn't imperil the food supply.

Short of another European land war there is little chance that we'll face similar constraints on our outside food supply again.  Remember that natural disasters damaging food production don't create the same imperative to localise food production.  The best way to avoid getting in trouble if the worst happens and ecological disasters threaten food supplies in a given country or region is to diversify your sources of food as much as you can.  That way the effect of particular regions suffering reductions in yields will be diluted.

So, it's not really about security.  The word "security" is only included because the "food security" lobby think they can break right-wingers' attachment to free trade if they invoke spurious security concerns.

Peter suggests it is actually about reducing food prices.  A few points on this:

1)  Forming economic policy in order to take advantage of expected changes in the terms of trade has a really bad history.  The idea that some products are going to get more expensive so you'd best start making them led a House of Lords report to condemn deindustrialisation under Thatcher (foundation of our economic success since the nineties).

2)  Short of actually going for autarky - which will make food cost more now just in the name of making it less of a shock if it costs more later - international food prices will still be the important thing for consumers.  British output will never be particularly significant for world prices in many foodstuffs.  Of course, some prices are heavily dependent on British output but those are necessarily the areas where our farmers already have a large domestic market share.

3)  If you want to improve food security and prevent prices going up the most important thing to do is increase yields.  As such, Peter's combining his fears of food insecurity with a love of "home-grown" and "organic" produce is something of a contradiction.  It's a lot easier to feed lots of people with good, old fashioned factory farming and as much genetic modification as you can fit on a chromosome.

4)  What does Peter think of biofuels?  If he does anything other than condemn them as folly right now then he doesn't really care about food security.

Cross-posted from CentreRight.Com

The Independent and biofuels

Mr. Eugenides has a must-read post exposing just how completely the Independent has turned around on the biofuel issue. In 2005 they were fervent supporters of biofuels and the new transport fuel obligation. Now, without the slightest embarassment, they are running a front-page on the mounting criticism of the new obligation from within the green movement and the human cost of buying up large amounts of agricultural output to replace petrol.

Massive subsidies for biofuels across the developed world are creating more and more human and ecological crises - and are pushing up food prices. This disaster is a testament to the dangers of listening uncritically to a green movement that too often fails to think seriously about the effects of its proposed measures. The Renewables Obligation is another example of a green policy that has seriously unpleasant side effects and fails to achieve its objectives as I set out in this blog for the TaxPayers' Alliance.

It is unlikely that, despite the clear evidence that biofuels are a dreadful idea at the moment, the policy will reverse. There are a series of uninspiring reasons why reversing these kinds of policies is hard but this, from the EU Environment Commissioner, is perhaps the most dismally unimpressive:

"There is no question for now of suspending the target fixed for biofuels," said Barbara Helfferich, spokeswoman for EU Environment Commissioner Stavros Dimas.

"You can't change a political objective without risking a debate on all the other objectives,"

While I'm on the subject of environmentalists misunderstanding agricultural economics, Peter Franklin is completely wrong on food security which is largely a non-issue for Britain. We produce a pretty large share of our own food at the moment compared to the norm since the abolition of the Corn Laws. In the First and Second World Wars, for all the "Dig for Britain" rhetoric we had little difficulty feeding our population - in fact, diet is thought to have improved. Unless Peter really thinks there is going to be a greater challenge to our food supply than the U-Boats and economic demands of WW2 then there's little reason to worry about it. Britain can feed itself easily enough if it really needs to.

Cross-posteed from CentreRight.Com

In honour of Chris Dillow's relocation

This is a thought that has been occuring to me from time to time while reading Chris Dillow's blog for months now:

If I called Chris the Last Man incarnate, would he take it as a compliment?

After all, this is the man who said he wanted his epitaph to read:

"He made no difference."

If Chris is the Last Man, does that matter? After all, given how rarely I meet someone who can think outside the box of utilitarianism isn't everyone a Last Man nowadays?

The Human Rights Act and the struggle to combat Islamist terror

There is an excellent article over at Comment is Free discussing the bind that we have been gotten into by the Human Rights Act with an inability to effectively control or kick out dangerous Islamist terrorists.

I've said before that I think the real tragedy of Guantanamo bay is that it responded to a real problem in such a shoddy way. Terror suspects come from conditions similar to those of prisoners of war where it isn't really possible to gather evidence - as it is overseas in a conflict zone - but they are part of a conflict that won't have a clear end after which we can hand them back. That means that neither prisoner of war nor civilian law are really appropriate. Some new legal resolution was needed.

Unfortunately, the Bush administration didn't set about coming up with a real solution but instead came up with a shoddy ad hoc legal limbo.

We have similar problems with terror suspects here. They are part of a conflict so large and diffuse that ordinary criminal law struggles to cope. Too much of the evidence is from ongoing intelligence work. That means that we do need some kind of new legal synthesis. Unfortunately, one hasn't been provided and the courts have been loathe to consider any 'least bad' option.

Institutional Decadence

In today's Guardian we have yet more evidence that the Commons has, with a few honourable exceptions, become utterly emasculated and decadent.

Douglas Carswell, MP and contributor to this site, wrote, in the Mail on Sunday, that "speaker [Michael] Martin must go". This isn't, outside SW1, very controversial at all. Michael Martin is the speaker who has spent thousands of pounds of taxpayers' money in a vain attempt to prevent the public seeing the bills they've been paying for MPs' expenses. He is trying to keep MPs' expenses secret while there are serious concerns about his own use of the taxpayer's pound to pay taxi fares when his wife goes shopping. His spokesman resigned for giving "an inaccurate account" of these trips.

While some might disagree with Carswell's call for Martin to resign he has only echoed similar calls from groups outside parliament - including the TaxPayers' Alliance and former independent MP and war reporter Martin Bell. The call should hardly be a surprise or a shock.

However, the response today suggests that the Commons is trying to close ranks.

"[Denis] MacShane said yesterday that the public attack on Martin was part of a plot to discredit the government and parliamentary institutions. "David Cameron must take steps to rein in this campaign and he should discipline Mr Carswell," he said."

An MP should be disciplined for representing the views of his constituents and the public at large? MacShane has a nerve.

It gets worse:

"Tory whips were said to be likely to have "a quiet word" with Carswell, mainly to warn him such a public attack would be counterproductive and end up with him not being called to speak during debates."

A "quiet word" to warn that saying sensible things on an issue of great public concern is "counterproductive". What kind of pseudo-oligarcy do these people think they are running?

If they're worried about not being called during debates there are two options for the Conservatives:

1. If they all speak out then the Speaker can hardly refuse to call the entire opposition.



2. Grow a spine and stop being so pathetically easy to intimidate.

What will really be "counterproductive" is this new, shameful attempt to silence criticism of the Speaker. When the public rightly think that the Speaker is attempting a cover-up of the details of MPs' expenses the idea that a new cover-up is being launched to protect the Speaker himself will strike most as utterly contemptuous of the public that MPs are supposed to serve.

Cross-posted from CentreRight.Com

Judicial Aristocracy

Tim argues that British democracy is being undermined by judicial activism. Supreme Court Justice Antonin Scalia made a similar argument to the Times last year using the more poetic and, perhaps, informative term 'judicial aristocracy'. Tim is going to write to Dominic Grieve requesting clarification of the Conservative Party position on this issue. Unfortunately, this article by Fraser Nelson suggests that Grieve might take a different position.

There are a number of problems with British judicial activism:

1) An unnecessary sacrifice of democracy

Many nations have needed written constitutions and judicial power to curb majority tyranny. They're an imperfect tool, though. Constitutions can be circumvented and such 'safeguards' imply sacrificing the principle of rule by the demos to a significant degree. It is to our nations eternal credit that we haven't needed to make that sacrifice. We've done as well as any, and far better than most, without it. I see no need to sacrifice that great tradition now. The great threats to our liberty come not from an angry majority but unnacountable minorities whether in Europe or our own bureaucracy and political class.

2) Lawyers don't think like 'normal' people

Every profession comes with its own set of cognitive biases. A tendency among its practitioners to a particular way of understanding the world around them. These biases can affect the way people approach important debates. One example is that lawyers tend to be sceptical of deterrence.

A couple of generalisations: Every economist, if they're honest and believe in their discipline, believes in deterrence. We understand the world in terms of incentives and expect that setting up a powerful disincentive to being a criminal will, ceteris paribus, reduce the amount of criminality. We have very good empirical evidence that this is the case. By contrast, every lawyer, in their heart of hearts, thinks that the very idea of deterrence is unhelpful and, most of the time, pretty specious. They spend their entire career thinking in terms of individual cases. That's usually how they learn law and how they practice - one case at a time. The big picture isn't something they have any serious reason to look at and sentencing one person harshly just to affect the attitudes of others seems unjust.

These two disciplines sit at opposite ends of this crucial debate. Worse, we can't even talk to each other. Economists sound brutal and unrealistic to the lawyers, lawyers sound wooly-minded and sappy to the economists.

There is no infallible way of getting to the truth of the matter, which side is right. It is a decision that is rightly left to the people in a democracy as I set out in point one. Further, if the lawyers are given a priviliged position to change policy, beyond their ability to convince people, it can mean a massive bias against the right-wing position.

3) Weakening the defence of liberalism

Constitutions and the judges who enforce them cannot, themselves, defend liberalism. The populace can always ignore, change or pervert constitutional rules and disregard or replace judges. A constitution only has value if it has legitimacy. The American Constitution, and the power of judges to enforce it, isn't contested. People believe that free speech, for example, does deserve particular protection as a constitutional right. There is no such source of legitimacy for the British judiciary and they appeal to foreign documents such as the ECHR. This means that the judicial aristocracy actually weakens, by association, liberalism itself by association. The concept of "human rights" itself becomes thought of, by the population at large, as a foreign charter defending awful men on spurious grounds.

I've put these arguments to lawyers many times. The last is usually the most successful.

Cross-posted from CentreRight.Com

Tax evasion vs. tax avoidance

Tax evasion is rightly a crime and honest taxpayers should not have to subsidise a criminal minority. Equally, there are sensible measures - such as simplifying the tax system - that can be taken to reduce the extent to which people can plan their way around tax (and reduce the advantages accorded to those with expensive accountants).

However, we don't think that trying to blur the line between tax evasion (breaking the law in order to avoid paying tax) and tax avoidance (arranging your affairs, within the law, in a way that minimises your tax burden) is a good idea at all. There are a number of reasons why, in practice and economic theory, such schemes turn out poorly whether you attempt to clamp down on anti-avoidance through a grand General Anti-Avoidance Principle or by encouraging the HMRC to become extremely aggresive (as has happened in recent years).

However, the basic problem is that the people who pay the highest price are never the rich foreigners that many on the left like to set up as bogeymen. It is ordinary people. Ex-cabbies starting up a business who haven't done anything wrong but are bankrupted for 88p, for example. This morning we found this 1909 election poster from the excellent collection at the Bodleian library which illustrates the basic problem pretty beautifully:

Cross-posted from the TaxPayers' Alliance blog.

Does a politician's private life matter?

Tim sets out six factors that can help us to understand the relevance of a politicians' private life to his actions.

To my mind the crucial thing to remember is that we are in a representative democracy.  We can't judge politicians entirely on their policies because we are not just electing a manifesto but a set of oligarchs to rule for four to five years.  Politicians can ignore what they have promised in their manifesto.  Beyond that, they may be faced with conditions that policy could not be formed for before hand.  Trusting someone with that kind of power is a big deal, advocates of mixing in some purer democracy might argue it is too much, and it is quite understandable that people should want to know the character of the person they are giving so much authority.

I think that actually presents something of an argument for ideology in politics.  While ideology might be seen to corrupt people's decision making by introducing concerns other than a simple balancing of evidence and expectations it does at least make politicians predictable.  Even if you don't completely embrace a politicians ideology if they take it seriously you do at least know where you stand.

Finally, I have to quickly respond to Tim's particular dislike of indifference (he laments that people are less infuriated by that than by hypocrisy).  I actually think he is wrong on this.  It would be a real shame if the Right were to replicate the Left's weakness for unserious 'caring'.  The idea that, for example, even if someone's prescriptions for responding to climate change are lunatic it is, at least, good that they care cannot be something the Right accepts.

Cross-posted from CentreRight.Com

Apologies for my absence

Sorry for the lack of posts. I'm afraid I've been both very busy and short of the little ideas of which posts are made. The blog will recover soon enough, hopefully over the weekend.

Eco-towns

A few months ago Mike Denham wondered, on the Burning Our Money blog, whether the new eco-towns would be "The Crap Towns Of Tomorrow". After all, the last generation of government sponsored new towns hardly matched up to the initial, idealistic visions. Even the relatively successful schemes like Harlow are now themselves candidates for "regeneration". The less successful new towns have become bywords for urban blight.

Classic mistakes are already beginning to be made. On Monday the BBC reported that those living in or entering the new eco-towns will be kept to a 15mph speed limit. Caroline Flint says that she will "make no apology for setting the bar as high as possible" because there is "a unique opportunity to deliver a programme which will genuinely revolutionise the way people live".

This attempt to use housing policy not to deliver the kind of lifestyle people want but the kind that Ministers think they should want is not just unpleasant and dictatorial, it is almost invariably a dismal failure. Harlow's town centre is in need of regeneration after 60 years, while older centres have been well maintained over centuries, because it couldn't attract the shoppers and other ordinary people whose patronage provides the economic incentive to keep a place looking pleasant. Similarly, the eco-towns will only be a success if ordinary people want to live there.

Outside of major cities a heavy majority of people drive to work. As there is no way for the government to make the eco-towns immune to the impracticalities of public transport and only a limited range of jobs will exist in towns with populations of 5-20,000 residents of eco-towns will drive to work as well. A 15mph speed limit - not just in the centre of town but also on approach roads - will be a endless source of frustration and make eco-towns an undesirable place to live.

While shortages of housing supply will mean that someone will live in the eco-towns, if it is only those with no other choice - who leave when they can - the new towns will quickly fall into unloved neglect. Most of those who profess to care so much about the environment will stay in market towns built millenia ago. It is easy for Flint to 'set the bar high' if she isn't going to be the one facing the frustration of trundling along at half the national urban centre speed limit.

Eco-towns are likely to prove expensive - both financially and in terms of destruction of the natural environment they are built on top of. Unless they are stopped or seriously rethought that cost might be paid just in order to create new urban planning disasters and, as Mike predicted, "The Crap Towns Of Tomorrow". Politicians much prefer the noisy idealism of forcing people to walk to work and 'eco-towns' to carefully thinking through the possible unintended consequences of their actions. Housing policy needs to be brought closer to ordinary people or we will keep seeing the same mistakes being made, decade after decade.

Cross-posted from the TaxPayers' Alliance blog.

Ignore me...

I'm not anti-American...

...but if I was this article from the peerless alt-magazine for expats in Moscow - the Exile - would explain why. Hysterical.

Obama

Chris Pope, a friend working at the AEI, provides a fine example of why I seriously dislike Obama:

"Like all Obama's stuff, it is very eloquent, at times beautifully emotive, but where it verges on policy it dives into nonsense:

"Just as black anger often proved counterproductive, so have these white resentments distracted attention from the real culprits of the middle class squeeze – a corporate culture rife with inside dealing, questionable accounting practices, and short-term greed; a Washington dominated by lobbyists and special interests; economic policies that favor the few over the many."

Well, actually, the unfolding chaos is caused by a housing market bubble.

Any fool who has been paying attention to the news over the past year knows this. Obama knows this. we all know this. Trying to scapegoat corporations, accountants, lobbyists and "the few" is demagogy that is as deliberate as it is mendacious, and as dangerous as it is unserious."

On the same subject, Andrew Ferguson has an absolutely brilliant, must-read dissection of Obama's speeches. My favourite section, although the article should be read in full:

"That's a clue, anyway. The sentence may not have any positive content, Walker seems to be saying, but it does have an indirect meaning, an implication, as a kind of self-referential gesture for the people who claim it. When Obama's supporters say "We are the ones we've been waiting for," what they mean is that in the long roll call of history, from Aristotle and Heraclitus down through Augustine and Maimonides and Immanuel Kant and the fellows who wrote the Federalist Papers, we're number one! We're the smartest yet! Everybody--Mom, Dad, Gramps and Grandma, Great Grandpa and Great Grandma, maybe even the Tribal Elders--they've all been waiting for people as clued-in as us!

Is this what Obama means too? No one who's wandered through an Obama rally and heard the war whoops and seen the cheerful, vacant gazes would come away thinking, "These are the smartest people ever." I'm sorry, they just aren't. What is unmistakable is the creepy kind of solipsism and the air of self-congratulation that clings to his campaign. "There is something happening," he says in stump speeches. And what's happening? "Change is happening." How so? "The reason our campaign has been different is about what you, the people who love this country, can do to change it." And the way to change it is to join the campaign, which, once you join it, will change America. Because this is our moment. The time is now. Now is the time. Yes, we can. We bring change to the campaign because the campaign is about change. We are the ones we've been waiting for. Obama and his followers are perfecting postmodern reflexivity. It's a campaign that's about itself. The point of the campaign is the campaign."

Quasi-revenue-neutral tax reform

Polls suggest that voters increasingly want lower taxes, even if that means lower spending. Tax cuts are popular. This poses quite a conundrum for politicians who aren't willing to take serious measures to control spending and have no room to borrow.

Revenue-neutral changes to the tax system seemed like the way out for a while but they are a political nightmare because the losers will hate you for it and the winners will prove fickle and ungrateful.

The new solution politicians appear to have hit upon is the quasi-revenue-neutral change. The most politically successful example was the Conservative increasing of the Inheritance Tax threshold 'paid for' by a new flat rate charge to non-doms. The secret is to find a change that is revenue neutral from the Treasury's point of view but a tax cut from the perspective of ordinary people.

There is a problem with all this. It's quite hard to get large sums of money out of the rich 'other'. There aren't very many of them, they leave or use the advantages that made them rich to hide their money from you. Charges on non-doms, of whatever political colour, appear unlikely to raise money. Attempts to crack down on tax avoidance drive ordinary people to bankruptcy but don't yield much by way of revenue. In order to finance their plans Menzies Campbell's Liberal Democrats had to define "rich" down to £35,000 each, in a two-earner household.

With his Vehicle Excise Duty proposals Alistair Darling must have thought he was onto a winner. He could raise revenue from "gas-guzzlers" and give it to the working poor. Unfortunately, there aren't that many Hummers out there and they're already heavily taxed. In order to get substantial amounts of revenue he had to increase VED on the kind of cars ordinary people drive. We crunched the numbers and once it started to be reported that cars as humble as a Nissan Micra would be paying more tax the political logic of the changes looked a lot more suspect. To find out how much your car tax will go up visit www.taxpayersalliance.com/whatsmycartax/

Darling's plan failed and the Budget became a disaster. As the News of the World reported: “for the first time since Labour came to power in 1997, support for the government has SLUMPED after a Budget”. This is another example of quasi-revenue-neutral tax changes failing to deliver the political goods.

Cross-posted from CentreRight.Com

Universalist conservatism

While I am no apologist for the BBC I think that Conor Burns is being a little too aggresive in his attack on them for calling the victors of Iran's election "conservatives". Conservatism can be understood as a passion for institutional stability - a wish to preserve something in an established order. In that sense, a conservative in one country could favour free-markets and democratic governance and, in another, theocratic tyranny. There is no universal conservatism and a conservative could be a man of good sense in England but not in Iran.

Hayek's critique of conservatism is rooted in this problem. If your passion is for preserving then you concede the future to your enemies; if the fight is between conservatives and socialists you will move slowly to socialism. That is why I think that conservatism needs liberalism (in the European sense of the word).

I think that the Iranian "conservatives", clearly defending an established order we would not want to defend, highlight a dilemma for all conservatives. At what stage is there too little worth conserving? At what stage do we concede that conservatism needs to be set to one side in favour of the more radical medicine of liberalism?

I set out the ideas in this post, in more detail, a while back on TCS Daily.

P.S. All this doesn't mean that the BBC's article isn't sloppy. Whether or not the Iranian election victors were 'conservative' or 'reformist' doesn't get at the crucial distinction among Iranian hardliners - clerics or soldiers? The BBC's analysis is weak because they don't draw that distinction so can't properly analyse what the change means for Ahmadinejad. That leads to false enigmas like this one: "However, many of the conservative winners are critics of hard-line President Mahmoud Ahmadinejad."

Cross-posted from CentreRight.Com

The politics of the Budget - the results are in!

Apologies for the lack of posts. Still, it appears that I got the politics of the Budget just about right.

The politics of the Budget

I think Mike Smithson is overstating the case for Balls' heckle being a monumental cock-up a bit here. I think it is unlikely Balls has just cost the Labour Party the next election. It seems more likely that, and his other silly heckling, has ruled him out as a potential Chancellor. That's important. There aren't many other candidates who could succeed Darling and it might mean he is more likely to remain in post. Given how thoroughly Darling's reputation for competence is being trashed that could be very significant.

Now, the bigger issues in yesterday's Budget:

1) A hike in taxes on alcohol and cigarettes


I really can't improve on the magisterial treatment of this subject by the Daily Mash (particularly the second post). Their graphic sums it up:






More than anything this will start to create for Labour the same kind of problem the Tories used to have. They risk being thought of as a nasty, no fun, party.

2) More complexity in the benefits system


The announcements yesterday had all the problems of Labour's benefits policy over the last decade. Plenty of money and good intentions. Unfortunately, far too little thought is given to incentives and there is every indication this Budget will trap a lot more people in dependency on the State. This is more of the same and, while it appeals to parts of the Labour base, isn't going to persuade anyone.

3) Punishing tax increases on motorists

The delay in the Fuel Duty rise is good news. With petrol prices rising so sharply and petrol so heavily taxed already any breathing room for motorists is good news.

However, the VED changes are absolutely hideous. A majority of Britons already think that when politicians call for green taxes they are really after revenue and not really out to save the planet. Darling will, rightly, not get the benefit of the doubt. Now he introduces VED changes that will see quite ordinary little cars paying significantly more excise duty, and new quasi-Showroom Taxes, and tries to pass that off as an attack on "gas guzzlers".

To see just how bad this is, or how your car will be affected, go and take a look at the database I created for the TaxPayers' Alliance.

This could well be a political catastrophe. Unlike taxes that are concealed in a product price, like Fuel Duty or the Renewables Obligation, people have to pay Vehicle Excise Duty directly themselves. People of modest means with old Mondeos, for example (any car registered since 2001 will face the new duties), will find themselves facing demands for hundreds of pounds in excise duty where they had paid significantly less before.

Living in London it is easy to forget that outside the city the vast majority of people drive to work and rely on their cars. They don't want to cram their family into too tiny a space to go away for the weekend and the new bills will be about as welcome as a kick in the nuts. When they pay those bills they will hate the Government. Brown has to hope that hatred fades before the election.

Back from New York

Well, I'm back. I returned from New York on Sunday but have been really busy the last few days and slowly recovering from my jet lag (always worse after travelling East). Spent today responding to the Vehicle Excise Duty con on Sky News. There'll be interesting posts again soon!

Off to New York

First, the story of my last forty-eight hours. Late last night I suddenly decided that I was going to find my passport. I'd need it on Sunday when I flew out to the States, after all. On finding it I discovered it expired in December. Calmed down. Rang the passport service. They had no appointments till Monday. After another panic, which I hope didn't sound too pathetic down the phone, I asked if they had any appointments in offices elsewhere in the country. They had one, at 9.00am on Saturday - in Wales!

Given that there are no trains from London that get you in to Newport by nine on a Sunday I would have to drive or make it a two day stint. After a train ride back to Letchworth to get the car, six hours driving and four hours waiting for it to be produced in Newport I am now the proud owner of a brand new passport.

All those heroics mean that I will be travelling to New York tomorrow. Blogging will be light but hopefully, when I can find a bit of time, interesting next week as I'll be at this conference till Tuesday and then taking a bit of a holiday to explore New York. Normal service will be resumed the following Monday. I'll still keep an eye on the comments and my e-mail when I can - if anyone has any New York-related recommendations please post them in the comments to this thread.

London losing its edge

A huge share of Britain's GDP, tax revenues and exports are dependent upon financial services and the continuing ability of London to attract investment in this vital industry. It is one sector where we are a world leader. Take a look at the WorldMapper map with countries' sizes adjusted to their share of the international finance and insurance market. 99% of world profits from this huge industry flow to Switzerland, Germany, Luxembourg and the UK - we are the leaders:

This is a highly mobile industry as it operates globally and can communicate effortlessly across the world. If London ceases to be competitive we could lose our lead in this vital sector really quickly. If that happens we will struggle to make up for the loss of most of the around £15 billion of tax revenues that London exports to the rest of the country every year rather than spending itself. That's just tax revenues - our long-term prosperity would also seriously suffer.

With all that in mind the news, from the Financial Times, that our competitive position relative to New York and other financial centres is eroding should be extremely worrying:

"London is losing its status as the world’s leading financial centre and being overtaken by New York, according to a global survey of finance professionals.

The collapse of Northern Rock and the proposed tax crackdown on non-domiciled residents are making the UK less attractive to overseas businesses, according to the City of London Corporation, which commissioned the survey.

A separate survey, also commissioned by the City, said the UK tax system had lost its competitive edge over other financial centres. The UK had become increasingly unpredictable and uncertain, complex and unnecessarily aggressive in its approach to taxpayers, it found."

Cross-posted from the TaxPayers' Alliance blog.

Live-blogging E-Day

I just checked BBC News and found out about E-Day. In the face of criticism for bias and politicisation and with poor audience figures for Live Earth the BBC pulled the plug on 'Planet Relief'. One part of Planet Relief was to be twenty-four hours in which everyone tried to save energy. This part was kept in business by the determination of Matt Prescott - campaigner for low energy light bulbs among other things - who dreamed up the scheme.

As a result E-Day started at six this evening. It has a glowing write-up on BBC News Online, the support of the Bishop of London - of all people, energy companies and various environmental pressure groups. Power use will be monitored by the National Grid and compared to their business as usual predictions (which should be very good, if they get them too wrong we get blackouts).

Things aren't exactly going well:



They've actually managed to increase energy usage. Ouch!


We'll check back later.

9.40pm: Total "savings" so far are at -1.2%. E-Day is still making things worse! What will we do?

It's about as important as it would have been if things had gone well, i.e. not very. UK electricity generation is a tiny percentage of global emissions.

9.50pm: Bishop Hill has some background on the BBC's support for this farce.

10.58pm: 1.8% total increase in electricity use! Also, apparently this is a 'moral issue'. The Church of England continues its drive to become the religious wing of the BBC.

Midnight: We're a quarter of the way through and so far E-Day has seen 2% higher energy use than expected under 'business as usual'. This is proving about as successful as when anti-capitalists stage one of their periodical 'don't buy things' days.

9.00am: Over half way now and energy use is still 1.3% up on business as usual. It is running 4.4% above business as usual use right now so things are only going to get worse. How long before Dr. Prescott holds an angry, expletive-laden press conference?

2.30pm: Only 0.8% up now. Maybe they'll break even?

4.30pm: Still up 0.7%. They don't have long now. A correspondent from an American think-tank has a suggestion:

"Wouldn’t it be more effective to encourage people to turn on everything they can? The surge in demand could cause a massive blackout, which would force people to use a lot less power for awhile."

Sensible policies for a happier Britain.

9.30pm: I'm back - missed the big moment but checked it on my mobile. Sure enough, they've increased electricity consumption.

What can I say? Except:

9.35pm: Freeborn John smells a rat. I agree with him that the dissapearance of the early excess consumption is very suspicious. It is hard to explain why the pattern in the early hours would look so different at the end compared to when it was actually happening. Also - in terms of anecdotal evidence from watching the meter - the live usage bar always seemed to be running an excess higher than the average, which shouldn't happen. Still, surely they wouldn't rig it that brazenly?

00:30: They've updated the site with this message:

"E-Day did not succeed in cutting the UK's electricity demand. The drop in temperature between Wed 27 Feb and Thurs 28 Feb days probably caused this, as a result of more lights and heating being left on than were originally predicted. The National Grid refined their assessments, based on actual weather data, during Thursday afternoon but I am afraid that E-Day did not achieve the scale of public awareness or participation needed to have a measurable effect. I will do my best to learn the relevant lessons for next time. Thank you to everyone who helped me or left something off specially as their contribution to E-Day, and this Leave It Off experiment. Please enjoy E-Day's solution, video and science sections which all worked well. Warmest regards, Matt"

A few points:

1 - If the temperature had been unexpectedly mild would they have updated the prediction?

2 - How exactly do you define "worked well"?

3 - "Next time"? You've got to be shitting me.

Still, I'm impressed he managed to avoid the term "climate criminals" or call for us to be sent to Climate Camp.

Rambo

You know what struck me most about the new Rambo? It's very pagan.




A few reasons why:

• Middle Earth was Tolkein's Christian critique of Europe's pagan spirit. In the Lord of the Rings victory belongs not to martial valour, which is hopeless, but to faith and hope. In Rambo the Christian aid workers are the hobbits. Their illusions are shattered and they are saved by pagan military heroics, which are effective. It rebuts Middle Earth.
• It is brutally violent.
• The real heroes are overwhelmingly amoral in outlook and attitude but effective and on our side.

I'm not saying it was intended that way. I think that it is entirely possible that the film was intended to send a Christian message. However, the pagan attitude creeps in and has a certain plausibility to it. I sometimes wonder if we don't do enough to understand our Northern European/Germanic roots and how they influence our outlook.

Update: I've set this out in rather more detail on CentreRight.Com

Indur Goklany on What to Do about Climate Change

Indur Goklany's paper (PDF) for Cato's Policy Analysis is excellent. He goes through, using the Stern Review and DEFRA's Fast Track Assessment as his sources, why even pessimistic accounts of the costs of climate change cannot find more than marginal harms within the foreseeable future. This builds into a case that humanity will actually be better off in the warmer but richer scenarios that were purported to be the worst-case scenarios by Stern and DEFRA's researchers than in a cooler but poorer world.

Goklany argues that adaptation to the specific problems that might be worsened by climate change, such as malaria, is the way forward. His study provides yet more support for the now reasonably well established three-pronged response to climate change; that such an approach is a better idea than aggresive attempts to curb emissions. Technological development, adaptation and resilient free-market institutions can all contribute to an effective response to global warming.

Leaving the country

When economists want to know what people think they try to avoid relying upon asking them. Surveys, opinion polls, personal anecdote and other ways in which people express their opinion can often be misleading or distorted. When and how a question is asked and how it is phrased can seriously affect the outcome of a poll. More importantly, people may express a certain preference in a poll but make quite different choices when asked to make real decisions with real consequences.

It is often better to look at revealed preferences; how people actually behave when faced with actual decisions in real life rather than hypotheticals in a survey.

Some dramatic new evidence of this kind emerged yesterday. High staff turnover often suggests that an organisation is not a pleasant place to work. High numbers of asylum seekers from Venezuela suggest that Hugo Chavez's rule is not very pleasant. The Army's recruitment and retention difficulties suggest that the poor management of the Armed Forces is making them an increasingly unpleasant place to work. In that light, the evidence yesterday that Britain is facing the biggest brain drain in 50 years, that those most able to leave are doing so, is an alarming suggestion that things are going very wrong in Britain today:

"There are now 3.247 million British-born people living abroad, of whom more than 1.1 million are highly-skilled university graduates, say the researchers.

More than three quarters of these professionals have settled abroad for more than 10 years, according to the study by the Organisation of Economic Co-operation and Development (OECD).

No other nation is losing so many qualified people, it points out. Britain has now lost more than one in 10 of its most skilled citizens, while overall only Mexico has had more people emigrate."

Why are people leaving? One suggestion:

"Prof David Coleman, of St John's, Oxford, said the brain drain was "to do with quality of life, laws and bureaucracy, tax and all the rest of it"."

Ever higher levels of tax; little to show by way of public service results for that huge drain on private incomes; an overly meddlesome state that leaves people bereft of control over their own lives. Yesterday's emigration numbers should be a wake-up call for a nation whose government is attempting to do too much and doing a very poor job of it. If things don't change Britain will continue to lose far too many of its best and brightest.

Cross-posted from the TaxPayers' Alliance blog.

The Government's Northern Rock agenda

Vince Cable, in yesterday's debate on the bill to nationalise Northern Rock, framed the essential question that the Government are not openly addressing but that is of paramount importance to the question of where Northern Rock goes from here over the next few years:

"May I return to the central question of what kind of bank will now operate? Will it be built up or run down? The hon. Member for Newcastle upon Tyne, Central (Jim Cousins), with whom I have had several exchanges in the past few weeks, put it rather well yesterday when he asked whether this is the end of the beginning or the beginning of the end of this bank. That question is crucial. It is at the heart of the argument about the business model, on which Ron Sandler will presumably be asked to decide. It is not clear to me which of the two approaches is the better. A wide range of options exists, so one can envisage a kind of continuum, at one extreme of which the bank would be run off and would have no new business. The other extreme might involve a highly expansionary strategy—a kind of publicly owned Virgin or “the people’s bank”, as somebody called it yesterday. Alternatively, something between the two might happen." - Hansard, 19 Feb 2008 : Column 193

The agenda that the Government are trying to slip under the radar is something closer to the latter that the former; a highly expansionary strategy. Jim Cousins provided an illustration of the political pressure that the Government are under to deliver such a solution to the problems of Northern Rock:

"Let us be fair about this. Northern Rock was trying to be a big bank based in the north-east that could take on the big boys of the banking sector. That prospect, from the north-east’s point of view, must be retained. It may not ultimately work out that way, but it must be retained." - Hansard, 19 Feb 2008 : Column 198

Cousins is supporting nationalisation because he believes that it is a vehicle for taxpayers' support to be used in an attempt to revive the busted Northern Rock. Why does he believe this?

Such a strategy wasn't mentioned in Alistair Darling's speech and is hardly the impression given by his rather humble talk of "temporary public ownership". John Redwood asked whether the Government had told Cousins that they were going to attempt to run into reality his vision of nationalisation reviving Northern Rock as a big bank:

"Mr. Redwood: As a local Member for the business, has the hon. Gentleman been given any assurances by the Chancellor that he is going for the growth model and not the wind-down model?

Jim Cousins: No, I have had no such assurance; nor, at this stage, would I necessarily look for one. We have had from Mr. Sandler clear comments that he sees the business as a going concern and is preserving the option of growing it on." - Hansard, 19 Feb 2008 : Columns 197-198

If Cousins is representative then Labour MPs share our conclusion that Ron Sandler's unguarded statement on Monday (quoted in the Financial Times) offers the best clue we have yet to the objectives that will inform the business plan for a nationalised Northern Rock.

"The aim is to reinvent Northern rock as a 'profitable, vibrant and sustainable business'"

This is the agenda that the Government won't yet discuss openly but that seems to be underlying their policy on Northern Rock. Taxpayer support is to be enlisted in an attempt to revive the bank. There are a number of issues with this:

1. It ups the ante by committing taxpayers money to the risky venture of trying to revive Northern Rock instead of taking the more cautious approach of trying to get value from the assets as they stand. As Stephen Dorrell put it: "The state would be used as a sort of turn-around venture capitalist" (Hansard, 19 Feb 2008 : Column 200). The ill-fated Phoenix Consortium attempt to turn around Rover as a mass-market car manufacturer shows the risks of a hubristic failure to accept that a company has had its day and might need to be wound down.

2. Regardless of Ron Sandler's abilities he will be operating a nationalised industry and subject to the political pressures that make the lives of many brilliant private-sector executives' lives hell when they switch to the public sector. Jack Lemley, the project manager brought in to run construction of the London Olympics venues, told the Idaho Statesman:

"Well, I’ve never walked away from a project ever until I retired from the London 2012 programme, and it was so political that I think there is going to be a huge difficulty in the completion both in terms of time and money and it’s much more difficult because there’s so much time being lost now. [...] I don’t want my reputation ruined being able to deliver projects on time and on budget."

3. This will be a massive market distortion. There will be one player in the mortgage market with a guarantee from the taxpayer behind them. This will allow the bank to offer more generous interest rates than its competitors. Potential competitors with a revived Northern Rock are rightly furious.

The Government are deliberately keeping the plans for what happens next with Northern Rock obscure. However, their plan to make taxpayers play venture capitalist trying to revive a busted bank with a wrecked brand is becoming clear anyway. It is a political agenda that puts taxpayers' money at huge risk and could create damaging distortions in the British economy.

Cross-posted from the TaxPayers' Alliance blog.

What the opposition should say in the Northern Rock nationalisation debate

The Government offered every inducement to private sector bidders for Northern Rock. It offered a heads you win, tails we lose deal whereby the taxpayer would foot the bill if things went wrong at the bank but a new owner could walk away with big profits if things turned around for the better. They still couldn't find a private sector bidder able to offer good value to taxpayers.

That the Government could not find a bidder despite lowering the bar so drastically suggests that the private sector didn't expect to be able to get much value out of Northern Rock. We are now expected to believe that the Government can do a better job - can deliver taxpayer value where the private sector couldn't. Taxpayers are understandably cynical.

There are several unanswered questions. Just how strong is Northern Rock's loan book? How well prepared is it to weather weaknesses in the housing market and still pay off massive loans to the taxpayer?

What will we have to pay shareholders? Is there any chance that the outrageous demands for £4 per share being made by hedge funds, who have bought into Northern Rock since the crisis, will be sated?

Bigger questions are raised by the form that this nationalisation is beginning to take. While this is, in theory, a debate on whether or not to nationalise Northern Rock that is less a decision than a resignation that there is little other alternative. By contrast, the form of nationalisation is a decision firmly within the Government's grasp and one that could have vast financial consequences.

We can understand how that decision has been made by listening to Ron Sandler, the new boss at Northern Rock, who was quoted in the Financial Times as saying "the aim is to reinvent Northern Rock as a 'profitable, vibrant and sustainable business'". The Government have chosen not to take the option of running down the mortgage book and steadily putting the bank out of its misery. Instead, taxpayers are being asked to support an attempt to resurrect the bank. There are many parallels to the Phoenix Consortium's promise to make Rover a world-beater again.

Such an endeavour is necessarily more risky and involves a greater exposure of taxpayers' money than running the bank down. The Government is upping the ante on taxpayers' behalf. While there has been an attempt to spin this 'temporary' settlement as a very short-term arrangement Ron Sandler has acknowledged that it is likely to be years before a resurrected Northern Rock is likely to be ready to return to the private sector.

Throughout that period each British taxpayer will, effectively, have £3,500 staked on the future of a mortgage bank with a busted brand. Beyond that, they will have to hope that this bank is really run on commercial, and not political, terms. While Ron Sandler may be impeccably qualified he will be employed by, and answerable to, politicians. If they see some short-term political advantage in delaying, for example, important decisions on downsizing Northern Rock will the chances of taxpayer value being delivered be further imperilled?

There are other costs to a nationalisation that aims to reinvent Northern Rock. It will mean facing other mortgage lenders with a rival able to call on a guarantee from Her Majesty's Government. That is quite a luxury and, in a time when banks are struggling to raise finance, will make it hard for other banks to compete. For that reason European authorities are likely to take a dim view of overly ambitious proposals to revive Northern Rock.

It is a betrayal of basic economic principle and the interests of every taxpayer for the Government to use Northern Rock as, perhaps, the most expensive job creation scheme in history.

Cross-posted from the TaxPayers' Alliance blog.

Obama and the Precautionary Principle

Tim links to some rather... enthusiastic statements from Obama supporters:

"He empowers us with words... People are rushing into the tent to drink that Magic Water."

"He is not the Word made flesh, but the triumph of word over flesh."

"I felt this thrill going up my leg"

All from the excellent Is Barack Obama the Messiah? blog. So on the one hand we have the possibility that Obama is some kind of saviour who will reward a vote for him with all kinds of miracles.

Unfortunately, there is another possibility. Kevin Henry suggests that electing Obama could lead to the destruction of the human race thanks to a giant meteorite.

So, should we take the possibility that God is a racist and will punish Americans with extinction for electing a black man seriously? Or, should we vote Obama so that he can end terrorism, global warming and man's inhumanity to man?

We should probably ignore both but, then, we should probably ignore a few degrees of climate change here or there after 2800 (PDF, Box 1.3). Imagine if someone proposed going to war with Iran in case they nuked us in even two hundred years time. Stern and those who believe his "authoritative" report are allowed to get away with that kind of breach of common sense.

Cross-posted from CentreRight.com.

Defence spending

As I noted following the CSR in October defence spending as a share of GDP is set to continue to fall. It is even set to fall absolutely in real terms over the next few years. Massive commitments in Iraq, Afghanistan and now in Kosovo just can't be combined with steady cuts in the military's resources. Particularly given the ongoing scandal of MoD inefficiency.

The Government's standard defence - that military spending fell under the last government is very weak. The last government both started from a high, Cold War, base and never faced the military with the massive commitments that the present Government has.

The Armed Forces are being massively let down. Good personnel are leaving thanks to the conditions created by such an overstretch. The consequences will last for decades. Soldiers are dying thanks to the Government's failure to properly resource the Army.