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August 2011

Dunno Ritchie, I\’m about to try it

Anyone who believes that in the current circumstance where demand is disappearing around a U-bend seemingly to never be seen again the chance that any business is going to take advantage of low interest rates, low tax rates and high investment incentives to decide now is just the perfect time to build a new factory or office or to innovate new products needs their head examined. It’s just not going to happen.

I\’m getting very close to the decision about whether or not to launch a company to do exactly that, innovate an entirely new product.

For, you see, innovation, the onward march of technology, isn\’t one of those things that is dependent upon aggregate demand. Better, cheaper, faster, these are all still desirable whatever the growth rate or not of the wider economy.

A letter to the Guardian: that they actually printed

There\’s obviously a mischievous mind or two on The Guardian\’s letter page.

• The idea of a People\’s Jury certainly has merit, but there is a risk of the creation of a new, publicly paid secretariat producing comfortable sinecures for its proponents. So might I make a suggestion that would completely eliminate any lingering suspicion among those possibly ill-disposed to the idea?

No one who has signed the letter, no one proposing this possibly desirable exercise, may take a paid position if and as the People\’s Jury is created. Not in the secretariat, not in preparing evidence for the jury, not in presenting evidence to the jury, not in the preparation of research. No salary, expenses, research grants, nor even consideration for a public honour. All of the signatories will immediately agree to this restriction, as they are purely motivated by their sense of public duty. Similarly, all supporters will be willing to donate their expertise without payment as they will also be motivated by a sense of public duty.

I am sure that with this one minor, even trivial, addition to the call to action that the support base will widen considerably.

Tim Worstall

Fellow, Adam Smith Institute

They edited out my last line which was that if they did agree to add this to their call then I would sign up to it too. As I would.

So, over to those looking for the research contracts to tell us why this shouldn\’t happen.

I seriously doubt it Richard

So the USA has a deal on debt.  In exchange for increasing the federal borrowing limit cuts of maybe $2 trillion in spending have been agreed, and it seems likely that the vast majority  of these cuts will be borne by those least able to suffer the burden amongst the American poor.

This is as a result a day when all who campaign against injustice should rightly be angry.

And let’s remember this deal is not a solution to a real problem:  this deal is a solution to a crisis  deliberately created by far right politicians in the USA  who were determined to increase the wealth of the wealthiest Americans at cost to the vast majority of the rest of the population of that country.  It looks very likely that they have achieved their goal.  It’s hard to celebrate a victory that will bring increased unemployment, an economic downturn, mass hardship  and even a return to destitution  for many Americans  when that outcome has been deliberately planned and imposed by the country’s own politicians.

But there’s something even worse than that  at the core of this deal which would be all too easy to ignore.  The fact is that this deal is not going to solve the US debt crisis.  By putting millions out of work, as I’m sure it will, US tax revenues will decline. Its fiscal position will deteriorate.

Could we have a little proportion here please?

Obama said the agreement will cut about $1 trillion over 10 years and cuts would not happen so quickly that they would drag on the fragile U.S. economy. Another $1.2 trillion would be cut if a joint committee fails to find at least that much in budget savings.

The deal cuts, at maximum, $100 billion a year from spending.This deal and the next deal together might cut $250 billion a year.

Total federal spending is around the $3.8, $3.9, trillion mark.

So we\’re talking about cuts in future budgets of 2.6% to, at maximum, 6.5%, over a decade.

You\’ve got to believe in a really high multiplier for that to cause serious problems you know.

Arrest the Libertarians!

What I was saying was that libertarians threaten the state at potential massive cost to most in society – and that the police have got it completely wrong to think anarchists are the big threat to society

Guess Who?

Idiocy on fisheries

The G editorial and then some of the comments about fisheries and how to \”save\” them.

My comment there:

Lordy, we\’ve known the solution to this since Garrett Hardin wrote in the 60s. We even had Elinor Ostrom awarded a Nobel for her study of how to manage such communal resources.

Above a certain number of people trying to use a resource (Ostrom estimates low single digit thousands) there really is only one solution: private ownership of the resource.

Just as with farmers and farmland, we need to privatise ownership of the right to fish a certain stock.

And we\’ve actually tried this: the Alaskan halibut fishery. Works like a charm too.

There are still problems, yes, the deep ocean fisheries for tuna, marlin etc. But other than a bit in the Sea of Okhotsk, all of the commercial fisheries other than those tuna, marlin etc ones, are in national economic exclusion zones under the UN\’s Law of the Sea. We already have the legal structure, we\’ve got the theory, we\’ve got successful examples of implementation: all we need to do now is get on with it.

\”We need to take capitalism out of the equation\”

No, capitalism is the answer here.

That public jury thing

A call for a randomly drawn 1,000 person jury? To examine everything?

Umm, no, not quite.

The Jury would be made up of 1,000 citizens drawn as a random sample of the electorate.

There\’s an awful lot of wriggle room in that you know. What\’s the weighting we\’re going to use to show that it\’s representative of the electorate?

More importantly though who is going to present evidence? Who controls what is looked at, how and by whom?

The Jury will be funded out of the public purse, with a paid secretariat with the resources to commission research and call witnesses.

Yes, quite, it\’s always the terms of reference which determine where an inquiry goes, isn\’t it?

Then we get the people who have signed it.

Professor Kate Pickett, University of York

That would be interesting: can we commission Chris Snowden to examine her book the Spirit Level?

Ann Pettifor, Prime Economics

Prime economic loon there.

Deborah Doane, World Development Movement

Teenage Trot.

John Christenson, Tax Justice Network

Richard Murphy, Tax Research LLP

No, no, they wouldn\’t be angling for a place on the paid secretariat now, would they?

Andrew Simms, nef fellow

Nor he

Professor Danny Dorling, University of Sheffield

This one\’s definitely a loon. Claims that all children are entirely equal, it\’s only upbringing and training that makes them different.

Professor Prem Sikka, University of Essex

Rare to see one of these letters he doesn\’t sign.

Professor Richard Wilkinson, Emeritus Professor of Social Epidemiology

Ditto with Mr. Snowden and the book.

Jeremy Leggett, founder and CEO, Solar Century

Who would like to bet one whether the jury will be asked to increase solar PV feed in tariffs?

Ruth Potts, The Great Transition, New Economics Foundation

Stewart Wallis, executive director, New Economics Foundation

Three neffers in total? We know it\’s going to be lunatic, don\’t we?

Rajesh Makwana, director, Share The World\’s Resources

Who?

Now, there is one way I would support this. To take a little lesson from business say. When you set up a joint venture you never, ever, set it up as 50/50. Someone, somewhere, has to have the ability to tell the other side to shut up. The most sensible way of doing this is to give one partner 51%…..but give management control to the 49%er.

The 51% can get rid of that management, that\’s what the 51% is for. But it\’s the nuclear option, only usable in dire crisis.

On this basis I say we give this list of Statist loons their jury. Yup, their secretariat, public funds and all.

But we get a very much non-statist loon (it\’s the \”non-statist\” which is important here) to actually run the secretariat and determine what evidence is collected, who is hired to do so and who presents it and how.

You know, me.

You get your investigation lefties: just not quite the parade of your own prejudices that you were hoping for.

Never happen but……

I have a dream proposal – replace all benefits with a single National Subsistence Allowance of £5,000 pa for every UK citizen. From birth, everyone would receive £400 a month and £200 on their birthday, no forms need to be filled, saving billions in administration overnight. That would fix the benefit system and by having a universal tax rate of 20pc (VAT, income, company and inheritance taxes) accountants would stop peddling avoidance schemes, tax havens would be deserted and revenues will rise.

But, of course, this is a dream, far flung from reality. History shows that life continually becomes more complicated because legislators can\’t resist legislating, so the best we can hope for is that we are not given any new rules to replace those that are on the way out.

Wouldn\’t it be nice if it did?

A cbi, a flat tax and millions of bureaucrats having to do something useful with their lives.

OK Mr. Balls, if that\’s the way you want it

A £1bn scheme to encourage businesses to expand has been declared a \”total flop\” as it emerged it had cost more to run than it has delivered in additional growth.

Let\’s subject all government spending to this test shall we?

You buggers in Whitehall only get to spend money which you can prove will make us richer.

I have a feeling you\’re going to be scrubbing a good few hundred billion out of your proposed budgets which is just fine with me……

Those ever longer working hours

You know, those ones that rise up as an incantation in Guardian not-think pieces?

Analysis of the most recent time use survey for Britain — which includes the unemployed and \”homemakers\” as well as working couples — shows that women work an average of five hours 55 minutes a day on employment and chores, compared with a man\’s five hours 37 minutes.

Yup, they\’re bollocks.

Because what everyone, but always, looks at is market working hours without adjusting for the decline in home working hours.

Now you might think this is trivial but this ignorance of reality leads to some entirely stupid prescriptions. For example, the nef (how did you know I was going to use them as an example of stupidity?), tell us we should all be doing fewer market working hours….and then rather fail to tell us that this will mean many more household production hours, leading to a decline in leisure time and an increase in total working hours.

Further, we can make a general presumption that market working hours are more productive than household. For in hte market we\’ve the division and specialisation of labour while in the household this is, at best, limited. So production will be, as this general presumption, less per hour of household labour than it will be for an hour of market labour.

So the nef\’s suggestion is that we should work fewer hours in order to work more hours to be poorer.

Put that way it sounds most attractive, doesn\’t it?