Tim Worstall

I\’m Very Confused

And please stop laughing at the back there, yes, I kow, not an unusual situation.

Richard Murphy:

But what is clear is that in this case the banks, despite having a useful role for which they have been given the right to claim for themselves about 97% of all seignorage, worth about £45 billion a year for their profits, have declined to support Northern Rock even though it is, according to the Bark of England solvent and able to pay its way.

Hunh? Are bank profits in the UK actually £45 billion at all? I\’d be astonished if they were (note, profits from banking in the UK, not of global banks that happen to have their HQ here). The links gives me this:

That technical factor also points the way to monetary reform at the national level. Dematerialised non-cash money (i.e. electronic bank-created money held in bank accounts and transmitted between them by modern information and telecommunication technology) is now overwhelmingly important. About 97% of this country\’s money supply is created in that form by commercial banks, and only 3% as banknotes and coins issued by the Bank of England and the Royal Mint.

The commercial banks create the non-cash money out of thin air, calling it credit and writing it into their customers\’ current accounts as profit-making loans. That gives them over £20 billion a year in interest, while the taxpayer gets less than £3 billion a year from the issue of banknotes and coins. Stopping
commercial banks creating non-cash money, and transferring to the central bank responsibility for creating it and issuing it debt free to the government to spend into circulation, will result in extra public revenue of about £45 billion a year. This is the reform with which this book is specifically concerned.

Errm, is this just fractional reserve banking all over again? I think it is you know. Didn\’t know that Murphy hung out with the LaRouchies.

New Blog!

Liberal Conspiracy.

Opening with many heartfelt paens to the joys of, well:

There is no denying that Liberal Conspiracy is partly born out of the frustration that many organisations who champion liberal-left ideals do not cooperate much with each other. It isn’t just the sectarianism that has traditionally been the preserve of hard-left socialists.

As our politics splits up into single-issue groups concerned about the environment, civil liberties, feminism, anti-racism, social justice, alleviating poverty etc – there isn’t much dialogue taking place between them and there is certainly a lack of broad coalition-building to push for political aims together. We want to be the network hub where other organisations sharing our ideals are promoted and their campaigns highlighted.

It’s all part of building a vast liberal-left conspiracy of course.

Mmmm hmmm.

I hate to tempt fate but, fingers crossed, touching wood and stroking a rabbit’s foot, this blog could turn out to be a rarity: a place where liberals and lefties gather to debate that I don’t feel an immediate urge to leave.

I doubt I’m alone in feeling that way. No need here to recap the British left’s long and turgid history of ideological introversion and sectarian scrapping.

Chris Dillow\’s a part of it which means that it will at least have some good writin and interesting arguments.

I\’d give them, say, three days before the ideological introversion and sectarian scrapping start. Maybe a little longer, perhaps until Chris points out (again, and correctly) that you can\’t have both a large State and a redistributive one. Or that markets actually solve many of the problems "left liberals" whine about.

The Low Carbon Kid Part II

This actually rather worries me. This bloke actually works as a news editor for Defra: thus he\’s influencing how the Beast of Government actually views these things:

Renewable energy will, by contrast and by definition, last forever. Oh yes, and it\’s free.

You what? Free energy? What is he drivelling about?


Paul Krugman: Wobbled By Wealth


The public wants change. … Nor is the demand for change solely about Iraq: there has been a strong revival of economic populism. Democracy Corps asked those who believe America is on the wrong track to choose phrases that best described … what’s gone wrong. The most commonly chosen were “Big businesses get whatever they want in Washington” and “Leaders have forgotten the middle class.”

So much, by the way, for pundits who claim that Americans don’t care about economic inequality…

Paul laddie. That first answer isn\’t a condemnation of economic inequality. It\’s a condemnation of the way in which the State pokes its nose into economic life. If Congress weren\’t so hell bent on detailing what we all may do then business wouldn\’t be in there buying the right to do as they wish. The way to stop business buying such influence is to stop Congress attempting to have such influence capable of being bought.

MP\’s Pay

So it would appear that MPs think that their pay should increase.

Ministers have already received a report from the Senior Salaries Review Body, which helps to set MPs’ pay and allowances every three years. It recommends that MPs receive an increase to the basic salary of £60,277 of more than the current rate of inflation, according to an official who has seen it.

The scene is now set for a clash with backbenchers from all parties. Some want their salaries raised to about £100,000, arguing that MPs have fallen far behind equivalent professions.

Over and above the issue mentioned already, that MPs who lose their seats actually find getting work anywhere near as remunerative terribly difficult, there\’s, again as mentioned, the point of supply and demand.

Given that there are at least five applicatns for every seat: and also given that this is a democracy, so that by definition, anyone capable of standing is capable of doing the job, it would seem that we\’re grossly overpaying MPs.

You What?


Dr Rant\’s employer is now insisting on taking the cost of a 1st class Royal Mail stamp out of all the hospital staff\’s paychecks each month to pay for posting the salary slips to them at their home address.

And do read the kicker.

Just Clean That Up For You, Shall I?

Belgium will set an uneviable record tomorrow for the longest period in its 177-year history without a government, after divisive election results in June.

Corrected it reads:

Belgium will set an enviable record tomorrow for the longest period in its 177-year history without a government, after divisive election results in June.

An Environmental Dictatorship

That does appear to be what is being suggested:

In a nutshell, the point is that to commit at the top level to sustainable development, you need to put on what the Low Carbon Kid (ie me) calls sustainable development spectacles, so everything you see and do is filtered through this way of seeing, which is, of necessity, holistic and all encompassing.

Every single act of government must filter through this lens to avoid inadvertently countering the overall aim.

Ministers cannot do this without special training. Civil servants, who have been in post for years, or who have Oxbridge legal backgrounds, cannot be expected to do it either.

Just hand over the power to me and people who think like me and everything will be OK!

Stunning credentials, don\’t you think?

David Thorpe is a freelance environmental journalist and a news editor for Defra\’s Energy, Resource, Sustainable and Environmental Management magazine.

He runs a blog, The Low Carbon Kid, and won a national competiton as a children\’s author with his novel Hybrids, published last May by HarperCollins.


As an example of his thinking:

Basically economic growth and sustainability are incompatible.

Now that will be a shock to the massed ranks of economists around the globe. That there are certain forms of economic activity which are not sustainable is not a shock: but that economic growth and sustainability are incompatible will be. Doesn\’t he know that technology is one of the drivers of growth?


Quote of the Day

In the comments to some anti-market eco-wibble at CiF:


Comment No. 906068

November 4 19:50


The article poses a simple question: do we want Government to decide how to allocate this valuable, scarce resource or leave it to the market?

Easy one. The scarcer oil becomes, the more important it is to leave its allocation to the market. That\’s what markets are good at.

Quite. Some things are simply too important to be left to governments.

Meera Selva

China has been quite rightly criticised for exploiting Africa, buying up mining concessions and primary goods in opaque deals that benefit African leaders but not necessarily their people.

Let\’s just clear that up a little, shall we?

African leaders have been quite rightly criticised for exploiting Africa, selling mining concessions and primary goods in opaque deals that benefit African leaders but not necessarily their people.

There, that\’s better.

Farmers\’ Markets

I am a nasty, nasty man, for I admit that I find these sorts of stories terribly, terribly amusing:

Farmers markets have become so popular – there are estimated to be about 550 across the UK – that there are concerns they are becoming victims of their own success. The argument is that if they get too big they lose what many feel they are all about: an opportunity for small-scale producers to sell goods produced nearby.

Just as the supporters of Farmers\’ Markets insisted, there is indeed a taste for good quality, locally produced food. Excellent, they worked that out and have built a system which provides exactly that. Might not be my cup of tea but so what, if it increases the consumer surplus of others then a damn good thing say I.

But that taste seems to be quite large, so much so that it looks as if it might turn into a real, large, industry. Horrors!

But then, how do they think the supermarkets, against which they see themselves rebelling, got so large in the first place. By, err, supplying what people wanted to buy, wasn\’t it?

Women\’s Corsetry

I know, I know, just the sort of serious subject you expect here on a Monday morning.

The quest for the perfect figure is causing droves of British women to resort to wearing the throwback girdle.


But its ability to reduce the waist by up to two dress sizes has seen it return.

Hmm, can we turn the truth in advertising people on them? Or is your, at the moment of disrobing, ending up with rather more than you bargained for to be seen as an added bonus rather than deception?

Kylie Minogue apparently donned a bit of extra support under her figure-hugging black dress at the Q Awards last month. Accepting her Q Idol award, she said: "I would like to thank those of you who continue to support me – including my dress!"

Denise Fraser, a buyer for the website Figleaves.com, said: "In the past, shapewear was something that your mother wore.

"But now there is no longer that barrier."

Hmm. Actually, given that Kylie Minogue is now 39 or so, she rather fits the "mother" demographic, doesn\’t she?



Russian Customs

Well, here\’s a surprise:

Sources say the conflict is as much about financial interests as power: some former KGB figures are said to offer protection to businesses and are involved in money laundering and smuggling.

The fiercest battle is reported to be over control of Russia’s customs organisation.

There is indeed good money to be made by being in charge of it.

The investigation, which uncovered evidence that Tri Kita managers had bribed FSB officers to smuggle in goods without paying duty, led to the dismissal and arrest of several high-ranking FSB figures last year.

We, of course, are far too small to be of interest to such people. But over the past 6-8 months there have been increasing problems in trying to import or export anything. We\’re a little unusual in that we do indeed pay all of the applicable customs duties on our materials, as we have done for over a decade. But we\’re now, even so, being hit with endless delays, samplings and so on. All the prelude to a shakedown in fact. So while we\’re of no interest to the big boys, the littler ones seem to be looking for their slice too.

It\’s actually got so bad that we\’re looking to build a supply chain outside Russia, despite it being the obvious place for us, chock full of both our desired material and the expertise to purify it in the manner we want. It\’s not even, to be truthful, the idea that a slice of the action will be demanded. We can change pricing to deal with that. It\’s the uncertainty that matters: a two month delay in shipping means we lose (as we have done) a customer.

Doesn\’t bode well for the Russian economy as and when the oil price falls, does it?

Political Machinations

Note that there\’s not even a pretense at providing a public interest explanation:

GORDON BROWN is preparing to announce curbs on spending by political parties which will prevent Tory candidates from gaining an advantage in marginal seats.

His first Queen’s speech this week, in which the prime minister will set out his legislative programme for the coming year, will signal a party funding bill to close a legal loophole that has allowed the Conservatives to splurge money on key constituencies in the run-up to the next general election.

Ministers have expressed concern that millions of pounds being provided to Tory candidates by Lord Ashcroft, the former party treasurer and one of the party’s biggest backers, is damaging Labour’s chances in marginal seats.

Just damaging Labour\’s chances is sufficient reason to change the law. Who now would want to deny the truth of public choice economics? That politicians do things which are good for politicians?

More Royal Gay Sex Scandal

Isn\’t this all becoming fascinating?

THE aide at the centre of an alleged blackmail plot against a member of the royal family has claimed he also had a homosexual liaison with the royal’s father and a Tory MP. The claims are made on recordings seized by police.

Given that we all now know who the junior royal is we therefore also know who the father is. And that\’s an allegation I think most unlikely, given the known predeliction of that gentleman for the ladies. And as to who the MP is, well, we\’ve actually got quite a number of out MPs these days, even in the Tory party. The thought that one of other of them might in fact have sex, might indeed have a boyfriend, is hardly shocking now, is it?

On the other hand, bonking both the father and the son does sound like taking this family values thing a little too far.

Or would the accusation be social climbing (although between a Tory MP and a royal aide, hard to tell who would be slumming and who climbing, really)?

Little Willy Hutton

He\’s good for a laugh this morning, that\’s for sure:

Thus the collapse of the American housing market, the explosive growth of American home repossessions and the discovery that \’structured investment vehicles\’ (SIVs), the toxic newfangled financial instruments that own as much as $350bn of valueless mortgages, are not American problems.

"Valueless"? Certainly, it\’s true, that people are having a hard time putting value upon them, which is the cause of our problems, but that\’s not to say that they are valueless, in the sense of worth nothing. Even the most pessimistic forecasts assume that the majority of those loans will continue to be paid, all the way to completion of the mortgage. Of those that will default, there migh be renegotiations, there might be foreclosures, the house then passing into hte ownership of the lender which they then sell again. Sure, there will be losses in that whole process but no one at all thinks that those $350 billion of loans are "valueless" ….except our foremost financial commentator, Little Willy Hutton, of course.

What should have happened, of course, is that when the Bank of England found that it could not find a secret buyer for Northern Rock in the summer, it should have done what it did in the 1974 secondary banking crisis. It should have taken Northern Rock into the Bank of England\’s ownership. Individual depositors and the City institutions alike would have been quickly reassured, and when the crisis passed the bank could have been sold back into the private sector.

But in 2007, the Ridley view of how to run a bank is also the authorities\’ view of how to respond to a crisis. There is a prohibition on even short-term public ownership. In a free-market fundamentalist world, this, like regulation, is regarded as wrong. Instead, the most expensive and riskier route has been taken so that Northern Rock remains part of the problem rather than the solution.

And that is also hilarious. For it doesn\’t mention why the Bank of England didn\’t do something (possibly) sensible like that. Because it is in fact no longer responsible for regulating the exposures of individual banks. Still responsible for the markets as a whole, true, but not the individual banks. That\’s the responsibility of the FSA. And, err, who set up this system of greater (note, greater, not lesser, at least on paper) regulation? Why, that would be Gordon Brown wouldn\’t it?

But of couse no criticism of the Great Man can be allowed to drip from Hutton\’s pen now, can it?

Immigration Controls

I think you\’ll find that this was predicted:

According to Romanians who have worked in Britain, many who exercise their right as EU citizens to enter the country simply disappear into the black economy. Others sidestep the regulations by seeking self-employed status or by securing a contract with a British firm.

Daniela Marinescu, who runs the Phoenix recruitment agency from an office in a concrete block near the centre of Bucharest, said the rules simply pushed those who wanted to work in Britain underground. "Most people who want to go to the UK will go there to find jobs on the black market," she said.

All that happened, following the denial of the right to work, but with the right to enter as EU citizens, was that people entered and worked illegally. Such a victory for those wanting immigration curbed, eh?