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Tim Worstall

The Logic of Free Trade

Via Mark Thoma we get Thomas Palley:

"The logic behind classical free trade is that all can benefit when countries specialize in producing those things in which they have comparative advantage."

The logic behind classical free trade is not dependent upon countries specializing. The logic works whether you are talking about people, companies, towns, tribes, cities, regions, countries or continents. To insist on the artificial barriers of the nation state as being a crucial part of the logic is to sell the pass.

The same point comes up in Roberto Unger\’s new book, Free Trade Reimagined (which Palley is riffing off I think):

If countries specialize in what they produce, the whole world can reap the benefits. It is a simple message of enormous power promising both greater riches and more freedom.

I haven\’t finished Unger (he comes up with some excellent points: there\’s one part where by implication he attacks the EU\’s insistence upon standardisation) so I don\’t know what his final solution is. However, if you start by insisting that the logical unit to study trade is the nation state then you end up with the possibility of reaching some very unwelcome solutions. That, for example, Governments have a part to play in creating comparative advantages (something Unger does say). That perhaps they should "manage" trade, that, in short, perhaps the Man in Whetehall does know best.

If you accept the real case for trade, that voluntary exchange benefits (at least in the minds of those doing it) all participants, that is allows the division of labour, there\’s nothing special about countries and nation states as being the unit required to make it work, nor the unit we should consider in our analysis. In fact, once you have accepted the case for trade all you\’re then arguing about is the unit over which it should be free: and there\’s nothing special about countries there at all.

As the once separate countries that now make up the US show, as the currently still sovereign nations of Europe in the EU show.

Defending Iain Duncan Smith

Never really thought I\’d write that. Still. The Devil:

Erm, cannabis is illegal in Holland? Really?

I don\’t think so, sunshine.

Wikipedia:

Cannabis remains a controlled substance in the Netherlands and both possession and production for personal use are still misdemeanors, punishable by fine. Coffee shops are also illegal according to the statutes.

However, a policy of non-enforcement has led to a situation where reliance upon non-enforcement has become common, and because of this the courts have ruled against the government when individual cases were prosecuted.

This is because the Dutch Ministry of Justice applies a gedoogbeleid (policy of tolerance or allowance policy) with regard to soft drugs: an official set of guidelines telling public prosecutors under which circumstances offenders should not be prosecuted. This is a more official version of the common practice in other countries, in which law enforcement sets priorities as to which offenses are important enough to spend limited resources on.

Yes, illegal, but not enforced very much. Rather like the British attitude to burglary. Prefer it the other way around of course, here.

 

Dan Hannan On Politics

There\’s two ways to read this:

This might seem an odd thing to write with the polls showing Labour 11 points ahead. But I haven\’t met anyone who actually believes these figures. Pundits have hunches about these things, and hunches matter in politics.

After all, what we call the sixth sense is really an unconscious amalgam of what the other five are trying to tell us. So pause, for a moment, and look beyond the polls.

One is what he means: implicit knowledge and all that. The other is what you can read into it. Politics is all about damn the evidence and go with gut feel. Which is why, of course, politicians do so many things that fly directly in the face of the evidence.

My gut feel is that 99% of the problems we have with politics comes from that latter. Simply no connection with reality.

Glaswegian Criminals

So, group convicted of forging bank notes. Pretty simple crime, if you want to make money, make money, why take an indirect route? One of the gang had been convicted of said crime before but the conviction was overturned. At the printing plant the police found:

McAnea had previously avoided a 10-year sentence for counterfeiting when an earlier conviction in 1998 was overturned on appeal.

Detectives who raided the forgery operation found a photograph of the trial judge at the time, Lord Cameron, with the caption: "Go on yersel, Big Man."

Russia, the Ukraine and Gas Supplies

This rather surprises me: didn\’t think they\’d be quite so crude about it.

The warning, which brought fresh accusations that Russia was using its natural resources to bully its neighbours, raised the prospect of a repeat of a gas dispute between the two countries last year that led to substantial energy shortfalls in the rest of Europe. The EU Commission called last night for a "swift settlement" to the crisis.

Russia\’s state-owned energy giant Gazprom denied charges that the Kremlin was seeking to punish Ukraine for an election that looks likely to hand control of parliament to the leaders of the 2004 Orange Revolution.

Claiming that Ukraine had debt arrears of £640 million, Gazprom delivered an ultimatum to President Viktor Yushchenko\’s government, giving it to the end of the month to pay up.

"If the debt is not settled in October, Gazprom will be forced to begin to cut natural gas supplies to Ukrainian consumers," Gazprom said in a statement. Ukrainian government officials said they were baffled by the threat and denied owing Gazprom anything near the amount it was demanding.

"We don\’t understand what Gazprom means," said Oleksy Fyodorov, of the Ukrainian state gas company Naftogaz. "We don\’t understand where this sum has come from."

That such pressure would be brought to bear doesn\’t surprise me in the least. Ukrainian independence, let alone it being pro-Western rather than looking to Moscow as the Slavic big brother, rather sticks in the craw of many a Russian. But quite so openly and nakedly?

Might actually work against them. If our rulers have any sense (not a foregone conclusion) they\’ll take note and at least attempt to diversify energy supplies away from reliance upon Russian gas. Over the long term thus the imposition of power in the short term will reduce the ability to do so in the long.

What Facebook Is For

I\’ve wondered you know, tried to work it out, what, exactly, is Facebook for. Now I know. On my newsfeed this morning.

Owen Barder and Brian Barder are now friends.  They found each other using the Friend Finder.

Isn\’t that amazing? A triumph of technology I call it, overcoming human nature (those teenage years are indeed such a strain), that a father can be friends with his son. And even guiding them to each other, so that they could become so!

More on the Google Algorithm

As I said a few days ago the traditional method of gaining a ranking in Google, using anchor text and linkage, a la Google Bombing, seems not to work any more.

The original entry was at number 41 in the listings, adding (or attempting to add) more mojo to it made it fall, significantly (somewhere in the hundreds).

Removing those attempts to add juice to it have had a really rather odd effect though. It\’s now higher than it was originally, at 13.

Hmmm. Clearly still rather more to learn here.

 

Whip Your MP

No, really.

The campaign to offer the right of entry to those Iraqis who have been working for us and who are now being murdered for doing so needs your help.

Here is how.

Get them to turn up: don\’t forget they work for you so your views matter to them.

What the Fucking Fuck?

Who are these cretins that rule us?

Sending refugees from Darfur back to Khartoum? WHAT THE FUCK?

I\’m ashamed of this government and of everybody who voted for it.

Are they actually human? Are they even an intelligent life form?

The Investigative Standards of the Daily Mail

I think this is actually quite a cute way of doing the research but your mileage may vary.

The beatroot can reveal that in their zeal to prove how ruinous recent immigration by new EU members – meaning Poles – has been to the very fabric of the United Kingdom, the Daily Mail (London) will go to any lengths – including giving people money to break the law.

 

Polly on Taxing the Rich

She\’s still not quite got it, has she?

Those registered as a non-domiciliary, absolved from British tax although they live here, would pay a flat rate of £25,000 a year.

Err, no. Income made in hte UK is taxed exactly the same as that of any other resident\’s. It\’s the taxation of overseas income that is at issue here. If you want to think of it in moral terms (which no doubt Polly would), well, what right does the UK State have to income made in, say, Russia? By a Russian?

It\’s not just the non-doms and non-residents, but the private equity tax avoiders and all the mega-rich.

Non-residents now? What, you mean that people who don\’t even live in the UK should be paying UK taxes?

The UK has one of the lowest top rates in the OECD 30 nations, yet the rich use the same roads, services, police and national security to conduct their business in a well-regulated environment, with the NHS to save them when their Porsches crash.

Now that is interesting. The implication of course is that the rich should be paying more because they use the same services. That there might be some fixed amount that people should pay for services does not, of couse, cross Polly\’s mind. However, let\’s look a little more closely. How much of all of the tax take do the rich contribute? And how does that compare to other countries? This is the top 30% of the people (just because that\’s the stat I found) but it doesn\’t actually show what Polly would like it to show.

In the UK, the top 30% of the people, the richest 30%, pay 62% of th total tax take. This is lower than the US for example, at 65% or so. But what about the Nordics? Those perfect social democracies, which Polly would so dearly love us all to be like? Hmm. Finland 56.8%, Norway, 53.8%, Sweden 53.3% and Denmark 48.7%.

So, err, for us to become the sort of society which Polly would like we should be lowering the tax take on the richest 30%.

As house prices rise, more people fear that their estate will creep into the £350,000 level most recently set by Gordon Brown; 37% of estates are now worth over £350,000 (homes, pensions, cash), so if everyone died today then 37% of estates would be liable. But everyone is not dying today. According to Carl Emmerson of the Institute for Fiscal Studies (IFS), by the time people grow old and die they have divested themselves of money, giving it away when children and grandchildren need it, downsizing their homes to spend on cruising, enhancing their pensions or going into long-term care.

Didn\’t Polly recently call for al lifetime gifts to be taxed as inheritances? I\’m sure she did you know.

Good grief!

People think IHT is an unfair "double taxation" out of already taxed income. But no one pays it from income: it is only paid after death by inheritors.

No it isn\’t! it\’s paid by the estate! If £5 million is left to one person or the same £5 million is left to 100 different people the tax paid is the same. If inheritances were taxed at the level of the recipient then there\’d be a great deal less fuss about the whole subject.

Is it worth asking, you know, pleading almost,  that journalists know what they\’re writing about?

Well, Quite…

When my uncle bought his Provençal house he called on his neighbour, a farmer in his sixties, and jokingly apologised for the fact they now had "des anglais" next door. The farmer merely responded, "Heureusement, vous n\’êtes pas Parisien."

After all, everyone hates the Parisians.

S\’Not My Fault!

Interesting little thought:

The paper, published today in the Proceedings of the National Academy of Sciences, looked at the ultimatum game, in which a proposer makes an offer to another person on how to divide a sum of money.

The researchers found that twins were more likely to behave in the same way as each other when deciding whether to accept an offer.

"This raises the intriguing possibility that many of our preferences and personal economic choices are subject to substantial genetic influence," said the study\’s lead author, Bjorn Wallace of the Stockholm School of Economics.

See, I can\’t help being a greedy capitalist bastard: I was born this way!

Putin as Prime Minister

Well, yes…

Vladimir Putin has announced that he intends to return as Russia\’s prime minister after stepping down as president next year.

Doesn\’t he have to win an election first. Oh, wait….

Teacher Training Days

So surprising, eh?

Sending children home from school to allow teachers to train is a waste of time, a leading academic says.

Pupils in England lose about a week of schooling every year as staff take "inset" days to brush up on the latest teaching techniques and Government reforms.

But research claims there is "depressingly little evidence" that it has any effect on teaching standards.

So teaching teachers the latest trendy educational nonsense doesn\’t improve teaching. Fancy that!

The Perils of Expatria

One of the perils of living aborad is that the infrastructure might not be quite as robust as what is expected in Northern Europe. We\’ve entered the rainy season here and so we\’ve got regular thunder storms and buckets of rain. Fine….but the local power station (down the hill in Tunes: it\’s actually the vast field of transformers they have there that gets hit) is always the first place hit by the lightning. Thus 50% of the storms knock out the electrical power.

Thus the late start to this morning\’s blogging: apologies to the paying audience (size, nil) and those who are getting it for free, well, you get what you pay for, eh?