The Nobel in Economics

So here\’s the announcement:

This year\’s Nobel Prize in economics goes to Leonid Hurwicz, Eric S. Maskin, and Roger B. Myerson.

Greg Mankiw then asks:

Eric is used to teach economic theory at Harvard and was a great teacher and colleague. If my recollection is correct, when he moved from Harvard to the Institute for Advanced Study in Princeton, he bought the house Albert Einstein used to live in. I wonder if there are any other houses that can claim two Nobel laureates.

Err, any house that Linus Pauling lived in between 1962 and 1994?


This is what should happen.

If the Tories want a morally sound and hugely popular tax policy, they should scrap the whole thing and instead cut the taxes of the very poorest. As far as I’m concerned, it’s nothing short of obscene that workers on the minimum wage pay income tax at all, and then have to beg pitifully to be allowed some of it back – assuming they’re eligible, that they can understand the forms, and that they can get over the worry that an incompetent state machinery will pay them too much, and then send the bailiffs round.

Tax credits make their recipients suffer the highest marginal tax rates of any group in society. They show what happens when a man with no imagination and too much faith in his own intellect is allowed to design a policy. Most importantly, as far as the Tories go, they are a policy that has sticky Brown fingerprints all over them, and one that Labour could never disown.

The replacement should be a non-traditional tax cut, aimed squarely at those at the bottom of the workforce. If the Tories scrap the £15bn that tax credits cost, and can fire a further £35bn worth of Gordo’s army of useless numpties, they could afford to raise the personal income tax allowance to a whopping £15,000. If you\’re concerned that vital services would be devastated, just remember that no one really noticed when they were all hired, so it would be surprising if anyone noticed when they get fired. This cut would free those working a 48-hour week on the minimum wage – or up to £6 per hour – from paying any income tax at all.

Nothing could be more powerful, or more attractive. It would be the great symbol of the new Toryism. It would be a slap in the face for Labour’s pretence to be the party that looks after the poor. Every piece of syrup-brained interfering middle-class leftism of the last half-century, from inhuman council estates to ‘progressive’ schooling, has hit the poor hardest. It could be the start of the roll-back – if Cameron has more bottle than Brown.

Guess which political party already advocates this? UKIP.

Blog Action Day!

Yes, brought to you by the European Union, it\’s Blog Action Day. When we all blog on the one subject, the environment and how the EU can affect it. Most exciting, don\’t you think? TEBAF is with it, the Environment Commissioner will be having an internet chat this afternoon. So, what can we say about the environment and the EU?

Well, let\’s look at what they actually do. There\’s the insistence upon recycling rather than landfill. This leads to greater emissions of greenhouse gases, not fewer. For example, using a wormery to recycle garden waste creates NO2, while landfill creates methane. The overall effect of the two gases, in CO2 e terms, is the same. But we collect the methane and convert it to CO2, creating energy in the process. The NO2 just goes into the atmosphere. Thus a truly environmental program would landfill such waste, creating one 23 rd of the greenhouse gases than wormeries. And, yes, the EU does insist that we don\’t landfill such waste.

Then there\’s the biofuels program. One report says that such crops use more fossil fuels than they replace. Another that simply letting trees grow and burning fossil fuels would reduce emissions from the biofuels plan by 50% to 90%. Err, the EU insists upon 10% biofuels.

And what about EUTS? This is a cap and trade system, one in which the transerable rights are given away, not auctioned. The nett effect of this is that it works just like a carbon tax, but with a huge amount of corporate welfare thrown in.

And then there\’s the puerile idiocy of the Common Fisheries Policy and….well, make your own list.

So, with this track record, what can we say about the European Union and the environment? It\’s clear and obvious that the UK would be better off out of the system (that much is clear to suckling babes) but what is the best thing the European Union could do about the environment? Clearly, stop existing.

So there we have it, the simple and clear message to the European Union on this auspicious day of blogging for the environment.

Bugger off and die would you?

Economic Logic, not Illogic

Caitlin Moran:

Secondly, the definition of “Best Buy” needs to be radically changed. Except for a roof, or a Saab, it’s usually cheaper to buy a replacement than get something mended. Now, we all know that that is a fundamental economic illogic, one that is driving gigantic global environmental and humanitarian problems. Which? should be at the forefront of a campaign for there to be a guaranteed functioning lifetime for any electrical item. Manufacturers should be legally obliged to mend or upgrade the item within that time. The current system – whereby it’s cheaper to buy a new kettle shipped over from China than to get an old one repaired around the corner – is obscene. It’s an issue even more pressing than asbestos, raw sewage or the introduction of the duvet.

Err, no, this isn\’t obscene, it\’s not fundamental economic illogic. Actually, it\’s economic logic. What we actually want to have is one of two things (in fact both of them). We want the maximum of things we can have with our current technology and scarce resources: or we want all the things we want at the least consumption of those scarce resources. Same thing really. We want the greatest efficiency we can.

OK, if buying a new kettle rather than repairing an old one is cheaper, that\’s telling us that we\’re consuming fewer resources in doing so (yes, subject to the caveat that all externalities are included in the prices but the CO2 emissions in the new kettle won\’t change those relative prices much). So, it is both environmentally and economically rational to use the new kettle, as this marvellous information network we have, the price system working in free (ish) markets, is telling us that we are using fewer resources by doing so.

The resource we\’ll be using the least of of course is human time: the most precious resource of all and the one that almost all of us agree we don\’t have enough of in our all too short stays here.

The Planners Again, I\’m Afraid

Do what we think you ought to do, not what you think you ought to:

Officials at the Department for Environment, Food and Rural Affairs have made a serious proposal that consumers switch to UHT (Ultra-High Temperature or Ultra-Heat Treated) milk to reduce greenhouse gas emissions.

It is part of a government strategy to ensure that some 90 per cent of milk on sale will not require refrigeration by 2020.

The paper states: “Retail and domestic refrigeration is an area with the potential for significant impact reduction. The milk chain should enhance the development, marketing and placement of UHT milk products.” It also states that existing choices for consumers (mainly fresh milk products) “mean that they may not demand milk that does not have to be refrigerated”.

That last is stating that the availability of fresh milk reduces sales of UHT milk. Well, yes, I suppose it does. They are substitutes, after all. The rather more chilling (sorry) implication is that the provision of fresh milk will be forcibly reduced against consumer desires.

The whole thing is an example of the shambles that is bound to result from allowing the planners to decide such matters. Whatever we do do about climate change (and yes, I know that some say nothing, indeed I sometimes say it myself, given the idiocy of what the politicians are already insisting upon), picking winners in this manner is absurd. What we\’re trying to do is reduce emissions at the least cost in the reduction of consumer utility. That means pricing carbon into products and then leaving consumers to make their own decisions. Not that some bureaucrat with a hard on for UHT gets to impose his vision on the rest of us.


Sir Jonny?

I, er, think not.

Jonny Wilkinson is on course to be voted BBC Sports Personality of the Year and receive a knighthood for his World Cup heroics, bookmakers predicted last night.

There\’s still, rightly or wrongly, a certain class based assumption behind such awards. Brain Ashton might get a KBE if they win but not a player. As Wilkinson is already an OBE he might, might, get upgraded to a CBE but the K before his retirement? I think not.

Scrapping Road Pricing

Well, I didn\’t think they would have the courage to do it even though it would be the economically rational thing to do:

Ministers are to perform a U-turn by shelving plans for a national road pricing scheme that would have cost motorists up to £1.30 a mile.

If you\’ve got a scarce resource then you want to charge people for using it. The charge should also be proportional to the usage. Fuel tax is a proxy, but not a very good one, as it doesn\’t account for the time and place of use: which is the congestion part that we really want to tackle.

In one of those little bits of serendipity, the new Oxford Entrance exams have been revealed. The first question is as follows:

Every motorist pays the same amount for road tax, regardless of how much they use the
roads: someone who covers as little as 1 000 miles pays the same as someone who
covers 20 000. This is unfair. Road tax should be scrapped and the money raised by an
increase in the tax on car fuel. Making this change would ensure that those who use the
roads more would pay more. This would not only be a fairer system, but could also bring
in more revenue.
Which of the following best illustrates the principle underlying the argument above?
A People should receive free medical treatment only if they cannot afford to pay
for it.
B People who travel to work every day by train should pay a lower fare than
those who travel only occasionally.
C People who earn more than double the average wage should be made to pay
much higher charges for dental treatment.
D Television channels should be paid for by subscription so that only those
people who watch them should be made to pay.
E Telephone charges should be higher for business customers than for
domestic customers because they are using the system only to make money.

Spooky, huh?


I\’ve just had an email asking me for money to support some federasts. Yes, I know, laugh. It was some French intellectual as well. Who says this:

Franck Biancheri expressed his deep belief that the European construction has now reached a crucial stage of its history and that the main challenge of this decade consists of being able to reconcile democracy and European unity; for otherwise the course of history will lead to a united but undemocratic Europe embodied by the emerging populist trends.

Look, Frankie, I hate to have to break this to you, but democracy is in fact populism. That\’s err, the point. What the mob wants, the mob gets. That\’s actually what democracy, the rule of the Demos, the mob, actually means.

A more reasonable campaign would be to protect democracy from European Unity: but that\’s something that Franck seems unable to understand. A more subtle approach might be to try and protect freedom and liberty from all three of the EU, democracy and the mob…..but then that\’s a very lonely furrow ploughed only by the most committed liberals,



Heeeeeee\’s Baaaaaack!

Just when you thought it was safe to get that interesting boil seen to, thought that embarassing purple patch in a very private place might benefit from some treatment, you find that there\’s no one at the surgery.

Yes, the NHS Blog Doctor is back.

Drugs, Drugs, Drugs!

The Government\’s consultation on drugs is coming to an end. If you haven\’t already told them what you think then do so here.

Of course, this bloke doesn\’t go far enough. All drugs should be legal.

It\’s your body, your\’s to ruin or not as you wish. So go tell the Statists that.

Lord Falconer\’s Pension

There\’s a simple enough solution to this:

Falconer, who gave up a lucrative career in the legal profession to give 10 years’ service as a Labour minister, is said to feel that he has a con-tractual entitlement.

According to the Cabinet Office, however, he is entitled to only £52,193. He is also permitted to receive a lump sum, which is yet to be decided, because of his special position as head of the judiciary for the past four years.

As lord chancellor he was entitled to an annual salary and a pension higher than any other cabinet minister, including the prime minister. However, he opted to take the standard salary of a cabinet minister based in the Lords – worth £104,386 last year – rather than his full salary entitlement of £232,900. When he became lord chancellor and constitutional affairs secretary in 2003, after Blair’s “botched” reshuffle, the historic post of lord chancellor was supposed to be abolished. However, a U-turn by the government led to the title being retained.

Those close to him say Falconer does not regard himself as a rich man. “Unlike some of his contemporaries he did not spend years earning a fortune at the bar,” said one source.

A spokesman said: “The payments are now being made to him in line with the PM’s statement of June 19, 2003.” That was the date when it was agreed that Falconer would take the reduced salary of a regular secretary of state.

What pension is Derry Irvine taking?


Being a southern shandy drinking type I have of course never allowed Vimto to pass my lips. But it does seem to be something of a hit in the Arab world.

A BIZARRE series of advertisements has resulted in record sales of a humble British fruit cordial that has become the Arab world’s most popular drink during the Muslim holy month of Ramadan.

Vimto, a blend of fruit juices, herbs and spices, has long been regarded in the Middle East as an energy-boosting accompaniment to the evening meal after a day of fasting. This year, 11 commercials broadcast on Arab satellite television featuring the British brand have become cult viewing on the YouTube video-sharing website and its equivalent in the region,

I think they do in fact have an extremely good marketing department. In the early 90s the canned, fizzy, version was a huge hit in Russia. Lord alone knows why, but there it is.

Alisher Usmanov

A profile in The Times.

Personally, that he was indeed the son of privilege and then survived 6 years in a standard penal colony (and I\’ve met others, even traded with some, with similar backgrounds) would be grounds for being extremely suspicious of the man.

Soviet camps were not survived by such without contacts being made, favours offered and taken.

Authoritarian Russia

Nick Cohen has a nice piece on the rise of authoritarianism in Russia. Most especially, on the way in which big business doesn\’t seem to mind:

Just before Tony Blair resigned, a telling scene illuminated the new world. At the June G8 summit, Blair warned Putin that unless Russia shared Western democratic values and tolerated dissent, there would be a business backlash. No, there won\’t, replied appalled business leaders. Hans-Jorg Rudloff, the chairman of Barclays Capital, said Blair\’s approach was \’unbalanced\’. Peter Hambro, executive chairman of Peter Hambro Mining, an Aim-listed company with extensive interests in Russia, said that Blair\’s comments \’ran the risk of being damaging\’ for British business interests in Russia. The outgoing PM\’s position was \’very different to that business\’.

And so it went on and few noticed that a regime filled with ex-KGB men was now being defended by the beneficiaries of global capitalism.

He also gets in a marvellous series of digs at the founders of the university I went to, the LSE.

There is one point I\’d like to make though. I\’ve not been particularly worried by morals in my business life (I\’ve done a deal with North Korea for example, I\’ve paid douceurs as another) but I have been concerned over the ease of doing business. A lot of that business life has taken place in Russia so I\’m well aware of the trends which Cohen is talking about: but I\’d like to insist that it is Big Business that thinks this way, not the small fry like me. Not, as above, for any moral reasons, but because that imposition of State power is making it ever more difficult to actually conduct business. Our last three shipments have all been delayed for weeks at customs, as those running the system attempt to extract their rents (we do in fact pay all of the applicable export taxes, as we have done for more than a decade). So much so that I spent part of this week thousands of miles away looking into the possibility of recreating the extraction and purification system outside the borders of Russia. Not because it would be cheaper (it wouldn\’t) but because it would be more reliable, less subject to the exercise of the power of the Russian State.

Big business might make peace with authoritarians, but small business never will: because we can\’t. We never have enough power to infuence the decisions, we are the prey that is picked over. The tragedy for Russia, indeed for all those who suffer such political systems, is that small business is the future, the driver of economic growth and the creator of the golden uplands of the future.

I know that as a good liberal I\’m supposed to be concerned about freedom of the press in Russia (which I used to write for actually and there\’s no way that the same house would publish those pieces now, owned as it is by Usmanov) and indeed I am. This is from the other side of the mind, from my self-interest, not my enlightened one.

Another way of putting this is that if someone as unscrupulous as myself is ready to give up on the place as a place to make money then they\’re right royally screwed.

Err, Will?


Forget the general election that wasn\’t – the biggest political event of this autumn is about to take place. The 17th congress of the Chinese Communist party starts tomorrow in Beijing.

Ah so. Will you be launching Operation Commie County then? That the ChiComs allow no voting on their internal affairs should not be an impediment to the Great and the Good of British Liberalism making known their preferences now should it?