Lies, damn lies and certain economists

Paul Krugman, the economist of choice for all socialists, keynesians and big spending governments everywhere, wrote an article in the New York Times (H/T American Spectator) providing support for Obama’s latest push to tax the ‘millionaires and billionaires’.  

 The United States already has one of the most ‘Progressive’ income tax systems in the world.  It’s estimated that the top 1% of Americans pay nearly 40% while the bottom 50% contributes only 3% of personal income taxes collected.  So providing evidence to support Obama’s class warfare requires some serious playing around with the numbers.  Hence this chart which he highlighted in his article.

Just look at all those nasty rich people living off the backs of the hard working middle class.  

 However, the Australian economist blogger, Catallaxy Files, points to the creativity of the chartist along the x-axis. Quintiles for the lower income groups, followed by smaller and smaller divisions as incomes rise.   He then calculates the same chart but using uniform divisions for each income group.

As the man said, it’s the way you tell ’em.


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HS2 – Time to get organised

It was interesting to hear your comments about the HS2 ‘Town Hall’ meeting in Wendover.  As you said, this is not only going to blight the area, it is going to waste a lot of money.  The Washington Post did an article on high speed rail in China (HT International Liberty), emphasising what a disaster these projects tend to be:

High-speed rail is a capital-intensive undertaking that requires huge borrowing upfront to finance tracks, locomotives and cars, followed by years in which ticket revenue covers debt service — if all goes well. “Any . . . shortfall in ridership or yield, can quickly create financial stress,” warns a 2010 World Bank staff report. Such “shortfalls” are all too common. Japan’s bullet trains needed a bailout in 1987. Taiwan’s line opened in 2007 and needed a government rescue in 2009. …the Beijing-Tianjin line, built at a cost of $46 million per mile, is losing more than $100 million per year.…

Despite this it sounds like the MP has made a calculation that whatever happens, the majority of people will continue voting Tory and so it’s in his personal interest to toe the party line and ignore what his constituents want.   In the absence of a system of open or party primaries, I like the idea of fielding a single issue candidate against him.  It could be that a tie-up with UKIP might be useful, but whatever is decided, it’s important that people start organizing now to put pressure on the government.


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Muddled ramblings on Easter

So I’ll cherish the old rugged cross,

till my trophies at last I lay down;

I will cling to the old rugged cross,

and exchange it some day for a crown.

I remember a few years ago I came home from work at around lunchtime.  I can’t remember why, but I do remember switching on BBC World, right at the start of a segment reviewing Christopher Hitchen’s book, “God is not Great”.  I was interested because I’ve always liked Christopher Hitchens.  I may not agree with a lot of what he says, but he’s incisive, articulate and not afraid to be politically incorrect, unlike most left-leaning writers.  Anyway, the whole set-up prior to the interview with Hitchens was the rise of Fundamental Christianity in the United States and how this represented a clear and present threat to world peace.  Yes, it made me open my mouth too. But at the time there was an undercurrent of opinion that held that fundamental Christianity in the US was giving rise to the evangelical right, Bush, Iraq, the vast right-wing conspiracy and every other boogey-bear of the left.  And if you are the multi-culti, politically-correct BBC, how on earth are you going to review an anti-religious book unless you focus all the attention on the only religion you are allowed to disrespect, Christianity.

Anyway back to the interview. 

So having done the set-up focusing on how fundamental Christianity was warping US government policy, the interviewer could then legitimately, from a politically-correct standpoint, get Hitchens to talk about the usual trope of how terrible religion has been throughout history, caused more wars and so on. Everything was going swimmingly, until the interviewer said, “Yes but these are just a small minority of extremists who are distorting the central tenants of their faith”. Oh dear.  Christopher Hitchens replies, “no, that’s not the case, these extremists are actually following what’s in their scriptures.  They are the ones who are scripturally correct.  For example, in the Quran it says …..” and he starts to cite verses from the Quran.  Bang, the screen goes dead, followed by silence and then nothing but a picture of a globe spinning round.  For several minutes. 

And that illustrates one of my main criticisms of “God is Not Great”.   It lumps all religions together, and says to hell with the lot of them.  Yet they are quite obviously not the same.  They have different values and philosophies and they produce different outcomes.

Our Western society, based on Judeo-Christian values has been the most successful and tolerant in human history.  It abolished slavery, pushed through anti-child labour laws, fought against prejudice and helped produce a flowering of science and culture.  It cemented parliamentary democracy in the UK, and inspired the Declaration of Independence and the Constitution in the United States. 

Christianity’s emphasis on individual responsibility, freedom of will, equality of the individual before God, the value of human life, separation of church and state, altruism, an appreciation of the beauty of creation, and an understanding of the existence of order and natural law in that creation was fundamental to Western society’s success.  The atheist argues that these are all values which don’t need God – that you can have them and not believe in a supernatural being.  And that’s true, but what Christianity did was to make these values the dominant and acceptable ones in society. 

Today, despite the cultural marxists attempts to turn Easter into Earth Day, is when we celebrate the death of Christ on the Cross. When God, because of his love for each one of us, no matter what colour, race, gender or religion we are, made the ultimate sacrifice with the death of his Son.  He gave us the free will to accept that gift, and by accepting it, live a life that is the best that we can live.  Not my dear Archbishop because we have to, but out of own our free will, decide we want to. 

For the video on that great hymn: The Old Rugged Cross, click here.

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Cairo – I was very, very drunk

I was in a coffee shop today checking out the internet and I came across this video clip (H/T Captain Ranty).  Over here in Lima there has been a growth in coffee shops with good internet connections.  It was a place called Gloria Jeans, which has a faster internet connection than Starbucks and so is full of earnest university students discussing their group projects over laptops.  Do you get that in the UK?

Anyway it made me laugh:

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Vince Cable? Meet Harry Reid. Exhibit A on why you need to re-read Adam Smith


Remember last year at the LibDems conference when Vince Cable gave a speech to show that despite being the Business secretary, he hadn’t sold out and was still down in the trenches with the rank and file?  In his attack on the free markets he championed government regulation by paraphrasing Adam Smith saying:

“Capitalism takes no prisoners and kills competition where it can, as Adam Smith explained over 200 years ago”.

Adam Smith actually wrote:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

In reply to Vince Cable, Dr. Eamonn Butler wrote that Vince Cable should have gone on to read the following paragraphs of Adam Smith’s, the Wealth of Nations.  For Adam Smith points out that while all businesses would love to create monopolies and raise prices accordingly, they are prevented from doing so by competition.  I know in my business I would love to be the monopoly provider of my service.  I would even settle at collusion with a couple of other competitors as well, as long as it could be guaranteed that we were the only game in town.  We could charge high prices, offer a bare minimum of service, not have to change or innovate – and earn some lovely fat monopoly profits in the process.  Unfortunately, the market here for my service is highly competitive and so I have to constantly update and add to the services I offer my customers, while charging the most competitive prices I can.  It’s the big players in the market who are pushing for government regulations to make it more difficult for a smaller company like mine to provide innovative services to the public.  And that was Adam Smith’s point.  Big Business loves Big Government.  In a competitive market, more innovative players keep coming into the market, threatening the existing players’ market share and preventing monopoly prices from being charged.  In the name of protecting the consumer, regulations can be used to keep out new and more nimble companies and protect the big boy’s monopoly profits.

A fine example of this in action happened last week over in the United States when the FBI closed down three on-line gambling operations.  Tim Carney (H/T Ricochet) over at the Washington Examiner thinks this happened partly as a result of the big casino operators drive to create a government-protected monopoly in the lucrative on-line gambling market.  Last year Harry Reid, the Democrat Senate majority leader, won the Nevada elections with considerable help from the Casinos.  They donated large sums to his campaign and provided buses to transport casino workers and other voters to the booths.  It’s now pay back time and Harry Reid is pushing legislation to legalise on-line gambling, but with the catch that to ‘protect the consumer’, on-line gambling can only be operated by:

“providers that have an established track record of complying with a strict regulatory environment, have an established track record of providing fair games to consumers, and have significant goodwill and assets at stake, in addition to their Internet poker assets, to ensure they would comply strictly with the new regulatory regime.”

Or in other words, the big casino operators.

As Tim Carney noted, the Politico reported:

The House Republicans will go crazy if this is in the bill,” said one senior congressional aide, declaring it “a total, 100 percent payback” for the support Reid received from gambling interests. The aide asserted that lobbyists or the Las Vegas-based casino operator Harrah’s, now known as Caesars Entertainment Corp., even helped write the legislation.

“You could call him ‘Harrah Reid’ at this point,” the aide quipped.

Anyway Vince, I hope you took up Dr. Butler’s suggestion and have read his, Adam Smith – A Primer.  But judging from your performance since then, I somehow doubt that you have.

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UKIP – A tiny minority, and so extreme. Just like the Lib-Dems.


Angus and Reid's March Poll

I see that Daniel Hannan has posted on the anti-UKIP bias at the BBC.  All parties opposed to the EU whether they be the True Finns of Finland or the PVV of Holland are always portrayed as small, extreme and with a whiff of fascism about them.  Something right-minded people should cross the street to avoid.  Hence when discussing poll numbers the BBC tends to lump the BNP and UKIP together.  “Minority parties such as the BNP and UKIP….”  You will never catch them putting the BNP and the Greens together.  This though would actually be much more representative of the real numbers and indeed more representative of their actual policies (apart from immigration).  For both the BNP and the Greens essentially adhere to old school Big Government Socialism whereas the UKIP are more small government types. 

Anyway, with the Lib-Dems tanking in the polls and UKIP going from 5% in December 2010 to 8% in March 2011(H/T The Tap Blog), I can’t wait for the day when I’ll switch on the BBC and hear, “minority parties such as the BNP and the Lib-Dems….”.


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On Washing Machines, Peru and Presidential Elections

Today I was introduced to someone and shaking her hand couldn’t help but notice how dry and calloused it was.  This is not unusual for women in Peru, most of who spend their lives hand-washing clothes.  But it did get me thinking.

Over three hundred years ago Adam Smith wrote (H/T Daniel J Mitchell):

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice.”

Here in Peru for the last 10 years we have been a testament to that truth.  When Fujimori’s Government imploded in 2000 as the public revolted against the systematic corruption of his regime, the level of poverty was 54%.  That’s to say more than 15 million people living in absolute and grinding penury.  For the next 10 years successive governments maintained his free market reforms, which had turned Peru around from the total disaster it was in at the beginning of the 90’s, but at the same time pushed through transparency of government, freedom of the press and rule of law.  The economy thrived and investment surged, causing the poverty level to decline to 49% in 2004, accelerating through to 34% in 2009.  That’s 20%, or more than 5.5 million people lifted out of poverty in less than 10 years. 

And that’s why it is so depressing that all this progress could be thrown away in June when the second round of the Presidential elections takes place.  For we have a very good chance that a National Socialist will be elected who wants to throw out the free market model with its vibrancy and rule of law, in favour of central planning, nationalization and arbitrary rule by fiat. (I shall write a detailed post about this on Thursday). 

Which is what got me thinking.  Not about the cronyism and corruption that always accompanies Big Government but the stultifying effect that central planning has on society.  Professor Nutter writing about the Soviet Union in 1957 said (H/T Adam Smith Blog):

All this in an economy that apparently has not yet discovered the wheelbarrow – sledges and two-man litters are used instead – where the scythe is far more in evidence than the mower, where brooms are mostly bundles of twigs without handles, where the mop is a handless rag, etc.  In the drive for modernism, the Soviet system has apparently ignored the multitude of simple yet dramatic inventions so important in the economic development of other countries.

Innovation, that vital part of increasing productivity, does not depend upon large and grand inventions. It depends upon the myriad of small changes which are made to this and that which in general make all of the peoples’ time more productive. Inventing Sputnik is all very well, but just think of the time in aggregate that could be saved by the deployment of the simple Fuller Brush to babushkas across the country!

Free markets and rule of law create the means whereby society can innovate and evolve and are vastly more successful at alleviating poverty than anything a central-planning bureaucrat sitting in his airless office in downtown Lima can hope to achieve.  Which takes me back to that woman with the calloused hands.  Hans Rosling did a brilliant presentation on the washing machine (H/T Cafe Hayek) and how that has revolutionized women’s lives around the world. The free market is transforming the lives of millions of people in Peru.  Like a 1970’s movie re-run, National Socialism will take us back to the days of bad haircuts and officials setting soap production targets for the nation’s women scrubbing away at the sinks and river banks around Peru.  Let’s hope the voters choose a different future.

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