Why markets cannot be perfect, but government is worse still

It's ever so simple - humans aren't perfect. Since markets involve human transactions, they cannot be perfect.

However, that's no reason for government to intervene, for us to cry "market failure" etc etc. It is not a failure of the market, it is a failure of humans to transmit information properly. Government is even worse at transmitting information, since it doesn't rely on its own money (though yes there is the issue of democratic accountability) and tends to go with what looks nice rather than what's right.

Financial crashes, housing bubbles, etc are caused by either government and central banks having too loose monetary policy (then tightening them too quickly, circa 2007) or simply by human expectations being wrong (dotcom). And generally humans realise and adjust quicker, resulting in the market adjusting quickly.

Markets adjust. They supply more of a product when it's needed (although yes, they may misinterpret information beforehand, but that's just humans). Governments don't do it as well. They might, but they don't always notice.

Markets aren't perfect. We should accept that, but realise that government cannot do a better job, since it's a human creation rather than human consequence.

Eurofederalists support a Lisbon referendum?

Really? I doubt it.

Cameron, as far as I can see, is no EU sell-out. Obviously when and if he gains power, it'll be something to watch, but I don't think the party will let him - it's generally too Eurosceptic.

"Hand the decision to the BBC"? Sounds far too conspiracy theory-type for me. British people are generally fiercely independent, we know about BBC bias.

And it is a necessary referendum, as I explained in my last post - it involves transfer of political power. Not only that, but 70% of the population want it. As well as this, the general call for a referendum was because that was what the three main parties promised (and only one kept to) - there was no "wrecking amendment" in the manifesto.

I think the important thing will be to withdraw ratification, then hold the referendum, then re-ratify or withdraw altogether depending on the vote. Otherwise some funny things could be done in other countries to make the referendum practically invalid.

Cameron and the EU

Ireland could still vote either way (despite the propaganda the EU has flooded them with) but there could be another way that Lisbon is taken down: with the help of Vaclav Klaus. David Cameron has written a letter to him in support of Klaus' position of not signing the treaty, promising to hold a referendum if it has not been ratified.

If Klaus and Cameron pull this off, could it be a modern day Thatcher-Reagan pact? In fact I'm quite interested in Ashley Fox MEP's comment on ConservativeHome that the Czech MEPs in the ECR are saying that Klaus is simply going to refuse to sign it. For the UK to withdraw ratification of the treaty would surely be its death knells, due to the UK's sheer economic weight. It should have been put to the people in a referendum across Europe anyway; it is about the transfer of political power (and we had referendums for elected mayors).

But what if it is ratified when Cameron comes to power? I will ignore UKIP and co's arguments that Cameron doesn't want a referendum as scaremongering, but would it actually be possible for revision after ratification? This being the EU, probably not, but it would take a strong man to stand up and withdraw ratification unilaterally (and potentially be acting illegally). A more sensible promise would be to promise a referendum on the Lisbon Treaty if it has not been ratified, and a referendum on EU membership (since they have ignored the will of the people) if it has been ratified. Not only would that get the Eurocrats worried, but it might stop Lisbon too.

Lib Dems: personal attacks and empty promises

The Lib Dems are just proving themselves, time and time again, to be a complete joke of a party. They know they aren't going to get elected, so they come up with stupid policies and personal attacks.

I won't waste time talking about personal attacks, which are generally a sign of losing the argument, but the 'mansion tax' proposal is so poorly thought out that it would be completely unworkable. The main problem is based on ability to pay, what brought down the poll tax. People can (generally) afford to pay income tax, since obviously they are getting an income. Corporation tax is a tax on profits, and companies will move around if need be. Sales taxes are based on being able to afford a product. Obviously if any are too high, there may not be an ability to pay, but that's another issue.

A tax based on the value of a house ignores who lives there, and their income. Can a pensioner pay £2,000 a year just for living in a nice house? With their income already low (and reduced potentially further due to Brown's raid on private pension funds), probably not. It just becomes a jealousy tax, saying that success in life is some sort of bad thing. Perhaps it isn't even due to that; they've just been caught up in the housing bubble.

How do you measure the value of a property? How often? Assuming a tax is collected annually, that involves independent valuations of many houses, including some that will be below the £1m threshold. Would the threshold be raised with inflation? Would the valuations be made by the private sector, or would government officials do it? Would the council give the valuer a bonus for saying it is valued at over £1m? Hayek's Road to Serfdom comes to mind once more.

When you sell a house, you have to be optimistic at first, then pull your price down until you find a buyer. That's the nature of the housing market; in no market is information perfect. If I was to sell a house, would I have to get a state valuation, or even possibly an overpriced valuation due to the huge increase in demand? As usual government intervention distorts the market.

I'm sure there are many other ways that this proposal could be ripped apart. But it's simply an unworkable proposal that brings back the pre-Thatcher view that generating wealth is bad, and should make people question whether Vince Cable is that economic guru they thought he was.

None of this actually matters though, because the Lib Dems will never gain power to implement this crazy idea.

Ireland to vote no again?

According to England Expects, this is a definite possibility with this new opinion poll. The methodology is being brought into question, so the poll may be flawed, but it could be good news for all those who believe in stopping the rise of the EU's power.

From reports I've heard Ireland has been flooded with Europhile propaganda, all paid with by our money, and the No side has had very little coverage. This Europhile nonsense includes "the economy will suffer if you vote no" - the economy will suffer if you vote yes because Ireland will have to increase its corporation tax rate in the name of harmonisation. Seems they've thrown the equal coverage rule out of the window then.

With this, and Poland and the Czech Republic (where it has been referred to the Constitutional Court again - 6 month delay), it looks like it may be the British public, courtesy of David Cameron, who destroy the consti-treaty once and for all. Let's just hope he keeps his promise.

If, however, the Irish happen to vote yes, that conference will be quite tense.

Just completely wrong

The government is introducing proposals to blame all crashes on the larger vehicle. So it's the car's fault not the cyclist's, the cyclist's not the pedestrians.

All this goes against the whole idea of a fair hearing, if we assume the car must be at fault. What about the cyclists that pull out, the ones that pay no attention to red lights, that don't use junctions properly - is it really the driver's fault if they are breaking the rules of the road? It's all peculiar, and really should be left to courtrooms not politicians.

I also see a proposal on the report to introduce a blanket 20mph limit on residential streets. First of all what is a residential street (there are many that could be considered for this category, but could easily be 40mph streets) and why introduce a speed limit that will just be broken and is often unnecessary? It's for local councils to decide, not central government.

Currency should be chosen by the market, not the UN

The UN's plans to create a new global supercurrency to replace the dollar are back in the news, this time with the reason given being anti-Americanism. From Fox:

According to Flassbeck demand for the US dollar is “irrational.”

Is it really? Are humans not naturally irrational? Isn't it more likely that one human (Flassbeck) is likely to be irrational than many who demand the dollar?

If I'm willing to pay you in dollars, and you're willing to sell me something in exchange for dollars, so be it. If we are both willing to use pounds, euros, yen, blue tack or livestock in exchange for a product, why should government, or indeed a supranational body like the UN tell us we cannot use it? It's a means of exchange, not something that government needs to get involved in.

And perhaps if there was a bit of competition in currency, they wouldn't swing about so much, or lose their value so quickly. Hayek was probably right.

Postal workers on strike again

It seems that, at least in Newport, they are, and I haven't received any post this morning.

It's about time that the CWU was taught that they cannot hold the country to ransom. Mail levels are falling, therefore jobs will fall, simple. The Royal Mail is already incapable of handling demand - last week I had to wait 20 minutes to pick up a parcel, and there were 7 counters closed. I'm sure they have too many counters open when demand is low too.

All of this stems from poor management, which is what happens when you put government in charge of absolutely anything. Royal Mail does not respond to demand, customer needs, or lack of government money. It's about time it was privatised to provide it with better management and demand responsiveness.

The argument that it is somehow necessary to have a government-run postal service is diminished by the advent of internet communications (note: provided by the market). The market would provide postal and courier services much more efficiently due to competition, with customers able to take their money and post elsewhere if, for example, something was lost in the post. It should also keep prices low.

So what if none of the private couriers will deliver government postage, the left cries? Is buying a few vans and using them too simple a solution for bureaucrats? Same response for the national security argument. Then of course the jobs argument, the main reason the CWU are striking, and it's one word - efficiency - the preserve of the free market.

How does she get away with this?

Harriet Harman is back on her feminazi soapbox today.

She does "not agree with all-male leaderships" because men "cannot be left to run things on their own" she told the Sunday Times.

She'd have a go at me if I said "women cannot be left to run things on their own". It seems this "equality" drive is now a drive for domination and blatant sexism left unchecked. If men are better for the job, so be it. If women are better, they get the job. Simple as that - merit. Trying to put women into roles just for the sake of balancing the sexes is pretty much saying that since women aren't good enough to take the job against men, they have to be given special treatment, and I wouldn't be surprised if more than a few women found that quite insulting.

Placing lives at risk

Once again the EU tries to impose their continental employment model on us by further breaching freedom of contract - a 48 hour week for junior doctors.

This is a vital stage in their careers, and at this rate training will have to be prolonged, hence increases in debt and so on. It also means that potentially there will be less doctors to treat patients, as my title says placing lives at risk and further increasing waiting lists. You then get the BNP etc complaining at the increase in foreign doctors in our hospitals.

But nothing more than this is the breach of the freedom of contract; the dynamic labour market based on supply and demand - doctors generally accept they'll have to work antisocial hours, and by devoting their lives to this career they accept that. So why stop them earning all the money they are willing to earn? This sort of regulation distorts the labour market.

I also thought we'd saved our opt-out from the 48-hour week. It's about time we left the EU and left continental Europe to rue becoming uncompetitive while Britain controls its own affairs and does well based on old Anglo-Saxon free market principles. It's ever so simple.