Add Solow to Baumol and you’ve really got something
Adam Smith Institute Blog
by Tim Worstall
11h ago
An interesting line from Andrew Sissons about Baumol’s Cost Disease. Maybe it’s not entirely cost? One interesting part of it being this: Baumol’s version of his “disease” actually combines two effects. The first is the famous finding, outlined above, that productivity gains in one sector lift wages in all sectors. The second, less positive part is that productivity growth will necessarily be slow or stagnant in some parts of the economy — typically the service sector. The combination of these effects, according to Baumol, is that the stagnant sector takes up a larger share of the economy over ..read more
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The glory of politics and the water companies
Adam Smith Institute Blog
by Tim Worstall
2d ago
You may have noted that we’re not wholly keen on politics as a method of running things. Here’s a good example of why: In his first interview since taking up office, he told The Telegraph: “Every single river in England today is polluted... The public quite rightly are furious that they have to worry about letting their kids splash about in the river, for fear of what they might catch, because it’s polluted.” Mr Reed said he will introduce a new system monitoring sewage spills, which involves independent scrutiny of the data, to stop water companies from “massaging the figures”. Oversight of p ..read more
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We really don’t think this works as a plan
Adam Smith Institute Blog
by Tim Worstall
3d ago
Colin Hines tells The Guardian how it all should work: Labour could achieve this by redefining growth as the increase in economic activity directed towards rebuilding public services and turbo-charging a green transition in every constituency. This must include retention and recruitment in these sectors through adequate pay levels, and in the process also boosting the businesses connected with them. We’ll all get rich by building each others’ windmills. At good union rates too. We think that lacks a certain something as a plan. Quite apart from that little redefinition of growth as being whate ..read more
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Mission critical plans with strict conditionality
Adam Smith Institute Blog
by Tim Worstall
3d ago
A useful example of why direction from the top does not work: It is the latest sign of a wobble over hydrogen, a so-called superfuel that has been championed as a solution to decarbonise everything from transport and heavy industry to home heating and power generation. Across the West, politicians have pledged to meet ambitious climate targets partly through developing different sources of the fuel, such as “blue” hydrogen made from natural gas, and “green” hydrogen derived through electrolysis of water. Collectively, they have pledged to produce millions of tonnes of hydrogen in the coming de ..read more
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We’re really very sure that the point is being missed here
Adam Smith Institute Blog
by Tim Worstall
5d ago
The first point being missed here is that this is theft: Landowners will receive less in compensation when they are forced to give up land for house building, under a tough new Planning and Infrastructure Bill. As part of its plan to “get Britain building”, Labour will toughen up the rules around compulsory purchase orders. It will mean that the amount of compensation paid to landowners will be “fair but not excessive”. We agree that we are projecting a little here. But there’s long been muttering that compulsory purchase should be at current permitted use prices, not potential permitted use p ..read more
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We’re sure someone promised us joined up government at one time
Adam Smith Institute Blog
by Eamonn Butler
6d ago
We also guess that hasn’t arrived as yet. "I am determined to create wealth for people up and down the country. It is the only way our country can progress, and my government is focused on supporting that aspiration." So says Sir Keir and jolly good, excellent in fact. Therefore, and obviously, we’re going to go about increasing the incentives to do the hard work to create wealth. Lower corporation tax, reduce inheritance tax, cut capital gains tax, lower the rate of income taxation and so on. For if we desire people to put in the hard work to create wealth then we would want to increase the i ..read more
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Farewell, Dr Smith
Adam Smith Institute Blog
by Emily Fielder
6d ago
We don’t know exactly when Adam Smith was born. It was some time in July 1723. But we do know that he died, on this day, in Edinburgh, in 1790. The story is that he was entertaining friends at his home, Panmure House off the Canongate, as he often did, being a lover of informed and educated conversation. At some point in the evening, he felt unwell, rose and said: “Gentlemen, we will have to resume this conversation in another place.” He died that very night. Well, not exactly, it was a few days later. But the story is in the right spirit. And Adam Smith’s religious beliefs are a matter of deb ..read more
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There really is no money left, you know?
Adam Smith Institute Blog
by Tim Worstall
6d ago
Yes, yes, government can just instruct the Bank of England to print more money. But even then there’s no money left. Labour needs a “growth miracle” if it is to fund its aspirations for public services, economists have warned, ahead of the King’s Speech. Economists have raised doubts over the new Government’s ability to boost the economy and expect a repeat of the slow expansion in growth since the global financial crisis. We can’t have government buying us lovely new things because all hte money’s already been spent. The promises that have been made to us about pensions, services, depend upon ..read more
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If people don’t grasp the basics then…..
Adam Smith Institute Blog
by Tim Worstall
1w ago
We’re willing to be fair to Will Hutton here. That’s a difficult job but someone’s got to do it. This line comes from the Observer’s subeditor, not Hutton himself - headlines and subheads are written by subs, not journalists or columnists. It does capture, well, the argument Hutton is making but these still aren’t his direct words: Wealth is a privilege, and with it comes the obligation of paying tax to benefit society This is, obviously, piffle. For what is being said there is that only by paying tax does wealth benefit society. Which is, obviously, that piffle. It’s actually true that wealth ..read more
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Adam Smith for the win once again
Adam Smith Institute Blog
by Tim Worstall
1w ago
There are those who think that the mere existence of billionaires is, as the cool kids say these days, problematic. There are those who say that it doesn’t matter very much. We’re in that second camp: The three-day wedding itself — which begins on Friday evening with the traditional Hindu ceremony, followed by the shubh aashirwad or blessings ceremony on Saturday, and a reception on Sunday — would make an extravagant maharajah blush. While the cost of the months-long wedding celebrations has not been confirmed, analysts have estimated that they may have cost up to 50 billion rupees (£462 milli ..read more
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