This Isn’t What We’re Told…

With last weeks announcement that the UK economy shrank by 0.3 per cent over the last three months, everyone is holding their breath for the inevitable “triple dip recession” that will surely be just around the corner.

Once again, we’re spoon-fed vague waffle about how this is all down to the “austerity”, i.e. “cuts”.

That’s why this reality-check from Allister Heath is so worth reading in full.

Austerity – in the government sense – can mean either cuts to public spending or increases in taxation. We’ve had a lot of the latter – taxes continue to rise – but as Heath points out so clearly, the size of government has gone from 48.6% of GDP in 2011 to 49% by the end of 2012. We’re increasing the size of the state. How can we see a large supply-side boost to the productive sector if we continue this engorgement of the unproductive sector?

You can call the current government’s plan whatever you want: savage cuts, deep austerity, but it’s clear isn’t the austerity that we need.

The governments plan will eventually get us back on track, but we could get there so much faster with real reduction of government expenditure.

These “savage cuts” that Nick Clegg was banging on about… when are we actually going to get them? The status quo doesn’t seem to be working.

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A Guns Schools and Violence Reality Check

The recent mass-shootings in the US are nothing short of tragic. But we have to remember that they’re an anomaly. These things don’t happen that often and you’re probably more likely to win the lottery than be killed in a mass-shooting. This doesn’t distract from the real pain and suffering that the people involved are going through. But you can’t legislate against statistical anomalies.

There’s calls to not only regulate guns, but also some really unpleasant stuff being said about people with Asberger’s Syndrome. Seriously? Do we really think this 100% non-violent mental illness is responsible for the killings in the Sandy Hook Elementary School? The perpetrator of that crime did have Asberger’s – but that wasn’t why he committed that crime. He did it because he was a violently disturbed individual.

And the calls to ban ‘violent’ video games have come around again. Apparently he played “Call of Duty” a lot. No kidding. No offense grandpa, but so does everyone else under 40. He also probably brushed his teeth with Colgate. Shall we ban that too? Video games are the current thing that parents and authority figures fear, though they’re something that young people enjoy, and the generation before just don’t understand.

Stated differently, video games are the new rock ‘n roll. Remember Charles Manson saying that the Beatles inspired him to commit his horrific crimes? Remember the calls of how “rock & roll has got to go”? If you were born between 1945-1975, you’ll probably remember how crazy it sounded when your parents and government-types screamed that nonsense. Well baby-boomers, I’m sorry to say you’re doing the same thing to us here in Generation Wired. Video games are the new rock & roll and you might just never get it, the way your parents didn’t get The Rolling Stones or Elvis. Or the way their parents didn’t get Miles Davis and Chet Baker.

That’s just my feelings on this. Remember that saying “If someone says ‘there ought to be a law’, there probably oughtn’t”? I think that summarises the hysteria against guns at the moment. (And the hysteria for them, if you’re conspiracy theorist Alex Jones I guess).

So in the interest of a little objective sanity, here’s an important video from one of my favourite commentators and journalists out there, reason.com‘s Nick Gillespie:

Just to recap Nick’s points: Violent crime (including violent crime involving guns) has fallen significantly in the last 20 years. Murder, rape, assaults are half of what they were in the early 1990s. And according to the US Department of Justice’s own figures, violent crime involving the use of weapons has fallen at the same rate.

There’s no correlation that suggests mass shootings have increased in recent years. Simply, they haven’t. The data is clear. And mass-killings more generally actually peaked in the US in 1929 (the year of a particularly awful tragedy at the hands of a pyromaniac, if I’m not mistaken).

According to the National Centre for Education Statistics, schools are significantly safer now than they were 20 years ago: the violent crime victimisation rate fell from 53 per 1,000 students to 14. An incredible fall of 74% from the early 90s.

At the time of writing, there’s now only two states that don’t have ‘right to carry’ laws in the US (i.e. laws that mean you can carry a concealed handgun). The unprecedented liberalisation (in the proper sense of the word) means that there’s over 300 million guns in the US and at least one in 45% of all households. All this despite the massive fall in gun-related violent crime. In fact, the proliferation of guns in America that are held by law-abiding citizens are probably a reason why the crimes are falling. A legally held gun is significantly more likely to be used to prevent a crime than instigate one.

And as Nick points out, this call for bans on “assault weapons” (there’s a correlation between how passionately someone wants to ban them and their inability to define what one actually is), would lead to no change in the level of gun crime. And that’s at best. A report by the US governments National Criminal Justice Reference Service concludes in a comprehensive study (where you get the feeling they really wanted to prove assault weapons should be outlawed): “Should [the so-called assault weapon ban] be renewed, the ban’s effects would on gun violence are likely to be small at best and perhaps too small for reliable measurement.”

We don’t need new laws. We just need to morn the loss of these precious people that we have lost. You want to solve the problems of the world? We libertarians cracked that a long time ago: More freedom. More love.

Sorry all, but supply-side economics is a fact.

Most political pundits and many politicians (of all flavours) describe “supply-side” economics as “voodoo economics” or the ramblings of “delusional supply-side fantasists”. But there's one problem.Whenever we get the stats in, it appears that the rate at which governments tax us actually have an effect on our behaviour, and subsequently on the amount of money that winds its way back to the treasuries.

When the change is small (say an income tax increase from 35% to 37%) there is almost no negative Laffer curve effect. But when the change is large (say a 10% increase or decrease) then this will have a more pronounced effect on government income. This simple economic reality – dynamic scoring – has for a series of bizarre anti-intellectual reasons been ignored and even ridiculed.

Well we've had some more hard data about this economic reality. Aside from this excellent summary from journalist Janet Daley, we've no one seemed to mention this when the data came in around November time.

Gordon Brown raised taxes on the higher earners from 40% to 50%. The effect? Millionaires who were eligible to pay at that rate (based on what they declared to the taxman as income) have – quite within the law, fallen from 16,000 to 6,000. The government has an estimated £7-£9 billion in lost earnings:

It turns out that the introduction of the 50p rate of income tax caused two thirds of those earning over a million pounds per year to simply disappear from the reach of HM Revenue and Customs. Whereas, under the previous highest tax level of 40p in the pound, 16,000 people were prepared to declare earnings of one million, that number shrank to only 6,000 after Gordon Brown, bless him, introduced the higher rate. Result: the Treasury actually lost 7 billion pounds in revenue.

It would appear that due to the worsening economy, and the higher taxation level both incentivising ways of getting around paying income tax at all, and also incentivising entrepreneurs not to bother trying as hard, the government has shot itself in the foot.

That's the funny thing about this supply-side “voodoo economics” that can't possibly be real: it has a tendency to actually be very real indeed.