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Friday, March 25, 2005

A LESSON WELL LEARNT - Scotsman letter 23rd Mar

The SNP’s willingness to learn from the spectacular growth, averaging 7 per cent, of the Irish economy over the past 15 years, and to embrace the policies that brought it about - lower corporation tax and reducing government controls - is to be commended. By doing so they have put themselves in the position of being easily the most economically progressive party in Scotland and, while they may not appreciate the honour, in the United Kingdom.

Ireland has moved from having an average income two-thirds of ours to four-thirds; no small achievement.

Any nation which believes it has nothing to learn from the most successful in the world will learn nothing.

Mind you, I still think independence is an irrelevance and that the SNP’s "populist" policy of wishing to close the nuclear plants that now generate 55 per cent of our power without having any valid plans to replace them is insane. It is, however, an insanity shared by every other party in Holyrood.

I have believe that the pressure of letters like this is helping to shift the Scottish political agenda.In pure numbers the Scotsman cannot reach a high % of the population bit somehow I don't think the Record would publish anything as complicated or anti-Labour as this. On Friday there was a letter in reply to this largely requoting it altho', being SNP, not unreasonably taking issue with my opposition to independence. Specifically pointing out that Ireland couldn't have tried this experiment without independence.

Thursday, March 24, 2005


On the Adam Smith Institute Blog

By Alex Singleton 24 March 2005 Industry & Employment
Allders, the British department store group, has gone into administrative receivership. 1850 jobs have already been lost. In some towns, Allders was a key retailing institution. Isn't it wrong that the company, which was founded in 1862, should disappear?

Receivership is a nasty business, unpleasant for everyone involved. But, long-term, it is socially beneficial process. It takes resources that are distributed inefficiently and redistributes them to people who can use them better. Over the past decade and a half, Allders expanded from 11 to 45 stores, but 40% of the revenues came from the original Croydon store. Twenty of the stores, known as Allders at Home, were total disasters. The head office was hugely overstaffed, and the first thing the administrators did was to make 130 head office staff redundant. In 2003, the Daily Telegraph described Allders as "the country's most boring department stores".

The administrators have sold 24 of the Allders stores to Allders' competitors, like Debenhams, BHS and Primark. Thirteen stores were closed this week without buyers at present due to lack of interest. Three, including the flagship (but tatty and dilapidated) Croydon store, remain trading under the Allders brand for the time being. The administration process continues.

The alternative to selling the company's assets to the highest bidders would be for government to intervene and give Allders a helping hand. It could be argued that Allders is merely facing short-term problems and needs some breathing space. In reality, government support rarely achieves this sort of turn-around. Instead, the drug of government money becomes addictive and constant injections of cash are required. It is much better to have the redistributive process of receivership. It's survival of the fittest, but it is that process which benefits shoppers - and society - the most. And even the loyal shoppers in Croydon, where the store is a real institution, might be pleased - rumour has it that the capitalist collective known as John Lewis wants to move in.

I replied:
Bankruptcy, or less spectacularly, poor dividend return is the equivalent of what engineers refer to as negative feedback in machines. ie some system that self corrects a machine that is not running optimally.

In some ways a well run command economy can put investment in massive quantities in useful directions faster than the free market. However without the negative feedback loop when the industry doesn't work there is no automatic system to stop the mess getting worse.

This fact can, almost on it's own, explain the remarkable industrialisation of the Soviet Union under Stalin & the eventual collapse of it's outdated infrastructure.

If somebody develops a working socialism that allows the bankruptcy of lame ducks rather than their subsidy it will sweep the world.

I am reprinting this here, unlike most things I put on other blogs, because this encapsulates my opinions on economics, free marketism & alternatives. In practical terms I often call for the same reforms as libertarians but I do not share their almost religious concern for capitalism. I regard present day entrepreneurship rather as Churchill did democracy - the worst system except for all the others. I think it quite likely that someday, perhaps before the USS Enterprise is cruising space, a working socialism will be developed. I don't think any current socialist politicians will have contributed to it.

Almost all machines of any sophistication have some form of negative feedback otherwise they would quickly destroy themselves. The only one that immediately comes to mind that doesn't is the atom bomb. Social systems which don't employ feedback (such as bankruptcy, the separation of powers, primogeniture) are also unstable.

Tuesday, March 22, 2005

RED ROAD FLATS - Herald letter.

Today's (22/3/5) Herald has this letter from me about the impending Red Road flats demolition (Red Road was a giant group of flats, allegedly the largest in Europe, built in the early 70s when flats were very PC - now flats arn't PC & they are coming down):

Dear Sir,
Before knocking down the 1300 Red Road flats, which in the normal world would presumably be valued at about 100 million pounds, we should be sure this is the best option.

It would be cheaper to give these flats gratis to their owners (or to the neighbours of those who would rather be rehoused) with a strongly enforceable factoring agreement -
there are many factoring businesses in Glasgow which would be keen to solicit such a contract from each building's new owners. Another alternative would be to sell the vacant blocks at auction allowing private enterprise to refurbish & resell at the market rate - we are told the location is not ideal but it should be remembered that Red Road is within 2 miles of the city centre & 1/2 a mile of 2 motorways.

Both options would obviously be cheaper than what is proposed. In worst case it saves the not inconsiderable cost of demolition. The primary advantage is that, in a
world where house prices are skyrocketing because of shortage, Glasgow would retain 1300 homes. For the council the long term effect of 1300 extra community
charge payments each year would be substantial.

< I would not like to think that these options have not been examined because
councillors have a dog-in-the-manger attitude that because they have failed to make a success of these spectacular homes private individuals should not be allowed to either. >
Yours Faithfully
Neil Craig

They cut the last paragraph marked <> which removes exactly what I do suspect about Labour councillors ideological position to free markets. I noticed that, at the start of the 2nd para I said "owners" could be given the flats when I should have said "occupiers" - nitpick. There may be a reason why this would't work - for example that the buildings are structurally unsafe because of vandalism or initial council jerry building but I would like to see that proven before blowing 100 million.

The Herald also carried pictures of the Red Road site & "the city's trendy Glasgow Harbour site" & they do indeed look remarkably similar.

Neil Craig

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