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Wednesday, May 06, 2009


I thoroughly recommend & have been contributing to John Redwood's blog:

John's article "Both the Brown and the Obama administrations seem united in one thing - the pursuit of lower living standards for all.....

I said "For the last 40 years it has been politically fashionable & not just among LudDim & Labour parties & the BBC, to say that we are, or will within 10 years, be suffering environmental melt down & the common people must be persuaded not want a higher standard of living.

Well they have got their wish.

In reality, with scientific knowledge expanding faster than ever & Moore’s Law, if anything, speeding up we could all be having the growth rates of China & India if our political class would get out of the way."

Stuart Fairney Reply "That may be the smartest comment I’ve ever read on this blog.

But how can we expect politicians to vote to reduce their power and influence. Turkeys voting for christmas etc This theme was discussed in the best political novel of 2008"
John's article "When waste, needless programmes, stupid jobs, pointless regulation, poor efficiency and rampant feather bedding are rife in an organisation, cutting costs is not only easy but rapidly makes the service better."

I said "Wikipedia says John “in 1995 he returned £100,000,000 of Wales’ block grant to the UK treasury unspent following efficiency savings and cost-cutting measures”. I assume total savings were several times that but most of it was used, more usefully in Wales. On a proportionate basis that sum was £2 billion across the UK & probably twice that now & multiplied again several times because Major clearly did run a much tighter ship than Brown.

He can credibly talk the talk having walked the cost cutting walk.

Reply: Yes, I saved more than £100 m and spent the rest of things Wales did need. It is never easy getting them to spend on things people want, as the establishment always wants to spend on itself."
He produced a very downbeat assessment of future growth based on what the Treasury believes to be our current underlying growth rate "So what is the trend rate of growth?

Current Treasury figure 2.75%

Less lower population growth -0.4%
Less impact of larger inefficient public sector -0.2%
Less debt effect -0.3%
Less financial sector distortions and losses -0.3%
Less incentive effect of new taxes -0.2%

Possible new trend rate of growth after recession 1.35%

I will be doing some more work to develop this model. Every 1% off the growth rate means the average family of four being worse off by £1,000 a year for each year of the slower growth. The losses compound up to large numbers quite quickly, as every year adds another shortfall of an additional £1,000 in their share of National income."

I disagreed on the assumption that we can substantially improve that trend by ending government Ludditry "I don’t think things need be so bad as that. It depends very much on the growth rate. If we got even the world average long term growth rate of 5%, let alone India & China’s 10% we could pay off debts in a few years. Growth in turn is not a fixed amount & if we got rid of government anti-nuclear & other ludditry & overregulation we could manage it.

This from Jerry Pournelle yesterday:

“Low cost energy is the key to economic growth, and nothing the government is doing would have as great an effect as a huge nuclear power program. The TVA was the best investment of the New Deal. It may be that private power would have done as well, but the cheap energy from TVA brought energy to the South.

Cheap power is the key to growth; and clearly that will not happen under the Change that we can believe in.”

It could happen in Britain. The best electoral promise in many years was Sarah Palin’s “Starting in January, in a McCain-Palin administration, we’re going to lay more pipelines and build more nuclear plants”. That would work & there are many people in the Conservative party who would support it. I’m not sure if there are enough."
UPDATE Stuart & others have also commented favourably on this comment of mine:

If money being printed is “flowing into commodities” that is a very bad sign. It means (A) that commodity prices are being artificially pushed up which makes everything more expensive while acting as a depressent to real production & (B) that investors are finding a shortage of real productive investments to make. I believe that the cause is that western governments have produced so many regulations either preventing manufacture (nuclear plantsw, GM, golf courses) or enormously expensive compared to the free market parts of the world (steel making, housebuilding, construction & manufacturing generally).

Technology is still progressing faster than at any time in human history & if we allowed its use we would be growing similarly.

Rather than printing pieces of paper & working the economy by by moving them round we coyuld be running space X-Prizes & building a production line to manufacture nuclear power plants & massively cutting these destructive regulations.

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