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Madsen Pirie



Articles by Madsen Pirie

Assar Lindbeck

16 days ago

Assar Lindbeck, who died aged 90 at the end of August, was a distinguished Swedish economist who at one time chaired the committee that awards the Nobel Memorial Prize in Economic Sciences. He is thought to have influenced the award of the prize in 1968 to James Buchanan, the Public Choice economist. Lindbeck’s research included work on self-destructive welfare state dynamics, dealing with the moral hazard of state welfare that undermines work and responsibility and leads to dependence of the state.His was famous for his work on Swedish rent control, which he opposed for decades. The ASI has many times quoted his opinion that “In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing.” We have pointed out that it is in fact

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We’re missing cost benefit analysis in our COVID19 discussion

May 10, 2020

Cost-benefit analysis is a useful tool for working out what things to do. Most activities have costs, even if it’s only the time it takes to do them. We could have used that time to do something else. We ask if the gain we achieve is worth the time spent doing it. Some activities have risks, and we ask if the benefit derived from the activity justifies the level of risk involved in doing it.Some surprisingly mundane activities have measurable risk of serious injury or death, including going upstairs, taking a bath, or crossing a road. Some activities have more obviously higher risks to be weighed against the benefits. Mountaineers know that people are killed every year climbing mountains, but do it anyway for the thrill of performing a difficult and dangerous task, and the exhilaration of

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Nothing is ever as permanent as a temporary government scheme — this must not be true after COVID19

May 6, 2020

When the Eiffel Tower was erected in 1889, it was expected to last for 20 years. So far, it has lasted for 131 years and counting. The London Eye, opened in the year 2000, had planning permission for 5 years, and it’s still there. Temporary things sometimes last. Where in this world can you find something that does that, something that endures through the changing times and the swings of fortune? Look no further than a temporary government programme. Although established to deal with short-term emergencies, they develop a life of their own, one that struggles to survive into perpetuity.Nowhere is this more true than of temporary taxes. These are often levied by government to provide the funds for a short-term emergency, but they provide such a useful source of revenue that subsequent

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Wouldn’t it be nice if we could have everything? In the meantime, priorities matter

May 4, 2020

Wouldn’t it be nice if we could have everything? If we had an infinite amount of money, we could apply it to solving all of our problems simultaneously. We could allocate resources to tackling pollution, AIDS, malaria, biodiversity, gender and racial inequality, transgender discrimination and lack of access to education. Even with that short list, we’d be less than ten percent of the way down the roster of things people want to be solved.Bjørn Lomborg’s Copenhagen Consensus assembled 60 teams of economists, together with NGOs and acknowledged UN and private sector experts, to research the pressing problems for humankind that might be targeted. They identified a list of the 22 “core issues,” including those already mentioned, plus issues such as global warming, clean water, infant

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F A Hayek was in fact a Conservative

April 28, 2020

This year marks the 60th anniversary of the publication, by Chicago University Press, of F A Hayek’s “Constitution of Liberty.” It remains a classic defence of personal liberty as that which makes civilization and progress possible. Hayek says that the legitimate role of government is to protect that freedom by laws that apply to all, including itself. At the end of that book is an essay, “Appendix: Why I am Not a Conservative,” in which he asserts that he seeks liberty, rather than the preservation of any current state of society. If society is not liberal, he supports changing it to make it so, rather than opposing changes, which is what he takes Conservatism to stand for. He uses ‘liberal’ in the way people outside of America do, to mean supportive of freedom.Hayek was writing in the

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Khayyam and Revolutions

April 23, 2020

There’s one stanza in “The Rubaiyat of Omar Khayyam” by Edward Fitzgerald that resonates politically. It is this one:“Ah Love! could thou and I with Fate conspireTo grasp this sorry Scheme of Things entire,Would not we shatter it to bits — and thenRe-mould it nearer to the Heart’s Desire!”Similar thoughts have occupied the minds of many revolutionaries from Robespierre onwards, and maybe even before. The drive for a better society starts with the destruction of the current one. Some people look at society with all its perceived imperfections and injustices, and want to do away with it, and replace it with a better society, one they can conceive of, that will lack those drawbacks and blemishes, and in which people will be able to lead fuller and more rewarding lives.Hayek criticized this

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A silver lining on homelessness from this crisis

April 22, 2020

The pandemic and the lockdown have given us the chance to think about some of the long-term problems we might solve. We should decide not to go back to having homeless people sleep in shop doorways. We have the chance to try a new approach to solving the problem. It’s important to understand what the problem is. National Audit Office figures show that a high proportion of rough sleepers who had needs assessed were prone to alcohol addition, drug addiction, or mental illness. These three factors were among the reasons underlying their situation. In the past efforts have been made in many countries to help street sleepers solve some of these problems so they can be allocated secure accommodation. But Finland now does it the other way round. It’s called “Housing First” because they house

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Answer the call!

April 21, 2020

Legend has it that Drake’s drum, the one he left to the nation, can be heard to beat at times when the country is in crisis or at war. It calls for people across the nation to rise up to defend it.We’re beating that drum now. The nation is in crisis as never before. The economic heart of the nation has slowed, and it needs major and urgent action to revive it. We are beating the drum now to rouse as many of us as possible into action. We look not to those on high to save us, but ideas and initiatives from the little platoons Edmund Burke correctly said made up a nation — the people who, added together, are all that makes us great. That drum call goes out to you: a vast army of people with ideas and with energy. We want to hear all of them. Companies stand on the edge of ruin and our

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Time to get rid of the idea of cultural appropriation and other Marxist identity claptrap

April 16, 2020

When the pandemic is over, it’s possible that a few things that once seemed important to some people might leave with it. This could include some of the more arcane elements of what constituted the “Woke” culture. For example, some people used to fret about what they called “cultural appropriation,” castigating people from Western white cultures who adopted practices from other cultures. Justin Bieber was slated for wearing his hair in blond dreadlocks, and university students were derided for holding costume parties themed on countries such as Mexico or Japan. It’s nonsense, or course. When we take on board things done by other cultures, more often than not it’s cultural appreciation rather than appropriation. The walls of my house feature paintings done by a Western artist in the Chinese

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Genetically Modified Organisms take the fight to the coronavirus

April 14, 2020

Some things will change after the pandemic, and one of the likely ones is that opposition to genetically modified organisms will be much diminished. We’ve been using genetic modification since our ancestors first domesticated grains and farm animals about 12,000 years ago, but in the slow way, by cross-breeding and selection. When we found how to do it faster by inserting useful traits from one organism into another, some environmental lobby groups discovered they could attract funding by running scare campaigns against it. They coined terms like “Frankenfoods” to imply that GMOs were laboratory monsters that would run amok. Since the technology was developed, none of their dire predictions has come about. Americans have been eating GM foods for most of this century with no ill effects at

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Helicopter money has dropped into the discourse once again

April 13, 2020

Helicopter money is in the news again. The original concept was from Milton Friedman. In a 1969 paper he asked what might happen if banknotes were dropped from helicopters, and people knew it was a one-off event. In his case it was a thought experiment, but it has been put forward since as a serious policy proposal. The thinking is that if the economy has taken a hit, as happened with the corona virus, then a stimulus will be needed to help it restart and move into growth territory. The idea is that a consumer boost might be stimulated by giving people free money, as if dropped from helicopters. If it produces extra spending, businesses will take up the economic slack, and production will be increased, with a positive effect on jobs and wages. This might be fine in theory, but does it

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Let’s not fall for the Nirvana Fallacy

April 12, 2020

In my logic book I classify it as “Unobtainable Perfection,” but it’s often nicknamed the “Nirvana” or the “Utopia” fallacy. It’s when you criticize something because it’s not perfect, like criticizing the present because it doesn’t reach the perfection of some imagined future world.People on the Left often compare the present world with a hypothetical future one.  “ Wouldn’t it be nice if all our wants were satisfied, and people behaved better towards each other.” Yes, it might indeed be nice, but it’s not what’s on offer. What’s on offer is this world that might be made better. Not perfect, but certainly better.People on the centre right usually compare the present, not with the future, but with the past. They don’t ask “Could it be perfect,” they ask “Is it better than it was.” They

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The zero sum fallacy

April 8, 2020

Ah yes, the Zero Sum Game fallacy returns to haunt us yet again. We can bury it with a stake of logic through its heart at the crossroads, but still it rises from the dead. It’s the one that says wealth is fixed, so that if someone gains more of it, it must be at the expense of someone else having less. It’s often nicknamed the pizza pie fallacy because, with a fixed size of pie, a bigger slice for one person means less pie left for others.It’s popular on the Left because they don’t like rich and successful people, and think the only way to help the poor is to take that wealth and distribute it. They say the reason the industrialized West became rich was that they stole wealth from poorer countries. It never occurs to them that wealth is created by trade and exchange. You can grow that

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When to ease up on the Precautionary Principle

April 6, 2020

The precautionary principle is not a real-life situation. It tells us not to do something until we’re sure it’s safe. It urges us to err on the side of caution, and not to risk new things that might be damaging. The “weak” precautionary principle rules out things that might just have unquantified risks, but the “strong” one, favoured by the EU, forbids things until they have been proven safe.Of course, in the real world we can never be sure that anything is completely safe. Everything has associated risks, from climbing downstairs to taking a bath. We might, over time, be able to assess the risk level of innovations, be they drugs, foods, additives or modes of transport. We don’t usually then ban them once they have an established risk level. Instead we assess the benefits of the

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How to do a post-epidemic economic miracle

April 4, 2020

Our economy has taken a real hit during the crisis. It’s been hit hard because so much of it is service sector. With pubs, restaurants and entertainment centres closed, and people staying indoors, much the economy has shut down, and needs to be restarted. Some suggest public stimulus, shoveling public funds to favoured sectors to restart them. No. It doesn’t work. It takes cash from those who might have invested it wisely, and lets ministers and civil servants invest it unwisely. Others advocate central planning to regulate and steer the economy into recovery. Again, no. That doesn’t work either. Central planning by remote bureaucrats with nothing to lose is not a patch on individual planning by those with skin in the game. Fortunately, history has given us a lesson in something that does

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Learning the lessons of the end of World War II

March 26, 2020

The Allies won a remarkable victory in World War II. Although among the victors, the UK was bankrupt and exhausted, its economy was in poor shape, and its infrastructure – roads, rail and telecommunications – was out-of-date and worn out. Its economy needed a reboot to refresh and renew itself to deal with the postwar world.Instead, the UK government, a major recipient of Marshall Aid (far more than West Germany), and having negotiated a huge loan from the United States, squandered the money on building up an expensive welfare state, nationalizing industry, and trying to maintain the costly illusion that it was still a superpower. The sad story is documented in detail by Corelli Barnett in “The Lost Victory” (Macmillan 1995). The result was that while Germany and Japan saw reinvestment and

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Happy Brexit Day

January 31, 2020

As we celebrate the UK regaining its independence today, we think back to the time when the seeds of that event were sown. In 1975 people voted eagerly to remain part of the European Economic Community we had joined in January 1972. The accession of Jacques Delors in 1985 to be President of the European Commission made it clear that the real agenda was the creation of a United States of Europe. Delors, an unelected civil servant, demanded to be treated as a head of state when he visited foreign countries. Speaking at the UK’s Trade Union Congress in 1988, he in effect bid for the support of fellow Socialists by promising that the leftwing policies the UK people would not vote for could be imposed from a European level. Regulations and controls would come from afar to foster centralization

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Rhode Island’s wage and price controls

December 31, 2019

On December 31st, 1776, Rhode Island introduced wage and price controls. They limited the wages of carpenters to 70 cents a day, and those of tailors to 42 cents a day. These were price ceilings, and it was illegal to set wages or prices higher than the government stipulated levels. The law fixed maximum prices for items “necessary for existence.” 7s 6d was the maximum for a bushel of wheat, and fourpence-halfpenny a pound for “fresh port, well-fatted, and of a good quality.” A gallon of New England rum could be sold for no more than 3s 10d, 10d a pound for butter, 8s for a pair of shoes, and 30s for a barrel of blubber. Other states joined in the “Providence Convention” that sought relief from “the exorbitant prices of goods.” Delegates from Massachusetts, New Hampshire, and Connecticut

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Robert Mugabe’s paper money

December 30, 2019

Robert Mugabe, who had been a terrorist, became Prime Minister of Zimbabwe in 1980, and on December 30th, 1987, became the country’s President by pushing through a constitutional amendment. The new post made him head of state as well as head of government. He was also commander-in-chief of its armed forces, and could stay on indefinitely as President, and declare martial law and dissolve Parliament if the mood took him.His policies were disastrous for his country. He favoured his own tribe and stirred up violence against others. He encouraged blacks to seize white-owned farms by violence. Many so seized ceased to produce, and food production declined, causing famines. The economy collapsed. By 2000, living standards were below those when he took office in 1980. Wages were down, and

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Ronald Coase studied real markets

December 29, 2019

Ronald Coase, winner of the 1991 Nobel Economics Prize, was born on December 29th, 1910. As is the way of most Nobel economists, he lived a long time, and died in 2013, aged 102. He studied under Arnold Plant at the LSE, and went on to become part of the Chicago School, where he co-edited the influential Journal of Law and Economics.He gained acclaim by examining why it is that business firms develop as they do, identifying the transaction costs of entering and operating in the market as a key factor determining their size and nature. In a ground-breaking paper, “The Problem of Social Cost,” he dealt with the problems of externalities, and suggested these might be handled by assigning property rights. This approach has been applied to dealing with problems of over-exploiting common

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The Gulag Archipelago

December 28, 2019

On December 28th, 1973, was first published one of the most powerful and influential books of the 20th Century. "The Gulag Archipelago: An Experiment in Literary Investigation" by Aleksandr Solzhenitsyn was an account of life in the Soviet forced labour camps, in which Solzhenitsyn himself had been incarcerated. The term GULAG is an acronym for the Russian initials of the Main Directorate of Camps. The camps were like an archipelago of islands, scattered in the vast ocean of Soviet territory, many in the harsh climate of the Siberian wilderness.Solzhenitsyn’s book narrates the history of the forced labour camps from when they were first introduced by Lenin in 1918. He traces through the various purges and show trials that swelled the number of inmates into the millions. Some of it is from

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When Spain became a democracy post-Franco

December 27, 2019

The Spanish Civil War (1936-1939) was a cause célèbre for left-wingers in the West. Some, like Orwell, fought with the International Brigade for the Republican side, fighting against the Nationalist armies led by General Francisco Franco. After the Francoist victory in 1939, Franco ruled as a dictator until his death in 1975. He kept Spain neutral in World War II, despite expectations that he would join the fascist powers, Germany and Italy. In 1969, Franco designated Prince Juan Carlos, the grandson of Spain’s last king, as his chosen successor, skipping a generation. The plan was to restore Spain’s status as a constitutional monarchy when Franco died. It was a delicate balancing act for six years as Juan Carlos prepared to succeed. The civil war was still fresh in many minds, with many

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The end of the Soviet Union

December 26, 2019

December 26th, 1991, was a bright day for mankind. It was on that day, 28 years ago, that the Supreme Soviet officially dissolved the Soviet Union and ended the Cold War. The Soviets had always taken the view that Communism would succeed across the world because of historically inevitability, as outlined by Karl Marx. However, they were quite ready to help history along with as much armed force and brutality as it might take. It reached the ultimate in armed force with the Brezhnev Doctrine, which declared that any country attempting to move away from Marxism-Leninism would be invaded by Soviet forces to override the will of its peoples. The Soviets did indeed suppress popular uprisings in Poland, East Germany, Hungary and Czechoslovakia. The problem for the Soviet Union was that Socialism

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Understanding Newton’s universe

December 25, 2019

Galileo died in Italy on January, 1642, and on December 25th of that same year, Isaac Newton was born in Lincolnshire, England. He became one of the most influential and distinguished scientists of all time. Remembered for physics, mathematics and astronomy, he also worked on alchemy and theology. He was a bridge between the mediaeval and modern worlds.Newton’s main contribution was to show that the workings of the world could be understood in terms of rational laws, and the same laws that explained the behaviour of objects on Earth also regulated the most distant part of the heavens. Where people had separated existence into two domains, the Earth and the Heavens, Newton showed that they were one. He wondered why apples separated from trees always moved in the same direction, towards the

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Apollo 8 in lunar orbit

December 24, 2019

NASA made its bravest move in December 1968. On the very first manned flight of the Saturn V rocket, NASA sent it to the moon. Previous orbital flights had been in low Earth orbit, "like a fly walking on the surface of an apple." Now Frank Borman, James Lovell, and William Anders became the first humans to leave Earth orbit and fly to the Moon. On December 24th, 1968, they entered lunar orbit and became the first humans to orbit another world. They were also the first humans to see the whole Earth from space, like a blue and white marble, while viewers back on Earth thrilled to the spectacle of their home planet as a small globe in the blackness of space. The mission was dangerous. They had no lunar module with them, and were totally dependent on the engine of the service module

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Richard Arkwright, industrial pioneer

December 23, 2019

Richard Arkwright, described as the "father of the modern industrial factory system," was born on December 23rd, 1732. Without formal schooling, he was taught to read and write by his cousin, then apprenticed to a barber. He was inventive from the beginning, creasing a new waterproof dye for the then-fashionable wigs. He created a spinning frame to mechanize the thread-making by using wood and metal cylinders to replace people’s fingers. It was initially powered by horses, and with a partner, Arkwright started up a horse-drawn factory at Nottingham. He took on investors from the stocking industry to set up the world’s first water-powered textile mill at Cromford, employing 200 people to perform both carding and spinning. His new carding machine made thin, strong cotton thread to feed what

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First flight of the Blackbird

December 22, 2019

In great secrecy on December 22nd, 1964, one of the most awesome planes ever built was rolled out at Air Force Plant 42 in California, and took its first flight. On that very first flight it achieved a speed of Mach 3.4. This was the SR-71 Blackbird, a plane that played an honoured role in the Cold WarWars are often started through uncertainty, when a potential aggressor is uncertain of the response. This makes intelligence extremely important; you need to know your enemy’s capabilities. Behind the Iron Curtain NATO needed to assess the USSR’s capabilities, and what aggressive potential it had. The US initially used the U2 spy plane, but it was becoming vulnerable to interception by missiles, and a successor was needed.Kelly Johnson at Lockheed’s "Skunk Works," created the SR-71. Its shape

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Benjamin Disraeli, a strange Prime Minister

December 21, 2019

On December 21st, 1804, was born a man destined to become one of Britain’s strangest Prime Ministers. This was Benjamin Disraeli. His background was ordinary, middle class, though he later romanticized it. Born and raised initially Jewish, his father renounced Judaism after a dispute with his synagogue, converted to Christianity, and had all four of his children baptized as Anglicans when young Benjamin was 12. This opened up the possibility of a political career, since Jews could not at that time take the Christian oath of allegiance without converting, at least nominally. In his 20th year, Disraeli changed the spelling of his name from D’Israeli to Disraeli.As an MP, Disraeli was extrovert, even flashy. At times he wore white kid gloves with rings outside them. He was drawn to glamour

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Flying Tigers in action

December 20, 2019

The American volunteer flyers who fought for China against the Japanese invasion were known as the ‘Flying Tigers.’ They saw their first combat on December 20th, 1941. They had originally thought this would be earlier, but various delays meant that it happened a few days after the US and Japan were officially at war.The Tigers, officially the American Volunteer Group (AVG), were the brainchild of Claire L Chennault, a retired US officer working in China. He’d acted as military advisor to Chiang Kai-shek, then as director of the Chinese Flight School. 100 volunteers were all recruited from US air forces, officially discharged so they could become civilian volunteers to fight with the Chinese. They were employed for “training and instruction” by a civilian military contractor (CAMCO), which

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The Penlee lifeboat disaster

December 19, 2019

The Royal National Lifeboat Institution is a private charity, not funded by government, that exists to save lives at sea in UK and Irish waters. It is manned by volunteers, people prepared to set out in heavy seas to rescue people at risk in maritime incidents such as sinkings, collisions, or incapacitated vessels. On December 19th, 1981, one of their lifeboats, the Solomon Browne, a wooden 47-foot boat manned by a crew of 8 was contacted by the coastguard to go to the aid of the Union Star, adrift after its engines had failed in heavy seas. A rescue helicopter sent to assist could not winch people off because the winds were too severe.The volunteer crew tuned up, ready to go, but when 17-year-old Neil Brockman turned up dressed and ready to sail with his father, Nigel Brockman, the

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