September 23, 2010

Diseconomies of Scale

Yes, diseconomies of scale exist in the public sector just as they do in the private sector.

“Countries with small public sectors report significantly higher PSE [public sector efficiency] indicators than countries with medium-sized or big public sectors. All these findings suggest diminishing marginal products of higher public spending. The results that we get from the production-frontier-related FDH analysis, which uses the PSP indicators, are also in line with the aforementioned conclusions. Small governments tend to show better results. Spending in big governments could be, on average, about 35 per cent lower to attain the same public sector performance. The calculations also point out that EU 15 countries show relatively low public sector efficiency when compared with the US and also the average of the other OECD countries in the sample. EU 15 countries are using 27 per cent more public spending than the “most efficient” countries with similar PSP indicators. Spending for the average of the other OECD countries is “only” 11 percent higher than necessary.”

Better Lives Through Individualism

"Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker."

— Paul Krugman

Here is a really interesting peice of economic research about the way that productivity changes in collectivist and individulistic cultures. Their model, which seems to fit the data that they provide, is that more collectivist cultures will be better at working smoothly together to make an existing process efficient. If the world was static then this would mean that more collectivist cultures would be better places to live than more individualistic ones, but the world is not static. The second part of their model is that innovations can make a big difference to productivity by finding radically better ways of doing things, and individualism better encourages innovation than collectivism because it places a greater value on outstanding individuals rather than everybody being the same. Over time this means that more individualistic cultures gain a higher GDP per worker (productivity) because they are more innovative. So over time a more individualistic culture will have better standards of living than a more collectivist one. This conclusion is baked up by the data that they provide showing that more individualistic cultures have better GDP per worker than collectivist ones. This will mean that more individualistic cultures will have better standards of living than collectivist ones.

The Government Spending Mountain

A good illustration of the rate that the government spends our money, and so why the we must cut spending.

September 22, 2010

Classic Murphy

Everybody's favourite retired accountant, and hypocritical tax avoider, is spouting off on the Illiberal Conspiracy about how the state must never cut anything and we should just wait for more money to fall out of the sky. Apparently the worst thing that you can do when you are spending over 10% more than you earn is to cut back on how much you spend: his clients must have loved him, and later their bankrupcy lawyers must have loved him even more.

Apparently because financial institutions are required to hold a certain amount of AAA rated assets, like government debt, then if government does not perpetually increase the amount of debt that it owes then the banking system would collapse. In Murphy-world the only assets that hold a AAA rating are UK gilts, and in Murphy-world gilts are such magical instruments that they will always and forever be rated as AAA no matter how much debt the UK accumulates. The actual ratings agencies might have different ideas about that saying:

“Moody's stable outlook... is largely driven by the government's commitment to stabilise and eventually reverse the deterioration in its financial strength.”

but what do they know? After all they only asign the ratings. No! The government must spend, spend, spend! The small fact that debt interest payments are beginning to take off as the debt compounds up should not worry us, but if the government employees have to make do with same average salaries, pensions, and perks as everybody else then the world will fall apart around us. If the massed ranks of outreach workers and five-a-day co-ordinators cannot bugger off on full pay for six months of the year by claiming 'stress' then civilisation will fall. What would we do without Democratic Services Officers (salary £25,515 to £33,306 pa)? And should one single NHS Specialty Doctor in Homeopathy (salary £36,807 to £68,638) loose their job then everybody in the country will die horribly!

September 10, 2010

Religion is Stupid

OKCupid have run statistical tests on their members and found that statistically religious people are more stupid than the non-religious based on their writing abilities, but then declaring that you have an invisible friend when you are more than 6 should have been a bit of a hint as well.

Note that for each of the faith-based belief systems I've listed, the people who are the least serious about them write at the highest level. On the other hand, the people who are most serious about not having faith (i.e. the "very serious" agnostics and atheists) score higher than any religious groups.

September 02, 2010

The BBC is Biased says BBC head

So yet another BBC employee has gone on the record to say that the BBC, like every other media organisation, has editorial biases. Yet the Left will still claim that the BBC, alone in the world, is free of editorial biases. Maybe this is because the biases that BBC shows tend to be the same as the middle class metropolitan Left.