Saturday, December 23, 2006


This is an important article - a very well researched PDF of 68 pages of a statistically investigation of what causes economic growth.

To give away the ending the answer is ECONOMIC FREEDOM. Perhaps not startlingly unexpected but proven in great detail.

It was written for the South African government shortly after the end of apartheid & has, for reasons which may be those mentioned on page 10, not been absorbed by them. Since economic growth is far & away the most effective way of improving the total population's lives I would like to think that anybody invol;ved in government would at least make themselves aware of this.


p3 Table of contents

P9 "When published data for all countries has been analyzed the correlation between higher taxes & lower growth (which exists in OECD countries) is not found"

p 10 "During recent years, simple techniques have developed for predicting probable effects of individual measures. It should therefore be easy for all countries to prosper, yet very few do, which suggests that policy makers in most countries:
 Adopt sub-optimal or counter-productive policies unwittingly;
 Do not use readily available techniques to avoid, identify and correct mistakes, or
 Have higher priority anti-growth objectives." (since this report was prepared for the new South African government it seems itself proof of government not making growth a priority - this suggests that what is needed to obtain growth is to put it higher on the political agenda - precisely the intent of the 9% Growth Party & achievable without becoming a majority party)

p12 "There is no evidence that foreign "aid" has the potential to "make poverty history". On the contrary, the evidence suggests that aid may be harmful......The aid paradox is that to be a positive incentive, aid would have to go to countries where it is not needed, that is, where governments adopt policies that
result in high growth." (I would point out that aid recipients are self selecting as failed states statistics shown a correlation between aid & failure may be because more aid is the effect rather than the cause)

p13 "What matters, as far as economic growth is concerned, is not the characteristics
of rich countries, but of high-growth countries." The fact that Ireland & Norway are richer than us doesn't matter. The fact Ireland is growing far faster than us should be a lesson)

p 25 "Everything gets better with growth....
few people realise how much faster countries become much wealthier if they achieve just slightly higher growth rates" (indeed few people understand in their bones how fast compound growth in anything works)

p40 "Most of the world's top 10 richest or highest growth countries never had

p41 "welfare states under-perform on average, which could also be attributable to the fact that welfare statism tends to coincide with other policies which compromise growth, Sweden being the conspicuous exception, where the market has been characterised by regulatory liberalism and privatisation." (I would also hold up Singapore have a cradle to grave welfare system, though one which is cost conscious, & has an obviously high growth rate)

p 43 "The world's experience appears to support the view that economic freedom may be a necessary and sufficient condition for prosperity"

p50 "Firstly, China cannot be thought of as a single economy or even as a single country as far as its economy is concerned. The diversity of economic systems within China, from one province to another, is bigger than the diversity of economic systems internationally. Secondly, almost all its growth (industrialisation, investment, etc) is not only confined to provinces with high scores on the "marketisation index", but to a few special zones. Thirdly, these zones have the freest economies on earth, if not the freest economies the world has ever known."

PP50 & 51 - China's 10% annual growth conceals even greater success. China is not an enormous free economy, it is a range of economies from Guandong province which is nearly as free as Hong Kong (& growing at about 20%) to Quinghai, whicheconomicallyconomicly free market than the world's least free independent country Burma accordinglyordeingly. China is "close to a controlled experiment in social science". An experiment which goes largely unnoticed here. This proves 2 things.

Firstly that 10% growth is not a maximum beyond which other countries cannot aim but merely an AVERAGE. If China has a province the size of European countries (85 million) growing at 20% then a mere 9% is fully achievable here (granted internal movement in China means the population is growing far faster than anybody would for the UK as a whole & this probably considerably helps growth). Applying this to the Scottish example it suggests that we can continue falling behind England & continue to see the decline of Scotland's population if we choose to do nothing. Or we can act.

Secondly that the Chinese "bubble" is not going to burst, indeed because the faster growing provinces are becoming an ever larger proportion of the economy we should expect their 10% growth, which represents the average, to increase.

PP 54 & 55 - Countries with high taxation levels are not automatically going to have lower growth rates than those with high taxation. This comes as a surprise to free marketists & somewhat less so to me, who at one stage was a great supporter of the state capitalism which really did produce high growth in the early days of the USSR. The reason seems to be that if government spends the money as wisely as the free market it will achieve at least as good results. To spend effectively government should (1) build infrastructure especially transport, (2) provide services rather than regulate (ie the NHS rather than smoking police) (3) do things that don't merely duplicate what the market does (don't run the railways) (4) increase efficiency by outsourcing & privatisation. To extend my point about the early USSR I believe that where government is bad is in the long term - because it doesn't have the spur of bankruptcy an efficient government enterprise will, over time, acinefficienciesficiences. I believe that is what happened to NASA & the USSR, both government organisations which once performed spectacularly & over time became mired in tbureaucracieseacracies. By comparison a Scottish executive which insists on spending 70% of its transport budget on outdated railways & prefers windmills to nuclear has managed to omit the first stage of the process.

P58 - Most studies find that less regulated countries out perform more regulated ones (unsurprisng) & that regulations cost the people 20 times more than they cost the government (surprising).

p60 - "The relative size of education budgets does not significantly influence growth"

Monday, December 18, 2006


The Scottish Executive seem to have made up their mind about the need for a new Forth crossing. Up to now all the semi-official word has been about another bridge but the Forth Tunnel Action Group & Roy Pedersen among others have made a very good case that a tunnel would be faster to build, cheaper & lower maintenance. While a bridge will cost about a billion tunnels have been credibly costed at between £500 & £250 million. The latter depending on achieving the same cost standards as Norway has achieved. Over recent years, because of new bortechnologylogy, tunneling has become much cheaper - something the Norwegians have noticed.

This brought me to look up Norway's tunneling record & it is impressive.
There are over 900 road tunnels in Norway. The total length of the tunnels is over 750 km. [1]

The longest road tunnels (>7 km, with opening year and length)
Lardalstunnelen, 2000, 24505 m
Gudvangatunnel, 1991, 11428 m
Folgefonntunnel, 2001, 11150 m
Korgfjelltunnelen, 2005, 8530 m
Almost all of them built between 1982 & 2000. Clearly there would be substantial cost savings doing a lot of tunneling rather than just one project. IndeNorwegianina cost are extremely competitive. This goes into more detail on construction & cost
Construction costs for the tunnels which are now open are shown in Figure 2. All costs are based on year 2000 costs, according to price indexes of the Ministry of Transportation and Communication.
From 1992 to 2000, prices have increased linearly by 37 per cent. This is higher than the official price index. The reason for this is the improvement in tunnel standards, which has not been compensated for in the Ministry's price index.
Costs for planning and field work are not included for all of the tunnels. It is estimated that these costs are somewhere between NOK 2,000 & 4,000 per metre tunnel. This does not apply to the last tunnels which have been completed, where all costs are included in the survey.
The total construction costs vary from NOK 35,000 to 115,000 per metre. The Tromsasund tunnel is expensive because of its double tubes, whilst the Nordkapp tunnel is costly because of the poor rock quality in the tunnel.
The conclusions to be drawn is that subsea tunnels have become cheaper, but that rock conditions are decisive for the final price.
Since there are 11 Kroner to the pound this makes tunneling costs from £3.2 million per kilometer to £10 million. Even with multilane dual carriageway & motorways we are talking about a pretty fair saving.

Useful Tunnels Projects in Scotland

Forth Crossing - I firmly believe the Forth Road Bridge can be reroped for £100 million but with traffic increases an additional tunnel would be worthwhile.

Glasgow Motorway Extention - The present above ground proposal is costed at £500 million apparrently relocting costs & because some of the ground is said to be polluted by chrome. Obviously a tunnel with bypass outlets would be far cheaper & would not cause the pollution problems opponents claim to be motivated by.

Gourock/Dunoon - Much of Argyllshire is remote from the central belt because of long lochs & roads which need to go round them. The road distance between Gourock & Dunokilometerskilometres despite facing each other across the Clyde.

Cowal Penisula/Bute - A few miles south of Dunoon. With 2 tunnels Rothesay would be about 35 miles. A pleasnt commute whereas now it takes virtually a full day including ferry.

Loch Fyne Tunnel - There are several possible crossings leading on from the Dunoon crossing which would put the Kintyre peninsula within about 60 miles of Glasgow.

Arran - Either from Ayrshire (the longer & more expensive tunnel) or from Kintyre which could tie into the roads mentioned above.

Oban Mull - Makes the place accessible to 10s of thousands of Balymory fans.

Kintyre/Jura - Another almost uninhabited island which could become a one hour drive from Glasgow.

Islay/Kintyre or Jura - Direct from Kintyre would be about 15 miles, linking to Jura would be much cheaper. Again this island has a very small population because it is, by current methods, inaccessible. Islay is know as the Queen of the Hebrides because, being the most southerly & well out into the Gulf Stream it used to be the capital of the Lordship of the Isles. When the ancient Scots kingdom & later Viking lordship communicated by sea it was very centrally located but because our transport methods are now road based it is isolated. With an area similar to the Isle of Man & & more temperate weather, because of the Gulf Stream, it could be as prosperous if it were an hour & a half drive from Glasgow.

Orkney/Mainland - This has already been proposed. It would be expensive but Orkney has an oil fund & should be prepared to put up most of the funding.

Ulster/Galloway or Kintyre - About 15 miles from Kintyre, 25 from Galloway. A Kintyre tunnel was seriously looked at last century - the technology has improved since. I assume that Ulster, which would benefit even more than Scotland would put up a proportionate share of the cost.

Isle of Man/Galloway - About 20 miles. Man could reasonably be expected to put up the bulk of the money.

Skye/Lewis - Again about 20 miles.
I don't say that all these will work & there may well be others where a tunnel would be a practical way from one glen to another. I do say that improving transport infrastructure is something where government investment almost always pays off. I can think of nothing which would so revitalise the Island communities. Check the map yourself for ideas.

Paying for it

The Executive have already talked of a Forth Bridge costing a billion & Glasgow motorway £500 million. This entire programme might well cost less. Beyond that the use of a land capture tax, whereby a proportion of the increase in value of land sales on the isles, Cowal or even Fife could be taken as payment. After that some money could be retained by local development corporations. Islay, for example has 3,000 inhabitants over 600 square miles so the land value cannot be high. It wouldn't take the building of many homes there to pay for a tunnel. There could also be a case for giving the development organisation authority comparable to that of the Manx Parliament. Home Rule did them no harm.

Thursday, December 14, 2006


1) High resolution video record a couple dozen people each teaching the same college course (e.g. calculus, freshman physics, freshman chemistry, partial differential equations, etc).

2) Make those video recordings free or very cheap to download on the internet. Sell them as DVDs too.

3) Put automated tests on the web where anyone can test their ability to do, say, calculus, freshman physics, etc).

4) Have testing days where you can go to a room and say what you want to be tested in (e.g. calculus, freshman physics, etc). Proctors in the room prevent cheating. Tests are designed by the appropriate British professional societies. Then pay a fee and sit down at a PC that shows you the test questions (variations thereon generated automatically with different numbers and such) and you write in paper to figure out the answers. Then you enter the answers.

5) At the end of the test they tell you if you passed and with what score and that score goes into a database. You then can say you passed freshman chemistry or organic chemistry or inorganic chemistry or linear algebra.

6) Repeat process until the professional societies say that you have demonstrated your understanding of a bachelor's degree worth of chemistry, physics, math, mechanical engineering, accounting, or other useful topics.

Granted, this does not work so well for topics like Dramatic Arts. But it would save probably tens of thousands of pounds for each person who wants to earn a degree in an objectively measurable topic.

The idea is not original with me however it is apparent that, if this is on the net, it would be possible for anybody able to visit Scotland & able to paythe testing fees to seek such a degree. So long as there is no relaxation, if anything the opposite, in the standards required a degree from Edinburgh, or indeed Islay University would be desirable anywhere.

In many ways this is what the Open University could have been had it been willing to divorce itself a little more from conventional education. It is something we could do now.

Wednesday, December 13, 2006


This Rolling Stone article goes into 6 pages on stopping global warming by proactive means. I am not going to reprint the whole thing (I have discussed this before) anyway but here:
Wood hooked up his laptop, threw his first slide onto the screen and got down to business: What if all the conventional thinking about how to deal with global warming was wrong? What if you could do an end run around carbon-trading schemes and international treaties and political gridlock and actually solve the problem? And what if the cost to get started was not trillions of dollars but $100 million a year -- less than the cost of a good-size wind farm?

Wood's proposal was not technologically complex. It's based on the idea, well-proven by atmospheric scientists, that volcano eruptions alter the climate for months by loading the skies with tiny particles that act as mini-reflectors, shading out sunlight and cooling the Earth. Why not apply the same principles to saving the Arctic? Getting the particles into the stratosphere wouldn't be a problem -- you could generate them easily enough by burning sulfur, then dumping the particles out of high-flying 747s, spraying them into the sky with long hoses or even shooting them up there with naval artillery. They'd be invisible to the naked eye, Wood argued, and harmless to the environment. Depending on the number of particles you injected, you could not only stabilize Greenland's polar ice -- you could actually grow it. Results would be quick: If you started spraying particles into the stratosphere tomorrow, you'd see changes in the ice within a few months. And if it worked over the Arctic, it would be simple enough to expand the program to encompass the rest of the planet. In effect, you could create a global thermostat, one that people could dial up or down to suit their needs (or the needs of polar bears).

By comparison the Lewis windfarm, which is not going to solve 1000th part of the alleged warming, is being costed at £500 million. Perhaps Scotland should just cough up the £50 million to save the world & be done with it.

Actually I would be opposed to doing this until we know any non-beneficial warming is actually taking place. For entirely different reasons a number of catastrophe enthusiasts held the same view:
Bill Nordhaus, a Yale economist, worried about political implications: Wasn't this simply a way of enabling more fossil-fuel use, like giving methadone to a heroin addict? If people believe there is a solution to global warming that does not require hard choices, how can we ever make the case that they need to change their lives and cut emissions?
This is also the Nicol Stephen reason for opposing nuclear - that if we solve this "problem" the common people will never again be persuaded to accept all the nonsense regulations & taxes we want to heap on them.