Logical Fallacies: 2. Runaway Train

https://www.youtube.com/watch?v=L2-Umtmd6x4  

Madsen Pirie introduces the second in his series on logical fallacies - this one is the Runaway Train.

You can pre-order the new edition of Dr Madsen Pirie's How to Win Every Argument here

Celebrating the success of the free school system

This is a welcome success in the free school system that we should celebrate:

The government’s flagship free schools programme has been dealt a blow with the announcement that a third school is to close after a damning Ofsted report found that leadership, teaching, pupil behaviour and achievement were all “inadequate”, the lowest possible rating.

Durham Free School, which has a Christian ethos and opened in September 2013, has had its funding agreement terminated after being put in special measures by the schools watchdog, Ofsted, after an inspection in November.

It follows the closure of the Discovery New School in east Sussex, which was forced to shut last year because of poor standards, and the partial closure of Al Madinah in Derby, the country’s first Muslim free school, which had to close its secondary school after a critical Ofsted report.

No, we haven't gone mad. We really are using the failure of a school or three to celebrate the success of the system. Because this is actually the point of said system. People get to try out new things. Some of those new things will succeed, others will not. But this is exactly what we desire to happen. To have people try new things so as to see what will succeed and what will not.

This is also the defining feature of this capitalism/free market hybrid that should be the prevailing ethos of our society. That failure quickly becomes obvious and thus fails and fails fast. All experimentation will produce failures and without experimentation there will be no advances. So, we desire a system that experiments and one that quickly identifies those inevitable failures, closes them down and gets on with another round of experimentation.

TYhis is just what the free school system does: it's therefore a success story that a failure has been spotted and dealt with. Because that's the damn point.

Restating the case for freedom of speech

One thing that’s becoming clear in the aftermath of the Charlie Hebdo tragedy is that when it comes to mockery, a lot of politicians and spokespeople have the backbone of a paramecium.  All these people trying to defend us against the insensitivity of mockery have missed something vitally important: Not only is there usually nothing wrong with mockery, there is, in actual fact, often something very good about it – because mockery is frequently a powerful tool for highlighting the absurd and the inane. In such instances the reason mockery usually cuts so deep to offend is that it is exposing some absurdity or inanity in the belief held. To silence mockery is to be in danger of suppressing the wit that exposes the kind of beliefs that can only be held by surrendering the mind to reject evidence and rational enquiry. If we rightly endorse free speech as one of the great human necessities, we should insist the same kind of endorsement for mockery too. Free speech is one of those issues about which it is difficult to say anything original. It has been written about so well by people like John Milton, Voltaire, John Stuart Mill, Thomas Paine and George Orwell. John Milton's Areopagitica is perhaps the best of all works on this - being acutely perceptive not just about free speech but about the need for a free press too.

Alas, even though these great men make it difficult to say anything original on free speech, if what they've said has been forgotten by modern politicians to the extent that the qualities they propounded are gradually being eroded away by our ever-increasing nanny state authorities, there will always be the need for a reminder.

The general wisdom that has been distilled from these great writers on our liberty of free expression is that we will not agree with every opinion being proffered, but we should defend everyone's freedom to proffer those opinions. We should do this not just to protect the right of the person with the opinion, but also to protect our right to hear opinions too. In other words, in denying someone the right to voice an opinion, we at the same time deny ourselves access to that opinion, so we decline the opportunity to hear something that may differ from the consensus or challenge widely held viewpoints.

We may not agree with everything we hear, and some of the things we hear may be vile, controversial or damn stupid, but we do ourselves an injustice if we fail to hear the dissenting voices, because even the most discordant and discrepant opinions may contain within them at least a grain of truth. Therefore we should be impelled to consider them carefully, for in doing so we force ourselves to question how we know what we do and whether the sources from whence our knowledge came were reliable and verifiable.

When it comes to free speech and mockery, then, so long as no threat is being made, or slanderous or libellous lie about a person being told, or employer/employer protocols breached, it is in our best interests to have complete freedom to say/write/draw whatever we wish, however controversial or repugnant.

Sadly, it becomes ever more apparent nowadays that these important principles regarding free speech are being gradually forgotten, or in some cases deliberately eroded away, by the kind of charmless busybodies who would call for the arrest of a Tweeter or the sacking of an MP or journalist or the condemnation of a satirist who says, writes or draws something they don't like. As is evident to anyone with even the sketchiest understanding of human nature and basic philosophical familiarity, the more censorious we become the more we become prisoners of our interference.

One cheer for democracy

Today (20 January) is hailed in the UK as Democracy Day – the 750th anniversary of the establishment of the first parliament of elected representatives in Westminster. Let's not get too dewy-eyed. We classical liberals are democrats, but we are sceptical democrats. Yes, some (minimal) functions require collective action. We think that the public, not elites, should make those decisions - and that representative government is probably the best way to do it. But we are fully aware hat the democratic process is far from perfect. It is not about reconciling different interests (as markets do), but about choosing between conflicting interests – a battle in which only one side can win. Democracy is tainted by the self-interest of electors, of representatives and of officials; it can produce deeply irrational results; and all too often it leads to minority groups being exploited, and their liberties curbed, all in the name of ‘democracy’.

That is why democratic decision-making must be bound by certain rules, and should focus, with precision, only on those issues that cannot be decided in any other way. Many people (and almost all of those who happen to be in power) argue that more and more things should be decided through the democratic process. But that means deciding them through the political process; and politics is not always a benign force. The more things that are decided politically, the easier it becomes for the rights and liberties of individuals to be eroded, and for minority groups to be exploited or suppressed by those who are wield the coercive power of the state.

But rights and freedoms are for everyone: they are not a matter of numbers and majorities. Election success does not license the winning majority to treat other people exactly as it chooses. The power of majorities needs to be restrained.

That restraint really has to come from within the understanding and culture of the people. A constitution might curb the excesses of politicians for a while, but even countries with seemingly strong liberal constitutions are not immune from rapid increases in the size of government and from the erosion of individual rights and liberties by majorities. Constitutional freedoms are hard to protect if the general public loses its understanding of their importance and its will to protect them. Let's hear it for Limited Democracy Day.

Never mind the quality of the Green New Deal just feel the width

The Green New Deal has another of their little reports out. Essentially saying the same as all of the previous ones. Print more money to spend on all that Caroline Lucas holds dear. But it really does have to be said that the level of economic knowledge that goes into these reports is not all that high. We've for some years now had the egregious Richard Murphy shouting that we should just collect all hte tax avoided and evaded in order to beat austerity. He not realising that collecting more tax is austerity. For it reduces the fiscal stimulus as it reduces the budget deficit. And of course, there's a similar gross error in this latest report:

No Need to Repay QE Since QE involves a central bank putting new money into circulation by creating e-­‐money and using it to buy assets, this will not increase Europe’s debt levels according to the originator of the term ‘quantitative easing’, Professor Werner, Director of the Centre for Banking, Finance and Sustainable Development at the University of Southampton. He states that since the central bank can simply keep the assets on its balance sheet then there is no need for taxpayers to pay or to expand public debt. The assets should simply stay on the central bank balance sheet. Furthermore, this debt, which would be owed by the government to the central bank would not have to be repaid, as Adair Turner, the former Chairman of the UK Financial Services Authority has made clear. In the European context, the EIB is the European Union's bank, owned by and representing the interests of the EU Member States and so the debt that the EIB would incur through Green Infrastructure QE would also not have to be repaid.

Well, according to that first paragraph I've no need to repay my mortgage as I used the loan to buy an asset. But leaving that aside note the deep appreciation of matters economic on display here.

QE is the central bank creating money to purchase assets. Therefore the EIB can and should do this. But the EIB is not a central bank with money creating powers. It's an EU development bank that borrows on the usual capital markets for funding. The EIB simply cannot do QE because it's not a central bank.

We might not expect any more insight than this from a combination of Caroline Lucas, Richard Murphy and Colin Hines. But Larry Elliott has always been rather more sound than this: is he still with this group or has he left in disgust?

Cameron's 'full employment' pledge isn't very convincing

Earlier today in Ipswich, Prime Minister David Cameron pledged to turn Britain into a nation of “full employment”, aiming to overtake Germany for the top percentage of people in work. From the BBC:

The PM is aiming for Britain to have the highest percentage of people in work of any developed nation.

Labour said the Conservatives' promises would sound like "empty words" to the unemployed or those on low pay.

Mr Cameron's goal of "full employment" would involve the UK, currently 72%, overtaking Germany's 74% in terms of the percentage of people in work, said BBC assistant political editor Norman Smith.

There is no timescale, but it is an "aspiration which he wants to achieve", he added.

It’s a nice ‘aspiration’ sure, but Labour’s not the only group to think these are ‘empty words’ coming from the PM.

Why?

His pledge to bring full employment to Britons includes measures to increase the number of start-up loans provided by the government, as well as plans to invest in infrastructure, which he hopes will attract business and support new apprenticeships. But no word about changes to the minimum wage. Not a word about the personal allowance or National Insurance tax.

Research that my colleague Ben recently highlighted shows what a negative effect the minimum wage can have on unemployment – it's estimated that “minimum wage increases reduced the national employment-to-population ratio by 0.7 percentage point(s)” in the United States during the late 2000’s.

What’s more, a job is significantly less valuable to the newly employed if she is still unable to provide for herself and her family. At the same time the PM scraps the minimum wage, he should raise the tax-free personal allowance to the Living Wage, taking the poor out of tax completely. National Insurance tax should also be scrapped for low-earners, as it works as just another form of income tax.

A backtrack on minimum wage increases combined with pegging the personal allowance and NI to a Living Wage would be a serious indication of Cameron’s commitment to ‘full employment.’ But while he continues to spout plans for increased government spending and building, I remain unconvinced.

The amusement of Oxfam's wealth report

Oxfam is one of those groups jetting off to Davos this week to talk about how to set the world to rights. And they're doing so by going to sit among the plutocrats and telling everyone that it's the very plutocrats that are the problem. The top 80 people have more wealth than the bottom 50%, this is appalling and so on. You can see the report here.

Wealth: Having it all and wanting more, a research paper published today by Oxfam, shows that the richest 1 per cent have seen their share of global wealth increase from 44 per cent in 2009 to 48 per cent in 2014 and at this rate will be more than 50 per cent in 2016. Members of this global elite had an average wealth of $2.7m per adult in 2014.

Of the remaining 52 per cent of global wealth, almost all (46 per cent) is owned by the rest of the richest fifth of the world's population. The other 80 per cent share just 5.5 per cent and had an average wealth of $3,851 per adult - that's 1/700th of the average wealth of the 1 per cent.

Winnie Byanyima, Executive Director of Oxfam International, said: "Do we really want to live in a world where the one per cent own more than the rest of us combined? The scale of global inequality is quite simply staggering and despite the issues shooting up the global agenda, the gap between the richest and the rest is widening fast.

Winnie needs to get out more. As Saez, Zucman and Piketty have been explaining to us all this is just how wealth distributions work. The bottom 50% always have less than 10%.

Fraser Nelson is very good here. This global capitalism stuff has been reducing poverty like billyo these past few decades. And for a charity like Oxfam, nominally focused upon poverty, we might think that's a good thing. But they seem to have changed their minds a bit.

But for one elegant point about this brouhaha have a look at Figure 1 on page 2 of that very Oxfam report. Their actual complaint is that global wealth inequality is climbing back to, but is still under, the level reached in 2000 and 2001. This isn't unprecedented, it's not staggering and it's not even unusual. Wealth inequality is actually lower than it was 15 years ago.

Rules and recipes are different things Mr. Burnham

We tend to think that there must be some special dictionary out there, one hidden from us mere mortals, that allows politicians to say whatever they damn well please and yet not use the words that we all do. Almost as if there's some other foreign language they use to speak to us mere voters. Take this from Andy Burnham for example:

As Burnham correctly said last week: “For change to work in a market context, all players need to be following the same rules.”

This is in the course of The Observer managing to get absolutely everything about obesity, sugar and fatty lardbuckets entirely wrong. We all consume fewer calories than our grandparents did, sugar is not addictive (we consume less of it than in the past) said fatty lardbuckets do not cost the NHS money (dying young saves the NHS money) and so on and so on throughout the entire litany. And, of course, they're entirely wrong in the basic theory of what they are talking about for the role of government is not to tell us how to live our lives but to enable us to live our lives as we would wish.

But specifically what Burnham is talking about there is that manufacturers should be forced, whether by taxation or by regulation, to put less sugar, less salt, in our food. And no doubt to throw some organic lentils in there at some point as well.

Which is where that special dictionary comes in of course. Because that's not "rules" that's "recipes".

Is it too much to hope that one who would rule the country actually speaks the language of it? Sure, Willie the Conq and George I didn't do so well on this basis but aren't we supposed to have moved on?

We might have an answer to where (some) of that missing growth is

It's a commonplace these days to shout about how growth rates are lower than when we had strong unions, nationalised companies and stinging tax rates. Therefore we should bring back unions, stinging tax rates and nationalised companies in order to have higher growth rates. The perceptive will note that there's a fallacy of composition in that argument: I once met a very pretty girl on a day that I had a cold. My getting a cold today will not make me meet a very pretty girl (nor would it please the pretty girl I am still with if I did). However, leave that aside and we do still have this point that growth rates these days are lower than that post-WWII heyday. One explanation is that there was pretty much no economic growth 1933-1945 but technology still marched on and thus there was some catch up after the unpleasantness was over. In conversation over the past couple of days another idea has popped up.

Take the contributions of Google and Facebook to the economy, to GDP. As we measure them those contributions are simply the value of the advertising they sell (or, the wages they pay and profits they make). That's just how we calculate GDP. That portion of whatever it is that is monetised. But this is near insane, to value having the world's knowledge at our fingertips (or, in Facebook's case, all the people you never want to meet again at hand) at only the value of the ads presented with it. we're simply not measuring the true contribution of the new technologies to our actual standard of living. At which point, Brad Delong:

 The key difference is between “Smithian” commodities–where it is a safe rule of thumb that the consumer surplus generated is about equal to the producer cost, so that GDP accounts that value goods and services at real producer cost will capture a more-or-less stable fraction equal to half of true standards of living–and… I might as well call them “Andreessenian” commodities, where consumer surplus is a much larger proportion of monetized value because what is monetized is merely an ancillary good or service to what actually promotes societal welfare. What is the proportion? 5-1? 10-1? Somewhere in that range, I think–at least.

It would be safe to argue that there's definitely some of this going on. The difficulty is quite how much. But it wouldn't surprise at all to find that our traditional measure of GDP is increasingly failing to measure economic progress.

Spotting C Northcote Parkinson in the wild

That Parkinson's Law is generally applicable is obvious. But in the great man's work there are other observations which we can spot occasionally out there in the wild as it were. That the Royal Navy will have more Admirals than ships has been true for some time now, that committees and bureaucracy will, in the end, strangle the life out of any and every organisation is also obviously true. He also pointed out what is happening here:

Civil servants went on a £1billion spending spree in just eight weeks to hit the Government’s target of spending 0.7 per cent of the nation’s income on overseas aid.

The extra cash was spent at the end of 2013 on humanitarian programmes in Syria and the Philippines and a fund which was started by billionaire Bill Gates to help victims of Aids, Tuberculosis and Malaria.

MPs said the fact that the taxpayer funds were spent so quickly raised serious questions about whether value for money was achieved. Civil servants are now set to be called in front of an influential committee of MPs to justify the spending.

The point of spending by a bureaucracy is not to provide value for money. Nor is the point of political spending to actually achieve anything. In this story we combine those two to lethal effect.

The point of political spending is to allow a politicians to announce that something is being done so vote for me. Doesn't matter what is being done, how effectively it is being done or even whether it needs to be done at all, let alone with other peoples' money. The point is the purchase of those votes.

Similarly, the point of a bureaucracy is not to provide value for money. It is to spend the budget allocated to that bureaucracy and to thus make the case that the budget, and thus the bureaucracy, should be larger in the next budget period.

These two have combined here to produce the sight of a bureaucracy shoveling money out the window, into and on anything at all, in order to enable the politicians to purchase votes.

Well done everyone.

The solution Parkinson offered to such problems was simple. It isn't possible to reform such practices. One must simply stop doing the thing itself. No, we don't mean stopping charitable aid to poor people if that's what we all decide we want to do. But stop running it through these inefficiencies of government.