The new politics is interesting, isn't it?

Edward T. Walker is an associate professor of sociology at the University of California, Los Angeles.

And what does this sociologist have to tell us all?

The nasty battle between Uber and New York' Mayor Bill de Blasio's administration over its proposal to limit how many drivers Uber and other ridesharing companies could put on the streets has ended, with the city and the ride-hailing giant agreeing to postpone a decision pending a "traffic study." There's no doubt who won, though. The mayor underestimated his opponent and was forced to retreat. It wasn't just conventional pressure — ads, money, lobbying — that caught the mayor off guard. Uber mobilised its customers, leveraging the power of its app to prompt a populist social-media assault, all in support of a $US50 billion ($68 billion) corporation. The company added a "de Blasio's Uber" feature so that every time New Yorkers logged on to order a car, they were reminded of the mayor's threat and were sent directly to a petition opposing the new rules. Users were also offered free Uber rides to a June 30 rally at New York's City Hall. Eventually, the mayor and the City Council received 17,000 emails in opposition. Just as Uber has offloaded most costs of operating a taxi onto its drivers, the company uses its customers to do much of its political heavy lifting.

Yes.....

These practices are redefining what it means to take part in politics. Social-media platforms were briefly perceived as democratising tools, engendering transparency and empowerment in the digital age. But these new protest-on-demand movements blur the distinction between genuine citizen organising and what often is called "astroturf": participation that looks grass roots but actually isn't, because it's been orchestrated to benefit a well-heeled patron. This Uberisation of activism allows corporate sponsors to call the tune: Consider how for-profit colleges leaned on vulnerable students for political pressure, how Comcast enlisted its philanthropic beneficiaries to support the Time Warner merger or the way that the beverage industry hired protesters to oppose soda taxes. Technology may be neutral, but grass roots should mean bottom up, not top down. The #blacklivesmatter movement is a genuine grass-roots civil rights campaign, mobilised through social media. So is the environmentalist Bill McKibben's 350.org, with its blend of online organising, social media strategy and in-person campaigning around climate change. But Uber's corporate populism is not. We should learn to recognise the difference.

Hmm. Apparently the actual users of, customers, of a service shouldn't be allowed to tell politicians what they think about regulating that service.

Only those who have no direct interest and thus know nuttin' about it should have a voice.

Sociology is a very interesting subject these days, isn't it?

Finally, something we can agree with Ha Joon Chang upon

That the Hitchhikers' Guide to the Galaxy is indeed a great piece of science fiction comedy and satire.

As an economist, what delighted me especially were the representations of economic theories. The story about people paying large sums of money for Antarean parakeet glands, which taste revolting, only because they are “very rich idiots who want to impress other very rich idiots” is a reworking of the 19th-century American economist Thorstein Veblen’s theory of conspicuous consumption. The wildly profitable planet-building business of Magrathea forced into hibernation for 5 million years because its own success impoverished everyone else, thus destroying its own market, is a clever way to describe the “under-consumptionist theory” that was popular in the 19th century. This theory has actually become much more relevant since Adams wrote H2G2, with the rise in inequality to shocking levels in many societies.

Veblen and under-consumptionist theory we will agree are being made fun of, used, in the comedy. But the application to our world of today, the economics we should take note of, we think should be the Golgafrincham B Ark:

MANAGEMENT CONSULTANT: Since we decided a few weeks ago to adopt leaves as legal tender, we have, of course all become immensely rich.

FORD: No really? Really?

CROWD MEMBERS: Yes, very good move…

MANAGEMENT CONSULTANT: But, we have also run into a small inflation problem on account of the high level of leaf availability. Which means that I gather the current going rate has something like three major deciduous forests buying one ship’s peanut. So, um, in order to obviate this problem and effectively revalue the leaf, we are about to embark on an extensive defoliation campaign, and um, burn down all the forests. I think that’s a sensible move don’t you?

MARKETING GIRL: That makes economic sense.

We feel this has a certain relevance for Peoples' Quantitative Easing as proposed by Jeremy Corbyn and as designed by Richard Murphy. Let's print lots of money so that the government can buy us all nice things. Nothing could possibly go wrong, it makes economic sense, doesn't it?

As to who it was on the B Ark:

CAPTAIN: Oh precisely yes. So it was decided to build three ships, three Arks in space, anyway…where’s the soap? Ah! Thank you. Ah! So the idea was that into the first ship, the A Ship, would go all the brilliant leaders…

NUMBER ONE: The scientists…

CAPTAIN: Yes, the great artists, you know, all the achievers. And then, into the third ship, the C Ship, would go all the people who did the actual work; who made things and did things you see. And then in the B Ship -

NUMBER ONE: That’s us.

CAPTAIN: Yes. Would go everyone else, the middlemen you see. And so we were sent off first.

Yes, a certain relevance for a monetary and fiscal system devised by a retired accountant from Wandsworth. We're not absolutely certain quite why it's relevant but we're really pretty sure that it is.

Notes from a 'slum-dweller'

Yesterday was quite a heavy one for the ASI Twitter accounts, with what seemed like the world and his politically-correct wife piling onto one the student winners of our ‘Young Writer on Liberty’ competition for his suggestion that Britain could benefit from the creation of slums.

Clearly, 'slums' is an evocative and emotionally-charged word: As the author conceded, there probably wouldn’t have been any pushback if he’d just titled the piece ‘Britain needs more microflats for dynamic urban communities’. And perhaps the title was ultimately misleading, because the post didn’t actually agitate for open sewers, no electricity and dysentry for the UK’s most vulnerable, but instead relaxing restrictions on the type of homes which may be built. Still, the competition asked for bold and original thinking, and that’s exactly what we got.

A common response to the article was (in more safe-for-work terms) ‘Pah! I'd like to see the author actually live in the kind of odious accommodation he calls for!', and other retorts based on the idea that living in a sub-regulatory optimal stock of housing would in fact be unbearable. So, at this point I’d like to take one for the team, and say a few words in defence of slums. For, you see, I’m something of a ‘slum dweller’ myself. (You know what, I very much object to suggesting that where I live is a ‘slum’. But it fits the definition by reference of the original article, namely housing which fails to meet 'acceptable'/ legal living standards, and would be labelled as such by critics).

I’m part of a growing group of ‘property guardians’, who protect and look after a range of disused buildings—from houses to churches to schools and offices—while they’re unoccupied and waiting to be refurbished, demolished or repurposed. With the company I'm a guardian for, none of the properties have gas, and they have only limited hot water points. They're unfurnished, often with stripped-out floors, walls and kitchen equipment.  When they first come to be occupied they're usually grimy and dirty, with broken light fittings and rubbish left by the original inhabitants. And, perhaps most controversially, guardians only need receive two weeks notice before they can be kicked out of their current place.

Most people instinctively recoil when they hear all this. But in exchange for these kinds of conditions, guardians get a place to live at far-below market rent, often in a prime location, and with a amount of living space otherwise unobtainable.

I'm currently living in an old library-cum-theatre-cum-community space in South-East London (see picture above), which was initially inhabited by squatters after the council closed it down. The first guardians to move in reported mouse droppings (from cannibalistic mice, it turns out, for they proceeded to eat my taxidermy collection), people’s urine and general filth. It's covered in warnings about the asbestos, and we wash in temporary showers by the old cubicled toilets.

There's no way in hell that these kind of properties would get built for human habitation.

You wouldn't be able to put a tenant in one, either: The property guardian business only works by circumventing all the regulations and restrictions which apply to the rental market, instead registering guardians as live-in security and granting them a ‘temporary licence agreement’ for a particular room.

But instead of being trashed as exploitative and unconscionable, these property management companies (rightly) win awards for the innovative and socially beneficial service they provide. In London, such schemes are so oversubscribed that prospective guardians sometimes literally race to a new property to claim a space in it. I genuinely love being a guardian.

I’m lucky: I could afford a decent room in a normal flat, but I’d honestly just rather not spend close to 50% of my pay packet on one. The people I live with range from students to freelance artists to young professionals, some of whom have also signed up for the ‘luxury’ of lower rent and the excitement of living in unique spaces. For others, the scheme has allowed them to move to London to study or set up their business; an opportunity they otherwise wouldn’t have been able to afford.

That’s the kind of chance we want more people to have. Property guardianship will only ever be a niche offering available to some, while the current system restricts the type and level of further experimentation that can be done with alternative living setups.

The point of this post isn’t to prove that those with lower incomes can get by in far lower living standards, thankyouverymuch. Instead, it’s to show that there already is clear demand for affordable housing which doesn't conform to current rental standards, and which may fall below the 'acceptable' or accustomed living standard for much of the population.

There’s more than one thing we can can do to help the UK’s housing crisis, some of which are more long-term or politically palatable than others. Personally, I still think building over some of that damn green belt is the best way to go. But underneath the clickbait title of Wednesday’s piece, there’s more than a kernel of truth to the idea that given the choice, some will willingly tradeoff regulations and protection for rent. And I'm one of them.

Farmers and the milk price: this is how markets are supposed to work

We've another of those pieces complaining about the fact that dairy farmers cannot make money producing milk these days:

As I write this, the future of our dairy farm is bleak. It must be a crazy concept to keep borrowing money to produce something that almost all of us use and which is, somewhere along the line, making money for somebody. But farmers’ lives and homes are so entwined with the production of food that they continue doing it when most serious business people would have thrown the towel in. As a result, they are exploited. How long will it continue?

What is being missed is that this is exactly how markets are supposed to work. There is, as there has been for some time, a surplus of milk production around the world. More people are willing to produce it at current prices than are willing to consume it (or perhaps, volumes produced and consumed) at this current price. Thus some of the people who are currently producing it at this price should stop doing so. And that farmers cannot make money at this price is the incentive, the impetus, for some to stop doing so.

Making a loss really is the market's method of telling you to go do something else with your life and capital. This is true whether you produce milk, wheat, jet engines or buggy whips.

As to who benefits from these current low prices obviously that's the consumer. And given that the aim of having an economy at all is so that the consumer is able to satisfy as many wants an desires as possible given the scarcity of the factors of production this is just fine. In fact, more than just fine, this is the point of the exercise.

Milk can be sold for less than the cost of production? Then stop producing milk then.

If you hate sweatshops, you should love immigration

Last week I argued that sweatshops are good for workers in poor countries. They usually pay more than the alternatives their workers have near them, they seem to reduce child marriage and pregnancy rates for girls who live near them, and when you actually ask workers in poor countries, they tell you that sweatshops are the best options going. But that isn’t sufficient, because compared to even very bad jobs in Western countries, sweatshop jobs are still exhausting, poorly paid, and dangerous. Garment workers in England are typically paid far, far more than garment workers doing almost the same job in Bangladesh.

Branko Milanovic argues that location is the main determinant of income, not class – you’re better off being near the bottom in a rich country than being near the top in a poor country:

All people born in rich countries thus receive a location premium or a location rent; all those born in poor countries get a location penalty. [In a world of low international migration] most of one’s lifetime income will be determined at birth. [Chart above from here.]

Why might this be? Different skill levels are certainly a part of the difference, but a worker who moves from Bangladesh to England can still expect to significantly increase their earning power. There is a network effect whereby working with people with better skills boosts your own productivity. Christian Benteke is likely to score more goals at Liverpool than he did at the lower-quality Aston Villa, and Uber drivers in New York City make more than Uber drivers in Mexico City.

Capital differences are crucial, of course. Infrastructure and factory equipment are usually better in richer countries. And one big reason for this is institutional quality – the risks of capital investment are much lower in the developed world.

Things like the rule of law and decent, stable governance make it easier to invest with confidence, and seem to be some of the hardest things for poor countries to develop themselves. The cost of running a factory is lower in places where you know that factory won’t be seized by the state. I am not quite convinced that institutions are the most important driver of economic growth but they clearly matter a lot to maintaining a decent level of development.

All of which strikes me as a good reason to try to allow would-be sweatshop workers in the developing world to come to the richer world to work. Letting them work here effectively allows us to stretch our institutions over them, boosting their incomes productivity and incomes.

Given political constraints, this might be best done in the form of a new ‘guest worker’ visa that allows firms to bring people guaranteed a job from poor countries to the UK to work. The firm could be required to post a bond equal to the cost of that immigrant returning home, so nobody is stuck here against their will, and so that we don’t have to worry about immigrants sponging off the state (not that that happens much anyway).

If we targeted this guest worker scheme at people from the poorest countries in the world, we would be able to reduce poverty dramatically. We might see the emergence of industry built specifically for those low-paid workers, who nonetheless would be earning far in excess of what they would earn at home. There is evidence from New Zealand’s guest worker programme that this has large positive effects in the long-run for migrants’ families as well:

We find that the RSE has indeed had largely positive development impacts. It has increased income and consumption of households, allowed households to purchase more durable goods, increased subjective standard of living, and had additional benefits at the community level. It also increased child schooling in Tonga. This should rank it among the most effective development policies evaluated to date

The Gulf States’ guest worker policies, on the other hand, are ugly and brutal in many ways, but people still keep coming because their alternatives are worse. Sweatshops are ugly and brutal in many ways, but people want to work there because their alternatives are worse. How good it would be if for once we could give poor people a better alternative – just by letting them come here to work.

This blessed isle, this England

Sometimes we forget how lucky we are to have so many keeping watch over us.  An elderly woman running a B&B up here on the Norfolk Costa Geriatrica has not been paying attention to this good fortune.  Someone comes in from the village to help with making beds and the like.  As an employer she should have been complying with the rules on Legionnaires’ disease but, and I know it is hard to believe, the guidance had escaped her attention.  Its six pages are merely an introduction to “the Approved Code of Practice (ACOP) and [the] Legionnaires’ disease: The control of legionella bacteria in water systems … technical detail.” These rules apply to every employer. Specifically she should have been:

• identifying and assessing sources of risk;
• preparing a scheme (or course of action) for preventing or controlling the risk;
• implementing and managing the scheme – appointing a person to be managerially responsible, sometimes referred to as the ‘responsible person’;
• keeping records and check that what has been done is effective;

There are about 300 cases of the disease a year about 40% arising from overseas travel.  The UK cases arise in clusters, i.e. one faulty water system typically infects about 10 people who use it.  The numbers have been falling from a high of nearly 600 in 2006.  There are less than 20 cases a year in East Anglia which probably means, allowing for clusters and overseas travel, no cases in Norfolk at all.

This disease is clearly a local problem and, if regulations are needed at all, they should be local and focussed.

But the urge to regulate is a general UK problem not limited to health and safety.  It has grown massively since Margaret Thatcher invented regulators, originally for the utilities, in the 1980s.  We blame the EU but most of it is home-grown.

Universities provide a very different example.  Should they be truly independent as they were for hundreds of years?  After all, the whole point of a university is freedom to pursue knowledge unfettered by bureaucracy. And if they should be regulated at all, by whom?

If you were choosing a university for yourself or a loved one, which regulator would give most confidence in the integrity of that university?

The Open University proudly boasts, on its home website and emails “The Open University is authorised and regulated by the Financial Conduct Authority.”  No better guarantee than that.

Not enough people watch Game of Thrones

That might just sound like the subjective ramblings of someone who's into blood, guts, quality drama and gratuitous nudity. But economic theory suggests that an inefficiently low number of people are enjoying George R.R. Martin's fantasy epic, along with other cultural gems such as Wolf Hall, Mad Men, and Keeping Up With The Kardashians. The BBC's current system turns its rights over to private distributors who profit from the sole right to sell it on. Instead the Corporation could act as a 'national netflix,' negotiating purchase of the UK distribution rights to content, and making it available to the public for free.

Such a radical proposal makes sense because of the strange economics of the digital age. The cost of producing an episode of Game of Thrones is high – the first season alone set HBO back $50 million. But the cost of producing an extra copy of that episode is almost nothing. There are lots of people out there to whom the episode is worth only 50p, whereas it costs $4 on iTunes.

This argument applies to a lot of digital media – to e-books, to search engines, and to blogs. Google have found a way around it by monopolising the market and raising revenue from the vapour rising off viewers' eyeballs. (Advertising). The Adam Smith Institute raises funding from wealthy, libertarian-minded donors. So far the best that TV has to offer is streaming services like iPlayer and Netflix, and the option of online piracy.

It would be anathema to suggest the government getting involved in the business of search engines. Producing the kind of unique institutional culture that Google has is very difficult for a private company to do, and almost impossible for the government. But a quality institution – the BBC – already exists. It already provides online media to millions for free, and iPlayer is an immensely successful streaming platform.

One concern might be the weakening of incentives to produce great shows. But in an age of piracy, producers are already finding innovative ways to finance projects that don't require shutting out potential viewers.

Nationalising content rights might not seem very pro-freedom. But the current copyright laws provide content producers with a monopoly, preventing people from enjoying content that costs nothing to produce. In this case, government intervention can promote freedom.

Theo Clifford is winner of the 18-21 category of the ASI's 'Young Writer on Liberty' competition. You can follow him on @Theo_Clifford, and read his blog at economicsondemand.com.

The case for abolishing Inheritance Tax

Posthumous taxation is no different to Victorian style grave robbery, only done on a much larger scale. Morally- the inheritance tax should be abolished. As well as the moralistic argument, there are also serious economic consequences of the tax- chiefly that it makes the tax system incredibly complicated. Abolishing the tax also means that those who are about to die will have the security of knowing their loved ones will have enough to live comfortably- a worry most parents have in common.

Some say this will lead to more inequality of opportunity. However this may not necessarily be the case. Take the case of the Walton family. Sam Walton grew up very poor. Through innovation and enterprise he founded Walmart and grew it to be the biggest retailer in the world, and when he died in 1992 Walmart was worth roughly $45 billion. His six children have no such experience in building a business. They are better at spending money than making it, and so their fortune will decline over the generations even without inheritance tax. This happens across the economy in Britain and the U.S. Of all the Fortune 500 companies that existed in 1955, only 11% remain. The average life expectancy for a Fortune 500 firm is now 15 years old. Family owned firms are usually sold by a less competent individual family member to another firm or individual, one with a better talent for enterprise.

So, without inheritance tax, the market still distributes resources to ensure maximum efficiency. The inequality of outcome cannot be attributed to lack of opportunity, but to inequality in entrepreneurship, something which builds capitalist society. Additionally some wealthy individuals like Bill Gates, choose to give away their wealth voluntary on their death, Gates choosing to leave his three children with just $10 million each of his vast fortune so they can “find their own way”. Taxing this fortune would probably result in less social good than would result from it going to the charities of Bill Gate’s choice, given how efficient government is.

Of course some hereditary inequality will occur, but this is the case when parents hand down good parenting skills, or good genetics or good education. Why should hereditary property be regulated by the government? Inheritance tax is unfair, predatory and economically harmful. The UK economy would benefit from Inheritance tax being scrapped.

Theo Cox Dodgson is winner of the Under-18 category of the ASI's 'Young Writer on Liberty' competition. You can follow him @theoretical23.                             

Finally, an idea on international aid we can get behind

Should we clothe the naked, feed the starving and succour the ill favoured in our world? Yes, no doubt we should. Emergency aid isn't one of those things that really causes much controversy. There might be arguments about how it is done, should we ship food or ship money to buy food locally, for example? (The answer is the second). But that's not what international aid is these days: it's rather more about paying the EU to teach people to take trapeeze lessons.So, we entirely welcome this suggestion:

First, the language of investment better reflects the reality of modern aid. The charity paradigm has long been considered patronising by most poor countries, and is increasingly considered old-fashioned even in many “donor” agencies. The reality that strategic and economic interests have always been at play in aid-giving is recognised by most DAC, or developed country, donors somewhat cautiously, but is explicitly promoted by the “emerging” contributors of development cooperation in the global south.

These “emerging donors” eschew the term aid because of its simplistic connotations, preferring the language of “mutual benefit”. They want to imply “horizontal” relationships between equals, fundamentally similar to business transactions. Investment, not charity.

Yes, we're all for this. Firstly, doing it as investment means that at least some attention will be paid to how effective it is. That is, what is the return? It's not necessary for this return to be appropriable by the investors, but just the calculation of whether there will in fact be one or not would have a bracing effect upon decision making.

But there's another point to be made here as well. We don't, domestically, think that governments are very good at investment. So, there's no reason at all for us to think that they will be very good at foreign investment either. Thus, if we are to move over to an investment paradigm, as we agree we should, then it's not going to be government that does the investing. Thus the end of Overseas Development Aid altogether, and the replacement with proper commercial investment.

As of course should happen anyway in our view. As has in fact been happening. ODA is of the order of $100 billion a year these days, Foreign Direct Investment, FDI, is of the order of trillions a year globally. The ODA is only a remnant rump of the process making the poor of the world richer anyway. So, no problems if it gives way to the more efficient and effective investment, is there?

Britain should leave the United Nations

Much talk these days is made of Britain leaving the EU. But what of other bodies that violate Parliamentary Sovereignty? What about, for example, the United Nations? The EU, is made of 28 member states, most of whom could broadly be described as liberal democracies . The UN is made of 167 non-micro states, 88 of whom The Economist would describe as “Hybrid regimes” or “Authoritarian regimes”. Only 25 are full democracies. When dictatorships have a say on the policy of Great Britain, one should not be surprised when the results are bad. Britain, if serious about Parliamentary Sovereignty and democracy, should leave the UN.

To be clear, such a move would likely mean the entire UN would disband. Unless there were major consequences imposed upon our country, the world would remember that membership of the UN is voluntary and thus nations are free to leave at any point in time. And what would the world really lose? Peace has been maintained primarily by two forces over the last 70 years:

1) Democracy- Democracies are less likely to go to war than Autocracies. 2) Free Trade- Building trade relations between countries means going to war with other countries is extremely expensive in terms of lost trade.

The UN facilitates neither and discourages both. By passing numerous binding resolutions- often against democratically elected governments such as Israel, it violates the principle that National Parliaments are sovereign and furthers the neoconservative delusion that imperfect countries can be perfected through the “General will” of other countries, many of whom are far less democratic than Israel.

The UN also implements trade sanctions. The UN claims that this is peaceful, but aside from economic damage- we should also learn from Otto Mallery (Not Bastiat) who said “When goods do not cross borders, armies will”. Iraq makes a good example. On August 6th 1990 the UN approved trade sanctions against Iraq which lasted until 2003.

These sanctions resulted in the deaths of over 576,000 children, and agitated Iraq further into isolation and radicalism. Mallery‘s lesson was proven when the US and UK invaded Iraq in 2003. This was not only an example of the UN failing to secure peace- it was an example of the UN actively discouraging it.

Membership of this organization is at best useless and at worst malign- it is time Britain set an example and left.

Theo Cox Dodgson is winner of the Under-18 category of the ASI's 'Young Writer on Liberty' competition. You can follow him on Twitter @theoretical23.