We would blame central heating ourselves

Science has discovered a mystery:

It may be the final straw that kicks off intergenerational war. Hard-pressed millennials already resent their parents’ generation for their free university education, generous pensions, higher employment rates and ownership of mansions they bought for £18.50.

Now it turns out baby boomers even had it easier when it came to dieting. A new study has found those consuming a given number of calories were 10% heavier in 2008 than 1971.

The difference, it turns out, is not down to Generation Y spending all its time sat on their well-padded nether regions playing computer games and sexting. Those with the same calorie intake and physical activity levels had an average body mass index 2.3kg/m⁲ higher in 2006 than in 1988. While average food and energy intake around the world has risen in recent decades, research has undermined the notion that weight gain is simply the result of people consuming more calories than they expend.

Well, actually, calorie intake in the UK has declined over that period. But this paper is specifically looking at the US:

Between 1971 and 2008, BMI, total caloric intake and carbohydrate intake increased 10–14%, and fat and protein intake decreased 5–9%. Between 1988 and 2006, frequency of leisure time physical activity increased 47–120%. However, for a given amount of caloric intake, macronutrient intake or leisure time physical activity, the predicted BMI was up to 2.3 kg/m2 higher in 2006 that in 1988 in the mutually adjusted model (P < 0.05).

If that were a British result we would immediately "blame" central heating. Something unusual in 1971 and near universal now. As an American result we're less certain.

Factors other than diet and physical activity may be contributing to the increase in BMI over time. Further research is necessary to identify these factors and to determine the mechanisms through which they affect body weight.

But that is the first thing we would go and look at. Given that we are, in fact, mammals. And that the major use of calories in mammals is the regulation of body temperature?

Rather than, say, blaming the food industry for advertising yummy things to us which we regard as the inevitable outcome of this current approach.

Transport for London could dissipate its goodwill

Transport for London has quite a good record. There have been significant improvements in London's transport, and TfL can take credit for some of them. We have the new Routemaster buses with the open back that you can hop off in a traffic jam, or hop on or off at traffic lights. There are the new wide tube train carriages that allow you to talk from one carriage into another in search of a seat. We are soon to have all-night tube services on some lines. The new traffic lights that tell pedestrians how long they have to cross are a good innovation, as is the reconfiguration of some congested crossings that were previously more dangerous to pedestrians. TfL took part in some of the consultations that led to these and other improvements.

The leaked proposals under consideration on Uber could dissipate all of the goodwill TfL has earned, however. There is no conceivable benefit to Londoners in having to wait 5 minutes before a car can pick them up, or in preventing them from seeing which cars are nearby. This is typical corrupt rent-seeking, trying to hobble competition through political lobbying in order to protect incumbents and keep up prices.

Uber has provided Londoners with a service that is more flexible, more convenient and less costly. An estimated 1.2m users have taken to it. They do so because it is of value to them. Black cabs provide a good service, too. Most cabbies are cheerful and helpful, and they know the shortcuts. There is room in London for both types of service. The way to benefit most Londoners would be to ease the regulations and costs of the black cabs, rather than to legislate away the benefits that Uber brings.

The black cab drivers' association and those representing licensed minicabs boast openly that they were behind the now-public consultation proposals, and influenced TfL to take them on board. TfL should now ditch those proposals as ones bringing no benefit and great disadvantages to Londoners. Unless they do so, they will rapidly lose all of the goodwill gained by their other, more sensible, innovations.

The best part of Britain's health care

This is a slightly strange thing for the Guardian to be trumpeting:

The UK is the best place in the world in which to die, according to a study comparing end-of-life care in 80 countries.

The integration of palliative care into the NHS, a strong hospice movement largely funded by the charitable sector, specialised staff and deep community engagement are among the reasons cited by the Economist Intelligence Unit (EIU).

Not that most of us tend to like thinking about it but yes, death is an inevitable part of any health care system. And here we've got an analysis of the one part of health care where Britain really is the world leader. Which is very interesting, of course it is, to know that we are still, at times, world beaters.

But what's even more interesting is that this one world beating part of the overall health care service is the one part of it not run by the NHS and not financed through taxation: that hospice movement. Which is rather food for thought about how we might look to organise, run and finance other parts of that health care system, isn't it?

Perhaps, even, the original decision to amalgamate all of the private, charitable, municipal health care systems into that tax funded NHS wasn't the quite the right thing to have done even?

Yes of course Donald Trump is wrong about Nafta

More interesting is why Trump is wrong about Nafta:

Recently, Donald Trump made a strong claim about the North American Free Trade Agreement (NAFTA) in an interview on CBS 60 Minutes:

"It's a disaster. ... We will either renegotiate it, or we will break it. Because, you know, every agreement has an end. ... Every agreement has to be fair. Every agreement has a defraud clause. We're being defrauded by all these countries."

And we have an, admittedly incomplete as yet, theory for why we think businessmen are often quite as bad as they are at economics. We would expect them, given that they are usually playing in the private sector, to be rather better than they are at how private markets work. And certainly someone in Trump's industry should understand public choice arguments.

But our theory is that so much of what a business actually does is trying to beat economics that the knowledge of the underlying theory rather gets missed. Just as one example, every business is trying to gain market power, the ability to set prices. From the economic theory point of view this is a very bad idea: and it's the competition that markets provide that stops every business from gaining that market power.

And something similar happens with trade: when running a business you are obviously going to try to reduce your inputs. Of anything: one of the ways to succeed is to minimise inputs. And yet when we talk about the whole economy, about trade, the aim and point of the entire exercise is to maximise those imports, those inputs. That's why we're doing it, to gain the maximal amount possible of the resources and labour of foreigners that our people get to consume.

So, much of the time, running a business is trying to beat economics. Thus a businessman can often have a distorted idea of what desirable economic policy is.

There are those who will make the leap from this claim to the one that therefore we must regulate businesses because they are "anti-economic". To which we would respond yes, of course , we must do so. And we do do so, we insist on competitive markets which is exactly the correct antidote to such attempted behaviour.

EU Inners and Outers

The City Corporation hosted a gathering at the Guildhall last Thursday to discuss, from a financial services perspective, what the Prime Minister should be seeking in his EU negotiations and the consequences of Brexit, should that come about.  The eight invited speakers were supposed to be balanced between those leaning towards staying, the Inners, and those leaning towards leaving, the Outers.  Given the funding, it was no surprise that the majority were Inners.  Indeed, according to Mark Boleat, Chairman of the Corporation’s Policy and Resources Committee, who introduced the conference, the status quo is well-nigh perfect so far as the City is concerned.  Apparently, the Brussels regulators now follow the City’s advice like lambs following their shepherd. Perhaps the single market for financial services could be hastened a little but the important thing, we were told, was to remain within it.  Dr. Pangloss would have been proud. Interestingly, the few words of dissent from the Outers produced more applause than anything from the Inners.  But this was shadow boxing. There was little attempt to answer the questions: just the ritual “leaving is too risky” and “Europe will drag the UK down in global terms” arguments from the two sides.  The only speaker to land a punch was David Campbell Bannerman, ex-UKIP and now Tory MEP, speaking from the floor and dismissing one speaker’s contribution as undiluted self interest.

In essence, the big companies and organisations, City Corporation, CBI, unions, Whitehall, are mostly Inners whereas SMEs, including those in the City, and their representatives, IoD, Chambers of Commerce, are mostly Outers.  Some portray that as the old guard versus the future.

There is a vague wish that the UK government can protect the City in the way the French protect the Common Agricultural Policy but no one suggested how that could be done.

The most substantial issue proved to be the Euro.  The double majority rule that protects the non-Eurozone countries from being out-voted by the Eurozone ceases to apply once the current seven of the former shrink to three.  Furthermore, the other EU members have made it clear that they dislike the principle and even Lord Hill, the UK Commissioner, would not support it being extended to non-financial matters.  Since, when the current troubles subside, it is a racing certainty most of the current outsiders will join the Eurozone, the UK can look forward to being out-voted on almost everything and losing out, as we now do, in the EU Court of Justice.

So the bottom line, whatever the outcome of the referendum, seems to be that the UK must, in the longer term, accept the Euro or leave the EU.  A stark choice.

There is greater joy in heaven over one sinner that repenteth etc.....

Someone seems to have got the message:

Bono illustrated the shift in thinking that has taken place in his remarks.

“I’m late to realizing that it’s you guys, it’s the private sector, it’s commerce that’s going to take the majority of people out of extreme poverty and, as an activist, I almost found that hard to say,” he said.

As Madsen Pirie of this parish is wont to say, the way to reduce poverty is by buying things made by poor people in poor countries.

But there is more to this than just our being correct and Bono now becoming correct. For the UN and the global illuminati are currently congratulating themselves on having met the Millennium Development Goal of halving absolute poverty. And are now designing the next set of goals in order to abolish it in its entirety. Yet absolutely none of the meeting of that MDG came from anything that the UN of those illuminati did. And not even from the eyewatering overseas aid target of 0.7% of GDP, a target which the UK is almost alone in actually meeting. And there's a problem with this.

That problem being that while abolishing absolute poverty is absolutely the thing to be trying to do, none of the mechanisms being suggested by the UN/illuminati to reach that goal actually have anything to do with how we reached the previous one. They're muttering about inclusive development and reducing inequality. When what is needed is yet more globalisation and trade. Or, in simpler terms, just buy the damn stuff made by poor people in poor countries.

We think (and hope) that the true abolition of absolute poverty will happen. But it will be in spite of, not because of, these lovely plans that are being drawn up. Because none of those plans actually ask people to do what we do know actually works: please people, go shopping!

Rather waving the bloody shroud, isn't it?

Whenever the budget of a bureaucracy is cut (and cuts here means "less than an acceptable rate of growth") then the cuts will be implemented in the most useful and obviously visible service that that bureaucracy is supposed to provide. This is not a new observation and we have no intention of trying to claim credit for it. The reason is twofold. The first is the obvious one that if some mild brake is applied to, say, the council's leisure budget then reducing library opening hours, or ceasing to purchase new books, gets the local paper (and MP) nicely roused to shout about it. Curtailing the supply of choccie bikkies at council meetings just wouldn't create the same public outrage.

The second is that of course that a bureaucracy's reason for existence is to be a bureaucracy. What service, if any, it emits is the least important thing about it. Most certainly less important than the continued existence of meetings at which there may or may not be choccie bikkies.

This is all we need to know to explain this story:

The Labour-run Newcastle Under Lyme Borough Council has told grieving relatives that no one can be buried in any of their eight cemeteries for three weeks, blaming funding cuts.

Sticking the bodies of the recently departed into holes in the ground is not a difficult nor expensive endeavour. This is precisely why we delegate the task to the local municipality. But if there is to be even the whiff of a cut to the overall budget it is those bloody shrouds that will be waived to the distress of the relatives of the departed. Cause the maximum pain: to fail to do so would be to betray all bureaucracies everywhere.

It is true that said council is currently advertising for a fitness trainer. But we do think that's rather the long way around of trying to reduce the pressure on the space in the graveyards.

Mariana Mazzucato's interesting economic argument

Alberto Mingardi, one of those we around here think to be a top bloke, has an excellent analysis of the rather, umm, interesting economic ideas of Mariana Mazzucato over at Cato. Mazzucato it the one who insists that because all of the components of the Apple iPhone had their start in some government research grant or other then the government should be owning a piece of Apple. To really cover the issues with this line of thinking please do read the whole of Mingardi's piece. For a flavour though, he notes an interesting thought. Which is that this obviously didn't happen with the original Industrial Revolution because government didn't fund anything other than the military and the debt back in those days. So it's clearly not necessary that government fund research, despite Mazzucato's insistence that it must. And we can then go one step further: not that government has its mitts all over 40% of everything in the economy it would really be rather surprising if something as complex as a smartphone didn't have some fort of series of connections to said state. Because it's got connections to rather large parts of that economy that the state has its mitts all over, of course.

Again, well worth reading.

And we must also turn to a more speculative reading of this situation. Do understand that this is entirely opinion. And it is our opinion that it's a very interesting fact that the first governmental R&D funding organisation to adopt Mazzucato's prescriptions is that of the European Union. The latest round of EU funding for R&D will indeed insist that the EU should take part in any financial rewards that develop out of any research or even D that it has funded.

And the original research by Mazzucato that led to the conclusion that this should be done was funded by the EU. An EU which we very well know would love to have its "own resources", that is funding that it doesn't get by going cap in hand to the national governments.

Again, let us be very clear indeed that this is opinion and opinion only, but we are of the opinion that there's a very definite whiff of policy driven evidence making in the air.

Welcome Holly and Hunter!

Holly Mackay and Hunter Georgeson have joined the ASI as gap-year employees. We asked them to write this post to introduce themselves to our readers. Holly:

Having said in my interview that my favourite book was Harry Potter, I was both extremely surprised and delighted to find out that I’d landed one of the coveted gap year internship positions at the Adam Smith Institute. After finishing my A-Levels in Politics, Economics and Maths, I desperately wanted to fill my year with something that would hopefully allow me to build on my interest in those subjects, and working at the ASI is the perfect opportunity to do so.  Three weeks in, I’ve already had a fantastic time; I can’t wait for the rest of the coming year here.

I am an enthusiastic advocate of the ASI’s forward-thinking libertarian stance, and as Margaret Thatcher’s no. 1 fan, it’s a dream for me to have the opportunity to work with the masterminds behind some of her policies. As well as championing greater economic freedom, I also subscribe to the belief that individual liberties on social issues should be maximised too. I have already written my first blog post from this perspective, arguing in support of the Assisted Dying Bill, and I look forward to exploring so many more topics that are currently pressing British politics. Some of my personal interests include education, particularly in the wake of high levels of immigration and how we should cope with expanding demand, and how a freer market can actually be fairer for everyone- the Bleeding Heart Libertarian within me fully supports ASI campaigns to lower taxes for the poorest, get rid of the National ‘Living' Wage, and reduce regulations on businesses to allow entrepreneurs to flourish and create higher earnings for everyday workers.

I’m so excited to learn more from my colleagues here at the ASI; their energy and hard work is hugely inspiring, encouraging me to look at economic problems from angles I’ve never considered before. I greatly admire the work the ASI does, especially its outreach to students and young people, and I look forward to being able to contribute myself.

Hunter:

Very aware that an entire year without a definite plan would become a sort of spiritual black hole, I leapt at the opportunity to apply for the ASI's internship programme. After my first week here, I find it difficult to imagine that my time could be any better spent.

I did A-levels in subjects (English Literature, History, and Maths) that limited my ability to ask big questions – there's only a certain extent to which you can explore the deeper political philosophy behind Thatcher's privatisation reforms when you're studying the history of modern Britain. Although the ASI's work is on policy reform, there is behind the scenes a rich discourse on the ground-up basis for the free-market, libertarian perspective. It's very exciting to be around people who feel just as strongly about explaining their own ideas and hearing new ones as I do.

My own introduction to the liberal-right perspective came with reading, firstly, Hayek's The Road to Serfdom, and later, Mill's On Liberty. I found the simplicity of the principles underlined by the authors refreshing, whilst the few nuances and inconsistencies only drove me onto further reading. My particular interests include the problem of whether we can, or should, regulate against monopoly in a market economy, and the idea of more localised government systems, specifically with regard to the fostering of competitive forces between regional health-systems - like in Sweden.

Outside of academia, I'm the drummer in a band called Topknot (it's ironic, I promise!), and spend a lot of time working towards my ultimate goal of becoming an ascetic.

So how much should the world's fifth largest economy pay toward drug development?

Depending upon exactly how you want to measure it the UK has around the fifth largest economy in the world. The creation of a new anti-cancer drug is of course a global (or at least rich world) public good. So, how much should that fifth richest society be asked to pay toward the creation of such a public good? Too much apparently:

The health secretary, Jeremy Hunt, has been challenged by a coalition of cancer patients, clinicians and campaigners to effectively tear up the patent on a breast cancer drug that has been dropped from the NHS because of its cost and allow the import or manufacture of a cheap generic copy.

The radical demand is reminiscent of what happened with Aids drugs in the early 2000s. The cocktail of antiretroviral medicines that now keeps millions of people with HIV alive was unaffordable in the developing world until a legal loophole was found enabling generics companies in India to make cheap copies.

The drug, Kadcyla, known generically as T-DM1, will not be available to new patients with advanced breast cancer from November on the NHS, although those already on it will be able to continue getting it.

It has been turned down for NHS use by the National Institute for Health and Care Excellence (Nice). Recently NHS England dropped it from the list that the Cancer Drugs Fund – set up to pay for drugs Nice rejected – is willing to reimburse.

The drug offers some 6 extra months of life to those with a particular form of breast cancer resistant to other treatments.

But here's the really important numbers. It costs some £70,000 for a course of it. It benefits perhaps 1,500 people a year. And the cost of development of a new anti-cancer drug is around and about $1 billion. That is, please do note, the cost of development. That doesn't cover manufacturing costs, marketing, training and the rest. Further, the few drugs that make it out of the development process have to also pay for all the ones that fail within it. Finally, note that this isn't about the profit driven nature of the industry. We can imagine alternative methods: say, governments pay for all drug development and testing. That wouldn't change those numbers: someone, somewhere, still has to pay for those costs.

So, that fifth largest economy in the world is being asked to pay some £100 million a year (recall, that's including all of the training, production, and marketing costs, not just the R&D) towards something that had an R&D cost of $1 billion.

Is that too much? Could be: but it doesn't seem wildly out of order either. The effective life of a patent is really only around 10 years (because of the time it takes to get approval) so it certainly wouldn't be appropriate for that fifth largest global economy to be paying £10 million a year for that global public good. Nor, obviously, £1 billion a year. So while there might be room to argue about this price it really doesn't look wildly disproportionate.

What we've really got here, with this call for the patent to be broken and then we can have puppies for all, is the economic equivalent of baying at the Moon. Because drugs cost a great deal to develop. Therefore, if the drug only benefits a small number of people it will be expensive to administer to each of that small number. It's simply a truism that a $1 billion cost amortised over few people has a high per capita cost. And that doesn't change whatever the financing method used in that development.