It would be nice if they did is not sufficient justification to force other people to pay your expenses
We're told that it's simply an iniquity that buses outside London are not subsidised in the same manner as those inside it. This is rather dressed up with complaints about privatisation, their not being planned and run by the local bureaucrats, but it's this lack of subsidy which is the real complaint here:
It’s not only Londoners who rely on buses and trains
Lynsey Hanley
Buses in the capital are fairly priced and frequent – and well used. Why has the rest of the country been left behind?
There's actually no evidence at all that buses anywhere are being fairly priced - nor unfairly. What we can see is that different people have to pay for them. For that's what "subsidy" does, moves the person bearing the cost away from the person doing the using.
Since deregulation, bus usage outside London has declined by more than a third, and fares in many rural areas are rising far above the annual rate of inflation. In the capital, however, usage has risen by 98% since 1986 – though it has fallen slightly in the last year – and passengers enjoy a stable flat fare of £1.50. (I pay £2.40 for a bus trip in Liverpool, where I live, a city with median earnings of £23,000 per worker, compared with London’s £35,000.)
What’s the difference? London’s buses are regulated, subsidised...
There it is. Other people manage to snag some portion of other peoples' money, why can't I? All of which is entirely understandable of course. It is nice if other people pick up part of your daily expenses. But there does need to be some reasonable justification for forcing them to do so through the tax system. Other Londoners - the taxpayer nationally in fact as well - pay that subsidy to London's buses. We're open to arguments that they shouldn't, equally to that they should. As ever, the answer is "it depends."
The argument in London being that 10 million people just aren't going to be able to move at all without some more general taxation paying for moving 10 million people around. Maybe it's a valid argument, maybe not, but that is the one here.
The justification for someone in Saffron Walden being taxed to subsidise buses in Liverpool is what? Other than it would just be nice?
Do we really have to be subjected to these sorts of misunderstandings?
We agree that the European Union is an important trading partner for the UK. We agree that services are important to the UK economy, that services exports are too, even those to the EU. However, we really are also pretty sure that we'd all be better served by the commentariat - today's example being Polly Toynbee - being a little more informed on these subjects:
But take the other mammoth in the room: to escape the free movement rule, the plan omits services from any trade deal – and that casts 80% of our economy to the winds, a hard Brexit by any account.
Services are 80% of the total economy. International trade is not 80% of the economy. In fact, services exports (the only part to be affected by Brexit, we can do whatever we like about imports of them once out of course) are perhaps 8% of the economy. That's gross services exports too. Of which about half goes to the EU.
Yes, certainly, 4% or so of GDP is an interesting number. But it ain't 80%, is it?
The 26 million people working in British services create a massive £28bn-a-year trade surplus with the EU,
Again, eyeballing the percentages, but 2% of GDP is an interesting number, not an economy defining one. And of course the 26 million are not working in service exports, they're working in services, the vast majority of which are - in common with every other large economy - domestic in both production and consumption.
They know the EU will never allow a single market deal on goods without services. How often must they repeat that the EU’s four freedoms of goods, capital, services and labour are indivisible?
Well, yes, except that that single market in services is, to put it as politely as possible, as yet an unfinished work in progress, not something that entirely and wholly exists today.
Please do note that the above is not an expression of our opinion. Now is it to insist that Brexit should happen, nor the manner in which it should. It's rather an insistence that those who would pronounce on it really have a duty to know more about it. As with the economy more generally - ignorance isn't a good starting point for a chain of evidence nor logic.
As to opinions, we have 'em. Polly tells us of this:
Patrick Minford CBE, former Thatcher adviser and leader of Economists for Brexit, is willing to spell out to me what Brexit politicians dare not. Their goal is no tariffs, no barriers, no regulations, open free trade with the world. That, he claims, cuts 20% off food prices in tariffs and roughly the same again in removing all regulatory barriers. What of food quality? As long as it’s labelled, let the consumer decide. What of farmers bankrupted by cheap imports? Big farmers will do more efficient biotech farming (GM, etc); small inefficient farmers will go to the wall or be paid to protect the environment.
What of manufacturing, facing a tidal wave of cheap, imported, unregulated goods? That’s an insignificant 10% of our economy, so let cheaper countries do the “metal bashing”, as we import cheaper cars: we will do high-value intellectual work. And what of all those “metal-bashing” jobs? Here he uses a favourite phrase: the “reallocation of labour”, just like all those “reallocations” of the 1980s on which he advised Thatcher, when unproductive mines, steel works and shipyards closed. Look, he says, over those years most of the 35% employed in manufacturing have been “reallocated”, with a growth in city financiers, consultants and all other services. But what of the people and the places destroyed in the process?
Yes, he admits, the 1980s was a “big shock”, but it rid us of “hopelessly uncompetitive” industries. That’s what unilateral open free trade would do again, clearing out overprotection from global competition with, he claims, a huge economic boost. Short-term pain means long-term gain: a second coming of Thatcher’s 1980s.
That’s the vision that dare not speak its name among Brexiteer MPs – for good reason.
As an aside, we'd note that the clearing out is what moved people into those services which export so much that even Ms. Toynbee is impressed.
But as to not speaking its name - we agree thoroughly with Minford here. It's all rather the point of Brexit itself in fact, that we can go and do all of those things which will make the economy so much larger, make our children so much richer. That is, the point of leaving the European Union is so that we can stop doing all the things they insist upon, all the things which progressively impoverish those who will come after us, and make the lives of the little ones so much better. Yes, absolutely, Brexit is for the children.
You don't like what we produce? You'll just have to work harder at it then
This is the cry of the producer interest over the ages. We're producing what we desire to produce, if you don't like it well then, you'll just have to work harder at it, won't you?
In the face of plummeting sales of literary fiction, the writer Howard Jacobson has declared that the novel is not dead: the problem is the modern reader, who apparently lacks the attention span to enjoy the intellectual challenge of reading.
He actually goes so far as to say that the reader is the problem. But nthen that's that producer interest, as we say.
The NHS isn't competing for our money so we get whatever it is they desire to allow us to have, not what we might want. Mixed sex wards don't exist in the private sector, they do in the NHS.
BT, when nationalised, wasn't exactly swift at installing that basic desire we have from a phone company, a phone line.
It's true, obviously it is, that literary fiction does at least try to sell us a copy or two. But the ecosystem is also buoyed, kept afloat, by that river or ocean of public and grant money. That is, the practitioners don't have to pay all that much attention to what the readers might actually want.
So, obviously, they don't. And when they don't they get told it's their fault. Such is the cry of the producer over the centuries. And it's only market competition that deals with it too. The genre novels are doing just fine....
Can we at least get the basics about business rates right?
This is something of a forlorn hope for clearly we cannot manage to get the basics about business rates correct. A pity, for there's quite clearly something between a groundswell and a deliberate campaign going on concerning the subject.
Yes, it's entirely true that expensive retail properties pay more business rates than sheds around the back. But everything else that is being said is wrong:
The popular villain of the UK piece is business rates, the property-based tax that raises £29bn a year for the Treasury, of which retailers cough up £8bn. It isn’t the only culprit, but the complaint from bricks-and-mortar shopkeepers is essentially correct: business rates were invented in a pre-internet age and the system is archaic. A useful tax system would help to reverse the damage done to high streets from the 1980s by sprawling out-of-town retail parks. Instead business rates, as currently structured, add to the problem.
The thing wrong here is that the taxes aren't actually paid by the retailers or tenants. Sure, they hand over the cheque but everyone is up to date with the idea of tax incidence. Certainly, the government and those writing newspaper business editorials must be otherwise we'd be having the ignorant in those important positions, wouldn't we?
The price people are willing to pay to have that shopfront gaining that footfall traffic is that price. It's set by the willingness to cough up for the limited supply of it. How that is divided into rent to the landlord and tax to the government makes no difference to that demand for it nor the price willingly offered by tenants and potential such. The landlord is deeply interested of course - reduce the tax burden and their portion of that total price, their rent, rises. We have an empirical test of this, when business rates were reduced or abolished in enterprise zones rents rose in tandem.
A reduction in business rates will lead to - ceteris paribus - rent rises. Or perhaps, given the excess of retail property at present, smaller falls in rent than would otherwise occur. A reduction in rates thus would benefit landlords and a reasonable assumption would be that the groundswell, or deliberate campaign, is being driven by such and their interests.
There is a further point:
The most startling statistic was provided by the New West End Company, an alliance of central London retailers, hoteliers and property owners. It calculated that Marks & Spencer, a company with a turnover of £9.6bn last year, paid £184m in business rates, whereas Amazon, with slightly smaller revenues in the UK of £7.3bn, paid substantially less in rates – just £14m. Amazon, of course, operates from more lightly taxed warehouses and requires fewer properties. New West End calculated that a 1% sales tax on online businesses could raise more than £5bn, which could go some way to levelling the retail playing field.
Rates are a tax upon the use of a scarce resource, that expensive property. If someone has worked out a way to economise on the use of an expensive input then why would we want to tax them to confiscate their greater efficiency? It's as if we decide to tax the cyclist because they're not using enough petrol.
Rates are incident upon the landlord, not the tenant, and we don't want to tax people using less property to supply desires anyway. Once we do all agree upon those two facts then, and only then, can we start to have a reasonable and informative conversation upon what, if anything, we're going to do about business rates. Roll on the day we get informed politics, eh?
Some people really are easily confused
We're treated, again - and aren't we the lucky ones - to a rant about the evils of ticket touting. We're told that the very idea entirely turns the basics of economics on its head:
The phenomenon of secondary ticketing – a less pejorative term than “touting”, reportedly invented by Viagogo founder Eric Baker – turns the economics of supply and demand on their head, and enables a hardcore of dedicated and professionalised sellers to distort the market.
That something in short supply relative to the demand for it rises in price is not what we'd call overturning those basics. Nor the thought that supply apparently in excess of demand - as with Morissey's recent tour so we hear - leads to a fall in price to zero.
We would assume that this is a vindication of those basics ourselves, a proof.
Still, it's entirely true that many people don't like this. Equally, that many do, as it does have to be the punters, the consumers, coughing up the money to the touts. And we not only do but must believe that people freely handing over their own money for something believe what they gain to be worth the amount they're paying.
But many don't like it. So, what could or should be done?
In a bid to disrupt the secondary sites, entrants to Sheeran’s recent stadium shows were required to bring ID and booking confirmation from an authorised primary ticket agent. Resale was authorised only through an official face-value service, Twickets. Thousands of tickets purchased by known touts were cancelled, and fans who inadvertently purchased through Viagogo (the only secondary site to list tickets) had their tickets invalidated – but were given an opportunity to buy face-value replacements and provided with assistance to claim a refund under Viagogo’s guarantee. In this way, fans have clawed back hundreds of pounds, and in some instances thousands. And all saw the show at the price intended by the artist.
Others are trying alternative methods. At their recent series of Northwich shows, the Charlatans successfully sold tickets exclusively through 100% mobile service DICE. Iron Maiden have also used so-called paperless tickets, in their case working with Ticketmaster – and primary ticket companies including See, Eventim, Resident Advisor, Skiddle, The Ticket Factory, Gigantic, Eventbrite and Music Glue are either offering or promoting consumer-friendly resale. Last week, it was announced that the O2 and the SSE Arena (Wembley) would be introducing a new fan-friendly ticketing system this autumn.
I suspect this is the kind of true secondary market that most music fans would like to see, as well as the majority of artists – which is why we need more of them to follow suit.
Looks good to us. Market competition to provide those fans with what they desire is leading to, well, it's leading to competition in providing those fans with what they are thought to desire. Those who sate those desires better will end up dominating the market. Which is what we want to happen anyway, consumers get to express their preferences and in doing so train suppliers into producing what it is that they do desire.
What we cannot see is any necessity to change things at the system, or legal, level. That market, pure and unadorned, seems to have it all under control already.
In fact, we see good arguments against system or legal changes. For quite obviously - see above about people paying touts in the first place - some do desire to be able to pay more to jump queues, happily paying speculators to gain what they desire. Others would prefer not to, varied artists taking different positions on the same point.
It's only the market solution which allows the granularity of all being able to sate those varied desires. Thus it is only the market solution which is appropriate, isn't it?
We're never going to get anywhere thinking like this - or not thinking to be accurate
The basic sentiment here we entirely agree with of course. Innovation, raising productivity, automation - they're the very things which make society richer over time. There's no reason whatsoever why such in health care won't do the same - thus we'd like to have innovation, rising productivity, automation in health care, yea even in the NHS.
Great, now, how do we get them?
From vaccines and antibiotics to memory metal stents that widen narrowed arteries and algorithms that process radiological images and let us see the earliest signs of disease, innovation has been saving lives since the inception of the National Health Service 70 years ago. It is this blend of new molecules, materials science and biomedical engineering, in partnership with digital systems, that will continue to transform our expectations of life and survival in the 21st century.
The problem with the piece, with the discussion, is that it ignores the two things we do know about such health care innovation. The first being that we've already tried that top down, planned, method. At this distance quite how much money was sprayed against the wall we're not sure. £13 billion was it on patient records? It certainly wasn't £1.3 billion and even Blair's NHS didn't waste £130 billion. Those interested in a more accurate number can look it up but the important point is that the output was zero. We gained precisely nothing at all usable from the expenditure of that much national wealth.
This is not the way to promote innovation. Which leads to the other thing which we do know about innovation, derived from the work of William Baumol - yes, he of the Cost Disease point.
Planned systems can invent but they don't innovate. Market based systems are about as good at invention and vastly, hugely, better at innovation. The distinction here being between creating some new thing and putting it to use. It is precisely the competition from other suppliers of goods or services which drives the application of new technologies. The fear of losing out as others do innovate to lower costs, higher productivity.
So, we'd like to have the NHS innovate, would we? That means having markets in the NHS, not a centrally planned system. Something that really needs to be mentioned in any discussion of how to get more innovation into the NHS, no? For yes, even the government still paying all the bills but with multiple suppliers will mean more innovation.
Freedom's Fighters 2 – Daniel Hannan MEP
The second in the ASI’s monthly series honouring “Freedoms Fighters” featured Dan Hannan MEP for Southeast England since 1999. He answered questions from Dr Madsen Pirie as to what motivates him, and how he survived in the European Parliament without going native.
Before an invited audience of 24, he held forth about his love of Shakespeare and his views on the food of his native Peru, as well as on the shenanigans of the European Union. You can watch it below 👇
Mancur Olson was right you know
A basic contention of Mancur Olson was that democratic politics becomes just an almighty catfight among special interests to get snouts in pots. Hmm, perhaps dedicated public servants arguing that it is they and their specialty which is the solution to our ills.
Same difference.
As with this listing of what needs to be done about the NHS. Taking them in order, the bloke who thinks that society must be upturned to reduce inequality thinks that society must be upturned, inequality reduced, in order to save the NHS. The lady from the professional union for general practitioners thinks more should be spent upon general practitioners. The GP who actually works in community care thinks more should be spent upon community care. The bloke from the professional union for local government authorities thinks local government authorities should have more money.
My, perhaps Our, isn't there are lot of thinking outside the box there?
Or, you know, Mancur was right?
Freedom’s Fighters 1 – Mark Littlewood
The ASI has pioneered a new event format.
In a monthly series honouring “Freedom's Fighters,” the ASI hosts interviews with some of those who have campaigned for free enterprise, free trade and individual liberty.
The format features a 20-minute interview before an invited audience of 24, as Dr Madsen Pirie asks questions that try to bring out some of the personality of the subject, as well as their beliefs and values. There are no questions from the floor, just drinks afterwards and the chance to question the subject in person.
First off was Mark Littlewood, defending freedom, free enterprise, and Southampton Football Club...
That idea of a national investment fund then
A highly fashionable idea these days is that there should be a national investment fund. Financed by borrowing perhaps, by just printing money maybe, even that taxes should be higher so as to allow the government to direct more investment into the economy.
This does rather fail the usual economic test of efficiency - we've really no evidence at all to suggest that government is better at identifying nor investing in projects than the private sector. Other than the most obvious public goods that is - and do note what a public good is. Not goods for the public but things which, by definition, the private sector isn't going to be good at investing in. The absence of infectious disease from that combination of treated drinking water, drains and vaccines is a public good, but it's the absence which is. Clean water, sewers and injections are not themselves public goods.
We're suspicious of the likely success therefore. But we also have an interestingly different problem from Malaysia:
1Malaysia Development Berhad (1MDB) is a Malaysian strategic development company, wholly owned by the Minister of Finance (Incorporated). 1MDB was established to drive strategic initiatives for long-term economic development for the country by forging global partnerships and promoting foreign direct investment. 1MDB focuses on strategic development projects in the areas of energy, real estate, tourism and agribusiness.
Strategic investment in essential areas of the economy. Sound familiar?
The former Malaysian prime minister Najib Razak has appeared in court in Kuala Lumpur where he was charged with corruption-related offences over his alleged involvement in the multibillion-dollar 1MBD corruption scandal.
In a stunning fall from grace, the former prime minister was charged with three counts of criminal breach of trust and one count of corruption in a prosecution led by the attorney general, Tommy Thomas. He has pleaded not guilty to all charges.
Some billions are said to have gone missing and into the pockets of the political class. Sure, we could say that such would never happen here but then we did have T Dan Smith and other such, didn't we?
PJ O'Rourke's point that we should never let the people with all the guns and the people with all the money be the same people comes to mind.
Or to be a little less apocalyptic about it, let's not think about outright theft. Instead, politically directed investment will go to those with the right political connections, won't it? It'll still be a slush fund for the friends of the politicians in power. Which isn't, when we come to think of it, quite the way to make the rest of us richer, is it?