It's easy enough to be generous with other peoples' money

The Labour Party has announced that it will spend £100 million to deal with the curse of rough sleeping in cold weather.

Hahaha, no, of course not. The Labour Party has announced that they will spend £100 million of our money to, well, something, about rough sleeping in cold weather.

Labour has pledged £100m a year in additional help for rough sleepers in cold weather, which the party says is key to reducing the unacceptably high number of homeless people who die each year.

Hmm:

That’s why today I announced that Labour will make emergency accommodation available for every rough sleeper in every area whenever local temperatures are set to fall below freezing. The new national scheme will be funded through a new Rough Sleepers Cold Weather Fund, set at £100m in the first year…

That’s an interesting number. There are, according to the usually agreed numbers, some 5,000 (just to round up a bit) rough sleepers on any one night in the UK. That’s thus £55 per person per night being spent there, not a greatly efficient scheme therefore.

Or, we could say that winter is only one quarter of the year, giving us a cost per person per night of £220 which is when this looks rather more inefficient.

Or perhaps we should look a the number of frost days, which seems to be about 21 at Heathrow at least. After all, they are saying this lodging is to be specially available on frost days. That’s 950 pounds per rough sleeper per night - yes, we’re obviously in the realms of government plans here, aren’t we? Must be to reach that level of inefficiency.

Do note also that this is on top of all of the things already done by government, charity and just plain hearted good folks.

As Milton Friedman pointed out it’s really easy to waste other peoples’ money on other people, isn’t it?

It's not just how they talk about things; it's also what they choose to talk about

I recorded a podcast interview last week with an Australia-based group that deals with critical thinking. I was asked several questions about logical fallacies, given my book on the subject, and was asked which ones were the most widespread today, and which were the hardest to detect. I chose examples that crop up in public debate, guessing that this is what would command interest.

I made the point that as well as critically analyzing what people are saying, it is important to ask why they are saying it. When an historian is confronted by a document, for example, they should immediately ask how it came to be in front of them: Who wrote it and why? How did it come to survive where similar ones did not? Did this purport to be a factual account, or was it written as one-sided propaganda?

Similarly, when someone is making a case on television or radio, it is helpful to ask how they came to appear on the programme to present it. Did the producer deliberately choose extreme views in order to set up a straw man to be attacked or ridiculed, or did they choose someone who reflected their corporate outlook? Even more importantly, why was that subject chosen in the first place? The content of a news bulletin often reflects the bias of the producers, in that the items included usually represent those the producer thinks are important or significant. The very selection of what to cover can be just as much a source of bias as the decision of how to cover it.

UK television news bulletins seem to feature a high content of Trump stories and Brexit stories (both hostile), coupled with stories about alleged gender inequality. Obviously, these items are those the producers think should be given priority over other stories they might be covering, such as foreign wars, shark attacks, natural disasters, or local initiatives to mitigate social problems. The fact that they prioritize their chosen items reflects a bias, maybe even an unconscious one, as does the slant they choose to put upon them.

There is almost an infinite amount of news that could be covered, so bias creeps in to the choice of what to include in a short bulletin. It is possible that the producers' selection corresponds with what their viewers and listeners think important, but I doubt it. Their bias does not reflect my preferences for news, and I often find myself tuning into foreign stations to hear about stories that are of more interest to me than the diet served daily in the UK.

Madsen Moment — differing on method but not desired outcome

Dr Pirie takes a look at how the Left and Right have drifted apart in recent years. But while we differ on method, what we want is often the same outcome.

Squabbling over Social Care Costs

Last week, the Department for Health and Social Care (DHSC) updated its 2012 guidance on who should cover the costs of those needing health and social care. A simple matter, you may think: the NHS pays for healthcare and local authorities pay for social care.

Well, not quite. 167 pages of “guidance” reveal a massive bureaucratic process whose costs should be devoted to the care itself. Many elderly people have both health and social care needs and neither public purse wants to pay for the care they need. In extreme cases, the patient dies before the squabble is concluded and care is provided.

The basic guidance is that “where an individual has a primary health need and is therefore eligible for NHS Continuing Healthcare, the NHS is responsible for commissioning a care package that meets the individual’s health and associated social care needs.” (p.6, my italics).

A complication is that the NHS is not great at providing social care so it either does so expensively (e.g. keeping people in hospital) or has to contract it out—normally to the local authority, but in theory the private sector could meet the need.

The public purse squabble starts at the top: although the DHSC is nominally responsible for social care, they do not pay for it. The money comes to local authorities from council taxes and the Ministry of Housing, Communities and Local Government who have no particular interest in social care. This is crazy. It would just need a flick of a switch to transfer central funding to the DHSC.

Under the current multi-pocket arrangement of paying for care, the expensive drugs for a lucky few are, in effect, funded by evicting frightened old people from their care homes because the local authority has run out of money or needs to use it for other purposes.

Unsurprisingly, in this context, the new DHSC guidance notes are written from the perspective of the NHS. The objective appears to be the avoidance of having anything to do with social care and especially not to pick up the bill, unless it is to free up a hospital bed. In other words, the guidance notes appear to be an elaborate means of refusing to pay for Continuing Healthcare.

They use two devices: a multidisciplinay team (MDT) and a decision support tool (DST): “Determining whether an individual has a primary health need involves looking at the totality of the relevant needs. In order to determine whether an individual has a primary health need, an assessment of eligibility process must be undertaken by a multidisciplinary team (MDT) (refer to paragraphs 119-123) which must use the national Decision Support Tool (DST) (refer to paragraphs 131-141).”

One might think that a good way to determine if someone has a primary healthcare need would be to ask their GP but not in the wonderland of the DHSC. Instead a committee of people with other territorial, the MDT, interests should be formed. It is very unlikely to include the GP who will be too busy to participate in these buck passing games. There is also the risk that the GP will say their patients have healthcare needs. The CCG (Clinical Commissioning Group) does have to sign off on the MDT’s findings but they too are mainly driven by trying to keep within budget.

Best of all is the DST which is a sophisticated, modern measurement technique based on the Texan methodology for weighing pigs. A plank, with a basket on each end, is placed across a tree. Once it balances, a pig is placed in one basket and stones progressively added to the other. When the plank balances again, they guess the weight of the stones. The DST works in much the same way: needs are broken into 12 “domains” each of which is assessed (by non-doctors) along with how it mat develop in the future.

To decide whether it is primarily a health problem (and the NHS should pay), the MDT is required to see if social services could cope, with the NHS doing the medical bit. The purpose of the whole charade is to dump NHS problems onto local authorities. According to one senior GP: “In practice, very few people seem to be awarded continuing healthcare, hardly surprising since virtually everyone’s primary need in life is social care.”

From both a national and an individual point of view, this may be a good thing. Social services look after people far more economically than the NHS and none of us want to live out our lives in hospitals.

Three things are wrong with these “guidelines”: the DHSC is partisan because it pays for the NHS but not social care (it should pay the share from the public purse of both); they needlessly bureaucratise what should be a simple matter thereby taking funds away from any kind of personal care; and squabbling over who pays the bill does nothing to bring the two sides of care seamlessly together.

The DHSC agrees that health and social care should be seen together but their twin green papers on these subjects are now long overdue. It is high time DHSC practised what it preaches.

BIS is right to worry about clearing risk, concentrating it well, concentrates it

The Bank for International Settlements - often described as the central bankers’ central bank - is worrying about central clearing houses. They’re right to do so, for concentrating risk into the one place doesn’t make risk go away:

The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain-reaction in the next crisis, the world’s top watchdog has warned.

Giant "central counterparties" (CCPs) that clear much of the $540 trillion (£428 trillion) nexus of derivatives are themselves vulnerable to failure in times of extreme stress.

Entirely so and there’s not really a solution here either. There’s an optimal position to each but no actual solution - w’re in that economics lesson where there are no solutions, only trade offs.

As the perceptive expert on the subject Craig Pirrong has been detailing for some time now any insistence that everything be cleared through the one or few clearing houses does indeed risk creating another too big to fail component of the system.

I believe that I am on firm ground saying that I was one of the first to warn of the systemic risks created by the mandating of central clearing on a vast scale, and that CCPs could become the next Too Big to Fail entities. At ISDA events in 2011, moreover, I stated publicly that it was disturbing that the move to mandates was occurring before plans to recover or resolve insolvent clearinghouses were in place.

The underlying points being that if everything is running through the one or three points then, in the absence of crisis, that’s efficient. One clearing house means just the one stock of capital to meet margins, it being possible to offset the requirements for different positions and thus only be consuming the net amount to support the net position. This makes the laying off of underlying risk - the point of such markets in the first place - cheaper and that’s a good thing.

But, of course, having all the risk on one place means that in extremis we’ve all the risk in one place, making that one node of the system too big to fail. We simply cannot afford to let it fall over. And, sadly, at the real extreme ends of the long tail of possible events there’s a possibility that it will attempt to fall over.

We’re in the same sort of bind as we are over fractional reserve banking itself. That system has the inherent instability of possible bank runs, yet in more normal times the system is societally wealth enhancing. We can manage - say with central bank support - the risks but we cannot make them go away entirely. The same is true of central clearing. BIS is right to worry.

The best solution being to work through, as Pirrong says, what we’d do if there was that failure. And most certainly we’ve got to acknowledge that it could happen. We’re in that reality where we’ve no perfect solutions, only trade offs of greater or lesser desirability.

Making "Green" mean green

A significant part of the opposition to building more houses where there is a demand for them comes from two erroneous impressions. The first is that the UK is vastly overbuilt, and we are in danger of losing huge swathes of what little countryside remains.  In fact 5.9 percent of UK land is built upon, with a further 2.5 percent designated as "urban green," such as parks and cemeteries. This means that about 92 percent of UK land is not built upon.

Even the notion that "the Southeast is overcrowded" is an exaggeration, as anyone flying over the Southeast will have observed. Most of its land is not built upon.

The second error is the assumption that the Green Belt is green. Some of it is indeed what people think of as "green," with meadows, woods and streams and rolling green fields.  Much of it is not, however. Some 65 percent of it is agricultural, including vast fields of monoculture crops onto which quantities of fertilizers and pesticides are applied, running off into nearby waters. This does not provide a suitable habitat for birds and small mammals, and is not "green" in the understood environmental sense.

Within land designated as Green Belt there is also a significant amount of damaged or distressed land such as abandoned quarries, dumps, breakers' yards, abandoned factories, filling stations, and former car parks. Some 18 percent of Green Belt land is deemed to be "neglected," rather than properly green.

The Town and Country Planning Act of 1947 has led to a shortage of housing near or around cities. It might have been appropriate for the very different UK of 70 years ago, but it should now be updated to bring it to meet modern needs. A major step would be the classification of land within the Green Belt into three categories. Genuinely green land would be designated as "verdant," the type people like to look at and to walk through, and to feel that we are protecting nature by keeping it green.

The second designation would be "agricultural," itself perhaps subdivided into the different types of farmland given over to cereal crops, animal husbandry, or other agricultural uses. L The third designation would be "damaged" or "distressed" land.  The Town and Country Planning Act should be amended so that it protects the verdant land, but allows building, especially house-building, on some agricultural and damaged land.

Not a great deal would be needed. A recent ASI report found that building upon just 3.9 percent of London's Green Belt, for example, could allow for 1 million new homes.  A reclassification of this nature would allow for the building of the desperately needed homes, while protecting the genuinely nature-friendly green land that is part of our heritage and part of our sense of identity as a nation.

Government's not very competent - therefore it should do less

We’re just fine with this line of reasoning but we are surprised to see it in The Guardian, that home of the Panopticon state, all seeing and all knowing. For that is what would be required of government if the varied plans that newspaper proffer to us were possible to bring to fruition. We’d need to have a state which was able to know, in detail, what the problems were, their causes, and how to cure those ails.

Yet here we’ve a complaint that government can’t in fact do more than one thing at a time:

Brexit: not just a political shambles, but a disaster for all public policy

Richard Vize

Vital services in health, social care and local government are being neglected. It’s an unforgivable failure

No, the argument is not just that Tories don’t care therefore. It is instead that by concentrating upon Brexit there’s not enough government left over to look at these other things:

It’s a funny way to take back control: vital areas of public policy that directly affect our lives are being sacrificed to the obsession with Brexit, and there seems little chance of respite.

While Brexit sucks up all the political oxygen, major areas of public policy, including local government, health and social care, are drifting.

Note that it’s not even the competence of government to be able to do these things which is being called into question - something we’d question ourselves but so be it. It’s that government simply doesn’t have the attention span, the capacity, to even consider more than one thing at a time.

At which point we’d better to move to a system of government that only does concentrate on one thing at a time then, if that’s all it can do. Welcome to the minarchist state, courtesy of The Guardian, on the grounds that government just can’t handle more than the one problem at a time. Therefore only allow it to deal with one at a time.

So we've solved that women in movies problem then

There are those who tell us that there’s something wrong with the film business. That women aren’t given their due in the industry, portrayals aren’t as they should be, starring roles not properly allocated. Given that this is probably the most viciously capitalist and free market business out there, this concerns us. For we do indeed think that capitalism and free markets combine to produce the best world we’re going to get.

The thing is though, we don’t believe that the combination produces that less bad than other systems just because. Rather, we insist that it’s the error correction system which is better, meaning that the joint system approaches the right answer better than any other.

Thus this system seems to be rather solved:

Films featuring a woman in the lead role are outperforming those in which a male actor gets top billing.

The conclusion was reached by researchers who carried out an exhaustive study of the most popular 350 films released in cinemas around the world between January 2014 and December 2017.

In films with small, medium and large budgets, all averaged better global grosses at the box office when a woman was listed as the lead star.

The study was carried out by Creative Artists Agency, the talent agency that represents many of Hollywood's biggest stars, male and female.

We do not claim that capitalist free marketry is perfect, nor that the world is. Only that this system aids us in zeroing in on what will make it better. Before this information was collated perhaps people didn’t know it. Now it has been collated therefore people do. We need do nothing more - that capitalist pursuit of profits in a market system is going to lead to the production of more movies with female lead roles, isn’t it?

Which is why the system does work, why it does correct errors. For it contains with in it, that ability to profit from getting things right, its own error correction system.

It's not the one limit, it's the total package, that counts

We’ve pointed this out before, that it’s not the drink drive limit itself which determines how many people drink drive and thus the accident rate. Human incentives don’t work that way. This is thus not surprising:

Cutting the UK drink drive limit would not reduce the number of accidents on our roads, a new study suggests.

Researchers from the University of Glasgow have found that the lowering of the legal blood alcohol limit for drivers in Scotland in 2014 has had no impact on the number of road traffic accidents in the country.

The research, published in The Lancet, evaluated the impact of the change in Scottish law in December 2014, when the blood alcohol concentration limit for drivers was reduced from 80 mg/dL to 50 mg/dL.

Broadly, the weekly rates have stayed relatively stable, with between 5 and 9 road traffic accidents per 1000 traffic count in Scotland between Jan 1st 2013, and January 31st 2016.

In England and Wales, the number of accidents was proportionately similar over the same period, according to the study in which the University of East Anglia, the NHS and the University of Stirling also collaborated.

What matters, as people like Gary Becker have repeatedly pointed out, is the total package here. Yes, the drink drive limit matters. But so does the punishment for breaching it, so also the likelihood of being caught if over that limit. The expected cost of a crime is, obviously enough, the punishment for being caught times the probability of being caught. A 20 years sentence for burglary combined with a 0.1% chance of being convicted might deter less than 7 days in the cells and a 99% chance of capture. No, we’ve not checked the maths there.

The British system did have - England still does - a limit which is high by international standards. We also have a high probability of being caught. And we have, by those international comparisons, very heavy punishment for the crime. Yes, automatic 12 month licence suspension is, while perhaps entirely righteous, high by the standards of other places.

The end result of all of this is that Britain has a low incidence, again international standards, of the crime itself, drink driving. Unsurprisingly, a low accident caused by booze rate as well.

In fact, that former British system of heavy punishment, high likelihood of being caught, produces what we desire, low incidence of the crime and its corollaries, those accidents. Moving the limit doesn’t seem to change that at all. So, perhaps not moving the limit, given that the system already works, is the right course of action?

We've studied poverty, now let's study wealth

Numerous studies have examined poverty and the lot of poor people. Now Rainer Zitelman has studied the psychology of the super rich. His study, based on in depth interviews and questionnaires, looks at wealthy Germans who gained their wealth, not as employees of large corporations, but as entrepreneurs and investors.

It reveals significant factors. For example, the parents of 60 percent of them were self-employed, which is ten times the average for Germany. They were not necessarily rich, but they worked for themselves.

School or education did not play a key role in determining their future status as super rich, but extra-curricular activities did, notably competitive sports or entrepreneurial activity. As youngsters, they tended to be difficult, even rebellious, unwilling to subordinate themselves to authority or established organizations.

They all had sales skills in the broad sense: selling ideas, or selling themselves. They exhibited the ability to explain things clearly. They showed a pronounced optimism, and had early acceptance of high levels of risk. They were reliant on intuitive as well as analytical knowledge, and they showed a readiness to learn from experience and “turn the page” on negative experiences.

Zitelman’s research reveals that they had personality traits that went with success. They scored high in self-discipline and deliberation (advance planning). They tended to be conscientious (thorough, meticulous), as opposed to negligent or careless. They were hardworking as opposed to lazy. They tended to be well-organized, punctual, ambitious and persevering.

The upshot is that although luck, of course, plays some role in determining who will succeed, it mostly comes down to personality traits. They have drive and determination. They succeed because they have the qualities that often lead to success, and in doing so they create the wealth that enriches society as well as themselves.