Apple’s game changer

On January 24th, 1984, Apple unveiled its Macintosh, two days after its famous Super Bowl commercial directed by Ridley Scott had portrayed a dystopian, grey conformist future, with a female athlete smashing the giant screen with a hammer throw. The ad was aimed at IBM’s dominance of the home and business computer market, and the Macintosh was the first mass-market personal computer that featured a graphical user interface, built-in screen and mouse.

It was the first of a series of Apple challenges to conventional markets by the introduction of innovative products. Still in the future lay the iPod, the iPhone, the iPad and the iMac. The approach provides an illustration of the way in which innovation can challenge complacency and displace market leaders. People who attack the market dominance of brand leaders fail to appreciate their vulnerability. Many of the big names that once seemed so dominant are now remembered only for their downfall. Failure to adapt to changing technology or changing tastes has brought down many one-time giants, ranging from Woolworths to Pan American, and from Blockbuster to Kodak, together with many, many more.

Most of the top names of the FTSE 100 of half a century ago are no longer with us, and the average age of an S&P 500 company in America is now 20 years, down from 60 years in the 1950s. Churn and change characterize the market, rather than continuing long-term dominance. In November Jeff Bezos predicted that Amazon will one day go bankrupt, and told the firm to “stay hungry” to postpone that day.

The market system thrives on the “creative destruction” that new ideas wreak on established players and practices. It is what makes us richer by providing products and processes that meet more of our needs. Apple has been a trailblazer in this respect and has earned its accolades.

All hail our Glorious NHS and Proton Beam Therapy

We have glorious news on the tractor production front - the National Health Service now offers proton beam therapy. This is indeed good news and not worthy, in itself, of the sneering we’re giving it. And yet it’s also true that the very same NHS was a pioneer of the technique, 30 years ago. Further, the only reason we’re getting it now is because of that competition so derided. This isn’t thus a story about how leading edge technology is being brought to us by our Wonder of the World, but how monopoly limits and delays technological adoption.

A 15-year-old boy has spoken of his excitement at being among the first to have NHS proton beam therapy in the UK.

Mason Kettley, who suffers from a rare brain tumour, began treatment on Tuesday - five years after the parents of Ashya King sparked an international manhunt when they took him abroad in search of treatment.

Until last month, NHS patients were sent as far away as the US for treatment, if specialist doctors said it was required.

Now the Christie Hospital in Manchester has begun offering the highly targeted treatment, with Mason the fourth case to undergo it, and the first to speak publicly about it.

We wish him and the others that will follow a good recovery and a long life. And yet, and yet. The world’s first hospital based proton beam treatment centre was mere miles away from this one, the Clatterbridge cancer centre. In, umm, 1989.

And what did happen in the Ashya King case? The NHS said, well, we don’t offer that treatment. There was even legal intervention to try to ensure that the lad did not receive it elsewhere. Which he did, a charity funded centre in Prague offering it seemingly - so far at least - successfully.

So, what is it that we expect to see from a monopoly? A certain lack of leading edge technology as the incentives and impulses from competition don’t demand its adoption. What did we see from the NHS?

Quite, and what did happen? That private sector in the UK competition didn’t do it but the political embarrassment of that foreign impelled action and investment. Which gives us two economic lessons for the day.

The NHS may be, is, many things. But as a monopoly it’s going to be well behind that leading edge of the available technology. We also see one of the values of imports - yes, that treatment of Ashya was an import of health care services - in that they provide the competition which improves home grown monopolies by breaking them, even at the margin.

Just think how much better off we’d be if we didn’t rely upon the imports for this driving of technological change but had the competition at home to impel it?

Rent controls are the last thing London needs

Matthew Lesh, our new antipodean Head of Research, demolishes the case for Sadiq Khan’s new rent control policy. They discourage new investment and new building. They cause deterioration of existing housing. And inflated prices for newcomers will do little to persuade the world that London is Open.

Robert Nozick – philosopher of liberty

Robert Nozick died 17 years ago on January 23rd 2002. He was a colleague at Harvard of John Rawls, and it was partly to counter the latter's "A Theory of Justice" that he wrote his most famous work, "Anarchy, State and Utopia."

The book is a thoroughgoing defence of liberty and the minimal state, a state that limits itself to protecting individual rights of life, liberty, property, and contract, and denies the use of state power to redistribute income, to make people moral, or to protect them from harming themselves.

Following Kant, Nozick sees humans as ends in themselves. They have rights that are not given to them or earned, but are theirs simply because they are human. Against leftist and redistributive ideologies, he asserts that any state with more extensive powers than those necessary to maintain those rights would violate the natural rights of its citizens. The state is, in effect, a "night watchman," with powers limited to those necessary to protect citizens against violence, theft, and fraud.

Redistribution of goods can only take place, he says, with consent. The state should not have the power to regulate its citizens' economic activity, to redistribute wealth in the name of greater equality, or to provide social services. There should be no price controls or minimum wage levels, because these would violate the natural right of citizens to dispose of their property, including their labour, as they wish. Similarly, the minimal state should not establish public education or health, financed by taxation, because that would violate the right of its citizens to buy those things for themselves, and would subject those required to pay the taxes to a form of "forced labour."

For Nozick, distributive justice is incompatible with the rights of individuals. He takes these rights as given, with no need to establish how they come about. Because we all have these rights, it cannot be justified to sacrifice, or make suffer, anyone for the general good of others. Coercion can only be justified to protect the citizenry from abuse by others.

Modern states are far from the utopia spelled out by Nozick, but the principles that underlie his work are a timely reminder that states have to justify their actions, and take due regard of the rights of their citizens. Because they have coercive power does not justify their use of it. Because they can does not imply that they should.

These little details that Brexit reveals

An interesting headline here. One that reveals just that little bit more of what the European Union stops us from doing in the name of protecting domestic producers. Which isn’t, as we all know, quite the way we should be running an economy, we want to be protecting, exalting even, the interests of domestic consumers:

Warning only 60 lorries allowed to cross Irish border in no-deal Brexit - 13,000 crossing a day

Need for permit would sign death certificate for Northern Ireland industry

The background here is that duly licenced lorries from any EU country can cross those intra-EU borders whenever. This is as it should be of course. But there’s a permit system - limited, just like many taxi systems as to the number issued - allowing only a few non-EU licenced lorries to do the same. As the NI/Eire border will now become an ex-EU one that permit system comes into play.

Yet as we know from our Uber/Taxi interface the permit system itself is a conspiracy against consumers. And it’s only when we consider Brexit that this similar scheme to disadvantage consumers to the benefit of producers becomes visible.

Views around here, as elsewhere, on Brexit itself differ. But isn’t it interesting how many of these little conspiracies against us we’re discovering as a result of the process?

The Victoria Era – a testament to free trade

Queen Victoria's reign ended at her death on January 22nd 1901, 117 years ago today. During her reign of nearly 64 years, The UK's population nearly doubled, but there was no Malthusian trap of extra numbers lowering living standards. On the contrary, her reign saw unparallelled increases in prosperity as free trade became the norm. The 1846 repeal of the Corn Laws, shortly after her accession, was the capstone of the policy of cutting duties and tariffs begun earlier by William Pitt.

Britain's Industrial Revolution was in full swing, with the railways opening up the country to trade and commerce. The goods poured out of the factories onto the trains for shipment across the country and to the ports for export. Britain's naval supremacy, added to its industrial might, underpinned international free trade and the Pax Britannica.

Imports were allowed in unconditionally, save in a small handful of cases, and the UK relied on market advantage for its exports. British goods were shipped across the globe. Disraeli coined the expression "Workshop of the world" in 1838, the year of Victoria's coronation, referring to British manufacturing and industrial capacity. It remained true throughout her reign.

The policy of free trade brought the wealth that paid for public buildings, medicine and modern city sanitation. Increases in productivity were boosted not only by the railways, but also by a string of inventions that included the telegraph and gas lighting, and by increased education. Britain could afford to abolish child labour and to pass Factory Acts to improve workplace conditions and safety.

Free trade worked then, as it does now, by allowing countries access to cheap goods that leaves them with resources to spare for other things, including investment. Support for it in the modern era is mixed, with the EU imposing a Common External Tariff to boost domestic production at higher prices. It makes EU citizens poorer than they would be without it. Similarly the US tariffs on steel and other goods make their citizens pay more for them. They further make US production that uses those raw materials more expensive and less competitive.

As the UK prepares to reach trade deals with countries across the world, it would do well to take on board the lesson of the Victorian era, that free trade brings prosperity and opportunity.

Non-redistribution to the cities is known as democracy in action

One of the interesting little points about democracy is that it enables us, collectively, to change our minds. We can think of this without prejudice and potter along with the thought that we, the electorate, are proffered plans and we try them out to see if they work. If they don’t then come the next or subsequent election we get to change our plan and our minds. We can be more cynical - what we would refer to as realist - and decide that given the ghastly mess created by that lot we’ll try the others for all the good that will do us.

But whatever the tone of our explanation that we do get to change course is the very essence of the basic set up:

Ministers have been accused of a “stitch-up” over proposals to redraw the funding formula for councils in a way critics say will redirect scarce cash from deprived inner cities to affluent Conservative-voting shires.

The proposed changes – which include the recommendation that grant allocations should no longer be weighted to reflect the higher costs of poverty and deprivation – come amid increasing concern over the sustainability of local authority finances.

Leaders of urban councils have written to ministers to complain that under the “grossly unfair and illogical” proposals, potentially tens of millions of pounds would be switched to rural and suburban council areas.

That we’ve collectively changed our minds is the explanation for this. For, under the Brown Terror, the system was moved to one of more redistribution from those leafy shires to the grim and bitter inner cities. That might be a good or a bad idea, might be righteous and might be approaching theft. But it is indeed what the duly elected government of the day decided should happen, we having done that electing to do this.

We’ve had more than the one election since then, we’ve put the other lot in charge and thus we seem to have changed our minds upon the desirability - to say nothing of the perceived righteousness or theftness - of such redistribution.

We do actually get to do that, it’s the very point of our having this democratic system. We the people have changed our minds. And?

Abolish the DWP - a failure to understand how Whitehall works

The think tank, Demos, has released a report recommending the abolishing of the Department for Work and Pensions - so the Observer says. The report itself seems a little more modest, suggesting that certain functions be moved elsewhere in Whitehall. It is, sadly, true that it does not suggest entirely closing down some function of government - as we know, the only way to actually reform anything given institutional inertia.

But even the Observer’s reading, close it all down having transferred the functions, doesn’t work, as doesn’t the report’s more modest of transferring some of those functions. For both ideas are missing how such transfers are done in practice.

The same people sit in the same offices doing the same stuff. There’s just a different departmental nameplate outside and up at the airy height of Cabinet anoxia there’s a different person responsible for their errors. That’s how the civil service does these things.

This is exactly why reform of anything civil service is so difficult. We don’t even get shuffled deckchairs nor the band reading from different sheet music, just a different baton waver influencing near nothing.

The actual complaint itself is that the DWP is pretty good at dealing with people unemployed because they can’t find a job, pretty bad at dealing with people unemployed because they’re incapable of a job. We agree it probably is but only because that second is the rather harder task. Quite probably one that no government organisational system will ever be able to deal with.

Lenin died 95 years ago

On January 20th, 1924, Vladimir Ilyich Lenin died. After the February Revolution had overthrown the Tsar in 1917, Germany allowed Lenin and supporters to cross their country in a sealed train. Back in Russia, Lenin with his Bolsheviks overthrew the Provisional Government of Kerensky, and quickly established a Communist dictatorship. He instituted the Red Terror, in which tens of thousands of people were killed or interned in concentration camps. He spoke the language of Marxist Socialism, but his practice was of the ruthless seizure and maintenance of power by violent repression of all opposition. He and his fellow Bolsheviks expected a proletarian revolution to sweep Europe within days, but it did not happen.

Marx had predicted that the most advanced capitalist countries would progress to revolution first, not a relatively economically backward country such as Russia, but Lenin seized power and attempted to impose socialism regardless. The record of the Soviet Communist state he established is now known to have been bloody and brutal. The problem was that central planning does not work. It did not then and does not now. State takeovers of industry and agriculture set production quotas, but in the absence of market information about what was needed, they might just as well have been guesswork. The result was the shortages, queues and rationing that characterized the Soviet economy throughout its existenceWhile party bosses in the Soviet Union, the nomenklatura, could shop in special stores packed with Western goods, ordinary Soviet citizens had to deal with bare shelves, shoddy goods, poor quality clothing and plain food. It was a socialist state that Lenin created, one that lasted 72 years, giving the world an example of what socialism achieves in practice. There have been other examples since, and all have failed. Between them in their 72 years, those states murdered 100 million of their own people, an average of 4,000 every day of every year.

Some young people in Western countries claim to be Marxist-Leninists, but have little knowledge of the history of Lenin’s great experiment. They talk the theory with the honeyed words of liberation and equality, but have little inkling of what the practice achieved. They want to redesign society according to their vision of what it might be, but without taking on board the violence, suffering and deprivation that have accompanied attempts to bring this about.

The physical remains of Lenin were embalmed 95 years ago. It is a tragedy for the world that his ideas were not embalmed with him.

Venezuela Campaign: Chavez' Cuban healthcare fiasco

Hugo Chavez’s apologists have always used his healthcare spending in the early years of his presidency to counter criticism of his appalling human rights and economic records. A cursory google search brings up many fawning articles to this effect.

However, a closer examination of Chavez’s healthcare policy reveals a decidedly ugly picture. Chavez subcontracted a large chunk of Venezuelan healthcare provision to Cuba in a programme called Barrio Adentro, paying huge sums to Cuba for the provision of doctors. Very little of the money goes to the Cuban doctors, the vast majority (96%) is pocketed by the Cuban state. This funding helped Chavez finance Cuban security and intelligence support for his regime. Cuban intelligence has been vital to the Chavista regime’s ability to control both its population and political opposition.

Meanwhile, the Cuban doctors working in Venezuela are close to being slaves. The doctors are not allowed to bring their families with them and are forced to live in terrible conditions. They are only given small stipends with most of their extremely modest salary being held by the Cuban state until they return. They lose that too if they are sent home early by the Venezuelan regime. In 2010, seven Cuban doctors and a nurse who had escaped to Miami sued Cuba and Venezuela for conspiracy to force them to work as “modern slaves”.

Barrio Adentro failed to create a lasting healthcare system in Venezuela and consumed a large part of the Venezuelan budget. Between 2005 and 2014, $29.7 billion (over 50% of all social expenditure) was spent on Barrio Adentro. Most of this money went directly to the Cuban state and much of the rest was lost to pervasive Chavista corruption. By 2014, according to the President of the Venezuelan Medical Federation, 80% of Barrio Adentro’s facilities had been abandoned. Many of these facilities were being used to dump trash or were occupied by the homeless. Of the 20% of clinics still operational most were operated only part-time, often just until 10am. By 2014, after a nine-year programme and tens of billions of dollars, most of the Cuban doctors had gone home or fled to other countries.

Barrio Adentro has also comprehensively failed as a preventative healthcare programme. Since 2010 Venezuela has had the highest teenage pregnancy rate in South America, something that is easily prevented with basic contraception and education. The Health Ministry stopped publishing statistics in 2016, but by then maternal deaths had reached 756 per annum from 346 in 2010, and child mortality had increased by 92% since 2010. Vaccination rates for all the major preventable diseases have collapsed. Vaccination against polio fell from 86% in 2000 to 58% in 2008, and vaccination coverage against tetanus, whooping cough and diphtheria fell from 77% in 2000 to just 22% in 2008. After having been eradicated, diphtheria broke out again in 2017 and is spreading, along with many other previously eradicated diseases.

Essentially, Chavez built Barrio Adentro as a secondary healthcare system based around foreign indentured labour and starved the primary public healthcare system of resources. Following the almost total collapse of Barrio Adentro, Venezuelans are left with a system that is falling apart and unable to provide even the most basic forms of healthcare. Hugo Chavez’s healthcare legacy is a broken system that disproportionately harms the poorest Venezuelans.

More information on the Venezuela Campaign can be found on their website.