NHS CEO gets yet another boss
One has to feel sorry for Simon Stevens, the long-suffering CEO of NHS England. Every chief executive has a Chairman but few have ever lambasted their own organisations to the extent that Lord David Prior last week criticised the NHS and, by inference, current and previous Secretaries of State: “Do you know any other big organisation in the world that hives off its digital strategy into a separate organisation, that hives off its people and HR strategy into a different organisation, and splits its purchasing function from its sales function? Because that’s where the NHS has been. You could not have designed something that has inherently, at its heart, more dysfunctionality.”
A major part of the problem is the sheer number of quangos and committees telling Stevens how he should do his job. The Taxpayers Alliance suggested last year that the 19 health quangos could be reduced at a stroke to seven, saving three quarters of a billion pounds and releasing top managerial time to improve NHS England.
Instead of that, Health Secretary Hancock today announced yet another meddling quango: “NHSX: A new joint organisation for digital, data and technology”. The press release says “The CEO of NHSX will have strategic responsibility for setting the national direction on technology across organisations. The CEO will be accountable to the Health Secretary and chief executives of NHS England and NHS Improvement.” Odd that. If digital technology is to be the saviour of the NHS as the Health Secretary believes and NHSX will be in direct charge of it, surely NHS England will be accountable to NHSX, not the other way around. We already have a similar problem with NHS Improvement, i.e. which is in charge of change and therefore who reports to whom? This compounds it. In Lord Prior’s language, do you know of any big organisation in the world that hives off development to outside agencies?
But it gets worse because NHS Digital already has all the responsibilities now being ascribed to NHSX and NHS Digital employs 6,000 people to do them. It also has the ambiguity of being part of the NHS and independent from it. It is also supposed to have the same relationship with social care except it does not bother to do that at all.
Today’s press release quotes Sarah Wilkinson, chief executive of NHS Digital, as saying: “This new joint venture between the organisations who currently define digital strategy and commission digital services will create cohesion in these activities by concentrating work and capabilities in one unit.” So all this digital leadership will become a single entity? Dear me no. She goes on to say: “Within NHS Digital we view NHSX as an important and welcome initiative and we are absolutely committed to working closely with colleagues in NHSX to make this new venture a success.”
Quite frankly, this is Yes-Minister-speak for “These two organisations will fight like cat and dog.” Creating a fight without purpose in the biggest public sector department, what a fantastic use of taxpayer funds.
Lord Prior is right: NHS England’s CEO needs fewer bosses but more responsibility.
Lord Byron defended the Luddites
On February 27th 1812, two week before the publication of Childe Harold’s Pilgrimage brought him instant fame and considerably more wealth, Lord Byron delivered his maiden speech in the House of Lords at the age of 24. It was a stirring defence of the Luddites, the machine-breakers who smashed the textile machinery that threatened their jobs. They were an oath-based group who met at night, masked and in numbers, to break into Midlands textile factories and destroy the machines they housed.
Byron was opposing Perceval’s Frame Work Bill, which introduced the death penalty for that and related offences. His case was that the men who did this had no alternative but starvation. He said:
“But whilst these outrages must be admitted to exist to an alarming extent, it cannot be denied that they have arisen from circumstances of the most unparalleled distress.” And that:
“nothing but absolute want could have driven a large, and once honest and industrious, body of the people, into the commission of excesses so hazardous to themselves, their families, and the community.”
Byron claimed that the machines destroyed the livelihood of the poor, simply in order to make the mill owners more rich.
He was right to spot that new technology often causes distress to those whose practices it makes outdated and unnecessary, but he did not realize that it also creates new jobs, together with increased productivity and wealth. The Industrial Revolution greatly boosted the standard of living of working people, and created the wealth that enabled medical advances and improved sanitation to better their lives. The machines whose destroyers he defended enabled goods to be produced more cheaply, to become more affordable, and to sell in wider markets.
The typewriter greatly reduced the demand for scribes, but it made vastly more new jobs possible. The word processor and the computer also outdated some jobs but created more. People today worry that Artificial Intelligence will make many jobs redundant, which it will, but it will also create new jobs. It will increase productivity and the wealth of society, and will generate new jobs from the augmented spending power it will sustain.
No masked and armed gangs are yet breaking into premises to smash computers like modern age Luddites, but if they did, no doubt some latter-day Byrons would rise up to defend them. And if they did, they would be just as wrong and short-sighted as the original Byron was.
Schrödinger’s Basic Income: What Does the Finnish UBI Experiment Really Show?
The preliminary results of the Finnish Universal Basic Income (UBI) experiment (2017-2018) have been released. So, what does the preliminary evidence from the experiment show? The unwelcome answer is: not much – at least not much that we didn’t already know based on previous studies.
In the famous thought experiment by the physicist Erwin Schrödinger, the cat in the box is simultaneously dead and alive. Similarly, the Finnish UBI experiment is simultaneously a success and a failure, depending on one’s background assumptions and interpretive slant. In behavioural psychology, the concept of “framing” explains how the same situation can be explained in wildly different ways (sometimes even diametrically opposed), depending upon one’s frame.
As an illustration, here are two contrasting headlines about the same experiment:
“Universal income study finds money for nothing won't make us work less.” - New Scientist, February 8, 2019.
“Universal basic income trial in Finland fails to help unemployed people back to work.” – The Independent, February 8, 2019.
Which one is correct? Or are they both right? (Spoiler alert: yes.)
Despite some false reporting in the global media, the Finnish UBI experiment ran its uninterrupted course for the two years (from January 2017 to December 2018) and has now concluded. The primary aim of the Finnish UBI experiment, as stated by the centre-right government, was to test whether UBI could be used to incentivize employment. The target group consisted of 2,000 long-term unemployed people, between the ages of 25 and 58, randomly selected from all over Finland. Participation was compulsory. The target group were given an unconditional monthly payment of €560, no strings attached, with the ability to top up their income from any other sources.
We will have to wait until 2020 for the final report, but the government has released some preliminary results based on a) employment data from the first year of the experiment and b) a phone survey conducted towards the end of the pilot. According to the government’s own report, the preliminary results suggest that “self-perceived wellbeing improved” and “during the first year [there were] no effects on employment.” If we combine these findings with comparable data from studies around the world, it is likely that UBI would not significantly reduce work incentives. Nor would it significantly improve them. The glass is half full and half empty, at least in the short run. The results also suggest UBI is likely to boost psychological wellbeing and health indicators of poor people—but again the size of the effect is subject to uncertainty; and it is unclear whether the boost is permanent.
Furthermore, it is important to realize that the Finnish experiment suffered from several methodological problems from the very beginning:
Observing the long-term effects, both economic and psychological, will take years, even decades.
The experiment excluded various key demographics – e.g. part-time workers, entrepreneurs, young people, and disabled people – who might benefit from the in-built flexibility of the UBI system.
The experiment did not include a regional saturation study, so we cannot say anything about the “network” effect of a whole community being involved with UBI.
The income tax system was not changed to accommodate for the UBI system.
Many UBI-recipients were still eligible to apply for various conditional unemployment and other benefits; and most of them did. This means that most UBI recipients were still subject to similar conditions as the people in the control group (which goes against the notion that UBI automatically liberates people from the constraints of conditional bureaucratic controls).
That’s a lot of problems with the Finnish UBI experiment. But, at least from the narrow perspective of employment prospects and work incentives, and based on all the accumulated evidence, it seems that UBI stands roughly shoulder to shoulder with workfare programs and conditional unemployment benefits – neither better nor worse. Similar results were found in the Canadian and United States experiments half a century ago. And from the point of view of intangible benefits – such as psychological wellbeing, freedom, and dignity – UBI seems to perform better than its competitors. Therefore, given that there is no evidence of a looming incentive catastrophe – such as an epidemic of laziness – it seems to me that the experimental evidence allays many of the common fears about UBI.
However, the current fascination with randomized control trials (RCTs) and evidence-based policy (EBP) is a double-edged sword. Ideally, it can be used to stress test controversial policies. In practice, however, it contributes to a misunderstanding of both politics and science, because it obscures a) the biases and heuristics that drive actual government policy and b) the inherent uncertainty in the scientific data. Furthermore, a small-scale experiment can only give a glimpse of the behavioural responses that can be expected in a wider-scale implementation. An excessive use of experimental data may therefore lend a thin layer of scientific credibility to technocratic policy making – a credibility that it desperately craves but rarely deserves.
It is a little bit ironic that UBI is being tested by such a technocratic tool as an RCT experiment, since UBI supporters often express a healthy scepticism about the capacities of technocratic governance. UBI would constitute a paradigm shift that transfers powers away from the meddlesome, convoluted bureaucracies that characterize the existing benefit system. It could hopefully give poor people an increased sense of freedom, security, and dignity. But UBI is not a perfect system, and it comes with many potential dangers. Firstly, it needs to be set on a sound fiscal footing and constrained by institutional checks and balances. Secondly, it should be implemented as part of a broader range of liberalisation reforms in labour markets, entrepreneurship, and technologies. (For a broader discussion of the design parameters of an ideal UBI system, see my research paper for the Adam Smith Institute.)
Overall, these kinds of experiments are a Rorschach test for the reader: one is liable to see what one wants to see. The lack of an employment effect, for example, can equally be given a positive or negative spin. The power of narrative shapes the political discourse as analysts from all sides are liable to interpret the same incomplete and inchoate data as definitive proof of their own biased predisposition. Drawing overconfident and unwarranted conclusions from the partial and incoherent data makes for exciting headlines for zealous newspaper editors, but it does not constitute good science nor good governance. In order to avoid diluting the scientific value of these experiments, it will be necessary to educate both the public and the politicians about the dangers of over interpreting experimental data; and to show them that the welfare of the poor is not amenable to scientific micromanagement. UBI will not kill us – but technocratic hubris might.
Quite obviously this would happen - it's the customers who benefit, d'ye see?
Much has been made of the manner in which post-Brexit there are going to be all sorts of regulatory barriers to this and that. For The City for example, there would be an inability to sell products and services to people simply because the regulations to allow it don’t exist. There being a certain truth to this, obviously enough, as the regulatory structure has grown up during these decades of EU membership. Thus those regulations rather depend upon that surrounding structure of law and assumptions.
Some have been arguing that this is a sticking point. Woe is us as our largest net export sector is entirely stymied. That was never what was going to happen of course:
Financial markets moved a step away from no-deal chaos on Monday after the UK and US struck deals to preserve crucial clearing activities whatever the outcome of Brexit.
New York and London are the two largest centres for so-called derivatives trading and clearing actions - a major part of the financial ecosystem that allows firms to hedge risk in areas such as interest rates.
The future of international clearing activities was clouded by Brexit uncertainty because permissions from US regulators for the UK were granted due to its EU membership.
The UK will now be covered by agreements for at least three years. These will be activated the moment Brexit happens, safeguarding contracts.
Regulations are strikes of the bureaucrats’ pens. It being possible to tell them to get their pens out and get on with new regulations.
As to why it was obviously going to happen we need to ask ourselves, cui bono? Who is it that benefits from thriving derivatives markets?
Sure, those supplying them make a tidy penny. But the customers must gain greater value than that. These are voluntary transactions after all, those spending their own money must be gaining greater value than they’re shelling out, that’s definitional. So, who is it that is going to be telling those bureaucrats to get their pens out?
The customers, obviously enough. Exactly and precisely what is happening. Those who use, rather than those who provide, those derivatives markets are making it entirely clear that whatever the desires of the British to be subject to Brussels or not they’d like to keep using those derivatives markets. So, the regulations are being adjusted so that they can.
It always having been obvious that this is what would happen too.
Levis and Kelloggs – consumer icons
Levi Strauss and John Harvey Kellogg were both born on February 26th, the former in 1829, and the latter in 1852. Each created and sold a new product, both of which have become part of modern life and are traded worldwide. Each established a brand image that customers associated with quality and reliability.
The creation of both products is steeped in myth and legend, in claim and counter-claim, but some facts are documented. When on 1853 Levi Strauss, originally from Bavaria, opened a San Francisco branch of his brother's New York business, he numbered Jacob Davis among his customers. Davis thought that copper rivets on work pants would reinforce places likely to tear, and suggested a joint business with Strauss. They patented the idea in 1873 and started making the denim pants we now call jeans. A widespread myth is that they first supplied them to the 49-ers gold miners, but their jeans came later.
John Kellogg was the director of the Battle Creek Sanitarium in Battle Creek, Michigan, and an innovator in health advocacy. He sold vegetarian foods, but is best known for the invention of corn flakes. Instead of discarding a batch of dough left overnight, he put it through rollers and unexpectedly made flakes that could be baked. He filed for a patent for the process in 1895. In doing so he created not only corn flakes, but breakfast cereals and the breakfast habit of millions.
The establishment of brands and brand advertising was the market's response to quality control. In the absence of regulation, customers could choose established brand names that had a reputation for quality. They might often be more expensive than their less fastidious competitors, but many customers sought the security of the big names that had a reputation to protect.
Levis and Kelloggs are both worldwide businesses, advertising their quality and trading on their long-established names for top range products. Both firms have responded to changing customer tastes by extending their product ranges to adapt to changing fashions and tastes, but their basic innovation was a new type of product that found favour with the public because it met their needs. This is how the market works; it rewards those who provide goods that customers want and are prepared to pay for. Levi Strauss and John Kellogg did that spectacularly, each introducing a novel product, ones that have lasted. Today, perhaps, as people try to avoid spilling cereal onto their jeans, some will thank the 19th Century entrepreneurs, born on this day, who gave us such consumer icons.
We rather like this idea, it has so many possible uses
As we’ve pointed out before there’s a certain amount of dissembling over homeless numbers in the UK. We have figures of hundreds of thousands bandied about when in fact there're more like 5,000 or so rough sleeping. The hundreds of thousands number is of those protected by our welfare system from that agreed destitution of having to sleep in the streets.
We’ve the latest insistence from the campaigners though:
Councils have been accused of deliberately hiding the scale of the rough sleeping crisis in England by changing the way they compiled figures for the 2018 official count, the Guardian can reveal.
Gosh. That would be bad.
Official government statistics reported a 2% fall in rough sleeping in England in 2018 after seven consecutive years of rises when the figures were released last month. But critics have suggested the percentage decreased after several councils changed their counting method and does not reflect the reality on the streets.
The government has described the claims as “an insult” to the volunteers and charities who help compile the official figures. But back in 2015 the figures were also criticised as low-quality, untrustworthy and vulnerable to political manipulation by the UK Statistics Authority who threatened to remove their official status.
The rough sleeping statistics for England, based on a combination of estimates and spot counts on a single night in autumn, are intended to include everyone about to bed down or already bedded down on the street, in doorways, parks, tents and sheds but not hostels or shelters.
Estimates, akin to a local census, are typically agreed by agencies who work closely with rough sleepers in the area all year round, whereas street counts are one-night snapshots.
Analysis by the Guardian found that more than 30 councils switched from submitting an estimate to a street count from 2017 to 2018, with some councils reporting reductions in rough sleeping of up to 85%.
So the old method of using estimates was criticised as being low quality, untrustworthy and vulnerable to political manipulation. Therefore many moved to the better system of conducting an actual census. It is these new, presumably better, numbers which are being critiqued because. Well, because what? They show the previous level of political manipulation?
We’d not expect homeless charities to underestimate now, would we?
But it’s that basic contention which has so many uses. Ignore reality and instead depend upon our estimates of the problem. Because our estimates are going to be so much more accurate.
You know, the cry of the snake oil salesman down the centuries. Who you gonna believe, me or your lyin’ eyes?
The history and future of fuel taxes
On February 25th 1919, Oregon became the first US state to levy a tax on gasoline. It was 1¢ per American gallon (four fifths of a UK imperial gallon). From there the only way was up, and the current highest state taxes on fuel are Pennsylvania at 58.7¢ per gallon, and California at 55.22¢. The lowest are Alaska at 14.6¢ per gallon, and Missouri at 17.35¢. These figures include excise taxes, environmental fees, storage tank taxes, other fees or taxes, general sales tax. They do not include the federal tax of 18.4¢ per gallon on gasoline, or 24.4¢ on diesel.
When I lived in the US in the mid-70s, my gold Cadillac Sedan de Ville did about 16 miles per gallon, and even less in city driving, but is scarcely mattered since petrol then cost about 70¢ per gallon. Today it's about four times that for premium. The US government has mandated better gas mileages for fleets, but Americans never really liked the compacts that were produced to meet those fleet targets, and turned to SUVs to circumvent the limits.
Fuel taxes are higher in the UK. They started in 1909 with a petrol tax of 3p per gallon "to help pay for roads." The most recent UK figure was of 57.95p per litre, plus a 20% VAT levied on both the actual price of the fuel and on the fuel duty – a tax on a tax. The current cost to motorists is 65.25p per litre for petrol, and 61.55p on diesel. The fuel duty escalator from 1993 adds 3% above the rate of inflation, but it is not applied in every year.
Obviously these fuel taxes are major sources of revenues for the US and UK governments, as they are for most other countries. Given the surge in sales of electric vehicles, encouraged by government subsidies, this revenue will decline as fossil fuels are phased out. Before very long governments will have to cut their spending, or find other ways of making up the shortfall in fuel duties. One option will be to raise the cost of electricity, a policy unlikely to appeal to domestic users of it. Another way might be to load the tax cost onto the vehicles themselves instead of the fuels they use.
I have paid the government nothing in fuel tax for the four years since I started driving a Tesla. On the highway Elon Musk lets me charge up for free at his power points. If many people move in this direction, as is highly likely, it will be good for the environment, of course, but bad for Treasury coffers. No doubt insatiable personnel there are already greedily examining what other taxes they might introduce to replace those on fuels.
We just thought this was rather good, that's all
That a couple of likely lads from Eritrea are bringing electrification to South Sudan strikes us as being a Good Thing. Certainly, it seems to be being done with rather less collateral damage than Lenin’s electrification of the Ukraine. But we’re also drawing attention to how it is technological advance which brings that newfound wealth:
“There has been a boom in solar over the last five years,” says Joyce Nkuyahaga, CEO of the Uganda Solar Energy Association. “At least 500,000 Ugandan households are now connected to solar.” The bulk of the connections come from pay-as-you-go home kits where customers pay around $10 upfront for a small solar panel, a few light bulbs, and a port to charge cellphones. They pay installments of around $10 until they pay off the system, which usually cost between $100 and $200.
It is indeed better to illuminate the night than it is to curse the darkness. Those illuminations meaning that children can do their homework, the charging port that markets can complete with information and thus economies grow.
Usually at this point we make some political or economic assertion. Today rather it’s to stand in awe at what’s happening. We’re in the middle of the greatest reduction in absolute poverty in the history of our species. And it’s exactly the things like this that are causing it. Uganda’s pretty close to where humans actually started, so it’s been inhabited essentially forever as far as we’re concerned. For the first time in all that history people are lighting the night with something other than a burning brand. Worth a moment of gape mouthed admiration at that, no?
Steve Jobs - capitalist innovator
Steve Jobs was born on 24th February 1955. By the time he died, aged 56, in 2011, he had changed the world. He was in many ways a poster boy for the innovative capitalist, introducing new products that displaced established ones and changed the way people behave. He was Schumpeter's "creative destruction" in action. In partnership with Steve Wozniak, he founded and led Apple, a company that became at one stage, the world's most valuable. Jobs himself became one of the world's richest men.
The roll call of Apple products reads like a list of the things that enhanced and enriched people's lives, and made new opportunities possible for them. The 1984 Macintosh featured a graphic user interface and a mouse. I saw one at Cambridge and was captured by its intuitive ease of operation. The 2001 iPod revolutionized the MP3 pocket music player. More significantly, it became a style icon. Apple products were decidedly cool among the young generation.
The 2007 iPhone was a sensation, and was Time Magazine's "invention of the year." It put the smartphone into people's pockets, and made portable computing a mass-market phenomenon. The iPad in 2010 was a product that created a demand not previously there. It put the product out to create its own market. Jobs quoted the hockey player Wayne Gretzky to describe Apple's policy: "I skate to where the puck is going to be, not where it has been."
Some big firms relapse into crony capitalism, lobbying government for favours and relying on legislation to inhibit competitors instead of outperforming them on quality and price. This is not what capitalism should be, or where its benefits lie. Steve Jobs epitomized the role capitalism plays in introducing products that people freely buy because they perceive the benefits to themselves. He was also a globalist, bringing job opportunities that improved the prospects for people in poorer countries.
It helped that Jobs was a charismatic showman. Working with Jonathan Ive as designer, he made products that created a culture people willingly bought into. The smooth, sleek, white products with curved edges were things that people wanted to be seen with. Jobs was a symbol and a spokesman for the role that innovative capitalism can play in making the world a better place. He certainly did.
Venezuela Campaign: Aid helps, but fundamental reform is needed
While most of the West sits around paralysed, debating whether to give any credence to Maduro’s claims that Venezuela does not need aid, people are dying. In Caracas’ only functioning children’s hospital, children are dying every day because the dialysis machines are not working. Other children are dying of malnutrition or are being permanently stunted. Due to a lack of medication, cancer and AIDS patients cannot receive the treatment required to keep them alive.
While aid is desperately needed, it is by no means a long-term or even medium-term solution. Aid is a sticking plaster, and it is wholly inadequate to treat Venezuela’s gaping and festering wounds. A vast quantity of aid is required to feed starving Venezuelans and prop up Venezuela’s collapsed healthcare system. It would be impossible to provide such a large volume of aid for years or even months, even if the Maduro dictatorship was prepared to let it into the country smoothly and not interfere with its distribution. Hospitals and other institutions would require reforms that the dictatorship does not wish to permit.
Venezuela’s humanitarian disaster is wholly man-made: there has been no hurricane, earthquake, flood, drought, or war. The lack of food, medicine, healthcare, and other necessities is solely attributable to the failed socio-economic policies of the Chavista regime.
Venezuela was once the richest country in Latin America. It had a thriving agricultural sector, it was a founding member of OPEC, and it was entirely capable of feeding itself through domestic production supplemented by imports. That status quo was destroyed by the policies of the Chavez and Maduro regimes. The economy outside the oil sector has largely ceased to function. Agricultural production has shrunk catastrophically. The once proud oil sector is in a state of collapse, with production levels near those of the 1940s and rapidly declining. Four policies have been most destructive:
Price controls made it uneconomical to produce goods and services. Prices were arbitrarily set by the regime, with no consideration to the actual costs of production. These controls have forced thousands of companies out of business and crippled most of the remaining ones.
Nationalisation has eroded any sense of business security. By confiscating private property at political whim, nationalisation has discouraged any investment in the Venezuelan economy and promoted short-termism in Venezuelan businesses.
Political cronyism and mismanagement went hand-in-hand with nationalisation. State-owned and nationalised companies were put under the control of party loyalists and military officers with no commercial understanding other than a desire to line their own pockets. This ensured that any nationalised businesses were run into the ground.
Currency controls compromised Venezuelan’s ability to import vital goods and supplies. Restricting access to foreign currency and fixing the rate enabled the regime and its cronies to make a fortune. But it also undermined the entire Venezuelan economy. The suffering is particularly acute in the healthcare sector, which cannot import advanced medicines such as those for cancer and AIDS.
A serious long-term solution to Venezuela’s crisis will begin with a reversal of these four policies. Once price controls are lifted, farmers will resume production and businesses will once more be able to function. Once currency controls and nationalisation are abandoned and judges once again uphold the law impartially, investment will flow again. Aid is needed to alleviate the worst of the existing problems, but only fundamental political, economic, and social change will restore Venezuela to health.
More information on the Venezuela Campaign can be found on their website.