When Sir Winston bowed out

On April 7th, 1955, Sir Winston Churchill resigned as Prime Minister. His second term in office, from 1951-1955, was not as dramatic or as prestigious as his wartime stint from 1940-1945, but it witnessed major and beneficial changes to his country.

In 1950, exhausted by continued deprivation and rationing, the voters had cut the Labour majority of 146 down to 5. Twenty months later when Atlee called a snap election to improve his majority, they returned Churchill’s Conservatives instead, with a majority of 17.

There were many foreign policy issues to contend with, such as the Mau Mau terrorism in Kenya and the Communist insurgency in Malaya. And Churchill was determined to retain and strengthen the US-UK partnership. In 1947 he’d said "let Europe arise" but "we shall allow no wedge to be driven between Britain and the United States". He supported a European unity with the UK and US as friendly sponsors outside it.

On the domestic front his government finally ended rationing and licensing, and the shortages also ended. More of the wartime regulations were removed, including the much-disliked Identity Cards. Perhaps the most remarkable achievement of his administration came in house building. Churchill was pragmatic. The country needed new houses to replace those destroyed in the war, and the Labour government had failed to build enough. Macmillan was appointed to deliver an announced target of building 300,000 houses a year. The target was met a year early.

The economy boomed as exports soared and new factories were built. This led to near full employment, and rising consumer demand. Living standards improved, and people felt better off and put the war behind them. When Churchill’s failing health finally led him to leave office on this day 64 years ago, he could do so confident that his government had done much to “set the people free,” - words from an election speech that still resonates:

“The Socialist planners have miscalculated and mismanaged everything they have touched. By their restrictions they make scarcity; and when scarcity comes they call for more restrictions to cure it. They keep the British bulldog running round after his own tail till he is dizzy and then wonder that he cannot keep the wolf from the door."

Compare and contrast with Freakonomics

The Times tells us that those estate agents which charge a higher commission tend to overvalue properties. This is so as to gain the contract to sell said property of course.

Estate agent chains are overvaluing properties by up to a fifth in a practice that can mislead sellers into paying higher rates of commission, an investigation by The Times has found.

Analysis of more than 200,000 properties listed online reveals that overvaluations are rife, with the biggest agents the worst offenders.

The data suggests that agents with the highest commissions are over-valuing properties the most to attract homeowners. The properties then sell at lower prices, but the agents take big fees. Nearly two thirds of homes listed by Foxtons, the biggest agent in London, have to be reduced from their initial price before they can be sold, almost double the national average. Foxtons charges a commission of 3 per cent, which is more than twice the average.

There’s a certain amusement here as one of the interesting bits in Freakonomics was the research into the principal/agent problem in real estate - to distinguish American from British - markets. The point being that real estate agents seemed to gain higher prices when selling their own properties than they did when acting on commission for more normal sales. The answer being of course that when selling your own property you’ve rather more skin in the game. It’s worth being aggressive with price on the up side at the cost of perhaps a longer time to sell. In a manner that it isn’t when 6% (an American average) in commission doesn’t quite provide.

Here the complaint is that those gaining higher commission rates seem to be more aggressive upon price asked. Which is much the same point, isn’t it? Those with more skin in the game will indeed be more aggressive on price asked than those just looking for a smaller commission slice and thus interested most in the transaction taking place rather than the price at which it does.

Data from surveyors and the independent consultancy TwentyCi shows that on average Foxtons is able to achieve a 6.3 per cent price premium after fees

Whether we believe that or not - come along now, it’s marketing speak after all - it is the correct measure to be thinking about. Does being aggressive in asking price lead to a rise in price received? If so then what is the problem here?

Some old salesmans’ wisdom might aid here, when selling you can always lower your price but you can’t raise it.

No more docker "jobs for life"

On April 6th, 1989, 40 years ago, the Employment Secretary, Norman Fowler, stood up in the House of Commons and announced that the government would introduce a bill to abolish the National Dock Labour Scheme (NDLS) which guaranteed jobs for life for over 9,000 dockworkers.

The National Dock Labour Board, which administered the scheme, had been established by the Atlee government in 1947. The local boards under it were made up of 50% dockworkers and 50% employers of same. Registered dockers laid off by any of the 150 firms bound by the scheme had to be taken on by another or be paid £25,000. The scheme was financed by a levy on employers. The government had promised dockers to introduce it if they ended an earlier strike.

Astonishingly it guaranteed them jobs for life. They could not be sacked, were paid way above the rates for non-scheme dockworkers, and their jobs went to their sons when they retired. Not surprisingly, 42 years later Norman Fowler described the scheme as “a total anachronism.” The 60 ports in the scheme had been losing trade to non-scheme and foreign ports because of the high costs the scheme imposed. Despite the eye-watering generosity of the scheme, its dockworkers were led by militants such as Communist Jack Dash, and were notoriously strike-prone.

Margaret Thatcher had already seen off a challenge from the miners, and the dockers were not confident of success. They went in strike in July, after the NDLS had been abolished, but returned to work in August. The strike was ineffective because the employers were now free to hire casual labour to replace the strikers. Liverpool dockers held out, but 500 of them were simply sacked.

The abolition of the NDLS should perhaps be seen against the background of increased container use, including refrigerated containers, dramatically reducing the dockers’ industrial muscle. The fact that compensation of up to £35,000 was offered to men laid off by the scheme’s abolition probably also weakened their resolve.

The NDLS illustrates the producer capture that takes place in centrally planned and directed industries. The ports were in effect run for the benefit of dockworkers, rather than for their contribution to the economy, and government had both enabled and connived in this. It was indeed an anachronism, but it took a bold government, sure of its authority, to end it.

The difference between legal drugs and legal trade in drugs

We’re really rather firm in our belief that drugs should be legal. Ingesting adults should be able to ingest as they wish - that’s what being consenting and adult means in a free and liberal society. This is also one of those areas where the Good Fight is being won and we are returning to Victorian levels of liberty. However, there’s a great deal more resistance to our second insistence upon the subject, that this must also mean the freedom for people to produce, package and market those very same drugs. As an entirely legal enterprise.

This being a good example of why:

Buying, selling and importing cannabis is against the law in Spain, as is using it in public - although it is technically legal to grow it for personal use, provided it is not publicly visible, and to consume it in private.

We have that private legality, but not that public. The result of which is:Cannabis resin sold on the streets of Madrid is contaminated with dangerous levels of faecal matter, a study says.

Traces of E.coli bacteria and the Aspergillus fungus were found by analysts who examined 90 samples bought in and around the Spanish capital.

The samples of hashish were wrapped up in plastic "acorns" were the worst offenders, reportedly because of the way they are smuggled into the country.

Some 40% of these also had the aroma of faeces, the study's lead author said.

The technical term for such smuggling is in a “charger”. Not something we ever wanted to be reminded of really. But we do think that it’s fairly obvious that there’s a difference there?

Alcohol, for example, another substance that humans like to use to get a buzz, get a little high, this is legal to produce - under regulation, certainly, significantly taxed - and market and distribute. This means that brands arise, the quality and purity of the product being the very thing that contributes to that brand value.

Smirnoff tends not to get stuffed up a colon to get it across a border. The equally legal to consume - but not to produce, market nor distribute - hashish does. Which is a bit of a difference we contend.

And thus we do indeed argue that drug legalisation needs to mean proper and full such. Exactly so that we do have producers competing by reputation and brand for our custom, this being the very thing which drives up standards.

To return to Victorian times for a moment. Such food brands as Heinz and Campbell’s became popular and famous because they mastered the then new art of canning rather better than many rivals. Leading to rather fewer customers being killed by inadequately produced and transported soups. This is a lesson that could usefully be applied to today. The legality of trade in cannabis and other drugs would lead to better transport of them. Lorries perhaps instead of lower bowels.

Thomas Hobbes, first political scientist?

On this day, April 5th, 1588, Thomas Hobbes was born. He was in his 40s when his thoughts turned to political science. He admired the way in which Euclid's geometry started from first principles and reached its conclusions by deductive reasoning. He wondered if the same could be done for politics, and set about writing "Leviathan," his classic of political philosophy. Leviathan, the Hebrew sea-monster from the Book of Job, refers to the huge creature we call the state.

Hobbes wrote his book against the background of the English Civil War, and published it in 1651, when he was 63 years old. Hobbes looked back to a state of nature in which, without government, life was not worth living. It was "solitary, poor, nasty, brutish and short," with everyone against everyone else. To remedy this, people agreed with each other to accept the rule of a sovereign to impose order. Unlike Locke's later version, Hobbes' sovereign did not agree to do anything in return.

Political thought has come a long way since Hobbes. Now we regard government as a two-way process in which rulers and ruled each have their rights and responsibilities. Given the way in which power is abused so often, we seek limitations on that power, and restraints that bring it under the law. Where there is government, though, people will abuse it. They will use it in an attempt to make others live as those using the power think they ought to live, rather than letting them live as they wish to live.

The only was to restrain this process is not, as Plato thought, to make our rulers virtuous but, as Popper thought, to limit what they can do. If constitutional restraints are in place that set limits to authority, and if there are checks and balances to restrain it from infringing the liberties of its subjects, there is a hope that its excesses might be restricted and its ambitions thwarted.

We need to recognize what Hobbes saw, that people seek power over others. He thought the only way to restrain them from abusing others was to put them under a power that would restrain them. In more modern times we seek to put them under laws that will restrain them, and with restraints and limits put upon the power of those who administer and exercise those laws. And we need to prevent Leviathan from growing too mighty.

Time to boogie - English declining as the language of pop

We could mourn the manner in which English is decreasing in importance as the language of pop music. Our gift to the world now declining in importance in a sad reminder of our own relative decline - but we’ll leave that sort of stuff to the worrywarts on the opinion pages. We would rather point to what a glorious event this is:

English losing crown as unofficial language of pop, as streaming sees Asian and Latin American music climb global chart

There are two ways to explain this:

Songs performed in Spanish, Chinese and Korean are enjoying rising success worldwide, an industry report found.

A report from the International Federation Of The Phonographic Industry (IFPI) found that while sales of music in Europe grew a very modest 0.1 per cent in 2018, Latin America grew by 16.8 per cent and Asia and Australasia 11. 7 per cent.

“Some of the fastest growing markets are in Asia and Latin America (South Korea, Brazil), it found, “with Asia becoming the second largest region for physical and digital music combined for the first time”.

It could be that those native speakers of other languages are, for the first time, becoming rich enough to be able to actually spend money on music. That would be cheering, given that we know very well that music is a foundational part of what it is to be human. We really do find flutes and the like from the very dawn of homo sapiens’ existence. The other is, if we prefer to concentrate upon streaming, to note that this new technology now means that the billions can enjoy music. Which is just another way of saying the same thing, that they’re getting richer.

That pop music has been English dominated is the result of an historical coincidence. The technology to have it at any level above the immediately live human performance has only been around some century and a bit. A time when it just happened that the English speaking - with a bit of assistance from other European languages - places were the only ones with the wealth for the technology, the purchases or even the leisure to allow both.

That consumption in other languages is growing strongly tells us that peoples with other native tongues are enjoying that same climb up to leisured wealth that we’ve so enjoyed.

That beat combos are becoming popular while performing in non-English languages is not therefore something to mourn it’s just another symptom of perhaps the greatest event in human economic history. The poor are getting rich. Isn’t that something to sing and dance about?

The North Atlantic Treaty reaches 70

NATO, the North Atlantic Treaty Organization, is 70 years old today. On April 4th, 1949, 12 countries signed the treaty that bound them together in a military defence pact. In addition to the countries of the Western Union – the UK, France, Belgium, Netherlands and Luxembourg – the other signatories were the United States, Canada, Portugal, Italy, Norway, Denmark and Iceland.

The collective defence of the alliance is embodied in Article 5, which states that an armed attack against one member state, in Europe or North America, shall be considered as an armed attack against them all. If one member is attacked, the others will respond. The backdrop to the treaty was the aggressive and expansionist policy of Stalin's Soviet Union. It had incorporated territory and countries of Eastern Europe, reducing them from independent countries to vassal states. Its huge military power could only be checked by an equal or superior power. NATO was the West's embodiment of that power.

The Soviet response to NATO was to formalize the military allegiance of their satellite countries into the Warsaw Pact in 1955, setting the two Cold War alliances to face each other. What some have called 'the Nuclear Peace" kept the Cold War from breaking out into open conflict. The Soviet Union could not move against the Western nations while they were protected under the American nuclear umbrella. NATO did its job, and kept the West protected until the Berlin Wall fell in 1989, and the Soviet system collapsed, along with the Communist governments it had sustained.

NATO has grown to 29 countries, with most of the former Communist countries joining it to gain protection from future Russian vengeance or encroachment. At the time of the Soviet collapse, the European countries between them contributed 34% of NATO's military spending, but by 2012 it had dropped to 21%, and there were rumblings elsewhere that Europe was not bearing its fair share of the cost. Members have responded by committing to reach 2% of their GDP on military spending by 2024.

The decision of the Western nations, 70 years ago, to stand united against Soviet military power and to do together what they could not do singly, calls to mind the words that Edmund Burke wrote in 1770: "When bad men combine, the good must associate; else they will fall, one by one, an unpitied sacrifice in a contemptible struggle." NATO was just such an association. It enabled the countries of Western Europe to live in peace and freedom, and its anniversary should be celebrated by all those committed to the achievement of those goals.

Sure, air pollution's a problem. So, what should we do about it?

A report telling us that large areas of the world suffer from air pollution. The thing being, well, what should we do about this?

The life expectancy of children born today will be shortened by 20 months on average by breathing the toxic air that is widespread across the globe, with the greatest toll in south Asia, according to a major study.

Air pollution contributed to nearly one in every 10 deaths in 2017, making it a bigger killer than malaria and road accidents and comparable to smoking, according to the State of Global Air (SOGA) 2019 study published on Wednesday.

Perhaps the first thing is to understand what the report is actually telling us.

For example, the highest exposure over a large area to the PMI stuff - the little bits that get stuck in the lungs - is in and around the Sahara. As the report notes - give them credit - this is sand and there’s not a great deal that can really be done about that.

More generally it ‘s the indoor use of solid cooking fuels (this is what they measure, agreeing that solid fuel heating will increase the damage) which produces great exposure for near half the world’s population. Next up is the clouds and smogs of an industrial revolution under way. The rich countries have, obviously enough, pollution problems but they’re of a different and lesser kind.

That is, we’ve the environmental Kuznets Curve here. Pollution changes as development occurs. That internal to the home decreases first even as the factories start to belch. Once interesting amounts of income are being widely shared - for which they’ve got to be created first - then pollution declines, significantly. London’s economy is, after all, far larger than it was in 1955 and we’ve not had a killer smog since.

The report itself is here. The correct takeaway being that economic development cleans up the air, as it cleans up so many other things.

So, what do we do? We argue for more hell for leather economic development so that the currently poor places can quickly reach that same clean and pure air (if you prefer, cleaner and purer) we in the already rich places enjoy. Yea, even though there is that bolus of industrial pollution during the process this is more than offset by the reduction in domestic at the same time.

Doctors still don’t understand tobacco harm reduction

Doctors and pharmacists appear to be giving ill-informed advice about reduced risk tobacco products, undermining public health efforts towards smoking cessation.

A new survey has revealed a serious lack of knowledge among healthcare professionals about e-cigarettes or heated tobacco products - making life harder for people who want to quit smoking.

International market research firm, ResearchNow, polled 500 UK GPs and pharmacists. They found that only 29% believe that e-cigarettes are very effective at helping a smoker to quit smoking. This is despite a substantial and growing body of evidence showing this to be the case (including a recent randomized control trial showing that they’re nearly twice as effective as nicotine replacement therapy).

Just 7% of healthcare professionals are aware of Public Health England’s February 2018 statement that e-cigarettes are at least 95% less harmful than normal cigarettes. Few are very familiar with NICE guidelines on smoking harm reduction, which are broadly positive towards e-cigarettes as a component of smoking cessation services. And most don’t even know that heat-not-burn tobacco products exist—nor are they aware of the emerging evidence of their relatively lower risk compared to cigarettes. Unsurprisingly, this means that the majority are unlikely to recommend them to patients who are looking to quit smoking.

This is likely linked to misconceptions about the harm caused by nicotine. Dr Roger Henderson put it best when he explained that “it may be nicotine that makes it hard for smokers to quit, but it is smoke and tar that puts them in the ground.”

Previous research has demonstrated widespread ignorance among healthcare professionals about the relative risk of nicotine compared to other constituents of cigarette smoke, and this new evidence is just as concerning: 34% of GPs and 25% of pharmacists surveyed believe that nicotine is very likely to contribute to the development of smoking-related diseases.

To their credit, our public health authorities have broadly accepted the case for liberal harm reduction policies for tobacco. But the message still hasn’t got through to healthcare professionals on the frontline, who are an important source of information for many people looking to quit smoking. Every effort should be made to provide GPs and pharmacists with accurate information on this new wave of smoking cessation technology. Leaving the EU could give us greater scope to reform advertising laws, spreading this information to even more smokers.

In the meantime, if you know someone who works in smoking cessation, link them to Public Health England’s evidence summary and the latest NICE guidelines. You might just save a life. And what’s more, you’d be doing so in a way that embraces liberalism and the fruits of free market innovation!

Beginning the Marshall Plan

The postwar Marshall Plan, aimed at helping Europe’s war-shattered economies to recover, ran for four years from April 3rd, 1948. Generous as it was of the US to give away $12bn, part of the motivation behind it was to prevent the spread of communism. It was not just money, but the dropping of barriers to trade and the ending of damaging and unnecessary regulations.

Some have claimed it as the basis of the German economic recovery, but the statistics don’t support this. The UK received about 26% of the total, and France 18%, compared to West Germany’s 11%. Yet neither the UK or France recovered as fast or as far as Germany did. Furthermore, it accounted for only 3% of the combined national income of the recipient countries (1948-1951), meaning it increased their GDP by only 0.3%. It was Ludwig Erhard’s “bonfire of restrictions” that gave birth to the German Economic Miracle.

The Soviet Union not only declined to participate, but prevented its satellites such as Poland and Hungary from receiving any of its largesse. It formed its own Molotov Plan, which later merged into Comecon. It also exacted huge reparations from countries that had sided with the Axis powers. Stalin took the view that the plan was American imperialism, designed to make the European countries economically dependent on America.

The Marshall Plan was immensely generous of the US, representing about $100bn at today’s values. It was not without its critics, however, with some saying that it encouraged countries to keep going with outdated and failing industries. They did this largely for political, rather than economic, reasons. Giant industries such as coal and steel constituted powerful constituencies, and it is claimed by some that Marshall Plan money enabled governments to keep open some plants that should have been replaced by more modern ones.

These seem to be minority views, with the general consensus being that the Marshall Plan helped, but played a less significant role than did the Erhard reforms in Germany, and similar economic liberalization in other countries. There is a similar discussion today about the role played by development aid in helping to boost the economy of poorer countries. Some say it helps, but others instead urge poorer countries to cut tariffs and regulations, and liberalize their economies, while we should open our markets more to their produce.