A certain failure to grasp the basics here
That there is a long line of people desirous of social rentals is taken to be evidence that there’s a shortage of social rentals. Demand far outstrips supply that is. Well, yes, but that is to miss that very basic point about the trifecta of demand, supply and price. Of course there are many people desirous of something at half market price:
Yet, according to housing charity Shelter, there are there are more than 1.1 million households on social housing waiting lists in England. Fewer than 273,000 homes at social rents, which are typically half of market rents, were made available in 2017/18 – a difference of more than 840,000 homes.
That market rent is the price of providing that housing. Including opportunity costs of course and if we’re not going to consider opportunity costs then whatever it is we’re doing it’s not economics. Provision of anything at half that market price will create queues. That’s just how those supply and demand curves work, price being the variable here they’ll meet. Move the price and they’ll not meet - there will be queues either side. Raise it and properties will wait for tenants, reduce it and tenants for properties.
This is not some neoliberalism, a result of neoclassical or even classical economics. There is no heterodox deus ex machina to get us out of this corner. This is just reality.
The question being what do we do about it? We’d all, quite obviously, prefer that the poor be well housed, none are into the idea of recreating Victorian or even Georgian rookeries.
So, yes, build more housing so as to increase the supply and thus reduce prices. As we’ve been saying for decades, issue more planning permissions so that the supply increases.
Which leaves only the social or market provision? There being only one of the two which does indeed aid us in taking account of those opportunity costs. Below market rents - whatever that level of market rent - come with said opportunity costs. Exactly and precisely the amount by which they are below market. We are adamant that such costs - subsidies to the poor if you wish - be openly visible in our taxation, expenditure and national accounting systems. Quite apart from anything else we need to be able to see it so that we can work out how well or how much we’re raising the living standards of those poor so we can decide to do more, less, the same.
So, market provision of houses. Many, many, more houses. With housing benefit being used for those who cannot take the strain even of the more reasonable rents brought about by greater supply. That is, don’t bury the reduction in inequality in the unrecorded opportunity costs of social housing but make it all open and explicit in the HB bill.
In the meantime, just marvel and wonder at that discovery by Shelter. Something on offer at half market price has a long queue to gain access to it. Well, yes?
Returning to currencies with hard anchors?
After years of discretionary management of monetary policy by the Federal Reserve, there is a strong case for re-fixing our fiat currency system to a hard anchor. Though the dollar was far more stable under the gold and gold exchange standard era than after it’s delinking from gold in 1971, those systems came with significant weaknesses that contributed to their ultimate abandonment. To avoid these, three key elements of the Fed’s operation should be modified. These are: 1. The monetary policy rules determining how currency fixed to a hard anchor is issued and redeemed; 2. The monetary anchor itself; and 3. What the currency is issued or redeemed for.
Monetary Policy
Because of loose adherence to strict gold standard rules, the U.S. no longer had enough gold to honour its redemption commitment by the 1960s. On Aug 15, 1971, Nixon ended the U.S. commitment to buy and sell gold at its official price and in 1974, President Ford abolished controls on and freed the price of gold, which rose to a high of $2,128 in February 1980 before falling back to $1,293 on March 29, 2019.
Under a strict gold standard, the central bank would issue and redeem its currency whenever anyone bought it for gold at the official price of gold. In fact, however, by actively buying and selling (or lending) its currency for other assets whenever it thought appropriate, the Fed’s monetary liabilities (base money) were partially backed by U.S. Treasury bills and other assets. In addition, the fractional reserve banking system allowed banks to create deposit money, which was also not backed by gold. The market’s ability to redeem dollars for gold kept the market value of gold close to its official dollar value. However, the gap between the Fed’s monetary liabilities and its gold backing grew until the market lost confidence in the Fed’s ability to honour its redemption commitment and President Nixon closed the “gold window” in 1971 rather than tighten monetary policy.
A reformed monetary system should require the Fed to adhere strictly to currency board rules. Such rules oblige a central bank to buy and sell its currency at a set price in response to public demand. Under the Gold Standard, the price of the currency was set as an amount of gold (a gold anchor). For existing currency boards, the price is typically an amount of another currency or basket of currencies. The Fed would provide the amount of dollars demanded by the market by passively buying and selling them at the dollar’s officially fixed price for its anchor. All traditional open market operations by the Fed in the forms of active purchases and sales of T-bills or other assets or lending to banks would be forbidden.
The Anchor
Another weakness of the gold standard was that the price of the anchor, based on one single commodity, varied relative to other goods, services and wages. While the purchasing power of the gold dollar was relatively stable over long periods of time, gold did not prove a stable anchor over shorter periods relevant for investment.
Expanding the anchor from one commodity to a basket of 10 to 30 with greater collective stability relative to the goods and services people actually buy (e.g. the CPI index), would reduce this volatility. The basket would consist of fixed amounts of each of these commodities and their collective market value would define the value of one dollar. There have been similar proposals in the past, but the high transaction and storage costs of dealing with all of the goods in the valuation basket doomed them. However, with indirect redeemability discussed next, the valuation basket would not suffer from this problem.
Indirect redeemability
Historically, gold and silver standards obliged the monetary authority to buy and sell its currency for actual gold or silver. If the dollar price of gold in the market were higher than its official price, people would buy gold at the central bank increasing its market supply and reducing the money supply until the market price came down again. These precious metals had to be stored and guarded at considerable cost. More importantly, taking large amounts of gold and silver off the market distorted their price by creating an artificial demand for them. A new gold standard would see the relative price of gold rising over time due to the increasing cost of discovery and extraction. The fixed dollar price of gold means that the dollar prices of everything else would fall (deflation). While the predictability of the value of money is one of its most important qualities, the stability of its value, such as approximately zero inflation, is also desirable.
Indirect redeemability eliminates these shortcomings of the traditional gold standard. Indirect redeemability means that currency is issued or redeemed for assets of equal market value rather than the actual anchor commodities. Market actors will still have an arbitrage profit incentive to keep the supply of money appropriate for its official value. As the economy grows and the demand for money increases, this mechanism would increase the money supply as people sell their T-bills to the Fed for additional dollars at its official price.
Towards a global anchor
The United States could easily amend its monetary policy to incorporate the above features – a government defined value of the dollar as called for in Article 1 Section 8 of the U.S. Constitution and a market determined supply. The Federal Reserve would be restricted by law to passive currency board rules. Additional financial sector stability would be achieved by also adopting the Chicago Plan of 100% reserve requirements against demand deposits.
The gold standard was an international system for regulating the supply of money and thus prices in each country and between countries and provided a single world currency (via fixed exchange rates). Balance of trade and payments between countries was maintained (when central bank’s played by the rules) because deficit countries lost money (gold) to surplus countries, reducing prices in the former and increasing them in the latter. This led to a flourishing of trade between countries. This was a highly desirable feature for liberal market economies.
The United States could adopt the hard anchor currency board system described above on its own and others might follow by fixing their currencies to the dollar as in the past. The amendments to the historic gold standard system proposed above would significantly tighten the rules under which it would operate and strengthen the prospects of its survival.
However, there would be significant benefits to developing such a standard internationally as outlined in my Real SDR Currency Board proposal. One way or the other, replacing the widely fluctuating exchange rates between the dollar and other currencies would be a significant boon to world trade and world prosperity. Replacing the U.S. dollar as the world’s reserve currency with an international unit would have additional benefits for the smooth functioning of the global trading and payments system. Embedding the system in the governance structures that already exist in the IMF's Articles of Agreement would elevate monetary policy rules to the constitutional level recommended by James Buchanan.
Warren Coats retired from the IMF after 26 years service in May 2003 to join the Board of Directors of the Cayman Islands Monetary Authority. He was chief of the SDR division in the Finance Department of the IMF from 1982–88 and a visiting economist to the Board of Governors of the Federal Reserve in 1979. His latest book is One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina, which chronicles his work in establishing the CBBH, a currency board, in 1997. He has a PhD in economics from the University of Chicago.
DNA is finally sequenced
On April 14th, 2003, a hugely ambitious project announced a successful conclusion as the human genome was finally sequenced. It was the world’s largest collaborative biological project, involving thousands of people at 20 universities and research centres in the US, UK, Japan, France, Germany and China, and costing billions of dollars. It was formally launched in 1990 with funding from the US National Institute of Heath and various charities and other groups around the world.
Its goal was to determine the sequence of nucleotide base pairs that make up human DNA, and of identifying and mapping all of the genes of the human genome. It was necessarily a massive project because the human genome has approximately 3.3 billion base pairs. A similar, privately funded effort was launched by Craig Venter at Celera Genomics, and there were fears that he might try to patent the information if he succeeded. However, President Clinton announced that this would not be permitted, and in the event Venter made public his information.
The sequencing of DNA offers the prospect of understanding and treating the causes of diseases, but it raises the possibility of uses in a range of other fields, including forensic applied sciences, biofuels, agriculture, and animal husbandry, among others. It also raises ethical, legal and social concerns if information about the DNA of individuals becomes publicly available. One fear is that employers and insurers might refuse to deal with people if health concerns are indicted by their DNA.
The movie “Gattaca” was set in a future world where the top slots, including space travel, were reserved for only those with superior DNA. The US Health Insurance Portability and Accountability Act protects against the unauthorized release without consent of individually identifiable health information to any group not actively engaged in the provision of healthcare services to a patient.
I was one of the early customers of 23andMe eleven years ago, when I had parts of my genome mapped. This uses genotyping rather than sequencing, but can provide useful information about the proportion of certain genotypes that are associated with different conditions, including illnesses. Three weeks ago I finally had my own DNA fully sequenced, all 3.3bn base pairs. The Human Genome Project, completed on this day in 2003, after 13 years of work by thousands of people, cost $2,7 billion. I had mine done at a much more affordable price. It has taken a mere 16 years for a miracle to become commonplace.
This seems perfectly acceptable to us too
This is about American practices but still:
When my kids started pre-kindergarten in New York last year, the school issued parents with a long list of items to buy and bring in. This was not, as in state school in Britain, a list of uniform and PE kit requirements but rather necessities including paper towels, glue sticks, a year’s supply of paper plates and plastic cutlery, cups, napkins, board markers, crayons and packing tape. Classroom supplies, in other words.
These donations were discretionary; no one was going to yell at you if you didn’t bring them in. And in the sheer volume of stuff being asked of each parent – for two kids in separate classes, it was way too much to be carried in on a single trip – the tacit understanding was that those who could afford it were providing for those who could not.
This seemed to me right and reasonable at the time. The New York education system is as cash-strapped as any and, at least in the small scale, asking affluent parents to help out makes sense.
Think of what the alternative is. A higher education budget. Which will be financed by the progressive system of taxation in use. Which would mean those who can afford it providing for those who cannot. Unless it’s all more moral if the money is collected a gunpoint - the ultimate force behind any system of taxation rather than donation - we don’t see a particular difference.
Except, of course, that this way the educational bureaucracy doesn’t get a slice of the budget. Perhaps it’s that which makes the direct donation something to abhor?
Thomas Jefferson and liberty
Thomas Jefferson was born in 1743 on April 13th, a date that also saw the dedication of the Jefferson Memorial in 1943, 200 years later. He was the chief author of America’s Declaration of Independence, and served as his country’s third President. As President, he doubled the size of America by the Louisiana Purchase from Napoleon, which added over 825,000 square miles at a cost of $15 million.
Jefferson was a remarkable and versatile man, a planter, a lawyer and a statesman. He was also an architect, an archeologist and an inventor. Monticello, his home, has many of his inventions, including the swivel chair he invented, a revolving bookstand, and a great clock with heavy cannon balls as pulleys.
His philosophy was based on liberty, which he took to mean a God-given right to do what you wanted provided it did not stop others doing likewise. He wrote, “I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” He was proud of the law for religious freedom that he drafted as a Virginia legislator.
Paradoxically, while writing that “all men are created equal,” he was a slave-owner. He inherited about 175 saves, but owned about 600 over the course of his life, most born on his plantations. He is reckoned to have treated them benignly, and he did campaign unsuccessfully for the abolition of slavery. As President, he signed the Act Prohibiting Importation of Slaves in 1807. But he thought that to push too hard for abolition might break up the Union. In his “Notes on the State of Virginia,” he called slavery a moral evil, and later wrote, “Indeed I tremble for my country when I reflect that God is just.”
More controversy surrounds the fact that after his wife died, he fathered children with his slave, Sally Hemmings. Although his supporters have denied this, in recent times DNA tests on their descendants have established an unmistakable link to him. The Thomas Jefferson Foundation accepted Jefferson's paternity in a 2000 report, and his black descendants are now welcomed at family gatherings at Monticello.
Despite these inconsistencies, common in his day, he is rightly regarded as one of the great architects of liberty, and is honoured on Mount Rushmore, as well as in his memorial in DC.
The effects of Big Tech on competition
As we can observe - and it’s not just Elizabeth Warren making stuff up over in the US to give her an election campaign issue - there’s an awful lot of concern about the monopolistic effects of Big Tech out there. Regulate, break up, above all proffer more power to the bureaucracy than to those private market actors.
At which point we can try to consider the actual effects of Big Tech on the only human economic unit of any importance, the household. Has the irruption of online into the marketplace increased or reduced competition? For, sure, we can observe large companies out there and assume we’ve greater market concentration. But does that hold at that household level?
One cute possibility is to look at the UK supermarket industry. Over the years we’ve had several investigations into whether the big supermarkets had carved up the country between them. There was certainly some evidence of oligopoly - British supermarket margins were globally regarded as immense at some 6 and 7%. From one of those reports:
In rural areas, 71 per cent of the population has access to at least one grocery store larger than 1,400 sq metres within a 15-minute drive-time (see Figure 3.10), and 13 per cent of the population has a choice of at least four stores of different fascia larger than 1,400 sq metres within a 15-minute drive-time.
This indicates that a large proportion of the urban and rural population in the UK is able to choose between at least two larger grocery stores within a reasonable drivetime. Nevertheless, these national-level figures will mask substantial regional variations. In Section 6, we assess the extent to which local markets for grocery retailing are highly concentrated. We also take the extent of store choice into account when assessing the overall effectiveness of competition in grocery retailing in Section 10.
That report is from 2008. Something a little more recent, 2016:
With the introduction of online grocery shopping, home delivery and click and collect in the nineties, the market was initially made up of the four major players on the British grocery scene: Sainsbury's, Asda, Morrisons and Tesco. Since then, online grocery sales have skyrocketed, with the United Kingdom forecasted to become the second largest online grocery market worldwide after China by 2020. With the introduction of new players, such as purely online retailers Ocado and AmazonFresh, the online grocery market share has changed with Tesco, Asda and Ocado the leading online grocery retailers in terms of edible grocery sales.
Quite how many full service supermarkets are now available will be variable. One of those doing those deliveries might well be the same organisation which owns the locally accessible bricks and mortar store. But a reasonable rule of thumb would be that every household in the country, down to and including the most isolated rural hamlet, now has at least four supermarkets literally on the doorstep via those delivery vans.
Four being an important number as it was the number the Competition Commission used to indicate that obviously, clearly, there’s no competition problem here if that many choices exist.
We can also look at other indicators - anyone pondering supermarket share prices will know that retail margins have collapsed in the past couple of decades.
Again, sure, Amazon’s a big company. But it’s not obvious that it has led to increased concentration, less competition, in the retail market now, is it? So, our justification in trying to regulate it is what? Other than just that taste to find a justification for more regulation and plum jobs as regulators?
As to the larger picture, just another proof of the contention that every monopoly or oligopoly eventually - eventually being a variable amount of time - will be destroyed by advancing and changing technology. It’ll happen to all those we currently worry about, as it has happened to all those we used to.
Man in space
It was on April 12th, 1961, that Yuri Gagarin became the first man to orbit the Earth. Sergei Korolev designed and built the Vostok spacecraft that launched Gagarin on his single-orbit mission. Only 58 years had passed since Wilbur and Orville Wright achieved the first powered heavier than air flight over a distance that is shorter than the wingspan of a 747. A mere 66 years after that first flight, men put their footprints on the moon, this time in a Saturn V rocket designed by Wernher von Braun.
It provides a telling illustration of the rapidly-accelerating pace of change. Since the Renaissance we have been climbing the rapidly-rising curve of a hockey stick graph. Before that time, men and women lived pretty much as their grandparents had lived, in a world that stayed familiar. Since then this has not been true. We have lived in a world in which constant change has been the norm, the world of Heraclitus in which it is a new river into which we step for the second time.
We cannot predict the future with any accuracy because, as Popper pointed out, the future state of society depends on the knowledge available to it. We cannot predict future knowledge without knowing it now, and thus cannot predict society’s future. We do know, however, that it will depend on the technology that we and our successors develop.
We are witnessing a series of revolutions, each of which will have transformational effects. Three significant ones are being developed simultaneously. Autonomous vehicles, genetic modification and artificial intelligence are all game-changers, and they are arriving together.
The economic consequence of this accelerating pace of progress are immense, in medicine, agriculture, transport, communication and computing. We do not know what jobs there will be for the next generation, but we know they will be different ones. Gagarin’s flight was a breakthrough, but breakthroughs now happen almost daily. He and Korolev died within a couple of years of each other, and the houses they lived in, side by side at Baikonur, are now preserved as museum pieces. I saw them when I witnessed a couple of Soyuz launches close up. We can be reasonably sure that what we regard as today’s marvels will themselves be museum pieces in a much shorter time.
The correct question in the modern world is "Are we being cynical enough?"
Paranoia definitely exists and so too is it true that sometimes they really are out to get you.
Of course, why shouldn’t the State have a duty to ensure that all children are educated? But there’s also that possibility that those doing the educating will have more than just the 3 Rs in mind when they define what is an education. Possibly - and we mention this only as a bat’s squeak of a maybe - there is a thought that propagandising to the young will force them into growing up with certain viewpoints. Say, that the radical transformation of society is necessary to stop climate change. Or that absolutely everything must be recycled in violation of any commonsense rules.
Thus there would be an insistence that certain parts of said education must be enforced, so as to make sure the entire rising generation was exposed to such indoctrination:
Children taught at home will be placed on a register and monitored for the first time amid fears that thousands are being educated at illegal schools, Damian Hinds has announced.
The Education Secretary has warned that while many home-schooled children benefit from parental supervision, others are being exposed to “dangerous influences” at unregistered centres or not “getting an education at all”.
Define “dangerous influence”. Which disagreement with the ruling educational orthodoxy would qualify? Harming Gaia? Religious extremism? Rote learning of the times table?
The Education Secretary has said that parents cannot veto children taking part in LGBT lessons, as he warns that “myths” are being spread about the content of the classes.
If you were to want to use the education system to create New British Man then this is how you would do it. Insist that no one should be outside that approved, regulated and mandated system. And refuse to allow any opting out from any particular part of that approved, regulated and mandated system.
Of course, that’s to be excessively cynical, there’s just no way that we British would ever move to such a system. Except, well, there is that basic rule of modern life, are we being cynical enough when contemplating the actions of our rulers?
Free speech is more than just a laughing matter
Free speech is under attack in Britain. The police are knocking on doors to tell people off for ‘offensive’ tweets. The Government is proposing a new regulator of online speech. Universities are no-platforming speakers that don’t chime with student unions’ narratives. Places of work are forcing employees to sign contracts that ban certain phrases and words.
This culture of censorship has even reached the industry designed to push the limits of acceptability: comedy. At a comedy night you may be picked out of the crowd and receive a joke at your expense, or you might be offended by one that touches a personal weak spot. But in the end, it’s all in the name of having a good laugh. Comedy is supposed to be judged based on whether it is funny, not based on who it is offending.
This principle, however, is under dire threat from a new movement of ‘woke’ comedy. Woke comedians want to purge all potentially offensive material from comedians’ content. Boundaries cannot be pushed. And why would they? What comedian would risk the collapse of their entire career as a result of one offensive joke?
In February, the ASI hosted comedian and social commentator Andrew Doyle, who spoke out against this new culture. As a comedian, you learn quickly if a joke has gone too far. You will deliver the joke you have been practising and rehearsing in your set and if it doesn’t go down well, no one will laugh, people will look uncomfortable and you will learn not to say it again. Comedians are there to make people laugh. If that isn’t happening, they’re going to change their material. As such, material is designed to please the audience.
Andrew spoke about Comedy Unleashed - London’s Free-thinking Standup Comedy Club, explaining the ethos that:
“If something is funny, it’s funny. We shouldn’t be afraid of exploring prejudices, contrarian views and hidden thoughts. If someone is gratuitous or nasty, people won’t be amused. The audience is the ultimate judge.”
This resonated with me and the other young politicos in the room. Comedy is becoming predictable and stale. The same jokes are made over and over about what happened on a flight to Malia. Andrew spoke of something new, something fresh. Something that was so compelling, I left and immediately purchased a ticket for the next show.
I did not know what to expect when I travelled to the Backyard Comedy Club in Bethnal Green. I had been so brainwashed at university into thinking free speech was dangerous and something you needed to be protected from, that I was anxious at the thought of sitting there for hours of being offended. I went to the bar, bought a pint, took my seat in the second row, and waited for the show to start.
All of my worries disappeared within a few minutes of the host taking the stage. I have never laughed so much in my life.
Was some of the material controversial? Yes. Was it funny? Absolutely.
Afterwards I talked to Andy Shaw, a founder of Comedy Unleashed to find out more about what drove them to create a ‘safe space’ for comedians. Andy grew up with rebellious free-thinking comedians like Spike Milligan, Monty Python, Dawn French, and now he’s watching comedy start to die.
It started with a gig on the eve of the general election which brought together politicos from across the political spectrum. People who were intellectually curious, who didn’t see comedy as a vehicle for moral education. From speaking to Andy, one point that really stuck with me was that comedy is about exploring ideas, creating characterisations and thinking freely. It can be absurd and childish, as there is something naturally liberating about comedy.
Comedy had started to be seen as a negative experience, which is why Andy Shaw and Andrew Doyle decided to set up a club based on free thinking, expression and free speech. There is no need for self-censorship at Comedy Unleashed.
I asked Andy if he had one take home message to give to people who’ve never been to one of the events, but were considering it, he said: “If it’s funny, it’s funny. Every night is unpredictable, I don’t even know what’s going to happen anymore, and I organise it. It’s free expression, and that’s why we love it.”
“The growing culture of censorship is a danger to a free and liberal society. In recent weeks we’ve seen the cancellation of a free speech society event at Bristol University and Jordan Peterson’s fellowship at Cambridge University cancelled,” the ASI’s Matthew Lesh explains. “Freedom of speech is core to our humanity, to our capacity to think what we want and hear what we want. It’s through the process of debate, hearing a wide diversity of ideas, that we are able to separate good ideas from bad ones in the eternal human mission towards progress.”
Comedy Unleashed offers a new opportunity to spark debate, to question people on the material they say, and in this intense political PC climate, it gives people a chance to speak, without the fear of being locked up simply for a retweet.
World Parkinson's Day
James Parkinson, the English doctor who identified the condition is his 1817 paper, "An Essay on the Shaking Palsy," was born on April 11th, 1755. His birthday has been chosen to mark World Parkinson's Day, when efforts are made to publicize the disease, and to raise support for research into its treatment and eventual cure. A red tulip symbolizes the awareness and the efforts
Parkinson's is a long-term degenerative disorder of the central nervous system that mainly affects the motor system. Its early symptoms include shaking, rigidity, slowness of movement, and difficulty with walking. It leads to dementia in its advanced stages. The disease involves the death of cells in the substantia nigra part of the brain, with an insufficiency of dopamine.
It affects about 145,000 in the UK (1 in 350 adults), and 6.2m worldwide, with 117,400 deaths globally. While there is no cure yet, it can be treated with levodopa (L-dopa) in its early stages. Research is investigating gene therapy, possible vaccines to prime the immune system against it, and cell-based therapies using stem cells.
Celebrity sufferers include the actor, Michael J Fox, and have included Muhammad Ali, the boxer, and Jeremy Thorpe, the politician. They have helped to publicize the condition and the work being done on it. It will undoubtedly be cured some day, given the effort and resources going into it. Humanity's ancient enemy, smallpox, was killed. Polio is on the point of extinction, and we have the means to conquer tuberculosis. Malaria, too, will be wiped out.
All of these successes and impending successes illustrate the dictum that if humanity wants something badly enough and are prepared to commit the resources to it, they will get it. This is not blind optimism, but simply reality. It is what happens. Whether it is to put men on the moon or to eradicate smallpox, it is that combination of determination plus resources that achieves the result. It will be true of Parkinson's and other forms of dementia, and of other diseases that blight and stunt human lives.
The doomsayers who trade on predicting bleak and destructive futures for humankind, and who sell millions of books to an avid public, miss out on the determination, resourcefulness and creativity that humans bring to bear on their problems. We solve our problems, and Parkinson's is one of them.