Numbers are important but concepts even more so
One of the trailing - but imminently to break through! - Democratic runners over in the US is Andrew Yang. He’s arguing in favour of a universal basic income over there. Our own views on such differ among us with at least one of us simply arguing that it would be better than the current disincentives of the extant welfare state.
Yang’s shtick is that he can do math and that this is important. Which, of course, it is. But getting underlying concepts right before doing the sums also matter, which is where there’s a bit of a failure.
A Value-Added Tax (VAT) is a tax on the production of goods or services a business produces. It is a fair tax and it makes it much harder for large corporations, who are experts at hiding profits and income, to avoid paying their fair share. A VAT is nothing new. 160 out of 193 countries in the world already have a Value-Added Tax or something similar, including all of Europe which has an average VAT of 20 percent.
It’s true that the great difference between the US Federal tax system and those across Europe is the absence of a VAT. Also that anyone desirous of increasing the size of that Fed stuff to European levels will have to have a VAT or equivalent. It’s not possible to tax the rich enough to pay for such an expansion.
And yet, VAT is not a tax upon production. Sure, it’s producers who collect it but that’s not where the incidence is at all. As every economic textbook will tell you it’s a consumption tax. The people actually paying it are consumers. Us that is.
It might well be true that a UBI is the way to go and the numbers don’t look all that off. But concepts matter too - it’ll be US consumers paying the VAT to fund the UBI. Best to tell them that, eh?
Venezuela Campaign: Chavez versus the workers
The contempt of Chavez and his followers for the organised working class can be seen clearly in the fate of Ciudad Guyana, Venezuela’s industrial heartland. A hub of giant steel mills, coal and bauxite mines, iron smelters and aluminium plants, this is where the bulk of Venezuela’s heavy industry was built. This city is home to a million people, and was once Venezuela’s best hope of escaping its dependence on oil exports.
Instead, Chavez nationalised factories not already under state control, installing inexperienced political acolytes as managers who were only interested in ideological conformity.
Ideological schools were set up in factories, investment halted, maintenance was forgotten, and markets in the West were abandoned in favour of politically-aligned ones. Corruption became rampant, products were stolen and sold on the black market, and managers would buy trucks from Belarus just in order to take a cut on the contract.
Nearly all the country’s electricity was generated at Ciudad Guyana, but when nationalisation and mismanagement of the electricity industry led to a power shortage in 2009 – the first of many - Chavez shut down heavy industry rather than cut off supply to potential supporters in Caracas. 400 vital electrolytic cells in CVG Venalum and 200 in CVG Alcasa were terminated, never to start again. These cells effectively implode when denied power for more than two hours.
In 2009 workers went on strike to protest the damage being done to their livelihoods. The result? The strike leader, Ruben Gonzalez, was imprisoned for seventeen months for incitement, unlawful assembly and violating a government security zone. He was subsequently sentenced in 2011 to another seven years in prison.
By 2014 Ciudad Guyana’s decline had considerably worsened. Investment was next to non-existent and labour disputes had further spread. In August of that year troops shot at protesting steelworkers, injuring three. The huge steel-making company Sidor, at the heart of the Ciudad Guyana initiative, was shut down as a result of strike action. It produced 4.3 million tonnes of steel a year before it was nationalised by Chavez in 2008. But by 2014 its production was less than 700,000 tonnes per annum. Striking workers complained of poor wages, harmed by increasing inflation. 25-year Sidor veteran Wilmer Salazar said that while he used to be able to buy a new car with 3 months of wages, “now everything I earn goes to buy food for my family, and it’s still not enough.”
In 2019 the nation-wide power cuts dealt a final blow to Ciudad Guyana. At the country’s two remaining aluminium plants, the electrolytic cells went out for the last time – 59 at Venalum and 14 at Alcasa.
As a result, 5,000 Alcasa and Venalum employees were sent home. In March 2019 Sidor closed its doors for the last time and ceased production permanently. 13,000 employees lost their jobs.
Ciudad Guyana, once the great hope for Venezuelan prosperity, is now a ghost town. It is no surprise that of Venezuela’s six unions, five back interim President Juan Guiado against the Maduro regime. But it’s dangerous for workers and the leaders to oppose the regime. Ruben Gonzalez has been arrested yet again for leading another protest, and when workers criticised the regime’s incompetence, corruption and neglect of the national power grid, they were taken away by the secret police and haven’t been seen since.
Once democracy is restored in Venezuela, a major challenge will be to rebuild its industrial base that has been so comprehensively destroyed by Chavez and Maduro. Workers and trade unions should have their rights re-instated and be valued partners in that endeavour.
More information on the Venezuela Campaign can be found on their website.
Long to reign over us
April 21st is not just Easter Sunday this year; it is also the 93rd birthday of Her Majesty, Queen Elizabeth II. She came to the throne at the age of 26 upon the death of her father in 1952, and has reigned for 67 years, the longest reigning monarch in our nation’s history.
She acceded to the throne when Britain was still recovering from World War II, and presided over the UK’s relinquishing of its colonial status and the assumption of its position as a Commonwealth Power. The Queen has always set great store by her position as head of the Commonwealth, believing that it brings together diverse peoples and is a force for good in the world. During the decades when Britain seemed to be leaving its old friends to join forces with Europe, she continually highlighted the importance of the Commonwealth.
She witnessed the decline of the UK’s great power status as the postwar world came to be dominated by continental powers rather than individual countries. She also saw the decline of Britain’s economic position, as the resources that could have provided the investment for regeneration and renewal were spent instead on welfare progammes and nationalization.
The rebirth of self-confidence and the economic revival that followed the abandonment of the Keynesian postwar consensus from 1979 meant that she was now head of state of one of the top economies of Europe, rather than of the bottom one.
She has shown careful and considered restraint, taking care to remain above politics and to accept and work with whatever governments her people chose to elect. Her continued popularity derives in part from her status as a national symbol who takes no part in the issues of the day that sometimes divide her subjects.
On a personal level, she is known to be both intelligent and well-informed. In her visits around the country she meets and talks to people from diverse fields and takes on their information. She is briefed weekly by the Prime Minister and at Privy Council meetings, and reads her ministerial red boxes every day. She is by no means a mere figurehead, though she is careful never to reveal her own views, in order to preserve her impartiality.
Thanks to the Queen, constitutional monarchy remains popular and firmly entrenched in Britain. We join the nation in congratulating her and wishing her a happy birthday, and more years of wise oversight of her realm.
Governments win ISDS Cases often enough - therefore ISDS cases are bad
As we all know there’s a significant movement insisting that investor state dispute settlement systems - ISDS - in international treaties are a bad idea. For what they are is an insistence that there should be an independent court of law able and willing to rule upon the manner in which states live up to - or don’t - their contractual promises. And for those in favour of untrammeled state power who wants that?
As we’ve pointed out before such ISDS provisions do indeed mean that companies and individuals can sue governments. But then so does the European Court of Justice and even the European Court of Human Rights. None of those complaining about ISDS provisions going on to complain about those two.
What does amuse is that even when governments win such ISDS cases this is still taken to be proof that the system shouldn’t exist:
A US energy company’s controversial and unprecedented attempt to sue the Australian government has collapsed, leaving taxpayers with a $44,000 bill.
In 2017 Florida-based APR Energy became the first company to attempt to sue the Australian government under the Australia-US free trade agreement, demanding $344m in compensation for Australia’s treatment of its gas turbines.
The action was made possible by deeply controversial provisions contained in many trade deals – known as investor-state dispute settlement, or ISDS – that allow foreign corporations to sue a government for actions or policies that hurt them commercially.
No, no one gains the right to sue for commercial harm. People only, ever, gain the right to sue for government breaching contracts or terms they have already agreed to. And holding government to account is rather a useful function in a society, no?
Despite the case’s relatively short and uneventful journey, taxpayers have still been charged tens of thousands of dollars to defend it.
Documents obtained by the Centre Alliance senator Rex Patrick show the total legal bill to Australia was $44,000.
The bill is small but Patrick says it is further evidence that ISDS provisions leave Australia vulnerable.
“These are the dangers,” he said. “The matters have been discontinued but it has cost the taxpayer. Last time it was $39m, this time it was $44,000. Who knows what it will be next time.”
$44,000 to uphold the rule of law? Seems rather cheap at the price. What next, complaints about the cost of trying someone who turns out to be innocent? A demand that trials not be held because innocence might be proven?
420 - Cannabis Culture day
Every culture has its founding myths, distorted by telling and by time, and the truth of them sometimes matters less than the legend. Cannabis culture is associated with “four-twenty,” and since 4-20 is the American way of expressing April 20th, that date is celebrated as Cannabis Culture Day. It may be true that some high school students who called themselves the Waldos met at 4.20pm to seek out an abandoned cannabis crop, but the story racks more of lore and legend than it rings of reality.
Either way, on April 20th there are gatherings across the world centred around cannabis. Some are calls for legalization, but as more and more countries and states legalize it, many of the gatherings are simply celebrations of victory. When Washington DC’s Initiative 71 succeeded in legalization in 2014, the Mayor gave its leader the licence plate number 420 in celebration.
At the heart of it lies the desire of some people to consume substances that give them pleasure, a category that includes alcohol and nicotine. Others who disapprove have in the past used laws against such activity. They do not consume it themselves, and they want to prevent others doing so. It may be that the substances have harmful effects, but the choice of whether to accept the risks of what might follow is a choice that those of a liberal persuasion believe should be made by the individuals concerned. It is fine for them to be made aware of the possible consequences, but the choice should still be theirs.
The harmful effects of criminalization were vividly revealed in America’s period of Prohibition. It led to criminal gangs corrupting the police and the judicial process and to murdering competitors in turf wars. The illegality made it profitable for bootleggers, and turned ordinary citizen into law-breakers at odds with authority.
The illegality of narcotics leads to the rise of criminal gangs. Their actual production cost is tiny; it is their illegality that makes them expensive. Their manufacture, transport, distribution and sale all carry the risks of fines and imprisonment, and these risks have to be paid for. Were the drugs legal, none of these attendant risks would be carried, and the prices and profits would plummet.
Rival drug gangs in South America bury hundreds of victims in mass graves, while their bosses put billions into bank accounts. Teenagers in Britain murder each other on the streets in turf wars to decide who gets to tap the local income stream that illegal drugs generate. The huge profits made are magnified by being untaxed. Legal drugs would be cheap, controlled in quality, regulated in advertising and sale points, and have their profits subject to taxation.
With legalization would come control. Crime rates would plummet, including violent crimes. The prison population would be dramatically reduced, and the drain on police and court time spent on dealing with narcotics would end, leaving them far more able to deal with crimes that mattered.
As we mark Cannabis Culture Day, therefore, we should redouble our efforts to bring about the end of the perverse prohibition that casts such a blight on our society.
How terrible to demand actual facts
One of the minor amusements of current UK political life is the shrieking going on over the number of people rough sleeping - the truly homeless. There’s, if not an industry then certainly an interest group, a section of the NGO world which insists that the problem is massive, terrible, the economy must be radically changed to deal with it. This might not be a quite accurate description of reality.
So, what should we do about this? Well, one obvious idea is that instead of relying upon estimates from those inside the system we should go and do a direct count. For yes, those in the industry may well know lots - Hayek’s local knowledge - but there’s also the mildest of possibilities that they could harbour the tiniest piece of bias.
Claims that rough sleeping is falling in England should not be trusted until the government has explained how an emergency funding scheme for the worst-affected areas might have skewed the latest figures, the chair of the UK statistics Authority (UKSA) has said.
Sir David Norgrove’s comments are the latest development in a row over the apparent 2% fall in rough sleeping in England in 2018, which ministers said was a sign the government’s Rough Sleeping Initiative (RSI) was tackling the homelessness crisis.
The specific and detailed complaint here is that incentives have changed so don’t trust the numbers before and after that incentive change. Which is fair enough.
However, there’s also complaining about this:All councils recorded significant falls in rough sleeping from 2017 to 2018 after switching from an estimate to a count, which critics said occurred because of the methodology change and did not reflect the reality on the streets.
Well, no, not really, because the incentives didn’t change everywhere. At least some of the change therefore really being that the estimates were a tad too high. But given that admitting this means the government could claim to have reduced rough sleeping that can’t really be admitted.
Ourselves we prefer the actual count. Not because of anything specific about homelessness but just because of our general and long running insistence. Unless you know what reality is it’s rather difficult to change it.
Venezuela declared home rule from Spain
On April 19th, 1810, Venezuela overthrew its Spanish colonial masters and established a Junta Suprema de Caracas to take power, beginning a war of independence. There were reverses and reconquests along the way, but the incident initiated a train of events that led to full independence from Spain. Venezuela was the first Spanish colony in America to declare independence.
The country is well situated and exported agricultural crops including cocoa and coffee. Oil was discovered in the early 20th century, and Venezuela was found to have the world's largest known oil reserves. From the 1950s to the early 1980s, the economy saw steady growth and achieved the highest standard of living in Latin America. It ranked close to West Germany.
I went there a couple of times in the 1980s and was impressed by its natural beauty and obvious vitality. It was a country on the rise, with a vibrant business sector creating both wealth and jobs.
Hugo Chávez was elected in December 1998, and used oil revenues to boost welfare and social spending. Prices were fixed, and the leader's cronies systematically looted the economy, a policy continued under his successor, Nicolás Maduro. The oil industry was crippled by replacing its skilled staff with regime supporters, and using its revenues to buy voter loyalty rather than investing in its future.
This mismanagement resulted in hyperinflation, economic depression, and shortages of basic goods, coupled with increases in unemployment, poverty, disease, child mortality and malnutrition. Inflation has exceeded 1.3 million percent. Three million people have emigrated, and those who remain have to cope with lack of medicines and water, and frequent power cuts. Venezuela faces the worst economic crisis in its history. None of this is caused by sanctions, which mainly target individual corrupt officials. It is caused by mismanagement and criminal corruption.
There seems to be a pattern sometimes when a country sees economic growth. A populist leader is elected to divert the increased wealth to social and welfare programmes, and to take over successful industries, allegedly to have them serve the people, but in reality to make them tools of a government anxious to reward its cronies and supporters. The economy is run into the ground. Hyperinflation increases the prices of goods dramatically, so these are fixed by law, resulting in shortages when they cannot be produced at those prices.
It is a depressing cycle. Even more depressing is the adulatory support given to such governments by left-wing intellectuals in developed countries. They hail the birth of a bold new experiment in socialism, go quiet when it crumbles apart, and then announce afterwards that it was "never really socialism."
The terrors of British land ownership
A report trying to warn us about how unfairly, terribly, land ownership is distributed in Britain. Why, the place is still owned by aristocrats!
Half of England is owned by less than 1% of its population, according to new data shared with the Guardian that seeks to penetrate the secrecy that has traditionally surrounded land ownership.
The findings, described as “astonishingly unequal”, suggest that about 25,000 landowners – typically members of the aristocracy and corporations – have control of half of the country.
To claim that corporate ownership is a problem is itself problematic. For what do we mean by a corporation?
The list is headed by a large water company, United Utilities, which said that much of its land consisted of areas immediately surrounding its reservoirs.
UU is ultimately owned by millions of pensions and other individual shareholders. That land is owned collectively is a problem to whom? But is is this which really caught our eye:
Shrubsole writes that the bulk of the population owns very little land or none at all. Those who own homes in England, in total, own only 5% of the country.
How excellent, housing, including all those gardens, covers some small fraction of the country. That means there’s plenty of room to buy land off the aristocrats and plonk housing - under that individual ownership - on it. We’ve not, that is, got a shortage of land to build upon.
All we need do therefore is allow people to indulge in that voluntary cooperation that is mutual exchange and we’ll have solved the housing problem. That is, the solution to a problem is, as so often turns out to be true, stopping government from preventing people from solving problems on their own. We even have empirical evidence. The last time the private sector built 300,000 houses a year was in the 1930s, before the Town and Country Planning Act stopped the industry from building houses people wanted to live in where they’d like to live.
The day nothing happened
Nothing at all happened on April 18th, 1930. There was no news at all. The BBC announcer for the 8.45 pm radio news bulletin announced to the nation, "Today is Good Friday. There is no news." The rest of the 15-minute bulletin was filled by piano music, until the BBC resumed with a broadcast of Wagner's opera, Parsifal.
The BBC took itself very seriously in those days, with a self-imposed mission to use its broadcasting monopoly to uplift the nation morally. The newscaster would be wearing a dinner jacket to read the news, even though no-one outside the studio could see him. The point was that he could see himself, and be aware that the news was a very serious matter, something to be treated with dignity.
On that Good Friday, the BBC thought there was nothing worth reporting. In more modern times, with better, more rapid communications, they might have reported that Indian rebels led by Surya Sen attacked and burned the Chittagong armoury in Bengal, part of the Indian Empire. It took martial law and British troops to restore order. The BBC might have covered the church fire in Contesti, Romania, when candles set fire to church fabrics, or maybe covered the typhoon that struck Leyte in the Philippines. But they didn't.
They showed bias, of course, not in the way they covered the news, but in deciding what counted as news. They do this currently every day, picking the stories to cover that fit in and support the BBC's world-view. In modern times they have added bias to promote their agenda in the way they report events, as well as in deciding what events to cover. An earthquake might have killed hundreds in Asia, but if someone has made some unfounded criticism of President Trump, the natural disaster will rank low on their agenda, hardly competing with the interviews and speculation as to how much the criticism will undermine Trump's presidency.
Similarly, the murder of dozens of Christian worshipers in Africa is unlikely to feature if a new scare story of the impending Brexit disaster has been contrived. For the most part it is unlikely that the BBC staff even think of this as bias. To them it just reflects how the world is. They nearly all share a common outlook that to them seems like common decency. Those not sharing this view are disregarded as some kind of extremists, there to be mocked if they are mentioned at all.
This is all done with public money, with funds extracted from the people whose views they disdain. These days they would never announce, "There is no news." They would just manufacture some.
Our bet is that this study about ocean plastic pollution will be misused
A new study talking about plastic pollution in the oceans. This is about “macroplastic”, the bits that can be seen and felt. We would lay good money at even odds that this study will be misused by campaigners:
Plastic pollution has got 10 times worse in seas around Britain since 2000
Sounds bad:
Plastic in the North Sea is 10 times worse than at the start of the century, a study by British scientists has found.
Researchers looked at records from a plankton sampling mission which has been trawling the North Atlantic and surrounding regions since 1957.
They found that before 2000, the little torpedo shaped collection device would become snagged on large bits of plastic rubbish on fewer than one in 200 outings.
But now researchers are forced to untangle plastic bags, fishing equipment and other debris after one in 20 trawls.
The misuse will be “untangle plastic bags, fishing equipment and”. For here’s the study itself:
A similarity percentage (SIMPER) analysis19 determined that the percentage contribution between the litter types to the change in macroplastic counts over time were 44.86% due to fishing related plastics, 44.67% due to other (fishing not specified) plastic types, and 10.48% due to plastic bags.
It’s almost entirely down to fishing gear. Those plastics first being used in fishing gear in the 1950s. As to the plastic bags:
There is also evidence of a decline in the entanglement records of plastic bags since 2000
2000 is a decade, decade and a half before the battle against single use plastic bags was even started. Well before any government action like compulsory charges and so on.
So, our evidence says that plastic bags are a small part of the problem, one that is declining anyway even in the absence of government action. And our prediction is that this will be misused to argue that ever greater efforts must be made to phase out the plastic bags which aren’t causing the problem.