Sirius Minerals and the imminent global shortage of potash
One of the usual claims from the wilder shores of the environmental movement is that the world is about to run out of potash. This would be a problem, if true, because that’s the way that we get water soluble potassium into the soil so that we can grow plants to feed us all. The alternative is to try organic farming, using manure, and also ploughing up all the land we currently leave nature to thrive in.
As we’ve discussed before the claim is nonsense in itself. Because the measurements are being used are those of “mineral reserves”, the definition of which is “here’s what we prepared earlier for us to use in the near future”. What mineral reserves aren’t is “here’s all that we can use”. The most obvious point about this being that our using up, in the near future, what we’ve prepared for us to use in the near future is not a great surprise nor even problem. We can just go and prepare some more for us to use in the next near future.
Which is, in fact, largely what the mining industry does. The digging the stuff out of the ground isn’t the point of it at all. The identifying and preparing the next bolus we’re to dig up is.
Which brings is to Sirius Minerals. This is an attempt to dig up the world’s largest deposit - identified and tested so far of course - of polyhalite. A source of that potassium to be used as with potash.
Thousands of retail investors risk losing their money in Sirius Minerals after it admitted its plan to build a fertiliser mine in Yorkshire was on the brink of collapse and the Government appeared to rule out a rescue.
The FTSE 250 company warned that it had been unable to sell a $500m (£400m) junk bond it needed to unlock $2.5bn in debt financing from JPMorgan, throwing the future of its ambitious scheme to mine under the North York Moors into doubt.
That it’s not possible - so far - to finance such a mine shows that there’s no imminent shortage of what the mine would produce, doesn’t it? Or at least that one of the two beliefs has to be wrong. It cannot be true both that we face an imminent shortage which will end our way of life and also that it’s not possible to finance a method of ending the shortage.
Given that around here we do actually know something about mining it’s the imminent shortage bit that is wrong.
The Anti-Corn Law League fought for free trade
On September 18th, 1838, the most successful single issue pressure group of the 19th Century was established as a nation-wide organization dedicated to free trade. Specifically, it demanded repeal of the Corn Laws, introduced in 1815 to keep cereal prices high in Britain by taxing foreign imports of cereals.
The laws prohibited the import of foreign corn at less than 80s a quarter (28 lb), a limit replaced in 1828 by a sliding scale. The laws served the interests of the landed classes and aristocracy, who had dominated Parliament. They were opposed by the rising class of industrialists and merchants emerging from the Industrial Revolution, and who wanted cheap food for their industrial workers to stave off upward pressure on wages.
Richard Cobden was its leading strategist, with John Bright as its most eloquent orator. The League organized grass-roots opinion by distributing pamphlets, by correspondence (using the new Penny Post), by newspaper articles, public meetings and speeches. They built on the tactics used by the earlier anti-slavery lobbies. Crucially they based themselves in Manchester, surrounded by the textile trade, and had the financial support of many of the Northern industrialists.
They were well-funded, tightly organized, centrally planned but with numerous local branches, and above all with dedication to a strong central purpose. Thy were for free trade, above all in food. They elected MPs to influence Parliament with their arguments and oratory. Gradually, they built up a huge popular following and either won over or wore down the opposition. Prime Minister Sir Robert Peel is reported to have said at one stage, “You answer them, for I no longer can.”
The Corn Laws were repealed in 1846 when Peel converted to their cause, spurred by the catastrophe of the 1845 Irish famine that the potato blight triggered. The Parliamentary vote result was announced to the applause of Cobden and Bright. Today there are busts of the two of them in both the Reform Club and the National Liberal Club.
They had given free trade ideas a lively popular support within British political culture, a support that would last for half a century until the will-o’-the-wisp of Imperial Preference encroached upon its intellectual territory. There are signs that the movement towards free trade, so ably backed by Cobden and Bright, is gaining traction again, after decades of subservience to the EU’s protectionist Common External Tariff. Once out of the EU, the UK will be free to sign free trade deals that will prosper its citizens instead of French farmers and EU manufacturers. Indeed, it has already negotiated many such agreements, and is in the process of agreeing many more.
It’s a pity that Cobden and Bright look so stern in the busts of them on display. They should be smiling.
Why not, you know, just spend less money?
A report that tells us that farming globally is hugely subsidised. Also, that such money should be spent in another manner. We agree, it should be.
$1m a minute: the farming subsidies destroying the world - report
‘Perverse’ payments must be redirected to measures such as capturing carbon, report says
We do have a slight and small quibble with the insistence there though.
The public is providing more than $1m per minute in global farm subsidies, much of which is driving the climate crisis and destruction of wildlife, according to a new report.
Just 1% of the $700bn (£560bn) a year given to farmers is used to benefit the environment, the analysis found. Much of the total instead promotes high-emission cattle production, forest destruction and pollution from the overuse of fertiliser.
The security of humanity is at risk without reform to these subsidies,
Let us assume that this is all correct. Just so that we can examine what we should do if this is all correct.
Perhaps not what the full report demands.
For what is the actual claim here? That governments are taking 1 to 1.5% of GDP - that is, a percentage point and more of everything - and not just wasting it but actively making matters worse. So, the correct solution would be that government not take 1 to 1.5% of everything, no?
That is, instead of redirecting such subsidies, instead of using those obviously incompetent to be spending the money, why not just reduce the taxation and remove the incompetents from the equation altogether?
After all, consider the deeper claim here. There are some 192 governments out there, most of which have been intervening fiscally in agriculture for most or all of the past century and more. The claim is that absolutely none of them have got this right as yet. Probably enough experimentation with a system to show that process never is going to work.
Leave the money to grow and fructify in the pockets of the populace instead. For evidence that government can’t spend money usefully is hardly evidence that they should have another go, is it?
Solidarity – the union that won Poland
A remarkable event took place in September 17th, 1980, at the Lenin Shipyard in in Gdańsk, Poland. The Trade Union ‘Solidarity’ was formed, the first in any of the Communist countries of central and Eastern Europe that was not controlled by the Communist Party. The striking workers under Lech Wałęsa had the power to ruin Poland’s economy, so the government had to negotiate with them, and reluctantly agreed to recognize them. Within a year the union had 10 million members, a third of Poland’s working age population.
Martial law, imposed by Communist Party General Secretary Wojciech Jaruzelski struggled to contain the unrest. It was ironic that a so-called workers’ state used every conceivable method to suppress a genuine workers’ movement. Solidarity operated partly underground with clandestine meetings, and partly overtly by strike or threatened strike action. It commanded total loyalty, and was not just a union, but an anti-Communist groundswell.
Finally, in 1989, when a mood of restlessness and change was beginning to sweep the Warsaw Pact countries, Jaruzelski was obliged to concede semi-free elections in Poland. Non-Communists were allowed to stand, but only for fewer than half the seats in the lower house. The Communists and their allies were guaranteed a majority, however people voted. The result was a thunderclap, in that Solidarity won all of the contested seats in the lower house, and every seat except one in the upper house. The Communists and their satellite party allies still had a majority, and nominated a Communist prime minister, but in an astonishing move, Solidarity persuaded two of the satellite parties to switch sides. Suddenly there was a non-Communist majority in Parliament. Jaruzelski considered annulling the election, but was abandoned by Moscow and in late August appointed Solidarity activist Tadeusz Mazowiecki as prime minister and head of a Solidarity-led coalition.
The new government invited the Adam Smith Institute over in September 1989 to teach how the transition might be made to a market economy, and how to privatize the moribund state industries. We took the precaution of taking a Channel 4 Dispatches team with us to film it, thinking we’d be safer with cameras covering us.
The rest, as they say, is history, and Lech Wałęsa replaced General Jaruzelski as president after the presidential election in the following year. The name of the country became the Republic of Poland instead of the People’s Republic of Poland, and the Communist Party dissolved itself into the Social Democracy Party. The constitution document of a free Poland, which had been held in London by Poles in exile after the Nazi and Communist takeovers, was finally repatriated to Poland. What had begun as a brave labour union defying state power became within nine years the government of Poland. Poland is now a member of the European Union and, more significantly, a member of NATO.
Communist rule has to be totalitarian. The Party must control every aspect of life, from youth movements to charities to unions and to any grouping or association. All must be done under the direction of the Party and must be run to serve its propaganda and purposes. In Poland, they had to allow a movement outwith their control, and it destroyed them. The Party must keep its population prisoners physically and intellectually. A domain of independent thought and action will allow resentment of its rule to find a voice, and opponents will find bravery in banding together. In Poland they found it in Solidarity.
The interesting implication of Baumol's Cost Disease
Sadly, letters to The Times need to be short:
BAUMOL’S THEORY
Sir, Harry Wallop (“Going shopping? Here’s the proof that you’ve never had it so cheap”, Sep 13) wonders why university, theatre and healthcare have risen in price while women’s shoes, calculators and tennis rackets seem to have fallen. It’s called Baumol’s cost disease. As a society gets richer manufactured items will fall in price relative to services. It’s one reason why the NHS budget has to increase faster than general inflation every year.
Tim Worstall
Senior fellow, Adam Smith Institute, London SW1
It’s the “what do we do next” part of this which is so interesting.
The observation is that wages - the costs of labour - are set by the general level of productivity in the society. Further, that it’s easier to increase productivity in manufacturing via automation than it is in services. For if we can automate it then it’s no longer a service, it’s a manufacture. Thus the value of the embodied labour in those services will rise more than that in manufactures. And rising wages is that very signal, proof perfect, of the increasing richness of the society.
So, services will rise in cost relative to manufactures. And thus Polly Toynbee’s repeated observation that the NHS needs a 4% budget increase every year just to stand still.
OK. But what do we do about it?
We know that the way to increase productivity is via markets and their competition. Thus we need more markets and competition in services than we do in manufactures. That productivity increase is harder, d’ye see, therefore we must make more effort to achieve it.
It’s the very fact that the NHS inflation rate is above the general one that insists we have that competition.
Fleeing communism in a balloon
Forty years ago, on September 16th, 1979, one of the most thrilling escapes of the Cold War took place from Communist East Germany, when two families, eight people in all, fled to freedom in West Germany in a homemade hot air balloon. It took them one-and-a-half years, one failed attempt, and three balloons to complete it.
Peter Strelzyk, a 37-year-old electrician, and Günter Wetzel, a 24-year-old bricklayer became friends at a local plastics factory, and began to plan their escape. Like other Communist dictatorships, East Germany was a prison, with its population prevented from leaving. A wall barred their way in Berlin, and a barbed wire border with watchtowers, machine-gun nests and minefields sealed the larger border with West Germany. Hundreds had been killed as they attempted to leave.
They decided to fly over the border fortifications in a hot air balloon, having seen about ballooning on television. They measured the weight of themselves, their wives, and their four children, and calculated the balloon would have to hold 2,000 cubic metres of hot air. They reckoned it would take 800 square metres of cloth to make a balloon that could hold it.
It took 2 weeks on a hand sewing machine to stitch the fabric into a bag 20 metres long by 15 metres wide. The gondola was constructed from an iron frame, a sheet metal floor, and clothesline running around it every 15 centimetres. The burner was made of 2 propane cannisters to feed the gas through water pipe to a stove pipe nozzle.
At their first attempt in a forest clearing, they could not get the balloon to inflate, despite using an improvised blower to fill it first with cold air. They found the material was too porous, and resolved to try a different second attempt. They went to a distant city to buy 800 metres of 1-metre wide synthetic taffeta, telling the store it was to make sails for their sailing club. Having sewn a second balloon, they found the burner would inflate it, but could not generate enough heat to lift it. They doubled the number of cannisters and inverted them to make a bigger flame, and attempted a second try.
This time the balloon ascended, but when it entered a cloud, water vapour condensed on it, increasing its weight and making it come down. They landed next to a mined area 180 metres from the border, and realized they were still in East Germany. They walked 8 miles back to their car, leaving the balloon gear behind for the Stasi (secret police) to discover. They decided on a speedy 3rd attempt in case the gear was traced back to them, and they bought taffeta in assorted colours from a variety of stores to avoid suspicion. They sewed a third balloon.
Wind and weather were good on September 16th, so they took off at 2.00 am. The balloon malfunctioned several times and caught fire several times, but it held them aloft. They had to keep relighting the burners by hand because air rushing out through tears in the fabric kept putting them out. They were detected on West German radar, and had searchlights in the East turned on to search for the "unidentified flying object."
They came down near the town of Naila in Bavaria, and knew they were in the West when they saw the Western traffic lights and the Audi police car that came to inspect what had happened. Wetzel broke his leg in the landing, but otherwise they and their families were safe. More than that, they were free. Stern Magazine paid for the exclusive rights to their story, and their heroism and ingenuity was immortalized in the movie, "Night Crossing." After the collapse of Communism and following German reunification, the Strelzyks returned home, while the Wetzels remained in Bavaria.
It was an epic story that illustrates the determination people have shown to free themselves from the shackles and daily oppression of Communist regimes. The ideology has always failed. It has always produced poverty and squalor, and it has always had to be supported by brutality, concentration camps and executions. And always it has needed to keep its people prisoner and stop them seeking a better life beyond its grip. This is the ideology praised by modern-day Socialists such as Jeremy Corbyn and John MacDonnell, and it is regimes like that of East Germany that they bestowed praise upon. The night-time balloonists of 1979 knew better.
The perfect is the enemy of the good
It is entirely common within economics to mention that we live in a second best world. It may well be true that x or y, or even z, would be the best policy, the best construct. But as it turns out humans and reality don’t quite allow perfection to be achieved - we’ve got to use some second best bodge to get as close as we can to our goal without ever quite reaching it.
Something that is being forgotten by the public health crowd:
England's chief medical officer has raised fears that vaping is “a ticking time bomb” which could do long-term harm, amid growing concern about the safety of e-cigarettes.
Prof Dame Sally Davies, who will stand down later this month, made the comments just before Donald Trump announced plans to ban flavoured vaping products, in a bid to discourage children from taking up the habit.
In an interview with Civil Service World, Dame Sally raised concerns about the evidence to support the safety of e-cigarettes.
Is vaping entirely safe? That’s not even the interesting, let alone important, question:
Smokers are turning back to traditional cigarettes amid health scares over vaping, US experts have warned.
Vaping has been linked to six deaths across the United States, and 380 people have been hospitalised with lung illnesses in what the US Centers for Disease Control and Prevention has called an "outbreak".
As far as reports go - so far, it’s a little murky at present - those vaping deaths are connected with a particular contaminant in a particular product, not the process itself. But imagine it wasn’t so. Imagine that it is indeed that process.
People do indeed like taking nicotine. There will be ill effects from their doing so for there are ill effects to absolutely everything that humans do. Our favourite example of this is that hundreds of Americans a year die of being tangled in their own bedsheets. We do not therefore mandate duvets.
Of course, we are extreme by current standards on these matters. If people wish to kill themselves by smoking cigarettes then it’s their lungs, their lives. This is what to be a consenting adult means.
But even if you do not share this view the idea that we’ll limit vaping because of 6 deaths as opposed to the millions from tobacco smoking is ludicrous. We really are in this second best world where harm reduction has to be the goal, not harm elimination - on the very sensible grounds that as the switch back to proper puffing shows, harm elimination isn’t possible.
William Huskisson, free trader and railway’s first victim
William Huskisson, who died on September 15th, 1830, was one of the team of young free-traders who revolutionized Britain in the 1820s by continuing the work of William Pitt, ending huge swathes of regulations and tariffs, and paving the way for the free trading nation that became the dominant economy of the 19th Century.
He represented a variety of parliamentary seats, including Liverpool, where there is a statue of him in St James Cemetery. Another one stands in Pimlico Gardens in London. His political career owed much to the support of two important patrons, Home Secretary Henry Dundas and Prime Minister William Pitt the Younger. He served initially as Secretary to the Treasury, and later as President of the Board of Trade. His 1810 pamphlet on the currency system established his reputation as an expert in finance, but his reputation rests on his unwavering support for free trade.
As a member of the 1821 committee investigating the causes of agricultural distress, he was responsible for a clause in its findings that recommended relaxation of the Corn Laws, laws that kept up the price of cereal crops via tariffs, and guaranteed the incomes of the landed gentry at the expense of the poor.
While in the Department of Trade, he reformed the protectionist Navigation Acts, giving other nations access to the transport of British goods, thereby increasing competition and lowering prices. He repealed restrictive labour laws and cut duties on manufactures and foreign imports, as well as repealing quarantine duties. In all of this he was very much a disciple of Adam Smith, as Pitt had been.
To deal with low incomes, he was asked, as President of the Board of Trade, to enact a legally binding minimum wage. He ejected the request out of hand, saying that to introduce such a measure would be "a vain and hazardous attempt to impose the authority of the law between the labourer and his employer in regulating the demand for labour and the price to be paid for it".
He managed in 1828 the difficult task of having the cabinet agree to a compromise on the Corn Laws, difficult because the landed aristocrats strongly resisted measures that might compromise the incomes derived from having their estates farmed. It was not until Huskisson's friend and colleague, Sir Robert Peel, finally repealed the Corn Laws in 1845 that the issue was resolved in favour of cheap food for the newly industrialized workers, and it was not until efficient transatlantic freight came about that it achieved its practical effects. After this Huskisson resigned.
He attended the 1830 opening of the Liverpool and Manchester Railway, despite recent surgery that left him less than fully mobile. When George Stephenson's "Rocket" locomotive approached dangerously, he attempted to climb to safety aboard the Duke of Wellington's carriage, but the door swung open and he was struck by the locomotive and died from his injuries later that day. He is thus remembered as a great free trader who liberated much of Britain's economy, and as the first fatality of a railway accident. On the anniversary of his death we remember his achievements that preaged Britain's greatness, as well as the misfortune that killed him at the age of 60.
The Guardian, inflation and the 50p piece
The Guardian wants to tell us how living standards have changed over the 50 years since the 50 pence piece was introduced. Fair enough - matters have improved massively by the only standard that actually counts, how many hours work do we have to put in to purchase what lifestyle?
We are however struck by one little detail:
Back then, when booze was relatively cheap, it really was possible to go for a night out and still have change from 50p. A 50p piece in 1969 could buy you three pints of mild or bitter (priced about two shillings, equal to 10p) while a tube fare on the newly opened Victoria line in London cost just 5d (2.2p). You’d still have enough left to buy a portion of chips and a copy of the Guardian, then priced at 6d (2.5p).
Few denizens of Fleet Street as was would regard three pints of mild as a night out - that was breakfast. But as we can see a copy of The Guardian used to cost the same as a quarter pint of beer. Today’s price? £2.20 on a weekday and £3.20 on Saturday:
Perhaps unsurprisingly, the most expensive pint of beer is in London at £5.19, while the cheapest is in Carlisle at a more reasonable £2.35.
That is, The Guardian has gone from costing a quarter pint of that happy produce of our isle to somewhere between a half and a full pint.
True, these days they’re more likely to spell their own masthead right - Grauniad is not just a joke - but it’s not obvious that the quality has improved otherwise over those decades, is it? We wonder, what is it that justifies the paper having an inflation rate four times that of the price of beer? Especially since they note that back then beer was relatively cheap, something by implication they’re asserting it isn’t today. Can’t all be Polly’s salary now, can it?
Champagne - invented by an Englishman
In popular but inaccurate history, Champagne was invented by the Benedictine monk Dom Perignon, who died on September 14th, 1715. He allegedly discovered the 'methode champenoise' at the Abbey of Hautvilliers in 1697. No. Some 35 years earlier in 1662, an Englishman, Christopher Merret, delivered a paper to the newly-formed Royal Society revealing how to add sugar to a finished wine to create a secondary fermentation in the bottle.
A problem was encountered that the glass bottles of the time were fairly weak, and tended to explode with the pressure. The explosion of one in a cellar could trigger a chain reaction that exploded hundreds of bottles. Stronger bottles were needed. Here, too, it was English scientists and inventors who came up with the goods. Glass at the time was made using charcoal furnaces, but when this was banned so that wood was reserved for navy ships rather than charcoal, glassmakers began experimenting with coal.
Merret himself was among those who developed the stout bottles that could contain the bubbles, the early ones looking something like large onions. Because coal added impurities, the stout bottles tended to be dark and opaque, but they did the job.
Merret wrote, "Our wine coopers of recent times use vast quantities of sugar and molasses to all sorts of wines to make them drink brisk and sparkling and to give them spirit." It was the first recorded description of the process and the use of the word “sparkling” to describe fizzy wine. In England Merret and his contemporaries initially used the process with apples, rather than grapes, to make sparkling cider. It is, nonetheless, the 'methode champenoise' that is a source of French national pride. And the French rapidly caught on to the advances in English glassmaking technology, with early accounts of their champagne making referring to “verre Anglaise,” or English glass.
There’s a plaque honouring Merret’s achievements in the Cotsworld town of Winchcombe, but in fact he was one of a number of people who were experimenting with different methods of brewing and glassmaking. It was the early start of something remarkable, an age of invention and innovation that developed into the Industrial Revolution, the phenomenon that led to the modern world.
The historian T S Ashton describes how a schoolboy wrote, “About 1760 a wave of gadgets swept over England,” in answer to a question on the Industrial Revolution. That anonymous schoolboy has been quoted in many subsequent books on the subject because it sums up something unprecedented: an age of improvement in which it became respectable, even practically a duty, for people to experiment and innovate in order to make more of what people wanted, and to make it more efficiently. It was under way well before 1760, as Merret’s example shows us.
Much of this was the outcome of an empirical approach, with inventors testing new ideas in practice, and learning from experience how to adapt and improve them. The English tended not to build vast, all-embracing systems of thought like their Continental counterparts, but to concentrate on real-world experience. Their development of the champagne process is but one example among thousands. They did what worked, and then improved it. And they still do.