The plane that changed the world

People were astonished as the new plane was unveiled in public for the first time on September 30th, 1968, 51 years ago. It was huge, bigger than any civilian aircraft they had seen. It was, of course, the Boeing 747, the first wide-body passenger plane to take to the skies. Its distinctive shape, with a bulge on top at the front, made it instantly recognizable. That bulge accommodated the upper deck, where there was a first class bar and lounge or additional seating, with the pilots at the front. Some first class passengers downstairs in the nose of the plane were (and are) ahead of the pilots upstairs.

It was designed as a successor to the highly successful Boeing 707, and to carry 50 percent more passengers over greater distances. Its most common current variant, the 747-400 can cruise at Mach 0.85 for a range of 8,350 miles.

It was very costly to build, requiring a whole new factory built from scratch, and Boeing had to borrow heavily. The company 'bet the farm' on its new plane, going deeply into debt with a banking syndicate. During the final months before production, Boeing had to go back several times for additional funds which, had they been refused, would have bankrupted the company. Its debt exceeded $2 billion, and the $1.2 billion it owed the banks set a record for all companies.

The gamble paid off. The 747 was popular with airlines for its extra passenger seats, and with passengers for its great range and low ticket costs. It was so successful that for many years Boeing enjoyed a virtual monopoly in the construction and sale of large passenger aircraft. Indeed, its market dominance was a major factor in the formation of Airbus, to give European manufacturers a foothold.

Boeing expected its giant, the first plane to be popularly called a jumbo jet, to become obsolete after it had sold 400 of them. It thought that the future lay with supersonic travel, and that others would follow the route of the Anglo-French Concorde, making subsonic passenger jets obsolete. In fact the 747 was designed to be easily converted to become a cargo carrier by removing seats and installing a front cargo door. The company expected its passenger role to give way to supersonic aircraft, but that it would have a much longer future as a cargo carrier. They overestimated the economics of supersonic travel, and underestimated the durability and popularity of their big bird. Production passed the 1,000 mark by 1993, and as of this summer, 1,554 had been sold.

It changed the world by bringing low-cost long-range travel within the budget of ordinary people. What had once been the prerogative of the well-to-do now became available to average families taking package holidays. It made holidays to Disney World in Florida accessible to ordinary British families. A private company took a big gamble and called it right, reaping the rewards of success.

Concorde was not so fortunate. Funded by the UK and French governments, only 20 were built, 6 of which were prototypes, with only 14 entering service. Because of the sonic boom, it could only pass the sound barrier over water, which limited its routes. It was a technological marvel. I flew it 5 times and found each one thrilling, but the economics were not good. Research and development had been costly, since it crossed new and untried frontiers. If the development costs were written off, BA and Air France could operate it profitably, but it became increasing costly to maintain. If further offshoots had been built, like stretched versions, the development costs could have been spread over several models, but it never happened.

When supersonic passenger travel returns, as it soon looks set to, it will be private companies and private investment taking the gamble, as it should be. Several models are nearing the test flight stage, with smaller planes travelling below Concorde's Mach 2.2, and with designs to avoid the sonic boom, looking likely to blaze the trail. Some of the early ones will be business jets, but ordinary passenger versions will follow. No doubt they will be fun to fly in, but it is unlikely that any will have the world-changing impact that Boeing's first jumbo had.

Finally The Observer gets something right

Sadly it’s in the letters page but still, an advance on matters as usual:

Stop killings: legalise drugs

Deaths from drug turf wars will continue until we legalise drugs (“How London tourist hotspot became a flashpoint for drug gang killings”, News). Drugs should be treated like cigarettes. They should be legal, they should be taxed, packaging should show graphic health warnings, the strength (and, of course, purity) should be controlled, making them safer, and there should be no advertising. Banning drugs does not stop consumption; it merely hands over a massive business to criminals, making it impossible to tax and impossible to regulate.

Richard Mountford

We would add two things. The first being that there’s that liberty and freedom argument. The one we consider rather important. Freedom is that consenting adults get to be consenting adults. Yea up to and including the ingestion of things that may not, or even aren’t, good for them.

The second that advertising should not be banned at all. Perhaps a certain lack of “Get High, inject scag!” posters around the place but branding - a form of advertising - is not just desirable but necessary. For it’s exactly that which holds the manufacturer to those promises of purity and strength.

As the toll of overdose and disease deaths shows, it’s the lack of regularity in those two which kill. Thus our solution should be focused upon ensuring them both.

Ludwig von Mises

One of history's most influential economists was born on September 29th, 1881. Ludwig von Mises was born into a very talented family at Lemberg in Galicia, then part of the Austro-Hungarian Empire, now Lviv in Ukraine. By the time he was 12 years old, he could read Latin, understand Ukrainian, and was fluent in German, Polish and French.

One of the most famous of the Austrian economists, von Mises was influenced by Carl Menger, the founder of that school, and had attended the lectures of Eugen von Böhm-Bawerk. He worked for a time in the finance department of Austria's civil service, but worked and wrote as an academic after fleeing Austria in 1940 and moving to the United States.

Mises was an economist, an historian and a sociologist. Amongst his many original and influential publications, he is perhaps best remembered for 'Human Action,' described as "the largest and most scientific defence of human freedom ever published." Mises used what he called praxeology, the scientific study of human action, the purposeful behavior that characterizes us. He was at pains to point out, though, that it could never be like the physical sciences because it deals with human motivation, something we cannot know because there are no windows into the soul. Mises thought we could make logical deductions from the undeniable fact that humans exist and act, and made this the foundation stone of his economic system.

Under capitalism, he said, the price system translates individual subjective values into the objective information that enables resources to be allocated rationally. Socialist economies, with the emphasis on production rather than on the satisfaction of consumer demand, can never do this. There are no real prices, so the central planners can never allocate investment rationally to meet real needs.

Mises was a hugely influential figure in the postwar revival of the ideas and values of liberalism. He was a founding member of the Mont Pelerin Society, and a teacher and friend of F A Hayek. In His book, "The Transmission of the Ideals of Freedom," Hayek pays his respects to the influence of Mises in the 20th century libertarian movement.

Mises examined why it was that intellectuals, especially American academics, opposed free market ideas. In "The Anti-Capitalist Mentality," Mises explained that they resented the necessity of obeying mass demand, which is the basis of prosperity in big business. Hayek made a similar point in "The Intellectuals and Socialism" that academics resent the fact that intelligent people (like themselves) are not in charge of things.

The deductive system of von Mises is in the tradition of Aristotle and Aquinas, and later Ayn Rand, in that it moves from what are posited as undeniable axioms through logical steps to its conclusions. Hayek himself was of more empirical bent, and thought that a closed deductive system shut out the learning process that he thought was an essential feature of economics. He revered his mentor, though, and said, "I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument."

What Mises brought to economics was a thoroughgoing and systematic study of why capitalism works with the grain of human nature, and why socialism does not. He showed in detail why it is that capitalism succeeds, whereas socialism never does.

When public policy collides with reality

It’s usually reality that wins when there’s a conflict with what those making public policy would wish were true. This being a useful lens through which to consider proposals for public policy of course:

Mr Goldsmith said: “The fight against trophy hunting of endangered animals matters. It is clear that it is morally indefensible and that is why I am delighted that the Conservative Government will consult on a ban on the import of these trophies. By placing a higher value on animals alive rather than dead, we will begin to turn back the tide of extinction.”

The last sentence works. We humans work that way which is why it does. Things that are of higher value we preserve, even produce more of them. So, yes, we would like to make those endangered animals worth more.

Banning trophy hunting unfortunately doesn’t do that. A live predator has a negative value to those around it. Because, you know, predation. Things with negative values we humans usually try - and often succeed in doing so - to get rid of. Britain is, and has been for some centuries now, entirely out of wolves and lynx.

Trophy hunting produces a positive value to the existence of those live predators. And “predator” has a wide meaning here, elephants predate upon crops and gardens for example. A value because people will pay handsomely to come shoot the predators and collect the trophies.

So much so that there are farms raising animals such as lions for the express purpose of their being shot to create a trophy. Humans raising animals because they have value being a pretty good way of stemming extinction risks - we’re not short of cattle nor fur foxes as examples.

That is, the way to increase the value of animals is not to reduce their value. Obviously, although that’s what the government has just announced it’s going to enact. Reality differs.

An accidental Nobel Prize

The Scottish scientist Alexander Fleming recounted that the discovery of penicillin dates from September 28th, 1928. That was when he entered his laboratory in the basement of St Mary’s Hospital in London and found that one of the Petri dishes of Staphylococci that had been mistakenly left open had been contaminated by mould entering from an open window. It formed a visible blue-green growth, but around it was a ring of inhibited bacterial growth. Fleming concluded that something in the mould had killed the bacteria, and set about finding what it was.

The rest, as they say, is history. Fleming isolated it and grew a pure culture of it, naming it Penicillin chrysogenum. It became the first of a range of antibiotics that have saved millions of lives since that first discovery. Penicillin itself, once mass-produced, principally in America initially, saved many lives and limbs of injured soldiers in World War II.

Fleming’s laboratory is now part of Imperial College in London, and Fleming was awarded the 1945 Nobel Prize in Medicine, along with Howard Florey and Ernst Chain, who helped in the development of penicillin. Fleming was knighted in 1944, and in 1999 he featured in Time magazine’s list of the 100 most important people of the century.

It was not all down to the luck of that first discovery. While it was serendipitous that it happened, less skilled and less informed eyes might never have spotted the significance. As Popper says, there is an almost infinite number of things that our senses could focus our attention upon. We pick out those we regard as significant, perhaps those that reveal something new, or which do not fit in with our preconceived theories about what we expect. To Fleming, because of his intellect and his training, the sight of the Petri dish became an observation. He realized its significance and built upon it.

This is a very common feature in human progress, where something unexpected is recognized by trained or astute eyes as having a significance that merits investigation.

By coincidence, exactly 33 years before Fleming’s observation, Louis Pasteur had died on September 28th, 1895, after a lifetime of achievement in microbiology and chemistry. He had observed that environment mattered in the spread of diseases, and found that healthy silk-worms became ill when they nested in the bedding of those suffering from disease. He further observed that for wine to turn to vinegar, it must be open to the air, and concluded that microbes could be airborne and contaminate what they contacted.

From this he developed and researched the germ theory of disease, disproving the notion of the spontaneous generation of organisms that had previously prevailed.  It was the basis of massive advances in medicine, and in preserving foodstuffs. The word ‘Pasteurization’ honours his achievements.

Progress is more likely to be made when there are opportunities for research to be done that is somewhat outside the accepted paradigms of the time, and where observations of the unusual can be pursued, and where discoveries can gain a hearing. Competition for glory is part of what motivates researchers, so Royal Society accolades and Nobel Prizes play their part in advancing human knowledge and achievement, as do the cash rewards that often follow.

Of course The Guardian would put it this way

Boris Johnson’s pledge to raise the threshold for the top rate of income tax from £50,000 to £80,000 would cost £8bn a year and boost the incomes of the highest-earning 8% of the adult population, according to the Institute for Fiscal Studies.

The policy would take 2.5 million people out of paying higher-rate tax, more than reversing the increase over the past three decades, the tax and spending watchdog said. About three-quarters of the tax benefit would go to the highest-income 10% of households.

It’s the word “cost” in there which is misapplied. Not taxing someone, or some group, is not a cost. It might well be a reduction in the public revenues but even that is not a cost. It is, of course, a benefit. The price of government weighs more lightly upon the shoulders of the population.

It’s true that there are costs and benefits to everything, this is one of the central lessons of economics. But in order to make sense of the world around us we do have to identify which is which, which is a cost, which a benefit.

It is a benefit that the money remain fructifying in the pockets of the people. It is, therefore, not a cost.

The Model T Ford and the Liberty ships

September 27th was an important date in the development of mass production on two occasions. In 1908 it marked the beginning of production of Henry Ford’s Model T car in Detroit Michigan. The idea of using interchangeable parts that could be slotted together had been pioneered and popularized by Eli Whitney when he had won a contract to supply muskets to the new US army in 1798, but Henry Ford took it further. Using a moving production line, instead of individually crafting each car, as carriages had been made at one time, his workers put pre-assembled pieces together to make a car that became an icon. It could be made so cheaply that motoring ceased to be a plaything of the rich, but became accessible to the common man.

Suddenly America became mobile, and people could travel from their remote farms and dwellings into nearby towns and cities. It changed not only people’s mobility and lifestyle; it changed the American economy. Detroit became the motor city (Motown), and the US became a consumer society in which the automobile industry was to play a central role for decades to come.

By coincidence, it was also on September 27th, some 33 years later in 1941, that the SS Patrick Henry, the first Liberty ship was launched. The US was not yet in World War II, but it saw that ships would be needed in vast numbers. If it were to be the arsenal of democracy, it would need to ferry food, supplies and munitions across the Atlantic to the beleaguered island of Britain. Conventional ships might take two years to build, but the Liberty ships, so-called because they could bring liberty to Europe, were made like the Model T Ford of interchangeable parts that could be fitted together.

Henry Kaiser was to develop new methods of ship-building, enabling him to out-produce other yards and build 1,490 ships, 27 percent of the total Maritime Commission construction. Kaiser's ships were completed in two-thirds the time and a quarter the cost of what it took other shipyards. Liberty ships were typically assembled in a little over two weeks, and one was put together in less than five days. Altogether 2,700 of them were to be built, enabling the Allies to keep well ahead of U-boat sinkings, and to ferry across the Atlantic the supplies, troops and equipment that would win the war.

The mass production of identical items made items affordable, but at the expense of variety. Henry Ford offered “any colour you like as long as it’s black.” But technology has advanced to the point at which individual preferences can be incorporated into the manufacturing process. The Tesla customer specifies the accessories, the trim, the colour and the materials before the car is made, so that no two cars coming off Elon Musk’s production line are identical. Each one is unique, made for an individual owner to meet their tastes and preferences.

Technology has moved us beyond the age of standardized mass production of identical items to the stage where individual choices and preferences can be satisfied. The Model T Fords and the Liberty ships were valuable in their day, but the world has moved on to become one. not of collective mass production to standards determined by producers, but to one determined by the individual choices of consumers. So, two cheers for identical mass production, and three cheers for the personal choices that technology now makes possible.

About that 7 degrees temperature rise by 2100

Ambrose Evans Pritchard tells us of new climate change research:

We have a choice. Either we fight runaway climate change with liberal market policies and capitalist creativity, or we cede the field to Malthusians and the Green Taliban.

Retreating into denialism - or more corrosive these days, into shoulder-shrugging nihilism - will not cut it. Last week the France’s National Centre for Scientific Research (CNRS) warned that global warming could reach seven degrees by the end of the century under current policies.

As we’ve been saying for a long time now - and as people shout at us for saying - something is going to be done about climate change. The political head of steam exists and the idiots are going to enact something or other. The task therefore is to push that enacting over to something that would actually solve the problem if it exists while also doing the least damage by doing so. You know, the carbon tax rather than the destruction of civilisation.

We can also be critical in our comments on the claims. This one, of 7 degrees or example. It comes from here:

In the most pessimistic scenario (SSP5 8.5 – rapid economic growth driven by fossil fuels), the rise in mean global temperature is likely to reach 6 to 7 °C by 2100, which is 1 °C higher than in previous estimates.

The thing being that we know, absolutely, that RCP 8.5 simply isn’t going to happen. Look here at the assumptions behind it. It simply isn’t true that we’re going to be using 5 or 10 times as much coal as we do now. It’s equally not true that we’re going to be using more coal as a portion of energy output than we do now. We’ve already done the things that mean wee’re not going to be using coal in those volumes.

Sure, solar - just to take an example - may or may not be all that economic presently in high latitudes and so on but it’s also still reducing in costs at 20% per annum, as it has been for decades now.

The wilder estimates of the future simply are not true. For they’re entirely ignoring the changes we’ve already made. Evans Pritchard is right, we need to be taking the fight to the Taliban on what to do. The first step being to remind people of their own estimates, their own models.

It is not logically possible both that renewables are currently economic and also that we’re going to be using coal as the major power source for civilisation in 80 years’ time. We should at least demand they tell us which of the two they think is true.

Rave on for Liberty!

It was 1994, and the Home Secretary Michael Howard had had enough. Slamming his clenched fist down hard on the mahogany table of a Pall Mall club he very likely said “damn these hippies to hell, every last one of them”, and most right and proper Tory members of parliament very likely agreed with him.

Two years previously, and a couple of hundred miles away, the Somerset and Avon police force were trying – and failing – to stop the Avon Free Festival from taking place. The Avon Free Festival was a meeting of ‘free spirited types’, featuring new age hippies and many young and old people simply out for a boogie.

The attempts of the police to shut down this festival proved an abject failure however, as the diverted and dispersed crowds merely reassembled on a spot a few miles away at Castlemorton Common in neighbouring Worcestershire. There, on a sunny May Bank Holiday, over 20,000 people boogied away, chilled out and took part in other such festival-like past-times. Groovy.

This grand old shindig marked the zenith of what was a period of the ‘free party’ in the UK. A movement in which people would gather on common land and take festivities into their own hands, embracing delightful anarchy and all its wonderful appendages.

The metropolitan chattering classes were of course quite nauseated. The tabloid papers were likewise thoroughly outraged. They interpreted this festival as a signal of not just steep moral decline in our youth, but also of the utter uselessness of our namby-pamby police force, who had on this occasion arrested only a handful of people (all later acquitted) and impounded only a couple of loudspeakers. The media furore was phenomenal, and John Major’s government, with dwindling performances in the national polls, had to be seen to do something.

The occasion was debated at length in Parliament, and thus the 1994 Criminal Justice and Public Order Act was passed, section 63 of which stated that an event may be stopped by the police if there exists ‘a gathering on land in the open air of 20 or more persons at which amplified music is played’.

So that people couldn't escape prosecution by arguing the sounds coming from their stereos was not technically music, Section 63 of the bill included a sub-clause defining what the government meant by ‘music’, which was, in this case; ‘sounds wholly or predominantly characterised by the emission of a succession of repetitive beats’.

Reading this sub-clause in this new piece of legislation, two cheeky Mancunian chaps grinned. Rob Brown and Sean Booth, who comprised the techno duo ‘Autechture’ duly got to work on a radical new track.

In September 1994, their EP Anti was released. Within this EP there were three tracks; Lost, Djarum, and Flutter. The final track of the EP, Flutter, was constructed from a sequence of 65 unique drum beats put one after another, so to subvert the definition of music given in the clause of section 63 of the new bill. This means that whilst the track might sound repetitive, strictly speaking, it is not. As music critic Louis Pattison so eloquently puts it, Flutter “moves fluidly, nimbly, never moving into abstraction, never missing a beat, delivering a political coup de grace”.

The cover of the EP bore a black sticker reading the following:

Flutter has been programmed in such a way that no bars contain identical beats and can therefore be played under the proposed new law. However, we advise DJs to have a lawyer and a musicologist present at all times to confirm the non-repetitive nature of the music in the event of police harassment.

The black sticker sealing the track warned buyers that upon opening "you accept full responsibility for any consequential action resulting from this product's use". Rob and Sean weren’t just mucking around either. Every penny raised by sales of the EP would be given to the human rights advocacy group Liberty. The note, on what must have been a rather large label, sealing the record ended by saying: "Autechre is politically non-aligned. This is about personal freedom." 

This, I believe, is political protest at its finest. Subversive, intelligent and highly artistic, it makes a mockery of a piece of government legislation that was ill conceived and mostly reactionary. It brings to light the fatuity of government making such highly discretionary legislation and the ingenuity of individuals in being able to so deftly mock it.

Off the rails - why incentives matter

Transport Secretary, Grant Shapps, was asked on Sky News whether giving franchises incentives to be punctual meant that they could lose their contracts for poor performance, or if bonuses were a possibility for on-time working.

He answered: ‘If you don’t run trains on time, don’t pay them. If you do, then do pay them. So it’s a pretty straightforward thing. What’s happening at the moment ... is they’re paid even when they don’t run trains on time and that is one of the reasons why we’ve ended up with a very dysfunctional system. It’s too fragmented.’

Sounds pretty straightforward - but there’s been some level of backlash. Last week, I debated the comments in City A.M, with my opponent (Richard Hyde of the Social Market Foundation) calling the proposal to give firms who run on time bonuses ‘Python-esque in its absurdity.’ 

There’s an important distinction to make here: that Shapps isn’t just offering incentives for operators to deliver an agreed service, but repercussions if they fail. If big rail monopolies commit to a service, fail to deliver it, passengers will think it’s right to expect ramifications except in the most extreme circumstances. 

Although privatisation has more than doubled the number of rail journeys and massively increased capacity — consumers still feel the system isn’t quite working for them. The issue is a lack of competition. Just as air routes have competition on them, so should our railways. Where this already happens prices are lower, and passengers are happier with the service. 

The Adam Smith Institute has called previously for Open Access on our railways - allowing different operators to compete on the same routes for passengers. According to our research, fares on Open Access lines are up to 55% cheaper than monopolised routes - and Open Access operators have the highest level of passenger satisfaction. Open Access operator Grand Central has had the largest increase of passengers of any train company, up 12% over 2017-18, discluding Transport for London services.

As annoyance with our rail services grows amongst commuters, we hope Shapps and the Department for Transport legislate to encourage more competition in our railways. In the meantime, though, introducing incentives to operators to improve their service rather than allowing monopolies to ride roughshod over consumers with no fear for their bottom line is a good step forward.