Alfred Nobel gave us armaments and achievement prizes
On November 25th, 1867, Alfred Nobel filed a patent for a new type of explosive he called 'dynamite.' Nobel was a Swedish businessman, but also a chemist, an engineer and an inventor. He held 355 different patents, with the first, filed in England in 1857, being for a gas meter. His first Swedish one, in 1863, was for "ways to prepare gunpowder." He'd acquired an early interest in explosives from his father, and pioneered many innovations in that field. He invented a detonator in 1863, and two years later designed the blasting cap.
He met Ascanio Sobrero, the inventor of nitroglycerin, and became interested in discovering ways to make it safe. It was so unstable and unpredictable that Sobrero himself was opposed to its use. Heat or pressure could make it explode, so Nobel wanted something that made it stable enough to be safely stored and transported. That would make it commercially viable if it could be done.
He found that nitroglycerin could be blended into an absorbent, inert substance such as diatomaceous earth, a soft, siliceous sedimentary rock easily crumbled into a fine whitish powder. This made it safe to handle and more convenient to use. He called it 'dynamite' and patented it in 1867. It was rapidly taken up in the mining industry, and used extensively in building transport links, including tunnels.
Nobel tried combining nitroglycerin with nitrocellulose compounds, and finally achieved a transparent, jelly-like substance more powerful than dynamite. He patented it as 'gelignite.' It was more stable, easily transported, and could be shaped to fit in the holes made in drilling and mining. It became the standard technology used in mining, and made Nobel even richer than his previous inventions had made him.
In 1888 Nobel was the subject of one of those curious accidents of history that can change world events. His brother Ludvig died in France. Mistakenly thinking it was Alfred Nobel, rather than Ludvig, who had died, several newspapers ran obituaries of Alfred instead. They included a French one headlined, "The merchant of death is dead," and which went on to say, "Dr Alfred Nobel, who became rich by finding ways to kill more people faster than ever before, died yesterday."
Nobel was appalled to think that this was how he might be remembered, and resolved to improve his standing in the world by doing something more positive and worthwhile. He decided to bequeath his considerable fortune to fund an institution that would award prizes for excellent achievements in scientific fields, literature and peace. This established the Nobel Prizes. Six of them are awarded each year, one in each of the following categories: literature, physics, chemistry, peace, economics, and physiology and medicine. The economics prize, established in 1968, is actually called "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel," but it is administered by the Nobel Committee and regarded as a Nobel Prize, with its winners called Nobel laureates.
These are regarded as the highest honours in their field, except perhaps for the Peace Prize, somewhat devalued by recent politically motivated awards to Al Gore, Barack Obama and the European Union. But the others are highly respected and honour the memory of Alfred Nobel in ways that he would have wished, as a philanthropist and benefactor instead of a weapons dealer. He gained one other honour he would have liked. The synthetic element nobelium was named after him.
Another Whitehall Farce now running in NHS Theatres
One rarely sees a letter from a Cabinet Minister instructing a senior public servant to break the law. Matt Hancock’s letter of 22 November 2019 to Simon Stevens, Chief Executive of NHS England, appears to have done exactly that. In his 18 November letter, Stevens requested approval for “a commitment to make payments to certain clinical staff outside of the NHS pension schemes to restore the value of their pension benefits package, if they have elected to use the “Scheme Pays” facility to settle an annual allowance tax charge arising from of [sic] their pension saving in the NHS schemes in 2019/20.”
He and his Principal Accounting Officer needed written “Direction” from the Secretary of State because an employer paying its employees’ tax bills is evasion. Section 5.6.1 of HM Treasury’s rules for “Managing Public Money” state: “Public sector organisations should not engage in, or connive at, tax evasion, tax avoidance or tax planning. If a public sector organisation were to obtain financial advantage by moderating the tax paid by a contractor, supplier or other counterparty, it would usually mean that the Exchequer as a whole would be worse off – thus conflicting with the accounting officer’s duties (section 3.3). Thus artificial tax avoidance schemes should normally be rejected. It should be standard practice to consult HMRC about transactions involving non-standard approaches to tax before going ahead.” [1]
Although the matter was discussed with HM Treasury, there is no mention of discussion with HMRC, as Section 5.6.1 requires, nor of the tax treatment of the subsequent topping up of pension pots which would normally be regarded as additional (taxable) salary nor of the pension pot excesses that would result.
The problem goes back to 2015 when some bright spark in the Treasury, leaning somewhat to the left of Lenin, decided that NHS consultants were putting too much into their pension pots and should be penalised for so doing. They forgot to tell the consultants about the resulting 2016 tax change, so earlier this year, those who had worked overtime in 2016/7 were surprised by large tax bills. In many cases, effective tax rates exceeded 100%; in other words, consultants were having to pay the Treasury for the pleasure of doing overtime in surgical theatres and A&E departments.
The Department of Health and Social Care became aware of the problem at least by May 2019 but beyond soothing words and fruitless discussions with the Treasury, nothing was done. The Treasury, of course, is never wrong.
On 7 November, the Royal College of Surgeons published a “Survey on the NHS Pension Scheme”. Their key findings were “69% of consultant surgeons have reduced the amount of time they have spent working in the NHS as a direct result of changes to pension taxation rules. This coincides with a period of rising and record waiting lists for planned operations” and “68% of consultant surgeons are considering early retirement because of the new pension arrangements.” Personal contacts tell me that much the same applies in A&E which is heading for record long waiting times even with this week’s intervention by Messrs Hancock and Stevens.
There is nothing like an election to concentrate minds. The Conservative manifesto released on 24 November states “We also want to make sure that doctors spend as much time as possible treating patients, so we will address the ‘taper problem’ in doctors’ pensions, which causes many to turn down extra shifts for fear of high tax bills. Within our first 30 days, we will hold an urgent review, working with the British Medical Association and Academy of Medical Royal Colleges to solve the problem.” (p.10). But then Whitehall has been holding “urgent reviews” for six months without finding a legal solution.
Whitehall must sort this out before the end of the tax year as otherwise the illegitimacy will increase when the pension pots are topped up and there will be another two years of compensation due to NHS staff earning over £110,000 p.a. and doing overtime.
The truth is that this is just another Whitehall farce of many. Training places have been restricted for doctors for decades (short term thinking) so that the Conservatives now claim they will magic 12% more GPs by next year and 17% more appointments, a remarkable increase in productivity by any standards. Training place preference, also over decades, has been given, for ideological reasons, to those most likely to work part-time. Specialisation and big hospitals have been favoured over the much better value general practice. “A year's worth of GP care per patient costs less than two A&E visits, and we spend less on general practice than on hospital outpatients.” Surgeons complain that expensive theatres and kit lie idle because staff scheduling is incompetent.
The NHS has become a political football and a very expensive one at that. We need a cross party consensus on the structure and management of NHS England to run alongside the one the Conservatives now propose for Social Care. And we need it now.
[1] HM Treasury Managing public money, July 2013 with annexes revised as at September 2019, p.36.
It's taken more than a decade so far but then this is what we do
Boris Johnson might have been speaking more off the cuff than in a fully planned manner but this is good news:
Boris Johnson says workers will not have to pay National Insurance until they earn £12,000 if the Conservatives are elected to power.
Answering questions in Teesside, the prime minister promised his party would ensure "low tax for working people".
The current threshold sees workers paying National Insurance contributions once they earn £8,628 a year.
Mr Johnson had promised to raise the threshold to £12,500 during the Tory leadership contest.
That pledge could see workers saving up to £465 a year.
We started making this point back in 2008 as the living wage people started their campaign. The difference between the minimum wage then and the claimed living wage was entirely made up of the tax that we charge to the incomes of poor people. The solution was and is, therefore, to charge less tax to those low incomes.
So far we have had partial success, the income tax allowance has more than doubled to £12,500. We have always said that this should be true of national insurance too. It looks like this is now going to happen.
And a success it is too. For if you want the working poor to have more money then stop taxing them so damn much.
This is also rather what we do. Madsen Pirie has described our job here as to be the voices howling nonsense out in the wilderness. Give it a decade and it’s the received wisdom and it all gets enacted.
However, we are not quite finished, shoulders back to the grindstone. One of the reasons we know this is our proposal is that the full year, full time, minimum wage was about £12,500 when we started our shouting at full volume. Our point being that if there is this irreducible minimum that someone should get paid then that’s why it shouldn’t be taxed. Because, you know, irreducible minimum. Now that said minimum is up at £16,000, people are talking about it moving to £18,000, then that’s what those allowances should be. Irreducible, just and righteous minimum, d’ye see?
Oh, and it should also apply to employers’ national insurance for, as we all know and agree, that is incident upon the workers’ wages.
Steel nationalized
The steel industry in Britain was nationalized on November 24th, 1949, with the passage of the Labour government's Iron and Steel Act. This was reversed by the Conservative government elected in 1951, but the industry was nationalized again in 1967 under a Labour government as British Steel Corporation.
The problem with steelmaking in Britain has been that political control meant that the post-war industry was never properly capitalized and modernized. Its processes were outdated and expensive, inefficiently operating below capacity, and new competitors overseas were entering the market to undercut it on both price and delivery dates. Meanwhile government price controls hindered the domestic industry, as did higher coal and oil costs.
Following the 1967 re-nationalization, the Labour government's main objective was to keep employment as high as it could, especially in depressed regions where most of the steel plants were located. Many of plants were kept going by subsidies, since they were now loss-making. Nationalized industries are often under-capitalized simply because governments always have more pressing claims on their finances. Parents and patients shout louder at elections than do future steelworkers. The constant temptation is to divert funds to current spending and postpone investment in plant and infrastructure.
The industry was privatized in 1988 by the Conservative government of Margaret Thatcher. It became British Steel plc, and its employees were given a free quota of shares, plus a two-for one offer if they bought more at discounted prices. The company later merged with the Dutch steelmaker Koninklijke Hoogovens, to form Corus Group, and Corus itself was taken over by the Indian group, Tata Steel.
Tata itself has faced troubles, and saw British Steel go into liquidation earlier this year, kept going by the Official Receiver since then. Earlier this month, Chinese firm Jingye agreed to invest £1.2bn in British Steel as it signed a deal to rescue the UK steelmaker, and said it would seek to "preserve thousands of jobs in a key foundation industry for the UK."
One of the lessons we learn from the story of steelmaking in Britain is that nationalization doesn't work. It places industries into the political domain rather than the economic one. Their output and activities become directed to serving government priorities rather than market ones. Decisions are made to win voter support that make no economic sense. In nationalized industries the unions are able to acquire greater power in terms of wages and conditions, and this often makes such industries non-competitive internationally, leading governments to protect them by tariffs or subsidies.
The second lesson is that economies are dynamic; their reality is churn. Industries will always face new challenges and new forms of competition and will need to be flexible and adaptable if they are to survive and prosper. With new countries exploiting their natural resources and low-cost labour to produce cheap steel, the British steel industry might well have prospered by going upmarket into high quality products instead of the mass-market stuff. It did to some extent, but not sufficiently, and not soon enough. This flexibility and adaptability is something private businesses do much better than government-run nationalized ones do.
The children being paid $1 a week
The Guardian tells us of children in Zimbabwe making just $1 a week working in the sugar cane fields. Indeed a dreadful happening:
“I’ve never been to school. This is all I do,” he tells the Guardian in a shy voice. “I am helping my grandmother. If I don’t do it, we will die of hunger. My grandmother does not want me to go hungry, so she encourages me to work. It is tough, I get sick sometimes.”
Tapiwa is joined in this “maricho” (menial work) by his grandmother. They both earn $2 (£1.5) every fortnight.
This goes towards buying food and soap. “I would want to go to school one day so that I [can] buy my grandmother what she wants,” Tapiwa says.
This is life for the poorest young boys at the plantations. Mukwasine farmers have been criticised for underpaying labourers who constitute a critical part of the sugarcane industry in Zimbabwe. In cane cutting season, local farmers want cheap, casual labour.
What we’d like to know is, well, what caused this? Zimbabwe used to be better, richer, than this.
We could perhaps point to the ruination of the economy brought about by the insistence that it was to make it fairer. Or in more detail the breaking up of commercial and productive farms into peasant and green plots. These wages are being paid by very small scale farmers. Or to return to the grander scale, point out that Zimbabwe has had a state directed economy this past 30 years, something that doesn’t seem to have worked out well.
But that would be to project that story of utter destitution onto our own political and electoral concerns, wouldn’t it? Something that would be unfair because none of those vying to rule us at present have held up Zimbabwe as a model for our own lives. Venezuela on the other hand…..
Russia murders dissidents
Alexander Litvinenko was a one-time officer in the Russian FSB, successor to the KGB intelligence service. His task there was dealing with organized crime. He died in London on November 23rd, 2006, having been poisoned by Kremlin agents with radioactive polonium-210.
What aroused Vladimir Putin’s anger was that Litvinenko had identified links between the Russian hierarchy and organized crime. He coined the term ‘Mafia state,’ and went public at a Moscow press conference with details of officially ordered or sanctioned murders of political dissidents and reporters.
He was dismissed from the FSB on Putin’s orders, and put on trial for “exceeding the authority of his position.” He was acquitted, and fled to Britain vis Turkey with his family before new charges could be brought against hm. In the UK he became a writer and a journalist, and also, according to his widow, worked as a consultant with MI5 and MI6, helping them combat Russian organized crime in Europe. He became a UK citizen.
On the day he fell ill, Litvinenko had met another former Russian agent, Dmitry Kovtun, who was later found to have left Polonium traces in both the house and the car he had recently used in Hamburg. After Litvinenko’s death, a British murder enquiry identified Andrey Lugovoy, a former member of Russia's Federal Protective Service, as the prime suspect. The United Kingdom demanded that he be extradited to face trial, but this was denied, as Russia does not extradite its citizens.
A further British enquiry concluded in 2016 that he had been murdered by the Russian FSB, probably with the approval of Vladimir Putin himself, and Nikolai Patrushev, at the time FSB Director. His widow confirmed that her late husband had provided useful information to MI6 about senior Kremlin figures and their links with organized crime.
There are obvious parallels with the attempted murder of Sergei Skripal and his daughter Yulia in March, 2018, in Salisbury. Skripal had worked with UK intelligence as a double agent until he was caught and sentenced to 13 years in a penal colony. He came to the UK after a spy swap, and took British citizenship, He and his daughter were critically ill, but recovered after intensive care. The nerve agent Novichok was identified as the toxin. Two Britons later became seriously ill, and one died, after they picked up the discarded scent spray that had been used in the attack.
The UK identified the two people who had carried out the Salisbury attack, and was supported by 28 countries when it announced punitive measures against Russia. A total of 153 Russian diplomats were expelled. The culprits were identified as Colonel Anatoliy Chepiga and Dr. Alexander Mishkin, both ranking officers in the GRU, Russia’s military intelligence. The operation was almost certainly sanctioned by Putin himself. They appeared in a laughably inept interview on Russian TV, talking of the wonders of Salisbury Cathedral, which they claim they had just visited as tourists.
Two facts are significant about both poisonings. In both cases the victims had already revealed all they knew. They were targeted in revenge attacks, and in both cases an exotic poison was used that could only have originated from Russia. Russia is telling the world that it has the ability and the resolve to kill anyone who it feels has acted against it. It further lets the world know that it can do this with relative impunity.
The incidents expose Putin as a thug and a bully, and someone not to be trusted. It might be appropriate for him to be tried in absentia in a public trial for these murders and attempted murders. Witnesses could be called upon to testify, and a verdict reached that would show the world what he is, and give some small satisfaction to the relatives of his victims.
Lidl and the living wage
We find this interesting:
Lidl is giving its UK staff a pay rise worth £10m with a higher hourly rate likely to propel it to the top of the supermarket pay league table.
The retailer said 19,000 employees would get a pay rise in March when its hourly rate would move from £9 to £9.30 outside London and from £10.55 to £10.75 in the capital. The rises match the higher rate announced by the Living Wage Foundation – the charity which sets the voluntary measure – last week.
This is consistent with the basic analysis of higher wages. Employers who use labour more productively can - and often will - pay higher wages. The other side of the same statement being that those who employ more productive labour employ less labour. That’s what more productive means, that you get the same output from the input of less labour time.
That is, higher wages mean fewer have jobs. Our example here, Lidl, is famed for cutting back on the labour used to provide retail services. Shelf-stacking is in fact box-stacking, not individual items. Barcodes are printed on every side of the packaging to reduce till time.
Lidl is a labour-light method of retail. Which is why they can - and do - pay those higher wages.
But it’s this which we find absolutely fascinating:
Katherine Chapman, the director of the Living Wage Foundation, said: “It’s a great to hear that Lidl will be going beyond the government minimum and paying the new real living wage rate to employees. However, as Lidl is not accredited with the Living Wage Foundation, we can’t be sure that its subcontracted staff, such as cleaners, trolley collectors and warehouse workers, are paid this rate.”
We’re rather straying into the realms of religion here rather than economics or justice. Actions don’t matter so much in receiving that imprimatur.
To find out more details about the criteria for accreditation, read the FAQs. There is a sliding scale of accreditation fees depending on the size of your organisation.
Much more important is paying the tithe to keep the Tarquins and Jocastas in their comfortable offices.
The medieval Catholic Church would have been proud of that, home as it so often was to the extra, superfluous, offspring of the upper classes looking for a comfy berth.
Thomas Cook and package tours
Thomas Cook virtually invented modern tourism. He was born on November 22nd, 1808, in the village of Melbourne in Derbyshire. He started work aged 10, first as a market gardener, then as a cabinet maker.
He saw the possibilities the new railways offered, and conceived the idea of taking people in groups on them. He first took 500 people from Leicester to Loughborough for a temperance rally, charging them a shilling (£0.05) for the round trip. He later took 350 people from Leicester on a tour of Scotland, then 150,000 people to London for the 1851 Great Exhibition.
In 1855 he undertook his first foreign tour, taking two groups on a circular tour of Belgium, Germany and France, ending in Paris for the French Exhibition. He later introduced ‘hotel coupons’ in counterfoil books, to be traded for hotel stays and meals at places on the Thomas Cook list. These were the first travellers cheques, and became big business.
By now his Fleet Street shop was selling travel accessories such as luggage and guide books, and he’d entered partnership with this son as “Thomas Cook & Son.” His package holidays had ushered in an age of mass tourism, opening up the Continent to British visitors, and Britain to tourists from abroad.
After his death the business passed to his sons, then grandsons, and remained in the family hands until 1928. It became one of the biggest travel firms in the world, adapting itself to the emergence of mass air travel to supplement. It went under just two months ago owing to what analysts declared was poor financial management. There was still money to be made from holidays, but the firm had taken on too much debt and was no longer able to meet its obligations. When it went out of business on 23 September, it was about £1.7bn in debt to its banks with a further £1.3bn owed to suppliers.
A further factor was competition. Newer, leaner firms were undercutting its prices and taking market share from it. This is what the market does. It is part of the constant churn as new products and processes enter the market with new competitors. Ways are found to cut costs, and those firms which lag behind in doing so find themselves displaced by those which are quicker to embrace the new opportunities.
It was sad to see Thomas Cook go, especially with so many job losses. The firm had a distinguished history and was embedded into UK holiday culture. But many famous household names have gone the same way, and others undoubtedly will. A look at the top 100 FTSE companies over time shows this churn, as newer names replace the familiar ones. The churn causes localized distress, usually brief, but new opportunities and better value result from it.
Selling the NHS - What do you think we'd get for it?
A consistent claim at present is that - it being election season we’ll not identify who - some would sell the NHS off to American corporations. Which raises an interesting question really, how much would we get for it if we did?
As both parties tried to seize the initiative over the NHS, Corbyn at one point brandished a document he claimed showed that US negotiators hoped to secure full access to Britain’s health sector as part of a bilateral trade deal after Brexit.
“Full market access for US products to our National Health Service. You’re going to sell our National Health Service to the United States and big pharma,” he accused Johnson.
Full market access would mean American corporations would be treated just like any other supplier to the NHS. It does, after all, buy bandages, aspirin, food for the patients and the canteens and so on. Quite why allowing more people to bid for such contracts is a terror is unknown to us.
But think of trying to actually sell it. Flogging off the hospitals, the clinics. What would we get for it?
Sure, there are assets there but they’re not all that valuable without an income stream to cover their costs. That income stream currently being tax revenues. That is, the NHS, without its tax funding, is worth nothing more or less. Things that are worth nothing we find it very difficult to sell.
So, we could try and sell the NHS, sure. But to do so we’d have to insist that we were going to continue to fund it from general tax revenues. At which point, well, what would then have changed? We’d have a tax funded health service just as we do now. The intervention of those American corporations would just be a different set of managers handling the income stream and the assets. Which doesn’t strike us as being all that much of a terror.
Note what selling the NHS, lock stock and barrel, would not do - create that same set of employment based health insurance.
At which point we’ve two possible outcomes. We don’t continue tax funding and we can’t sell it, we do continue tax funding and it’s pretty much as it is. Thus we struggle to understand even what the claim, the allegation, is.
Oh, sure, we understand the emotional tug of the claim upon those British heartstrings. But surely we don’t think that appeals to irrationality are the way to manage 10% of the British economy.
Do we?
Economic warfare
The Berlin Decree, issued by Napoleon on November 21st, 1806, declared economic warfare on Britain. The British Order in Council of six months earlier had started a blockade of French ports; now France responded by banning all contacts and commerce with Britain. British subjects found in France or its allies were to be seized, as were British goods and merchandise. Vessels violating this order were to be confiscated along with their cargoes.
Napoleon thought to force Britain to surrender by stopping its industries from trading with continental Europe. The lack of foreign gold coming in for its exports would bankrupt Britain’s Treasury, he supposed. His “Continental System” might have looked plausible in theory, but was difficult to enforce in practice over the large landmass he controlled. Furthermore, it was unpopular among the peoples of Europe, and some nations unilaterally ceased to comply with its terms.
Smugglers readily exploited the blockade because British goods were welcomed on the Continent. This was especially rife in Spain and Portugal, prompting Napoleon to invade Spain to enforce it, then Russia when the Tsar withdrew his country from it. His big defeats in both Spain and Russia ultimately led to his demise.
The British economy suffered much less because Britain had command of the seas and could engage in transatlantic and colonial trade. The Continental ports never recovered their position because of the loss of trade and the industries dependent on it, such as sugar refining and shipbuilding. Far from ruining Britain, the Continental System ultimately ruined France.
The fate of Napoleon’s Continental system calls into question the whole effectiveness of economic warfare, which today takes the form of sanctions. Sanctions against a country designed to pressure its government generally hurt its poorer peoples most by depriving them of cheap goods, and hurting its financial ability to provide the public services that poorer people often depend upon.
This is the main reason why sanctions today are often applied to named individuals in foreign governments, and to particular corporations, rather than to countries as a whole. There is much dispute over their effectiveness. They seem to work in some cases, but not in others, and it seems to depend on the size and type of economy involved. Some analysts doubt that sanctions against Russia following its annexation of the Crimea have had much effect on restraining the actions of its government. On the other hand, sanctions against Iran seem to have had a major impact on its economy, stirring up resentment of its government by its people.
When a country violates international law, or reneges on agreements it entered into, there is a strong desire of those affected by this to do something in response. Short of armed intervention, the imposition of sanctions presents itself as a form of punishment, or a means of forcing the recalcitrant government to the negotiating table. It is a blunt instrument, though, and generally harms both sides. The countries that use them sometimes commit the fallacy of “We must do something,” feeling that to do something ineffective is better than doing nothing at all. In reality, it isn’t.