It's a very odd definition of success

The aim of an economic system is to produce enough of something while still being able to produce the maximal amount of everything else. Producing too much of the one thing means that we are producing, well, too much of that and are thus gaining not as much of everything else as we could be getting. We are therefore poorer.

Which makes this a very odd definition of success:

Thousands of homes across Britain were offered the chance to earn extra money this month by turning their electric vehicles on to charge overnight or setting a timer on their laundry load. Customers on a new breed of “smart” tariff were effectively paid to help make use of the UK’s abundant wind power generation, which reached a record 16GW of electricity, to make up 45% of the generation mix for the first time.

It is an early glimpse of the increasingly important role that cheap, renewable energy will play in the decade ahead – and a timely reminder to the new government of the huge potential that could be harnessed with the right policies to support one of the UK’s fastest-growing industries.

Devoting resources to producing something in such glut that we quite literally could not give it away? We’re fine with dealing with whatever dangers it might be that climate change sends our way, even reducing them if that’s the correct option. But spraying societal wealth down the drain just doesn’t seem to be the correct response to anything at all.

First flight of the Blackbird

In great secrecy on December 22nd, 1964, one of the most awesome planes ever built was rolled out at Air Force Plant 42 in California, and took its first flight. On that very first flight it achieved a speed of Mach 3.4. This was the SR-71 Blackbird, a plane that played an honoured role in the Cold War

Wars are often started through uncertainty, when a potential aggressor is uncertain of the response. This makes intelligence extremely important; you need to know your enemy's capabilities. Behind the Iron Curtain NATO needed to assess the USSR's capabilities, and what aggressive potential it had. The US initially used the U2 spy plane, but it was becoming vulnerable to interception by missiles, and a successor was needed.

Kelly Johnson at Lockheed's "Skunk Works," created the SR-71. Its shape was designed to reflect radar beams, it was coated in radar-absorbent iron-ferrite paint, and its fuel was mixed to minimize exhaust trails. It could fly at over Mach 3 at 80,000 feet, and was able to outrun any enemy aircraft and missiles. It gathered massive reconnaissance on its many flights, identifying potential enemy positions and military assets. Its appearance was thrillingly exotic, and breathtakingly elegant. It became an icon.

It had ground-breaking technology. It was 85% heat-resistant titanium, with windows of quartz. During flights its exterior could exceed 500F, and when it landed, it had a long period to cool down before the crew could leave it or the ground crew could approach it. It leaked fuel on the runway at take-off because the tanks were designed to expand and seal with the heat once it was flying up to speed.

Its twin J58 engines needed vehicle-mounted starter engines to get them going, and moved to partial ramjet mode at high speeds and altitudes. It was soon breaking records for speeds and altitudes, though many remained long classified. It once established a New York to London record flight time of 1 hour and 54 minutes.

32 Blackbirds were built, and although 12 were damaged or lost in accidents, none was lost to enemy action, even though it was in harm's way many times. During the Vietnam war years, over 800 enemy missiles were fired at it, none successfully. It had missile attacks against it over Libya and North Korea, but it outran them all.

It served with the US Air Force for 32 years, from 1964 to 1998, and NASA operated the two last airworthy Blackbirds until 1999. Its missions helped keep the peace by keeping NATO apprised of possible enemy capabilities and deployment. It was finally superseded by reconnaissance satellites, but its career reminds us of the constant need to be on our guard, to be alert to possible enemy plans, and to construct defences to meet new offensive capabilities that our potential adversaries develop. The price of liberty is eternal vigilance, and the Blackbird performed an essential part of that vigilance. On the 55th anniversary of its maiden flight, we salute it.

The Keynesian ratchet

Note that we say ratchet, although racket is also a useful description.

Approximately 700,000 Americans will soon lose their benefits as the government tightens the regulations around stable work requirements for recipients, stretching the already scarce resources of the communities that Waide’s operation helps.

Those communities are often African American, raising the prospect that Trump’s move will put extra stress on minority families. Approximately one in three households using Snap benefits are African American. In general, African American households are more likely to experience food insecurity, according to the Center on Budget and Policy Priorities. In 2016, Snap helped more than 13 million African American households put food on the table, according to data from the US agriculture department’s fiscal year 2016 Snap Households Characteristic data.

Snap is food stamps, one of the major pieces of US spending upon - or for the benefit of perhaps - the poor.

One observation is that if it is black Americans who will lose most from this reduction in the program then it must be black Americans who gain most from it at present. Given the social background in the US insisting that welfare aids blacks most might not be the wisest political idea ever.

But that’s not our point here - nor is whether the current, past or future levels of Snap are correct in the overall sense. Rather, that ratchet.

For Snap eligibility was greatly expanded in those dark economic days of the first Obama Administration. We can argue that that was the correct economic response too, in that Keynesian manner. Increase the deficit, get money into the hands of the people who will spend it, thereby boosting the economy. We could even call it a version of Milton Friedman’s helicopter money.

OK. But implicit in that justification is that when the dark days have gone - possibly when there’s no longer an Obama Administration - then that stimulation of the economy should cease. But note what happens when this is suggested. Instead of a general agreement that we’re finished now with Keynesian stimulus we have the shouting that we’re stealing crusts from starveling babies.

That’s the Keynesian ratchet. Even if it is true that there should be deficit paid for stimulus the justification for the increased spending changes when it becomes time to reduce it again. So that the spending never is - or never should be - reduced in those better economic times.

All of which is rather why we agree with the later Keynes himself. Assume, again, that the stimulus should happen - we’re not sure we do agree with this but make that assumption. It should be done by cutting taxation, not increasing spending. Again as Keynes suggested, by cutting social security (national insurance for the UK) taxes. The benefit of this being that the clamour to revive state revenues, when the crisis is past, will be rather greater than that to reduce state spending.

That is, pro-poor tax cuts in recession will alleviate the problem without becoming a permanent part of the economic settlement. We abolish the ratchet.

Of course, we’re pro-pro-poor tax cuts all the time anyway but that’s a rather more structural matter.

Benjamin Disraeli, a strange Prime Minister

On December 21st, 1804, was born a man destined to become one of Britain's strangest Prime Ministers. This was Benjamin Disraeli. His background was ordinary, middle class, though he later romanticized it. Born and raised initially Jewish, his father renounced Judaism after a dispute with his synagogue, converted to Christianity, and had all four of his children baptized as Anglicans when young Benjamin was 12. This opened up the possibility of a political career, since Jews could not at that time take the Christian oath of allegiance without converting, at least nominally. In his 20th year, Disraeli changed the spelling of his name from D'Israeli to Disraeli.

As an MP, Disraeli was extrovert, even flashy. At times he wore white kid gloves with rings outside them. He was drawn to glamour and glitter, and loved celebrity. He wrote novels, including his famous political novels. In which his ideas were expressed by fictional characters.

Initially in Parliament he backed the landowning aristocrats in opposing Robert Peel's attempt to open the country to cheap imports by repealing the Corn Laws, laws which protected the incomes of the landowning classes. When the laws were repealed, Disraeli helped bring down Peel and split the party. When he later became first Chancellor, then Prime Minister, however, he refused to repeal them.

In office he followed Peel's policy of bidding for the support of voters newly-enfranchised by electoral reforms. He enacted measures to protect and assist workers, often in opposition to the merchant and manufacturing class who found Gladstone's Liberals more to their political taste. It was the age-old combination of king and peasants versus the barons that he was constructing, only in this case it was Tories and workers versus bosses.

Disraeli lowered taxes on malt to lower the cost of the workers' beer, and refused to reimpose the Corn Laws when efficient transatlantic freight, enabled by newly-efficient steam engines, brought in cheap harvests from the American mid-west. He passed Acts to support public health and education, and to enable low-cost housing to be built. He called it a "One Nation" policy, but it more resembled class politics designed to give his party a sold base among the new voters.

The icing on top of his cake was imperialism, hugely popular among the working classes. They might come low in the national pecking order, but they took immense pride in being members of the world's mightiest empire. Queen Victoria liked it, too, and preferred Disraeli to the somewhat cold and stern Gladstone. "She liked flattery," said Disraeli, "and I laid it on with a trowel."

There is a parallel with recent UK events, in that the Prime Minister, Boris Johnson, seems to be forming a similar coalition, bidding for support in what were once the Labour heartlands of the Northern and Midland working classes. Like Disraeli, he appeals to the basic patriotism they embrace. His message is one of an independent and proud Britain that stands up to bullying and threats from overseas.

Whether Johnson will be as successful as Disraeli in forging and maintaining that coalition against the bubble politics of the urban and academic elite, as Disraeli did against the merchants and manufacturers, remains to be seen. As ever, time will tell, though the early portents look promising.

WeWork and Robert Shiller on the Efficient Markets Hypothesis

WeWork was and is, as well as being a hugely amusing tale of hubris, a lesson in the efficient markets hypothesis, the EMH.

As we might recall the little joke - economists aren’t all that good at this humour thing - the Nobel was awarded to Eugene Fama, Lars Peter Hansen and Robert Shiller, one for proving the EMH, the second for doing the maths, the third for disproving it. Which isn’t quite the way it did work. Shiller refined the idea.

That EMH not being a statement that markets are always the efficient way of doing things, nor that everything should be done by markets in order to be efficient. Rather, that markets are efficient at processing information. Thus things that are known are already in market prices.

Shiller’s addition was that this is only true when everyone in that market can trade their view. Thus, given the difficulty of going short housing the persistence and extremity of the American housing boom. And so his proposal that to limit future such problems there should be a futures market in house prices where people could bet on price falls. That would get the views of bears into market prices.

At which point, a comment on WeWork:

One of the great mysteries of modern finance is how to make money when you know there’s a bubble, or at least how to get much, much richer than everyone else. The obvious way is to bet against the bubble, but this is difficult, as its expansion can easily outlast one’s ability to finance the wager. It’s even harder if the bubble is primarily happening in the private markets, where it is very difficult, if not impossible, to directly bet against the fortunes of a company that you think is overvalued.

Quite so, it was the exposure of WeWork to those wider financial markets that precipitated the implosion. You know, the financial markets where a couple of months after the IPO people could go short the shares and thereby communicate their view that it was a dog. That echoing back in time to mean there was no IPO.

This also explaining why the EMH does indeed imply, even if not directly state, that markets are efficient ways of doing things. For the alternative to markets is command and control, usually by government. Which isn’t ever subject to that same reality confirming pressure of the opinions of those who are quite sure it’s a dog.

We offer HS2 as a confirmation of that contention. It’s only because it’s not subject to the oversight is people risking their own money that it’s lasted this long, isn’t it.

Building the Unity Bridge

As part of his campaign for the 2019 Conservative Party leadership election Boris Johnson suggested that he supported the construction of the bridge, describing himself as "an enthusiast for that idea", and adding that he believed it would be best "championed by local people with local consent and interest, backed by local business."

In September, 2019, the UK government had requested civil servants in the Treasury and Department for Transport undertake a cost and risk analysis of the proposed bridge, with special attention to be paid to possible funding options. The Department for Transport had reportedly already produced a factual paper on the subject for a former transport secretary. When asked to comment on the project the Secretary of State for Business, Energy and Industrial Strategy said the UK had "amazing ambitions for the future." 

The Independent's Europe Correspondent suggested that the UK was lagging behind by not taking the construction of the bridge seriously, suggesting that other countries had already invested in such bridges. The newspaper cited the example of Japan's islands of Honshu and Hokkaido, which are linked by the Seikan Tunnel which exceeds the length of the proposed bridge. It also cited the examples of the Fehmarn Belt Fixed Link and the Helsinki-Tallinn Tunnel as evidence that the UK was lagging behind comparative European nations. 

While addressing supporters for the bridge in Northern Ireland UK Prime Minister Boris Johnson is quoted as having said "With infrastructure projects, finance is not the issue, the issue is political will, the issue is getting the business community to see that this could be something that works for them, the issue is getting popular demand and popular consent for a great infrastructure project - and that is why you need Stormont."  

In late September, 2019, a group of engineers wrote to the National Geographic magazine agreeing that it was "technically possible and far from unrealistic to build" the bridge. The architect, Alan Dunlop, has suggested two possible routes: a 12-mile span covering the shortest gap from Mull of Kintyre, or a Southern route from Portpatrick to Larne. The Northern one might be too remote, whereas the Southern one is closer to Belfast, and has current road infrastructure.

The depth, rather than the length, poses difficulties, but none that cannot be overcome. Dunlop suggests it might be constructed like an oil rig, anchored to the sea bed by cables. While seas in the area can be rough, he points out that the Hong Kong-Zhuhai-Macau Bridge, a 34-mile series of cable-stayed bridges, an undersea tunnel and four artificial islands, which opened in China last year, “was designed and built to withstand typhoons.” Furthermore, his route is in shallower water to the North of the undersea dump of post-World War II munitions.

The Unity Bridge is technically feasible, and would unite the UK with a land crossing. Furthermore, it would also establish a land crossing between the Republic of Ireland and its EU partners. Lorries or trains could cross Northern Ireland, and head down to use the Channel Tunnel in the South. Some Irish and EU traders would find the bridge and tunnel tolls cheaper than loading and unloading ships. 

The venture would be a bold one, creating thousands of jobs where they ae most needed. It would, furthermore, be a symbol of the nation’s new-found confidence. And it would be a physical link tying Northern Ireland to the rest of the Union it is part of. It could be built, and it should be.

Flying Tigers in action

The American volunteer flyers who fought for China against the Japanese invasion were known as the ‘Flying Tigers.’ They saw their first combat on December 20th, 1941. They had originally thought this would be earlier, but various delays meant that it happened a few days after the US and Japan were officially at war.

The Tigers, officially the American Volunteer Group (AVG), were the brainchild of Claire L Chennault, a retired US officer working in China. He’d acted as military advisor to Chiang Kai-shek, then as director of the Chinese Flight School. 100 volunteers were all recruited from US air forces, officially discharged so they could become civilian volunteers to fight with the Chinese. They were employed for “training and instruction” by a civilian military contractor (CAMCO), which paid them roughly twice what their US pay would have been.

Chennault took charge of the purchase of 100 Curtiss P-40 ‘Tomahawk’ fighter planes. They were marked in Chinese colours, and painted with the distinctive shark face up front after pilots has seen a photo of an RAF P-40 similarly decorated. Chennault was a good tactical commander, and trained his pilots to take advantage of the P-40’s rugged strengths. It featured armour and self-sealing fuel tanks, and had a higher diving speed that most Japanese fighters.

Chennault forbade his flyers from engaging the more nimble enemy in a turning fight, but trained them to dive into attack, then pull away for another attack. His early warning system had Chinese villagers give warning of oncoming planes so his own planes could have an altitude advantage when they arrived. Although this manoeuvre went against US and RAF teaching, he’s seen the Soviets use it successfully. It worked, and saw his Flying Tigers credited with downing 296 enemy aircraft for the loss on only 14 of his own pilots. When his pilots eventually returned to the US, they found a bonus of $500 had been paid into their bank accounts for every enemy plane they shot down.

At a time when Japanese forces were streaming seemingly unchecked across Asia in a series of victories and conquests, news of the successes enjoyed by the Flying Tigers provided America with a much-needed morale boost, showing that the Japanese enemy could be beaten. It also cemented in the minds of Americans that the Chinese were allies facing a common enemy. A friend pf mine at St Andrews used to display a Coca-Cola poster from the period showing US pilots fraternizing with Chinese soldiers by drinking Coke together, with the caption, “Have a Coke - Good winds have blown you here.”

It was neither the first time, not the last, when brave Americans have fought for the freedom of other peoples. It was Jefferson’s US Navy that took on and ultimately routed the Libyan pirates wreaking havoc on Mediterranean shipping in the early 1800s. It was US forces that tipped the balance in two World Wars, and it was a US-led coalition that liberated Kuwait in Operation Desert Storm. What was different about the Flying Tigers was that they were volunteers, fighting an enemy superior in numbers and equipment.

The Flying Tigers received many honours American and Chinese. About to celebrate their 50th reunion in 1992, they were retroactively recognized as members of the U.S. military services during the seven months in combat against the Japanese. Their team was then awarded a Presidential Unit Citation for "professionalism, dedication to duty, and extraordinary heroism." And in 1996 their pilots received the Distinguished Flying Cross and their ground crew were all awarded the Bronze Star Medal.

It's just such an odd contention

The idea of recreating victory gardens seems to interest various people and given that we’re all liberals around here why not? If digging the front lawn for vegetables is what turns you on then have at it. It’s just that in one piece of praise for the idea we find this claim:

Together, we helped meet each other’s basic needs through an exchange, rather than using money.

Clearly the implication here is that exchange without the use of money is in some manner more moral. Or better, outstanding in some way. Which is the bit that we think such an odd contention.

For without money you can only exchange with those you actually know. What money as a medium of exchange allows is to do those exchanges with people you don’t know. The web of cooperation can extend - a la “I Pencil” - to all members of our species, not just to those in the immediate vicinity.

So why is it moral, better in some manner, to only be cooperating with those few who share your geography, culture, location? We do have reasonable authority for the idea that all men are our brother so why shouldn’t we use the means, money, that allows us to cooperate and exchange with them all?

It just seems so dreadfully odd to insist that voluntary exchange is wondrous but that it’s righteous to limit it.

The Penlee lifeboat disaster

The Royal National Lifeboat Institution is a private charity, not funded by government, that exists to save lives at sea in UK and Irish waters. It is manned by volunteers, people prepared to set out in heavy seas to rescue people at risk in maritime incidents such as sinkings, collisions, or incapacitated vessels.

On December 19th, 1981, one of their lifeboats, the Solomon Browne, a wooden 47-foot boat manned by a crew of 8 was contacted by the coastguard to go to the aid of the Union Star, adrift after its engines had failed in heavy seas. A rescue helicopter sent to assist could not winch people off because the winds were too severe.

The volunteer crew tuned up, ready to go, but when 17-year-old Neil Brockman turned up dressed and ready to sail with his father, Nigel Brockman, the lifeboat’s coxswain, Trevelyan Richards, refused to take him, not prepared to take two members of the same family out on such stormy seas.

The lifeboat made several attempts to get alongside the stricken ship, and radioed that they had successfully taken 4 people off. Nothing was heard after that from either vessel. Both ships were lost with all hands, 8 from the Union Star, and all 8 of the volunteer crew of the lifeboat. Some bodies were later recovered.

The RNLI has seen several such disasters in its honourable history. Always it recovers and renews itself. Within a day of the Penlee disaster enough people from Mousehole, the village where it was based, had volunteered to form a new lifeboat crew. The pilot of the helicopter that unsuccessfully attempted rescue reported that this was:

The greatest act of courage that I have ever seen, and am ever likely to see, was the penultimate courage and dedication shown by the Penlee [crew] when it manoeuvred back alongside the casualty in over 60 ft breakers and rescued four people shortly after the Penlee had been bashed on top of the casualty's hatch covers. They were truly the bravest eight men I've ever seen, who were also totally dedicated to upholding the highest standards of the RNLI.

The Christmas lights in the village are turned off briefly every year for an hour at 8 pm on December 19th in an act of remembrance. All of the crew were posthumously awarded the RNLI’s medals, with the coxswain, Trevelyan Richards, receiving its highest honour, the gold medal.

The RNLI is financed by private donations, not by government. At one stage it briefly accepted state money, but found that it was losing more private donations than it was receiving in public funds, so it reverted to being privately funded. Its volunteers have saved many thousands of lives, but they need and deserve support. Anyone wishing to help can do so here.

By George he's got it! Not that he realises this of course

George Monbiot tells us that the real problem out there is that power is too centralised, too concentrated. The answer therefore is to push everything down to the people:

But this is the less important task. The much bigger change is this: to stop seeking to control people from the centre. At the moment, the political model for almost all parties is to drive change from the top down. They write a manifesto, that they hope to turn into government policy, which may then be subject to a narrow and feeble consultation, which then leads to legislation, which then leads to change. I believe the best antidote to demagoguery is the opposite process: radical trust. To the greatest extent possible, parties and governments should trust communities to identify their own needs and make their own decisions.

Entirely so, we agree completely. George gives us the analogy of nature:

When you try to control nature from the top down, you find yourself in a constant battle with it. Conservation groups in this country often seek to treat complex living systems as if they were simple ones. Through intensive management – cutting, grazing and burning – they strive to beat nature into submission until it meets their idea of how it should behave. But ecologies, like all complex systems, are highly dynamic and adaptive, evolving (when allowed) in emergent and unpredictable ways.

Eventually, and inevitably, these attempts at control fail. Nature reserves managed this way tend to lose abundance and diversity, and require ever more extreme intervention to meet the irrational demands of their stewards. They also become vulnerable. In all systems, complexity tends to be resilient, while simplicity tends to be fragile. Keeping nature in a state of arrested development in which most of its natural processes and its keystone species (the animals that drive these processes) are missing makes it highly susceptible to climate breakdown and invasive species. But rewilding – allowing dynamic, spontaneous organisation to reassert itself – can result in a sudden flourishing, often in completely unexpected ways, with a great improvement in resilience.

We agree again entirely. That survival of the fittest - without straying into the social Darwinian area of ill repute - depends upon the interactions of all the other inhabitants of the biome. No one plans or even intends - or can do either - that the outcome be one way or another. Rather, all is emergent from what happens to be at hand.

When we come to humans there is a twist, as we are a species that creates its own environment, we’d not have fields or clothes or houses if this were not so. But we face that same problem of complexity which cannot be managed from the centre, as Hayek pointed out in The Pretence of Knowledge. The result is emergent from the voluntary interactions of the inhabitants.

We even have a name for the system which proceeds from this assumption of voluntary interaction creating the world - a market society.

We’re entirely with George Monbiot here, it’s not that society is better when left to emerge in this manner it’s that the only possible manner of gaining one which is stable and resilient is to do it this way. The centre cannot hold us as it were.

Of course, neither George nor anyone else who rails against the current world order is going to agree with us, or even be willing to recognise that they have just recapitulated the neoliberal argument. Yet it is still true - leave us all alone to get on with things as we wish and will, subject only to restriction in those times when our doing so limits the rights of others to do the same, and we’ll end up with the best that can be got.

Smith, Mill, Hayek and Friedman were right, the answer really is power to the people - individually.