Britain still hasn't paid off the slavery compensation debt

Something that seems to be extremely common these days, this idea that Britain paid off the debt for that £20 million in compensation to slave owners back in the day. As an example, although we’ve seen it around several times in the past couple of days alone:

Indeed, the “compensation” paid to slave owners after abolition was so vast that it took until 2015 for Britain to finish paying the bill.

Entirely piffle.

As to the compensation, or as some call it reparations that didn’t make it to the ex-slaves, we tend to a different view. It was a bribe and one well worth it. The slave interests had considerable political power in the Britain of the 1830s. The abolition of slavery wasn’t going to happen anytime soon unless those interests were appeased. £20 million was the price and we regard it as an excellent one, a bargain, to free that upwards of 800,000 people from durance vile.

The point here being that the debt was not paid off, has not been paid off and some infinitesimal portion of everyones’ tax bill is still servicing that debt.

Varied old debts - the slavery compensation, the Crimean, Napoleonic Wars - were swept up into Consols (Consolidated Loan Stock) which were perpetuals. There was no repayment date, they lasted forever. The interest rate was fair enough - although horribly manipulated - for a zero inflation environment but of course that’s hot what we had post-WWII. Thus these perpetual bonds traded at 20 pence, perhaps 30 pence on the pound. The debt managers could have called them in and paid them off at any time but to do so they would have had to pay 100 pence on the £. Allowing government creditors to recoup their inflation losses was never high on anyone’s list of things to do so therefore they weren’t called in, those Consols.

Then post-QE interest rates fell to something like was being paid on the perpetuals, as naturally happens at that point Consols traded at about 100 pence on the £. This gave George Osborne the chance to do something - perhaps the only thing - he was good at, make a political gesture. Call in those Consols and claim to have paid them off.

Except anyone noted what was the government’s debt position in 2015? That’s right, it was still borrowing an extra tens of billions of £s each year. It didn’t, because it couldn’t, pay off debt. It could pay off a particular set of bonds, sure, but not actually retire the debt because the only way it had of paying off debt was to issue more debt. The Consols, that is, were rolled over into the standard Treasury (Gilts) issues of 2015.

The slavery compensation bill is still there in the national debt. Tax bills still include some portion of debt servicing on that sum.

Again, we think that bribe of £20 million to have been money well spent considering what it bought. But we do insist that we’re all still paying it.

The market has spoken - Open the UK to American foods

The market has told us what is wanted about these American frankenfoods - the chlorine chicken and the hormone beef. We should change the law to let them in because no one will buy them.

A series of leading UK supermarkets have told Business Insider that they will never sell chlorinated chicken or hormone-injected beef from the US, in a blow to those pushing for UK food standards to be dropped in order to secure a post-Brexit trade deal with Trump.

The Trump administration has insisted that US agricultural goods must be included in any free trade agreement between the two countries.

The UK's current strict food standards prohibit such products from being imported. However, Boris Johnson's government last month opened the door to dropping the ban on the products once Britain leaves EU trade rules in 2021.

We have mentioned this point before. The more it is protested that no one in Britain wants to eat this filthy foreign muck the more insistent we are that this means - that this means, not just that it is meant more generally - that the ban must be lifted. For if no one will buy it, or in this case sell it, then the ban has no effect, does it?

It is only if you suspect that people will cheerfully chow down upon the stuff that there is a reason for a ban in the first place. And why would that some wish to have it be a justification for a ban?

We can also go one stage further. As is said, Trump will only allow a free trade deal if that food is allowed in. But as we can see, no one will sell it so no actual food will arrive. At which point we get the free trade deal without giving up anything at all - our market will still be frankenfood free and we’ll also have that trade deal.

We don't believe this for a moment and yet.....

This level of macroeconomic forecasting is only done to make astrologers look good:

Brussels is forecasting an 8.3% drop in GDP for the 27 economies of the European Union in 2020 followed by a 5.8% rebound in 2021. The eurozone is forecast to contract by 8.7% this year, with 6.1% growth in 2021. Both are worse declines and weaker rebounds than the historic downturn that the commission had forecast in May.

The UK economy will shrink by 9.75% in 2020, putting it among the worst-hit economies in Europe, although France, Spain and Italy are facing even steeper falls in output (10.6%, 10.9% and 11.2% respectively). Germany, facing a 6.3% fall in GDP in 2020, and the Netherlands (-6.8%) confront less severe downturns, while Poland is forecast to escape with the shallowest recession (-4.6%).

It would appear, from the way that is put, that flouting the EU’s strictures on civil liberty and democracy - as it is claimed Poland has done and we make no comment on whether it’s true or not - protects the economy against the effects of the coronavirus. We think that’s unlikely.

The mistake being made here is to be using zero as the baseline to measure those effects. Something which is always wrong - the effect of something is what we expected to happen without it as compared to the what happens with it. Poland has been growing at around the 5% level and we’d expect, as it climbs up out of the effects of far too many decades of socialism, that growth to continue. Thus the effect upon that country is 9.6% (the decimal point being used to show a sense of humour, see above about astrologers) not the 4.6% listed.

Yes, this is important and is of much wider application. For example, it is indeed true that Cuba has free at the point of use healthcare. This is not a justification of the Cuban Revolution as so does the UK have free at the point of use healthcare and we got there without shooting the bourgeois and driving everyone else in destitution. Actually, darn near everywhere has free at the point of use healthcare for those who require it. Thus our judgement of Cuba should be based upon not where it is but where we should expect it to be - as with Poland and GDP, the effect is not the baseline of zero but where would it have been without the coronavirus?

Fast fashion and sumptuary laws

Various societies at various times have passed sumptuary laws. Detailed regulations upon who may wear what that is. The aim being to make clear, rigid even, who are the top dogs by preventing the mere rabble from wearing the insignia of being a leading hound.

Of course, we’re entirely beyond that now:

Legitimised by Kourtney Kardashian and anyone who has ever lasted more than a week in the Love Island villa, fast fashion has become an accessible and budget-friendly way for “normal” people to embody the aspirational lifestyles they see on their screens.

Perhaps we’re not so far beyond it. For the sniff of contempt there is audible, isn’t it? That the rabble, the mere proles, are able to dress up like those they see as being socially superior to them.

That the poor have more than the one change of clothes, the Sunday best and the other set, is one of the great equalisers of our time. These past few decades have been first time in human civilisation that this has generally been true, it’s not all that long ago that the poor were not considered to need a wardrobe given they had so few robes.

One ethical commentator back in history suggested that our reaction to the naked should not be just to donate clothes, but to split our cloak so as to share both the covering and the cold. Today’s fashion seems to be to sneer at people for being uppity enough to desire their own clothing. That they can have it shows that we’ve advanced materially, the reaction to their being able to do so shows that there’s still some ethical work to do.

Seriously, where do these people get off when they insist that even the poor having a change of clothes is a bad idea?

The Rich in Public Opinion: What We Think When We Think About Wealth

Dr Rainer Zitelmann’s new book, “The Rich in Public Opinion: What We Think When We Think About Wealth,” brings a much-needed counterweight to the rent-seeking academic politics and sensationalized accounts that cloud our understanding of wealth. It gives the reader the data, along with scientific study, to help us really understand how we perceive the prosperous as we do.

Zitelmann argues that our understanding of the rich is distorted by snobbery and pessimism, aided by media stories that pander to populists, plus a set of complex yet well-explained psychological coping mechanisms. He tests these against empirical polling data, finding his theses of social envy and contrived moralities confirmed. However, in ground-breaking international analysis, he finds the British and Americans share most respect for wealth creators, very much more than their German and French cousins. This exposes our deep cultural ties with the one, and our divisions with the other, and charts across borders how an increasingly international society deals with wealth.

Zitelmann’s detailed research enlightens the reader without stodgy jargon, and is helped along by his eloquent arguments and explanations. He explains not only how inverse classism arises, but also how it is studied and perceived by biased academics. The review of scholarship is his focus, without bias or subjectivity intruding, and he arrives at his conclusions convincingly.

Unlike a partisan propagandist, he gives his readers the opportunity to develop the arguments in their own minds. For example, he points out that when participants were asked about how they understood such notions as ‘fairness’ and ‘redistribution of wealth,’ there was an overwhelming disparity between what partisans would claim, and what scientific study revealed to be their true opinions. While the vast majority of individuals initially claim that major redistribution of wealth is fair to the rich, the study’s outcome revealed that only 14-18% of over 6,000 participants studied agreed with this when probed more deeply. 

Zitelmann shows that class-envy has a stunting effect, coming as it does from ingrained coping mechanisms. His eighth chapter is particularly useful, bringing in reputable research backed up by scores of citations. He finds that, in the words of Karl Marx: “their social being determines their consciousness.” He shows that the way wealth is perceived differs from culture to culture, from social group to social group, and varies with the political stance and the degree of education people have. As he concludes: “the findings of these international studies demonstrate that explanations for wealth and success vary greatly both between countries and social groups.”

Overall, Zitelmann’s new book presents a superb piece of analysis about the moral quagmire we find ourselves in today. Pulling together the neoliberal tradition of evidence-based analysis, Zitelmann offers a convincing and engaging prescription of how we can contend with the Jacobin and Guardian journalists who seem to derive damaging and dangerous conclusions from prejudices supported by nothing but empty air. His book presents us with exemplary scholarship and analysis, helping us understand the social and economic background of how the rich are perceived, and making the case for greater tolerance in our society. To say that it is well worth reading and absorbing the information presented in his pages would be an understatement, and an impoverishing one at that. I hope that as many as possible will read it and take its lessons to heart.

Not everything is about sex - nor even gender

Among the odd ideas The Guardian presents for our delectation:

As far back as 1977, an American poet and professor of architecture named Dolores Hayden wrote an article with the explosive headline “Skyscraper seduction, skyscraper rape”. Hayden tore into the male power fantasies embodied in this celebrated urban form. The office tower, she wrote, is one more addition “to the procession of phallic monuments in history – including poles, obelisks, spires, columns and watchtowers”, where architects un-ironically use the language of “base, shaft and tip” while drawing upward-thrusting buildings ejaculating light into the night sky.

Despite the manner in which some do think that everything is about sex - or, to be more modern, gender - it ain’t. Building up in an urban environment is a reaction to expensive land, not a reference to gamete application systems. Building as a tower rather than a block is about gaining natural light, not male vigour.

But let us leave those who think everything is about sex - or gender - to their fantasies and address something that is simply wrong:

The consequences have proved deadly as Covid-19 rampages through our cities. Take the crisis in long-term care homes. Care for elderly and disabled people has been largely privatised in many countries, ...

No, that care of the elderly hasn’t been privatised it has been socialised. That’s why it is taking place in homes, not at home. Private care of the ill, the halt, lame and elderly, is something that was, at one time, done within the familial structure and dwelling. It is now done on that social basis, it has thus been socialised into communal efforts and buildings.

We are entirely fine with it having done so too, we are not about to argue that each household must deal with its own instances of Alzheimer’s alone and unspecialised - we are the true believers in the division and specialisation of labour of course. But we do insist on a certain clarity in the description of what has happened.

The communal care of these groups is not privatisation, it is socialisation.

Actually, we'd be arguing that NHS salaries should decrease

The claim here is fine, of course it is, unions exist to better their members at the expense of everyone else. So, this is just unions doing their job:

Unions representing more than 1.3 million NHS workers have written to the government calling for talks to begin on a pay rise to take effect before the end of the year to reflect the efforts of staff during the coronavirus pandemic.

In letters sent to the prime minister and the chancellor on Friday, as the nation prepares to give thanks to the NHS on its 72nd birthday, the 14 unions say the government should build on the huge public support for staff during the Covid-19 crisis and deliver an early pay rise.

Economic reality argues in favour of significant pay cuts though. The current best guess is that GDP has decreased by some 20% or so. That means that the aggregate incomes of all in the country - GDP is equal to all incomes by definition - have fallen by 20%. It seems fair that all should partake of this pain therefore the default position is that all public sector workers, the NHS Angels included, should have a 20% pay cut.

Quite possibly more than that in fact. Private sector workers are at considerable risk of being laid off, seeing their pay reduce to zero. This is not a risk being faced by anyone in the NHS. That job security is now worth more as part of the total compensation for the job, isn’t it?

Of course, resetting public sector pay to fit the new economic reality isn’t going to happen, even if it should. But pointing out that reality is still necessary, even if only to highlight how absurd these demands for further rises are.

After all, think on it, we’re all 20% poorer, why shouldn’t they be?

The Leicester sweatshops wages appear to be more about illegal workers than wages

The Sunday Times tells us that certain factories in Leicester appear to be paying less than minimum wage to their workers.

Undercover at an East Midlands factory making clothes for the hugely profitable Boohoo and Nasty Gal labels, our reporter found almost no protective equipment, and wages as low as £3.50 an hour.

It strikes us that this is about a different part of the law:

I told him my name was Sri and that I was a student from India.

That is, someone without the correct documentation to take a job in the UK.

“You are working illegally, so do not discuss or say anything with other people. "

Despite what everyone is calling it this is not slavery, modern or otherwise. People have come half way around the world and volunteered to do this - there is no compulsion - because it’s better than not coming half way round the world to do it. That’s a reflection on the evils of conditions out there, not on those here.

It’s also an elegant demonstration of why free migration has its merits- those who migrate can, by dint of it being legal to do so, be covered by the same laws as everyone else. There is no such skulking in the shadows if that penumbra is not being used to protect breaches of work permit laws.

Another elegance is the example of how passing economic laws is so difficult. We have that minimum wage law and yet large numbers of people routinely break it. Because it is in their mutual interest to do so, the unpermitted and the low end employer. People just will do what is in their mutual interest which is a lesson to all of those who would constrain economic activity by politics and wishful thinking.

Strange truths in The Guardian

Chris Dillow tells us something true in The Guardian:

No, no, no. In fact, it’s young people who will lose out most from this superficially “fair” move. If the triple lock stays, an 80-something will get only a few years of real-terms pension increases. But younger people can look forward to decades of such rises. Because our wealth is the present value of future incomes, scrapping the triple lock will effectively impoverish younger generations today more than old people. Far from promoting intergenerational fairness, scrapping the triple lock will deal yet another blow to young people who have already been comparatively disadvantaged.

This is, of course, all about the state pension. The specific truth we would highlight being this:

our wealth is the present value of future incomes

Entirely so. Except, when we go out to measure wealth that’s not what we do. This is from the canonical Saez and Zucman paper but it’s a general concept used in all valuations and calculations of the wealth distribution:

Our definition of wealth includes all pension wealth—whether held on individual retirement accounts, or through pension funds and life insurance companies—with the exception of Social Security and unfunded defined benefit pensions. Although Social Security matters for saving decisions, the same is true for all promises of future government transfers. Including Social Security in wealth would thus call for including the present value of future Medicare benefits, future government education spending for one’s children, etc., net of future taxes. It is not clear where to stop, and such computations are inherently fragile because of the lack of observable market prices for this type of assets. Unfunded defined benefit pensions are promises of future payments which are not backed by actual wealth. The vast majority (94% in 2013) of unfunded pension entitlements are for Federal, State and local government employees, thus are conceptually similar to promises of future government transfers, and just like those are better excluded from wealth.

Dillow is right, our wealth is the net present value of all future income streams. Things like the state pension - and of course unfunded civil service ones - plus the value of free at the point of use education, health care, the insurance provided by housing benefit, dole, tax credits and all the rest, are wealth. And yet when counting the wealth distribution we don’t include any of these things.

This poses one specific problem, when it is suggested that we should reduce the wealth gap by taxing the richer to funnel money to the poorer we end up not including the effect of the funnelling. Because we deliberately don’t include the effect of receiving tax transfers upon wealth.

But more importantly, given that we already do rather a lot of such redistribution all and every current estimation or calculation of the wealth distribution is wrong. Something that we should probably fix before we discuss whether we should be doing more levelling - or perhaps, mirabile dictu, less. After all, in determining whether we wish to change the current reality we should start with the actual current reality, no?

Or, as we’ve remarked before, it matters what you count and how.

Jet Zero is trivially easy

Boris would like to support something called “Jet Zero”.

Will Boris’s Jet Zero ever fly?

The prime minister’s call for Jet Zero on Tuesday may owe more to his fondness for a punchy slogan than any realistic view of how UK aviation might develop in the next three decades.

“We should set ourselves the goal now of producing the world’s first zero-emission long-haul passenger plane,” Boris Johnson said. “Jet Zero, let’s do it!”

But as far as the technology goes, Johnson might have more luck building a garden bridge to France than getting British-made, long-haul, zero-emission passenger planes in service before 2050.

There’s no need to wait util 2050. This can be done today. In fact, it’s trivially simple. Just use created hydrocarbons to produce the aviation fuel that powers today’s jets and airframes.

True, it’s expensive - last time we looked algal oil would cost the equivalent of $200 a barrel. But it’s entirely possible, it’s just chemistry and people can do it today.

Doing it at a price akin to today’s $40 a barrel is more difficult, we admit. On the other hand it doesn’t need doing at all.

Aviation is some 2% or so (2.4% in 2018 apparently) of all emissions at present. This is a rounding error on total emissions, obviously enough. It is not true that the desire to reduce emissions means every sector must do so - we do not have to spread the pain. Instead we should continue to emit where what emits is of most value and cease where it is of little.

Aviation is of great value for people like going off on their hols. The correct answer, thus, to aviation emissions is to fuggeddaboudit. The benefit in terms of human utility is higher than the costs in those same terms of human utility. This is thus something we wish to continue being able to do even taking those emissions into account.

Sure, it would be nice if there were a no emissions method, maybe someone will get lucky with those chemistry sets. But it’s not important that any one does or not. For aviation emissions simply aren’t either a large problem nor is aviation itself something we want to stop doing.