Greta Thunberg is, of course, entirely correct
We would not go so far as to say that Ms. Thunberg is correct in her every utterance but in this following she is entirely so:
“Ending fossil capitalism doesn't mean we have to implement socialism. We're stuck in an unimaginative 20th century debate. Regardless of what we'll call the economic system, it is essential that it functions within the planetary boundaries."
The reason we know this to be true being that the IPCC itself has been stating it is true for several decades now.
Look to the economic models that underpin the entire enterprise. Roughly speaking, as a pencil sketch you understand, A1 among the models is a globalised and free market capitalism, A2 a not-globalised version of same. B1 is a globalised social democracy shading into vaguely socialist world and B2 is a non-globalised version of same.
The non-globalised versions - A2 and B2 - are notably worse in outcomes than the globalised ones. More and poorer people with higher emissions.
A1 produces a world notably richer, per capita, than B1. Logically it should be preferred as long as that is possible within those planetary boundaries the analysis is claiming. It is possible. A1T - again the pencil sketch but largely a model in which we work on solar, wind and so on as we have been doing and succeed as we have been doing - produces an emissions outcome in which, as with B1, climate change becomes a passing annoyance rather than something truly dangerous.
No, please, before anyone starts shouting go and look at the models.
Note, please, that absolutely nothing outside the IPCC’s own analysis is being used to make this point. No claims of it isn’t happening, or it’s not us, or natural variability or conspiracy. Also, of course, no claims that perhaps the IPCC hasn’t got matters right or that there are problems with the theory. Within the analysis presented to us as proving that something must be done about climate change is an equal insistence that abolishing capitalism, or instituting socialism, isn’t the answer. Or isn’t the necessary answer if you wish the stronger position.
Great Thunberg is entirely correct here. Even if it is only here, on this point, that she is correct. Ending climate change doesn’t require socialism. Something which, while it will annoy those still looking for some excuse or other for socialism, will please those many tens of billions of the future population who won’t have to suffer said socialism.
Nobody knows anything
Yes, as a direct quote that’s William Goldman talking about the movie business but we can take that as a shorthand for Hayek’s point about macroeconomic management. We can only ever have the merest pretence at detailed knowledge of what is going on out there in something as vast, complex and chaotic as the economy.
To take a point of interest in the US currently, unemployment. Some say there should be lots more “stimulus” to boost employment and the economy more generally. Some say there should be a modicum. There might be a few extremists shouting don’t bother (among which we’d include ourselves). But the real point here is, well, how many actually are there either employed or unemployed?
American statistics give what is known as the U-3 rate, the one generally looked at. Roughly, those actively looking for a job. But there are other measures with ever wider definitions. U-6 is more like those who would work if a job landed in their laps. These are different from jobless claims, the number actually claiming unemployment benefit.
Or we’ve private sector statistics, the ADP report which is about employment, not unemployment. A payroll processing company they look at their own business then scale that up to the entire economy. Recently significantly different from the official numbers, half a million jobs created in August when the Dept of Labor was thinking up to a million a week going back to work. One reason being that again the counting is different. ADP counts a new employee as someone newly entered into the system. The government numbers an extant payroll entry revitalised - so, those coming back after being temporarily laid off, furloughed etc.
Absolutely no one at all is counting those working illegally, off the books, of course.
It does get worse. There’s the Pandemic Unemployment Assistance system, largely for the self-employed. California currently thinks that some 5 million of the 7 million claims in that state shouldn’t be there. Minnesota thinks that only 60,000 of the 600,000 claims in that state are truly valid.
So, some folks would like to do some economic management. To, you know, reduce unemployment and increase employment. A fair goal - now, how many unemployed are there? How much action needs to be taken to get to the desired level? We don’t have even the first clue - well, beyond “lots” - of how many we’re trying to deal with. So it’s really rather difficult to fine tune any policy response.
Which is as Hayek said of course. Nobody knows anything. Something of a stumbling block for macroeconomic management.
The plain truth on plain packaging
The ASI has long been sceptical about claims that plain packaging for cigarettes can cut smoking prevalence and with good reason. Back in 2012 we criticised plain packaging proposals for the UK: partly on the basis that there was no solid evidence of its efficacy. Initial evidence from Australia’s plain packaging law suggested it had no significant impact on smoking rates or quit attempts.
A new paper published in Nature last week, using data from a longer time frame, has also found that plain packaging in Australia “did not significantly affect smoking prevalence”: using New Zealand as a control country. To those of us familiar with the economic literature on advertising and branding, this should come as no surprise. Different fonts and colours on cigarette packets don’t brainwash non-smokers into taking up the habit—they persuade existing smokers to switch to different tobacco brands.
When you remove branding as a differentiating factor via plain packaging laws, you’d expect existing smokers to use alternative criteria to decide what cigarettes they smoke. The most obvious and important one is price, and this is exactly what the authors of this Nature paper found.
“In response to the policy, smokers switched from more expensive to cheaper cigarettes and reduced their overall tobacco expenditure and expenditure intensity. However, as smoking became less costly, smokers consumed more cigarettes.”
So not only did plain packaging fail to make a dent in Australia’s smoking rate—it actually caused smokers to smoke more cigarettes as they switched to cheaper brands. Hardly a win for public health.
It would be great if the paternalists pushing for plain packaging on ‘junk food’ (which we also predicted would happen back in 2012) learned some of the lessons from Australia’s failed experiment. It’s likely to create the same substitution effect towards cheaper brands and may end up boosting overall consumption as it appears to have done for cigarettes. I’m not holding my breath.
Every child matters – the education of internal migrant children in China
“What do you want your children to do in the future?”
“I don’t know. I just hope they will pursue a degree as high as they can. I don’t mind how much it will cost as long as they learn knowledge, not like me… then they will have a better life.”
This conversation happened between me and a single father with two daughters in the winter of 2019 while I was conducting my fieldwork in Guiyang, Southwest China. This father moved from one of the country’s poorest cities, Bijie, to the capital of the province, becoming one of the 236 million rural-to-urban migrants in China. Guiyang for them is a place brimming with opportunities where they will be able to pursue a better life than their agricultural work, but also may face discrimination and inequities. Most migrant workers are employed in manufacturing and construction industries with low pay and low social status: largely due to low levels of education. However, the migrant parents place an extremely high value on education. As the father indicated at the beginning, schooling is the ladder for their social mobility. Without this path, the lives of migrant students would often follow the same pattern as their parents’.
Despite the pivotal role of education, there are still more than 2 million (21.3%) migrant children unable to enrol in urban public schools in their destination cities. The main reason is that the Chinese educational system assigns responsibility for compulsory education to local governments at the county or district level. Funding for compulsory education is allocated by the number of children with household registration and does not transfer across administrative units. Although the central government urges local authorities to accommodate the educational needs of migrant children, some of them lack the incentives and financial resources. Therefore, privately-run migrant schools (PMSs), which are low-cost private schools, cater to millions of children. Generally, they are the sole providers of educational opportunities for this minority who would, otherwise, very likely be “left-behind” children or who may drop out of school. 6.97 million children are left behind in their rural hometown alone or with a distant relative. Hence, PMSs play an important role not only in meeting migrant children’s educational needs but also keeping migrant families together in the receiving city.
To better understand how migrant children educate themselves when state schooling is unavailable, I conducted three-month fieldwork in Guiyang to explore how PMS schools operate and the nature of their educational and social circumstances. I hope to shed light on the challenges and needs of PMSs that might otherwise remain invisible from the public and officials. A larger purpose of my research is also to highlight the circumstances of these migrant minorities, bearing in mind that a nation’s citizens are its most valuable resource. If this resource is unable to participate in society to its fullest potential, both citizens and the nation are losing out.
Yao Wang is a recipient of the ASI’s 2020 John Blundell Studentship, our grant programme for talented graduates pursuing research that advances economic and personal freedom.
Well, yes, OK, emergency, pandemic, ventilators etc
The coronavirus did rather blindside civilisation and no one was going to get all reactions to it quite right:
UK spent £569m on 20,900 ventilators for Covid care but most remain unused
Government was right to prioritise speed over cost, says National Audit Office
Many of those made cost some 50% more than those bought in less stressful - or lower demand - times and that’s to be expected. Demand changes, prices do, this is how the universe works.
We can also muse on whether having 90% of those extra made remain unused is a good allocation of resources but clearly being blindsided by that reality out there excuses quite a lot of mistakes. As with military stores in 1946 - some of which were still being used by cadet forces 30 years later - an excess of stock following an emergency may be undesirable but it’s hardly a hanging offence. Actually, to our certain and personal knowledge, some CCFs were still using 1918 stock in the 1970s.
However, this evidence of the efficiency of political allocation should not be dismissed even as it is accepted as being just one of those things. If this is the outcome of using politicians and bureaucracies to order and direct the economy then we clearly need to minimise the use of politics and bureaucrats to order the economy.
That is, it’s the very performance in an emergency which insists that we only use the system in emergency. Given what and how they plan when they do planning is something for us to use as rarely as possible.
It is possible to argue that if only it had been other people being stampeded by groupthink then things would have been different but really, can we at least try to keep the debate within the bounds of possibility?
We disagree, significantly, with the IFS here
UK total managed expenditure is, in total real terms, higher than it has ever been. Per capita it’s just a shade off that peak. As a percentage of GDP it is about where it was when Gordon Brown became Prime Minister - yes, higher than during his spending spree as Chancellor - and higher than at any time between 1985 and 2008.
This is described as:
In addition, the Spending Review will come on the back of the longest sustained squeeze in public spending on record, with pressure for austerity to be brought to a decisive end.
We simply do not, cannot, describe this as austerity. Public spending as a portion of everything we have - GDP - is well above long term average. That’s not being austere with our money and taxes. We rather think “spendthrift” is the word that comes to mind.
To describe it otherwise is to fall foul of the Keynesian ratchet. We’re not sure we do agree with blowing out the budget in a recession but let’s assume this is the correct policy. That blowing out is justified by the recession, once normality is re-achieved then the spending should decline again to the more normal to GDP ratio. Except that’s not what does happen, every attempt to re-achieve that normality is derided as cuts - as austerity. Which acts as that ratchet, every recessionary increase becomes the new baseline from which the future is then judged.
If as and when that total managed spend is around the 35% of GDP that it was in the late 1980s, or late 1990s, and then there is still talk of cutting further then yes, we’ll agree that that is austerity. We’ll almost certainly still argue for it too. But while government is still disposing of some £100 billion more than that it simply ain’t austerity, quite the opposite.
Economic growth protects the environment
Yes, yes, we know, this isn’t what we’re all normally told but it’s true all the same. As even The Guardian points out here:
How Tunisia’s shrinking economy and fish stocks put shark on the menu
Poorer people scrabble rather harder for whatever there is to eat. Time horizons shorten as the imperative is to survive rather than optimise the future world. So, yes, a shrinking economy does indeed increase pressure on those irreplaceable natural resources.
With Tunisia’s economy battered by the coronavirus pandemic and generally expected to undergo its greatest contraction since gaining independence in 1956, it is unclear where protecting its native marine species sits within the government’s priorities
Somewhere between nowhere and a long, long, way down the list would seem likely.
And yes, this does all work the other way around. Richer places have more resources to devote to not eating everything in sight, to protecting those desirable parts of the environment. That’s why, to give a different example, the air in London is cleaner these days that it has been since perhaps 1300 and the introduction of Newcastle’s sea coal to the capital.
Richer people protect the environment more - therefore, logically, environmentalists should be urging us all to become richer. Odd that it doesn’t quite work that way but then there we are, nowt so queer as folk.
One of those grand lessons from economics
The second great lesson of economics insists that there are always opportunity costs. A corollary of this is that because everything, but everything, has costs there is no such thing as a solution. There are merely trade offs and the best we can do is to get to the optimal set of them.
This is true of everything:
Green roads risk delaying ambulances, say parents of dead boy
Gareth and Candace Edwards want the Government to ensure council-backed road closures don't slow down 999 emergency services
It’s entirely delightful, we agree, to have pedestrian areas, cycling lanes, speed bumps, slow traffic and all the rest. It is also useful - at times at least - to be able to navigate the urban environment at some speed. Too much of the one - either way - limits our ability to have the other.
This should be obvious of course, we’re all adults and we all know this. It’s just that political management of whatever it is always has a very hard time understanding the point. If some is good then more is better - a rule in politics as it isn’t in life.
The British Retail Consortium is right about tariffs here
The BRC tells us that prices will have to rise upon Brexit given the current situation upon tariffs:
Supermarkets and their customers face £3.1 billion a year of tariffs on food and drink unless a free trade deal is reached between the UK and the European Union.
They do indeed get this right, unlike so many others:
In May, the UK published its new tariff schedule, which will apply from 1st January 2021 if a deal is not agreed. Under the schedule, 85% of foods imported from the EU will face tariffs of more than 5%. The average tariff on food imported from the EU would be over 20%. This includes 48% on beef mince, 16% on cucumbers, 10% on lettuce, and 57% on cheddar cheese.
They even get the solution correct:
The British Retail Consortium (BRC) has long been calling for a zero-tariff zero-quota trade deal between the UK and EU
Well, almost. Because they are calling for a deal. A deal would mean that goods flow between the UK and the remnant EU duty and tariff free. Which would be good, of course, as free trade is good. But a deal would also mean that the current tariffs against imports from the rest of the world would still be both possible and in place.
Meaning that we should be hoping for no deal. At which point we’re not going to do something as blindingly stupid as impose £3 billion of taxation upon our own wallets just because we like foreign food. So, we would go to zero tariffs. The absence of the deal meaning that we would then have to offer said tariff free access to the UK market to all comers. Or, alternatively, we’d not be taxing ourselves for buying foreign food from anywhere.
Or, to put it yet another way, we would adopt the only economically and logically correct form of trade management, unilateral free trade. As we did in 1846.
Having tariff free Danish bacon would also mean having tariff free Argentine beef. And? The problem with this is what?
The ganging aft agley of those plans
A nice real world example of why those grand plans for society never do quite work:
Fewer than one in five people experiencing symptoms of coronavirus between May and August self-isolated for the required seven day period, research suggests.
A team from King’s College London, University College London (UCL) and Public Health England (PHE) surveyed more than 30,000 people to find out if they were adhering to the test, trace and isolate system.
They discovered that although seven in 10 people said they intended to follow government rules, just 18 per cent of people had actually stayed at home.
In the face of a pandemic - you know, something that might actually kill - fewer than one in five follow the government plan. Which is why, of course, so many of those government plans gang at agley. Because we humans out here don’t follow them.
It might even be true that the effects of the pandemic would be lesser if those plans had been followed - for the purpose of this argument we are agnostic on the point. The point itself being that the same is true of oh so many other bright plans. That we should all be more communitarian and less individualistic. Eat organic not cheap. Shop locally not pluck from the produce of the globe. Expend out efforts for the good of the nation, the society, rather than merely ourselves and family.
Perhaps - again we are agnostic - these all would result in a better world. Even if government has to really, really, insist that we do these things. The thing being that we don’t do these things. At which point all those bright plans fall apart. Not because the outcome is undesirable, necessarily, but because the insistences are being applied to the wrong species.
Humans don’t do what they’re told. Therefore plans which assume they will are doomed to failure. This is true of economic plans, social ones, plans about pandemics and health care and concerning society in general. Humans are often biddable but not controllable.