Clarity of thinking is essential

We note this not to be mean to Mr. Colville for Robert is a thoroughly nice chap on the right side of most questions. However, this cannot pass without comment:

On financial services, for example, the EU is not going to give us unrestricted long-term access to its markets…

That’s not the right way ‘round to think of it. The purpose of trade is to be able to consume those imports. Thus the correct viewpoint is not will they open their markets to us but whether they will have access to the lovely things we make.

The City is the prime financial market in Europe and arguably the world. The question is not whether those financial firms can sell in Europe, it’s whether Europeans gain access to the financial services they desire.

This is true as a larger point about all trade restrictions, be they tariffs, phytosanitary rules, trivia over documentation or quotas. The only reason to have any of them is to deny consumers what they so obviously desire - for, of course, if they were not desired then there would be no point in having the restrictions.

Colville is probably correct in that there will at least be a determined effort by the European Union to stop firms and others in the rEU from gaining access to the largest, deepest, most efficient and most liquid capital market in the world. Our insistence upon describing the attempt in the correct manner does at least show how damn stupid the idea is.

Surfers against sewage

We’d suggest that Surfers Against Sewage do a little work and acquaint themselves with the basics of cost benefit analysis:

Water companies discharged raw sewage into bathing water beaches almost 3,000 times in the past year, polluting the environment and risking public health, new analysis shows.

The discharges took place all over England and Wales, including at some of the most popular beaches.

The study by Surfers Against Sewage, which publishes data on sewage releases as they occur, examines the notifications by water companies of effluent discharges over 12 months.

The claim is that this led to 156 cases of gastroenteritis and the like. The solution to which is:

Our ambition at Surfers Against Sewage is to end sewage discharge into UK Bathing Waters by 2030.

More specifically, they are talking about storm drainage and sewage. Trying to insist that when the heavens open there is no overflow at all - their insistence - from said sewage system into the standard water run off from the weather is going to be somewhere between vastly expensive and impossible.

That is, the cost of gaining the benefit of 156 dickey tummies fewer seems more than a little excessive. We cannot do everything, cannot be perfectly clean, and we’d propose that there are more important things to devote resources to than this.

We’d also suggest that a certain knowledge of finance could be useful:

We need to see legally-binding sewage emission reduction targets and subsequent investment that bring about an end to sewage pollution.

....

Ultimately, ambitious and progressive investment is needed to separate our surface water from sewage treatment infrastructure to truly protect the environment. It is incumbent on water companies to identify the pathway to make this happen. Perhaps instead of sickening dividend pay outs...

Why would people put more capital in if they weren’t going to gain a return on it? And no, shouting that the water companies should be nationalised again won’t work either. For when the government did own and run them it invested very much less than the privatised companies have done. Which was the reason for the sell off in fact, in order to bring in the capital necessary to raise water standards, capital that government wasn’t willing to assign.

Which is an interesting point really. If it can’t even pass a government cost benefit analysis with people spending other peoples’ money on other people then possibly this really is something we shouldn’t be attempting.

It's easy - and enjoyable - to make fun of Johnny Foreigner

An amusement from France:

Sales of foie gras fell 12 per cent last year and the pandemic has made matters worse. Producers are expecting a 20 per cent drop this year compared with last year. In response, the government has allowed unlimited cut-price offers on foie gras, while outlawing advertisements for the cheap deals.

You may sell at any price you wish but cannot tell anyone about it. The contorted logic continues, as this is a rule that applies only to fois gras.

Other comestibles may not be discounted in this manner:

Retailers were banned from selling more than a quarter of any product at a knockdown rate or at less than 34 per cent off their list price.

The reason why:

The law was designed to ensure “a fair price” for farmers and “healthy, sustainable food accessible for everyone”. It involved a curb on the supermarket promotions that Mr Macron blamed for dragging down prices, leaving a third of French farmers with an income of less than €4,200 a year.

Consumers may not, by law, be made better off in order to protect producers. What larks given the most odd moral economy of Johnny Foreigner, eh?

Except perhaps we shouldn’t laugh at Mr. Foreigner too much. Our own polity is insisting that consumers may not be made better off in order to protect those producers. This is what all that fuss about food standards, chlorinated chicken and so on, concerns. Certain other foreigners can produce food that we may wish to consume. Or not consume, as the taste takes us. We are to be banned by law from making that choice in order to protect domestic farmers, those producers.

The retailers are also restricted in their ability to tell us of sales and offers like Bogofs. The same twisted logic but as it has been for centuries now our absurdities are better than those of the French, aren’t they, entirely and quite, quite, different.

Actual logic would suggest that we pluck the beam from our own eye. Free trade, a free market, in food to the benefit of consumers. For making us consumers out here better off is the entire point of our having an economy in the first place.

It's the management of the NHS that fails

Of course, having a near Stalinist bureaucracy is unlikely to lead us to a well managed service. But recent findings about the impact of Covid on cancer treatments should give pause:

However, new analysis published in the British Medical Journal (BMJ) found that increasing the wait to surgery from six to 12 weeks would increase the risk of death by around nine per cent.

The scientists at Queen’s University in Ontario and the London School of Hygiene and Tropical Medicine found that even a delay of less than four weeks could not be justified.

The calculated a four per cent increased risk of death for a two-week delay for breast cancer surgery.

Across a wider range of cancers, a month’s delay to the start of treatment more broadly, such as chemotherapy or radiotherapy, was associated with an increased risk of death of up to 13 per cent.

Of course, we all understand why treatments have been recently delayed. But the message here is that cancer treatment should be started stat. The very thing that the NHS does not do:

You should not have to wait more than 2 weeks to see a specialist if your GP suspects you have cancer and urgently refers you.

In cases where cancer has been confirmed, you should not have to wait more than 31 days from the decision to treat to the start of treatment.

This being a promise the NHS doesn’t live up to either.

This not being a matter of some scarcity of resources. The same number of people get treated for the same number of cancers. It’s simply bad deployment of those resources - management in an inflexible system - which makes people wait. And so, more of them die.

There is a reason why the NHS comes near bottom of rich world health care systems when measured by “mortality amenable to health care”. The reason being that structure of the NHS.

How excessively cool is this?

Simon Jenkins is terribly excited by a new website where it is possible to pay full price for books. We share that excitement:

Good news from the high street. We don’t often read those words, least of all courtesy of the internet. The UK opening on Monday of the Bookshop website is a blood transfusion for independent bookshops and one from which all retailers can learn. The website is a mail-order circumvention of Amazon, selling books under the flags of more than 130 independent booksellers. Buyers order their book at a slightly discounted price after “entering” their chosen front door on the site and the shop duly receives the 30% bookseller’s margin.

Isn’t that good news? Not that we would recommend you use the site, nor that you don’t. It’s something entirely for you to decide for yourself. Which is exactly what provides the excitement in our little corner of the world.

Some of us are rather - from very to more perhaps - interested in what we ourselves have got to shell out to gain access to something, books being just an example of the larger point. Others of us are rather - from very to more perhaps - interested in the effects upon the provider. This leads to a certain bifurcation, in that some of us shop entirely on the cash price, others on the structure of the delivery system.

Of course, this changes at the extremes, very few indeed would agree that cheaper through the chattel slavery of book retailers is worthwhile - although there will always be a few - nor that £100 a volume is worth it to ensure a decent living standard for those who pack the boxes.

So, consumers have different desires, at least partially so, how best to accommodate that? Well, the only possible manner is that the different ways of achieving the goal - book retailing in our example - are tried out and we’ll see which best contributes to consumer utility. As we’ve already defined that utility as differing across people this insists upon our having many different methods of book retailing.

That is, this is all proof of the basic fact that it is free markets - the definition being that people get to try out different methods of assuaging that consumer utility - are the best possible system. Precisely and exactly so that those who wish to can pay near full price for their books even in the face of others offering greater discounts.

Isn’t that cool?

One of those weird occasions when we find ourselves agreeing with Polly Toynbee

Quite which time honoured phrase to use here - from the mouths of babes and sucklings or possibly something about emperor’s new clothes - doesn’t matter so much as the actual point being made.

I doubt the British government has learned the lesson: never again run down the country’s public health defences.

Entirely so, we too think that government won’t learn the lesson here. Which is that communicable diseases are a problem, one that needs management and the state an its employees are a vital part of that solution.

Which means that whatever - and whoever - it is that replaces Public Health England should be restricted to working upon the problems that stem from communicable diseases. Rather than the recent decades long haranguing us all about lifestyle diseases. What we smoke, eat and drink are important things, no doubt about it, but they are also personal and both the benefits and costs accrue to us as the individuals doing those things. They are not public health matters that is, even as they are matters to do with the health of the public.

We should indeed return to where the public health authorities deal, exclusively, with those matters where there are third party effects to decisions. To sewage and drains, to epi- and pan- demics, to where public actions, collective public actions that is, are actually required.

That is, let us have a public health service instead of bureaucrats mithering us about the size of chocolate bars.

Tune in some time next decade for our next agreement with Ms. Toynbee.

A wondrous piece of illogic

This is from across The Pond but we have our own domestics making much the same argument:

Assemblyman Phil Steck has been leading the charge to stop sending the revenue back to Wall Street from the minuscule transaction tax. Such an act could net the state up to $19 billion a year.

....

"The tax is in sum and substance one quarter of one percent, it's nothing . . . and according to data from Tax and Finance it was $1.6 billion in June alone," Mr. Steck said during a phone interview. "The present circumstances demand it . . .Teachers are being laid off . . .grant-based programs have been withheld. Upstate some of our education funding is all grant-based."

This is indeed the argument made about a financial transactions tax (or the Robin Hood Tax) here. It’s a teensie, tiny, tax but it’ll raise a fortune. One of the two statements has to be wrong of course, tiny taxes don’t raise lots, a tax which raises lots of revenue is not tiny.

One of us did a paper elsewhere explaining the larger story of why an FTT is a truly bad idea. We’re not trying to cover the same ground again here.

Rather, we just want to marvel at the mindset on display. $1.6 billion a month is real money even to New York state’s finances or to the assembled cash flows of Wall Street. That’s why the desire on the part of the politicians to collect it of course. But that very eagerness driven by the size shows that it’s not a small tax.

The cognitive dissonance of insisting that $19 billion a year being pulled out of one industry in one city is “nothing” is painful to the logic detectors.

Is the Grand Old Duke leading the charge to Zero Carbon?

Although the nursery song is much older, the Grand Old Duke of York usually refers to Frederick, the titular commander of the British army during the Napoleonic wars.  Despite some good innovations, such as founding Sandhurst, his grasp of strategy and financial control was fragile. Eliminating carbon emissions is certainly a good idea but the leadership is a bit wobbly on how that can be achieved and the costs. The Committee on Climate Change (CCC) is chaired by Lord Deben who, in his ministerial days, was famous for rarely, if ever, reading his briefs and for reassuring the public, during the mad cow disease era, by feeding beef-burgers to his children. But the CCC is only advisory. 

As previously discussed, current forecasts by the Department for Business, Energy and Industrial Strategy (BEIS) show an alarming shortfall in UK electricity generation capacity by 2050 if zero carbon is to be achieved. The CCC estimate the costs to be £50bn. p.a. by 2050 (1% of GDP). BEIS and HM Treasury reckon on £70bn. p.a. or £1 trillion overall, although the latter’s calculations are not due to be released until later this year.  The BEIS is also due to publish its long-delayed energy White Paper this autumn.  In the absence of any numbers from government, the Global Warming Policy Foundation (GWPF), in their October submission to the Treasury Select Committee Inquiry, put their estimate around four times higher, i.e. £4 trillion. 

The Grand Old Duke would have been proud of CCC’s response to the request from the GWPF (President: Nigel Lawson) for their annual figures leading up to 2050: “We do not hold the information you have requested. The purpose of the net zero report was to establish when the UK should reduce emissions to net zero, which we recommended be legislated for 2050. The focus of our scenario analysis was therefore on whether achieving net zero emissions was feasible in 2050, and what the additional costs would be in that year.”  In other words, CCC recommended marching up the hill with no idea how to get there.

That is a remarkable admission given their 304 page, May 2019, Technical Report which provided analyses across nine headings: Power and Hydrogen, Buildings, Industry, Surface Transport, Aviation and Shipping, Net-Agriculture and LULUCF, Waste, F-gas emissions and  Greenhouse gas removals. Unfortunately, CCC provided no executive summary so it is unclear how the figures add up. LULUCF, as any fule kno, stands for “land use, land use change and forestry” and F-gas is not that emitted by cows and humans but “fluorinated gases” emissions from refrigeration, air-conditioning and heat pumps due to refrigerant leakage.   

The Guardian was not impressed by the progress one year on from the government’s net zero commitment: “John Sauven, the executive director of Greenpeace UK, said: ‘If the government wants businesses, local authorities and households to make the appropriate investments over the next decade, they will need confidence that Britain really is committed to decarbonising the economy. But the practical measures taken by the government over the past 12 months add up to a tiny fraction of what is needed to keep us on course to meet that commitment.’” 

Alongside the Technical Report, CCC published a 277 page Advice Report with an exceptionally long (27 page) executive summary which consists mostly of political exhortations. Being responsible for 1% of greenhouse gases apparently puts the UK in the global driving seat. 1% is also stated, with little visible support, as the cost of moving up from the previous 80% elimination target which was itself going to cost an extra 1% of GDP.  So far as the power sector capital investment is concerned, “our scenarios imply an extra investment requirement of around 1% in 2050” (p.29). It is hard to take a report seriously where, whatever the question, the answer is always 1%. 

The UK, in partnership with Italy, chairs the UN Climate Change Conference of the Parties (COP26) in Glasgow next November.  As part of the run up to that, in case you had not noticed “This year, we’ve launched a Year of Climate Action”. The energy White Paper and the Treasury commentary may be part of that Action. Add to that the Treasury Select Committee has been holding an Inquiry into “Decarbonisation and Green Finance” since March and their report can be expected within the next couple of months or so. The technicalities of green finance reporting will annoy quite a few company secretaries but otherwise concern few voters.  On the other hand, the effects of net zero carbon on consumer prices, as distinct from production costs, are another matter. Ofgem may be encouraged to keep prices high so that the Government can use the margin elsewhere and consumers are motivated to use less electricity.  Conversely, Ofgem might be encouraged to push energy prices down to popularise the net zero target. In 2014 the BEIS predecessor ministry published “Estimated impacts of energy and climate change policies on energy prices and bills”.  In 2018, BEIS promised to update it but have yet to do so. This needs discussion. 

Chapter 7 of the Advice Report makes a valiant effort to assess the costs of zero carbon.  The clarity of presentation is not helped by mixing costs and benefits together as “resource costs”.  Carbon capture and storage is pretty much an unknown at this point and the assumptions are crucial for the reliance the report makes on hydrogen as a key part of the solution. The cost analysis is unconvincing. 

Land use is also an interesting part of this conundrum: humans breathe oxygen and exhale co2 whereas plants, notably peatland, do the reverse.  The CCC recommends more use of the land to remove carbon whereas the government’s planning White Paper seems to want to concrete it all over with new housing. 

The Advice Report concluded that a net zero carbon 2050 “is only possible if clear, stable and well-designed policies to reduce emissions further are introduced across the economy without delay. Current policy is insufficient for even the existing targets.” In other words, it is only possible if the government makes it happen.  As the Grand Old Duke explained to Wellington, “you are only going to win Waterloo, my boy, if Napoleon loses”. 

The more incompetent government is the more libertarian we should be

There’s a certain logical confusion on display here in The Observer. Not that that’s unusual of course. The first claim is that to be concerned with the economy above lives is a mark of libertarianism:

Understanding how this catastrophe occurred is of critical importance – for it cannot be allowed to happen again. Some may be tempted to conclude that our leaders took their eyes off the ball momentarily. It is not an argument that stands up to scrutiny, however. In fact, the causes of this month’s dramatic surge in Covid cases have their roots in policy decisions made by a government that has shown itself obsessed with libertarian issues since the start of the pandemic. This obsession led it to consistently play down Covid’s threat to our health while constantly highlighting its potential to cause economic harm.

Libertarianism - in common with the close cognates, neoliberalism and classical liberalism and you can use whichever of the three you desire to describe our position on most matters - does not prioritise “the economy” over any thing at all let alone peoples’ lives in a pandemic. It is, rather, a method, a manner of thinking about, how best to create, the better life as are all socioeconomic and political sets of ideas - communism, socialism, corporatism, fascism and whatever other precepts one might like to describe. They’re all of varying levels of effectiveness, desirability and horror but all do indeed ponder the same interactions of economy, life, health and so on.

Libertarianism places greater weight than most of those others upon liberty and freedom, certainly, but that’s not the same as “the economy”.

It’s the next part of the argument that is seriously awry:

It has hard to see any positives in this sad tale of government incompetence

Consider the claim. We’ve not had enough firm thwack of government because everyone’s been libertarian about stuff. We’ve also got the insistence that government is incompetent. Those two can’t both be true. If those who rule are incompetent then we’d do better with less of their intervention into life, not more. That firm direction of the nation’s effectiveness is predicated upon the competence of those hands upon the tiller. The insistence upon the absence of the competence is an argument, perhaps the argument, in favour of just running before the storm.

It’s not possible to believe both, both the incompetence and the more deployment of the incompetence. Well, not unless you’re writing for The Observer….

Dropping the degree requirement for lawyers

This is obviously a good idea:

School leavers will no longer need to go to university if they want to become lawyers after regulators approved the biggest reform of legal education for a generation.

Under the changes, which take effect from next September, people can join law firms as apprentices under the government’s “trailblazer” scheme. Then, after gaining mandatory work experience, they will be able to sit a new two-part solicitors’ qualifying exam to become fully qualified.

As the article goes on to point out this is rather a return to the past. It used to be possible to do articles without having a degree. Instead something akin to an apprenticeship was done followed by the exam. Licensure still existed - you had to have the chitty to be a lawyer - but the degree wasn’t necessary to gain the licence. This was also true of accounting and indeed many other of the professions.

The importance of this being that we societally tried insisting on the degree and now won;t. This idea having much wider application.

For example, there’s no obvious reason why a schoolteacher should have a degree. Certainly at the lower age levels where crowd control is rather more of what is being done. This is before we even consider that post-degree teacher training so often required. It seems to us obvious that the degree requirement for nursing was and is a bad idea - we speak as people who have watched family members go through the system both old and new. There are benefits to the members of both occupations in that the degree requirement engenders status - or did before 50% of all got degrees - and thus claims for higher incomes. But to the rest of us not so much.

Another way to put this is that if the traditional professions are no longer to require a degree upon entry then perhaps we should stop loading the degree requirement onto what were not and are not professions?