An interesting thing about climate that very few seem to grasp
Not just an interesting thing but a vitally important thing that very few seem to grasp. We, here in Britain, have already avoided those worst predictions of Ecogotterdammerung. Not that we’d know it from the public pronouncements but this is in fact true - always a useful attribute for a factoid about the world to have.
The proof is here:
Britain has already reduced emissions by 45 per cent since 1990 as it has phased out coal and developed its offshore wind sector.
Those predictions of Flipper’s imminent fate - to be broiled in the fumes of the last ice floe - depend upon a model called RCP 8.5. For which we need a continued and large rise in emissions over that same period. We have cut emissions over that period, not increased them, therefore RCP 8.5 is not the world that is going to happen.
Sure, what other people do here matters rather more than what we do. Global emissions create global problems, the atmosphere isn’t taking note of national borders. On the other hand we really are only responsible for what we do so that’s got to be the measure of our actions and our policy.
The reason this becomes important is that all the predictions of coming doom if we don’t abandon gas boilers, kill the ICE in favour of EVs, stop eating meat and all the rest of it, they all depend upon RCP 8.5 being the path we’re on. If we’re not on that path, say we’re on RCP 4.5 - consistent with our having reduced emissions by 45% already - then climate change and global warming become minor problems which pass in the normal course of technological development.
All the screaming depends upon RCP 8.5 happening. To prevent RCP 8.5 happening all that is necessary is for everyone to do what we in Britain have already done, reduce emissions by 45% from 1990 levels. Which, if we’re honest about it, doesn’t seem like all that much of a problem. It’s been expensive, it’s been done and incentivised the wrong way and so on, certainly, but it has been done without having to overturn society, markets and capitalism.
Which is why, in our more cynical moments, the screaming continues. For some out there it’s much more important to overturn society than it is to deal with the identified problem of climate change. Views might differ on this point, adjust to your own level of cynicism.
A world which had reduced emissions by 45% from 1990 would not be facing any significant problems from climate change. A world in which the rich countries alone did so would still be one entirely inconsistent with the claims of extreme damage under that standard assumption of RCP 8.5.
We have, in Britain, already done our bit.
So, how do we get this retail innovation then?
Larry Elliott tells us that Philip Green wasn’t all that good at retail. More investment, more innovation, that’s what he needed to do.
Well, perhaps. It’s just that we’d rather like to see those plans from 15 and 20 years ago by those who say things should have been different. Who was actually, among the planners and those who would direct innovation, proposing what would have worked? We don’t say that we’ve looked in every corner, under every cushion on the sofa, but we’re not aware of any plans other than those with the vision of 20/20 hindsight.
Well, except those who founded their own companies and driven by market freedoms and the usual capitalist lust for profits went off and did it themselves. This then giving us our answer to this:
High streets and city centres will need to change because there are too many retailers chasing a dwindling amount of consumer spending. As was the case until relatively recently, they need to become places where people live and work as well as places where they shop.
But all this requires some serious investment in skills, physical infrastructure and innovation, rather than a “pile ’em high, sell ’em cheap, make a quick buck” approach. That model is bankrupt.
Last time around it was only free market competition in a capitalist system that uncovered those that had the right plans, the right answers. It’s not a huge leap of faith to insist that the same will be true this time around. Actually, observation of reality over the past couple of centuries, since we started using this dual system, tells us that free market capitalism is always the best method of uncovering those few who have the right answers.
Other than those with the extreme acuity to know now what should have been done then of course.
Deep Mind and the production of public goods
There are indeed things government should do as there are things that only government can do and which also need to be done. But in determining which these are we do need to bring a certain clarity to our thinking.
One of the founding investors in DeepMind has warned that UK taxpayers will miss out on billions of pounds in revenue from a pioneering protein breakthrough because of the sale of the technology company to Google six years ago.
Humayun Sheikh, an early investor in the London-based artificial intelligence company now owned by Google-owner Alphabet, said the news this week that it had cracked the 50-year-old scientific puzzle of protein folding was a sign that it was now looking at more commercial opportunities.
The argument is that if - if! - the pretty much bust Deep Mind had not been bought by Google, but instead had had taxpayer money lavished upon it, then…..well, then if it had also pivoted from general AI to protein folding, if it had also, as a state owned bureaucracy, attracted the best minds of the generation, if it had been successful as it is, if government had kept funding it, then…..which all sounds rather tenuous to us.
All rather if my aunt were different then she’d by my uncle in fact.
Another analytical failure is to make the Mariana Mazzucato mistake:
Mr Clifford said funding of such research by governments was "actually a public good, and potentially even a global public good".
No, the public good is the thing that is produced. Here, knowledge of protein folding. The economic, rather than definitional, description of which is that it’s terribly difficult to make a profit out of a public good. That’s why the private sector undersupplies them and government intervention can be justified on optimal outcome grounds.
But if we’re now arguing over who gets the tens of billions from the invention of this method of studying protein folding then we’re not talking about a public good, are we? Because our argument is proof that profits can be made and thus the adventure into knowledge does not suffer from the public goods problem. As with Ms. Mazzucato and her shouting that government must invest in public goods but also that government should profit from the creation of public goods - the two insistences clash at a basic logical level.
This is before we even get to that other piece of base logic here. Let us, arguendo, agree that this really is a public good. Excellent, well, it has been produced, provided, by the private sector. So, where now is our argument that government must invest in the production of public goods because the private sector won’t?
No doubt Ms. Mazzucato can explain even if we can’t see it.
Common sense, Science and Nonscience
The government’s response to the Covid pandemic has thrown common sense, science and nonscience into stark relief. The seven strains of coronavirus that infect humans belong to the same family as colds and flu. We have been battling their various pandemics for 140 years and should have learned how to do it by now. The assumption by the Department of Health and Social Care (DHSC) in 2005 that the next pandemic would be like the flu was not wide of the mark. Contagious bovine pleuropneumonia, caught from cattle, as the name indicates, was the first historically recorded. We culled the cattle for no good reason because contagion was, after the first, human to human. The human mortality rate was high then. Imperial’s Professor Ferguson’s recommendation to cull the cattle during the mad cow disease period (1994/6) was similarly wrong; eating the meat we usually eat was no risk. As a result of each case, immunity grew to a greater or lesser extent and ceased to be life-threatening.
After all these years, we know to stay away from people with flu-like symptoms and we do not thank them for approaching us. If one has just had flu, then there is little risk in being close to someone developing those symptoms. Testing and tracing are obvious ways of keeping the carriers away from the rest of the public. If hospital admissions are escalating dramatically, it makes sense to step up distancing in case they exceed capacity. No sane person should challenge government advice to keep apart and wash our hands. This is common sense, not science.
Questions arise, however, when ministers, most of whom graduated, ironically enough, in PPE rather than science, treat people in white coats with excessive reverence and fail to distinguish science from nonscience or relevant from irrelevant expertise. Outside her own field, a scientist is no more expert than anyone else. “Models” have been especially venerated, probably because they are usually presented as impressive equations. Since the 19th century, mathematical models have been used to depict scientific thinking. The scientific method is, usually, conjecture -> model -> empirical testing -> revision of conjecture and then cycling on until the model becomes a useful depiction of reality. As statistician George Box pointed out, “all models are wrong but some are useful”.[1]
A map is a model; following one will reliably bring you to where you want to get. That is because the model has been empirically verified for generations. A thousand years ago, European maps showed terra incognita but they would not bring you to the area now called Washington DC. Models of the unknown are conjectures, i.e. guesswork. For whatever reason, the government has been economical in sharing the evidence from Sage, even its membership initially. The nonsense excuse was that it would compromise the academics’ freedom to publish. Their work was mostly funded by the taxpayer.
The models fall into two types: prediction and analysis of the data so far. Neither of these are science: the first category requires conjectures about the future. We now know that some of these predictions were wide of the mark. “According to Herodotus, erring soothsayers were clapped in irons and laid in bracken-filled oxcarts which were then set alight. Whether this improved the quality of forecasts is not known: most likely it did, at least, reduce the quantity of speculative and baseless prediction.” To be called “science” the models of both types should have been peer reviewed and tested using fresh empirical data. They were not. The concluding paragraph of one of the Sage papers is revealing: “As with all modelling, it is impossible to capture the full complexity of an epidemic. In this model, the major assumptions are that we have assumed that there is no change in behaviour during the course of the epidemic…We have not included any age-effects…we are not able to investigate the impact of school closures or the impact of the summer holidays, which had a large impact on the H1N1 influenza pandemic in 2009.”
Two of the best qualified critics of Sage are Doctors John Lee and Mike Yeadon. Here is Lee in June: “There’s really no clear signal (apart from modelling, which doesn’t count) that these interventions [lockdowns and social distancing] have had any significant effects on the epidemic curves, either on the way in or the way out of these rules, in many different variants and in many different countries.” And in July: “But how does modelling relate to ‘the science’ we heard so much about? An important point — often overlooked — is that modelling is not science, for the simple reason that a prediction made by a scientist (using a model or not) is just opinion.”
Yeadon has made two strong critiques. They were little reported, probably because the articles were not written to academic standards and were published in a prejudiced medium. His review of the composition of the Sage group concluded it had no one with “a biology degree [or] a post-doctoral qualification in immunology. A few medics, sure. Several people from the humanities including sociologists, economists, psychologists and political theorists. No clinical immunologists. What there were in profusion – seven in total – were mathematicians.” Professor Ferguson has been a lead mathematical modeller and is described as a “mathematical biologist” but there is no such speciality: cutting edge biology is now conducted by teams including biologists and mathematicians, with different skills. In the US, mathematics is usually considered a science whereas in Europe it is considered one of the liberal arts. It is a language and a way of depicting natural phenomena and in my view, as an Oxford mathematician, the European view is the more correct. Yeadon’s point is that the Sage committee had no scientist with the relevant expertise.
His next issue is Sage’s assumption that, as Covid 19 is a new virus, no one had any immunity. Whilst the levels of total or partial (cold-like symptoms) immunity provided by the T cells resulting from other members of the coronavirus family, has yet to be established, José Mateus (Center for Infectious Disease and Vaccine Research, La Jolla Institute for Immunology) et al. concluded that they are “a contributing factor to variations in COVID19 patient disease outcomes, but at present this is highly speculative.”
Yeadon’s second challenge is that Sage has grossly underestimated the number infected so far and therefore overstated the risk. Working back from the IFR (infection fatality ratio) which has been widely studied around the world, e.g. Ioannidis (2020), he calculates Covid-19 has so far infected “32% of our population of 67 million. That estimate might be a little high, but I’m confident it’s a great deal closer to the real number than SAGE’s 7%.” (p.10)
Quite apart from doubts about the reliability of the science, or nonscience, guiding government is the science they should have done during all these months. For example, two comparable towns should have been chosen in the summer, one where pubs were shut and one where pubs, following all Covid protection measures, stayed open. Is the hospitality sector correct to claim that pubs following the guidance are safer than closing them and allowing unruly mixing elsewhere? Test and trace should have been used to analyse the days when over-70s must have acquired their infections. After all, they are the ones at most risk. Deaths purely from Covid 19 should have been analysed separately, as there is some indication that the severity of the disease is linked to the extent of the exposure to carriers, e.g. hospital nurse deaths.
The House of Commons debated the revised tier system on 1st December. Few ministers made more than token appearances. They would not have enjoyed hearing MP after MP castigate the Government for its lack of evidence in support of their proposals and the lack of logic in the tier boundaries. The Prime Minister insisted that county boundaries must be used and then put Slough in tier 3 with the rest of Berkshire in tier 2. The economic impact assessment was described as a cut and paste job, not worth the paper it was written on.
MPs are entitled, even more than the rest of us, to a clear exposition of the evidence both scientific and economic. They should be able to specify revisions and what further evidence is needed before decisions are made. They need to distinguish common sense, which we should all accept, from uncertainties where evidential, quality science is required. And they should stop being guided by nonscience. MPs will need to hear from peer reviewers to do that and the Government needs to listen to the House.
[1] Box, G. E. P. (1979), "Robustness in the strategy of scientific model building", in Launer, R. L.; Wilkinson, G. N. (eds.), Robustness in Statistics, Academic Press, pp. 201–236
Why try to solve a problem we've already solved?
We’re confused as to why people keep insisting upon trying to solve problems that are already solved. One example might be that the cure for climate change is to make non-fossil fuel energy generation cheaper than fossil fuel. Arguably - and yes, we know about intermittency and so on - this has already been done, certainly many claim this has been done. Good, so, the problem is solved, what’s everyone arguing about?
Or, today’s example:
Entrepreneurs with new ideas for more productive and sustainable farming will be helped to join the industry under changes to agricultural policy in England, the government has promised.
Land will be made available for new farmers by offering existing ones a lump sum “exit payment” made up of the subsidies they would have received up to 2027.
The exit scheme and “additional support” for new farmers will be available from 2022. They are two elements of a fundamental change in public funding for farming that will be phased in over the next seven years.
The difficulty with getting into farming is that the land - a useful asset to have in order to be able to farm - to farm upon is expensive. This requires would be farmers to have vast piles of capital upon which they’re not going to make much return. The answer to this is to make farmland cheaper.
One reason why farmland is so expensive is the European Union’s insistence upon the single payment. If you have land you get money. As David Ricardo pointed out over 200 years ago such a rise in land rental, properly defined, will simply increase the value of the land itself. High agricultural land prices are driven by that method of subsidy.
We’ve left the EU, we’re abandoning that method of subsidy. Land prices will, ceteris paribus, fall. We have solved the problem of vast piles of capital which will gain little return being required to enter farming.
Given that the problem is solved then why do we have more plans to solve it?
Well, other than the usual political insistence that farmers are special people who deserve ever more of everyone elses’ money that is?
The government insists free range farming isn't worth it
As we might have pointed out here before expressed preferences - what people say - aren’t as good a guide to what they truly desires as revealed preferences - what people actually do. The government has just announced, not that they put it quite this way, that free range and other such farming lovelies aren’t worth it:
English farmers could be paid for producing free-range eggs or grass-fed beef under post-Brexit changes to agricultural subsidies, the Government will announce on Monday.
Why would food produced by such methods require subsidy? Sure, lots of people will say that they desire them. But they do cost more to produce and people aren’t willing to put their money where their mouths are. Not enough people are willing to pay enough money to support production by those more expensive methods that is.
Which is why the call for subsidy, so that everyone has to pay for those desires of the few. This isn’t something we should be doing of course.
Higher welfare English food could be labelled in shops to give consumers greater choice amid concerns over import standards in post-Brexit deals.
That is exactly what we should do. Those who desire those higher standards can have them - and pay for them - and those who don’t do not have to. Either through the prices of their own food or the weight of having to pay for others peoples’ desires through the tax system.
That is, increase the information available thus leading to a more perfect market. Animal welfare standards will become a result of such more perfect markets. Will be, as they should be, something we observe people desire from what they do.
How could anyone differ with this plan? After all, the claim is that all Britons desire, demand even, these higher welfare standards. Excellent, then all will voluntarily pay for them, won’t they? The claim that subsidy is needed is not an admission, it’s an insistence, that the claim all desire is in fact wrong. And why should people be forced to pay for what they don’t want?
So, that's settled then
Comparing public and private sector pay is difficult. For a proper comparison would be of compensation - so, job security, flexibility, hours, holidays as well as wages - which crucially must include pensions. This being something that those arguing for higher public sector pay tend to not wish to include. For as soon as we add pensions then the public sector is significantly better paid even when we control for age and qualifications and all that.
So, we need to find some manner of deciding this. Are pensions to be included or not in our comparisons?
Stephen Timms, chairman of the work and pensions select committee, called on the Monaco-based billionaire to pay up again, three years after he agreed to pump £363m into the pension fund of the collapsed BHS.
Mr Timms, who will write to the pensions regulator tomorrow to underline the importance of protecting pension scheme members, said: “This is a dreadful time for Arcadia staff to be worrying about their jobs and their pension. “Whatever happens to the group, the Green family must make good the deficit in the Arcadia pension fund.”
The claim is that pensions must, must, be paid whatever else happens. Even if the cause of the deficit is - at least partly and we’ll allow others to argue over how much - a result of government policy in reducing interest rates. Yes, this matters, falling interest rates lead to pensions liabilities increasing more than asset prices rise.
Pensions must be paid so much that the call is being made to ignore the corporate veil even, to overcome limited liability.
We don’t think much of that idea to be honest but it does give us an indication of how we should be accounting for pensions as a part of wages or compensation. If they’re so important as to overturn near the entirety of law and practice on the division between corporate and personal finances then yes, we really should be thinking of them as firmly fixed and part of compensation, shouldn’t we?
That is, public sector pensions must be included in our estimations of the compensation being paid to public sector workers. Clearly so, that’s settled.
We are amused
Apparently the world of international corporate taxation has changed:
Netflix is to finally start declaring the £1bn-plus revenues it makes from millions of British subscribers each year to the UK tax authorities, a move likely to ramp up pressure on tech firms such as Google and Amazon to stop funnelling revenues through overseas tax jurisdictions.
Netflix, which has funnelled UK-generated revenue through separate accounts at its European headquarters in the Netherlands since launching in Britain in 2012, is to notify its almost 13 million UK subscribers on Tuesday about the change, which starts from January.
The change is likely to increase the amount Netflix pays in UK corporation tax and is expected to add to pressure on Google, Amazon and other tech firms that have been accused of funnelling revenues to low-tax jurisdictions to avoid tax.
No doubt there will be much patting of backs and lashings of ginger beer among the varied tax campaigners who will insist they made this happen. Sadly for such self-congratulations actions here in Europe have had near nothing to do with this. Diverted profits taxes, people gluing themselves to shop windows, marches and campaigning outfits just haven’t made any difference at all.
The claim always was that if profits could be wafted away out of the UK to somewhere less taxing then those profits would be entirely untaxed. This wasn’t entirely true, they would be taxed if shareholders were ever to get them but they could indeed be parked without having paid tax. So, therefore, there was good incentive to attempt to so waft - it is a standard tenet of economics that incentives matter.
What has changed is that the incentive is no longer there. Those European profits, wafted offshore, that accrue to US based companies - and this always was what it was about - are now taxed in the US. Profit shifting in Europe now makes no difference to the total tax bill of a corporation for European taxes paid are deductions from that US tax bill to be presented.
The company - that mixture of shareholders and legal personality that makes it up - doesn’t actually care who collects the cheque, only what the size of it is. So, if the tax bill will be of - exactly - the same size, wafted or not, why bother with the wafting? Which is why those American corporations aren’t - that tenet of incentives matter once again.
Which is where the amusement comes in. For the change that led to this was a change in American tax law. One suggested and, to the extent that the President gets to do this in the American system, imposed by Donald Trump.
Yep. The demands of Tax Justice, Richard Brooks, Richard Murphy, Alex Cobham, UKUncut and the rest of the dreary list of them have been met by The Donald. Not that any of them will ever be able to bring themselves to admit it, nor write a thank you note, but then that’s where the amusement is, isn’t it?
Here's an idea - let's not do things that don't work
The Guardian tells us of an idea that we should learn a lesson from:
Berlin's rent cap offers a new way of thinking about Britain's housing crisis Alexander Vasudevan
Yes, OK, let us use this example as an aid to our thinking.
The rent cap in Berlin also offers an object lesson in the rather different role that city governments might play in the UK
Indeed, this is something we should consider.
The rent cap has many detractors in Germany, including landlords’ associations, who have argued that the cap will only lead to housing shortages and scare off investors.
Well, yes, that’s possible.
A rent cap should not be seen as a panacea.
Well, that depends really. What actually has been the effect of this rent cap in Berlin?
Within a year, the supply of rental apartments in Berlin fell by 41 percent - according to the result of an analysis by the real estate portal "Immoscout24". At the same time, demand rose by 172 percent.
Ah, OK, it doesn’t work then. People having a place to lay their weary heads is replaced by long waits to have a place to lay a weary head. It’s not just that it doesn’t solve the problem it is in fact entirely counter-productive. Let’s not do that then, eh?
Of course, we already knew this. Assar Lindbeck spent some of his time working out who should receive the Nobel in economics:
“In many cases rent control appears to be the most efficient technique presently known to destroy a city—except for bombing."
When even a Swedish socialist is able to see the stupidity of an economic policy it’s something best avoided.
So, yes, we do have that example of Berlin before us, as we’ve others over the years and generations. We can and even should consider the idea of rent control. OK, now we’ve considered it and it’s a massively stupid idea. Let’s not do it then. eh?
Wrong end of the stick firmly grasped over electronics recycling
We may have muttered, over the years, that it’s not necessarily the brightest and best of a generation that pursues politics as a career. Our latest test of this calumny is a report on electronic waste from the environment committee of the House of Commons.
The tsunami of electronic waste was throwing away valuable resources vital to a sustainable future, the report published on Thursday said.
Globally, thrown-away computers, smartphones, tablets and other electronic waste have a potential value of $62.5bn each year from the precious metals they contain, including gold, silver, copper, platinum and other critical raw materials such as tungsten and indium.
No, they don’t. That is the - theoretical - value of the metals once collected, processed, refined and made available for reuse. There are costs associated with doing all of that, the largest being the collection. This means the expenditure of resources to do all of those things.
We also know that it requires the expenditure of more resources to do those things than is gained by having done them. This is simple in a market economy - anyone trying it makes a loss which is why it is not done. A loss is the price system’s method of telling you you’re doing something stupid - or, here, expending more resources to recover fewer resources.
By the way, anyone who thinks that human labour, a major component of the resources required, is not an economic resource can come around and mow our lawn on Saturday. For free, obviously, because their time is worth nothing, is it?
From the report itself:
We ask the Government to set ambitious long-term targets including for the collection, re-use and recycling of E-waste to be undertaken to a very high standard. We ask that these targets focus on reducing resource consumption; the environmental impact of the industry and on capturing and retaining value including critical raw materials.
Therefore, to save resources, we must not recycle electronics - exactly the opposite of the committee’s recommendation.
We ask the Government to ban the practice of intentionally shortening the lifespan of products through planned obsolescence.
That could actually be useful, oddly enough. The thing to do would be rescind the ban on the use of lead in tin solder. The reason for the lead being to prevent the growth of tin whiskers which, after a few years of use, cause electronics to go “zzzzzt!” and short circuit. So, rescinding the last environmental rule might be a good start to the new one.
Our high streets are under severe pressure and current regulations, coming into force from 2021, could unfairly entrench the competitive advantage of online retailers and marketplaces like Amazon. As a matter of urgency, and at the latest by the end of 2021, online retailers and marketplaces must have an equal obligation to collect electronic waste from customers. To prevent take-back only being offered at remote, inconvenient warehouses, we believe that the exemplary innovation shown by some companies should become a minimum—meaning all large online retailers and marketplaces must arrange and pay for like-for-like electronic waste collection from a customer’s home on delivery of new electronics. They must also offer to collect any electronic waste defined as “small” at the same time.
Even if we were to desire an electronics recycling system that isn’t the way to do it. Instead we should impose a deposit upon each piece of equipment which would be repaid - in full - when the piece is handed into a recycling centre. That would be the actual place where the recycling factory is, not even a network of collection places.
For we do have excellent recycling schemes for metals. Some 99% of all gold ever produced is recycled and there’s hardly a hamlet in the country where you cannot enter an ounce or two into that system. The reason being that it has value. Such value means that we can rely upon simple capitalist greed to get it to the refiner.
So, if we want thing which do not have value to be collected assign - twist the price system - a value so as to invigorate those covetous juices. A £10 deposit on every laptop will have - just as an example you understand - the Boy Scouts running a collection every whatever Bob a Job week is called now. Possibly more pertinently the electronic waste that is ink jet cartridges can be handed in, for money, in any town because they’re worth money as things to be refilled.
So, the considered thoughts of the ruling class seem to be that we should do something we shouldn’t be doing, do it in the wrong way and not do the thing which would aid in solving the problem identified. It might be that it’s not a calumny to posit that the brightest and best of a generation don’t go into politics.