Taxpayer Value

Gordon Brown, Chancellor and then Prime Minister, made much political capital from labelling all his government’s expenditure “investment” (good, no matter how wasteful and transient), and all opposition proposals for savings “Tory cuts” (bad, no matter how sensible or good for the taxpayer).  

Unfortunately, Boris Johnson is starting to misuse our language in the same way: the £30 billion defence expenditure announced last month was labelled “investment”. Some of it may be; but the 10,000 extra jobs, hopefully in the armed forces rather than the ministry, are definitely not. Investment means money spent today for benefits in future years; accountants put it in the balance sheet.  Otherwise, it is current expenditure, like wages and travelling costs; accountants put that in the profit and loss, or income and expenditure, account. 

Politicians would like us to believe that all their investments of our money are good, i.e. will provide a generous return in due course.  Yet many such investments, from the ground nuts scheme to HS2, have been dreadful because the costs wildly exceeded those initially announced. The next government (or two) face the criticism when that reality dawns.  By then, the projects are too advanced to stop.  

The Private Finance Initiative 

1992 saw a further muddying of the water with John Major’s creation of PFI, the Private Finance Initiative.  This got around Treasury objections to government expenditure on schools, hospitals and such like by using private sector finance to build them on the never-never.  Needless to say, these schemes cost a great deal more than if the Treasury had picked up the bill in the first place.  The idea was that the private sector would secure so much better deals than unworldly civil servants, and those savings would outweigh the no-risk profits to the investors. If the investors had been undertaking these projects for themselves, maybe they would have found the savings; but they were spending other people’s money. The Norfolk and Norwich University Hospital is one example: “The private finance initiative (PFI) deal used to build the hospital in 2001 costs around £20m a year, which chief executive Mark Davies previously said left the hospital hamstrung.”

For over 20 years, government departments had no choice but to pay for these projects on the never-never because the Treasury claimed it had no money.  But as the Covid pandemic has demonstrated, the Treasury has any amount of moolah when it wishes. According to the National Audit Office (NAO), by 2018 PFI projects to date had a capital value of around £60 billion but they cost £199 billion. The NAO ducked the question of value for money on the grounds that “there is still a lack of data available on the benefits of private finance procurement.” (p.5) The “benefits” are clear enough: the same public assets cost the taxpayer £139 billion due to government incompetence. Ex-investment banker Rishi Sunak knows enough to stop that nonsense. 

Parliament must take the rap for this. Three percent of MPs are accountants compared with 11% lawyers, albeit down from the 15% in the 1970s. But you do not have to be a qualified accountant to assess the likely costs and benefits from alternative capital expenditures even if they cannot all be quantified financially.  Every new regulation is supposed to include them on the impact assessment and that is all taxpayer value is. 

Funding allocation 

It is much easier for current expenditure.  The Arts Council England is a mechanism for allocating the expenditure that (mostly) the Treasury and the Lottery provide to subsidise selected English theatres, galleries and other arts centres – about £500m in total. The Arts Council England bureaucracy helps itself to about £38m (2019/20 annual accounts, note 4c) and passes on what is left.  Obviously, some administration and audit are needed but perhaps £8m rather than £38m.  Oliver Dowden should ensure that the Arts Council England becomes simply a money channel to give maximum value for the taxpayer while retaining the minimum to fund an efficient allocation process. 

Four government departments are essentially also money channels: apart from setting policy and monitoring progress, they contribute little to government beyond sharing out the available funding to the units down the line. They are the Department for Culture, Media and Sport (e.g. the arts and sports councils), the Department for Education (local authorities’ schools and child care), the Ministry of Housing, Communities and Local Government (local authorities) and, arguably, the Ministry of Defence (where the present central procurement system is alleged to cost the taxpayer a great deal more than the armed services themselves would pay on the open market).

Other departments are a mix of two roles — money channel and governing e.g. the Department of Health and Social Care, Business, Energy and Industrial Strategy, the Home Office and Foreign Office (overseas aid). At Health, Matt Hancock has, this summer, been looking at the excess bureaucracy problem.

The higher education example 

Some of the money channel thinking applies to universities. Strangely, it is not the Department for Education that devises the policy for this but Alok Sharma’s Business Department, except when it actually is under the DfE. University funding goes through several teaching and research channels when one should suffice.  

Further education does, however, come under the DfE and also has half a dozen different funding channels. University Technical Colleges, presumably on the grounds that they have nothing to do with business or industrial strategy, come under the DfE. Unsurprisingly, with no focus on taxpayer value, all but two (of the 58 set up since 2010) have ranged from adequate to disaster.

The government’s whole approach to young people needs to be rationalised from a taxpayer value point of view with the channelling of funds streamlined under the Education Secretary, currently Gavin Williamson.  

Conclusion 

In essence, the front line of public services (doctors, nurses, police, theatres, armed forces) is the source of value for the taxpayer. Administering the front line and taking care of the money is necessary but does not directly benefit the taxpayer. Government itself is not a public service although someone has to pay for it. So, from the taxpayer’s point of view, value is maximised when the front line delivers what the taxpayer wants and the other Whitehall costs are minimised. Let us focus on achieving that.

Try out that socialist planning with Nick Timothy

Nick Timothy used to be something or other in British politics. Examining this proposal aids in telling us what has gone wrong in that sphere:

In leaving the EU, we are swapping scale for agility and uniformity for diversity and innovation. But how can we turn these principles into policies and reality?

One way is to become a first-mover and world leader in the regulation of new and high-growth industries. While the EU tends to move slowly on questions of regulation, and its decisions often reflect the interests of established firms, Britain can be faster out of the blocks. On artificial intelligence, automated vehicles, life sciences and many other sectors of the future, Britain can develop a new, more agile model of regulation, and attract investment and global expertise by getting in ahead of cumbersome competitors, like the EU, and reluctant regulators, like the United States.

At heart that claim is that those innovating, us consumers out here who want to be innovated to, need that guiding hand of the clever people in government in working out what can be done and what we want to have done. Only that - dead - hand of the State can possibly lead to the nirvana of shiny white hot heat of the new technology.

This is, writ small and yet equally damagingly, the socialist planning delusion.

The entire point of technological advance is that such expands the universe of things that can potentially be done. This then needs to be matched up against the list of things that the people - that’s you and me out here - desire to have done. Things that are successful are those things that can be newly done and also we desire to be done. The important point to note about which is that no one, no one at all, has any idea what those things are before they are tried, offered, and succeed or don’t.

How can we have regulation therefore? Other than the basics of a common system - which we might as well call Common Law - encoding things like don’t poison the customers, don’t steal and so on.

We have a theory - a surmise perhaps - about why so much of the innovation of the past couple of decades has been in that digital world. Yes, certainly, partly because that’s where the new tech is. But rather more because that’s where there hasn’t been any regulation. 25 years ago there were no - none, zip, nada - regulations or even legal guidances about how a search engine could or should work. As no one had heard of social networks the limitations upon experiment were non-existent. How one might use mobile phones was entirely unguided - which led to that canonical case of the sardine fishermen off Kerala producing pure and exultant economic growth through their employment.

Much of the rest of life, things being done more or less badly by current technology, is indeed regulated. Which is why there’s been so little innovation there, the cost of overcoming the extant regulations. In theory, at least, current law states that to make apricot marmalade one must get Parliament to change the law to allow the making of apricot marmalade. No, really, the Jams, Jellies and Marmalades regs state that citrus extracts - the essential difference between jam and marmalade - may only be added to compotes made of citrus fruits. As apricots aren’t then you can’t. £5,000 fine and or 6 months pokey if you do. It’s as if we still had to gain an individual bill through Parliament in order to gain a divorce. Something which would, we all agree, rather reduce the number that happened. So with innovation.

The case study here would be Uber and Lyft and the like. The new technology made possible a new way of hailing a cab. The extant regulation of the cab hailing business meant that tens of billions of capital needed to be expended on, umm, a new and exciting method of hailing a cab. Their strategy - expressly so - being to move into a market in such size and at such speed that the previous protective regulation be entirely overwhelmed. That is, if they’d had to go and ask for permission, for a variance in said regulation, it wouldn’t have happened at all.

This entire idea that there should be a regulatory pathway to innovation is to entirely misunderstand the principle of the issue under discussion. It’s to commit that socialist planning delusion. You know, the one that enabled the Soviet Union, according to Paul Krugman, not to increase total factor productivity one whit nor iota in its entire 7 decades of existence.

We have learnt the lesson of 1989 around here. That Nick Timothy and others presuming to rule us as yet have not is one of the things wrong with the place. Innovation needs freedom to succeed, not regulation and guidance from the political caste.

It's not up to shareholders to make companies behave morally

Mark Carney quotes Adam Smith and of course everyone claims him for their own version of reality. Philliip Inman in The Observer:

This amounts to just another form of self regulation, which cannot succeed when companies, under pressure to drive up profits, would be taking actions that increase their costs. Only cross-party, popular action, forcing governments to impose rules on corporate behaviour, can inject some morality where so little manifestly exists.

Matthew Syed also slightly misses the point:

This is why it can be argued that the problem we have in the West today isn’t capitalism per se; it is the way that giant corporations have sought to rig markets in their favour. They have been assisted by a group of economists who, in the 1970s, started to say some truly bizarre things. That markets don’t need regulation. That government is bad. That companies have no responsibility to society, but only to their owners. In effect, they sought to denigrate the values that markets had cultivated, insinuating that sectional interests alone should prevail.

Given that we are on the extreme bleeding edge of those being criticised here it’s worth our pointing out that no one at all believes that markets require no regulation. The discussion is about who does that regulating.

Some regulation does indeed need to be at the level of government - to pick an extreme example who may own a nuclear bomb, say. But the ethics and morality of business, that’s best done by consumers. On the entirely logical grounds that there are many different ethical and moral systems, many of which conflict. Therefore it’s necessary to allow the adherents of each to deploy their own - subject to the usual third party harm restrictions - as they wish.

So, if you prefer your soya fed chicken to not have a link with farming Brazil’s Cerrado then that is available. As is organic, free range, and factory farmed, chlorine washed and Cerrado stuffed. Your morals and you impose them upon suppliers by making a conscious choice.

Not making a choice on such grounds is rather evidence that you don’t care enough about the ethics to bother. Something which isn’t a great argument in favour of getting government to force you.

The ethical and moral monitors of corporate behaviour are us, as consumers.

Those who would rule us think differently of course. Allowing us to do our own thing rather takes the fun out of ruling. Further, we might make the wrong choices, impose the wrong moral values. This summer, for example, there was a rag trade company accused of using subcontractors in Leicester that paid below minimum wage. The share price dropped precipitately as worries about the consumer reaction spread. A few weeks later it became apparent that the teenage customers for the schmutter didn’t care and had carried on buying - the share price revived.

The consumers had shown they didn’t care about the allegations. That is, for them this was not a moral nor ethical issue. Well, that’s how society is supposed to work. We’re all free to live our lives as we wish, inside whatever moral and ethical constraints we wish to impose upon ourselves.

The opposition to this consumer regulation comes from those who would impose, upon others, their own ethical strictures. And that’s not really moral, is it?

Shareholder primacy is regulated by consumer supremacy and that’s, barring those extreme cases of things that go bang, the way to do it.

Of course interest rates can go below zero

That something can be done is of course not quite the same as the statement that this thing should be done.

UK interest rates can be cut below zero if needed to ward off the scars of Covid-19 or an economic hit from a no-deal Brexit, the Bank of England's Michael Saunders has said.

Rates are currently at a record low of 0.1pc but the Bank has embarked on an review of negative rates in the event the Monetary Policy Committee decides to go further still.

MPC member Michael Saunders said his own view was that the lower bound for interest rates was "probably a little below zero"

We agree with the “can”. The lower bound isn’t that zero - we can see that as there are negative rates out there already, both nominal and real - which leads to the question, well, what is the lower bound?

The answer coming from considering alternatives, substitution. At some point having money in the bank - at some negative interest rate that is - becomes more expensive than not having money in the bank. Or, given financial markets, having the money not in some bond or repo instrument or whatever. As Tyler Cowen pointed out many years ago this is really constrained by the cost of holding cash in a vault. That might be half a percent, one, possibly even two but it does exist as that constraint.

If you’d lose 10% a year from having money in the banking system then having it not in it at a cost of 2% is an obvious thing to do. Move those numbers around as you wish to find that actual lower interest rate bound.

Below zero interest rates can be had, certainly, but not all that far below zero. Whether it should be done is another matter of course. Our suspicion is that even trying it would lead to our needing a radical change to pension funding arrangements. Imagine the capital required now to fund a pension payable in 50 years’ time in a negative interest rate world. Near none of those organisations still running defined benefit pensions would survive - and we really, really, should account for civil service and governmental body pensions in the same manner as well.

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?