Reasons for optimism - cultured meats
Although the general public probably regards cultured (lab-grown) meats with some amusement, and perhaps disdain, it is a technological advance that promises to transform the agricultural industry of many countries. Cultured meats are made without killing or even harming animals. Muscle cells are taken from a biopsy of a living animal and grown in what is sometimes called a bioreactor by being fed and nurtured so they multiply. The muscle tissue they create is biologically identical to the meat that comes from a slaughtered animal, but is made in premises that have more in common with a factory than a farm.
The first cultured burger was unveiled in 2013 by Dr Mark Post of Maastricht University. It had taken two years to produce, and cost $300,000 to achieve, and was partly funded by Sergey Brin, one of the co-founders of Google. Since then the cost of production has fallen dramatically, as have the techniques needed to give the meats the texture and taste of the animal-produced meats they replicate. It is calculated that this year will see the price of cultured meats fall to the point where it can compete on price with traditionally-reared meats.
Rapid progress is being made with different types of meats. Cultured fish is seen as an alternative to depleting fishing stocks worldwide. It has yet to replicate the muscle texture of wild or farmed fish, but can already serve as a substitute in fish fingers, fish burgers or fishcakes. Cultured chicken was the first lab-grown meat to be passed for human consumption when it was approved by Singapore in 2020. It proves a valid substitute in chicken nuggets.
The chief advantage of cultured meats is that they are potentially limitless. Synthetic beef does not require vast acres of land for pasture, and does not threaten to convert rainforest land to agriculture. It does not use the antibiotics given to farm animals, and risk spreading antibiotic-resistant bacteria. It does not involve the mistreatment, suffering or slaughter of animals.
Cultured meat raises the prospect in some countries of allowing current farmland to be returned to wooded or wild conditions, with the ecological and environmental gains this brings. It could enable people in poor countries to improve their diet without putting excess strain on the Earth’s resources. It currently has a high energy input, but this will diminish as production is scaled up and can be supplied from renewable or non-polluting sources.
For about 12,000 years humans have used animal husbandry as a source of protein, but the technology of cultured meats looks to change that. It will bring about major economic, environmental and cultural changes, enabling us to produce more food for the world without the drawbacks that this might otherwise involve.
Sir Simon believes things that just ain't so
Simon Jenkins tells us that inequality has increased considerably in this 21 st century:
Political economists on both the left and the right are coming to the conclusion that the gap between rich and poor countries, as well as between rich and poor people, is destabilising and dangerous to democracy. The so-called Gini coefficient of inequality in personal incomes and wealth fell steadily in the latter decades of the 20th century, but has risen sharply in the 21st. The world is getting less equal.
As Mark Twain pointed out it’s not what you don’t know, it’s what you believe for sure that ain’t, which is dangerous.
Globally the world is becoming more equal. That’s what neoliberal globalisation has been doing - the poor countries continue to grow faster than the rich ones and the gap between them shrinks. It’s entirely true that we here don’t worry very much about inequality thinking that absolute poverty is the thing we should be striving to defeat. Fortunately this neoliberal thing beats both, proper poverty and also global inequality.
If we restrict ourselves to the UK then Sir Simon really should have a look at his own link to the evidence he says supports his thesis. His own dang newspaper points out that the Gini rose substantially in the last decades of the 20th century and has been roughly flat since - actually, it’s a little below 2008 levels right now.
It’s possible to become a little curt, possibly even short, here and mutter than basing policy on entire ignorance of the subject under discussion might not be the best manner of running the world. Or even of writing columns about what that policy might be. But there’s more here:
The world’s most successful industries – largely the concern of the top 10 wealthy individuals – are still operating virtually tax-free. The reason at root is that these industries are global, while taxation is national. Tax regimes tend to be deeply conservative, continuing to undertax wealth, notably property, and overtax lower and middle incomes. Fiscal authorities, such as Britain, are also cynically indulgent towards tax avoidance and money laundering, while loading taxpayers with regressive imposts such as council tax and VAT.
The global marketplace of Apple, Facebook, Google and their sprawling dependencies is essentially left alone in space. No one country has yet had the nerve to confront it – except possibly China – despite its vast tax potential. This will end only when Europe and America take the lead and act in concert, which should be a top item on Joe Biden’s agenda.
This has already been done, this was part of the Trump tax reforms. It used to be that if profits could be squirreled out of Europe or other such areas into a tax haven then they remained, for a US corporation, untaxed forever. Or could, potentially so, remain untaxed. This is now not possible. Overseas profits made by a US corporation are taxed in the US. That loophole being complained about is at least 3 years out of date now.
It’s possible that soaking the rich is the answer however much we think it would be completely the wrong thing to do. But those who would advance that argument should be held to a reasonable standard of proof. Offering justifications which are at least true rather than clearly and obviously not being so a good starting point we think. Inequality is not increasing, globally or nationally. Big Tech profits no longer go untaxed.
Any other reasons to offer up?
One wing good, two wings better
90 years ago, the Air Ministry dismissed monoplanes as fighter aircraft on the grounds that biplanes had served us well in World War 1 and biplanes were what our world-beating aircraft industry built. The fact that monoplanes were breaking airspeed records and winning international races merely indicated their suitability for amateurs. It should have been no surprise, come 1939, that British “string bags” proved no match for the Luftwaffe’s monoplanes. Luckily, and just in time, the private sector had rebelled and put the Spitfire, and then the Hurricane, into production. MIT Professor Eric von Hippel has long demonstrated that “user innovation” is more successful than that by bureaucracies.
The Department for Business, Energy and Industrial Strategy (BEIS) exhibits the same “two wings better”. It is widely accepted that a zero carbon 2050 means that most electricity by then will have to be generated by renewables and, because the wind does not always blow, nuclear. BEIS is committing us to the third generation of pressured water reactors (PWRs) like Hinkley Point and Sizewell C. They expect those to be followed by Rolls Royce which is “planning to build 16 Small Modular Reactors [SMRs], and says the first one could be on the grid by 2031.” There are a number of other types of nuclear plant that BEIS could be evaluating but the most attractive looks to be Molten Salt Reactors (MSRs). However, BEIS does not want to consider those before the 2040s.
There is no BEIS analysis today, e.g. in the White Paper, of the best options. PWRs roll on because that is what we have done before. PWRs purchased from EDF, described by Alistair Osborne, The Times Business Editor as “the cost-overrun and late-delivery specialists behind the consumer-fleecing £22.5 billion Hinkley Point C.” What with flood risks, ecological damage and nuclear waste disposal, these are unpopular and virtually banned in Germany. Seven of the existing eight UK plants need decommissioning by 2030 and it would seem that we can expect more of the same out-moded PWRs.
The case for the Rolls Royce SMRs rests on Rolls Royce being British. If any performance or cost comparisons have been made, they have not been published. The case for MSRs rests on safety, size, cost, and rapid deployment. We should look at those in turn.
“The basic idea is to dissolve the nuclear fuel in a liquid – a molten salt at 600-700 degrees C – that is continuously circulated through the reactor core. In the core, the liquid-carrying channels are surrounded by neutron-moderating material (mainly graphite), which provides the conditions for fission chain-reactions to occur in the dissolved fuel. Leaving the core at a higher temperature, the fluid runs through a heat exchanger, transferring the extra heat energy to a secondary circuit. It is then recirculated back to core.” I am not sure that explanation leaves me much the wiser. Let’s just say, it is high tech and it works.
MSRs operate at low pressures without the need for large containment structures. Radioactivity declines as they heat up with no risk of radioactive isotopes escaping. They are small, built on a factory production line and delivered by road. They can also be mounted on special barges and moved close to where electricity is needed. They do not need large quantities of cooling water which means that they can be located inland.
Capital cost estimates are in the range £1.5m to £2.5m per megawatt (MWe) of output. This is significantly lower than the capital cost per MWe of output of Hinkley Point C (currently around £6.6m per MWe) and would make electricity from molten salt reactors cheaper than electricity from gas fired power stations.
Total costs (including running costs) are compared using the ‘Levelised Cost of Electricity’ (‘LCOE’). The LCOE for molten salt reactors is in the range $40 to $50 per MWh. For comparative purposes, the LCOE for conventional nuclear is in the range $118 to $192 per MWh. Offshore wind is estimated at $111 to $115 per MWh.
MSRs were successfully tested in the USA in the 1960s. The Seattle-based USNC expects to get approval for a demo plant in Ontario in 2022 and commercial operations are due to start in 2026. At the end of 2021, the Washington State based ThorCon will begin the first stage of construction of its 500MWe demo plant for installation in Indonesia by the end of 2024. Most of their plant will be built in a Korean shipyard. Using rapid modern shipbuilding techniques, they will be able to build most of a plant in a year. ThorCon started as outsiders in the industry – but so was Elon Musk and he is now well ahead of the traditional car makers. Moltex and Terrestrial Energy, both with offices in Canada, the US and the UK, have received large financial backing from both the US and the Canadian Governments. USNC, Terrestrial and Moltex are the front runners to produce cheap electricity for the Provinces of Ontario and New Brunswick by 2029. Those companies estimate dates for deployment of full-scale MSRs in 2024 (Indonesia), 2027-2029 (Canada, USA & Denmark) and 2030 (China).
It really is remarkable that BEIS should ignore international developments and fail to cost or compare the options available. Some people might consider that unprofessional. Unless Kwasi Kwarteng wakes up soon, the UK will be 20 years behind other leading nations.
As we enjoy pointing out, private equity pays very well
The scolds over at the High Pay centre keep telling us that CEOs get much too much money. Quite why said scolds have an interest in how shareholders spend their own money is unexplained but they do keep making the point.
One of their explanations is that the diffuse interest of shareholders in a publicly listed company means that the CEOs as a class - to include all those directors, exec and non-exec - get to bamboozle the owners into those high payoffs. If this were true it would not be, could not be, a problem which affects private equity. For there the shareholder interest is, by definition, concentrated and presumably more than a match for those employees, however senior they may be:
The chief executive of Dr Martens is set for a £58m windfall in a stock market listing tomorrow which could see the bootmaker valued for as much as £3.5bn.
Kenny Wilson, who has led the business since 2018, is one of a number of bosses in line for a combined fortune of £350m, The Sunday Times reported.
Dr Martens has flourished under its private equity owner Permira, which has invested in the company’s stores and online business, helping sales to soar almost six-fold to £672m since it took control in 2013.
Ah. So that’s that theory killed off then. The presence of a concentrated shareholder interest, rather than the diffuse which is to be bamboozled, leads to higher, not lower, pay.
As with that CEO of Entain who is off into private equity for five times his public company pay.
The reason CEOs get paid a lot is because shareholders value the services of CEOs. Whether they should or not is of course another matter but since it’s their money to spend as they wish what business is it of the rest of us?
How joyous to see the Laffer Curve in the wild again
A little reminder for those who insist that the Laffer Curve is just a product of an overactive - and neoliberal of course - mindset:
NHS workers who have taken on extra shifts in the fight against coronavirus are at risk of sleepwalking into giant tax bills.
Doctors and healthcare professionals working overtime during the pandemic could face eye-watering charges because of continuing issues with the “tapered” annual allowance for pensions.
The contention of that Curve from Art Laffer is only that at some tax rates increasing the rate increases revenue collections, at some other set of tax rates an increase in the rate reduces revenue. Simply because some people will look at what they have left after the tax and decide to go fishing rather than to work. Thus, if we find people not working because of the tax rate we can be sure that the original contention - that tax rates can be above maximum revenue collection - is true:
Higher-earning NHS staff have been burned by hefty duties, forcing some GPs to cut down their working hours or retire early.
Dr David Stevens, 57, a full-time clinician whose name has been changed, said he had no choice but to turn down extra shifts out of fear of a big tax penalty.
Dr Stevens, who earns £110,000 a year, said: “I’m up to my neck in Covid-19 cases but the size of my tax bill is what keeps me awake at night.”
There we have it. There is only a certain amount of money to be shaken out of the people who work for a living before they stop doing so. This also, clearly enough, places an upper limit upon how much government we can have without making ourselves poorer.
Having proven that the concept is true we must go on to consider whether we’re already at this limit or not. And, given that we are already seeing the withdrawal of labour due to those tax rates, we must conclude that we’ve already got more than the optimal amount of government. Not something that surprises us of course but nice to be able to see the proof alive and well out there in the wild of our economy.
The begging bowl is usually a little better hidden than this
The claims here might actually be true. That the development of electric vehicles in the UK requires that there be a UK electric battery plant. Further, that such a battery plant requires advantages in order to be created.
We can’t say that we’re convinced of this, we see no reason why it should be necessary, nor even desirable, that the two pieces, the car and the battery, be made in close geographic proximity. After all, the diesel engines for BMW’s mini are made in Austria, international supply chains are hardly a novelty in the car business.
But imagine that it’s true, it’s then still true that the begging bowl is a little better hidden than this:
The Government must attract battery-makers to the UK with the same determination that Margaret Thatcher showed in the 1980s when major car producers were convinced to invest in Britain, a leading industry figure has said.
Former Aston Martin boss Andy Palmer, who is now vice-chairman at European electric vehicle battery producer InoBat, says the future of British carmaking depends on new technologies developing on these shores.
"We’ve got to be mindful of local production," Mr Palmer said.
"Car-makers will want batteries near their factories and the Government has to go all out to attract and support investment in a UK battery gigafactory.
"It’s an existential threat now, just as the UK car industry faced in the 1980s."
“Subsidise me!” is a common enough demand but as we say, it’s normally a little more subtle than that. We’d suggest Mr. Palmer try to develop his argument a little more than that.
As for the rest of us given the clarity here an answer is easy enough to come to. Specific benefits - whether tax, grant, planning, whatever - don’t need to be, shouldn’t, offered to this or any other sector. If we do have rules - tax, planning, other - that prevent economic development then of course we should be getting rid of them for all developments, not just those who hire a PR firm. If it is true that aid is required then that’s evidence that the system itself is too restrictive, not that a specific sector deserves said aid.
Hayek was right about the National Health Service
No, not that we’d all become slaves the moment that the NHS tottered into action. Not that he said that anyway - rather, that once health care was politically delivered then health itself was going to become a political matter.
George Monbiot complaining about this in his column:
A recent study shows that diseases mostly afflicting women tend to receive less funding than those mostly affecting men. Scientific effort is also, to a large extent, a function of the effectiveness of patients’ campaigns.
When medical care is run by the political system then of course politics will determine what is treated and how. When medical research is allocated by politics then political power will determine what gets researched.
The problems with Monbiot’s complaint is that this is the world that those on the left desire. That all of these things be allocated by the political system. Therefore, of course, it is going to be political power - threats to vote or not vote, campaigns to whip up the populace, the clamour of public politics that is - which will determine investigation.
Why, that is, is the complaint about the world they themselves have created? Or even, how dare they complain about political allocation when they campaign for political allocation?
Unilever's mistake about the supply chain
This is worse than a mistake, it’s an error:
Millions of people around the world are in line for a pay rise after Unilever pledged that every worker in its supply chain will earn the living wage by 2030.
One of the canonical works of popular economics is I Pencil. An inverted reading of which is that the supply chain of something - of anything at all - is the global economy.
As it’s not possible to ensure that everyone in the global economy is paid a particular wage the effort is doomed from the start.
The consumer goods giant said it will require its direct suppliers to pay staff a local living wage that allows “workers to participate fully in their communities and help break the cycle of poverty”.
That may be how it starts, to that first level of the supply chain. But that’s not where the demand is going to end - we’ve seen that with boohoo and Leicester. The fashion chain has been critiqued because companies three and five levels down that supply chain might, possibly, have been employing the undocumented on less than the national minimum wage.
The underlying misunderstanding is the old one about the planning of an economy. That from some point we can determine what happens though out the complexity and near chaos of a global economy. Here it’s the payment of a certain income but the same desire has been applied, at times, to output prices, volume and detail of output and so on. All such attempts fail for the same simple reason,.
It’s simply not possible to know, to the required level of detail, what the supply chain is. Because it is all those 7 billion people out there and their interactions. This is not something controllable therefore attempts to control it will fail.
It’s simply not going to work.
Zambia buys a copper mine - the most lively experiment is about to happen
Zambia is buying the Mopani copper mine from Glencore. Glencore is lending the bankrupt - well, it’s in default, anyway - country the money to buy the mine. This is going to be a fascinating experiment.
We can’t help but think that the timing’s a little wrong. Zambia sold the mine, or at least Glencore took it over, back in 2000, when the copper price was 65 cents per lb US. Today it’s $3.50. Selling at the bottom and buying at the top doesn’t look that great a deal for Zambia it has to be said.
So, why do this? Well, it’s as we pointed out back here. Various of the NGOs have been really insisting, really most insistent, that Zambia is being ripped off by the price it gets for its copper. There was all that nonsense from Alex Cobham when he was at CGD about how prices varied by hundreds of percent from what they ought to be. Gobbledegook as it turned out.
But the underlying insistence still burns bright in many. The poor country is ripped off by the ugly foreign capitalists.
But now we’ll see, won’t we? Will the mine be better managed? Will the price received for the copper improve? Will Zambia actually gain from not being exploited by the Big Bad Capitalists?
Our point here being a simple one. The experiment to work this out is now being undertaken. We will in fact find out, in a few years, whether the rip off was happening or not. And the evidence will be simple too - is Zambia going to gain from not having Glencore owning the mine and thus controlling - recall the claim - both the export price and the import one?
Ourselves we think it’s going to go horribly wrong because there was a reason that Zambia privatised those mines at the bottom of the market. They couldn’t make any money running them directly. But leave that aside. Here we’ve now got a direct test of those claims of exploitation. Let’s not take our eye off this ball until we see the results.
You know, hold the NGO types to the proof of their claims.
Reasons for optimism - autonomous vehicles
One of the technological developments that will transform the British, and much of the world’s, economy is the emergence of autonomous (self-driving) vehicles. It will make a huge and positive change in the way in which people and goods are transported by land, sea and air. It will be a positive development because it will be faster, safer and cheaper.
The artificial intelligence that controls autonomous vehicles will not make the driver errors that are the major cause of road traffic deaths, currently about 1,750 per year in the UK, or the roughly 25,000 serious injuries sustained annually. Communication with other autonomous vehicles, will enable much of the current traffic congestion to be avoided. Journeys will be faster as well as safer.
Marine transport will be similarly autonomous, with fewer crew needed, and the enhanced ability of ships to avoid collisions with other ships or with rocks and reefs. Higher speeds and shorter transit times will be possible, speeding up the flow of trade and lowering its costs.
The automation of passenger and freight transport on roads will lower costs because machines are less costly to operate than people. There will be dislocation as the jobs dwindle for truck and bus drivers, for chauffeurs and cab drivers, just as the advent of railways and automobiles cut the jobs for coach drivers, postilions, grooms, stable boys and blacksmiths. But the economic growth spurred on by the change will itself create the new jobs to replace them. Increased productivity means more output per worker, and autonomous vehicles will make those still involved in transportation much more productive, lowering costs and increasing economic growth.
There will be autonomous air transport, in addition, involving people-carrying drones as well as the automation of more conventional aircraft. In all of these cases there will be convenience and new capability added to the safety, the speed and the reduced costs. The ability to have passengers and goods lifted directly from tall buildings will dramatically cut congestion and travel times. Artificial Intelligence can handle the traffic in three dimensions in a way that would be difficult, if not impossible, for human operators.
These developments will amount to an economic revolution, but it will be a positive one, just as electricity was, because of the opportunities they bring. Commentators who predict a future of stagnation and falling living standards are failing to account for the economic impact that technological innovations can bring. The impact of autonomous vehicles is set to be both transformative and positive.