Cutting the regulatory deadwood

It was Milton Friedman who told us that nothing is so permanent as a temporary government programme. The same can be said of government regulations. They accumulate as new ones are added and the old ones stay in place. This is often true even if the old ones have been rendered obsolete by technological developments or changes in practices.

Regulation is a cost, even when it is a worthwhile one. It makes production more expensive and often reflects itself in increased prices. In many cases the tight regulations imposed on one country can make its goods unable to compete internationally against those from countries with more sympathetic regulatory regimes.

As the UK government seeks to take full advantage of its new status outside the EU and not having to accept regulations imposed from afar, there are several approaches it might take to hack away at the accumulated deadwood built up over the years that now burdens its businesses.

One involves the use of “sunset” clauses, under which when a new regulation is introduced, a termination date is set upon it so that it will expire on that date unless it is renewed. Even if it is renewed, the process of doing so brings it up into question, and provides the opportunity for evaluating its effects, and for introducing possible modifications that will lighten its load without losing any of its advantages.

A second way to reduce the regulatory overhang is to institute a policy of “one in, two out,” which specifies that a new regulation can only be introduced if two old ones are deleted. This motivates those seeking a new regulation to lobby for the repeal of old ones no longer seen to be as necessary as they once were. In pursuing this strategy, it is important to guard against the possibility of repealing only minor regulations of little consequence to make way for ones that have serious impact.

A third way was pioneered by Dan Quayle, who served as Vice-President under George H Bush from 1989 to 1993. He headed a Council on Competitiveness established by President Bush in 1989 to review regulations issued by Federal agencies, with the aim of ensuring that they did not unduly harm the competitiveness of American business. The Vice-President’s Council attracted the ire of Federal agencies and would-be lawmakers in Congress. It was described as “the roach motel of Congressional bills” after a popular pest control product of the time that lured cockroaches into a cardboard box and poisoned them. It was called a roach motel, and the TV ads featured the voice of Mohammed Ali saying, “they check in but they don’t check out.” It happened to regulations and bills that were deemed anti-competitive by the Council.

All three of these approaches could play a key role in a post-Brexit deregulatory strategy. Certainly a UK version of the Council on Competitiveness could provide a useful tool to explore and debate the anti-competitive aspects not only of proposed new regulations, but of existing ones as well. It might protect us from ill-thought-out new proposals, as well as clearing out the deadwood of past ones.

An example of thoroughly missing the point

Bob Seeley, who is apparently a Conservative MP, demonstrates how easy it is to thoroughly miss the point. He’s talking about the planning system and how it must not be changed to allow anything to be built anywhere near any of his constituents. We think we’ve got that nub of the argument correct there:

Second, planning should be environment-led. Low-density, greenfield housing is unsustainable on so many levels. Yet it is argued that as many as 400,000 homes are still planned on greenfield sites in the South in the next five years.

Idea: we need a greenfield tax, the proceeds of which should be spend on brownfield clean-up to pay for and prioritise building on the 36,600 hectares of brownfield land in this country. The developers will squeal. But, to paraphrase Billy Bragg, whose side are we on?

Well, yes, whose side are we on? For us the ideal is simple enough - whatever planning system used should deliver housing that people wish to live in in places where people wish to live. Bob Seeley MP seems to have a different idea about this:

And levelling up; many Red Wall colleagues are beginning to realise how the South-East housing obsession damages them. Why? Because the current housing methodology "systematically disadvantages poorer parts of the country, particularly in the North and Midlands … where investment is more in need", according to one expert report.

A useful summation being that people should live where Bob Seeley thinks they should in housing that Bob Seeley thinks is adequate for them. We’d note that Lady Bountiful has always been put forward as a satire of a certain sort of conservatism, not a paragon to be emulated.

It’s simple enough to show that this, possibly disparaging, summation is correct. The only justification for the entire mess of Green Belt, no greenfield, not in the SE and definitely nowhere near any of my voters set of restrictions is that without the restrictions then that’s where housing would be built. Which does rather mean that people wish to live in greenfield, possibly Green Belt, housing in the SE. The very argument for the restrictions is to stop people gaining what they desire.

The entire point of having an economy - heck, a civilisation - is that folks get more of what they desire.

As we’ve noted before the only planning change currently required is to blow up the Town and Country Planning Act 1947 and successors. For the 1930s, before that abomination, was the last time the nation built the housing that people desired where they wished it to be.

Recovering freedoms

The recovery of freedoms for the people of the UK was to have been June 21st, but now is put back possibly until July 19th. There will undoubtedly be people after that date who will attempt to keep some of the restrictions in place simply because they like to tell people what to do. They will be egged on by self-styled scientists making spurious claims. We must be vigilant and determined if we are to reacquire the freedoms we enjoyed prior to the pandemic, and which the vaccine programme makes possible again.

We want the freedom not to be ordered what to wear, not to be confined indoors or only allowed out under limited circumstances. Nor must we be prevented from receiving visitors into the home without limit on numbers or on relationships.

We wish not to be prevented from travel, nor having to produce “valid reasons” for doing so. We must be able to return freely to this country without restrictions or requirements.

We need to be able to freely associate with others in such numbers and in such places as people may want, and not to be prevented from engaging in group activities. We need the freedom to engage in or watch sports, concerts, theatres and cinemas.

And most assuredly there must be no requirement to have permits for legitimate activities, nor to submit to questions about lawful pursuits.

All of the above freedoms must be restored, and the Acts that restricted them must be allowed to expire or be expunged. If such restrictions are ever needed again, Parliament can pass enabling legislation again if necessary. But they must leave the Statute Book until such a time.

In addition to having these basic freedoms restored, we must now put the case for “surplus freedoms” that people should acquire or reacquire to compensate for the temporary loss of the ones listed above.

These should include the freedom to speak one’s mind without fear of police action or criminal proceedings or criminal record, even if some people find the remarks offensive, or lead them to feel “unsafe.”

These “surplus freedoms” should include the freedom to engage in open debate that does not advocate physical violence against others, and to be able to do so on public platforms without authorities being able to prevent this by excluding certain people or subjects.

Hospitality businesses should have the freedom to continue to have tables outside that cause no public nuisance. And property owners should be able to develop their property in ways that cause no nuisance to others without the need for official approval.

A most welcome freedom would be a five-year moratorium, publicly announced as a commitment, against any new measures to restrict or discourage what people want to eat or drink. Having been under daily attack for many years by those who want to punish us for consuming what they disapprove of, it would be a most welcome pause, and even better if it were then made permanent.

Nuclear Fission, Fusion and Fiction

Today’s nuclear plants are expensive and produce waste that remains radioactive for thousands of years.  Some people consider them dangerous but that, Chernobyl excepted, is more potential than real. Like the original atom bomb, the energy is from fission – breaking apart large atoms such as uranium.  Since the 1940s, the hope has been to produce clean energy the opposite way, namely by fusing isotopes of the smallest atom, hydrogen, to produce helium and large amounts of electricity which do not depend on the wind blowing or the sun shining.  This is how the sun and all other stars produce light and heat. The trouble is that the hydrogen isotopes, deuterium and tritium, have positive nuclei and are extremely reluctant to fuse. Stars use their massive gravitational forces to overcome this reluctance but we have no means of replicating anything like those forces on earth. 

Never ones to let such obstacles get in the way, researchers claim they can deliver commercial fusion power, if not by 2050, then at least by the end of the century.The research budgets have grown: in October 2019, the UK committed “£220M to the conceptual design of a fusion power station – the Spherical Tokamak for Energy Production (STEP).” “A ‘tokamak’ is a machine that confines a plasma using magnetic fields in a donut shape that scientists call a torus. [It can also be spherical.] Fusion energy scientists believe that tokamaks are the leading plasma confinement concept for future fusion power plants.” The Russians invented this technology around 1958 and the word “tokamak” is an acronym of its description in Russian. The plasma process is explained later. 

The US Department of Energy’s Office of Fusion Science spends “approximately $700M per year.” On the 16th June, the UK Atomic Energy Authority announced an agreement with the Canadian start-up company, General Fusion, to build a £400M demonstration plant at the authority’s Culham campus.  Note that this will not actually produce any electricity, it will just show how that might be done. Of course, we would be considering far larger sums for the real thing; the budget for ITER, the European fusion project, is US $22bn. The US Department of Energy thinks it will cost $65bn. 

We need to look at these mutually repulsive isotopes a little closer.  Hydrogen, as most people know, is a single proton. Deuterium has the same proton with a neutron attached. Tritium is an isotope of hydrogen with a half-life of 12 years with the same old proton but now with two neutrons. It is produced as a by-product in nuclear fission reactors, and would also be formed in fusion reactors by using liquid lithium as the primary coolant. 

When deuterium and tritium nuclei fuse, they form helium kinetic energy. There are many other candidate atoms that could emit energy and power but as the lighter they are, the (relatively) easier it is to produce energy by fusing them, these two isotopes of hydrogen seem the way to go.  We have heard a lot about hydrogen as the clean fuel of the future but it has, as 1930s airship makers found out, its dangers.  If large scale fusion energy worked, the r helium output might be available as fuel in place of the combustible hydrogen. Apparently, whilst it is rare on earth, there is plenty of helium-3 (helium-3 is regular helium with each atom short of a neutron) on the moon and 25 tons of the stuff would power the USA for a year. But this is speculation. 

In terms of energy per unit mass, the yield of fusion is much greater than that of the fission of heavy elements like uranium. This is why nuclear weapons rapidly evolved from fission bombs to hydrogen (fusion) bombs. That leads to the thought that the hybrid fission/fusion model used by hydrogen bombs might be controlled and used for electricity generation in place of the purely fusion models now being pursued.  Unfortunately nuclear fission is only hot and dense enough in a critical mass of several kilogrammes of uranium or plutonium. Then there is a massive nuclear explosion, which would not be popular with the locals. The temperatures that can be safely reached in a controlled nuclear fission device, i.e. a reactor, are way too low for fusion to occur in a deuterium-tritium or deuterium-deuterium mixture. 

Returning to the fundamental problem of getting the two repulsive isotopes to coalesce, one must first collect minute quantities of deuterium from the sea, or wherever, and tritium from those fission reactors you are trying to get rid of. Whilst deuterium is rare on earth, there is plenty in the wider reaches of the solar system, notably on Jupiter, which may be of comfort for the longer term.  Sourcing deuterium, otherwise known as “heavy hydrogen”, in small quantities on this planet for pilot fusion plants is not a major problem; every million atoms of hydrogen taken from the sea yields about 156 atoms of deuterium.  Doing that on a commercial scale, however, might prove more challenging.  

Next, the two isotopes in the form of gases have to be mixed and made into a very, very hot plasma heated by an ionising electric current.  Note that it takes a lot of energy to get the hydrogen, and then the deuterium, and then heat the mixed gas to, say, 100M Kelvin - roughly the same as degrees Celsius and six times hotter than the sun’s core. At these temperatures, the gas becomes a plasma, i.e. a high energy state of matter in which the electrons are stripped away and move freely about.  It is the high temperature that gives the isotopes enough energy to overcome their mutual repulsion. If you are wondering how I know all this, this blog was based on emails from a respected physicist who prefers not to be named as he is not a specialist fusion scientist.  

We are not done yet. Tritium is radioactive and may leak from reactors. There may well be substantial environmental radioactivity releases.  The plasma vessel can only be handled remotely for the year after use. Lithium is used as the buffer material but availability of that too, thanks to heavy use for batteries, is threatened.  It is even claimed we will run out in 2025. There are plenty more engineering and production issues to resolve, and differing methodologies to select, but we need not consider those now.  They all add up to a colossal energy requirement to fuel and operate a nuclear fusion plant.  So far no one has managed to make a fusion device produce more energy out than in, for more than several seconds. If we do, will we have to trawl the solar system to gather the raw materials? 

It does not look like anyone yet knows the answers to all of the above issues.  We will hear of “break-throughs” and some will be real and some mythical, “cold fusion” for example.  Nevertheless, it seems certain that nuclear fusion will make little or no contribution to zero carbon by 2050.    

The difference between make and receive

We’re noting one of those little linguistic changes that are designed to deceive:

Covid jabs for billions of humans will earn their makers billions of dollars

The word “earn” usually means, with respect to corporate matters, the profit made, not the revenue:

We look at the drug firms – led by Pfizer and Moderna – that are set to profit most in an unprecedented global vaccination drive

The one thing the rest of the article does not even mention is profit.

Pfizer and Moderna, which are charging $30-plus per person for the required two shots in Europe and the US, will take the lion’s share. Analysts believe they could make more than $50bn in revenues collectively from their Covid jabs this year.

Everything is about revenue. And that’s not, entirely not, the same thing. Yet there’s - OK, to our eyes there is - a determined effort underway to blur this vital distinction. We see it when people talk about the taxation of Amazon for example. Reference is made to revenues - that hundred billion or whatever it is - and the tax bill on the profits. But the revenue isn’t the same as the earnings, the amount made. The comparison between tax paid on earnings and gross revenue misleads - deliberately we think - vastly more than it reveals.

We’ve been through all this before of course. Time was that poverty meant crustless waifs being stuffed up chimneys to avoid their actual starvation. Then came the idea of relative poverty - being in a household with less than 60% of median earnings - and over time that distinction of “relative” was dropped. Leading to people insisting, with an entirely straight face, that Poland has less child poverty than the UK, a place thrice as rich. That’s not how the actual, as opposed to relative, living standards of children work out in reality.

The general realisation that the word has changed meaning in such propaganda takes some time to arrive. By which time the work is done, all are convinced that not having the third pair of trainers like the kids down the road is the same as being crustless - or even to be stuffed up a chimney - and that revenue is the same as profits, that to receive money is the same as to make it.

We should recognise this for what it is, propaganda, not explanation.

This is all something folks can - and will - work out for themselves

A certain inability to understand what people are capable of seems in evidence here:

Workers must be given a right to do their jobs from home, Labour has demanded as it piled pressure on the government not to let its consultation on flexible working be kicked into the long grass.

Hmm:

“Boss, I wanna work from home!”

“Tim, you’re a waiter.”

“Ah, yes, bit of a problem that….”

It is not possible for all jobs to be done from home. Not even that bit where the forks are polished is going to work that way. So, the actual demand is:

Rayner said: “As restrictions lift and we adjust to a ‘new normal’, we need a new deal for working people. As a starting point, this must mean the right to flexible working – not just the right to ask for flexibility – and a duty on employers to accommodate this unless there is a reason a certain job can’t be done flexibly.

So each and every discussion about whether a job can - or will - be done flexibly is going to be a negotiation between worker and employer. Because that’s where that discussion of whether it is possible or not is going to take place, between those two parties.

Which is where the discussion is going to be anyway, whether Angela Rayner gets her new law passed or not. Because that’s where discussions about the details of working arrangements take place right now, always have done, always will.

What happens to the wider economy is the summed and aggregate outcome of all of those individual decisions and negotiations. Rather like - well, exactly the same as - that wider economy anyway, it’s the summed and aggregate outcome of the 65 million of us making arrangements, taking decisions and negotiating with each other.

Folks, you know, adult human beings and all that, are entirely capable of having such conversations about who will do what in which manner. A goodly part of the art of governance is in leaving ‘em be to do so.

Economic policy does matter

From The Times’ obituary for Kenneth Kaunda:

He might have stayed in power and departed at a time of his own choosing but for his Achilles’ heel, an ineptness in economic management, which blighted his country’s development. When he came to power in 1964 Zambia was among the more prosperous of Britain’s former colonies in Africa thanks to earnings from the Copperbelt in the north. Even greater wealth might have been harvested from the Zambian soil, which was and remains some of the finest farming land in Africa. But, like his friend Julius Nyerere, the president of Tanzania, Kaunda trusted to socialist agricultural policies with disastrous results, and when the copper price fell in the 1970s Zambia was precipitated into an economic decline from which it has never recovered.

To create food shortages in a land where you have to leap out of the way of a fallen seed’s zooming growth does require excessively bad policy.

In his early years in office, humanism could be equated with socialist policies; the copper mines were nationalised and agriculture put in the hands of peasant co-operatives and state farms. When the copper price fell and state agriculture became riddled with inefficiency and corruption,

We do like to remind that Tsarist Russia and today’s Russia - for all the faults in both polities - both were/are grain exporters. Soviet Russia, for all the science of the agricultural system, required grain imports.

We seem, as with the Washington Consensus, to have a little list of stupid things that should not be done to any economy. This being one of the pieces of evidence to show that at least a part of economics is in fact a science. Postulate an hypothesis - say, that socialism makes a place rich - and test that against the evidence. When it’s the universe disagreeing with the idea then it’s reality that wins, not the wishful thinking.

A useful lesson for the rest of us perhaps?

Deregulating properly

The task force for innovation, growth and regulatory reform, led by Sir Iain Duncan Smith, reported last Tuesday. It was welcomed by the Prime Minister, which suggests that its general approach might find support among the Better Regulation Cabinet Committee. It sets out a blueprint with over 100 recommendations on how the UK can grasp the opportunities that Brexit brings to reshape its whole approach to regulation.

Its proposals include initiatives to allow greater freedoms to pension funds, to encourage investment in “sunrise” technologies and business start-ups, and to give greater flexibility to the financial sector, while retaining “prudent” regulatory protections.

Our departure from the EU allows us to change three restrictive EU approaches and to replace them with ones that are more in accord with common sense than bureaucratic diktat.

The first is that we can replace the EU’s precautionary principle by the more sensible cost-benefit analysis. The EU line is to prevent innovation until it is “proved safe.” The UK philosophy is more Popperian, recognizing that nothing can ever be ‘proved’ safe, and that we have to weigh up the benefits against the risks. The EU looks only at the downside, and does not take the advantages into account to set against them.

The second change to the EU approach we can make, one on which Sir Iain’s team stress strongly, is that we can move from process-driven regulation to result-driven regulation. The EU style is to set out in detail the technology that must be adopted to achieve the result it seeks. This shuts out inventiveness and innovation. The alternative is to specify the required outcome, and leave it to businesses and individuals to come up with ways of achieving it. This will almost certainly lead to more innovative and cost-effective ways of doing so.

The third change is to revert to the English Common Law practice of allowing interpretation to be decided by case law, rather than by detailed statutory requirements. This means in practice that we can enshrine principles in law, and allow interpretation to be built up by the decisions of juries and tribunals. We could require employers, for example, to provide “adequate” toilet facilities for employees, and instead of setting out in 150 pages of detail what that involved, leave it to the decisions made by good citizens sitting on juries and tribunals to quickly build up a body of case law specifying what previous judgements have decided that this required.

One of the most refreshing aspects of Sir Iain’s task force report is its recognition that regulations impose costs. Big businesses tend to like them because they can absorb those costs, and because they squeeze out would-be competitive market entrants who cannot. The emphasis should be on keeping those costs low enough to achieve their objective, while cutting out the bureaucratic creep that expands and extends them and makes life unnecessarily difficult for would-be start-ups. Implementing most of the task force’s initiatives would indeed tell the world that the UK is now open for business, and especially for new businesses.

The universe appears on a mission to prove Hayek right

A central part of Hayek’s concept of governance, of the world, is that the centre - whether that be messy politics or even a benevolent dictator - simply cannot ever have enough accurate data about the economy to be able to extract the information necessary to manage that world, or economy, in detail.

On Monday, just hours before Boris Johnson pushed back Freedom Day by four weeks, the Government published new modelling, warning that a deadly third wave was on the horizon.

Under the most pessimistic scenario, Imperial College estimated Britain could experience a further 203,824 deaths by next June, while even modest estimates from other groups suggested more than 50,000 would die.

Yet it has now emerged the models were based on out-of-date estimates of vaccine effectiveness, which assumed far fewer people protected by the jabs.

Which does raise an interesting question. There being two possible answers here. The first is simply that Hayek was right. The second is that the universe is striving mightily to prove him right. As we’re not sufficiently even Deist to believe that the universe strives to do anything at all we will run with the conclusion that Hayek was right in the first place. But given the only two possible answers that makes little difference.

It isn’t possible to plan in any detail as the information necessary to do so simply cannot be extracted from reality. Therefore we must stop attempting to plan in any detail. We are left with only the one option. Set the basic rules, yes, of property, incentives, of the law, then leave be and see what happens.

Equality and opportunity

There seems to be a widespread assumption that in our societies equality should be a prime goal. There are other goals, many agree, but they suppose that equality should be a paramount goal, outranking others deemed to be lesser goals.

In John Rawls’ book, “A Theory of Justice,” he famously makes the case that if we were drawing up the composition of a society without knowing what our position in it might be, we’d choose to make it a reasonably equal one. He and many of his followers have thought that this ‘proved’ the case for equality, and that a just society would have to be an equal one.

But as Robert Nozick pointed out almost immediately in “Anarchy, State and Utopia,” such a society would not be equal for long. In his Wilt Chamberlain thought experiment he argued that Wilt Chamberlain might freely choose to exercise his talents for basketball, and that spectators might willingly put 25c in his box to watch him, making him $250,000 richer. To prevent this distortion of equality, the rules would have to prevent people from freely choosing how to exercise their talents, and prevent people from freely choosing how to spend their resources. Few people would call that a just society.

Rawls did not ‘prove’ the case for equality, he assumed it. His assumption was that people would want to be reasonably equal with other people, and would therefore choose a make-up of society in which that happened. But there are those who think that some goals outrank equality. Some would choose a society in which, whatever their role in it, they would have opportunity, the chance to better their lot.

Adam Smith remarked upon “the uniform, constant, and uninterrupted effort of every man to better his condition.” Today we’d make that “every person,” which is what Smith meant. Thomas Jefferson spoke of “life, liberty and the pursuit of happiness,” valuing the pursuit of it rather than the attainment of it. Several psychological surveys have shown that people are happier when they feel they are improving their condition than they are in static societies, even those with a higher level of achievement.

Many people value opportunity, and want to live in a society that offers it. This is not equality of opportunity, just the chance of improvement, even when it is not available to everyone in the same degree. A society that does offer opportunity will necessarily be an unequal one because not everyone will avail themselves of the opportunities present to the same extent. It is difficult to conceive how equality of opportunity might be brought about, given that some people have more loving parents, or parents more concerned to help their children to seize opportunities. The childhood environment makes a difference, as does character, and as does chance.

What we can do is work to bring about a society in which everyone can strive to improve their lot and to give themselves and their children better lives. Everyone is a stakeholder, even though not an equal one, in such a society. They all have something to gain from it, together with the chance of self-fulfillment.