Jobs are a cost, jobs are a cost
The TUC is manfully grasping the wrong end of the stick here:
TUC calls on the UK government and companies to work together to future-proof jobs at risk of offshoring.
The union body estimates that between 368 thousand and 667 thousand jobs could be offshored from Britain if industries fail to meet climate targets and the UK falls behind other countries on climate action.
The argument is that we must spend £85 billion - one number they suggest - on going green in order to preserve these jobs. Which is to get matters very much the wrong way around.
Firstly, the number of jobs in an economy is not determined by either technology or trade. Which jobs are done is, but not the number of them. That number is determined by the fiscal and monetary policies within the economy - what’s demand? Whether we have full employment or not doesn’t, therefore, depend upon our going green or not, nor whether we go green by buying foreign windmills or make them at home.
Secondly, jobs are a cost of our doing something. Assuming that policy does give us that full employment then insisting on having half a million folk building windmills means we’ve not got half a million folks designing games, taking care of babies, fixing the NHS or selling finance packages to foreigners. We are poorer by that diversion of that labour by the amount of banking, health care, child-minding and games that we don’t have as a result of the home grown windmills.
Now maybe it’s more valuable for us to have the windmills than the other things, that’s possible, so perhaps we should have the windmills not those other things. But the argument about how many jobs are created by the windmills is still a ludicrous one. For it’s urging that choice by emphasising the cost of the plan, not the benefit.
For jobs are a cost of doing something, d’ye see?
The TUC is arguing that we must go green because it will be expensive to go green and see, here’s the proof, those half a million jobs are the expense which is the argument for the plan.
This really is firmly grasping the wrong end of the logical stick.
Adam Smith and the division and specialisation of work
As the BMJ is reporting private sector surgery seems to be rather better than that in the NHS:
Planned (elective) surgery in an independent sector hospital in England, and funded by the NHS, is associated with shorter lengths of stay and lower readmission rates than the same treatment in NHS hospitals, finds research published online in BMJ Quality & Safety.
The findings were consistent for 18 common procedures performed between 2006 and 2019 on more than 3.5 million patients.
Since 2009, NHS patients in England have been able to choose where they want to be referred for non-urgent hospital treatment, and their choice can include independent sector hospitals.
The NHS spend on independent sector providers rose steadily from 3% in 2006-07 to 7.5% in 2015-2016, with the purchase of elective care one of the fastest growing areas of NHS expenditure on the independent sector.
We can’t say we’re surprised of course. Adam Smith did rather point this out 245 years ago and counting - the division and specialisation of labour. Folks who do things repeatedly get better at them, more productive. So, we should split up tasks so that people can so specialise and thus become that better, more productive.
The value of the marketplace is that it provides us, through the price system, with the measure of who is better, who produces a greater value of output for the same or lesser cost of input.
While many factors can influence the course of hospital treatment, the researchers speculate that “greater technical efficiency may explain some of the findings in our study.”
Quite so, run the hip replacements though the places which specialise in hip replacements and we’ll gain a better outcome.
The argument never is, never has been, that markets are somehow better. Rather, that they’re the method by which we discover what methods are better - who should be doing which bit then?
Aren't we being assured that all this net zero will be cheaper?
It is possible that dashing to net zero will be cheaper - through technological advance - than the current set up. It is possible that net zero will be wildly more expensive than that current set up. We think it will be the latter for there is a reason we use the current set up, it’s cheaper.
What we’d all like of course is some absolute. Some method of being able to decide this question one way or the other, definitively. Here that is:
The Government should introduce a carbon tax on imports to protect domestic companies that are subject to the UK’s “net zero” climate policies, a report backed by major UK manufacturers has said.
A carbon import tax could prevent so-called “carbon leakage” – where Britain cuts pollution at home only to import more dirty goods instead as they are cheaper. It could also stop producers moving abroad.
If we need to have trade barriers against people doing it the cheaper way then that is obvious proof that not doing it the cheaper way is more expensive. As with all tariffs this is a call for a tax upon consumers. The total cost to consumers being that tax plus the price rises inside the tariff barriers caused by the tariff barriers.
The very fact that an increase in costs - a decrease in living standards - is being demanded to make such net zero policies work means that, by absolute proof, net zero will make us all poorer.
Making ourselves poorer is not, except among the most ascetic sects, known as an aim of economic policy. Plenty of economic policies - socialism, buy local, vast government, high tax rates - do make us poorer than we need be but even then the poverty is rarely declared to be the aim.
There is an alternative policy available. One which we thoroughly support. We all do know that it is technological advance which will solve the problem. So, let’s develop the technologies first, then deploy them when they are cheaper. This is already true of, say, solar power in Abu Dhabi (we hear stories of 1.5 US cents per kW hour for example) and isn’t of tidal lagoons in the Severn. Do what works and don’t do what doesn’t seems a reasonable enough guide to life and the economy.
As to deciding between what does work and what doesn’t, as always the price system is your friend.
We're not sure that George Monbiot is being serious
Not just George Monbiot either. The claim here is that climate change is just absolutely terrible so we’ve got to do everything, anything that might help, right now:
So the target that much of the world is now adopting for climate action – net zero by 2050 – begins to look neither rational nor safe. It’s true that our only hope of avoiding catastrophic climate breakdown is some variety of net zero. What this means is that greenhouse gases are reduced through a combination of decarbonising the economy and drawing down carbon dioxide that’s already in the atmosphere. It’s too late to hit the temperature targets in the Paris agreement without doing both. But there are two issues: speed and integrity. Many of the promises seem designed to be broken.
At its worst, net zero by 2050 is a device for shunting responsibility across both time and space. Those in power today seek to pass their liabilities to those in power tomorrow. Every industry seeks to pass the buck to another industry. Who is this magical someone else who will suck up their greenhouse gases?
We have our doubts about that insistence upon right now. For we’ve observed that the target - 3oC, 2.5, 2, 1.5 - seems to get lower every time that capitalism and free markets, suitably incentivised, seem to be getting to grips with the claimed problem. We have more than a sneaking suspicion that the increasingly shrill screaming is more about abolishing capitalism and markets than it is anything else. If it turns out that - just to give an example - the experiments on making synthetic avgas out of cheap electricty in the Abu Dhabi desert do in fact work and thus make flying carbon neutral then some other excuse for curbing air travel will be found. So too with a collection of such processes leading to 1.5 oC being happily and easily met - the claim will then move to 1oC being so terribly dangerous so we must still institute global socialism right now.
But those are doubts. We do have a proper test here though. There is an available technology that would reduce atmospheric CO2 concentrations - iron fertilisation of the oceans. We know this is a natural process, wind blown sand from the Sahara does this regularly in the Atlantic. It’s possible to increase the area this happens in thereby sucking perhaps 1 billion tonnes a year out. The end result is more fish plus another layer of rock. The raw material is ferrous sulphate, so cheap that you’d probably be paid for carrying it away. A few thousand tonnes is all that’s needed, out of vast stockpiles available. Distribution is, quite literally, sending a ship or two out with a stoker shovelling it over the side.
True, a billion tonnes of CO2 isn’t a total solution - it’s about two Britains - but then nothing is a total solution. Any one thing only helps a bit, many things to be done to solve it all in aggregate.
So, people who were serious about we must do everything right now would be shouting that we must do this. In reality the environmental movement has made it somewhere near bureaucratically near impossible and legally impossible to even conduct further experiments, let alone deploy the technology.
A few years back we did go and talk to the people who did the last set of proper scientific experiments (no, not the guy making claims about salmon off British Columbia) and they indicated that yes, it works, it’s cheap (perhaps $1 per tonne CO2 permanently locked into rock) but there’s no legitimate manner of getting even permission for that further experimentation.
Which gives us our test. Anyone demanding that everything be done now, right now, should be demanding at least further experimentation with iron fertilisation of the oceans. If they’re not then they’re not being serious in their demand, are they?
Statesman or Medicine Man?
Watching the Statement in the Commons Chamber about the long-awaited reform to social care, one was bound to be reminded of Dulcamara (the “Dr. Encyclopedia” in Donizetti’s L’ Elisir d’Amore), selling his cure-all to the local populace. Of course his elixir was rubbish but his salesmanship did the trick. He convinced them it needed enough time to take effect for him to make a safe escape. In the event, things worked out, no thanks to Dulcamara, but that did not stop him taking the credit. The opera buffa was first staged 89 years ago but only the dramatis personae have changed.
The plan for such a major topic as social care which has been in the “too difficult” tray for so long should have been given time for critical analysis when presented. A statesman, knowing we would have to live with the outcome for the following decades, would want to ensure it is the best it can be. He would want opposition parties to propose improvements before settling on the least bad solution. Instead, we have a social care strategy raced through the Commons faster than it can be analysed and faster than any opposition improvements can be considered. Sir Norman Lamb long called for consensus and the Prime Minister endorsed that last year but another commitment has been shredded.
Of course, one has to remember that Dulcamara –– I mean the Prime Minister –– was trained in rhetoric where numbers are used to give verisimilitude to an otherwise bald and unconvincing narrative. 2 + 2 = any number that looks impressive. In the Chamber on 8th September Mr Johnson referred to the “50 million more GP appointments that are already in our plan.” What Matt Hancock actually announced in October 2019 was “50 million more appointments in GP surgeries”, i.e. appointments with whatever staff happened to be in that day. If you appoint enough non-GP staff, the latter might be possible at some future date. The Prime Minister’s claim, however, implies a 50% increase in (full time equivalent) GPs when they have been in steady decline and new GPs take 10 years to produce. The total number of GPs may have increased somewhat but so many are part-time, notably the women, and so many now work from home, that face-to-face GP appointments are becoming a rarity.
Then he told us that 30,000 hospital beds would be freed up by his reforms of social care: “that is 30,000 out of 100,000 hospital beds in our NHS, costing billions.” There were two problems with that: NHS England has, at the last count, 141,000 beds not 100,000, and there was no explanation of how the reduction would be achieved. In fact in all his long sales pitch, there was no mention of any reforms to social care at all, whether for the elderly or those of working age. There was nothing about increasing remuneration, working conditions, the status of carers to parity with nurses or the disconnect between the department nominally responsible, the local authorities that actually have charge of it, and the Ministry of Housing that messes up the funding. Hypothecation is feasible for the NHS but not for social care.
The Prime Minister did pick up the Matt Hancock/Simon Stevens scheme that the NHS should, in effect, take charge of social care “by integrating health and care in England so that older people and disabled people are cared for better, with dignity and in the right setting.” That is cloud cuckoo-land. In practice, ICS means a huge number of committees depriving GPs of the time they need to see patients. The evidence from the 13 pilot ICS projects is, unsurprisingly, negative: “there is no evidence, across either West Yorkshire or the 13 pilot areas more broadly, of the sort of large-scale improvements the ICS reforms are supposed to bring.”
In short, Dr Dulcamara’s social care proposals focus on how much moolah the customers should hand over, not on, specifically, what they will get for their money nor how that will be better than the existing provision. 19th century medicine men were ever thus. It is even hard to disentangle how much money social care will get nor how that will divide between the elderly and those of working age – roughly 50-50 at present.
The government has long been fiddling about with ad hoc social care grants – there have been about ten in the last five years. With that ad hockery and the byzantine funding of local authorities by the Ministry of Housing, the contributions from the NHS (essentially to pay local authorities to take bed blockers off their hands) and the variety of expenditures by the local authorities themselves, it is well nigh impossible to know the total cost to the public purse now, still less what it should be. The House of Commons library estimated “total public spending on adult social care was around £18 billion in 2018-19.” In October 2020, the Health and Social Care Select Committee reckoned that £3.9 billion p.a. should be added to that.
On that arithmetic, the £12 billion p.a. from the levy should be divided two thirds/one third to NHS/social care. Although unspecified, it seems that social care will not be getting a sniff of that.
Towards the end of his time at the Dispatch Box, the Prime Minister mocked the opposition for having no alternative plan but by that time he too had provided no social care plan albeit with one notable exception: “we are investing in 700,000 training places for people in social care; and we are making sure that we invest £500 million………in the social care workforce.” But even there one has to wonder whether the figures are not just decorative.
An October 2020 report found “that 7.3% of the roles in adult social care were vacant in 2019/20, equal to approximately 112,000 vacancies at any one time. Around a quarter of the workforce (24%) were on a zero-hours contract (375,000 jobs).” Is it really likely, at a time when nationwide we have more unfilled vacancies than unemployment, 700,000 people will be hammering on the doors to be trained as carers?
A statesman would draw on the wisdom of all parties and give a plan oxygen and the time to breathe it; a medicine man would try to take the money and run.
Just how progressive should paying for social care be?
We look upon the current row about spending for social - by which everyone really means old age - care with a certain wonderment:
Sir Keir told MPs in the Commons that his party would support taxing wealth: “We do need to ask those with the broadest shoulders to pay more, and that includes asking much more of wealthier people, including in respect of income from stocks, shares, dividends and property.”
The Prime Minister and Chancellor’s plan to raise the dividend tax rate by 1.25 percentage points, another pillar of the Government’s package, amounted only to “tinkering and fiddling”, he claimed.
A tax on dividends is a tax upon income from stocks, shares and dividends Sir Keir.
But that’s just snark over a small part of the issue.
The current system is that those with wealth pay for their own social - old age - care. Those without wealth are subsidised from the general tax pot. A pot that is largely filled by those with both higher incomes and also wealth. Which, we submit, is a pretty progressive manner of funding that social - old age - care.
That is, if it’s a progressive system to pay for care that is desired then that’s what we’ve already got before any changes. So, why change it?
Capitalism and the solution to climate change
Not that we are endorsing this specific example of capitalism getting to grips with climate change, rather just a support of the underlying idea. Folks putting their own money where mouths are and getting on with attempting to solve a problem:
A British app that encourages people to give away excess food has raised $43m (£31m) from investors including German takeaway giant Delivery Hero.
Olio, founded in 2015 by Tessa Clarke and Saasha Celestial-One – whose second name was invented by her “hippy entrepreneur” parents – has 5m users who collect and distribute food that is going to waste in their neighbourhood.
The start-up has signed up deals with Tesco and Booker, which pay Olio to collect food near the end of its shelf life to give it away for free.
We’re not entirely sure that this is a particular problem but then that’s why central planning never does work - no one group of people can possibly know what all the problems are, let alone the solutions to them.
Ms Clarke said while she was a “card carrying capitalist”, she sympathised with Extinction Rebellion’s view that “time is running out” to tackle climate change.
We are pretty certain that time isn’t running out and that XR are entirely wrong about everything. However, we still support this base idea.
You’ve got an idea about how to make the world a better place? Go on then, do so. As and when you prove that you are doing so - making a profit being the signal that your output is worth more than your inputs put to alternative uses - then other greedy capitalists (sorry, that should read others following their own enlightened self interest) will copy you and the world will become a better place at an accelerating rate.
Capitalism providing both the incentive and the measuring rod, free markets the ability to try it all out.
Or, as both we and the IPCC have been saying for some decades now, free market capitalism is the way out of climate change assuming that the problem exists in the first place.
The Fabian Society fails Chesterton's Fence
Chesterton’s Fence is the idea that, if when walking in a field one encounters a fence, it is necessary to work out why a fence was built before concluding that the fence should be destroyed. We can also invert this and ask, when considering a new policy, whether we’ve had this before and if we did why did we stop doing so?
This is what the Fabian Society fails to do:
Hundreds of thousands of people would be guaranteed up to 80% of their earnings for a maximum of six months if they lose their job, under furlough-style proposals to overhaul the current unemployment benefit system.
Under the proposed scheme, people who have paid sufficient national insurance credits prior to losing their job would be eligible for payments of up to £460 a week – rather than the current job seeker’s allowance (JSA) of £75 a week for over 25-year-olds.
The scheme, proposed by the Fabian Society thinktank,
The thing being that we used to have this. From 1966 to 1982 in fact, then we stopped having it. We did look through the Fabian report and could see no mention of this - perhaps it is our speed reading at fault.
We can think of all sorts of reasons why it was stopped. Significant unemployment benefits do extend the period of unemployment. Costs might well be more than what a 1% rise in national insurance might cover. Folks might indeed start to wonder why people on higher incomes get more. But that’s not our point here.
The specific reasons why it might be a bad idea are this one thing over here. Far more important is this other over there that we used to have this then we stopped doing so. The first and most obvious thing to ask when proposing it again is, well, why did we stop having it? Failing to do that means that the entire suggestion must be ignored until they bother to do that most basic inquiry.
But then this is the Fabians, the future of the left from 1884 and having learnt little by experience since.
Shock horror! We do not all enjoy equal health
From time to time, the government bows to the view that, as we are not all equally healthy, the government should do something about it. According to the Department for Health and Social Care (DHSC), health inequalities cost the economy “around £100 billion a year”. Not unusually, the reasoning is fallacious: it is the ill health that costs the money, not the disparity. The NHS already focuses its resources on trying to make the sick healthy. If we were all equally unhealthy, the bill would be a great deal higher. The DHSC response, of course, is to set up yet another quango,The Office for Health Improvement and Disparities (OHID), which will tell us, yet again, not to smoke, to go easy on the booze, take more exercise and lose weight. There are no costs or performance measures. The OHID will have no effect but at least the government will be seen to have done something.
According to the WHO, the root causes of health disparities are “education, employment status, income level, gender and ethnicity”. The DHSC tells us that “health disparities across the nation [are] to be reduced by tackling [these] top risk factors for poor health”. That will be as transformative as four year-olds tackling the All Blacks.
The government needs to forget disparity and focus on improving the nation’s health overall. Has the DHSC considered, for example, whether the UK’s unique affection for the NHS is as much part of the problem as the solution? We can smoke, drink and get fat safe in the knowledge that the NHS will, mostly, protect us from the consequences at no cost to ourselves. Our GP may wave a warning finger and nanny state may run advertising to tell us to mend our wicked ways but the NHS will pick up the tab if we don’t.
In terms of healthcare quality, France and Italy come first and second with the UK 18th – not bad really. Italy is also the second healthiest country in the world (after Spain) with the UK 18th once again, but that does not tell us which countries have the lowest disparities. One would expect health and income disparities to correlate and on the latter the UK comes 104th [a high number means low disparity] out of 174 countries, next to Spain. The EU is comparable with the UK but the Nordic countries have slightly lower income disparity.
The French healthcare system expects some contribution, apart from taxes, from the unhealthy: “When you visit the doctor in France, the healthcare system will typically cover 70% of the fees and 80% of hospital costs. If you have a major illness, 100% of the expenses are covered………. the patient [pays] 1 EUR (1 USD), for example, per doctor visit.” Driving one’s car at excessive speed is not good for one’s life expectancy or that of others on the road but we are likely to pay a financial penalty for doing so. Irresponsible attention to one’s own health should attract penalties, not wholly free health care.
The disparity that does need attention is that between the NHS and social care. If one needs nursing due to a condition that’s no fault of one’s own, such as dementia, one is expected to pay for the care oneself or have one’s family do so. If, on the other hand, one occupies a hospital bed due to one’s own life choices, lung cancer for example, the state bears the cost. One’s life may be shortened but there is no financial penalty.
The nation’s social care problem will not be solved by giving more money to the NHS. Indeed, it may make both care and health worse. Social care “aggregate expenditure has declined in real terms by 8% between 2009/10 and 2015/16 in England” despite rising demand and huge increases for the NHS. We should use insurance to incentivise responsibility for our own healthcare and trim the NHS back to front line treatment and cure. It is astonishing that the insurance systems that have played such a big part in continental health and care systems barely exist here beyond BUPA-type health insurance that enables wealthier people, or those in high-level employment, to jump hospital waiting lists.
The Americans have given insurance too large a part; a balance between state (NHS and local authority) and private sector (insurance) health and care provision is needed. France and Germany have that roughly right; the UK does not.
As only about 20% of people used care homes at the last published census (2011), it is an ideal opportunity for insurance not least because the premium for those with healthy lifestyles would be lower than those for their more self indulgent cousins. “41% of residents in care homes fund themselves (self-funders) and 49% receive LA [local authority]-funding (around a quarter of these pay top-ups). Even for those receiving LA-funding, nearly all income, such as pensions, is offset against state contributions. The NHS also commissions nursing care services for people who have a primary health problem, around 10% of residents.” Of course, the problem would be that those who can least afford insurance are also those with the most need for it, i.e. the greatest health deprivation. Controversial as it would certainly be, the logical solution would be to increase social security benefits but then take the health and care premium from them. Practical solutions can be found on the continent.
Interestingly, whilst the care home population remained stable in the ten years to 2011 (290,000), the percentage dropped from 23% to 20%, possibly because of the funding difficulties.
The Association of British Insurers have talked with the government about this issue but, I was told, decided there was “no market for it.” In the 19th century there was no market for motor cars. A point which may have escaped them is that, far from being unfair, insurance is actually positive for reducing health disparities. If you are number 20 in the queue for a hip operation, and five people use private insurance to jump the queue, you are now number 15. Insurance is such a valuable tool to getting personal responsibility for one’s own health or late-in-life care that it should be tax deductible.
This blog makes four suggestions for reforming England’s health and care regimes:
The new disparities quango is either well intentioned, but muddled, thinking or a cynical application of political PR. Either way, it is an unhelpful distraction from the health and care reforms the country needs.
Private insurance already exists for health to a limited extent but not for late-in-life care. It should be encouraged for both, with tax deductibility, to incentivise healthier lifestyles through the premia.
The NHS does not need further large financial handouts but should be trimmed to front-line treatment and cure. Hospitals do not need layers of boards of different kinds nor should the NHS be allowed to take over social care via a mass of joint committees. The Centre for Policy Studies has found no evidence that integration improves outcomes.
Social care, per contra, does indeed need substantially more funding as well as a rise in status to rank alongside the NHS. That would also reduce the pressures on the NHS.
The significance of Labor Day
US Labor Day, September 6th this year, honours the works and contributions of labourers to the development and achievements of the United States. It is a Federal holiday and comes on the first Monday in September after a Labor Day weekend, a time of picnics and some parades. It marks the unofficial end of summer as the Northern hemisphere moves into autumn, and a time to enjoy the diminishing opportunities for outdoor barbecues.
Most European countries celebrate their Labour Day on May 1st, or on the nearest Monday to it. It cannot escape notice that the European Labour Day comes in Spring, at a time of planting and promise, whereas the US Labor Day comes in the Autumn, when the harvest is in. It highlights the difference between hope and achievement.
The difference between the two Labour days also illustrates the difference between Socialism and Capitalism. Socialism is full of promise and aspiration, but does not achieve in practice the results it aspires to. Most Socialist countries have been racked by shortages and shoddy goods, some even by famines. Inflation has abounded in many. Never do its Springtime plants deliver their hoped-for harvest.
Capitalism has delivered the goods. Its harvest is in, and has lifted more people out of subsistence and starvation than anything else people have ever done. Its wealth has eliminated malnutrition for most, extended life expectancy, reduced child mortality and deaths in childbirth.
Socialism is Spring; Capitalism is Autumn. By all means enjoy the Springtime hopes of better weather and a better world. But more realistically, enjoy the Autumn achievements of human success, and reflect on what it has taken to bring it to pass. Happy Labor Day.