Perhaps Professor Mazzucato could examine her own logic

This is amusing or puzzling according to taste. Professor Mazzucato is telling us that government spends much too much upon consulting. That process of buying in outside expertise to address a particular and precise problem which cannot be dealt with in house. Her argument against this - do note this is the argument against this practice - includes the following:

Meanwhile civil servants are assumed to be stuck in old ways and lacking relevant competences. Frequently, teams find they do not have enough internal capacity to deliver what ministers want, and feel they have no option but to outsource.

Evidence that the civil service does not have the requisite specialised knowledge and therefore outsources is used to show that outsourcing of specialist knowledge should not happen. We do think that’s a piece of logic that would benefit from some examination, possibly even correction.

We were, given our own involvement in the overall process, amused at this:

….with companies even contracted to help deliver the privatisation of state-owned enterprises.

Well, yes. Most people do hire a merchant (“investment” these days perhaps) bank and a stock broker when selling a company onto a stock exchange. It’s one of those things, like hiring a baker to make your bread.

What really amuses though is that the complaint itself misses the entire point of our having government in the first place. It is true that there are certain things which must be done and which only government can do. Excellent, so we the people contract out those things to the specialists. That this base logic also applies to those specialists in governance should not be all that much of a surprise. There are skills, knowledge, they do not have but others do - go get it from them then.

To return to our baker. Professor Mazzucato has entirely forgotten Paul Seabright’s point about the supply of bread to London. No one is ins charge of it because it has been contracted out to the market. It is remarkable that it works but it does. It is not, in fact, necessary to have - even, it is undesirable to have - niente al di fuori dello Stato. But then convincing corporatists of that has always been a difficult task.

Do corporations have to obey the law?

That’s a silly question, we know, for of course corporations have to obey the law. Say, just to imagine, that Facebook had illegally intervened in the Brexit referendum, or an election campaign here, then of course we would be righteous in insisting that they should obey the law here. That’s what national sovereignty means, that whatever we decide the law, here, should be has to be obeyed by those who are or who operate here.

Except people then go on to insist that actually, corporations should not obey the law:

Apple and Google shut down a voting app meant to help opposition parties organize against the Kremlin in a parliamentary election in Russia that’s taking place over the weekend. The companies removed the app from their app stores on Friday after the Russian government accused them of interfering in the country’s internal affairs, a clear attempt by President Vladimir Putin to obstruct free elections and stay in power.

We’d not argue with much of that. But it’s what comes next that matters:

In a bid to clamp down on the opposition effort, the Russian government told Google and Apple that the app was illegal

Maybe it is and maybe it isn’t, legality can be a shifting concept in some places. But this?

Critics say the episode serves as an example of why Apple, specifically, can’t be trusted to protect people’s civil liberties and resist government pressure.

But this is the point. Are we to insist that corporations obey the law or not? Or is there some special set of laws that they don’t have to obey - possibly some set in foreign places - and some other set they do - like those where we reside?

That we don’t like some laws that J. Foreigner sets up is fine, even honourable. We might also say that some sets of laws are so appalling that no one need feel bound to obey any other them. No one’s going to be too upset about a corporation bruising one or more North Korean laws after all.

But we do enter a terrible minefield when we insist that corporations should ignore some laws and not others, in foreign places, because of what we think about them here at home. It’s time to make up minds. Should Apple break Russian law or not? And if so, then which of our own are equally ripe to be ignored? Facebook and elections perhaps?

Just how many problems is it that would be solved by fracking?

We will admit to a certain surprise at present:

Gazprom, Russia’s state-owned energy corporation, is facing an investigation into a spike in the cost of natural gas and a knock-on effect that threatens to disrupt the supply of meat in the food chain within a fortnight.

On Friday night, more than 40 MEPs signed a letter accusing Gazprom of “deliberate market manipulation” by ratcheting up gas prices to record levels. On Monday, electricity prices in the UK surged to 11 times above normal levels – a record high caused by a crunch in the gas supply chain and a lack of wind to power turbines.

….

As a result, household energy bills are likely to rise next year but the immediate effect has been to force the closure of two “globally significant” fertiliser plants in the UK that will lead to shortages of carbon dioxide, a by-product crucial to the meat processing industry and the manufacture of fizzy drinks.

That a supplier with market power decides to exercise it doesn’t surprise us at all. Nor does the price rise more generally. If the supply of electricity is not linked to price - which it isn’t, it’s linked to whether the wind blows or not - then high prices do not become their own usual cure for high prices.

What does though surprise us is that we cannot see anyone pointing out the solution to these varied problems. Reverse the decision to ban fracking. That would enable farming to continue - the country doesn’t have enough land to even try the non-fertiliser organic methods at any scale - and solve the pig stunning issue, bring electricity prices down and even increase the security of electricity supply.

The number of problems to be solved by fracking seems large, the number caused by banning it equally so. We’ve a free gift of nature down there in the Bowland Shale and not taking advantage of it seems absurd. Especially since the argument against doing so is that entirely spurious concern about earthquakes at as much as 0.5 on the Richter Scale. This is the sort of level of a heavy lorry going past the end of the road, a cat jumping off the bookshelves in the next room.

The ban is publicly justified by an entirely made up and created concern. We should re-examine that justification and reverse the decision. Fracking cures what ails much of the energy system at present. So, we should go fracking.

Facebook needs to learn that once you've paid the Dane the grift never stops

We can’t say that we‘re surprised here at all:

Facebook has announced new efforts to combat climate crisis misinformation on its platform, including by expanding its climate science center to provide more reliable information, investing in organizations that fight misinformation, and launching a video series to highlight young climate advocates on Facebook and Instagram.

But critics say the new push, announced on Thursday, falls short and will allow vast amounts of climate misinformation to slip through the cracks.

Facebook has long been criticized for allowing misinformation about the climate crisis to proliferate on its platform.

Once censorship starts happening then everyone with a misconception to push - or a truth they’d like to see denied - will be piling in to get their favoured lies declared to be the truth. So, any system that does succumb to that “public” pressure to stop certain viewpoints being promulgated will face an ever growing army at the gates insisting upon yet more of that censorship. We’d not be in the slightest surprised to find that entirely mainstream views are now included as that misinformation. One of us is actually listed as something akin to a climate denier for agreeing with the Stern Review on what we should do about climate change.

We’d go further than this as well and point out that once you’ve paid the Dane you’ll not get rid of the Dane:

Khoo, of Friends of the Earth, argued Facebook could do far more. “For a company that makes $85bn a year, a $1m program that outsources the problem they’ve created shows that Facebook is not serious about solving climate disinformation,” he said.

Ah, yes, spend more than $1 million a year on Khoo and his friends and you might be able to achieve peace. For the moment.

It never does actually work, does it?

Prices really are information you know

We insisted just recently, with reference to childcare, that prices are information. This is also true when talking about new nuclear power designs:

China is due to fire up an experimental nuclear reactor this month that could revolutionise the atomic energy industry. The reactor is fuelled by thorium, a weakly radioactive element, instead of uranium.

One of us predicted that this was on the way some 8 years back. Merely by observing prices:

The most cheering thing I've heard recently on this subject is that the price of thorium is now positive. That might not mean much without explanation, so here goes: There's thorium in all sorts of minerals from which we already extract interesting metals. The tantalite and columbite that we make our capacitors from for example: there's enough in the wastes from their processing that old factories that used to do this are now Super Fund sites in the US.

Vast sums of money being spent carting off the lightly radioactive wastes into secure storage (actually, just to piles by uranium mills). And if you actually happen to have any thorium around, as I do, getting rid of it is a very expensive proposition.

The usual solution to this sort of problem is that you refine whatever it is up to a useful commercial purity then sell it. But there's almost no one out there still using thorium: thus the price of thorium, given the disposal costs, is actually negative. Until just recently, that is.

Lynas, which has built a new rare earths refinery in Malaysia, will have thorium as a byproduct (there's always Th in your rare earth ores). They've announced that they're getting offers to actually buy it from them: the price has turned positive.

Now, OK, that's possibly only a matter of interest to metals geeks like myself: but what it actually means is that someone, somewhere, is being serious about starting up test runs of thorium reactors. It's the only possible use for the material these days in any quantity.

If someone's buying then someone is at least considering filling up a test reactor. My best guess is that this is the Indian research programme: although it could, possibly, be the Russian one and there are rumours of a Chinese as well.

That’s not a bad prediction even if possibly a little waffley as to precisely who is going to be doing it. But all done simply by observing the fact that someone is, newly, willing to pay for thorium.

Prices are information, prices are therefore something we should pay attention to.

If only people understood their own arguments

Allyson Pollock has managed to get herself extremely confused here:

According to a study by the Competition and Markets Authority carried out in 2016 and updated in 2018, the care homes industry alone was worth around £15.9bn a year in the UK with 5,500 different providers operating 11,300 care homes for older people. In 2020, there were more than 456,000 care home beds in England, with local authorities and the NHS combined having closed and sold off an equivalent number during the preceding decades. For-profit providers, many of them large multinational chains, own 83% of care home beds with a further 13% provided by the voluntary sector.

At the same time, government funding for local authority adult social care in England fell by 55% in 2019-20 compared with 2010-11, resulting in a 29% real-terms reduction in local government spending power. By 2019-20, local authority net spending on care was £16.5bn, 4% lower in real terms than in 2010-11.

The confusion is that she’s adamantly against this process of using the private sector as a supplier here. Yet the argument, as stated, is hugely supportive of the use of the private sector. For the claim is that we’ve the same number of beds available for that care with a reduction in the cost of those beds for that care.

True, a 4% real terms decline in costs isn’t all that much but we should probably contrast that with the usual NHS numbers which are a 2% rise (as Polly T keeps telling us, 4% nominal inflation rate since 1945) in real costs each year.

We gain the same outcome for less money. Why isn’t this a rousing endorsement of the use of the private sector?

Allyson Pollock is clinical professor of public health at Newcastle University

Answers on a postcard to Newcastle University presumably.

A Good Yarn needs how many Spinners?

A Pall Mall club

“Good Lord, Humphrey. What are you doing here?”

“Well, we both happen to be members of the same club, Minister.”

“I know that, and it is very good to see you, but at this time of day, why aren’t you briefing your minister?”

“You may recall that I have now transferred to the Cabinet Office where different rules apply.”

“I’m surprised any rules apply.”

“Indeed they do, but we no longer brief our ministers, Dom Cummings put a stop to that. I am now working with the Government Communications Service (GCS). Ministers tell us what they would like to happen, we decide if it fits with our agenda and, if it does, how the new policy will be publicised.”

“Golly. I thought we were supposed to be a democracy.”

“Indeed we are. Minister. We track what our electorate really, really wants, instead of being side-tracked by MPs with all their pettifogging ideas. Now we have AI to respond to their questions and our Dear Leader shouts at them on Wednesdays.”

“Speaking as a “pettifogging MP” Humphrey, I’m not sure I care for this. The GCS must need an army to govern in this way.”

“Surprisingly few, Minister. At the last count, we had just 8,000 staff, 4,500 of whom are professional communicators. ‘Our goal is to provide an exceptional standard of professional practice to support the government, implementing the priorities of the Prime Minister and the Cabinet to build a stronger economy, a fairer society, a United Kingdom and a global Britain’.Or that’s what it says on the tin. In fact, we get our marching orders from the PM, who tells us and we tell the Cabinet. We also tell the media who then tell the MPs.”

“Mr Speaker gets a bit tetchy when the media hear before Parliament.”

“Yes, he does, Minister, but we’ve solved that by leaking everything a few days before it is formally announced in the Commons. That gives the MPs all the time they need, poor things, to think about what they will be voting for before they actually have to do so.”

“That didn’t work well with the health and social care announcements last week. As soon as we discovered the PM was going to put up national insurance contributions to pay for it, we were up in arms. Never mind manifesto pledges; it was hitting young workers to pay for affluent elderlies that ruffled our feathers.”

“Yes, but that gave us time to modify it and still relieve larger employers of their surplus cash. When you think about what we do for the CBI, they should be more grateful. Anyway, companies do not have votes.”

“I still don’t think the GCS has come well out of this. We promised to reform adult social care, properly fund it and discuss our proposals with opposition parties to achieve consensus. We haven’t done any of that. It is a complete vacuum and we’ve dropped five points behind Labour in the polls – quite a difficult thing to achieve with this opposition.”

“Well, things did not work out exactly as intended.” 

“Your GCS team really must explain how social care is going to be transformed when you are giving all their money to the NHS.”

“That is all in hand. Social care comes under local authorities who are all generously funded by the Ministry of Housing. So when the time comes to reveal our wonderful social care reform, we will have to explain that the local authorities have messed up yet again and prevent us from revealing all – or even any. The Director of Communications will fall on his sword and we’ll have a new one ready to step in. No shortage – we have 22 of them.”

“Drum roll, Humphrey. Drum roll.”

“‘We aim to lead the way in developing innovative practices, adapting to the fast-paced, dynamic communication landscape and consistently delivering high-quality results’ but I have to admit that too is just what is says on the tin. It’s a joke, really, and that is what this is all about. The great British public do not care for politicians but they do like jokes, and the thing about jokes is that they are all about how you tell ‘em. So we try to present policy as entertainment; anyone who opposes it must be a pompous bore, not, of course, that I would suggest such a thing in the case of Sir Keir.”

“Great strategy, Humphrey, but a little risky?”

“It does backfire occasionally but then we shoot the monkey, not the organ-grinder. When Dom became the story, not the spinmeister, he had to go. Lee Cain, whose original ‘claim to fame was dressing up as the Daily Mirror "chicken" and pursuing David Cameron during the 2010 election campaign’ followed but fell out with Mrs Johnson and was responsible, according to the same news story, for ‘a series of PR disasters.”

 “Humphrey, I am not sure whether your wit or your memory is declining faster. It all looks like a muddle to me and rather confirms Lee Cain’s parting shot, in his paper for the Institute for Government (IfG), that the GCS is not up to the job, staffing should be cut from 8,000 to 2,000 better qualified people and civil servants should be restored as the lead press/official spokespeople in their departments. Alex Thomas, for the IfG, welcomed those ideas but suggested ‘better messaging is no substitute for coherent policy nor a remedy for misleading statements from government’.”

“Minister, your homework is impressive. I expect you have also read the CGS’s latest annual plan?”

“Well as it is spread across numberless departments, it does not have a plan as such, no costs, measurable objectives nor achievements of its own – just attributing other departments’ successes to itself. Cain is wrong, we don’t need 2,000, we don’t need any at all. We just need to train high-flying civil servants to tell us in plain English what the government proposes and why those are good things to do.”

“I think you are being a little unfair. Our 21/22 Plan shows a mass of achievements in the last year, beginning with ‘Our COVID-19 campaigns are estimated to have contributed to saving between 22,629 and 27,658 lives’.”

“That is itself spin, Humphrey – other departments’ successes. The truth is that we came about in the middle of the European pack, a bit better than Italy and a bit worse than Spain, and I cannot see that the GCS has much to be proud about, especially as we had all those vaccines before anyone else did. The COVID messaging was dreadful.”

“I suppose you will regard the ‘priorities’ for 21/22 likewise?  Surely the plan’s concluding words bring a bounce to your step: ‘We will promote essential government activity, ensuring our citizens have access to vital services and keeping them informed about critical legislation. From guidance on health and safety at work to information on NHS screening, our campaigns are essential to the smooth running of the country.’”

“Total claptrap, Humphrey. I was going to buy you a small G&T but I think you need a very large one.”

A politically most incorrect truth about childcare

There’s a wave, a surge perhaps, of muttering about the cost of childcare in Britain today:

Somehow we have ended up with a system that’s too expensive for parents (especially single parents) but not lucrative enough to pay staff properly, plus a hidden drag on the economy, as parents reduce their hours because they can’t afford a full-time nursery place. A staggering 94% of those changing their working patterns after having children say childcare costs were a factor; surprise surprise, women were more likely than men to say they’d be more senior or better paid if it wasn’t for childcare considerations.

There’s no money to fix this, obviously; there’s never any money, unless of course the right people start asking.

This isn’t a problem that money can fix. Price are prices and they are information. We might not like that information, we might decide we’re going to ignore it but that information is still there in those prices.

Childcare is expensive to provide. So, childcare is expensive. It’s even true that childcare is more expensive than the income to be earned by doing something else. Or at least this is true for some number of people.

OK, childcare is more expensive than the income that can be earned by doing something else then. That’s just real world information that we’re being provided with by that price system. Deciding that we’re going to hide that by putting the cost onto the taxpayer doesn’t change that base fact.

This leaves us with two possible solutions. Either some people should stop doing that other thing of lower value and take care of their own children, or we should make childcare itself cheaper. No, not simply shift the cost elsewhere, but actually make it cheaper - kill some of the regulatory burden perhaps. That cost shifting, from the person doing the lower value work, doesn’t change the fact that it is lower value work they’re doing.

The very definition of wealth creation is that economic resources - of which labour is one - move from lower to higher value uses. If a job produces less income than the cost of the childcare required to do it then the childcare is the higher valued use of that labour. Society as a whole, let alone the individual concerned, is made richer by the childcare being done directly.

We do have a certain suspicion here. Most ungallant of us and all that but there we are. Those whose alternative labour really is of less value than their own childcare tend to do their own childcare. There are then those whose market labour is worth more than their childcare costs. Say, those who write for national newspapers. But those on the right end of that price information would still prefer that the rest of us pick up their costs. Because who wouldn’t? Or, as we could put it, the taxpayer should pay childcare costs to solve that servant problem for the professional middle classes.

The land link between Scotland and Northern Ireland

The BBC quotes an unnamed “senior” Treasury official boasting that they have “killed off” what he called “the stupid tunnel” that has been proposed to link Scotland and Northern Ireland. If there is any substance in the BBC story, the government should require the Treasury to revive the project by looking at less conventional ways of financing its construction.

The tunnel would reduce the cost and the difficulties of transport of people and goods between Northern Ireland and mainland UK. It would create a symbolic land link between the two, as well an enabling freight to be shipped between the two by road or rail without the need for it to be loaded and unloaded from ships. But it would do more than that.

It would also provide a land link between Northern Ireland and the European Union via the Channel Tunnel. Goods could flow directly by land between Northern Ireland and the EU, facilitating both imports and exports, and expanding trade between the two. Even more than that, it would provide a land link between the Irish Republic and its EU partners. Instead of trade between the two relying on shipping, as at present, freight could be sent up through Northern Ireland, through the new tunnel to mainland Britain, and then down to the Channel Tunnel and across to Continental Europe. Exporters and importers would willingly pay the tolls for both tunnels to gain the speed, convenience and lower costs of a land voyage for their goods.

Facilities would be needed at both ends of the new tunnel, and new communities would spring up on both sides to service the traffic that would flow through it in both directions. These new towns should operate as Freeports, relieving them of many of the costs and regulations that burden businesses outside their boundaries. With these advantages, both of the new towns connected by the tunnel would see massive economic growth. Indeed, they would be boom towns, creating jobs and businesses in parts of the UK that could benefit greatly from such a stimulus.

The new towns and the Freeports would be a means of financing the tunnel’s construction, given the wealth and the revenue they will generate. Japan financed much of its rail construction out of the added value created by its newly-constructed links, and the new tunnel linking Scotland and Northern Ireland could take a leaf out of the same book, using future wealth to fund the costs of construction.

The new tunnel would do more than generate growth and wealth, however. It would also symbolize a closer United Kingdom, one linked physically as well as politically. It would knit us together more closely. Indeed, the suggestion has been made that it might be called the “Unity” tunnel. It would also declare to a new generation that this country can still accomplish great things.

The economic arguments coincide with the political and symbolic ones, and tell us that the tunnel should be built.

If regulation is good then it's regulation that is good, right?

We’re entirely in agreement with the argument that matters need to be regulated. Our differing from the usual story here is that we ask “regulated by whom?” Regulation doesn’t have to be by a bureaucracy, markets and consumers and prices and revealed preferences and all those things are also a form of regulation, often one more effective.

We would though go on to say that if a bureaucracy is going to regulate then it has to actually, you know, regulate:

When a court-set deadline for "premarket" review of nicotine vaping products came and went on Thursday, the Food and Drug Administration (FDA) had received millions of applications but had not approved any. As a result, the agency says, every vaping product sold in the United States—including myriad e-liquids, devices, and parts—is now "subject to enforcement action at the FDA's discretion."

Seven years after the FDA officially declared its intention to regulate e-cigarettes as "tobacco products," in other words, the entire industry remains in legal limbo, existing solely thanks to the agency's enforcement discretion and limited resources.

Seven years to decide whether the world’s greatest smoking cessation tool is legal to sell. The inaction, at this point, leaving the entire market in a legal limbo.

C. Northcote Parkinson did point out that eventually all bureaucracies become merely bureaucracies. They might start out (Pournelle made comments on this point as well) attempting some real world task but in the end they become paper pushers for the sake of protecting the paper pusher budget. Merely a costly sink of uncertainty that is.

The answer, at this point, is to simply close them down. They are not retrievable. It might even be true that drugs and food do require regulation from a government bureaucracy. But this one is broken, is not sufficiently reformable, so the solution is that Carthaginian one and start again.

This applies to rather a lot of things - we’ve made the same point about the British planning system often enough. Blow it up and start again from a blank sheet of paper. As a certain American journalist once pointed out:

“Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.”

Quite so, quite so.