Now, what was it that Hayek said about the NHS making us slaves?

The Road To Serfdom does indeed make the claim that nationalised health care is the start of a slippery slope to a certain slavery to the state. It is a proper slippery slope argument too, not the logical fallacy. For the insistence is that if this first step is taken then the rest will inevitably follow.

It’s also worth noting what the argument is not, which is that government making or ensuring provision for health care will lead to such. Rather, that if it is the state itself doing it then that serfdom will follow. The serfdom itself being that we will be managed and manipulated in order to benefit the state health service rather than it serving our health.

Primary school children should be taught to treat their minor illnesses on their own to stop unnecessary visits to GPs, NHS leaders have said.

The call is part of a raft of recommendations for a national “self-care” strategy to ease the burden on the NHS, set out in a new report written by a coalition of health bodies.

The authors include NHS Clinical Commissioners, which is part of the NHS Confederation, the body which represents all parts of the health service, the Royal College of Nursing, the Royal Pharmaceutical Society, and the National Pharmacy Association.

It’s entirely true that a scraped knee isn’t the most appalling of health care problems. And yet those injunctions to suffer the little children do come to mind, even the obvious point that our children are the most precious thing of all to each of us.

But how foul would it be if any of the priests of the national religion had to sully their hands in comforting a crying child? Quite, we must be managed for their benefit rather than they having to do anything we might want them to.

It’s only taken 73 years - for the NHS - or 77 years - since the publication of the forecast - but who really wants to try and insist that Hayek was wrong?

Why would we want to tax consumers more and landlords less?

The argument in favour of us having all those clever and informed people governing us, in such detail, is that they’re all clever and informed people governing us. Therefore they can correct our misbehaviours and solve our problems, in detail.

This all rather fails when those doing the governing are neither clever nor informed:

Rishi Sunak is stepping up plans for an online sales tax to level the playing field between tech behemoths and high street retailers after delaying an overhaul of business rates.

Treasury officials have accelerated work on a new e-commerce tax in the past few weeks and are scoping out details of a potential levy, including what goods and services will be covered, sources told The Daily Telegraph.

Whitehall insiders said that a so-called “Amazon tax” under a wider business rates shake-up is “clearly the direction of travel” being considered by the Chancellor, but that final decisions will be pushed out beyond the upcoming Budget.

Tax incidence is the study of who really pays a tax. The wallet of which live human being gets lighter as a result of the existence of the tax?

For business rates this is landlords. For a sales tax this is consumers.

Now, yes, we do understand the larger picture. It’s simply impossible that government could get by while devouring fewer societal resources. There are green boondoggles to fund, inefficient manners of providing health care to finance, diversity advisers who need paying and so on. Absolutely everything government currently does is essential, must be done by government and no reduction in the bill is possible by even the merest iota, penny or groat.

Therefore if the revenue from one tax seems to be sliding another must be created to make up the difference. Given the inability of any politician with a chequebook to spend less that’s just the way it’s gonna’ be.

But this still leaves us with that point the clever and informed seem to have missed. Why do we want to transfer that tax bill from weighing upon the wallets of the landlords to doing so upon those of consumers?

It is the failure to even note these not very small details that brings into doubt the idea that government is run by the clever and informed, isn’t it?

Waging war against asylum seekers

The Nationality and Borders Bill will make it more challenging for asylum seekers to access protection. The government has justified the changes by claiming that the system is overwhelmed, with 73% of claims having been in the system for over a year. While this is certainly an issue, the solution should be to improve the systems for the benefit of the UK and asylum seekers, rather than break the Refugee Convention.

The Refugee Convention requires states to provide certain protections to refugees: defined in international law as “someone who is unable or unwilling to return to their country of origin owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group, or political opinion.” In the Nationality and Borders Bill, however, the Government creates two classes of refugee status, allocating groups according to factors that are simply immaterial to refugee status in international law. The UK will then only grant the necessary protection to those in group 1.

One factor used for determining the group allocated is route of travel. Asylum seekers will be placed into group 2 if “an individual does not come directly from a territory where their life or freedom is threatened”. The notion that asylum seekers must make a claim in the first country of entry is not a requirement under international law or the Refugee Convention. Many asylum seekers may choose to continue past the first safe country to another due to connections, language or cultural reasons. If it were a requirement it would put an unnecessary burden on countries dependent on their geographical position, such as Greece who already accept far more asylum seekers per capita than the UK.

The changes will mean most refugees are automatically placed in group 2. To travel directly to the UK from their country of origin, asylum seekers would have to travel by plane. However due to the serious financial consequences faced by plane companies for allowing passengers without visas, this is often untenable. Without the option of plane travel, this pushes asylum seekers into travelling by boat. As this is unreliable and dangerous, asylum seekers are often unable to make the journey in a single voyage, requiring them to enter other ‘safe’ countries before entering the UK.

For those asylum seekers placed in group 2, temporary protection may be granted. With temporary protection, refugees have no recourse to public funds unless in the case of destitution, no route to resettlement, continued work restrictions and no rights to family reunion. Not only is this creating a hostile and solitary environment but any barrier to family reunification contradicts both article 8 of the ECHR and article 6 of the Human Rights Act. As temporary protection only lasts 3 years, it becomes far harder for people in this position to integrate into society, and find a stable source of income. In addition, barriers to employment mean that rather than becoming constructive members of society, refugees in group 2 are likely to be a strain on public funds or turn to alternative, even illegal, sources of income.

The Government ought to understand that simply stating that this bill is compatible with the Refugee Convention does not automatically make it true. Rather than warping international law to deny necessary protection to many refugees, in order to deter illegal travel, the government needs to improve and expand the safe and legal methods for arrival in the UK.

The Hume-Rousseau Affair

When David Hume learned in 1762 that Jean-Jacques Rousseau was interested in relocating to Britain, he got busy to make that happen. The two men first met in Paris in 1765. They travelled together from Paris to England in January 1766. Hume arranged lodging for Rousseau, otherwise tended to him, and successfully procured a pension for him from King George III.

Within a few months, things turned very sour. Rousseau wrote hateful letters to Hume accusing him of having plotted for his disgrace and humiliation by way of petty torments. An especially long letter, declaring enmity toward Hume, was written as though for publication. Hume felt the need to counter Rousseau’s version and defend himself against accusation and besmirchment.

What was published was a rushed version of the account, first in French in Paris in October, 1766, then in English in London the next month. The English version was, apart from the letters therein, mainly a retranslation of a French translation of Hume’s manuscript. Mishaps and communication problems between Edinburgh and London led to Hume’s extreme dissatisfaction with the English version.

The blow-up between two of Europe’s most illustrious intellectuals was an affaire célèbre throughout Europe at the time. The two protagonists could not have disagreed more in their moral and political tendencies and influence. The spectator feels divided sympathies with each of the two men. Their interpretations disagree wildly. Was Hume innocent in the matter? Was Rousseau?

Now, 255 years later, Hume’s original manuscript has been put before the public, by Jason Briggeman, Jacob Hall, and me. Hume “expresses himself bluntly and forcibly,” as Paul Meyer said about this never-before-published manuscript. Also provided is link to a PDF scan of the original manuscript itself, kindly provided by the National Library of Scotland.

Even after the blow-up, Hume continued to work for more than year to maintain the plan of a royal pension, and to keep Rousseau settled in England. Rousseau remained in England until May 21, 1767, but never accepted a single payment of the pension.

What was Hume thinking? What was he up to? In an article that accompanies Hume’s manuscript, I suggest that Hume went to such remarkable lengths because he felt that doing so would diminish Rousseau’s influence and legacy, and consequently improve the lot of humankind. I believe that, had Hume succeeded, Rousseau’s influence and legacy would have been greatly diminished, and the lot of humankind would have been improved.

Hume’s manuscript consists in large part of letters between the two men. One sees the relationship evolve and go bad.

An article about Hume’s original manuscript was published in 1952, by Paul Meyer. Hume’s manuscript account differs markedly from the London publication of 1766. There is, said Meyer, “a decided discrepancy in tone.” Hume’s original version has the tone of “a man sitting down in a rage immediately after a violent quarrel and giving his version of it.” Hume “is plainly beside himself at Rousseau’s behavior”. The 1766 publication, by contrast—and by way of the French editors—gives a voice to Hume that is more detached, sometimes even circumlocutive. “Certain of Hume’s indignant and spontaneous exclamations on reproducing Rousseau’s charges against him are not given in the published texts at all.” Hume’s original has him enumerating a dozen lies (“lyes”) as footnotes to Rousseau’s mammoth letter of July 10, 1766; such enumerating of points is absent from the 1766 published version. The original is stouter and more authentic.

The account oozes with psychological paradoxes, wrapped in a huge moral conundrum. Was Hume conspiring against Rousseau? Was Rousseau one of the conspirators?! Was the conspiracy against Rousseau for Rousseau? Was Rousseau playing Hume? Don’t miss it!

Dan Klein for Adam Smith Works. Hume’s manuscript account of the extraordinary affair between him and Rousseau can be downloaded here

The problem with government planning things

There are problems with planning. There’s that uncertainty about the future which gangs aft agley the ability to make it arrive on time and in line as upon rails. There’s the quality of the people doing the planning of course, a talent for kissing babies not being notably efficient as a method of selecting those who should decide upon, say, what the energy production mix should be. There’s that problem with planning for everyone rather than just for the self-interested who bother to engage with the planning process.

But the really big one is that no one has a clue about the present:

But you don’t need to have spent those ten minutes on hold — or to have read MPs’ rather more critical report on the early months of the pandemic, published last week — to have doubts. The kind of doubts I get when I read that the government has authorised visas for 800 butchers, or 5,000 HGV drivers, or 5,500 poultry workers, to tackle the supply chain crisis.

In the very precision of those figures is a built-in assumption that the state has a perfect understanding of the employment market, just as it has a perfect understanding of infection rates. And yet as Dominic Cummings — remember him? — pointed out last week, this is the state that experienced large waves of immigration from the EU for 20 years but “was so useless at handling this, it could not even estimate its size to the nearest million”.

GIGO is not just some computing term, garbage in, garbage out is a truism of any system of calculation. It’s why philosophy spends so much time in defining terms before even attempting logical deduction - which is why the subject is still chewing over whether truth is actually beauty these millennia after folks started writing stuff down. And let’s not get started on the complications of thinking our way through “What is truth?”

If we don’t know the present then we cannot possibly plan our way to a preferred future. Simply because not knowing the starting point makes the navigation impossible.

Of course, this has been pointed out before. Hayek’s Nobel Lecture is on this very point. But it’s worth insisting, once again, that we need to pay more attention to it. Every attempt at central planning does indeed leave us where we don’t want to be. For the simple reason that we never do have much more than a vague clue as to our starting point.

At least we're getting an accurate definition of austerity

How long has this taken to arrive?

“Restrictions on the growth in health and social care expenditure during ‘austerity’ have been associated with tens of thousands more deaths than would have been observed had pre-austerity expenditure growth been sustained,” said Prof Karl Claxton of the Centre for Health Economics at the University of York.

“Our results are consistent with the hypothesis that the slowdown in the rate of improvement in life expectancy in England and Wales since 2010 is attributable to spending constraints in the healthcare and social care sectors.”

This past decade people have been screaming about the cuts. And there it is, the actual definition - a slow down in the rise of such social spending. It should be obvious that such social spending cannot continue, forever, to grow faster than the economy as a whole. For the, well, obvious reason that if it did then soon enough we’d have nothing but social spending and nothing financing it.

Some haven’t quite got the message yet. Polly Toynbee, obviously, among them:

I once chronicled Labour’s social programmes and their effects from 1997 to 2010. Spending on the NHS rose by an average of 7% a year, more than since it was founded in 1948.

Well, yes, but it can’t do that forever, can it?

Perhaps now that it’s in a scientific journal we can all agree that there were no cuts? That it was the rate of growth which was shaved, nothing else? That what actually happened was that after an election the new government declined to follow the spendthrift ways of the people who had just lost the election? That being, we’re really pretty certain, the purpose of having elections, that we folks out here get to decide whether the current plans should be followed or that the nation tries some other ones?

Democracy?

We fear the Prince has been grievously ill-informed

It is never The Prince who is wrong but the advisors. So we fear it is here:

In his interview about climate change, ahead of his inaugural Earthshot Prize awards, the duke said: 'We need some of the world's greatest brains and minds fixed on trying to repair this planet, not trying to find the next place to go and live.'

This about Bezos boldly firing Shatner off into sub-orbit and all that.

The mistake being to think that space isn’t a (not the, a) solution to repairing this planet. For example:

But what if we could have solar panels that always face the sun, that are immune to the vagaries of British Isles weather, and which could never be accused of blighting the countryside?

That is the idea behind out-there proposals for a series of giant solar farms floating in space, which are now being considered by the Government. Experts say the systems - each one able to produce power equivalent to a nuclear plant - would provide 24-hour reliable energy and account for a quarter of Britain’s electricity needs.

The first mistake is to think that the current rocket firings are just those sub-orbital tourist trips. They’re actually part of the development programme for orbital heavy lift. The second is to think that being up there isn’t a solution to woes down here. It’s possible to take the Elon Musk view that there is indeed that asteroid out there with our name on it and the solution is to have some of us where that asteroid won’t be. It’s not necessary to take that view though.

For space based solar is entirely possible right now. It’s simply fearsomely expensive and thus not a viable solution as yet. Billionaires spending - or making in one case - their money making getting into orbit is not a diversion from solutions it’s a path to them. For getting into orbit cheaply then makes those fearsomely expensive possible solutions cheaper. Cheaper here means more viable - to the point that if orbit becomes cheap enough then space based solar becomes the solution of preference to our energy desires.

This isn’t to say that orbit will ever become cheap enough for this to be true. It is though to insist that finding out whether it can be made so isn’t a diversion from solving our local planetary problems, it’s one of the means of devising those solutions. As, you know, privately funded technological development tends to be.

Covid and the Permanent Income Hypothesis

In a rare display of political bipartisanship, Joe Biden and Donald Trump have been united by their belief that fiscal injections are the sole gospel of salvation for the Covid-19 economy. This idea is derived from the largely untested Keynesian axiom of the ‘consumption function’, that stipulates a universally positive correlation between one's disposable income and their levels of consumption (measured by their personal consumption expenditure).

This thinking flows into the idea that government injections of capital into an insolvent economy is the secret elixir to restimulation. However, many have been sceptical of the efficacy of this idea, none more so than Nobel Laureate economist - Milton Friedman.

Friedman contended that Keynes has misunderstood the relationship between levels of disposable income and consumption, and that such a faulty premise contaminates much of his work. The Chicago school economist argued instead that the true relationship lies between one’s permanent income and their level of consumption. Through this, Friedman theorised an idea called the ‘Permanent Income Hypothesis’, whereby individuals calibrate their levels of spending today by their expected earnings tomorrow; a direct assault upon Keynes’ long-held premise.

The partitions can be clearly observed: Keynes arguing a strong positive relationship between disposable income and consumption, Friedman arguing for one that is much weaker.

Despite numerous micro-experiments over the past decades to prove or disprove either man, there was not any conclusive far-reaching evidence. However, through the actions taken by the United States government of three separate fiscal injections over the past eighteen months, there has been a clear opportunity to judge this gladiatorial feud.

The period modelled in Figure 1 (January 2020 to present), presents the relationship between Disposable Personal Income (DPI) and Personal Consumption Expenditure (PCE). Through observation, the periods of fiscal injection where the US fiscal stimulus bills were enacted, DPI spikes, and correspondingly PCE is shown as largely inelastic. This theme is continued through the weak positive correlation between the two variables. This suggests the past eighteen months confirms a faulty relationship between disposable income and personal consumption, suggesting that over six decades since theorising, Friedman may just be right after all.

While the state-induced economic fallout necessitates adequate compensation, a point eloquently argued in an earlier article of ours, the sheer magnitude of the fiscal stimulus inevitably raises the question whether such money has been worthwhile. Despite spending over $5 trillion, levels of consumption have been measly affected. This futility is tantamount to the government's sheltering of Keynesian dogmatism behind a Maginot Line of state intervention. It is time this line is broken.

Finally, a sensible complaint about business rates

It really does seem to take time for good economics to sink into the collective consciousness. Henry George was making this point a century and a half ago:

The industry groups – representing all sectors of the UK economy from airports to pubs, shops, construction and manufacturing – said the current system served as a tax on investment and could hold back firms from spending on green projects and boosting their operations outside London and large cities.

Their statement urged the chancellor to announce a cut in business rates alongside other reforms to lower the burden on firms, including removing disincentives for green investment.

Under the current system, a company investing in its physical premises by installing solar panels or heat pumps could add to the value of the building, raising its rateable value and therefore the firm’s tax burden.

This is entirely unlike the landlord whining that we complained of a couple of days back.

The value of a building depends upon two things. What the building is, what’s been added to it - this is investment. Then where the building is, the plot of land it occupies - that’s land value. We actively desire to tax that land value whatever the landlords have to say about it. And we don’t want to tax the investments because investment is what makes society richer.

The correct reform to business rates is therefore clear. Make it a land value tax and be done with it.

Dealing with Covid was easy

We don’t say that dealing with Covid was well done but we do insist that it was easy. We’ll also admit to a certain fondness for the Swedish Method - government action on the really big things and leave most of life to the good sense of the population - and also for Jesse Norman (despite an historic contretemps there). For Jesse was, according to reports, the only person within half a mile of the Cabinet who actually asked the important question: “How much is this going to cost?” Not, we hasten to add, in anything so crude as the mere monetary sense, but in the proper one of what is being given up as a cost of this plan?

Tom Chivers starts our point for us:

But the valuable lesson, I think, is not “we should have done X” or “we should have done Y” specifically, but that we should be less confident in our ability to predict highly complex situations. And more than that: we should look at the possible results of being wrong in our attempts to predict those highly complex outcomes.

A reasonable estimate is that there are, currently in London, 1 billion things on sale. Not 1 billion items, but different things, left handed, right handed, brass, steel, tin, half inch, 3 mm screws and on with the combinations of nails and hammers and on to cars and hoovers and…. Karl Marx was astonished that century and a half ago that one could buy 500 different types of hammer in that city.

Now note that the billion in London are different from the same billion in Birmingham, both ditto Bradford, all three from Brighton and on.

The economy., that is, is a complex thing. Compared to managing, planning and running that economy dealing with covid was elegant simplicity. Yet having observed the performance - and not just of our own government, many did equally badly - with respect to covid there are those who insist that the economy can be run by dictat. Without all of us falling about with laughter. Or, perhaps, without us all rising up to remonstrate with those who could say something so observably stupid.

Covid was simple compared to the economy. Yet there is still that delusion, despite the very evidence before our eyes, that the more difficult task will be achieved more easily than the simpler, or even better.

We wonder if one of those 500 types of hammer can be described as a cluebat? If not, can someone get on with the invention bit please?