Could we suggest The Guardian reads up a bit on America?

We’re all for globalisation, of course we are. So, The Guardian wants to become the global English language newspaper for the progressive types. We can - and do - moan about the content but can’t fault the ambition. We would though suggest that actually learning something about that globe out there is a useful precondition.

At which point:

On Tuesday, the US supreme court in its Merrill v Milligan decision, upheld Alabama’s racially gerrymandered congressional map, which see Black people represented in only 14% of congressional districts, despite making up about 27% of Alabama’s population. This ruling is reminiscent of the holding in the supreme court’s 1857 Dred Scott decision that Black people “had no rights which the white man was bound to respect”. Even though the two cases addressed two different situations, the overall disregard of the rights of Black people in America by the highest court in the country is the same.

And Jim Crow is coming back and aren’t Republicans awful and so on. It would only take the slightest of tweaks to the GuardianColumnGeneratorBot to complete the 1200 words.

Except the Supreme Court didn’t uphold anything. What it said was that it shouldn’t be overturned right now. Hey, it might be terrible, that’s for the full case to be heard, but we can’t go around changing election rules right before an election. That is what the court said. If there’s to be an election then everyone needs to know what the rules for this election are, what the districts are, which ones to run for, even which ones the would be politician currently lives in.

There is a tension, that is, between having good rules for this election and having settled rules that allow the election to take place. In accordance with previous decisions given the imminence of the election having settled rules won over good rules.

BTW, the election started yesterday, Friday, Feb 11. That was the filing date to run in the Republican primaries.

This might all sound too detailed about something far away from our usual concerns here. But there is that Gell Mann Amnesia effect to think about. When the details of the story are examined it turns out not to be the way the newspaper tells us it is. Which has implications for everything else The Guardian tells us, doesn’t it?

Err, remember the amnesia that is.

A climate change solution

We admit that we have no idea at all whether this would work:

Quaise Energy, a startup that just raised a $40 million Series A funding round led by Safar Partners, uses “millimeter wave” drilling systems to go as far as 12 miles underground—that’s 3 to 5 times deeper than typical oil and gas drilling—reaching a layer of rock which is more than 700 degrees Fahrenheit. The heat can be used as a constant power source essentially anywhere on the planet.

We’re not even going to try and work it out either. The reason we don’t drill that far routinely anyway is because it’s not economic. It just takes too long to pull the drill bit up, sharpen it, then send it down for another go. So, if a new drilling method does it, well, why not?

Further, they seem to us to be being sensible. A fossil fuel plant is really a way of getting steam that you can run through turbines. So, if you’ve got a hole with lots of steam, why not make the holes at the fossil fuel plants where you’ve already got the turbines, electrical connections and so on?

Yes, we are alive to the joy deployment of this system would bring. For there would either be all those screaming matches about seismic activity which acommpany fracking - the waste water injection would lead to the same activity - or we’d find out that the screaming wasn’t about seismic activity in the first place.

Our real point here though is that this is the sort of thing that does get tried out with a sensible policy response to climate change and doesn’t with the response to climate change we’ve got. For the system we’ve got depends upon bureaucrats and politicians deciding what gets built and where. This leaving us with Drax burning American woodchips and this being described as carbon neutral - a nonsense. A sensible system - as described by the Stern Review, by Bill Nordhaus in gaining his Nobel and so on - just sets the basic limits to the system then allows ingenuity to explore all the myriad ways of reaching the desired goal.

That planned system also has another difficulty with it. Big Solar and Big Wind now have their lips so firmly grasping the subsidy firehose that they’re not going to allow some potentially competitive technology to get a look in. Vide those seismic restrictions on fracking.

We would end up laughing like drains if geothermal, or fusion say, ended up being the actual answer. After we’d mourned the trillions lost to men of plans and their delusions of course.

Mr. Monbiot, tax and the North Sea

George Monbiot is angry - and we’ll not like him when he’s angry - about the manner in which Shell and BP appear to be paying no taxes on their North Sea production. He’s right that they’re not paying but he has not noticed that the reason they’re not is that they already have.

In the UK, these companies have been granted a licence to print money. For the past three years, Shell and BP have paid no corporation tax on the oil and gas they extract from the North Sea and no production levies either. In other words, they have been given these resources by the government.

Whoops, I mean paid to take them away. Over the same period, they have been granted reliefs on the taxes they didn’t pay of almost £400m. This is because they can claim the cost of decommissioning their rigs and platforms against their nonexistent tax bills. But decommissioning should have been priced in when the contracts were signed. It’s a classic case of private profits, public liabilities. After being paid to take the gas away, these companies sell it back to us at mind-boggling prices.

You see, the costs of decommissioning were priced into those original contracts. Which is why no tax is being paid now.

Everyone does know, everyone did know, that there would be two grand lumps of costs in exploiting the North Sea fields. Putting up the rigs and pipelines to do the exploiting and then taking them down again 50 years later. OK, maybe 25 years later. The interim, the running costs, were minimal.

Any sensible business knows how to deal with this. In those years of minimal running costs but gushing revenues you put aside a certain portion of the income to build up a fund to pay that final bolus of costs.

This ran smack into the political desire to have the cash now. The tax revenues that is, the tax revenues that would be diminished by allowing anyone to put aside income now to be stored for future use. So, the British government banned the oil companies from creating sinking funds to pay those final costs. Instead, pay all the royalties, super-profits taxes, higher corporation tax rates, to the Treasury this year and in 15 years when you have to decommission we, the Treasury, will let you have back the tax you’ve already paid on the money you should have been saving for these expenses.

Decommissioning was priced into the original contracts, that’s why taxes aren’t being paid now. Because they were paid 15 years back and now need to be returned - because that’s what the original contracts said - as it’s the Treasury that has been enjoying that sinking fund, not the oil companies.

George Monbiot is complaining about the very solution to his complaint. The reason no tax is currently being paid on North Sea oil is that decommissioning was priced in when the contracts were signed.

We’ve no problem with people complaining about this system, of course we don’t, we’ve not been wholly in favour of it ourselves. We do think though that people who complain about it should know about it.

What Idiot is Blocking Imports From the EU

You may recall being told that the EU was over-regulated but when we left, all that would be shed? In reality, our government is loading those over-regulated EU goods coming into the UK with a whole lot of our own. Allegedly to comply with World Trade Organization (WTO) rules, the UK is required to apply UK devised import controls on goods arriving from the EU in a way that is no more favourable than it does on goods arriving from the rest of the world. Imports are slowed, ports are blocked, bureaucracy is multiplied and the costs to British consumers are raised, compounding the inflation we are already suffering.   

Worse still, the out-of-control Whitehall bureaucracy cannot decide what controls it wants and is keeping everyone guessing. The 36th report of the Public Accounts Committee chastises the government for being unable to specify the new systems and paperwork, or even where inspections should take place, but they have missed the point.  Why do these goods need and import controls, delay, inspection and paperwork at all? 

The Committee cites evidence “that even though full import controls have not yet been introduced into the UK, the new formalities and costs that have [already] been introduced make it more expensive and complicated to trade between the UK and EU.” (para 9) “Office for National Statistics (ONS) data for the UK’s total trade in goods with the EU (exports plus imports) show there was a 23% and 13% reduction in Quarter (Q) 1 2021 and Q2 2021 respectively against Q4 2020.” (para 8) The potential Get Out of Jail card, i.e. allowing minimal blockages is if the “differences are justified by one of the exceptions to the Most Favoured Nation rule as set out in the WTO treaties.” (para 3) 

We were led to understand that the EU-UK Trade and Cooperation agreement (TCA) did establish the EU and UK as mutually “most-favoured-nations” but on re-inspection it may not do that. “Most-favoured-nation” is mentioned 65 times in the TCA but they seem to be more about mutually being “no less favoured” than being “most favoured” in which case the UK’s import bureaucracy for goods from the EU has to comply with bog standard WTO rules as distinct from genuinely free trade.  Whichever way you skin the cat, some idiot in Whitehall is responsible for either negotiating a TCA which is pointless and misleading us in the process or now failing to take advantage of the open borders to which our businesses are entitled and creating a wholly unnecessary bureaucracy. 

We cannot do anything much about the rules the EU creates for imports from the UK since that, ultimately, is their business.  But what happened to the sovereignty over our own borders we were told the UK would regain?  And since import bureaucracies benefit neither the EU nor the UK why do we not use the most-favoured-nation rules to trade them away even now, especially as the UK still have not set them up (Northern Ireland apart).  The truth seems to be that we are ruled by civil servants who just love making life difficult and expensive for those contributing to our economy. 

The Public Accounts Committee grumbles that the new UK import controls which should be in place by now have been postponed: “The UK originally intended to introduce import controls on goods entering Great Britain from the EU when the transition period ended in January 2021. The government has delayed introducing these controls three times and now intends to introduce them in phases between January 2022 and November 2022.” (Conclusion 4)  Of course, January 2022 has come and gone, and no visible progress has been made.  “By October 2021, only 42 of 5,000 users had moved across.” (Conclusion 8) HMRC excuses itself on the basis that it not only has to train UK importers, but also the 27 EU member states exporting to the UK. No wonder no one in HMRC has time to answer the phone, or prevent billions of fraudulent takes from the Treasury, when they have to rush around Europe training foreigners. 

But that raises a more interesting point: these controls should have been in place over two years ago but we have managed without some of them and probably could have been better off without any of them.  That being the case, why do we not postpone all of them indefinitely? 

The answer, of course, is that we are ruled by idiots and those that should be ruling them are enjoying tea parties at Number 10. Let us hope that the appointment of Mr Jacob Rees-Mogg will bring sanity.  The simple truth is that products from countries with whom we have shared common standards for nearly 50 years no more need import controls, than imports from Wales into England. As and when significant differences emerge, special, targeted checks can apply but not the whole shebang. 

“In December 2020, the government published its 2025 UK Border Strategy, which set out the government’s vision to have the “world’s most effective border” by 2025. This set out how the government would improve coordination between government departments and agencies at the border; reduce duplicative asks for data; and make greater use of modern, digital and simple processes.” (para 23) The government’s 2020 paper sets out six unworldly “transformations” of which the last is a good example: “Shape the future development of borders worldwide, to promote the UK’s interests and facilitate end-to-end trade and travel.” The world’s most effective border is not defined and the Committee clearly rightly regards the whole paper as a joke. It drily notes that the government’s track record on large IT systems is not good. What is “effective”?  The least burdensome border is no border at all but that is the very opposite of what the bureaucrats are trying to achieve. 

The one area where some form of border control is necessary is VAT. When the UK was part of the EU, each member state pocketed the VAT it collected and refunded what was due, no questions asked. No VAT was charged or refunded at borders. That is still true for goods moving between the Province and the EU as Northern Ireland is treated as part of the EU for VAT purposes. Goods now entering Great Britain from the EU (and the Province) pay import VAT and vice versa. Of course, the negotiators of the TCA should have allowed the old rules to continue as part of the TCA until VAT rates diverged materially, but…

Even if all these controls are necessary, the manner of their introduction is incompetent: the Public Accounts Committee says “We also note the potential [regulatory and fiscal] risks caused by delays putting in place the necessary permanent infrastructure: for example, until the Dover White Cliffs site becomes operational in 2023 trucks arriving in Dover that are carrying goods selected for physical checks will have to travel 60 miles to Ebbsfleet. The further the inland sites are from the ports, the greater the risk that goods could be offloaded on the way. HMRC agreed it would be ideal to have the infrastructure at the port itself and goods controlled at the port but said that it was not possible.” (Conclusion 6).  Traders are expected to comply with all these new rules by the end of the year but they do not know what they will be, still less how to comply. 

They should all be postponed five years to sift the necessary from the unnecessary with full trader consultation, publish the net requirement and then give traders time to adapt. 

Greed works you know

Or perhaps we should say enlightened self-interest does.

We present two tales from yesterday’s Guardian. First:

The Indian coal mining tycoon Gautam Adani has become Asia’s richest person thanks to a push into green energy that has boosted his fortune to $88.5bn.

He and his companies are investing fortunes in that green energy:

The group is in the process of ploughing $70bn into green energy projects by 2030 with the aim of becoming the world’s largest renewable-energy producer.

Of course, this may work and it may not. But something is indeed happening at least.

The second:

British farmers must reduce their production of meat and dairy by a third in the next 10 years if scientific advice on limiting greenhouse gas emissions is to be met, the conservation charity WWF has said.

British farmers must reduce production, reduce their incomes, for some lovely but societal goal. Act against their own immediate, even medium term, incentives that is.

Which structure do we think is going to work better? A system in which someone beats Croesus by reducing climate change or one in which stout yeomen must attempt to rival Lazarus for poverty? No, not which would work better if humans were not as they are but given the nature of the species, which is going to work?

Quite, the solution to climate change is to engineer the price system so that people become rich by creating that solution. As M’Lord Stern has pointed out, Bill Nordhaus got the Nobel for saying and as 90% of polled economists shout very loudly indeed when asked.

So why are we allowing the loons to try and plan this for us using method 2?

How people become famous

Rainer Zitelmann, whose previous books include ”The Power of Capitalism and “Dare to be Different and Grow Rich,” has produced a volume telling his readers “How People Become Famous.” As with several of his other books, he chooses to do this through examples, looking at the careers of several famous people. In its pages we see such figures as Albert Einstein, Andy Warhol, Stephen Hawking and Donald Trump. Several others are included such as Steve Jobs, Madonna and Princess Diana.

Many of us might find it difficult to discern what such a disparate group had in common with each other, but Dr Zitelmann shows that all of them had and used the power of self-marketing. All of them deliberately projected themselves to the world through a variety of techniques that they shared.

One might think that fame requires one to be among the best in one’s field, but the author shows that this is not necessarily true. They were scientists who made a bigger contribution than Stephen Hawking. There were real estate dealers who did far better than Donald Trump. Princess Diana had only lacklustre schooldays, only winning prizes only as “most popular girl” and for “the best kept guinea pig.”

What they did do was to carefully cultivate a distinctive image. As Doctor Zitelmann puts it, “one of the rules of self-marketing is that you don’t need to look better, you need to look different.” Albert Einstein deliberately cultivated his image as a dishevelled scientist and an eccentric. Andy Warhol exhibited an instantly recognizable look. The others, too, had a distinctive trademark look that marked them out.

All made sure always to do things that drew attention to themselves. Famously Schwarzenegger went out in the street in his posing brief to be photographed at a building site. The photo was in many of the papers next day.

None of the figures in the book ever wanted to be like everyone else. They all believed they were special. All of them sought the company of other celebrities knowing this would enhance their own fame. Each of them was, in his or her own way, an expert at self-promotion. What they had in common, says Dr Zitelmann, was the ability to market themselves to the public.

Often it took a degree of provocation, doing somewhat outrageous things, doing things that are noticed. They thought it was better to be thought shocking than not thought of at all, though many had the sense later in their careers to back down from the shock value they courted initially.

Many of them cultivated an image of being close to people. Steve Jobs and his trademark roll-neck black jumper and jeans, Donald Trump who spoke the language of ordinary people and liked many of the things that they enjoyed doing. Many maintained the sense of self irony, and an ability to laugh at themselves, and most retained an almost childlike self-obsession late into their lives.

The author takes his readers through the lives of a dozen superstar celebrities, analyzing how they achieved that status. The book is a fascinating read, crammed with insightful anecdotes.

The problem with plans and targets is what are you measuring, how?

We thought this was interesting:

Britons are going to have to spend upwards of £100 billion improving their homes if they are to meet the government’s energy efficiency regulations, analysts have estimated.

That idea that net zero is going to be cheaper takes a slight knock. As, logically, it cannot be cheaper. For if it were cheaper then we’d all do it anyway. The people insisting there must be plans and forcing of the issue are the very folk insisting it cannot be cheaper - otherwise, why the plans and the forcing?

But our point today is that it does matter what you measure, how:

Landlords are required to hit a minimum rating under upcoming rules and some mortgage providers take the certificates into account when lending.

But the way that the ratings are currently estimated means that replacing a traditional gas boiler with a heat pump can lower a home's energy efficiency rating.

That would seem to be a problem with the plans, no?

Given that heat pumps can actually increase energy use

Ah, the plan seems to be that in the name of energy efficiency we should use more energy. Plans of mice and men and all that.

The larger point though, beyond the snickering at people who have no clue about economics trying to manage an economy, is that near all such plans depend upon what it is that is being measured and how. All too often the details of what is being measured getting lost and thus the plans and targets not actually achieving the desired goal.

Take, for example, this idea that lots of “free” childcare will boost GDP. Sure, it will - but that’s because GDP measures monetised interactions. A detail that is really quite important. That children are taken care of seems to be a reasonable societal goal. But moving it from being something done by mothers inside the household to other young women (it is always largely young women who do this work either way) outside the household and intermediated by money doesn’t in fact change the amount of childcare going on. It just monetises that activity and so boosts GDP without actually changing anything else very much.

The method of measurement obscures the reality, not illuminates. We can go on - the concept of relative poverty means that poverty falls in recessions. Everyone gets poorer and poverty reduces?

It is, as the mantra goes, only possible to manage what you measure. But the method of measurement, the details of it, matters vastly for that method of management. Which is why we ourselves think that detailed management shouldn’t be done. Because no one ever does - not in politics - either understand nor even accept the implications of the detail of the measurement system.

If something really must be done then change the price system and leave folk to get on with it. Actual targets and plans just aren’t going to work. Even on important things they’re not going to. As here, we’re to save the planet from our energy consumption by installing heat pumps and increasing our energy consumption? And this is something that government is actually going to force us to do? Err, yes….

Why government directed and paid for pharmaceutical research will never work

There is, as we all know, a considerable campaign out there to insist that the private sector should be excised from the pharmaceutical drug development system. Groups like Global Justice Now march around insisting that it’s evil that capitalists make money here. Vastly more sensible people like the American economist Dean Baker suggest that government should both pay for and direct such research. That way that patent system - and the high costs of that first 10 years of drug deployment - could be avoided.

Our first line of defence of the current system is that changing who pays the costs doesn’t in fact change the costs themselves. If it costs $1 to $2 billion to develop and gain a licence for a new drug - which it does - then that’s what it costs to develop a new drug. Taxpayers can pay this through the prices of drugs after the capitalists have funded it or they - we - can pay it upfront under the direction of the politicians.

It’s not entirely necessary to buy into our core conviction that politcians are useless, counterproductive even, at allocating capital to think that perhaps that second system might not be all that much of an improvement upon the first and extant one.

But there’s another argument, a clinching one:

The UK government ordered the jab, under development by Valneva, in 2020. However, after rolling out vaccines by Pfizer, Moderna and AstraZeneca, it scrapped that order in September last year. Valneva said ministers had thrown it “under the bus” when the €1.4 billion deal was pulled. Shares in the company, which is listed on Nasdaq in the US as well as in Paris, fell more than 45 per cent.

Now it has emerged that the terminated agreement cost taxpayers €253.3 million (£214 million) in non-refundable payments that the government had already made. In results for 2021, Valneva revealed that revenues had risen by 216 per cent to €348.1 million, which included that €253.3 million relating to the terminated UK Covid vaccine deal.

The expense comes after the government was condemned after admitting that £10 billion of spending on PPE had been written off. Hundreds of millions were wasted on unusable equipment that had passed its expiry date, while taxpayers paid extra in the scramble for masks and gowns at the start of the pandemic. It has also been criticised for failing to stem fraud in Covid loan schemes.

Wes Streeting, the shadow health secretary, said the Valneva expense was “yet another example of wasteful and careless spending” by the government. “The Tories have already lost billions of taxpayers’ money to fraud and waste during the pandemic,” he said. “The British public are paying the price... in higher taxes.”

Yes, OK, Wes is the definition of student politics promoted beyond ability or experience but still. This is the problem with any government funded and directed development process. There will be mistakes, there will be errors. Not in the sense of damn, that was a bad decision to make, but damn, well, that one didn’t work out, did it? Because that’s how development does work out.

The entire world of R&D is to explore the universe of what can be done and see where that coincides with what we’d like to have done. It is, by definition, a process of trial and error. The error is not just an inevitable part of the process it’s an important one too.

So, wrap that all up into politics and any politician who does make such an error - recall, we’d actually like them to make error in this field, find out things that don’t work as well as those that do - will be attacked and possibly defenestrated for having done so. Which kills off that exploration mission that is the mission itself.

The capitalists shrug, say damn that one didn’t work and look around for the next mistake to make. Politics does not, will not and cannot work that way. Therefore politics isn’t the right way to manage this process.

Of course, not allowing Wes Streeting near any decision is one way to deal with this but we would remind that the National Union of Students does still exist and there’ll be another Wes along every year.

Politics never will give pharma development room to make those mistakes therefore politics cannot drive pharma development.

We should indeed take Terry Pratchett seriously

The Financial Times tells us that we should take Terry (Sir Pterry that is) Pratchett seriously as a commentator on this real world around us. The fantasy elements are just there to disguise the pointed nature of the observations on this real world out here.

Pratchett thus combines the social commentary of Boz, the machinations of Machiavelli, the political theory of Mill and the philosophy of Arendt, and all that with wizards, jokes and a grim reaper who could “murder a curry”. Wisdom, humanity and serious social commentary. That sounds like something serious people could do with taking seriously.

The politics of Mill, yes, but there’s also a substantial leavening of the economics of Smith and Ricardo. Even of Mancur Olson as well - the roving bandits live appallingly badly as do their victims, those subject to an enlightened but stationary one do very well indeed. That enlightened nature allowing folk to do their own thing, without interference, to work, invent and trade as they wish.

Throughout that Pratchettian universe it is laissez faire that makes the populace richer. Not an entire “do nothing” order, but one that contains enough order to allow markets and capitalism to flourish. The peace, easy taxes and tolerable administration of justice thing, with that emphasis on both easy and tolerable.

Yes, perhaps people should take this all more seriously.

We’d also point out that - with so many of us here having experience of how this specific industry works - “The Truth” is the best satire on newspapers since Evelyn Waugh’s “Scoop”. Whether Piers M. actually sat for the word portrait of C.M.O.T D. we’re not sure but we do find it explains a lot to think of it that way.

However amusing the concept, let us take Christine Lagarde seriously for a moment

Ms. Lagarde tells us that:

Britain’s inflation problems are worse because Brexit has drained the UK workforce, Christine Lagarde said as the European Central Bank stuck to its ultra-loose monetary stance.

“I don't want to take a political stand, but I think that there was a lot of non-UK labour force that eventually had to leave the United Kingdom, which has not been totally replaced,” the ECB president said.

“The shortage of work is actually having a bearing on the forces of the labour market in the UK.”

The absence of that EU workforce is leading to wage push inflation in the UK that is. As we pointed out elsewhere some time ago:

Brexit is about to give us a problem with this, though. Karl Marx was right: wages won’t rise when there’s spare labour available, his “reserve army” of the unemployed. The capitalist doesn’t have to increase pay to gain more workers if there’s a squad of the starving eager to labour for a crust. But if there are no unemployed, labour must be tempted away from other employers, and one’s own workers have to be pampered so they do not leave. When capitalists compete for the labour they profit from, wages rise.

Britain’s reserve army of workers now resides in Wroclaw, Vilnius, Brno, the cities of eastern Europe. The Polish plumbers of lore did flood in and when the work dried up they ebbed away again. The net effect of Brexit will be that British wages rise as the labour force shrinks and employers have to compete for the sweat of hand and brow.

If a lack of that free movement of EU labour leads to higher wages now, then the presence of that EU labour must have led to lower wages then. It is not just possible but mandatory in politics to have it both ways but reality doesn’t work that way.

See what joys we can uncover from, however amusingly, taking Ms. Lagarde seriously.

Do note though what the point is. It is not that immigration lowers wages for the incomers bring with them their demand as well as their labour. It’s that temporary immigration does, that creation of the reserve army outside the economy.