Not that we think this is a consolation and yet

Natural experiments are worth monitoring, even if we all desperately hope that the experiment never actually came to pass. Being able to compare East and West Germany in 1989 was not worth the pain and grief of the previous 40 years but there was still a lesson to be learned from doing so - socialism isn’t the way to economic development.

Cryptocurrencies are Putin’s sanctions-busting superweapon

Despots will find it easier to get their way in a world where cryptocurrencies undermine the US dollar

This could be true, yes. This always was rather the selling point of crypto, that it was a non-governmental type of money which could be used when governments were restricting the use of their own, government created, money.

We’re about to find out, aren’t we?

Money is, simply, whatever people agree to use as money. History is replete with examples of restrictions upon one type leading to the use of another. Cigarettes for example, where people might literally smoke a bank note.

No, we do not think that being able to conduct this experiment is worth the associated costs. But given that the idiocies are already happening let’s actually observe and see.

Do cryptocurrencies work as a way around government restrictions on the use of money? Or not? At least we’ll then know.

The problem with state ownership of the water companies

From America comes a little tale which is relevant to our British shouting match over the privatisation of the water companies:

‘This is everybody’s problem’: inside America’s growing sewage crisis

In the docuseries Wasteland, communities battle institutional neglect and personal and environmental damage

The American water systems are - largely enough - under what we would call local authority control. They’re suffering from a lack of that routine maintenance and investment over time which keeps a water system in top-notch condition.

Which is also roughly what the original diagnosis of the British water systems was under government control. In theory, yes, it’s true, government can allocate capital across society’s needs. Given the lower cost of capital to government - based on the ability to tax us all off into the indefinite future - this should, again in that theory, lead to a cheaper and also ideally funded water system.

Except it didn’t work out that way. Government found it was much more exciting to spend that societal capital in other ways. We might even say that this is a feature of political control of those purse strings. There’s not much red ribbon cutting to do for the cameras when the money’s spent on repairing the drains. Better to, say, fund more grievance studies courses so that joyful graduates can be crowded into the photograph.

The British water systems gained access to much, much, more capital when privatised. Further, the more privatised - as with England - the more more capital was available and the more upgrading of the water system that resulted.

Now we have that same problem to be analysed in the US. The water systems have not been invested in properly over the generations. We can use this either as a further example to show us that privatisation here was the right decision, or proffer our own privatisation as the example for the US to follow.

Yes, it’s true, in theory government should be able to allocate capital across infrastructure, borrowing powers making that capital cheaper. Real world experience says - now with this added example - that it doesn’t work out that way. The problem with the theory being that it doesn’t actually take politics into account - which is a significant problem if it’s political control of investment that is the subject under discussion.

Rest In Peace, Daniel Doron

I am saddened to report the death of my friend — and a good friend of liberty — Daniel Doron. He was founder and director of the Israel Centre for Social and Economic Progress (ICSEP), which promoted market solutions to economic and organizational problems in the country. Though Israeli politicians were generally consumed by anti-competitive socialist policies, his close contacts with Israeli politicians on all sides enabled him the the Centre to achieve a number of successful market reforms.

For much of his lifetime, Israel’s politicians were consumed by the conduct of wars and intifadas. He himself, born in 1929, served in Air Force Intelligence in the 1948 Arab-Israeli conflicts. But rather than allow such hostilities to extinguish liberty, Daniel kept on championing freedom and the benefits it would bring, even in difficult times. As he cheerfully told me during the first Intifada: “Our government may be in a state of conflict, but we can still do something to make the buses run on time.”

He recognised that mutual prosperity was the best way to promote peace and urged market reforms on the Palestinian leaders as much as the Israeli ones. He write a number of prominent articles in The Wall Street Journal and other international papers explaining the importance of peace in spreading prosperity, and the importance of prosperity and interdependence on maintaining peace. In this he was informed by his time at the University of Chicago's Committee on Social Thought and the ideas of Friedrich Hayek and Milton Friedman, who were teachers there, and with whom he continued a lasting friendship and collaboration — particularly Friedman. All three were members of the Mont Pèlerin Society, an international forum of liberal economists and social scientists, from which he garnered more pro-freedom ideas, and intellectual and moral support.

He served in various offices on the fringes of Israeli politics, advising on economic policy and entrepreneurship, and promoting pro-freedom politicians. He also had a boundless feeling for art, literature and culture: he prided himself on having seen every one of Shakespeare’s plays — even travelling specially to London to catch a rare performance of King John — and among other things, he arranged a number of exhibitions for the artist Shalom Moskovitz (whose works are on display in national museums and galleries in Paris, New York, Amsterdam, Stockholm and elsewhere). He also translated Catcher in the Rye and A Portrait of the Artist as a Young Man into Hebrew.

Cheerful, gregarious, larger than life, and never backward in coming forward, Daniel Doron will be remembered internationally as an active, energetic, enterprising and effective promoter of social and economic freedom.

That Modern Monetary Theory doesn't seem to work so well

These past few years have been an interesting test of Modern Monetary Theory. Don’t worry about the balance between tax and government spending. After all, the actual real spending is financed by simply printing money anyway, tax is that balancing item that comes later. So, why bother with the pretence, just keep printing and spending as much as pleasures politicians’ hearts to fill societal need.

UK households face biggest fall in living standards since 1950s, say experts

Ah, that doesn’t work out so well then.

There being those three reasons why it doesn’t work. One is that the quantity of money does in fact matter. Inflation will come and bite upon the fundament.

The second is that more government spending is not just more money floating around. It’s more direction of more of life by those who are good at kissing babies. Being able to get elected is not, surprise though this may be to some, actually a good qualification for knowing how society should work in any detail. That’s knowledge that resides in us, the populace, not elected representatives. Shifting the power and the chequebook over to those with even less knowledge is not a good strategy.

The final - and to us proof positive - one is that spending other peoples’ money is glorious fun, taking it one of those tricky little things that there’s always a certain hesitancy over. Politicians like to be liked - the kissing babies thing - and they just never will tax to cover their spending desires. That we’ve a national debt at all proves both two and three on our little list. If all government spending were more productive than private such then there would have been the burst of growth from that past spending to pay off the debt which would no longer exist. Also, they’ve not raised taxes in the past in order to finance that spending, have they?

Or, as we might put it, allowing politicians a free hand with a never-empty societal chequebook is about as useful as providing alcoholics with a free bar. Some will eventually learn self-restraint, undoubtedly, but not many and not soon.

The fog of ignorance argument for minarchy

It appears that the decisions about lockdown were not well taken:

Scientists did not have accurate Covid case numbers, and were unsure of hospitalisation and death rates when they published models suggesting that more than 500,000 people could die if Britain took no action in the first wave of the pandemic, it has emerged.

That’s a bit of a blow to the accuracy of any predictions or models.

Yet as Britain’s epidemic begins to fade away, it is becoming increasingly clear that many influential scientists were ignored, ridiculed and shunned for expressing moderate views that the virus could be managed in a way which would cause far less collateral damage.

Instead, a narrow scientific “groupthink” emerged, which sought to cast those questioning draconian policies as unethical, immoral and fringe. That smokescreen is finally starting to dissipate.

We agree that public health policy in the face of a pandemic is not quite the place to be arguing for laissez faire. Something had to be decided after all - that Swedish model is looking ever better, as at least one of us recommended at the time.

However, our point here is something larger. It also involves letting everyone in on a little secret. Every decision about anything is taken in this same fog of ignorance. No one at all knows the entirety of the economy nor society. Everyone is making certain guesses about reality when they make a decision about anything at all.

Which is the argument for minarchy of course. Government is no better - at best, it’s entirely possible to outline ways in which it is worse starting with the quality of the people making the decisions - at this than the private sector. The big difference being that government makes the mistake for everyone. Any business decision makes it for that business alone. Or, to widen a little, any organisation makes it for the staff, suppliers and consumers of that organisation alone, profit is not the defining difference here.

If every decision suffers from the same problems of information lack, groupthink and just plain commonplace incompetence then we would rather each and every decision affect smaller, not all, areas of everything.

The useful argument in favour of minarchy is therefore that decentralisation of power allows mistakes to only cock up part of, not all of, life. Which, given recent governmental performance across the near entirety of the rich world seems like a useful argument in favour of that minarchy, doesn’t it?

Dear Sir Ed Davey - To Whom?

An idea is gaining some credence, that BP must be made to sell its stake in Rosneft. Sir Ed Davey for example:

On Friday Ed Davey, the Liberal Democrat leader, wrote to the Prime Minister urging him to sanction Rosneft and put pressure on BP to divest its stake.

He wrote: “It is unacceptable for a flagship British company like BP to hold such a large stake in a Russian state-backed company.”

It’s worth, perhaps, reminding that the British government no longer owns BP. Therefore what BP does - within the law - is not the concern of the British government.

But over and above that there’s the simple practicality of the idea. We’ve just - rightly so - placed significant sanctions upon the Russian economy. With effect from, we believe at least, 1 March no one may invest further in that economy. Bond issues may not be bought, capital markets are closing and so on. So, who could actually buy that 20% stake? No other oil major can. Private investors cannot. Institutions would be locked out. The only possible buyer would be someone within that Russian and sanctioned economy.

The price would be pretty bargain basement therefore.

The proposal is, therefore, that the largely outside Russia shareholders in BP should lose very large sums of money, someone inside Russia - or the Russian state itself - should be able to buy a large and valuable asset at pennies on the $. This is to be done in the name of punishing Russia and Russians.

Someone here has lost their minds and it isn’t us.

Now, if this sale had been forced through at some point in the past, the money safely banked before the sanctions, we would still be opposed to the idea but could admire the Machiavellian manipulation of selling at full price then slicing the value through sanctions. But to force the sale afterwards? It’s not just what are these people thinking, it’s are they thinking at all?

As is so often the case the proposals of those who rise to senior positions in politics are the finest and purest argument in favour of minarchy.

Nick Stern had it right in his Review

One of the points in the Stern Review is that whatever it is that we do about climate change we’ve got to do it the efficient way. As is obvious about us humans, we do more of cheaper things, less of more expensive. So, if we want to deal with climate change then we’ve got to do it the cheap, efficient, way because that’s how we’ll do more of the dealing with climate change.

The logic there is inescapable. We also though need to mix into this not just the expense and inefficiency of planning by politicians but also the blind idiocy.

We like to think of wood burning as a climate neutral source of energy. This has led to subsidised wood burning for electricity generation and is part of the appeal of an evening around a roaring fire. This idea relies on the carbon released from wood burning being reabsorbed by forests and woodland. Reality is more complex.

Firstly, it takes time for new forests to regrow and absorb the carbon. For large-scale wood burning for power generation using wood imported from North America, it can take decades or perhaps more than a century for forests to reabsorb this additional carbon from our air. This means greater chances of irreversible climate tipping points before any possible benefits accrue.

Sticking American woodchip into Drax increases, not reduces, climate change. We’ve seen one estimate - which we simply mention, not insist upon the veracity of - that says the process, including transport, produces more emissions than simply burning the coal that Drax is built on top of.

We might also note the German idea of reducing emissions by retreating back to using more lignite. Or the EU insistence upon biofuels that produce more emissions in their growing than they save at the tailpipe.

The actual problem with planning to beat climate change is that our ruling classes aren’t competent to do so. By their works shall ye know them….

People do so often get correlation wrong

Slightly old news from the annals of public health research. Food swamps are the cause of obesity. Or at least correlated and then the causation assumed.

Food Swamps Predict Obesity Rates Better Than Food Deserts in the United States

We’ve always had a sneaking desire to call them food desserts given the link with obesity but that “definition” is that it’s a place beyond waddling distance of a supermarket with a fresh veggies section. A food swamp is a place where you cannot move for fast food outlets.

An area stuffed with burger joints and chippies correlates better with obesity than one without cucumber vendors - so, the leap to causation becomes obvious, does it not? Limit the number of fast food outlets and folk will become slimmer.

Except we do have that logical razor that we should use, Occam’s Shaving Kit. Simple explanations are to be preferred where they exist. Obesity is correctly identified in our modern world as being something that poor people suffer from. It’s a glorious sign of how far we’ve come that the poor are fat. Poor people, rather by definition, don’t have much money - they tend to live in the cheap parts of town.

Fast food retailing is not a notably high margin business. The sheer number of outlets is proof of that - you know, the competition thing? So, fast food outlets will be where rents are low - the cheap part of town.

This neatly explains that correlation between obesity and the plethora of fast food outlets.

The lovely thing about science is that it actually works. Put up an hypothesis about why and how something works and the intent is to then shoot it down. Prove it wrong that is. So, grand, we’ll continue with this hypothesis until someone proves it wrong then. Good luck.

Poor people and burger joints are in the same places because that’s where rents are cheap.

Curbing the Mickey Mouse degrees

The government is trying to micromanage university degrees by attempting to cut down on the so-called Mickey Mouse degrees which are largely valueless in terms of career potential. Someone suggested that any university course which has the word “studies” at the end of it should be regarded as deeply suspect, with the notable exception of War Studies at Kings College, London, widely regarded as one of the very best university courses in the UK if not the world.

After expanding university admissions during the Blair years, the government now wishes to act against institutions that charge full fees for comparatively worthless qualifications. It now proposes that students who lack English and maths GCSEs, or two A-levels at grade E, should not qualify for a student loan in England. Their point is perhaps that students who graduate in courses such as “inequality studies” will go tens of thousands of pounds into debt for a qualification that will not help them into a job, except perhaps in an NGO promoting class division and conflict.

This is typical of government micromanagement, adding details in order to alleviate a problem that they themselves caused in the first place. The alternative to stepping deeply into more detail might be to step back and go into less detail. The government allows university students to take out loans, thereby giving its approval to university education as opposed to other career pathways that people might otherwise follow. Now it wants to specify which students shall be entitled to those loans.

It might instead seriously consider extending the availability of loans to all those reaching the age of 18 whether or not they choose to use those loans to pay for university education. Some of them might want to use that money to pay for equipment with which to build a career, or to go into business as budding entrepreneurs. Some of them might want to finance training schemes that will give them a qualification other than a university degree that might be more valuable to them in future employment. Instead of specifying the details of what they approve of and are prepared to sanction, the government might leave that to the individuals aged 18 to decide for themselves if they wish to take out a loan and how they might choose to use it.

The Civil Service, nearly all university educated, might recoil from the idea that individuals might want to decide things for themselves instead of being channeled into approved directions, but they might consider the effect such a move might have on social and economic inequality. The claim is often made that concentration on academic success holds back those from disadvantaged backgrounds, whereas such a move might allow them the opportunities to get ahead in fields that do not necessarily require the academic skills

To make loans available to all 18-year-olds would be a startling reform, but sometimes a system that doesn’t work needs to be replaced by one that does, instead of being merely tinkered with at the edges.

Is John Vidal merely ill-informed or is he actually this dim?

We think this is an interesting question. John Vidal complains about ghost flights by the airlines:

Flying empty or near-empty planes around just to hold on to landing slots at airports now seems close to “ecocide” – an act of deliberate destruction of the environment. A staggering 15,000 ghost flights flew from UK airports between March 2020 and September 2021.

We’d not say ecocide ourselves, emissions from flights are about 2% of whatever problem there is so not a major factor. But yes, flying empty planes in and out of airports merely to hold on to the right to fly in and out of an airport is somewhere between silly and daft. But it’s the next bit that makes us fear for Mr. Vidal’s intellect:

These flights are a symptom of an unregulated, highly protected industry encouraged to keep growing without responsibility.

It’s that word “unregulated”. Airlines would obviously prefer not to be flying ‘planes with no passengers - that’s costs with no revenue. So why do they do it? Because in order to maintain the right to fly in and out of an airport - to maintain the “landing slot” - you must maintain the flights in and out of that airport in that landing slot. The law states that you must do this. Even if you’ve no passengers in order to maintain that scarce resource, the right to fly, you must fly an empty ‘plane.

Ghost flights are a product of regulation, not a sign of an unregulated industry.

Which brings us to that headline question, is John Vidal merely grossly ill-informed or is he actually dim enough not to understand? We can’t, without looking it up, recall whether Vidal’s career was at The Guardian or Greenpeace. Not that it’s worth looking up because either answer wouldn’t in fact resolve that headline question, would it?