Two Ferries, One Shipyard
Two ferries, same shipyard, but Scotland’s government pays twice as much.
Last month, the Scottish government company CMAL, which owns the ports, harbours and ferries in the Clyde and around the Western Isles, signed a contract with a Turkish shipyard to build two new ferries. This week, the private Norwegian operator Torghatten Nord, announced an order for a slightly larger ferry, from the same shipyard, at half the price.
That’s right, as the Mull and Iona ferry users’ committee explains, the Scottish government has blithely agreed to pay for its ferries twice what a private operator is prepared to pay for them.
It’s not that the Norwegians’ ferry will be slower or more polluting. It will have a similar diesel-electric hybrid propulsion system to CMAL’s. It will have more advanced and larger batteries, helping reduce its emissions. And it will travel twice as far each day than the CMAL ferries.
So why, ask the Islanders—who are also Scottish taxpayers, after all—do the CMAL ships cost so much. Well, one reason is that CMAL ships have far larger crews. In fact, thanks to the hard protectionist efforts of the RMT union, they have much larger crews than any ferry operator in Europe. And so CMAL has to have extra cabins for crew members, plus a refectory for them. Oh, and they’ve thrown in a gym as well. While good systems management means the Norwegian ferry will operate round the clock with a crew of just ten, CMAL has to provide for a crew of 31.
So, 200% overstaffing is one reason why the CMAL ferries are so expensive to build—and to run. Then, CMAL starts from scratch and commissions a completely unique ferry, never built before, while the Norwegians start with a common, tested design and simply tweak it as necessary. CMAL also builds in over-complicated engineering and has large passenger spaces with dedicated dining rooms—hardly necessary on the 46-minute journey to Mull. I took a Mediterranean ferry on a four-hour trip from Spain to Morocco, and there was no dedicated restaurants. You just took your food back to your seat.
“Finally,” says the ferry users’ committee, “publishing the price you expect to pay 12 months before putting the tender out doesn’t really help your negotiating position.”
Well, neither it does.
Do we need the Ministry of Defence?
To answer that question, we need to consider what we would do if it suddenly disappeared. Starting at the top, the shrunken numbers of our armed forces must leave the Chief of the Defence Staff (CDS) with rather less to do apart from arguing with the Defence Secretary about resources. If the PM wants to send a battalion to Estonia, he has to ask the Defence Secretary who has to ask the CDS. Much simpler would be for the CDS not to have to wait for his retirement for his life peerage, but to ennoble him on appointment as CDS and Defence Secretary combined.
The MoD HQ has six three or four star flag officers and nine civil servants of equivalent status. That is not counting the 18 three and four star flag officers outside the HQ. A similar compaction to the military staff plus the Director General Finance and his department should be feasible. In other words, units immediately relevant to conducting warfare (plus the accountants) should fall under the command of the CDS. The other units should either be disbanded, privatised or transferred to more relevant government departments.
According to its 2020/21 accounts, the Ministry of Defence (MoD) employed 63,393 civilians, i.e. excluding the 160,232 in the armed forces. In 2016, the MoD employed just over 56,000 civilians with 196,590 in the armed forces. Few will be surprised that the former headcount has increased whilst the latter has decreased. The army is about a Corps in size which should require just one Lieutenant General (three stars). In 2015, and the numbers will not have greatly changed since, the payroll included three Lieutenant Generals in the Royal Marines and 11 Lieutenant Generals in the Army. No shortage of top people to cover the necessary staff roles.
Apart from procurement (16,902 staff) which is a separate blog, three of the other 12 MoD enabling organisations duplicate services provided by other government departments. Police forces are already too splintered around the country without the MoD having its own. Similarly, the Defence Safety Authority (created 2015) provides the same health, safety and environmental protection regulation that the rest of us enjoy through seven Regulators. Its annual report gives no staff numbers, performance indications or costs. Finally, the Defence Science and Technology Laboratory (Porton Down – 4,378 staff) mostly works for other government departments and should be integrated into the government’s mainstream research under UKRI. The Medical Research Council is part of that, not the Department of Health and Social Care; defence research should follow the same logic.
The above analysis covers all the MoD published units but leaves roughly half of the 56,000 staff unaccounted for, not to mention the military personnel driving desks. It is said that each MoD job needs a military officer who might know something about it during his or her short secondment and a civilian overseer. Whatever the truth, a great deal of the headcount is unexplained. A streamlined armed forces ministry might at least aim to limit each job to just one person.
The bottom line is that Her Majesty’s realm would most probably be better defended without the MoD but we need an explanation of the missing headcount to be sure.
Just another one of those little teachable moments
That something should be done we agree. We just want to use a suggestion about what should be done to make a deeper point.
Cui bono?
Who benefits from the proiduction of things? Who benefits from imports?
Europe must turn off the Russian gas taps right now
Governments are still sending money to a regime whose troops are arbitrarily killing civilians and leaving their bodies in the streets
Perhaps that’s true, perhaps those taps should be turned off. But think for a moment about who benefits from their being on?
The standard answer is that it’s Russia (or Putin, or the Russian Government, or some such variation). They end up with a pile of euros and that’s the benefit, right?
But think of who would actually suffer if those taps are turned off. Some large portion of Europe would be unable to cook their food, heat their homes, live that civilised and urbane life.
So, who is it that benefits from the production of that natural gas? The consumers, clearly. Equally, who benefits from the imports? Again, consumers.
Production benefits consumers, imports benefit consumers, that’s why we do these things.
Which is that teachable point. We’re never going to grasp the basics of production and trade until we all agree who it is that benefits from such systems. It’s consumers, for they are then able to consume what is produced, imported.
When absolute poverty isn't absolute poverty in the slightest
John Harris treats us to some poverty porn in The Guardian:
A stark metric is the UK’s level of absolute poverty, which is defined as being a household income less than 60% of the median income level of 2010-11, adjusted for inflation – a measure that usually goes up only in times of recession.
That’s actually not true. For this measure of absolute poverty isn’t a measure of absolute poverty at all. It’s still one of relative poverty.
So median household income in 2011 was of the order of £21,000 a year. 60% of that is £12,600 a year. Upgrade for inflation and that’s £15,700. We agree, it’s not a great fortune. It’s also not absolute poverty and nothing like it either. Using what might still be the modal household size of 2 adults and 2 children (and entirely ignoring that the poverty measurement is in fact for equivalised household size) that puts that household in “absolute poverty” in the top 25% of global incomes.
Yes, after we’ve adjusted for the difference in prices across geography. This result also holds, roughly enough at least, before or after housing costs and so on and on. It also doesn’t include the value of free to the user health care, education and so on.
This is not poverty in any absolute sense.
It’s also not true that it only goes up in recession. Yes, we know, what Harris means is that the number of people below that line normally only goes up in recession. But Chart 12 on page 23 here. In 1961 85% of the population was in absolute poverty by this measure. In 2018 perhaps 10%. And we’ve never actually had anyone claiming that 85% of the population is in poverty, not in modern times at least.
So, what’s going on here? The answer is that the “absolute” part is rebased every now and then. That is, as incomes continue to rise - we agree, something not greatly in evidence recently - in general then the number of people in this absolute poverty falls to embarrassingly low levels. Embarassingly low levels for those who wish to screech about the necessity of tax and redistribution that is. So, instead of continuing to use the same, absolute, measure it is rebased to the median income of a later period now and again. So that it will always be possible to insist that there are still hordes in absolute poverty rather than society relishing how much of it - that drop from 85% to 10% say - has been conquered.
Yes, they are lying to you about poverty. Why do you ask?
Who’s Afraid of Self-Driving Cars?
Who gets punished when self-driving cars kill people?
Dr Tomaž Slivnik
"Who goes to jail if a self-driving car kills a pedestrian?" There is no good answer to this question. If it's the car's owner, nobody will buy them. If it's the manufacturer's CEO, nobody will build them. If it's the software writer, nobody will write the software. The inevitable conclusion is: nobody will go to jail. Self-driving car advocates suggest accidents will be purely an insurance (financial) matter.
Unfortunately, this is the worst possible answer to the question. The prospect of going to jail creates an incentive, much greater than financial cost, and which cannot be delegated, to drive carefully. The absence of this incentive creates a moral hazard.
Insurance-based solutions will lead to perverse incentives. Razor-razor blade markets teach us that buyers prefer products which cost less upfront even if later recurring costs are higher. Especially if the upfront cost is high. Initially, regulators won't allow self-driving cars on the road until their safety record exceeds that of human-driven cars. Eventually, human-driven cars will be displaced and only self-driving cars will remain. With human-operated cars and driving skills and non-financial incentives (jail time) gone, market forces will favour cheaper cars over lower insurance premiums (=better safety). Eventually, the safety record of self-driving cars will become terrible. Incentives eventually always win out, even if it takes time. Regulation is no substitute for private actors' incentives.
Self-driving cars are underpinned by AI. AI has had its successes - games, financial markets, search, etc. Its greatest success (and main raison d'etre) is big data analysis and mass surveillance. What do all areas where AI has been successful have in common?
1) they are non-mission-critical: no single wrong decision has catastrophic consequences;
2) in a single iteration, the AI algorithm beats other solutions on average;
3) the outcome is measured by running the algorithm many times.
AI, being a black box solution, is not such a good fit for mission-critical applications.
Will self-driving AI be "tweaked" in the same way search AI was "tweaked" to downgrade or cancel political opponents?
Current self-driving cars are electrical. The average UK household has 2.4 members and consumes 4000kWh of electricity p.a. A typical Tesla consumes 0.24kWh-0.30kWh per mile. The average UK car travels 7500-9000 miles p.a. In 2020, the UK had 32,697,408 licensed cars and 67,886,011 inhabitants. If every car were replaced with a Tesla, electricity consumption would increase by 2000-3000kWh p.a. per household, a 50%-75% increase. The grid is already stretched. Where are the power stations and distribution lines to generate and deliver all this additional electricity?
Tesla started as an electric car company, but, perhaps realising the above problem, diversified into solar energy and switched strategy to "local generation and charging". A fast 400kW electric car charger refuels an electric car in 11 minutes. A 7kW domestic charger (requiring a 70m^2 solar panel installation, fully dedicated to it, on a sunny day) takes 10.5 hours to refuel it. That's longer than overnight - and overnight, there is no sunshine. How's that going to work?
Dr Tomaž Slivnik is a technology entrepreneur and angel investor.
Improving safety without the punishment
Dr Anton Howes
I do not think it would ever be as simple as the CEO of a car manufacturer going to jail, and nor should it be. There are better approaches.
We have a potential model in the aviation industry, for example, where systems do occasionally fail and cost lives, but where manufacturers or airline CEOs do not end up in jail. Instead, aviation has developed a culture of learning from each previous failure, in which faults and shortcomings are openly reported without fear of punishment.
A different example is factory safety. Before the 1890s it was widely regarded as a worker's own fault if they got hurt when operating dangerous machinery — and not just by managers and owners, but by workers themselves. If they really thought the injury was due to their employer, they would have to sue them, which few could afford to do. This changed with the creation of workers' compensation: workers received automatic compensation for injuries, according to a fixed schedule of rates, but in exchange they lost the right to sue for further damages. This arrangement meant that both employers and employees avoided costly lawsuits and it re-focused employers from shifting blame towards preventing injuries. The change, and its benefits are documented here.
So I think it is a mistake to assume that only the threat of punishment, jail or financial penalties, provides enough incentive to promote safety in self-driving vehicles. There are other options.
I think Dr Slivnik’s view of a cost-safety trade-off is also mistaken. Airline customers certainly demand a (high) minimum level of safety, or at least of safety regulation. Though airline prices have fallen markedly over the last 70 years, safety has risen markedly too. Nor do I accept that AI will never be safe for "mission critical" applications. Indeed, the whole point of using AI is to go beyond very simple robotic decisions and learn to deal with a growing multitude of less expected events — and it is getting better all the time.
Lastly, on the power needs of electric cars, we need to be aware of price signals. If the grid becomes over-stretched by electric cars, then higher electricity prices, or even the expectation of them, will strongly incentivise the development of a better supply. It sounds like a big job, but we have gone through much more capital-intensive technological changes before. Just think of all those Victorian plumbing, sewerage and gas networks!
Dr Anton Howes is a historian and author of ‘Age of Invention’.
Today in people not understanding markets
We’re not in favour of child labour in cocoa plantations. But we’d also like to point out that paying farmers more isn’t the solution.
Joanna Ewart-James, executive director of Freedom United, an international organisation campaigning against child labour in the cocoa supply chain, said: “Child slavery and child labour have plagued the industry in Côte d’Ivoire and Ghana – which produce 60% of the world’s cocoa – for decades. Cocoa farmers are not earning an income that enables them to recruit the labour they need.”
That doesn’t make sense.
The campaign group says Mondelēz has invested in community initiatives to combat child labour but, along with other leading companies, needs to pay farmers more money for its cocoa.
Nor does that, nor does this:
Martin Short, president of the World Cocoa Foundation, said: “Dealing with child labour abuses as a standalone issue will never work until we deal with the root cause of child labour, which is farmer poverty.”
The farmers find child labour profitable. So, if the price paid to farmers rises they will still employ child labour and increase their profits.
Child labour is, per hour, of course less productive than adult labour. What makes it profitable is that child labour is considerably cheaper, making productivity as measured by the wage bill equal or better than that of adult labour.
Paying the farmers more does not solve this. Making child labour more expensive does. Given that it’s already illegal then more laws about it don’t help. What is necessary is that the place become richer - not the farmers, the place - so that parents won’ t send their children out to work.
As has happened everywhere else, the cure for child labour is an industrial revolution. Which also means the killing off of smallholding peasant farming - because people are making so much more in that industrial society.
As we've been saying, there is no gender pay gap
For some years now, decades even, we’ve been pointing out that there isn’t, in fact, a gender pay gap. It’s most certainly true that there was, there was direct discrimination in employment against women. It’s simply one of those things that isn’t true any more.
What we actually have is a motherhood - or if you prefer, primary child carer - pay gap. The difference is that if employers are not discriminating against women to produce the observed difference in pay then action to stop employers discriminating will not move that observed difference in pay. If it is primary child care producing the gap then it is the perhaps more difficult societal change in who becomes the primary child carer within a child producing human unit - that thing we often call “a family”.
At which point further evidence of that original contention - it’s a child care pay gap:
Women in the United States continue to earn less than men, on average. Among full-time, year-round workers in 2019, women’s median annual earnings were 82% those of men.
The gender wage gap is narrower among younger workers nationally, and the gap varies across geographical areas. In fact, in 22 of 250 U.S. metropolitan areas, women under the age of 30 earn the same amount as or more than their male counterparts, according to a new Pew Research Center analysis of Census Bureau data.
Interesting, especially when added to this:
First-time mothers are older in big cities and on the coasts, and younger in rural areas and in the Great Plains and the South. In New York and San Francisco, their average age is 31 and 32. In Todd County, S.D., and Zapata County, Tex., it’s half a generation earlier, at 20 and 21, according to the analysis, which was of all birth certificates in the United States since 1985 and nearly all for the five years prior.
The mapping of women under 30 outearning men near exactly coincides with that of average primagravidae being at or later than 30.
It’s about children and their care, not women specifically. Now, true, that does most often devolve to women and given the sexual dimorphism in our human species it might be some time before that changes.
However, science is not just about observation, it is to use observation to construct an hypothesis which can then be tested against further and different evidence to see whether it stands up. It’s even considered good practice for those who propose such an hypothesis to point to where evidence might be gathered to prove - as in the meaning of test - their hypothesis.
So, we shall do so. That glorious expansion of liberty which is marriage equality has expanded the number of same sex marriages. Some to many of those are having children by the usual variety of means biology makes available. A study of such families might well be able to identify the primary child carer in such and then look at wage incomes. If the result is that the primary child carer achieves a similar reduction in earning power as that gained by mothers in heterosexual relationships then that would be supportive of the claim that we have a child care, not women’s, pay gap.
It would even be interesting to see whether there is a difference in results across countries - especially between those that have free child care, sorry, taxpayer provided child care, and those that do not. Just to test whether that policy is a solution or not.
It is, of course, up to those who wish to shoot down our hypothesis to go and do that work. We look forward to discussing the results.
If only Owen Jones could understand the statistics he trails
From Owen Jones:
No excuses for the Tories, no place to hide: that poverty and economic insecurity kill is an incontrovertible fact. Some may flinch when they hear that the government’s failure to address a worsening cost of living crisis will tip many of its citizens into premature graves, but the macabre nature of a fact does not make it less true.
New research published by the Office for National Statistics is merely the latest addition to what has been understood by anyone with a sufficient interest in matters of life and death for centuries. The ONS figures show that avoidable deaths account for four in 10 male deaths in England’s poorest communities: in the least deprived, that figure is less than half, at 17.8%. For women, the figures are lower, but the gap barely less acute: 26.7% and 11.9% respectively.
Does deprivation kill? Most certainly it does, yes. Deprive someone of water and they die very soon. Deprive them of food and it takes a little longer. And so on. But what Jones is describing here is not deprivation - it’s inequality. This is some having less than others. Inequality does not, in fact, work in the same way as deprivation.
The actual ONS figures:
Alcohol and drug-related disorders; the only category of causes where the age-standardised mortality rate (ASMR) has shown statistically significant increases since 2001 for males and females in the most deprived areas and males in the least deprived areas.
Neoplasms (cancers); the largest cause of avoidable mortality for females in the most and least deprived areas and for males in the least deprived areas in 2020.
Those are the two big issues.
Booze and drugs runs up against that long standing criticism we’ve had about the Sir Michael Marmot numbers. Marmot insists that it is the poverty - inequality, sorry - which drives the health inequality. As we keep saying, this could be possible but it’s vital to also note that health inequality will drive, to some extent, the economic inequality. Those drinking themselves to death - or injecting etc - are rather likely to have made themselves poorer in the process and thus be living in cheaper areas.
Until and unless this is unpicked then the numbers are valueless. Certainly, we cannot say that inequality leads to cirrhotic livers if it’s the exploding livers which lead to the inequality.
The other part, the cancers. Well, yes, this is a measure of “mortality amenable to health care” as ONS says. As is also true in all of the international surveys of health care systems among rich nations the NHS does worst in “mortality amenable to health care”. In those studies from the likes of the Commonwealth Fund the NHS is great at equality of access, equity of funding and so on. And, of rich world systems, worst at actually treating people - that mortality amenable to health care.
Both ONS and Jones have just noted that people making themselves poorer through addictions tend to live in cheaper areas. Plus, the NHS as a health care system isn’t very good at actual health care. But important, even vital, points to make. But not the point that Jones chooses to make which is a pity. For reducing inequality isn’t going to solve either of those issues yet inequality reduction is Jones’ preferred policy.
Ah well, it is only a Guardian column after all.
Falklands - 40 years on
Forty years ago, on April 2nd, 1982, Argentine forces invaded and seized the Falkland Islands, a British protectorate peopled by people who overwhelmingly wished to be British. The Argentine junta calculated that there was nothing the UK could do from 8,000 miles away in the North. Margaret Thatcher’s advisors were of the same opinion, but at the end of an exhausting and dispiriting day for the Prime Minister, the First Sea Lord, Sir Henry Leach, was shown in, not having had time to change out of uniform.
The prime minister asked him, “Could the Falkland Islands be retaken militarily?” He replied, “Yes they could, and should be taken.” When she asked him why, he replied that if not, Britain would become “a different country that counted for little in the world.” He told the prime minister that he could have a task force ready to sale within 48 hours.
It sailed, and the Falklands were retaken. The Admiral knew that ships would be lost, but thought the price would be worth paying. General Galtieri and his junta utterly failed to appreciate the degree to which the British would fight back. They also failed to appreciate the hostility that would be shown by the Falkland islanders to their Argentine invaders
Forty years on, and another dictator, Vladimir Putin, has made the same mistake. He thought his superior forces would have a walk-over and be able to take over Ukraine and impose a Moscow-leaning puppet government within four days. He, too, underestimated the opposition and the fighting spirit of the people he was up against.
They have met with stubborn resistance and taken heavy losses. They have failed to take their key objectives, and it seems certain that they will not succeed in subjugating Ukraine. The morale of their conscripts, like that of the Argentine conscripts four decades ago is at rock bottom. They have poor leadership, inadequate supplies, and know they are fighting a war not to liberate a people, but to subjugate a proud people determined to retain their freedom.
The similarities are clear, including one fact about Britain's behaviour. Forty years ago Britain behaved honourably and regained its pride. Similarly, in the case of Ukraine, the UK has played a part in leading the campaign to assist the Ukrainian defenders diplomatically, with sanctions against their enemy, and with the armaments that make their resistance possible.
Just as Britain was able to secure the freedom of the Falkland islanders 40 years ago, it now looks very likely that the Ukrainians, by their bravery and resistance, will secure their own freedom aided by all the help that the UK can give them short of a military intervention that would plunge the world into an unimaginable war.
The UK did the right thing then and now and can take a justifiable pride in standing up to tyranny on both occasions, and helping those who want freedom.
The price cap has, of course, increased energy prices
That the British Government decided to copy the grand mistake of the California deregulation debacle does not come as all that much of a surprise. Government does seem to decide that it’s the mistakes, rather than successes, of others that should be copied. Or perhaps it’s that political inability to understand markets which is the universal.
The mistake being to fix retail prices. With wholesale left free this will, in any time of dearth, lead to the mass bankruptcy of the intermediaries, the retail companies. This has happened here as it did to the once mighty PG&E.
There is more though. That very fixing of the retail price, that price cap, has led to prices now being higher than they would have been without the cap. For prices do in fact lead to changes in demand. People see prices rising and they curb their demand for that item rising in price.
As ever in economics this is something that happens at the margin. How much it happens is the elasticity - the price elasticity of demand. But unless we’re talking about Giffen Goods - and no, domestic energy is not one - then rising prices curbs demand.
So, what has the price cap done? Along with bankrupting the intermediaries in the system it has protected retail consumers from the rise in prices. So too it has protected them from the signal that energy is becoming more expensive and so should be economised upon. Energy demand is - up until midnight last night perhaps - higher than it would have been without the price cap. Higher demand means higher prices.
The very existence of the price cap has made prices now higher than they would have been without the price cap.
Yes, we’re aware of the date, no, it isn’t. It’s not even some clever attempt at a reverse ferret on the foolishness traditional. Price caps, by protecting demand from price rises, increase demand and so the price level once the cap is lifted. Energy prices today would be lower than they are if the price cap had never existed.
There’s a lesson here too, one worth remembering next time someone has some bright idea about bucking markets. That is, don’t mess with markets because if you do they’ll most assuredly mess with you. You can compensate for market prices and that can often be a very good idea. You can construct markets and that’s often necessary. But attempts to fix prices in markets always do fall apart. Simply because the price is an outcome of the market itself and to change it you need to change the market interactions, not just declare that different result.
It really is true that prices for domestic energy today are higher as a result of the past price cap than they would have been without that past price cap. So, you know, thanks guys, that was really helpful of you.