Don't replace Section 106, abolish it

A certain chance is being missed here:

Michael Gove is poised to hit property developers with a £7bn levy that could pave the way for a massive expansion of new council housing.

The Levelling Up Secretary is preparing to axe rules which force companies to build a set number of “affordable” homes on their developments themselves, and will order them to pay into an infrastructure fund instead that can be used by councils for their own projects.

Slipping another £7 billion into council budgets isn’t going to increase the amount of housing built, it’ll increase the number of grievance studies graduates employed.

Leave that obvious truth aside for a moment and think instead.

What’s the sort of profit margin on turnover that capitalists tend to be happy enough with? Can we get a bid of 10% there?

Hmm, OK. So, we could take £7 billion in profit off the capitalists and give it to councils to build houses. Or, we could leave the capitalists with the £7 billion and watch them being willing to do £70 billion of turnover to gain that £7 billion. Which is going to produce more housing, £70 billion or £7 billion?

Given that every house - solitary, sole and single, of whatever type, size or location - built lowers the market value of every other house in the country which will have more effect on making housing more affordable? £70 billion or £7 billion?

It’s as with that idiocy being promoted currently, that the solution to a supply shortage of energy is a windfall tax on energy companies. Taxing supply does not, as it happens, increase supply.

The answer to the deep, deep, silliness of Section 106 is not to replace it but to abolish it. Instead of trying to confiscate the profits of supply leave ‘em be and watch as rather more capitalist competition for them red in tooth and claw makes prices crumble in front of our very eyes.

Another way of putting this is don’t be clever about it, be vicious. Execute, don’t reform.

There is actually a reason for high CEO pay

Macron has decided - in the fits of an election campaign of course - that there should be European Union limitations upon executive pay. We in Britain should, of course, welcome such actions by the remnant-EU if we are to be selfish - economic performance there will decline and at least some companies are likely to move to here as a result.

No, really, think through this for a moment. Assume that it really is true that CEOs gain high pay simply because they hoodwink everyone else. So, they’d move their corporate domicile in order to be able to continue to hoodwink everyone else, wouldn’t they? Now lift that untrue assumption and think about reality for a moment.

Is there a reason for high CEO pay?

Though Japanese firms benefit from a high-quality workforce and invest in R&D as much as their US counterparts, they fall behind US firms in terms of their earning power. This column suggests that corporate structures in the two countries could be an explanation for this phenomenon. The findings indicate that CEOs of US firms aim to maximise profits, whereas CEOs of Japanese firms prioritise long-term corporate survival.

Japanese firms, famously, pay their CEOs less than the Americans do - 90% less by some measures. That very pay difference is what changes those incentives and thus performance.

So, err, perhaps not, eh?

Climate change never was about the climate

For some at least. In a piece about how now that policy already means limiting climate change to 2C - that is, announced policies will reach that - we are told this:

But they are also disruptive and at odds with long-running means of maintaining power and making money. Ultimately, limiting heating to below 2C – or 1.5C – demands that we overcome the ideas, economic systems and organisations that enable this power. Tackling this imperative can feel like an overwhelming challenge.

The aim - for those some at least - is to fight the power, not to power civilisation without boiling it.

This, we fear, is why the actual solution, that carbon tax, is not used. For if we were to use the generally agreed by the experts - Stern, Nordhaus, 93% of polled economists, even the IPCC itself in the right chapters of its reports - and efficient method then there would be no need to fight the power to stop the boiling.

Therefore we end up with markedly less efficient policies which do still leave room to call for that overthrowing of The Man. The effect of this is, as the Stern Review itself points out, that we do less to prevent the boiling. For humans do less of more expensive things, more of cheaper. The use of the efficient method would mean more dealing with climate change is done.

Which does lead to an interesting point. Those arguing against a carbon tax - as many indeed do - are in fact arguing for more climate change.

Prince William is quite right about climate change

Not, we hasten to add, in the details of what he says, but the overall statement is entirely correct:

Prince William says ‘politics gets in the way’ of fight against climate change

The problem being that politics means that we don’t, can’t, solve climate change the way that the science says it should be solved.

Politics brings us things like a ban on fracking - when the IPCC’s own reports say that the worst outcome, RCP 8.5, depends upon us not using unconventional oil and gas. Politics brings us instead things like onshore wind which, being less energy dense, requires even more of our green and pleasant land. Politics means less nuclear and more lignite in Germany - exactly what the IPCC identifies as the way to gain that RCP 8.5 disaster.

Politics has given us biofuels which not only put food into cars, not people, they also have higher emissions than just burning petrol. Politics means burning American forests in Drax is counted as carbon neutral - an absurdity.

As the actual science tells us, Stern, Nordhaus, 93% of polled economists - even if we assume that everything the IPCC, in its most lurid nightmares, tells us is true - the answer is a carbon tax at the social cost of carbon. This, according to politics, cannot be done as it will be regressive. This from the same people who gleefully impose regressive taxes on tabs, booze and sweeties.

Politics is the reason that we’re not dealing with climate change the cheap, effective and efficient way. So, yes, Prince William is right there.

Even if we assume everything we’re told is true the solution is indeed that carbon tax, possibly with a slight trimming of the hems afterwards. We don’t have that so, yes, politics is to blame, isn’t it?

Robert Boyle and the future

Those who think that humanity has already picked “the low-hanging fruit,” and that future technological and innovative advances will be more difficult to achieve, would do well to study the life of Robert Boyle. He lived from 1627 to 1691, and was one of the founders of the Royal Society. He is generally recognized as the father of modern chemistry, and established the relationship between the pressure and volume of a gas, the famous “Boyle’s Law.”

He wrote a wish list (Desiderata) of discoveries and inventions that he wanted to come about to improve the human condition. None existed in his day, but he listed the things he thought would enhance people’s lives and achievements. It is a remarkable list:

The Prolongation of Life.

The Recovery of Youth, or at least some of the Marks of it, as new Teeth, new Hair colour’d as in youth.

The Art of Flying.

The Art of Continuing long under water, and exercising functions freely there.

The Cure of Wounds at a Distance.

The Cure of Diseases at a distance or at least by Transplantation.

The Attaining Gigantick Dimensions.

The Emulating of Fish without Engines by Custome and Education only.

The Acceleration of the Production of things out of Seed.

The Transmutation of Metalls.

The makeing of Glass Malleable.

The Transmutation of Species in Mineralls, Animals, and Vegetables.

The Liquid Alkaest and Other dissolving Menstruums.

The making of Parabolicall and Hyperbolicall Glasses.

The making Armor light and extremely hard.

The practicable and certain way of finding Longitudes.

The use of Pendulums at Sea and in Journeys, and the Application of it to watches.

Potent Druggs to alter or Exalt Imagination, Waking, Memory, and other functions, and appease pain, procure innocent sleep, harmless dreams, etc.

A Ship to saile with All Winds, and A Ship not to be Sunk.

Freedom from Necessity of much Sleeping exemplify’d by the Operations of Tea and what happens in Mad-Men.

Pleasing Dreams and physicall Exercises exemplify’d by the Egyptian Electuary and by the Fungus mentioned by the French Author.

Great Strength and Agility of Body exemplify’d by that of Frantick Epileptick and Hystericall persons.

A perpetuall Light.

Varnishes perfumable by Rubbing.

What is remarkable is that nearly all of his wishes have been fulfilled. From the art of flying, to ships that need no wind, from malleable glass to mind-altering drugs, from constant light to the way of finding longitude, the list is a bold leap into what for him was an unknown and unknowable future.

A similar list made today might look at things that now seem as unattainable to us as that list did to Boyle’s contemporaries. The list radiates optimism about humanity’s ability to achieve the seemingly impossible. He foretold of the limitless creativity and resourcefulness of humankind, the inventiveness that is “The Ultimate Resource.”

In this space we will be compiling a list of some of the things that seem difficult or beyond achievement today, but which would bring great benefits to the life of humanity. These will not be inventions on the point of discovery, but similarly bold wishes for the currently inconceivable, just as Boyle’s were in his day. We are optimistic that they will be achieved, and that the future will be better than the past.

Might it be possible to connect politicians to reality?

We were a little surprised at this from the Home Affairs Commitee:

Home Office-held data for the year to September 2021 show that a mere 1.3% of the recorded rape offences that have been assigned an outcome resulted in a charge or summons.4 Recent figures from the Crown Prosecution Service (CPS) show 1,557 rapeflagged cases proceeding to the prosecution stage in 2020/21, down from 5,190 in 2016/17.5

We thought we recalled something that happened in that year - over and above the gross dismissal of the importance of rape as a crime to be prosecuted that is. So we checked that footnote (5) and it’s the CPS saying:

Owing to the impact of COVID-19 on the criminal justice system, the volume of completed prosecutions fell to 1,557 in 2020/21 from 2,102 in 2019/20.

The volume prosecuted continues to be on an upward trend as recovery from the pandemic continues. There were 547 completed prosecutions in Q4 2020/21, 486 in Q3, 306 in Q2 and 218 in Q1. The latest quarter has the highest volume since Q1 19/20 (593).

Oh, right. Yes, we just knew that something had happened that year. Do note that the year being used here is to end-March, so the last quarter of 2019/20 was also covid afflicted.

Of course, it’s possible to point out that they do mutter something, the Home Affairs Committee, about covid down on page 16 but that’s really rather later in any such report than anyone ever bothers to read. Well, except for footnote checkers like us and we have no friends. Evidence of this being an article from Vice magazine which quotes the numbers but entirely misses the pandemic disease qualification.

We’d be willing to lay substantial bets at fair odds that much other newspaper reporting will miss this rather crucial point.

We’re entirely willing to accept that there might be something wrong with rape prosecution. As we’ve said before now there’s always a trade off between prosecution and conviction rates - increase prosecutions and inevitably more marginal cases, harder to prove, will be prosecuted leading to a fall in conviction rates from that prosecution decision. Maybe the current system is wrong at one or another point.

But we would and do insist that before anyone can have a rational decision about such things it’s necessary to start with reality.

The prosecution rate has been rising in recent years. Not, as this committee report makes it look, fallen off a cliff - other than that covid influence of course.

The perils of high pay in public service

Apparently it’s possible to pay those public servants too much:

Simply put, if the United States pays the salaries of the Afghan Army, then there is little benefit from the Afghans collectively organizing to encourage people to join the army and fight for their country. In practice, if the salary is sufficiently high relative to the outside option, people might join but will not fight when it is time to deliver. Indeed, General Wesley Clark, former NATO supreme allied commander, gives the following description of the motivation of Afghan soldiers: "People signed up with the Afghan military to make money...but they did not sign up to fight to the death, for the most part." Contrast this with J.R.R. Tolkien's description of Britain at the start of World War I: "In those days chaps joined up, or were scorned publicly." We think it is reasonable to assume that such peer pressure to defend the country did not exist in Afghanistan.

This implies that the solution for any British Chancellor is to cut public sector pay. In that way only those who truly wished to be there, only those really motivated by the ethos of public service, would be doing the varied jobs.

There’s also another interesting implication to this. Those unions which continually argue for higher pay for public servants - that’s an admission that it is the pay, not the public service, which motivates. That is, that their members are not in fact motivated by that public service idea.

Yes, yes, there are limits to how far this terribly fun idea can be taken. But perhaps we could at least acknowledge that no one can be both a selfless Angel*, doing it for the honour or the service, and also requiring a very much higher pay packet to motivate.

Erratum slip. For “Angel” read “MP” as appropriate.

When did The Guardian descend to outright lying?

Yes, obviously, differences of views, different angles from which to observe the world and all that. But outright lying is a new one on us:

Cost of living crisis: UK benefits plunge to lowest value in 50 years

There is no manner in which that is possibly true.

Pensioners and benefits claimants will see the value of their payments fall to the lowest point in 50 years on Monday, anti-poverty campaigners have said,

It’s simply a lie.

Just one example. The 1972 state pension for a single person was £6 a week. Upgrade by real value and that’s £80.93 now. The income value - ie, showing how incomes in general have risen over that time - is £150.20 a week. As The Guardian tells us, the new state pension is £185.15 a week, the basic is £141.85. Both of which are, we really are certain of this, markedly higher than £80.93.

How did we get to the point that a major newspaper runs untruths like this? Or, perhaps worse, to the point where the people who write it are too ignorant to understand this point?

Yes, yes, we grasp that it’s “anti-poverty campaigners” who are originally making the statement. But are journalists these days really so innumerate that they can’t see through that statement?

That little window into how the system actually works

We’ve - at least should have - a certain sense of emergency about gaining housing for Ukrainian refugees:

A British family has been barred from hosting Ukrainian refugees because their home has bare floorboards, as council officials start to check Homes for Ukraine accommodation.

One householder was ordered to board up an internal glass door even though it had safety glass, while another was told they would be rejected if they failed to put locks on all their windows.

Council checklists warned against stairs that were "excessively steep", bannisters with gaps that were more than 100 mm wide, looped cords or chains for blinds, low windowsills, poisonous plants or any damp or mould.

The checks being rolled out by local authorities come amid anger from British hosts at red tape that has left some out of pocket after paying overseas hotel bills for delayed refugees. Others are still waiting for applications to be granted after three weeks.

So much for any sense of urgency then.

We should though be grateful for this little window into how the system actually works.

Economic growth is the doing of new things, also, the doing of old things in new and better ways. The speed of economic growth is the speed at which we can do the new things or, again, the old in the new ways. Having an entire army of bureaucrats which delays the doing of those new things, or new ways, slows economic growth.

It’s not just the wasted effort of all that labour which could be put to better uses. It’s the weed and barnacles slowing the entire ship of the economy. The insight we gain from this story is that everything, just everything, is slowed by that army of clipboard wielders.

We are all made poorer, forever, by this system that has been built around our lives and our ability to do anything new.

There has been talk that Brexit would allow us to have a bonfire of red tape. The lesson coming out of the Ukrainian refugee story - that thing we should be grateful for - is that what is actually required is a flamethrower turned on the bureaucracy.

Competition works in markets even without the capitalism bit

A little story from the French railways via The Man In Seat 61:

Competition works, who knew? Trenitalia is now competing with SNCF on Paris-Lyon: Overall bookings (SNCF+Trenitalia) up 20% on Paris-Lyon, up 106% on Paris-Turin-Milan. The average fare paid on Paris-Lyon has fallen by between 23% & 30%.

Note that (1) This replicates the experience in Italy: Competition WORKS for inter-city high-speed, but not necessarily for local/rural/commuter; (2) SNCF is nationalised, but this did not mean low prices. Without competition, SNCF priced to maximise revenue, nationalised or not.

That last sentence misses an important part. SNCF is still pricing to maximise revenue, even with the competition. It’s just that to maximise revenue it has to cut prices and so shift the demand curve.

Still, that is interesting isn’t it? Both SNCF and Trenitalia are state owned organisations. They’re both being forced to compete in markets without also picking up that grubby capitalism bit. The result is that more consumers gain what more consumers desire - that’s what that 106% rise in ridership is.

There’s also that point that such markets don’t necessarily work everywhere for varied technical reasons. Which is fine, not even we, arch neoliberals that we are, insist that all markets, everywhere, are all the time optimal. We do insist they should be used where they are though.

For example, it’s not necessary to sell the NHS to Americans to make it better. We have a sneaking suspicion that wouldn’t work anyway not least because who would in fact buy it? But where markets are possible then let’s have them - they produce that increase in consumer welfare by providing more of what consumers want. Which all sounds very sensible to us to be honest.

It could well be that there are parts of it that won’t work - say, the demand for a valid credit card before getting a jugular stitched up at A&E. OK, that’s fine, let’s not have markets at that specific point then - but let us have them where they are optimal. Say, elective surgery for hip replacements, perhaps that sort of thing.

At the very least let’s do what markets are really, really, good at which is to experiment and allow us to find out what is the optimal arrangement.

Seriously, if markets can improve the Italian train system - with rather less unpleasantness than the last man who managed to make them run on time - then we must be well within the envelope of things that markets can optimise.