Sadly, Oxfam aren't even understanding their own numbers

Oxfam tells us that:

Food prices, which are up more than 30% over the past year on average, are likely to push more than 263 million more people into acute poverty than before the pandemic. That would take the number of people living on less than $1.90 a day to 860 million by the end of the year.

This is not wholly and precisely true. The $1.90 a day measure of that extreme, abject, poverty is the value of consumption. It isn’t cash income, it’s value of consumption. Most of those abjectly poor are in fact subsistence peasants. That means they produce their own food and eat their own production of their own food. If food prices rise then the value of their consumption of their own production rises.

No, this isn’t true of all of those 860 million but it is so of a large portion of them. They are food producers on whatever tiny scale. Therefore rising food prices increase the value of their consumption.

If your analysis starts out getting matters so abjectly wrong then your solutions are also likely to be more than a little ropey.

Oxfam is calling for a tax of 90% on excess profits134 on a temporary basis, to capture the windfall profits of corporations across all industries; this will reduce today’s profiteering and create significant funds for investment. In September 2020, Oxfam estimated that such a tax on just 32 super-profitable corporations during the COVID-19 pandemic could have generated $104bn in revenue.

As Maya Forstater has pointed out, global tax revenues are of the order of $23 trillion. An increase in such tax revenues of 0.45% - well, that’s going to solve a lot, isn’t it?

Oxfam started out with the simple aim of getting food to those who were hungry. Now it has an equally simple message, more tax. It’s not obvious that this is an improvement in the message being proferred. But then that long march through the institutions has been going on for a long time, hasn’t it?

This doesn't work as a policy

The aim of having an economy, of having a society even, is that more people get to have more of what those people want. In the absence of there being third party harm from their getting it of course.

This idea, this policy, fails that test:

The legal smoking age in England could reportedly be raised from 18 to 21 after a “radical” review into plans to make the country smoke-free by 2030.

An independent review commissioned by the health secretary, Sajid Javid, and led by Javed Khan, the former chief executive of the children’s charity Barnardo’s, is also expected to support new taxes on tobacco company profits,

If consenting adults wish to smoke then that’s up to those consenting adults - that’s exactly one of those things that they desire to have more of and the purpose of the whole having an economy, a society, thing.

Taxing cigarettes ferociously, sure, why not? Demand is pretty inelastic, we’ve got to gain tax revenues from somewhere, taxing things where demand is inelastic is a great idea. Pointing out the very large private costs to the smoker of smoking is equally justifiable. A free and vibrant market in alternatives - vaping, snus, heated not burnt products - is again just the standard liberal line. Folk want more of these things, there’s no harm to others, why not?

No, we cannot justify anti-smoking drives by “costs to the NHS” as people who die young from relatively swift complaints like lung cancer save the NHS money - as they do save cash for any lifetime health care system.

Eighteen year olds are indeed consenting adults. They have the vote, even if they are likely to vote for Jezza. So, they have to be trusted with the decisions - properly informed decisions of course - they make.

The driver of this mooted policy is in fact that we think you shouldn’t do that. A profoundly illiberal idea and therefore one that fails in the basic task of governance. As at the top, the aim of the entire idea and system is that folk get more of what folk want. Not, as here, more of what some clerisy will allow them to have.

No.

Isn't this lovely?

We would expect that, soon enough, there will be cries that we, too, should do this:

Millions of Germans are expected to take advantage of a summer of cheaper travel from next month under government plans to boost public transport use and give financial relief to consumers facing a cost of living crisis.

A €9 a month ticket scheme is to be introduced from 1 June allowing travel on all modes of city and regional transport. A different ticket will apply for each region and it will be available for three months until the end of August.

Nothing wrong with a bit of loss leading marketing. Well, unless of course it’s about food given that BOGOFs are to be banned. Get people to try out that public transport, why not?

Well, there is this:

The scheme will cost the government €2.5 bn as it is due to pay back to transport companies the shortfall in income as well as the cost of administering the sale, including giving back to commuters who already have season tickets, the amount they are effectively out of pocket.

It doesn’t in fact cost the government that. It costs taxpayers that. No, even that MMT explanation doesn’t work here, that they can simply print the money, for being inside the euro Germany can’t print its own money.

So, with 80 million Germans this costs every man, woman and child in the country some 32 euro each.

As a loss leader and advertising, why not? Perhaps it will be made up over time. But as a permanent idea that 32 euros is why not. Because such subsidies making tickets cheaper transfer the costs from those who do ride public transport to those who do not.

As with the British railways where ticket prices are indeed higher than in many other countries. Because British ticket prices, largely (to perhaps 99% in normal times) cover the operating costs of the railways. Which seems to us fair and reasonable. Those who get to ride on the choo choo pay the price of riding on the choo choo.

The same should be true of public transport more widely - those who use it should be the ones paying for it. And why not?

We're distinctly unimpressed by these emergency powers

This does not bode well:

President Biden has invoked emergency powers to hasten the production of baby milk as the US scrambles to address the disappearance of almost half of the products from the shelves and a panic among parents.

Assuming authority under the Defence Production Act, which gives the government sweeping powers to direct industries

The point of the Defence Production Act - and other similar emergency powers worldwide - is to do an end run around those boring liberty, freedom and property things when there truly is an emergency. If the Parisian hordes were indeed about the ransack Dover then yes, it might be valid to allow government to direct more of life than they normally do.

But once government has a power it doesn’t remain an emergency one limited only to extreme circumstances. There is a problem with baby formula in the US and it’s one that’s easily solved, just prevent the FDA from not allowing imports. As so often, the solution to a government problem is that government should stop doing what it currently does. But instead we’ve this invocation of the Defence Production Act.

This allows the Feds to sidestep all of the usual controls and restrictions on the exercise of that government power. To beat Hitler and Tojo that might be fair enough. To sort out the FDA’s restrictions on the labelling of artificial moo juice might be thought a fairly trivial invocation.

But then that’s the warning. Once these powers exist then they will be used for ever more trivial definitions of “emergency” and so our freedoms and liberties will die.

There are, after all, both here and in the US, calls for the declaration of a “climate emergecny”. Which would mean exactly those restrictions of civil liberty so that the enthusiasts could do as they wish.

The simple existence of emergency powers does not bode well over the long term.

That puts paid to another fashionable explanation

America is in the grips of another of those fashionable delusions. Inflation is the result of an outbreak of greed among the capitalist and management classes. They’re raising prices in order to feed the bottom line and it’s nothing, nothing at all, to do with excessive government spending, the soared deficit or incontinent money printing. No Siree, it’s them, over there:

Target, a retailer with almost 2,000 stores, lost a quarter of its market value, falling $53.67 to $161.61, after warning of higher wage and fuel costs, as well as supply chain disruption. It came a day after Walmart, the world’s biggest bricks-and mortar-retailer, cut its profit forecast.

Oh. Umm, you mean that profits and margins at these retailers - the two together are a measurable portion of the entire retail spend of the US - are down? Lower than they were?

Gosh:

Operating profit will amount to only about 6% of sales this year, 2 percentage points below the previous forecast

Umm:

Neverthless, the company’s net income fell to $2.05 billion, or 74 cents per share. That’s down from $2.73 billion, or 97 cents per share, from a year ago.

Oh Woes and deary us. Profit margins are decreasing, meaning that it’s not the greed for increased profits pushing up inflation then. So dies another of those economic fashions - or as we’d put it, delusions.

Don’t forget, when theory, or even political artifice, disagrees with reality it is always, but always, reality that wins.

Down with this sort of thing

That those who err should be fined is entirely acceptable to us. But that the fines go to those who decide both upon the erring and the size of the fine? No, that’s a system pregnant with problems:

The proceeds of the £14.4 million fine imposed on KPMG last week for forging documents in connection with its audit of the collapsed construction group Carillion is to go to the trade body for accountants, with none of the money going to taxpayers or other creditors.

The Institute of Chartered Accountants in England and Wales (ICAEW) is set to receive the entire proceeds of the fine in another example, critics say, of it profiting from the misconduct of members while victims receive nothing.

The body, whose stated aim is to maintain professional and ethical standards, will have received at least £49.4 million of fines in recent years once it banks the Carillon-related penalty, under a controversial system known as the accountancy scheme.

Slippery slope arguments are logical fallacies unless that downward slide is a necessary outcome of those first steps. The incentives here are such that this is not a fallacy but a prediction.

We don’t allow the judge to partake of the fines in criminal court, nor are juries compensated from sums levied upon guilty verdicts. We even have a phrase containing the folk wisdom of not allowing such to be so - being judge and jury is a synonym for an unfair outcome.

Those who decide upon error, decide what the fine should be for error, collect the fines for having identified and quantified error, the incentives are indeed the same. Leaving the system as it is will inevitably lead to the abhorrence of the American system of near random confiscation of cash and assets by local police forces and the rest. Where the confiscee has to prove legal ownership of what is confiscated, reversing that burden of proof. Not for any reason other than that when the incentives are set that way then that’s what institutions will do. Collect the cash and dare those in their sway to come get it.

Fines that go into the general Treasury pot, perhaps. Fines that go to those financially abused, possibly. Fines that go into the coffers of those who decide whether there should be a fine, and how much if there should?

No, gerroutovit, do these people know nothing of human behaviour and incentives?

What horrors! How could this be?

The Guardian runs a piece from a civil servant. In which we are told of the horrors to come:

The omens aren’t good: we woke up on Saturday to a fawning interview in the Daily Mail, which confirmed Johnson’s incendiary plans to fix the cost of living crisis by cutting civil service numbers by a fifth, down to levels last seen in 2016.

At which point we do have a question. Was the country notably undergoverned in 2016? We can’t say we particularly noted that it was ourselves but that is the important question isn’t it? Or perhaps this one becomes even more so:

On my own patch, attempting to cut 20% of the workforce without a monumental and carefully designed change management programme would be a cluster bourach. Working from home accelerated the rollout of a lot of collaborative tools, and dealing with both Brexit and the pandemic has given us a lot of experience in working across silos to get things done. The minister I work for happens to be an actual human being, but my department is already struggling with its workload even after many of those efficiencies – what management wonks insist on calling “low-hanging fruit” – have already been found and priced in. There’s no question that cutting one in five of us would have a devastating impact on public services.

But if inefficiencies have been extracted, new tools - which presumably increase productivity - have been implemented, then don’t we require fewer civil servants than we did in order to gain the same amount of governance? That is what increased productivity means, after all. Gaining the same output from less human labour, or more output from the same input.

We do have some advice though. Cutting civil service numbers isn’t in fact the aim. Cutting what the civil service - government as a whole - tries to do is. Yes, there’s a certain irreducible minimum necessary to allow civil society - markedly different from the civil service - to work. But the proper task of a government is to slice, pare and surgically remove from its orbit those things that don’t need to be done by government.

Something which would make a 20% rollback in civil service numbers look very marginal indeed. We can but hope….

An example of 58 economists not being economists

There’s an open letter - which so far at least we can find no evidence of someone publishing - going around from 58 economists. Stating that the 58 aren’t being economists:

A group of 58 leading economists and politicians, including the former business minister Vince Cable, has written to the chancellor to say that scaling back City regulation will put the UK at risk of another financial crash.

The open letter, which has also been signed by the former Greek finance minister Yanis Varoufakis and Columbia University professor Adam Tooze, was sent in reaction to the Queen’s speech, which outlined Rishi Sunak’s plans to “cut red tape” through a financial services and markets bill.

Adam Tooze in an historian, Varoufakis and Cable are clearly politicians these days but still. It is indeed possible that bad regulation, which can include the idea of not enough regulation, could increase the chances of another crash.

The group of 58 economists, including a Nobel Prize winner and former business minister Vince Cable, said making competitiveness an objective could turn regulators into cheerleaders for banks and lead to poor policymaking.

The NL is Joe Stiglitz which doesn’t help us much in evaluating this - the unkind might suggest he’d lend his name to a note for the milkman.

But this is all evidence that the 58 aren’t being economists. For they’re stating that even to consider competitiveness is to be in error. Which is a breach of that most basic lesson of economics - there are no solutions, there are only trade offs.

Yes, of course we desire a financial system unlikely to crash. But only up to the point where the cost of it not crashing is no more than the cost of it crashing. Within that envelope we desire that it be as competitive as possible - because competitive is a synonym for productive and we really do insist that we want all portions of the economy to be productive. Preferably continuing to be more productive over time as that, in itself, is a synonym for growth - us all getting richer.

To insist that regulation should not consider things in the round, should not grasp that the task is to balance the trade offs - to insist that competitiveness not even be considered - is to be non-economic. Which is an odd thing for 58 economists to go around parading really.

Ah, we’ve just found that Richard Murphy was one of the signatories. Well, that just seals it then, clearly abject nonsense. No need to note those other such indicators, Ann Pettifor, Miatta Fahnbulleh, Nick Shaxson then.

Under daily attack from the Department of Health

The proposed ban on buy-one-get-one-free offers on foods considered to be unhealthy has been postponed for a year, with the cost of living crisis cited as the reason. Another part of the reason might have been the growing hostility on the part of several Conservative MPs to a stream of new laws from the Department of Health and Social Care designed to make it more expensive or difficult for people to do things the Department does not want them to do. They are usually things that people want to do. If they did not want to do them, there would be no need to ban them or make them costlier.

There seems to be a mindset in the Department of Health that they must attack popular tastes in food and drink, and use the power of the law to enforce change. They want people, but especially children, made to consume less sugar, salt and fats. This means controlling the advertising of treats enjoyed by children. They target obesity with proposed limits on calories. They seem to think we should all be eating steamed fish and cucumber, and then only in controlled quantities.

They “negotiate voluntary agreements” with the food industry to lower the sugar content of food and its calorie content. The word “voluntary” is used alongside the threat of legal action in the event of non-compliance.

It might be minimum unit alcohol pricing that leads poorer people to seek cheaper, stronger drinks. It might be calorie counts on restaurant menus that drive people concerned about their weight and shape into eating disorders. The point about these relentless “better health” laws is that some of them have unanticipated knock-on effects that lead to unplanned and undesired consequences.

In an ideal world, the Department of Health should concentrate its resources on being ready and able to deal with pandemics, and with clearing health backlogs and delays. Instead it squanders time and effort in trying to micromanage people’s diet, and on preparing and promoting laws that make decisions which most people would prefer to make for themselves. Since the Department is not very good at doing the things it should be doing, there is no reason to suppose that it would be any better at doing those it shouldn’t be doing.

It seems to be the less well-off who are most affected by all this. Sweets were once thought of as unnecessary luxuries that it was justified to ration and to tax, but in the real world it is more likely that poorer people will eat sweets to liven up what would otherwise be a fairly dull diet. As Orwell observed in ‘The Road to Wigan Pier,’ “The less money you have, the less inclined you feel to spend it on wholesome food.”

It might be reasonable to promote information about the possible consequences of eating certain foods, because that would enable people to make informed choices. But to make those choices for them is to step outside the line that divides a free society from an unfree one.

The postponement of the proposed ban on certain food offers should be a permanent one, and the Department of Health should be reorganized so that those dreaming up and promoting their cascade of restrictions should be candidates for early retirement.

An energy windfall tax on exactly what now?

There are calls for a windfall tax on the “excess” profits being made by energy companies. This is, of course, ludicrous. Taxing supply at a time of dearth really is not the way to go about things.

However, there’s a subsidiary point to be made here. Which energy companies should be taxed given that all are making “excess” profits?

North Sea oilwells should be taxed more heavily and so should the production of natural gas. Energy companies are making record-breaking profits from the sale of hydrocarbons that lie in the deep water that surrounds Britain and that should shame the industry when the people paying the highest price are the poorest in society.

It should shame them into willingly parting with some of the gains, especially when the price of oil and gas is dictated by global markets that are driven at the moment largely by the conflict in Ukraine. These are not super-profits that can be attributed to the ingenuity of their staff or foresight of company directors.

Every single part of that analysis can be applied to - just as an example - the offshore wind industry. We can even check this. Varied new such fields gain access to guaranteed prices from contract for difference arrangements. Those new fields are not, as yet, signing up to those CfDs because the open market price is higher than they would gain from those guarantees.

It’s logically possible to stand where we do. The entire idea is absurd. We positively lust after people attempting to make those “excess” profits by developing energy sources which can provide the juice we desire when other sources fail us. If the profits arrive then they’ve done us a service by spending their capital on covering that lack of energy from those other sources. If the dearth does not arrive then they don’t and, ah well, so, that’s capitalism, the profits don’t arrive.

It’s also possible to allow the green eyed goddess to determine behaviour and demand that swingeing taxes be applied to anyone who has the temerity to make a decent profit. But the point we think it important to note is that if society is to do the second then it is indeed everyone making those stonking profits from energy supply that should be so taxed. Yes, that includes the political favourites of wind, solar and so on. If profits are Bad, M’Kay, then it is profits that are Bad, M’Kay?

Windfall taxes are an idiot idea but such on the energy sector that don’t in fact cover the energy sector would be vile.