It’s Adam Smith’s birthday!

Well, sort of. We know when his birth was registered at the local church in 1723, and it’s likely that he was born a couple of days earlier. Then you need to add on a few days for the calendar change that happened in 1750, and you get 16 June. Which is why some enterprising group has christened this ‘Liberalism Day’.

But back to Smith. After a mostly uneventful childhood in Kirkcaldy, on Scotland’s east coast (although he was briefly kidnapped by vagrants) Smith entered the University of Glasgow, then went to Balliol College, Oxford — where he found that the professors had “given up even the pretence of teaching” because they got paid whether they taught or not (a useful lesson on incentives). 

Back in Scotland, he joined the staff at the University of Glasgow, where he wrote a book on ethics, The Theory Of Moral Sentiments (1759). This brought him instant fame. Enlightenment thinkers sought a firmer foundation for ethics than the dogma of clerics and commands of kings. Some sought ‘rational’ alternatives. Smith, however, identified morality as a feature of human social psychology. We have a natural sympathy for others and like to please them. As the book begins:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.

This natural sympathy binds and benefits the whole human species.

The book’s success prompted the Duke of Buccleuch’s stepfather to hire Smith, on a pension for life, to tutor the young Duke. Taking him on the Grand Tour of Europe, Smith picked up endless facts about different systems of commerce and regulation. He started writing The Wealth of Nations, weaving current and original ideas into a new, systematic, modern approach to economics.

The Wealth of Nations debunked mercantilism, the prevailing system by which countries tried to boost their cash resources by selling as much as possible to others, but buying as little as possible from them. So they subsidised exports and resisted imports. 

Smith, however, showed that both sides benefit from trade, not just sellers. The sellers get cash, but the buyers get goods that they value more than the price. What makes a country rich is not its gold reserves, but vibrant trade and commerce. Wealth came from liberating commerce, not restricting it.

The huge productivity gains made possible by the division of labour boost that wealth even more. Specialist producers can be thousands of times more productive than amateurs. They can produce surpluses that they can sell, giving them funds to invest in capital equipment — raising their productivity even more. This they do to benefit themselves, but their actions actually benefit everyone:

Every individual... neither intends to promote the public interest, nor knows how much he is promoting it... he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

Another unplanned benefit of commerce is that it automatically steers resources to where they are needed. Where things are scarce, consumers will pay more, so suppliers produce more. When there is a glut, prices fall and producers switch their effort into more profitable lines. So, without any regulation and planning:

[T]he obvious and simple system of natural liberty establishes itself of its own accord. Every man...is left perfectly free to pursue his own interest in his own way.... The sovereign is completely discharged from a duty [for which] no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.

This liberal system benefits the poor most. Smith railed against merchants using their political influence to win monopolies, tax preferences, controls and other privileges that distort markets in their favour—what today we call crony capitalism. He concluded that government must be limited to its core functions of providing the defence, justice and infrastructure that is needed for commerce to succeed. Leave people free, end cronyism, and the results will amaze you. 

Smith’s ideas were highly influential. The great free-trade era they ushered in, and the enormous rise in wealth it created — particularly for the poor — did indeed amaze the world.

Happy birthday (if it is your birthday), Adam Smith!

We find this to be colonialist, possibly even racist

A demand that Africa, the last truly poor continent, miss out on the known and useful route to being richer:

Africa must embrace renewable energy, and forgo exploration of its potentially lucrative gas deposits to stave off climate disaster and bring access to clean energy to the hundreds of millions who lack it, leading experts on the continent have said.

It is true that Africa is the last truly poor continent. It is also true that fossil fuels are a great way to start beating poverty. The demands that the poor - or perhaps these poor - must neglect the known and simple way of getting richer in favour of either a more expensive method, or even a method that doesn’t work, of getting richer strikes us as rather odd.

Almost as if there’s still some colonialism going on here - those poor people in foreign places should just jolly well do what we say - or even, given skin colours involved, some racism might be apparent.

We would note that renewables are rather more expensive than fossil fuels in these circumstances. Yes, it’s possible to construct models where over time the renewables come out cheaper but that is only after significant capital investment upfront. And what’s the thing a poor place, by definition, lacks? Cheap and low cost capital with which to make upfront investments, right?

Africa musn’t make money off of nature’s bounteous deposits and must also itself use a more expensive energy system and path to development? How isn’t this colonialism?

Are there really any benefits to the four-day workweek?

In 2019, the then Shadow Chancellor John McDonnell told Labour Conference that if they were to win the general election, they would “reduce the average full-time working week to 32 hours within the next decade”. It was unclear whether McDonnell was advocating for a blanket cap on the number of hours allowed to work, but there is no doubt that this would be disastrous. But are there any benefits to the four-day workweek?

Fast forward to 2022, the world’s largest trial of the four-day workweek has commenced in the UK, with over 3,300 workers participating. Provided they promise to maintain productivity at 100%, employees will work 80% of their usual hours for 100% of their pay. 

Joe O’Connor, Chief Executive of 4 Day Week Global, one of the non-profit groups coordinating the trial, said in a statement:

“As we emerge from the pandemic, more and more companies are recognising that the new frontier for competition is quality of life, and that reduced-hour, output-focused working is the vehicle to give them a competitive edge.”

Proponents of the four-day workweek argue that the morale-boosting benefits of reduced working hours, as well as the supposed boost in productivity, makes the four-day workweek worth the change.

The pandemic saw millions of people switch to remote working, and so the effects of alternative working arrangements may have changed. So this new research into the effects of alternative working arrangements is certainly welcome, as it helps companies make decisions based on more recent evidence.

A week and a half into the trial, and some companies taking part are beginning to regret their decision. Samantha Losey, Managing Director of communications company Unity, got off to a rocky start:

“We did our best to be as prepared as possible, but I think we were always going to hit snagging issues- that first day with half of the team out after the Jubilee weekend, it was challenging to get everything coordinated the way we wanted. We had the wrong team off, stuff went awry- it was deeply chaotic”.

These logistical issues may be solved as the trial continues, but only time will tell if these companies will be able to reap the positive benefits of reduced working hours.

However, looking at previous research, the benefits of the four-day workweek are often oversimplified and over-exaggerated. These kinds of alternative working arrangements have been tried in the past, and the morale-boosting benefits have been impermanent. Individual companies can make decisions on what working arrangements work best for them, but any government-imposed four-day workweek would be unjustified, counterproductive, and of course, illiberal.

The Icelandic government reported a number of  benefits from their trials, which saw the public sector move towards a four-day workweek. Workers reported that their work-life balance improved, they felt a reduction in stress levels, and had more time to spend with family. 

However, the validity of self-reported claims which were made immediately after these trials are questionable. In 1974, Martin J. Gammon credited the continued over-enthusiasm with the four-day workweek to the “Hawthorne Effect”. This is the idea that individuals subjected to the study of a new system will report more beneficial effects, purely because the system is novel. Like most things, with time, novelty wears off. These boosts in morale are just temporary and eventually subside, returning to pre-four-day workweek levels.

Myron Fottler’s 1977 paper questioned the supposed high employee acceptance rates of the four-day workweek. According to his own survey, Fottler showed that of employees who were given the opportunity to vote 6 months after the implementation of a four-day workweek, only 56% voted to continue the program. This is not the overwhelming endorsement cited in other studies, especially as the Hawthorne Effect would have still been working to boost short-term morale.

Finding the sweet spot between increased productivity within a shorter space of time and minimising fatigue is a difficult balance to strike. Reducing the number of days a person works to four often results in requirements to work evening and overnight hours, resulting in longer days. As was the case in Iceland, the introduction of the four-day workweek caused a reduction in the number of coffee breaks, water cooler chat, and the frequent movement of meetings to email correspondence. For those who work in shifts, a compressed workweek may also require quicker shift rotations throughout the day. Some studies have shown that compressing the workweek aggravates the negative effects of a rotating shift schedule. The full effects of a compressed workweek on businesses which use a rotating shift schedule should be looked at more thoroughly in these new trials which are currently taking place.

This brings to light a particularly positive aspect of the UK trials. Across the 70 companies taking part, there is huge variety in the sectors. A fish and chip shop in Norfolk, as well as financial service, hospitality and retail companies are taking part. This should give us some new data on the effects of the four day workweek in different sectors, and thus help inform company decisions moving forward.

Although there are short-term benefits to introducing a four-day workweek, the increase in costs (or reduction in wages) may not be worth the change. Whatever the outcomes of these trials, businesses should be free to create the working arrangements they see best, and workers should not be forced to sacrifice income due to government imposed caps. Work is not homogenous and working hours shouldn’t be either.

Protocol Follies

When Lord Frost bowed out, we optimists hoped revising the Northern Ireland protocol would finally progress. Sadly, the same old follies still seem to be running. Chief among them is the PM’s lack of probity of which only he seems unaware. On 13th June he announced that the changes in the Northern Ireland Protocol Bill were just a set of “relatively trivial set of adjustments“. When the Bill was published a few hours later, it emerged that at least four major changes that the UK has been seeking since the protocol was signed, will now be swept in by UK unilateral decree. The folly is to believe, even if the PM has now produced the perfect solution, anyone would believe him. 

Introducing a bill that turns out simultaneously to alienate Brussels, Dublin, Washington and almost all the members of the Stormont Assembly, is quite a coup. But then one should not be surprised that the author of the problems is more likely to worsen, than solve, them. For whatever reasons, our Prime Minister signed up to trade between two parts of the UK being governed by EU rules even though neither part is a member of the EU. Now, for the first time ever, he has even unified Stormont’s opinion: 52 MLAs signed a letter rejecting the bill and the 28 DUP MLAs also oppose it. That’s 80 out of 90. 

That matters because of devolution, As the explanatory note puts it: “24 The Bill contains provisions which cover devolved or transferred matters. Where the Bill engages the Legislative Consent Motion process, the UK Government will write to the devolved administrations to seek consent to legislate in the normal manner.” The DUP is opposing Whitehall’s efforts to reform the protocol by causing Stormont not to operate. Ironically, they will now have to open Stormont’s doors in order to oppose the Bill.  

The PM should recognise the hole he is in and stop digging. He should recognise that the protocol mostly, and perhaps only, concerns Dublin and Belfast, step away and invite their governments to come up with a joint solution. In other words, the second folly is Whitehall’s enduring vanity, namely that they, and only they, are wise enough to know the answers. The DUP rightly felt excluded from the original protocol drafting, its agreement and subsequent negotiations. Hardly surprising then that they have no ownership of it. It is high time they stepped up to the plate and used their good relationship with Dublin to be constructive. And Sinn Fein should also be involved. 

A number of the intentions in the new Bill are perfectly sensible, dividing east to west Irish Sea trade into two channels, for example: green (nothing to declare) channel for goods intended for the Northern Ireland market and red for the Republic, with all the paperwork and duties the EU requires. This must have been discussed before so why was it rejected? Why ship goods intended for the Republic of Ireland to Northern Ireland in the first place? Prohibiting that would save a lot of hassle and require no new legislation. The new Bill may deal with mixed, North and South, loads but this non-legal reader could not see how. 

There is the possibility that this Bill, hugely criticised as it will be, is not a folly at all but what the military call a “false target”.  In other words, it will never become law but the gunfire will better identify where the EU is really at and how the existing log jam can be broken. The protocol itself has better procedures for amendment than unilateral action such as this and yet Whitehall has elected not to use them. That makes this Bill either a foolish folly or a false target.  Time will reveal which.

There's really nothing quite so conservative as a lefty agitator

Our example here is Nick Dearden, of Global Justice Now:

The WTO’s crisis is part and parcel of the greater crisis of free-market globalisation as a whole. It was formed in the mid-1990s, the high point of free-market capitalism, when the answer to every problem was more markets, more private sector, less government red tape.

GATT before it tried the same messaging and it was really in the early 80s that the mantra - trade is good, let’s have more of it - started. According to Me Dearden this is wrong, we must return to the system we had before that:

We can see the results all around us.

Well, yes, that’s true. Global poverty is down, global inequality is down. The world as a whole is richer and it’s the poor to middling who have been the major beneficiaries by numbers.

But apparently we must rip up this successful system and return to the one used before:

Developing states have always been especially constrained by this system. If we want change, these countries will have to work together to begin creating change on the ground: building up their own industries, supporting their small farmers, regulating and taxing big business and big finance, and using the proceeds to build up public services to remove people’s basic needs from the market.

State led economies with infant industry protections. This didn’t work last time so why does anyone think it will work this time? But then as we say there’s nothing quite so conservative as a lefty agitator.

It's all there in Smith you know, really, it is

By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expense for which at least equally good can be brought from foreign countries.

At which point why would we desire to encourage domestic production of things we can get cheaper and better from elsewhere?

Giant greenhouses will be given planning permission under a “grow for Britain” strategy to be unveiled by Boris Johnson, to end the UK’s reliance on overseas food.

Why? Some parts of the world don’t require the greenhouses. So, we should go get our food, as our wine, from there.

It is understood that food the UK has the climate and expertise to produce needs to be increased as the country only produces, for example, 23 per cent of the cucumbers and 15 per cent of the tomatoes supplied domestically.

It is also hoped the rising cost of energy for farms can be helped by making use of surplus heat and CO2 from industrial processes, and renewable sources of energy.

Why do we desire to move to a more energy intensive food system, especially given climate change worries? This has been extensively studied too:

Tomato consumption has increased fast in Europe over the last decade. Intensive production techniques such as heated greenhouses and long-distance transport overcome seasonal constraints in order to provide year-round fresh goods. However, studies that evaluate seasonal and off-season production are scarce. Here, we analyzed the carbon footprint of tomato production systems in Austria, Spain, and Italy using a life cycle approach. We collected data from four main supply chains ending at the point of sale in an average Austrian supermarket. We aimed to identify hotspots of greenhouse gas emissions from agricultural production, heating, packaging, processing, and transport. Our results show that imported tomatoes from Spain and Italy have two times lower greenhouse gas emissions than those produced in Austria in capital-intensive heated systems. On the contrary, tomatoes from Spain and Italy were found to have 3.7 to 4.7 times higher greenhouse gas emissions in comparison to less-intensive organic production systems in Austria. Therefore, greenhouse gas emissions from tomato production highly depend on the production system such as the prevalence or absence of heating.

Grow tomatoes in England in that short part of the year that the sunshine can take the strain, otherwise ship ‘em in from Spain. This being something that the price system already tells us, that Smith tells us from 250 years ago, the way the industry works right now and therefore we’ve got the muddleheaded saying we must change this?

How did we end up with the grossly partial - partially informed and partial as to what the answer should be - determining where tomatoes should be grown? We’ve even that absolute proof that just leaving it to the grocers and the farmers already produces the correct result.

Not just how did we end up with these people doing these things but how do we stop them doing so?

Changing fashions in wasting taxpayers' money

Governments will always find ways in which to waste taxpayers’ money, but the fashions of how they do that change with the fads and fancies of each age. Twenty years ago, it was being spent on five-a-day officers, real nappy officers and walking officers. Some councils even had officers to go around reducing the number of holes in the salt shakers at fish and chip shops in an attempt to cut down salt intake. Maybe in some places money is still spent on such things.

Today, however, the fashion dictates that it must be spent on things such as decolonization, gender language modification, diversity awareness and ‘unconscious bias.’ Some even pay to have their staff attend courses in critical race theory and ‘white guilt.’

This is all in Milton Friedman’s fourth quadrant. You can spend your own money on yourself, your own money on someone else, other people’s money on yourself, or other people’s money on someone else, which is the fourth quadrant. Since it is other people’s money, the cost does not concern you all that much, and since it is being spent on someone else, the quality is not paramount to you either. This is basically the public sector of the economy, in which legislators and bureaucrats are spending taxpayers’ money on other people.

Because it is not their money, they can spend it like water on fashionable causes, and are prone to be influenced by minority pressure groups urging expenditure on things that matter to them, rather than to the population at large. The general public probably regards these fashionable causes just as novel ways of wasting money.

Given these endemic pressures, it might be thought that little can be done to curb wastage, but there are ways of minimizing it. One is surveillance. If there are organizations exposing it and highlighting it, with media doing the same, it is exposed to mockery, and Government Ministers will order it to be curtailed to avoid the embarrassment of allowing it to happen on their watch.

It can also be curbed by having departments focus on the priorities, the things that matter. By establishing a scale of priorities, they can concentrate resources on what is important, rather than on what is not. This process must be done publicly, under scrutiny, and in consultation with the public at large by the use of reputable polling organizations. Once this is done, it will be difficult for Ministers in the Commons to defend spending money on the fripperies rather than on the things that people think are important.

During a cost of living crisis, when the population has to cut back on unnecessary spending, it is important that government plays its part, and is seen to play its part, by doing the same.

Logic's not a strong point when folk talk about food and farming

Minette Batters should be able to do better than this but of course the brief she’s trying to follow doesn’t make sense either. “Give NFU members more money” is her message but that’s not really something that does make sense. So, she’s left with this sort of nonsense:

…the president of the National Farmers Union, Minette Batters, said ambitious proposals to help farmers increase food production, first put forward last year by the government’s food tsar, Henry Dimbleby, had been “stripped to the bone” in a new policy document, and meant farmers would not be able to produce affordable food.

Batters said she had told the PM on Friday that farmers – including those in the West Country seat of Tiverton and Honiton, where a crucial byelection will be held on 23 June – were furious with post-Brexit policies that they believed would make them poorer and leave them unable to compete with foreign producers.

By definition if the food being produced in Britain were affordable then there’d be no problems with competing with foreign producers. Because they’d not be cheaper than the affordable home grown stuff, would they? And if British farmers can;t produce affordable food then fine, we’ll take that competitive foreign produce then.

Then there’s this delight:

His method was hailed by organic farmers as a blueprint to make Britain self-sufficient in food without compromising on the environment, and helping farmers to transition from intensive farming.

But by definition intensive farming produces more crop on the same amount of land. That’s what it means. So how would Britain grow more, on the same amount of land, by using a less intensive form of farming? It’s abject nonsense.

Logic seems not to be one of the things concentrated upon when talking about food and farming.

These people aren't being remotely serious now, are they?

Fracking is a fairly important question. In the standard - that is, the IPCC that we’re all working from - models that RCP 8.5 is the one where it all gets out of hand and accelerates. That’s also the model in which we do not exploit unconventional gas and oil and so retreat back to coal to power society. As long as we don’t do that then the varied models that are left produce chronic but entirely manageable problems from climate change.

Note that this is the output of those standard models being used to describe and predict the entire subject. This is not some oddity from us, it’s right there, right at the heart of the predictions being made.

It’s also true that fracking will require some drilling pads, there will be - very light - seismic effects and so on.

It’s possible to hold different views on the relative importance of these things. But any decision does require that the decision makers be serious:

The billionaire's bid to produce gas in Britain was dealt a blow this week when the Secretary of State for Levelling Up overturned approval for Ineos’s planning application for a fracking site near Rotherham.

The company had been seeking to extract rock to examine the concentration of shale gas on the site. The company aimed to frack on the site at a later stage.

But the Government has refused planning permission over concerns about plans to construct a three-metre fence around the well to reduce noise from drilling on the site.

Department for Levelling Up cited Mr Gove’s concern the structure would impact the "openness" of the Green Belt Area.

Ineos had been asked to construct the barrier by local planning officers and would have removed it after extracting the rock for testing.

These people are not being serious in the slightest, are they? We would go further, this is the action of buffoons bringing the entire idea of representative democracy into disrepute.

Could we, just possibly, return to a system in which the adults make decisions?

In which we agree with Mr. Chakrabortty

Right in front of our eyes, Britain’s entire political order is being demolished

That sounds rather excellent, doesn’t it? A political order that taxes supply in a time of dearth - the only criticism being that it does not do so enough - would seem ripe for demolition.

From housing to health, the institutions are crumbling. This could be a historic chance to craft radical change from chaos

We are radicals so, yes, bring it on!

What turns these symptoms of acute crisis into a chronic national breakdown is, as Lord Hill says, the rottenness of our political institutions. So profound is their decay that they can no longer properly face the problems, let alone tackle them.

Super. So, to borrow a phrase, What is to be done?

Which is where we disagree with Mr. Chakrabortty. For his clear intent is that we should have a different politics, driven by different politicians. This, to us, doesn’t make sense if it is the institutions themselves which are rotten and undermined. The answer is to stop using the institutions - to stop using politics as a method of societal management.

Yes, of course, there is still a role for government, someone must organise the bins being taken out and so on. But our radical vision is that we simply stop using those rotten and undermined institutions. Return the management of life to where it always should have been, the subject of voluntary interaction among the people, not something demanded nor directed from on high.

That is, Mr. Chakrabortty is arguing for a different politics. We demand less.