We call this abjectly missing the point

It all does rather depend upon the definition of necessary - possibly even who is doing the defining:

Green belt land may have been torn up for housing unnecessarily, campaigners believe, after the 2021 census suggested population growth in many areas has been overestimated – in some cases by tens of thousands of people.

But the census also revealed other estimates were far too low – by up to 16% – meaning local politicians now face pressure to allocate more land for homes than previously anticipated.

The mistake here is to believe that those politicians and planners should be allocating the land. For the aim of the British housing system - however we define or manage that - should be to build houses that Britons wish to live in, where Britons wish to live.

The entire point of the green belt system is to prevent this. Therefore it’s the green belt system that must go.

We can get into the grubby details here. For example, note the complaint by these folk that the information used is hopeless at the prediction of demand that the planners then use - meaning the planning system fails. Or we could note that we have the smallest new builds in Europe. Or that house prices are ridiculous as a result of the price of not land, nor houses, but the chitty that allows permission to build.

But the real and true underlying point is that the current planning system actively - was set up to do so - prevents the building of houses that Britons wish to live in where Britons wish to live. Therefore we must tear down that planning system.

Blow up the Town and Country Planning Act 1947 and successors. Properly blow up, bang. Kablooie!

Only from the rubble of that can we construct a system actually fit for purpose. Assuming that the purpose is actually to house us all as we wish to be housed, rather than as the elite would insist we must put up with.

Quick! Quick! A justification for a bad policy, now please!

Placing import tariffs on intermediate goods - things which are then used to make other things - is a foolish policy. For it makes those intermediate goods more expensive for all users and manufacturers whoever is the producer. They raise the price of domestic production as well as imported.

Britain’s defence and nuclear industries are highly reliant on foreign steel, new figures show, as Boris Johnson considers whether to impose new tariffs on imports of the metal.

The UK is buying more than two-thirds of the steel needed for the two key industries from abroad, according to Government figures. The nuclear and defence industries spent £150m on the metal last year, of which just £45m came from British mills.

The disclosures come as Boris Johnson prepares to extend steel tariffs to protect the British industry. The Prime Minister has said the industry needs support as energy bills soar.

This looks like one of those things rolled out as a justification for such a bad policy. For we’re all expected to nod along. Ooooh, yes, isn’t it terrible that nuclear power plants, that the defence vital to the nation, is cheaper. Cheaper by being able to use steel that is cheaper than domestic production.

Two seconds thought of course leads to the opposite conclusion. We get more nuclear, more defence, for the same amount of money meaning that we are all positively anti the very idea of import tariffs on steel.

This before we get to the wider point, that such tariffs will make everything made with steel more expensive. Cars - just as one example - will be more expensive to manufacture in Britain as a result of making both nuclear and defence more expensive.

The only problem that tariffs on intermediate goods solves is the idea that we’re already too rich and therefore must make ourselves poorer. We can imagine the green part of the hair shirt brigade signing on to such a nonsense but what a Tory Government is doing proposing it escapes us. The aim of having a polity is that it enriches us after all.

Surely the Lake Wobegon joke is old enough now that people get it?

Of course, that headline is subject to Venning’s Law, the correct answer to any question including the word “surely” is “No”. As proof of this contention, the latest attempt at economic analysis from IPPR:

In new analysis, Common Wealth and the IPPR, the thinktank of which I’m executive director, have dug into the profit side of this equation. Our findings are stark: up to the end of 2021, half of firms have retained or increased their profit margins compared to pre-pandemic levels.

The Lake Wobegon joke is, for those few who haven’t heard it over the decades, that the Minnesota community is a place where “all the children are above average”.

On a radio show it’s a cute little, joking, observation. When discussing the economy it’s less funny. For what IPPR is really saying there is that fully half of all companies have seen falling profit margins over the time period - yes, for their claim is that 50% have maintained or increased. The modal change in profit margin is, therefore, assuming the three possibilities of lower, same and higher, actually for lower profit margins. It’s also true that the median experience is likely going to be on the edge between falling and static.

That is, if IPPR actually understood how averages work then they’d be worrying about falling profit margins and the ability of capitalism to regenerate itself by covering depreciation and future investment needs. IPPR instead takes this all to mean that companies are making too much profit, despite the actual move being in the other direction.

Ah well, there’s no licence on the use of the phrase “think tank” so we can’t insist that they do, can we?

Questions from Robert Reich that we can answer

Why is the US about to give away $52bn to corporations like Intel?

Robert Reich

The answer being that politicians are all too free with other peoples’ money.

Reich wants to impose conditions upon the handing out of industrial subsidies and tax breaks. But this isn’t a cure for the base problem. Politics will, as with seagulls and their young, feed the one that shrieks loudest. That means that the feeding at the taxpayer trough is not determined by any sort of logic other than that of who gains the ear of those doling out the money. Or, more cynically - we prefer realistically of course - whoever appears best for the re-election prospects of the person making the decision.

That is, we end up with economic decisions being made on electoral grounds - a recipe for bad decisions for inevitably the considerations taken into account aren’t even along the right axis of logic.

There is an answer to this of course. Do not allow the politicians the ability to dole out $50 billion and change to their favourites. Do not, in fact, allow politics to try to run the economy.

That’s not an answer that will find favour with Reich of course, he wants different groups to be favoured at that public expense. But it is still true that the answer to these sorts of economic nonsense is to pull government out of the economy.

Minarchy, it’s the only sensible answer.

Civil Service Strike? Bring it on

Now is the summer of our discontent made wintry by flat-footed government. As the Spectator leading article put it last week: “Johnson has weighed down the economy by presiding over a government that is now 55 per cent larger than it was even in the Blair years.” So he announced 20 per cent cuts in the civil service which prompted Liz Truss to demand a 10 per cent increase in her staff and a majority of cabinet ministers to panic about a civil service strike. That was the end of that idea so far as we have heard since.

When Mrs Thatcher was faced by the near certainty of a coal strike, she stockpiled coal and told Scargill to bring it on. Johnson should learn from that. 

The absence of most parts of the civil service would actually be welcomed by the public: we want the armed forces (who would not strike) and be delighted by the rest of the MoD taking their leave. Likewise a holiday from the Foreign Commonwealth and Development Office, BEIS, HMRC and the rest of the Treasury, DCMS, Department for Education, DHSC (the NHS staff are not civil servants), Department for International Trade etc. etc. would be a welcome relief.  Not paying them during the strike would achieve exactly the savings we need. 

Mrs Thatcher’s lesson is preparation: we need to provide cover for the civil service we would miss–not actually that much. Firstly, we need the law the government has been talking about to allow “agency staff”, i.e. any people prepared to do the work, approved by government, to cover for strikers. We need them actually to pass the law, not just talk about it. 

The good news is that IT systems do not strike and require relatively few staff to operate them.  On some pretext or other, Mr Putin’s threats will do, a Minister should create a very small “National Emergency Service” which would be essentially a Dad’s Army to back up the civil service in the event of a major crisis with enough expertise in each of the key protected areas to keep the show on the road. The “key protected areas” would be the civil service areas the public cares about, i.e. the parts that hand out short-term money (pensions and welfare payments) and security (borders and prisons). Licences would be automatically extended for the duration of the strike. The leading banks would be expected to provide the National Emergency Service for financial matters and the armed forces could be called on for security manpower. 

Johnson’s call for a 20 per cent civil service reduction was too modest. 55 per cent would be better and we are publishing a discussion paper this week showing that the Cabinet Office headcount should be reduced by 90 per cent and be the better for it. Watch this space. 

Advice for the Observer: don't believe your own casuistry

That statistics get twisted to make a political case is hardly a surprise to adults. But a useful piece of advice is that you really do have to recall how you’ve twisted them.

Anntoinette Bramble, chair of the Local Government Association’s children and young people board, said: “The Competition and Markets Authority has confirmed our own findings that private equity providers are making extremely high profits and carrying concerning levels of debt that risks the stability of homes for children in care, which is paramount if they are to thrive.”

It’s not possible to both make high profits and also carry excessive debt. If your profits are high then debt isn’t a problem for it can be serviced. If debt levels are a problem then profits are not high enough to service it. It’s an either or situation here.

What they are actually doing is looking at gross profits and saying they’re high. Then at debt levels and saying they’re high. Without making the connection that gross profits are what you make before financing costs. Given that children’s homes do require the existence of a home they’re measuring profits before the cost of having a home, debt levels after.

Casuistry, of course.

Now that we know that the figures are being played it’s possible to ask how else they’re being fudged.

The Observer examined the most recent Ofsted inspection of private children’s care homes. It found that 114 homes were given the lowest “inadequate” rating, which triggers further investigations. Of those, about 20 were run by providers with links to private equity. It comes amid continued frustration with the “broken” provision of children’s care homes.

Note what we’re not told. How many of the homes are being run by private companies, how many of those are connected with private equity? That is, are the results from private equity worse than other methods of provision? Better? We’re simply not told. We’re just told that some private equity run homes aren’t good enough. Without the information to be able to see whether that result is better, worse, the same, as other organisational and or financing methods.

The last time this subject came up we were told:

The 10 largest providers of children’s social care placements made more than £300m in profits last year, according to research that will fuel concerns over profiteering by private providers.

From which we might - reasonably, but with no certainty - conclude that private equity is the majority of the sector, but very much the minority of those homes rated inadequate.

Which is a very different message from that being given in this piece in The Observer.

The LGA’s position is obvious. No bureaucracy likes to see itself being bypassed. So, the LGA is against private provision of children’s homes. The Observer however:

an Observer investigation has found.

Well, come on then, do an investigation. What is the portion - for that is what matters - of good bad and indifferent dependent upon the management and financing method? Instead of just repeating whatever spin it is the LGA would seem to want to spout.

Oh, and another suggestion. Those investigating need to be people who know the difference between gross and net profit. For if you’re too dim to grasp that then accounting really isn’t a subject for you.

We know this is picky but could George Monbiot try reading his own sources?

Apparently the rich world should simply abolish all poor country debt to make up for the climate costs imposed by the rich world on the poor countries. That’s the latest Monbiot suggestion. Quite why someone who has lent to a successful and profitable business - for yes, of course, this is intended to cover all commercial debt as well - should have to give up getting it back is left unsaid.

However, the demand depends upon two different papers. Firstly, an evaluation of previous debt relief and how that might be extended. This insists that such debt relief only works when subsequent policy is sensible. Economic policy in the relieved country is sensible that is. Limit future debt to some reasonable multiple of export earnings for example. In fact, the outcome is pretty much that those who follow the precepts of the Washington Consensus - that list of stupid things not to do to an economy - do well, those that don’t, don’t.

The second underlying insistence seems to be that trade is bad. Poor people selling things to richer is exploitation. We can see this just because the wages poor people earn are lower than those richer do. QED.

Threading a policy between these two positions doesn’t seem possible. Which is why we’d rather urge Monbiot to check his sources rather more carefully. Because without understanding proposals it’s not really possible to start recommending them, is it? Or at least, not sensible to do so.

Food goes into people, not cars

Many will have noted the insistences that the Ukraine and Russia events are leading to a significant rise in the price of food and the possibility of shortages out there. There is indeed talk of famine rearing its ghastly head again as a result.

At which point, why are we putting food into cars?

Europe burns over 17,000 tonnes of rapeseed and sunflower oil every day – the equivalent of 19 million bottles[1] – a new Transport & Environment study shows. This has contributed to spiralling food price rises as well as empty supermarket shelves in the wake of Russia’s invasion of Ukraine. T&E has called on governments to prioritise food over fuel and end the use of crop biofuels now.

It does seem somewhere between odd and vile, doesn’t it? It’s not even as if it reduces CO2 emissions given that most analyses show that the crops require about as much to be grown as is supposedly saved.

We could also point out that this is a long running schema:

The 10% target was included in the 2009 RED that mandated EU member states pass laws to boost renewable energy use within power generation and transportation.

It used to be only 5%, now that 10% target has recently been reached. And yes, it gets worse:

The next phase of RED will target 27-29% of renewables in transportation by 2030.

Food goes into people, not cars.

The base and important lesson of both the Stern Review and William Nordhaus’ work on climate change is that whatever we do don’t, just don’t, let the idiots try to plan things. Set prices and leave markets to do the work.

So, that’s working well then, isn’t it?

This could well be so, yes

A strange complaint about the international aid business:

Boards and senior leadership positions in NGOs are dominated by white people and based in high-income countries such as the UK, underpinned by false assumptions that best practice originates in wealthy states, the report said.

The basic moral and logical contention here is that some places are rich, some are poor. This means that there is that moral duty for the richer to aid the poorer and thus the transfer of economic wealth from one to t’other. That is the logic being used.

Best practice is whatever it is that makes one place rich, another not so much. That’s the subject under discussion after all. So, logically again, best practice does indeed originate in the wealthy states. Because that’s the proof of the pudding, these are the things which make a place richer.

We’re trying to aid poor places in becoming richer. This does indeed mean following the policies that made rich places rich. How can anyone complain about that?

Prices are information - no, really, price changes tell us things about reality

That prices are information is obvious. Yet all too many don’t quite grasp how important this point is. So, a little story from the past pointing out that changes in prices allow prediction. There might be the slight echo or tarantara of an own trumpet being blown here but the story still stands as an example.

Back in 2013 one of us said, elsewhere:

The most cheering thing I've heard recently on this subject is that the price of thorium is now positive. That might not mean much without explanation, so here goes: There's thorium in all sorts of minerals from which we already extract interesting metals. The tantalite and columbite that we make our capacitors from for example: there's enough in the wastes from their processing that old factories that used to do this are now Super Fund sites in the US.

Vast sums of money being spent carting off the lightly radioactive wastes into secure storage (actually, just to piles by uranium mills). And if you actually happen to have any thorium around, as I do, getting rid of it is a very expensive proposition.

The usual solution to this sort of problem is that you refine whatever it is up to a useful commercial purity then sell it. But there's almost no one out there still using thorium: thus the price of thorium, given the disposal costs, is actually negative. Until just recently, that is.

Lynas, which has built a new rare earths refinery in Malaysia, will have thorium as a byproduct (there's always Th in your rare earth ores). They've announced that they're getting offers to actually buy it from them: the price has turned positive.

Now, OK, that's possibly only a matter of interest to metals geeks like myself: but what it actually means is that someone, somewhere, is being serious about starting up test runs of thorium reactors. It's the only possible use for the material these days in any quantity.

If someone's buying then someone is at least considering filling up a test reactor. My best guess is that this is the Indian research programme: although it could, possibly, be the Russian one and there are rumours of a Chinese as well.

From Nature, Sept 2021:

China prepares to test thorium-fuelled nuclear reactor

That prediction turned out pretty well actually. It was also driven by absolutely nothing other than that the price of a particular metal has changed. From negative - an expensive waste that must be managed - to positive, something that folk actually desire.

Prices are information. The trick is to work out what they’re telling us, not attempt to either change or ignore them.