If only Ms Lucas could follow her own logic
We thought this was quite remarkable for not even understanding its own internal logic:
All that profit, yet investment in our waterways is falling woefully short. Not a single new reservoir has been built in the past three decades, and our Victorian water pipes are being replaced at a rate 10 times slower than our European neighbours. So we need immediate action. The Green party is calling for an urgent enforcement order on water firms, a cut to bosses’ obscene executive pay, an end to dividends to shareholders and for the water supply to be brought back into public ownership as soon as is practicably possible.
Public ownership works, and is popular. Publicly owned Scottish Water is the most trusted public utility in the UK, while not-for-profit Welsh Water has helped 60,000 low-income customers to pay their bills. They invest more, too. Scottish Water has invested nearly 35% more per household in infrastructure since 2002 than privatised firms in England; it charges 14% less in water bills; and it doesn’t pay out costly dividends to shareholders.
There are four ownership regimes for water in the United Kingdom. None of them have produced a new reservoir in 30 years. We must assume, therefore, that it’s something other than the ownership structure that builds, or does not build, reservoirs. We might even suspect that it’s the shrieking from the likes of Ms. Lucas’ Green Party when anyone plans to build absolutely anything that could be the cause there. For there have most certainly been many applications to build new reservoirs. Which varied parties - say, the Environment Agency, or planning permissions etc - have denied.
It’s even true that the private, for profit, companies in England have a greater incentive to build reservoirs as their allowable return is set, in part, by their investment in such infrastructure. If they plough more capital into such things then OfWat is likely to allow them to make more profit. OfWat’s determination of whether they be allowed to do so or not also being a possible brake on said building.
We’re also not sure about that touting of lower prices in the Pictish lands. Wetter place charges less for water does it? That’ll have the economists headscratching all night trying to work out how that could possibly happen.
But it’s that claim that Scotland invests more that is the failure of logic. Investment is an input, a cost. So Scotland’s government owned water system spends 35% more per household and still doesn’t build any reservoirs. We’ve more input, more costs, for the same result therefore. Which is proof that the government owned structure is less efficient than the privately - money-grubbing - owned one.
We do tend to think that the country would run better if the varied politicians hoping to do that running even understood their own logic. But then that so few do is why politics should be, when running anything let alone a country, be kept to its irreducible minimum.
Well, actually, it was us
Under the Coalition Government, workers’ tax-free allowance steadily increased above inflation year after year, meaning a shrinking share of the population paid income tax to the Treasury. It was a Liberal Democrat policy, enthusiastically adopted by Conservatives as their own.
From 2010-11, the personal allowance rose from £6,475, reaching £10,600 by the end of the Coalition in 2015-16, and then £12,500 by 2019-20.
If it had increased in line with inflation, the threshold would have been closer to £7,800 - meaning workers paying tax on an additional £4,700 of their incomes.
We even know the name of the Lib Dem activist we convinced who then took it to The Clegg. CPS also had managed to convince Osborne so indeed it did happen. Today that good work is being put into reverse:
Alongside those smaller taxes, fiscal drag is now back with a vengeance. Rishi Sunak, when he was Chancellor, decided to return not merely to the old system in which the tax-free allowance and thresholds rise with inflation, as per the Brown era, but to freeze them completely.
This effectively puts fiscal drag on steroids, particularly at a time when inflation is rampaging at levels not seen in 40 years and wages are failing to keep up.
Indeed so. Although Brown wasn’t all that innocent, as we pointed out in 2008:
Allowances in each of Mr Brown’s Budgets - except 2003, when they were frozen - have risen by “statutory indexation”, in other words, by a similar rate to the Retail Price Index.
Yea, even Brown optimised fiscal drag. Which ended with:
We now have the absurd situation that someone working 20 hours a week or so on the minimum wage is paying income tax.
And that, we’re afraid, is vile. Think on it - the justification for the minimum wage is that this is the minimum that an hour of work is worth. We don’t agree with that, but that is the justification for it. Well, OK, if that’s the minimum value then that’s the minimum value. That sum has to be tax free. If the one boss isn’t allowed to take a slice to defray expenses then neither is the other boss to pay diversity advisers.
If there is to be a minimum wage then the personal allowance has to be that full year, full time, amount. So too with national insurance. If the Chancellor wishes to change the one then he has to change the other. Raise the minimum wage then the allowance rises, by definition.
We can even prove that people bought our argument that first time around. The £12,500 allowance is what the minimum wage was in that year, 2010, that they decided upon the policy. Time for us to be making it again.
If you want the working poor to have more money then stop taxing them so damn much. Which means that the personal allowance must be the minimum wage - at the very least.
It's possible to agree with the problem but perhaps not the diagnosis
Larry Elliott tells us that:
Britain has a cost of living crisis. It also has a housing crisis and an energy crisis. Weeks without rain in southern England mean there is a looming drought crisis. The NHS is only one serious Covid-19 outbreak away from crunch point.
These crises are all distinct and special in their own way but they also have a common theme: a failure to invest stretching back decades. An obsession with efficiency has meant infrastructure has been run into the ground rather than upgraded. Cost-cutting has been given a higher priority than capacity building.
Well, yeeees, but why?
Or take water. Since 1990 the population of the UK has risen by about 10 million to 67 million but not a single new reservoir has been built in the past three decades.
Water companies say they face widespread opposition in building new reservoir facilities, despite a recognition they will be increasingly needed under drier conditions as a result of climate change.
Thames Water has spent more than a decade attempting to construct a £1 billion reservoir to serve more than eight million people in Abingdon, Oxfordshire. The plans were first rejected by the government in 2011 and have been the subject of local opposition.
There are plans for a handful of new reservoirs across the country, but only one - the £100 million Havant Thicket project, near Portsmouth - actually has planning permission.
That is, we can’t build new - and energy efficient - houses because the planning system won’t let us build houses. We can’t go fracking for cheap (er) energy because the planning system won’t allow us to. We can’t build new reservoirs because the planning system won’t allow it.
Another stab with the same point is that the planning process - even if planning is finally granted - makes building or doing anything more expensive. Humans do less of things that are more expensive. Or, more formally, the planning process changes the cost benefit analysis of squeezing more out of the extant or building anew. Thus, if we wish to have more investment, more new things built, we need to lower that cost of that planning process.
Or, as we’ve been known to remark, many things would be cured by blowing up the Town and Country Planning Act 1947 and successors. Proper blow up. Kablooie.
Cutting business rates is a terrible idea - but, sigh, politics
One more little example of why politics is such a terrible way to run the economy. We’re in an election campaign, two candidates, the electorate is the membership list of the Conservative Party. So, we get promises and pledges:
Rishi Sunak on Tuesday night vowed to slash business rates this autumn as he warned Liz Truss’s economic plans would see the Tories get “absolutely hammered” at the next election.
The former chancellor said that supporting high streets would be “top of my mind” when asked by a Conservative member whether he would cut taxes on struggling shops.
He committed to extending the current 50 per cent reduction in his first Budget as Prime Minister, saying that small retailers are the “beating hearts of all our communities”.
That’s a terrible idea even as it might indeed aid in winning that election.
For business rates are a repeated tax on real property values - or, in other language, as close to the UK tax system gets as a land value tax. This is the least bad form of taxation out there so reducing it - to presumably tax more elsewhere - is a terrible idea.
It’s also not paid by retailers but by landlords. Yes, we do know this, no, there is no argument about it. Business rates are incident upon landlords of shops, not shopkeepers or retailers.
So, why would we want to reduce the taxation of landlords and shift that taxation burden to someone else? The answer being we don’t but politics might well mean we do it anyway.
Sadly there’s not really any other way than politics of doing this running a country thing. But it does need to be acknowledged that it can lead to very bad policy.
Just three little things here
Three little stories that appear in front of us:
Rishi Sunak’s Future Fund scheme mostly backed “zombie businesses”, according to a director who helped to oversee the pandemic venture capital scheme.
The £1.1 billion programme is likely to leave “a significant tail of dormant companies”, with the majority of those backed having a “limited chance of growth to a sufficient scale for success”, according to a non-executive director at the British Business Bank, which runs Covid-19 finance schemes.
To put this as mildly as possible, government appears not to have a great talent for picking winners.
Nicola Sturgeon has been accused of abandoning Scotland’s islanders "on a catastrophic scale" after disruption at a state-owned ferry company led to rationing.
Willie Rennie, the former leader of the Scottish Liberal Democrats, said confidence in the government had been "shattered" by ferry disruption affecting residents of the Western Isles.
Some shops were forced to ration essential items such as milk and bread over the weekend after a ferry operated by Edinburgh-owned CalMac was taken out of service for a third time in a matter of weeks, The Herald on Sunday reported.
Government appears not to have a grand talent for running things.
Liz Truss or Rishi Sunak should cancel the £1,400 energy price cap increase in October in a new “energy furlough scheme” and government should absorb the £36bn cost of the hike, the leader of the Liberal Democrats has said.
Ed Davey said neither candidate appeared to have any policies that grasped the magnitude of what could happen this autumn. “We are facing a catastrophe this winter, a drop in living standards unlike anything we have seen in my lifetime,” he said.
Government does have that talent for making money printer go brr and thereby devaluing every other piece of it in existence.
Incompetent at selection, incapable at management and harming everyone to pay for it. Perhaps this idea that we need more government intervention in the economy, more planning, isn’t quite - again to put it as mildly as we can - the most sensible of ideas? Despite the fact that it appears to constitute at least 90% of all ideas about politics and governance.
As we might have remarked before the argument against government is simply to look at what governments do.
Well, let's have a trial first shall we?
From that ever popular series, newspaper headline questions we can answer:
Should those who sent the sub-postmasters to prison now face court themselves?
Yes.
Of course, this is a violation of Betteridge’s Law but then it is those exceptions that make such observations interesting.
We would in fact go further. There needs to be the sight of a significant number of - and senior too - people staring out from between prison bars. We are willing to go with the trial first approach but that’s only on the good days. For this statement is correct:
The mother of two was one of more than 700 people wrongly prosecuted in the biggest miscarriage of justice in British legal history.
Strip away all of the he said, she said, stuff and the base mistake is incredibly simple. The new accounting system connecting the subpost offices with HQ contained an appalling - we’d say criminal ourselves but that trial thing - error. A design error, one that should never have been allowed to pass muster at all. If a transaction was dropped, was incomplete and then repeated - something that does happen over internet connections - then the incomplete was counted as a valid transaction. Instead of what should happen which is that the incomplete is disregarded and only complete transactions are added to the balance sheet.
That’s it. Everything else is organisations stoutly denying that they could ever have done something so stupid. But they did. The cover up perhaps being the difficulty in law but that initial mistake really was that simple.
We want to see jobs lost, pensions confiscated, gongs rescinded and jail time served. We are willing to wait until after the trial, even as we think that government should already be scything through those organizations like Atilla the Hun having a bad day.
We’re even willing to agree to it being a fair trial - for we think the result would be as we wish even with that process.
John Vidal's still not got the point
Not that we accept his analysis of the damages of course - a richer world will suffer more damage from any particular event simply because a richer world has more to damage. However, leave that aside and accept that contention, Vidal is still missing the point:
It shows that a future of spiralling human disasters is all but certain. This year’s record-breaking heatwaves, the wildfires hitting the northern hemisphere, and the floods sweeping Australia, Bangladesh, Uganda and elsewhere will almost certainly be attributed to global heating. Astonishingly, it suggests that one in three deaths caused by summer heat over the last 30 years were the direct result of human-caused global heating, implying a death toll of millions – potentially more than Covid and HIV/Aids. Without rapid action to slash carbon emissions – by 50% by 2030 – far worse extreme weather will ensue.
With these new studies, the most important argument of deniers, oil companies and reluctant governments not to act has been removed. With an immediate and growing global energy crisis gathering pace, and extreme weather affecting most people on Earth, governments must surely come together at the next UN climate summit in November to pledge immediate action.
That means the UK government must urgently invest billions of pounds to insulate buildings, oil companies must drop all plans to extract more oil, and renewable energy must be prioritised over all fossil fuel burning.
This is not true. At least, it has not been shown to be true as yet. Even as we accept the claims of damage we still need something else to inform any decision. Which is how much will these changes cost?
For our aim is to maximise human utility over time. Therefore we desire to do those things which have benefits greater than their costs, not to do those things where the costs are greater than the benefits. Pointing just to the benefits doesn’t do it - we need to also know the costs of achieving those benefits. Exactly the thing which isn’t being done here.
Of course, it has been done, in the Stern Review among other places. The result being that no, we shouldn’t in fact do all of these things immediately and at whatever cost. Further, we certainly shouldn’t do them via government planning. But then perhaps that’s why Vidal doesn’t bother to mention those costs. You know, given that the science says they’re greater than the benefits?
But, what is the Adam Smith Institute for?
This is also rather what we do. Madsen Pirie has described our job here as to be the voices howling nonsense out in the wilderness. Give it a decade and it’s the received wisdom and it all gets enacted.
A little example.
Taxpayer gifts to the Treasury have plummeted in the last five years as the general public has become disillusioned with high taxes and excessive Government spending.
A Freedom of Information request submitted by The Telegraph revealed the Treasury received £16,122 in donations from members of the public between January and December 2021. A single taxpayer contribution of £10,100 accounted for over 60pc of the funds received.
Taxpayer donations, which are classed as “patriotic gifts” by the Treasury, have fallen significantly in the last five years. In 2017 a total of £180,393 was donated.
We started this analysis of such gifts back in 2006 - applying for the numbers for the 2005 fiscal year.
LAST YEAR there were five people in Britain who thought that their taxes were too low. No, this isn’t the number of people who have called for higher taxes. Rather, it is those who were so convinced of the righteousness of state spending that they voluntarily sent extra money to the Treasury.
A number of people have repeated the analysis over the years and we’re fine with that. It’s actually become something of an easy win for a newspaper to follow it up each year and we’re just fine with having created that story template. No royalties are charged and you’re welcome, folks.
Which does give us one of the answers to that headline question. We’re for making the little societal earworms that advance those causes of freedom and liberty. Here just the absolute proof of how many people really believe that taxes are currently too low in this country. It’s a very, very, marginal belief. Certainly a very much smaller portion of the populace than the number who do what they can to reduce their tax bills - so we must conclude therefore that taxation is too high, right?
Not a good argument in favour of the magic money tree
Frances Ryan talks of how Labour should embrace that magic money tree economics. How the use of it as a sneer by the Tories should be turned. Then she bemoans current economic difficulties and:
The public’s concern about debt and borrowing was always era-specific to the aftermath of the 2008 financial crash, and the pandemic has well and truly eradicated it. From the furlough scheme to the vaccination programme, coronavirus killed the myth that large-scale government spending was not necessary, responsible or possible. The cost of living crisis, on top of crumbling NHS services, only shows that smart government investment is not something to be feared – it is to be welcomed.
But it is all that spending which is the very cause of the current travails. The magic money tree is what has led to our current pretty pass.
Whether the fiscal toot should have been undertaken is another argument entirely but the hangover is what is happening now. As the old saw goes, hair of the dog that bit you is the route to full blown alcoholism. So too money tree spending to cope with the effects of magic money spending.
That we’ve an inflation driven cost of living crisis is one thing, arguing that we should be printing more money to solve it is ludicrous.
The classically liberal contention: Different strokes for different folks
We think this is most encouraging from the CLASS think tank:
The “white working class” is such a peculiar phrase, so widely deployed and so misleading. Of course there are white people who are working class, but the class as a whole is the most diverse of any group. This is a point made by a report from Class, the union-funded thinktank, on new attitudes to race and class in Britain. You cannot predefine the beliefs and values of a class, it says, and then filter for people whose whose views correspond to them. Instead, the researchers built their sample on a points system, taking into consideration class identity, housing tenure, education level, occupation, household income, and if and how one might pay a £500 emergency bill. Perhaps that sounds obvious, but it is also quite a novel approach.
….
What hasn’t changed is that the working class is diverse. Indeed, this is a core definition; monoculturalism is a phenomenon mainly of upper-class groups. The values and attitudes associated with the “white working class” or its sibling phrase, so-called “red wall” voters – patriotism, xenophobia, racism, nativism, traditionalism, nostalgia – are simply not discernible themes in any prolonged discussion with working-class people.
This is encouraging because it’s an agreement that the base class analysis of Marxism - which feeds through into socialism - is simply wrong. There is no monolithic block of the “working class” who can be energised into taking that power which is rightfully theirs. This analysis coming not from weird folk like us, but from the very heart - calling it still beating is going too far such is the age of the philosophical mistakes - of that socialist movement. They’re saying it, not us - there is no the people, there’re just folks in all their diverse glory.
Which is, of course, the classically liberal contention. We are indeed all individuals, with our own interests, foibles, beliefs and desires. Therefore politics and the economy have to work on that basis, not on slabs of the faceless who are to be relied upon to act in uniformity.
It’s clearly too much to expect CLASS to recognise the import of their own finding but hope springs eternal. So, to cast this in the simpler form that they might understand. That great social observer, Rose Stone:
Different strokes for different folks
And so on and so on, and scooby-dooby-doo