Do we now get to fire them all?

An interesting way of defining the size of the public sector:

Although these workers and their employers might not consider themselves public sector staff, he said, they are nonetheless funded by the taxpayer and working for the state.

Mr Mortimer-Lee said: “If it looks like a public sector job, smells like a public sector job and has the same terms and conditions as a public sector job, then it's probably a public sector job.

“Whatever the government statisticians say, this is a better way of measuring it. They think [their way] is a better way of measuring it because it gives a lower number.”

The result of this different way of counting?

Analysis by the National Institute of Economic and Social Research (Niesr) suggests that around 10.6m people are employed by the state – far more than the 5.7m typically cited by the Government.

One in three workers are now in the public sector, according to Niesr analysis, up from 25pc when Tony Blair came to power in 1997, with the rise continuing steadily after David Cameron took over and despite the austerity policies of then-Chancellor George Osborne.

Which is an interesting result. We’re not wholly certain that we’d 100% agree with and wholly rely upon this new method and result but it is indeed interesting.

What’s even more so is the logical result of this. We’re told that British productivity growth has been weak at best these past couple of decades. Therefore we must change economic tack. Which seems fair enough. But that change in tack is then usually claimed to be stopping the austerity, stopping the neoliberal insistence upon markets and going back to a more intrusive and extensive state.

But if this analysis is true then reality is that we’ve been having the more intrusive and extensive state this past couple of decades which is what produces the weak productivity performance. Thus that’s the thing that has to be changed.

In short, bring on the neoliberal revolution and let’s start firing swathes of those public sector employees. They are, after all, making us all poorer than we need to be. Whether it will actually work, doing so, is dependent upon the accuracy of this analysis. But it’ll be fun too so why not do it just on the off-chance?

Who's in charge around here, Secretary?

I worry when I read stories like the business secretary Kemi Badenoch complaining that she cannot deliver her party’s manifesto plans to scrap all EU laws due to Whitehall intransigence. It makes me wonder who exactly is in charge of public policy: elected ministers or their unelected officials? 

There is an attitude among senior officials that they know better than these' here-today-gone-tomorrow' ministers. The old dictum of ‘advisers advise, ministers decide’ seems reversed. We have unintentionally ended up with a self-propagating bureaucracy who are either averse to change, or who feel they are above the democratic decision-making process. 

Past governments are much to blame, of course. It’s nice to create new ministries that give your colleagues nice jobs and chauffer-driven cars. It’s easy to create new quangos and agencies, with their associated bureaucracy, to address every new issue that the media get agitated about. But if ministers are going to manage the bureaucracy, they need principle and long-term vision.

Luckily we have such a plan, in the shape of a new book, Shrinking Whitehall by management guru Tim Ambler. He recommends that Whitehall departments should have a small core group dealing with policy, plus as many executive agencies as needed to deliver those policies. That was, indeed, the Next Steps plan created in the 1980. But decades of bureaucratic drift, the civil service has morphed into an unfocused blob of confused structures, functions and priorities.

At the last count, there were 636,786 UK civil and public servants. Of those, says Ambler, 105,291 belong in public corporations, since they work in things like museums, the BBC and other units which are not part of governing at all.

Scrapping all quangos — ministers can take advice from whoever they like, without needing permanent bureaucracies to advise them — and ending duplication in both policy and executive functions, means another 193,998 of the remaining posts could be lost, as and when their present occupants retire. That would shrink Whitehall numbers by 53%, cut the number of departments from 43 to 11, and reduce the size of the cabinet by a third. 

Saving staff and costs would be welcomed by over-taxed citizens but Ambler's recommendations are more important than that: government need to re-focus on what it really needs to do and re-structure to deliver it.

Then, perhaps, ministers might be able to get a grip on this turbulent beast.

Buy Shrinking Whitehall here.

So requiring degrees for nurses didn't work out then?

Back when the requirement for nurses to take a degree course came in (all the way back in 2009) we muttered more than a little about how this wasn’t in fact a good idea. And so it has turned out:

School leavers will be able to start working as doctors without going to university, under new NHS plans to fix the growing staff crisis.

The apprenticeship scheme could allow one in 10 doctors to start work without a traditional medical degree, straight after their A-levels. A third of nurses are also expected to be trained under the "radical new approach".

It might be an approach but it’s neither radical nor new. It is, in fact, profoundly conservative. It’s an acknowledgement that one of those bright ideas of the Blair years wasn’t bright and is therefore to be reversed.

Don’t forget, nursing training used to be a couple of days of learning how to wash your hands properly then several years apprenticeship on the wards. Which is apparently what we’re to go back to.

The only pity is that the planners decided to take us on this decade and a half diversion. All hail planning, eh?

Oh, and expect the Royal College of Nursing to be spitting feathers - they were so proud of becoming an all graduate profession.

Abolish inheritance tax because wealth inequality doesn't, in fact, matter

A good suggestion from Eir Nolsøe, let’s just abolish inheritance tax. It’s - by far - the most hated tax in the country, doesn’t bring in much revenue compared to the spending micturation of the political classes so why bother? Why not just tax people on the profit of the whatever it is if they sell it after inheritance? Why make death one of those things that crystallises profit into a taxable event?

But there’s one more line of argument here. Wealth inequality doesn’t actually matter very much. Both Norway and Sweden have greater wealth inequality than the UK. Both Sweden and Norway have lower income inequality than the UK. Of course, consumption inequality - the thing that really counts - is lower everywhere than either of those two numbers. But it is in fact true that wealth inequality does not feed through into a greater inequality in how people live their lives - that income which can be expended.

So the reducing inequality argument doesn’t even work - so why persist with a hated, damaging, light revenue raising tax?

We assume that it’s because lots of our fellow Britons are consumed by the green eyed God of jealousy. But that’s not a rational basis for a system of taxation now, is it? Or perhaps it is but that’s a Britain that we’d prefer didn’t happen.

Incentives matter, d'ye see?

We would put much less weight on this statistic than many others. In fact, we’d put near no weight on it at all:

Back in the 1990s just over a third of those living in poverty (or to put it another way, towards the very bottom of the income distribution) were living in a household in which someone was in work. That fraction has now reached something like 60 per cent. The majority of the poor are in work or live in a household where someone is working.

The reason we think it’s unimportant - in the sense of being some horror that requires a solution - is that we changed the benefit system over that period of time. For certain benefits - working tax credits for example - it’s necessary to work 16 hours a week. Which isn’t enough to climb out of poverty. But someone working 16 hours a week to gain access to that benefit is someone described as “being in work”. We’re absolutely certain that if we went back to the benefits structure of those 1990s then we’d see the level of poverty in families with someone in work return to those 1990s levels.

Incentives do matter, d’ye see?

The other reason we’d not change anything to deal with this perceived problem is that at least something has already been done. Universal Credit shakes up those incentives and we really should wait and see how people react to those changes.

That change in the number of “working families” who are in poverty is driven at least in part by the changes made to the welfare system. Not, as all too many are assuming, by the structure of the underlying economy. Even if we did insist that this was some problem that must be dealt with the changes should therefore be in the welfare system, not the economy.

Hayek's 124th

On this day, in 1899, the Nobel economist and social theorist Friedrich Hayek was born. He was, in the words of Robert Skidelsky, “the dominant intellectual influence of the last quarter of the twentieth century”.

Hayek was the driving force that kept alive the spirit of personal and economic freedom that had been crushed by the Second World War and the Keynesian economic experiment that followed it. Those who think they can rationally design a better society, he argued, suffer from the ‘fatal conceit’ that we know far more about how society works than we really do.

Governments simply could not collect and process all the information needed to run a functioning economy, because that information is dispersed, diffuse, incomplete and personal. The socialist dream would always be frustrated by reality; and as socialists struggled to control things, we would be drawn down a road to serfdom.

Societies do not need to be planned in order to be rational and functional. Their rules and customs contain a ‘wisdom’ that has stood the test of time. A wisdom that we cannot even understand, never mind control. The price system, for example, allocates resources to their most urgent uses, with a speed and efficiency that defies any government planners. Such ‘spontaneous orders’ (including not just markets but language, justice and much else) were, said Hayek, products of social evolution, not rational design. Trying to replace them with some planned ‘rational’ alternative always ends in disappointment and chaos.

Hayek influenced a generation of economists, including many others who would also win the Nobel Prize, such as Milton Friedman, George Stigler, Maurice Allais, James Buchanan, Vernon Smith, Gary Becker, Ronald Coase and Elinor Ostrom. His ideas also enthused intellectuals who in turn disseminated his ideas even more widely. Among them were Henry Hazlitt, journalist and co-founder of the Foundation for Economic Education; Ralph (later Lord) Harris and Arthur Seldon who ran the Institute of Economic Affairs; F A (“Baldy”) Harper who founded the Institute for Humane Studies, Eamonn Butler and Madsen Pirie of the Adam Smith Institute.

These thinkers and activists gave Hayek’s ideas a real political effect. Margaret Thatcher and Ronald Reagan owed much to his thinking, as did Mart Laar and Vaclav Klaus, who became political leaders in Eastern Europe after the fall of the Soviet system. “No person,” concluded Milton Friedman, “had more of an influence on the intellectuals behind the Iron Curtain than Friedrich Hayek.”

Hayek remains an inspiration to lovers of individual freedom all over the world. Think tanks promote his view; student groups name themselves after him; college programmes take his name; economists and journalists cite him; his views are analysed in books, papers and blogs. Millions of ordinary people around the world owe to Hayek their enjoyment of the fruits of personal and academic freedom, even though they may not realise it; but then as Hayek pointed out, knowledge is not always obvious.

Eamonn Butler is author of Friedrich Hayek: The Ideas and Influence of the Libertarian Economist (Harriman Economics Essentials).

https://www.amazon.co.uk/Friedrich-Hayek-influence-libertarian-Essentials/dp/0857191756

Just sometimes a modicum of thought is required

Once again we’re told that Vienna is that housing nirvana:

Yet, it need not be this way. In Vienna, the majority of the city’s population live in high-quality subsidised housing.

Quite why the majority of the population should be subsidised is not explained. But still:

The city spends more than €570m (£502m) a year on its housing, including building new homes, paid for largely with a 1% levy on the salaries of every Viennese resident. Elements of the model have been adopted by many other European cities, from Barcelona to Helsinki.

What good housing requires, as Vienna shows, is political vision and will.

We’d be a little hesitant about lauding the triumph of political will in that place and country ourselves. But take that seriously. Vienna has just under 2 million inhabitants. They pay half a billion a year - so, who thinks that £250 a head per year in subsidy will solve Britain’s housing problems? A week’s rent each?

Quite, no one, not even the author of this piece in The Observer. So, there’s obviously something else going on as well, isn’t there? Some difficulty, difference, impediment, in the British system that doesn’t exist in the Viennese.

We’d suggest finding out what that is then changing the British system so that it doesn’t have it. Like blowing up the Town and Country Planning Act 1947 and successors. Proper blow up, kablooie.

After all, Vienna doesn’t have that, does it?

Free market capitalism just isn't for the birds

We have a complaint here about broiler hens. On a moral basis it might even be somewhere between fair and true. As economics it’s desperately unobservant.

“Frankenchickens”, as campaigners have dubbed them, reach maturity 12 weeks quicker and can be up to twice the size of a typical farmed bird 50 years ago. They can go from egg to slaughter in just 35 days.

The selective breeding has helped ensure Britain has plentiful cheap chicken to furnish dinner tables across the country.

Yet campaigners, who include TV presenter and environmentalist Chris Packham, argue the breeding practice is unnatural and leads to severe health issues for the animals. What's more, they claim all this has been done purely for profit.

“A lot of these industries are not driven by simply feeding people and making a bit of a profit on top,” poet Benjamin Zephaniah, who is supporting the legal challenge, told the Independent outside the High Court this week. “It’s making maximum profit. And I can’t really think of another word but greed.”

It is a characterisation that chicken farmers would scoff at.

Far from greedy profiteering, many farmers say they are struggling to make ends meet. In fact, the industry is now warning of potential chicken shortages as soaring costs push many to give up altogether.

Shelley might have had a point about legislation - so much of it does come to pass on a surge in rhetoric - but not about economics.

Zephaniah and Packham have a point about the producer greed for profit, sure they do. Humans are naturally greedy, humans do like a profit and will do things in order to gain one. But then comes that free market part of the system, the competition. Producers find that profit eaten by the competition - it then ends up with the consumer gaining near all the benefit.

As, you know, shown by that recent Nobel Laureate, Bill Nordhaus. The entrepreneurs (and yes, let us indeed recall that this is where Anthony Fisher’s money came from) manage to, on average, retain some 3% of the value created - the rest being passed on to consumers as a result of that competition.

Human greed as tempered by free market capitalism leads to a chicken in every pot. Maybe that is even beastly to the birds who are the product. But in the interaction among humans beings it’s quite clearly the consumers who benefit from the whole arrangement.

They've not shown that dope smoking makes you mad, no they haven't

Much shouting is about to happen as a report claims that smoking cannabis causes schizophrenia. Which isn’t what has been shown or proven at all - that is what has been assumed.

The Telegraph:

Almost a third of schizophrenia cases in young men triggered by cannabis use

One stage back is the NIH:

Young men with cannabis (marijuana) use disorder have an increased risk of developing schizophrenia,

That’s already a step back in the claim. And the actual paper itself:

At a population level, assuming causality, one-fifth of cases of schizophrenia among young males might be prevented by averting CUD.

We’ve long known that there’s a correlation with heavy dope smoking and getting schizophrenia. The bit we don’t know is whether those feeling the madness descend self-treat with lots of dope or whether the dope causes the descent of the madness.

There will be a lot of people shouting about this report, shouting that it proves the movement is from dope to mad. Which isn’t what was shown at all, that is what was assumed.

Science is, of course, a public good, it’s even good for the public. But it is necessary to just check what is actually being said by the science. This paper measures the size of the correlation between cannabis and schizophrenia. It doesn’t even attempt to decide upon the causality. Despite what varied prodnoses are going to shout at us.

People who quote statistics should understand them - discuss

We are told this:

Over a decade ago, the answer to increasing earnings might have been to work more hours or train for a better-paid job, but these days work no longer pays. Workers in the UK are £11,000 a year worse off after 15 years of wage stagnation.

It’s not just that it’s a non sequiter - whether work pays or not is a function of the returns to not working, not to some mythic standard - nor that it’s logically invalid. After all, wage stagnation would not mean a fall in wages, it would mean not a rise in them. What does matter is that it’s simply not true. Even though The Guardian says so:

Workers in the UK are £11,000 worse off a year after 15 years of “almost completely unprecedented” wage stagnation that signals a failure of recent economic policy, according to the Resolution Foundation.

No, that’s not what they did say. Rather, they said that if wages had carried on going up as they had done in the boom then wages would be higher now by £11,000. Nobody - well, OK, this writer at The G, The G itself are but they’re wrong - not even the Resolution Foundation, are stating that British workers are worse off. They’re just not as well off as if some trend had continued. After all, if real wages had continued to grow at the 3.7% rate of March 2015 (YonY) then we’d all be squiddledepop richer. And?

We can even back test the original claim. In 2008 average (from median to mean) wages were in the £20,000 to £25k range. If that had fallen by £11k then real living standards would have declined by 50%. Which, despite whines and whinges, really has not happened.

Just a little hint, those who do not understand an economic claim or statistic - even those who have trouble with numbers - should not try to misuse an economic number or statistic to bolster an argument.

Of course, it’s also logically possible that this is intentional, an attempt at misinformation. But that would be naughty and no one would do that, would they?