Peter Thiel is wrong about technological advance here

It’s a common complaint but an incorrect one:

For example, Thiel points out, air travel has hardly improved in decades. In fact, with the demise of Concorde, we now have less access to high-speed air travel than we did 30 years ago.

That is to assume that the only possible improvement to air travel is greater speed. As if the only possible improvement from the agricultural revolution were more turnips. Or the computing revolution meant faster calculators.

Items - goods, services - can improve by many metrics. Along different spectrums if we like. Which they often do in fact. They get to “good enough” along one direction, toward one end of a spectrum, then stagnate in that direction. Cars, say. The first few decades increased speed - safe speed that is - as something that was developed as being able to cruise at 70 mph, or 80, was a great improvement over doing so at 20. But the improvement from 80 to 130 - say - was of must less value. Partly because of the reaction times of the wetware controlling it but also because most to many of the things we might want to use a car for can be done at 70 or 80 and 130 doesn’t add much value. Cars are much safer than they used to be, much more reliable, vastly cheaper for the level of performance than they used to be. All of which are technological improvements. Anyone claiming that car technology hasn’t improved in the last 50 years would be laughed at as a ludicrously ill-informed rube.

Airplanes have hugely advanced in that same past 50 years. Not in speed, true - 520 mph seems to be good enough for many uses - but ‘planes are very much safer than they used to be. Less noisy too. Also, the use of a ‘plane is hugely, vastly, cheaper. Roughly, you understand, just roughly, a trip from Britain to Europe, 50 years ago, cost about a week’s wages. Today it can usually be done for a day’s. And that’s not because wages have risen that much.

To claim that’s not technological advance is, well, rube-ish.

Of course, this becomes important when we consider train travel. Sure, the average speed hasn’t increased in 50 years. This does not mean we require high speed trains. We’ve developed the internet that works on trains now, so time spent on one is not time that is subtracted from working hours. That’s what kills the HS2 cost benefit analysis as it was originally done. And really, anyone want to claim that adding the internet to trains is not a technological advance? As, you know, has also recently been done to ‘planes?

But, but, we must have common standards to have free trade!

A common enough insistence these days. We must all accord to EU standards in order to be able to have free trade with the EU. Or, vice versa, in order to have EU goods come here we must make sure that our standards are the same as their.

What amuses is that this insistence is being applied to the car industry. Yet cars used in the UK are right hand drive, those on the Continent left hand drive. European factories do make RHD cars for us to drive, British do make LHD for them.

So the insistence becomes that we must have common standards for an industry which actually builds to entirely different designs in the first place. In order to enable the trade of those things built to those entirely different designs we must all agree upon the one single design that is.

Someone isn’t thinking logically here and we’re absolutely certain that it’s not us in error.

That other people build to different standards is something that exporters deal with routinely. As the car industry proves. Therefore we do not require commonality of standards in order to be able to have trade. QED.

Just think on this wealth tax idea

One of the more absurd ideas floating around is that we must tax wealth more. Some are even suggesting that a rise in an asset value should pay income tax, even if that asset is not sold and the value not crystallised. There really has been a bill put together in the US Congress along those lines - although it’s still a bit too silly even for them to get beyond the thinking about stage.

One reason for the silliness is that of course refunds would have to be paid if asset values fall:

Rishi Sunak’s rise to the top job in British politics has coincided with a colossal fall in the fortune shared by him and his wife, Akshata Murty.

This year’s Sunday Times Rich List, published today, reveals that the couple’s wealth has fallen by more than half a million pounds a day over the past 12 months. Their fortune is now estimated at £529 million.

The couple’s most valuable asset has long been a shareholding in Infosys, an Indian IT giant set up by Murty’s father. When the pair made their debut on the Rich List in 2022 this stake had a value of £690 million.

We’d love to see someone trying to defend a substantial tax refund to someone now only - only - worth a half billion.

But beyond the silliness there’s also another problem - such a tax wouldn't raise much money. The overall level of wealth doesn’t change all that much. Who has it is what changes, certain fortunes rise, others fall. Which means that a very large portion of the receipts will have to be paid out again in refunds. The net, well, the net might well not even be positive for large periods of time.

Adding a tax which gains negative revenue some to much of the time really just doesn’t sound all that sensible.

Fertility rates and the conflict with the liberal vision

More worrying about the fertility rate:

Politics works on the basis that society will go on and on into the future. The intense focus on climate change – for good or ill – takes for granted that there will be many future generations whose welfare is threatened by damage to the environment. But can we really be so sure that there will be future generations to benefit from our endeavours – or even to look after us in our old age?

The short answer is no: the evidence suggests that the very existence of future society hangs in the balance. The current UK fertility rate – the average number of children per woman – stands at 1.6. This is significantly below the “replacement rate” of 2.1, and continues to fall.

The correct answer there is well, bully for politics then. Because the liberal vision - by which we mean the real one, not the modern - is to maximise choice, freedom and liberty to the individual. Society is then the aggregation of those individual choices. Yes, of course there are limits, things like third party harm and so on. But leave people be and see what happens - that is the design for the liberal society.

This past century has included glorious events - the economic liberation of women for one. The result of that freedom and liberty is fewer children. Oh well, that’s just what humans want to do with their freedom and liberty.

It’s therefore the politics that needs to change, nothing else. For the people have spoken in their most intimate acts and decisions.

It might well be true that some don’t like that aggregate result, the society that results from freedom. But bully for the complaint, not the acts.

We just can't see the terror here

The general political thought these days is that this is some grand terror:

China owns most of the cobalt mines in Congo, which has the majority of the world’s supply of this scarce material needed for the most common type of battery. American companies failed to keep up and even sold mines to their Chinese counterparts.

As a result, China controls 41 percent of the world’s cobalt mining,

By golly this is a horror and gosh darn it something must be done. A reaction that we really don’t understand ourselves. China is doing a large amount of the economic scut work and we’re all worried about that? They work, we get batteries and electric cars and this is a problem?

It’s not as if China is shafting us on the price of cobalt either. Just 6 weeks back an American cobalt mine was just ready to start operations. They didn’t - the cobalt price is currently below production costs. And yes, given the way mining works it is possible for prices to be below production costs for years, possibly even decades. So not only is China doing all that work they’re losing money on it and we’re gaining.

We really can’t see this as a major problem.

Of course, there is that worry that perhaps, once a monopoly position is gained then China will try to rook us. But we’ve seen that too. Back in 2010 one of us pointed out that China’s attempts to restrict rare earth exports weren’t going to work. We’d just open new mines if they tried. Fast forward to 2014 and the problem was over - new mines had opened and prices were below their starting point.

Addendum: Bonus points to Tim Worstall, economist blogger and rare earth dealer, who in 2010 at the height of the crisis pointed out that rare earths were neither rare nor earths and China’s monopoly had been won only by low prices that accrued to our benefit. “If Beijing wants to raise its prices and start using supplies as geopolitical bargaining chips,” he wrote, “so what? The rest of the world will simply roll up its sleeves and ramp up production, and the monopoly will be broken.” Nailed it.

If they try - if - then we know how to react. Our only real necessary action if they do is to make sure the Nimbys (and the BANANAs) don’t prevent planning applications. After that we can just stand back and watch markets work. The cost will be the same as trying to boost our own production right now but we’ll only incur it if we need to.

Behind this is a gross misunderstanding. The world’s really a very large place. There are plenty of places we can dig holes and gain cobalt - or lithium or rare earths, or whatever else people want to worry about. The trick is to only go mining when we need to. If China’s willing to do all that work - often enough at a loss - then leave ‘em be. There’s absolutely no point at all in insisting that we too must make a loss right now.

Suggestions from people who simply do not understand

There is this thing in economics called “economies of scale”. If you do things on a larger scale then it might be possible to have lower unit costs for each of the things done. It’s not a certainty, thus the “might” there. But retailing is one of those things where we do see it.

Cheap stuff is sold in high volumes from sheds on the edge of town. Small quantities in the centre of town are more expensive. That’s just the way the economics work out.

At which point we get this:

Sue Davies, the head of food policy at Which?, urged Rishi Sunak to ask grocery bosses gathering at No 10 on Tuesday to commit to doing more to hold prices down, “including stocking budget lines in convenience stores to ensure easy access to basic, affordable food ranges that support a healthy diet”.

Convenience stores are those small places in the centre of town. Where the volume of sales is small and upon a higher overhead and cost base. Therefore retailers do not sell budget items in them because the margins aren’t enough to contribute sufficiently to the costs of having the convenience store.

This is not something to be overcome by asking eveyone to be nice.

But apparently we’re to solve the problem - if we’ve even got a problem, for we might usefully suggest that those who are budget constrained go to the sheds - by so asking. Which isn’t going to work when facing the basic economics here, is it?

But jobs and exports are a cost

We do think it would help if people grasped the very basics of economics before proposing economic plans. We have no problem with renewable energy - as long as it has to pass all the usual economic tests of being worth it and so on. But this strikes us as simply being wrong:

UK could unlock £70bn a year in renewable energy, report claims

Plausible for UK to become global clean energy superpower if investment is ramped up

Well, OK, so what is it they’re suggesting?

The UK could unlock £70bn every year by generating enough clean electricity to become a major exporter of energy to mainland Europe, according to a former government economist.

A new report has found that by increasing Britain’s clean electricity generation 50% above its current projections for 2050 it could become a clean energy superpower capable of exporting £17bn of green electricity to Europe a year.

The ambition to generate more green electricity than needed to meet the UK’s climate targets could also create an additional 279,000 British jobs, and support a total of 654,000 British jobs, across the UK’s clean energy industries, according to the report.

Ah, no, that’s not passing the basic economic tests, not at all.

Investment is clearly a cost. We’ve got to - at best - defer consumption in order to devote resources to building these whatever they are. That’s a cost. Jobs are a cost of doing something, so creating 279k. or 654k jobs, is a cost. We can have less NHS, or ballet, or performance poetry, food, housing and whatever because all that human labour is being devoted to renewables. Finally, exports are a cost - that’s our labour that is sent off for Johnny Foreigner to enjoy the fruits of. Sure, exporting so we can buy the fruits of J Foreign’s labour is just fine, but that’s the benefit - it’s still true that exports are the cost.

So, what this report is actually saying is that we should carry the cost of investment in order to also be able to enjoy the costs of jobs and exports. Which does seem to be missing something really rather important - what’s the benefit of this trio of costs?

The analysis by former government economist Chris Walker for the UK Business Council for Sustainable Development

Might we, ever so gently, suggest that these sums get done again? With the right plus/minus signs in front of each of the costs and each of the benefits? At which point it would be possible to actually evaluate this idea.

What an excellent argument for the free market this is

Sonia Sodha tells us that:

If the price of a supermarket chicken had risen at the same rate as house prices since the 1960s, it would today cost more than £50

OK. So why doesn’t a chicken cost that? Actually, a free range, organic, heritage breed probably does cost about that at some achingly trendy food purveyor. Or at least closer to that than the price most of us do pay. So the answer about the chicken is that we’re not stuck with only the old-style free range, organic heritage breed. We’ve had, over this time period, a technological revolution in chicken. As we’ve noted before people complain about how cheap chicken is in fact, what with broilers, vast raising sheds and all the rest.

So, why have we had that revolution? Sir Anthony Fisher is a part of it, certainly. Importing that new tech from the US in the post-war years. We never really did have EU stupidities on chicken and eggs as we did beef, butter, wine and olive oil - it wasn’t a traditional peasant occupation, d’ye see? Not in the same way at least. Therefore we never did get quite the same level of planning, government attention and, ahem, better than free market outcomes.

We got, to a very great extent, the free market able to get on with that technological revolution. Most chicken farmers scrape by, there are no excess profits in the system. And we consumers gain cheap chicken for the first time in millennia.

Free markets work.

So, why have house prices risen so much as compared with the cost of chicken? Because we’ve not had a free market in housing, we’ve got all that planning and all that bureaucratic effort to try to reach, ahem, a better than free market outcome. Which clearly and obviously hasn’t worked, has it?

Not free markets don’t work.

The current cultural insistence is that we’ve got to increase the price of food by not having a free market in the production of food. We have a better idea - why not have a free market in housing so as to decrease the cost of that? Blow up the Town and Country Planning Act 1947 and successors. Proper blow up. Kablooie.

Anything else is just for the birds.

There is a reason for the private ownership of property

Excessive foraging for wild garlic and mushrooms in UK ‘a risk to wildlife’

Experts say foragers taking too much, selling the goods commercially and harming fragile ecosystems

This was explored by Garrett Hardin in his Tragedy of the Commons essay. True, he tried to apply it to population where it doesn’t actually work. It’s also true that Elinor Ostrom gained her Nobel for noting how within smaller societies social pressure is a possible third management technique. But the base idea still stands.

When we have Marxian - open - access to a resource and demand rises above the regenerative capability of that resource then we need to have a management system. Which can be a capitalist, or private property solution. Or, a regulatory, rules based or as Hardin called it socialist, solution. Which works better will depend upon the specifics of the thing that is to be regulated. There is no in theory correct answer which applies to all things. We’re back in that most common of economic answers, “It Depends”.

As it turns out with land itself private property seems to work best. Access to the resource being controlled by the owner of that land. Invoking some medieval idea of the “commons” doesn’t work here as they were not open access in the slightest; those libraries full of manorial records are in fact records of who did have - and who did not - the right of access to the resource.

As a society we’ve faced this problem before and know how to solve it.

Gerrof moi land is that solution. We should apply it again.

Can we say the same about British low end housing?

Marginal Revolution points to a new paper on US housing for the poor:

This study analyzes patterns of housing consumption and expenditures among social safety net recipients since 1985. For safety net recipients, including Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) and cash welfare (AFDC/TANF), monthly housing expenditures have risen from $692 to $1,341. However, these increased expenditures partially reflect housing quantity improvements, including more square footage, more rooms, and larger lot sizes. The data also show a marked improvement in housing quality, such as fewer sagging roofs, broken appliances, rodents, and peeling paint. The housing quality for social safety net recipients improved across 35 indicators. These quality improvements equate to a 35 to 44 percent increase in housing consumption and suggest that a typical safety net recipient in 2021 experiences housing consumption equivalent to the average national household in 1985. Though relative housing consumption has remained similar for safety net recipients, this “rising tide” of housing quality may have additional benefits for the health and well being of families and children living in better housing.

US housing is as unequal as it was but at the low end the quality has risen to the population average of 40 years ago. It’s possible to say that’s not good enough but it’s certainly better than it was. Can we say the same about British housing?

By at least one of those measures - the space available to a household - of course entirely the opposite is true. Britain now produces the smallest new housing in Europe at something like 76 square meters. That’s a result of all that lovely planning and Green Belt and social housing that we do - instead of the American system of having something more akin to a free market in housing.

Given that British housing has got worse with planning, American housing - even at that bottom end - without it, perhaps we should be reconsidering our devotion to the planning of housing? On the fairly simple grounds that planning makes things worse?