News just in - freer markets work

Pew is not one of those right wing and free market organisations over in the US. We’d put it, in British terms, somewhere between the Labour Party and Novara Media - that range between wrong but not mad and wrong but….well, you understand.

They have just found out that:

Pew has examined several jurisdictions that updated their zoning codes to allow more housing and found that this flexibility helped these jurisdictions add new housing stock faster than new households were being formed. And while rent remains detrimentally high in many communities throughout the country, this research shows that communities updating their zoning laws in this manner kept rent growth to less than 7 percent over the most recent six-year period, even as rents rose by 31 percent nationally.

The solution to rising rents, to the price of housing more generally, is to build more housing.

Note that the US doesn’t have anything - not of any size - even vaguely comparable to council or social housing. Not since they reformed HUD they don’t - they have Section 8 vouchers, akin to our Housing Benefit. The finding here is that building more housing - of any kind - moderates the price of housing.

As, obviously is going to be true, increasing supply does that. Even if half this country is adamant that it won’t.

But, there we have it. If we liberate planning so that more houses are built then the price of housing will moderate. So, why don’t we liberate planning?

Blow up the Town and Country Planning Act 1947 and successors. Proper blow up, kablooie.

Let’s house the nation, eh?

Well, here's the problem about economic growth

Perhaps we should get really basic here. Economic growth is the new things we do. Can be doing old things in a newer and more efficient manner which frees up resources to then do other things as well. Can be doing something entirely new. But growth simply is those new and additional things.

The rate of growth is therefore the speed at which we do those new things.

The boss of National Grid has complained that it takes a decade to build a new power line in an attack on planning red tape.

John Pettigrew, the company’s chief executive, said that Britain’s planning rules add seven years of delays to the construction time for cables.

A planning system which triples the time necessary to do something new therefore slows economic growth.

We are observant enough to note that there are many complaining about the speed of economic growth in the Britain of today. If we’ve a planning system that is a soul-sucking leech on the potential speed of economic growth then this could, we submit, be part of the problem.

Our suggestion would therefore be to kill the Town and Country Planning Act 1947 and successors. Proper blow up, kablooie. We’d also insist that anyone who does not adopt this approach is not being serious about the slowdown in economic growth.

Well?

Well, yes, this is how competition works

The general lesson here:

Rail fares could be cut in half under government plans to allow trains to compete on the same lines, a leading rail body has said.

Rail Partners, which represents private rail firms, suggested passengers could see huge reductions of between 15 and 50 per cent in ticket costs if the Government pushes ahead with its plan to increase the number of open access operators.

This is simply how competition works. What limits the amount that Heinz can try to charge for baked beans is what others are willing to sell baked beans for. What limits the margin Sainsburys can charge on Heinz baked beans is the margin Morrisons, Waitrose, the Co Op and others are willing to accept on Heinz baked beans. And everyone is limited in what they can charge by the existence of those hundreds and thousands of substitutes that exist for baked beans (although not, of course, on a proper breakfast).

How much we can be charged for a rail ticket depends upon all those substitutes - the price of a car journey, cycling, the bus, just not going and so on. Adding in also that direct competition, someone else offering the same journey but in a different steel tube, at a different price, will indeed reduce prices to consumers.

Which would be good - consumers are made better off and that’s the aim of our having even a civilisation, let alone an economy. Lower prices would, we expect, also entice some of those journeys by car, foot, cycle and just not going onto the substitute of the train ride. Which would, we assume, please the environmentalists.

So, umm, yes. The interesting thing is therefore seeing what excuses are to be given for why it shouldn't be done, isn’t it?

The privileges of liberty and the sanctity of the individual went out and whipped butt.

Harry Wallop has a lovely piece about bananas. The point we’d lift from it being:

Keeping track of all the bananas comes down to barcodes on the outside of the boxes and a warehouse that operates, Hopkins says, with “relentless focus”. He deciphers the code on one box, which is destined for Iceland supermarket and has come from Colombia. “I can see that it was harvested on March 27 at 10am,” he says. “We have 3D warehouses, so I can tell which container, which ship it came in, who drove the forklift truck and which supermarket it will end up at.”

This is, of course, planning to the nth degree. Bananas crop 52 weeks a year, demand varies little. The entire system faces little variance in either supply or demand and the process is really just about the efficiency with which the transport can be arranged. Profit margins are tiny - 1 to 2% of turnover sorts of levels.

This is exactly what a planned economy should be good at - planned economic activity. That is the justification for the entire idea, that planning is more efficient than the chaos of mere markets.

But to offer a second PJ O’Rourke quote:

“For all the meddling the Communist bloc countries have done in banana republics, they still never seem to be able to get their hands on any actual bananas.”

Which gives us our lesson for the day. Planned economies aren’t even any good at planning. At which point the Hell with them really, there’s no other rational response, is there?

How excellent about deep sea mining - we should do more of this

The Guardian is becoming increasingly hysterical about deep sea mining. Articles here and here. To add to that Billy Hague piece we critiqued here. The demand is that there should be a pause, everyone should have more time to think this through and so on. Or, as it might also be put, hit the issue into the long grass where it can be strangled by ignoring it. Note, not issuing the rules for a licence would achieve the goal of not ever issuing a licence, after all.

The particular and specific issue here is the set up. An exploitation licence - as opposed to an exploration one - is, in effect, a shall issue licence. Two years after someone says well, what are the rules here, can we have a licence please, that exploitation licence must be issued. Or at least the rules for one must be. Note “must”. It is not possible to argue for more time, greater consideration and then lose the issue in the bureaucracy.

Which is exactly why the issue is coming to a head here. Either those rules, that licence, gets issued or the reason why not has to be published and defended. With, obviously, the opportunity for court action and so on against any refusal.

To go from that general to the very particular. One of us recently applied for a holiday let licence in one of the minor continental countries. The expectation was that this would take months, if not years, as the desire to not issue them - already well known and telegraphed - meant lost paperwork and echoes of Kafka. Except the national government had changed the rules. If the licence was not denied within 7 days then it was automatically issued. Indeed it came through, via email, 7 days later, within minutes in fact of the filing time (not just date) plus 168 hours.

We think this idea should be more generally applied. In fact, not generally, but universally. Every licence, every permission, for everything, becomes a shall issue one. There is a specific time period, 7 days sounds good, in which the bureaucracy can say no. Can say no while pointing to the specific law they are saying no under, the reason why, in a form that can then be used in a court to test the power of the bureaucracy to do that. Failure to issue such a denial within those 7 days means that the licence is automatically granted. One granted it is not appealable.

This applies to pylons across the countryside, fracking plants, planning permissions for housing, everything.

We insist that the planning bureaucracy micturate or get off the pot. That phrase can be modified for less family friendly conversations.

Note that this doesn’t stop planning. It does though stop delay in planning. So, everyone should support it, right?

So, obviously, delay installing solar for 5 years then

The logical outcome of this is that we should delay installing any solar for 5 years:

Solar power cells have raced past the key milestone of 30% energy efficiency, after innovations by multiple research groups around the world. The feat makes this a “revolutionary” year, according to one expert, and could accelerate the rollout of solar power.

…

The breakthrough is adding a layer of perovskite, another semiconductor, on top of the silicon layer. This captures blue light from the visible spectrum, while the silicon captures red light, boosting the total light captured overall. With more energy absorbed per cell, the cost of solar electricity is even cheaper, and deployment can proceed faster to help keep global heating under control.

The perovskite-silicon “tandem” cells have been under research for about a decade, but recent technical improvements have now pushed them past the 30% milestone. Experts said that if the scaling-up of production of the tandem cells proceeds smoothly, they could be commercially available within five years, about the same time silicon-only cells reach their maximum efficiency.

The technical stuff there is correct too. But if solar is about to get very much better - which it is - then the correct response is to stop installing this soon to be surpassed solar technology - installations do last 20 to 25 years after all - and instead wait and install the newer and better starting in 5 years’ time.

Actually, this has been true of solar for the past 25 years. Costs have been going down 20% a year. As Bjorn Lomborg predicted they would those couple of decades back. As Lomborg also pointed out assume that holds true and by the mid-2020s then solar would become the installation of choice. Why would anyone bother to install anything other than the cheapest alternative, after all?

The corollary of this is that everything we’ve spent upon subsidy up to now has been a complete and entire waste of money. Technologies do mature into being usable and cost effective - it’s simply spraying cash up against the wall to try and install them before that has happened.

Please do note our position here. We’re not against doing things to beat climate change, not in the slightest. We just keep insisting that we should be doing these things efficiently. For, as the Stern Review itself points out, humans do more of cheaper things, less of more expensive. Therefore attacking climate change inefficiently means we’ll do less attacking climate change. That might not be a good idea.

NHS at 75: Why I’m not celebrating.

Yesterday may have marked the NHS’s 75th birthday, but there was no reason to celebrate. Whilst children’s choirs sing happy birthday and the country raises a ‘cuppa’, I kept my party hat away. For, the system is no longer “fit for heroes”. The NHS does not work.

Waiting lists sit at a record high of 7.4 million, whilst median A&E wait time is a dangerous 3 hours 2 minutes. Ambulance services repeatedly miss their targets, causing half of those who need rapid treatment to die. Occupied beds sit at a worrying level of 92%, reducing overall capacity. And in December 2022, only 54.4% of cancer patients waited under 62 days for treatment, in contrast to the target of 85%. In short, the NHS is not just in crisis, it has essentially collapsed. The NHS is no longer the envy of the world, rather it is fast becoming a laughing stock. It is no wonder no other countries have followed suit in our system. Indeed, the only comparable systems were in the Soviet Union and Cuba, where hospitals were in a similarly dire state.

Why is there a crisis?

The left would have you believe that it is wholly situational. They blame the pandemic, Conservative “underfunding” (despite record spending) and Brexit. The system is not the problem they claim, rather poor governance and recent events have made it impossible for the NHS to act the way it should. This is plain wrong. The NHS is systematically flawed, and the only real solution is a complete overhaul of our healthcare system. 

Of its systemic flaws, none is more prevalent than its sheer size. The NHS is the fifth largest employer in the world and the largest state-owned employer in the free world. Its goliath size comes with challenges, one of which is management. Currently the NHS is managed top-down and with Trusts; policies, however, remain Westminster centred. The current system can be characterised by excessive bureaucracy and micro-management, held back by short-term political priorities. Indeed, there are more bureaucrats in the NHS then there are beds.

Socialists like to lecture us on the dangers of private monopolies. Yet, the NHS is the largest monopoly of them all. Monopolies are terrible for productivity and give the consumers no choice. Patients have little choice within the system. Many cannot choose their doctor’s surgeries. And patients are unable to see a specialist without a GP referral, which all too often involves further immense bureaucracy and long waiting times, such as waits up to seven years for an ADHD pre-assessment.

Meanwhile our infrastructure is constantly on red alert for the threat of strikes loom. The NHS can keep certain costs down, but it does this by suppressing wages and creating less than ideal working conditions. If we want our NHS to remain competitive and for the best doctors not to quadruple their income on fixed salaries at London’s new Cleveland Clinic, the NHS must radically change.

The alternative –

Simply more tax and spend won’t fix it. Sweeping structural change is needed.

Common rhetoric suggests there is but one alternative to the NHS: America’s bankrupting system. This is not the case. No rational individual would argue in favour of this, for it is mind-numbingly ineffective as a healthcare system. Other options exist which may be far more effective.

The government should pursue a competing social insurance scheme, similar to the Netherlands, Germany, and Switzerland, as we have proposed previously . This system will separate government from providers and patients. The government would have no direct management role, ending the health service’s known problem of limitless bureaucracy and unstable policy direction. In this system it would be compulsory for universal enrolment for social insurance, and insurers would be banned from refusing service. Premiums would be calculated by income, with the poorest paying nothing. This system would be fair, for it would be a one-tiered system where all receive the same (exceptionally high) level of care. And, crucially, all services would be free at the point of access, unless the consumers choose to pay in order to have lower premiums.

Short-term bandages –

Clearly in the current political climate the above is a stretch. Thus, it may be helpful to explore things we can do in the short term to make the crisis slightly less bad. This could be through outsourcing. Despite what Julia Grace Patterson or WeOwnIt would like you to believe, outsourcing does not mean privatisation. As Kristian Niemietz of the Institute of Economic Affairs puts it, it is a “failed conspiracy theory that never dies.” Outsourcing means hiring private firms to do certain jobs within the NHS, typically non-medical such as IT. And for all the fear-mongers out there, rest assured that it will continue to be free at the point of receipt. Let’s face it, private companies are likely to be better than NHS bureaucrats at delivering certain services. Remember that terrible NHS app? If this was outsourced to a tech firm rather than developed in house, maybe it would have been a success. 

Conclusions –

Our medical professionals are heroes. They do a stellar job, especially given the terrible environments they are made to work in. The system is letting them and their patients down. In the interim, more outsourcing should occur. In the long term, the government should completely overhaul our health system and replace it with a social insurance scheme. That way we will finally have a system “fit for heroes” as Attlee and Bevan envisaged. 

Oliver Ind is a Summer Intern at the Adam Smith Institute

Mr Smith goes to Oxford

On this day in 1740, no doubt full of trepidation and excitement, Adam Smith set off from his home in Kirkcaldy, on the east coast of Scotland, to take up the ‘Snell Exhibition’ scholarship in Balliol College, Oxford. His time in Oxford would teach him much — though it would by no means enhance the reputation of Oxford in general and Balliol College in particular.

At school in Kirkcaldy, Smith’s passion for books and learning, along with his extraordinary memory, became apparent. He went on to Glasgow University at the age of 14, and studied under the great moral philosopher Francis Hutcheson – libertarian, rationalist, utilitarian, plain speaker and thorn in the side of authority. Hutcheson seems to have infected Smith with some of the same.

Oxford and incentives

Smith excelled, as he had done at school, and won the scholarship to Balliol College, Oxford. In 1740, now just 17, he saddled up for the month-long horseback journey. If thriving, commercial Glasgow had been an eye-opener to a boy from backward Kirkcaldy, England seemed quite a different world again. He wrote of the grandness of its architecture and the fatness of its cattle, quite unlike the poor specimens of his native Scotland.

But the English university education system did not impress him. Indeed, it gave him an important lesson on the power of incentives, which he would catalogue acidly in his great 1776 work of economics, The Wealth Of Nations.

Oxford teachers were paid directly from large college endowments, not from students’ fees as they were in Glasgow. It hardly encouraged their interest in their students. “In the University of Oxford,” wrote Smith later, “the greater part of the public professors have, for these many years, given up altogether even the pretence of teaching.”

Ouch. But it got worse.

College life, he observed was contrived “for the interest, or more properly speaking, for the ease of the masters.” There were disciplines aplenty on the students, but not on the teachers. In his words, “Where the masters, however, rarely perform their duty, there are no examples, I believe, that the greater part of the students ever neglect theirs. No discipline is ever requisite to force attendance upon lectures which are really worth the attending, as it well known wherever any such lectures are given.”

From this experience, Smith drew out a general principle of economics: “It is the interest of every man to live as much at his ease as he can; and if his emoluments are to be precisely the same, whether he does, or does not perform some very laborious duty, it is certainly his interest, at least as interest is vulgarly understood, either to neglect it altogether, or, if he is subject to some authority which will not suffer him to do this, to perform it in as careless and slovenly a manner as that authority will permit.”

And institutes like a university, he noted, indulge each other’s laziness. They “are likely to make a common cause, to be all very indulgent to one another, and every man to consent that his neighbour may neglect his duty, provided he himself is allowed to neglect his own.”

Smith, then, learnt little from his Oxford teachers. Yet, thanks to Balliol’s world-class library and his own love of reading and learning, Smith was able to educate himself in the classics, literature, and other subjects. He left Oxford in 1746, before the expiry of his scholarship, to return to Kirkcaldy, where he began to write essays and articles that would make his reputation and launch his academic career — a career that would culminate with these insights on economic incentives and the cutting rebuke of the system that had so let him down.

The problem with socialist healthcare is that pretty soon you run out of everyone else's hospitals

A political party (shhh, no names!) is running a campaign based on how many babies the NHS has delivered. So, plugging my birth date into the calculator, something based upon census records, I find out that I’m the “10,723,296th BABY TO BE BORN ON THE NHS!” which is, I am sure we all agree, terribly exciting. Torbay General for the completists, out of Seaview in Strete.

Something else I know about the NHS. The first hospital to be actually built by the NHS opened in July 1963, the QE II one in Welwyn Garden City. So while I was indeed the 10.7 millionth baby delivered by the NHS that all happened 4 months before the NHS actually added, at all, to the medical infrastructure of the country.

For the creation of the NHS was simply the nationalisation, without compensation, of all medical facilities within the country. Which is, I think we can all agree, a little different from the idea generally put forward, which is that medical care only started with the NHS? Something that there is a familial memory of, given that the grandfather so interested in that first grandson was a GP, the grandmother equally interested a practice nurse.

But it is still interesting, isn’t it? These claims that the national debt was 200% of GDP when we started the NHS - so therefore we can achieve anything we want if we’re prepared to want it. The idea that it only used to cost 1% of GDP in fact.

Well, yes, but the problem with socialist medicine is that eventually you run out of other peoples’ hospitals.

The BMA says drink driving should be brought to the European standard. But which one?

Chris Snowdon has the BMA right here:

“The BMA’s new president, Ian Gilmore, is Britain’s leading temperance activist so he won’t mind if more pubs close, but he gives the game away when he says he wants the limit reduced to almost nothing.

“This would not just stop people drinking anything before they drive, it would discourage them from drinking in the evening if they were going to drive in the morning.

“It is an anti-alcohol policy, not a road safety policy.”

But let us take the proposal seriously for a moment:

The British Medical Association (BMA) on Tuesday voted formally to lobby the government to bring England and Wales in line with the European average, with senior members describing the current threshold as “scandalous”.

But in line with which European standard? Yes, the drink drive limit in most of Europe is lower. The rate of deaths per billion miles driven - the only useful measure here - is higher in most of Europe than it is in the UK. No, really, page 53 here. Actually, by that only useful standard - for what else is a useful measure other than the number of deaths compared to the amount of travel? - the UK is about half the EU 17 average. So, umm, why isn’t everyone else having to follow our standards? You know, the efficient ones? The standards that actually achieve the task at hand?

Actually, we know what’s happening here. The doctors - as with so many people, so many times - are only looking at the one part of the system. The blood alcohol level. Britain’s punishments for breaching our (agreed, higher) limit are positively bloodcurdling compared to some of the penalties elsewhere. In fact, a lot of those 02 and 0.5 limits elsewhere are simple and mere fines - significant punishments like suspension of licence kick in with “aggravated” drink diving, at the same or higher rates than the UK’s limit.

It’s also true that you’re much more likely to get caught on the British roads than in many other places.

Finally, there’s the fact that the current limit is socially supported. There is zero sympathy for anyone caught under the current limits. If two pints at lunchtime mean you can get caught driving home at the end of the day then that societal support will vanish.

We have a system that works, the moving parts work together to give us, depending upon which measurement you choose, the third or fourth lowest drink driving death rate in Europe. As with any complex system fiddle with one part of it at the cost of possibly destroying the entire machine. #

The current British system works - why would we want to change it?