Recycling should be a one bin, not seven, operation - anything else is just rubbish

We now have the Prime Minister stating that not everyone will be forced to have seven recycling bins, at least not immediately. At which point some are telling us that this was never going to happen at all. Ah, but yes, it was, as Tom Forth points out. It’s right there in the law.

To be extreme and absurd about it, think on what this means for the country building the smallest new housing in Europe. At 76 m2. If we think of a metre as the space for a bin (that’s the absurd bit) we’re trying to insist that 10% of the rabbit hutch be given over the recycling bins. And as modern planning permission doesn’t allow anyone to have a garden any more (that’s the extreme hyperbole bit) then that seems more than a bit of an imposition.

But as we’ve pointed out before about the seven bins, it’s possible to be entirely reasonable about this. Given that all recycling systems require subsidy they don’t, in fact, save any economic resources, rather they expend them. So why are we doing that? And that’s before we even think about the time required for each household to sort and collect in the right manner.

We should, instead, have the one simple collection method from the one single bin. Which is then processed centrally. Let’s take advantage of economies of scale after all. That which is valuable is extracted, that which is not gets burnt or landfilled.

Do note that we’ve nothing against recycling - one of us lived off scrap metal recycling for years, we can’t be against economic recycling. But we do insist that we should stop doing the recycling that loses money and costs resources. After all, isn’t that the point? To save economic resources by recycling? So let’s do that then.

One bin, one factory, only recycle what makes money. We all know this makes sense so why aren’t we doing it?

A new word for an old idea

The new word is fluxophobic, meaning fearful of change. It describes those who want the world to stay as it is now, and who think every change is to be opposed and avoided. This is for people who think every habitat should be preserved as it is now, or perhaps even restored to what it was when they were younger, with any changes reversed.

Every species must be preserved as it exists now, with no space left for new species to evolve and replace existing ones. High Streets must remain crowded with small shops specializing in different things. Places where bats nest must be kept as is, rather than encouraging the bats to nest elsewhere.

New building is opposed because it involves change. The demolition of transformation of old buildings is similarly opposed for the same reason. Agriculture must be carried out in traditional ways, and innovations are to be deplored, especially those that involve “interfering with nature.”

Are fluxophobes conservative? They are conservative with a small “c,” denoting the character trait that wants things to stay the same. But they are not in the Conservative political tradition that accepts change, but wants it to be spontaneous, rather than imposed from some preconceived plan of what some people think society ought to be like. Conservatism (with a capital “C”) wants change to come from below, rather than being imposed from above.

The real world is characterized by change. It changes from moment to moment as well as from year to year. We step and do not step into the same river, said Heraclitus, for new waters flow ever about us. The world is in flux, not in stasis, no matter how much those fearful of change deplore this.

Most people welcome economic growth because it increases the prosperity that will enable us to do more of the things we want to do. Yet economic growth necessarily involves change. It comes about as new products and processes increase productivity. It necessarily involves displacement, as some established companies are elbowed aside by newcomers. It involves employment churn as some job are lost and new ones take their place.

The fluxophobe is distressed by the changes that economic growth entails. Indeed, some of them oppose it, urging us to seek instead a more settled world in which people are content with their lot. Adam Smith did not agree with them. He spoke of “the uniform, constant, and uninterrupted effort of every man to better his condition,” believing aspiration to be part of what it is to be human. It seems to be human nature to seek a better life, and change is essential to that.

Fluxophobia is less common among young people than it is in the elderly. The young are generally more flexible and more adaptable to change, and they welcome the opportunities it brings with it. Many of the elderly are more set in their ways, and unsettled by the loss of tranquility that changes involve.

The Agricultural and Industrial Revolutions unleashed the idea of improvement into the world, and set in motion a period of rapid change that still continues. They set humanity on an uphill course in which change brought betterment, both in living standards and in life’s opportunities. Fluxophobia has its hold on some people, but ultimately it means stagnation rather than improvement.

The economics of climate change

Apparently we’re to have less Net Zero. Or later. Or something at least:

Rishi Sunak is facing a growing Tory backlash over plans to water down his key net zero policies, with MPs saying it would be “the greatest mistake of his premiership”.

Bans on petrol cars and oil boilers in the next decade are among the green pledges that could be loosened under the Prime Minister’s plan to meet the 2050 net zero target in a “better, more proportionate way”.

Ahead of a major speech this week, he admitted that the Government has “not been honest about costs and trade-offs” of net zero.

As the actual economic report - that Stern Review - says we shouldn’t have an emissions target anyway. As the Nobel Laureate on the subject points out, Bill Nordhaus, we shouldn’t have an emissions target. Because that’s the wrong way to incentivise the innovation necessary to gain less climate change. We need to use prices and the market, not bureaucratic dictat.

But OK, everyone’s decided, wrongly, to use a target instead. As we’ve pointed out before, they’re still getting it wrong even if we allow them that pass.

For the economics here is terribly simple. There are costs of allowing climate change to happen. There are costs of stopping climate change happening. The costs we don’t have to carry by not stopping it are therefore benefits of allowing climate change to happen. Equally, a benefit of stopping climate change is not having to bear the costs of climate change happening.

This is obvious. So is it also obvious that there’s a fairly delicate dance between those two sets of costs and benefits. We wish to optimise the outcome, maximise human utility over time. That means bearing the least cost we possibly can while gaining the largest benefits possible. Again, all entirely obvious.

That delicate dance then changes when the costs of action change relative to the costs of inaction. We’re just finding out that offshore wind power is three to five times more expensive than we were told. So, as we’ve noted, we desire less wind power in our mix.

But we’re also now being told the true costs of everything planned in emissions reduction. Those costs are higher than we had been led to expect. Therefore - and entirely rationally - we should be agreeing to have more climate change.

Prices have changed to the correct answer is different. Anyone not arguing for less climate mitigation in the face of rising prices is therefore wrong.

Greenpeace proves roads are better than trains

We must say we didn’t expect Greenpeace, of all people, to make this proof. But they have done.

European governments have “systematically” shrunk their railways and starved them of funding while pouring money into expanding their road network, a report has found.

The length of motorways in Europe grew 60% between 1995 and 2020 while railways shrank 6.5%, according to research from the German thinktanks Wuppertal Institute and T3 Transportation. For every €1 governments spent building railways, they spent €1.6 building roads.

Well, OK, we’re happy to take their word for that.

The fun part is when we get to Figure 3.1 on page 14 of the actual report. Which tells us that 80,000 km (measured by Mk I Eyeball method) of motorways provides 5000 billion passenger km of travel while 230,000 km of rail lines provides 500 billion passenger km. They don’t spell out these numbers - not that we can see - so you’ll have to put up with our estimations off the chart.

Clearly, road vastly outperforms rail in gaining what is actually desired from either system - the ability of a person to travel some number of passenger km. Recall, the aim of any economic system or subset of one is the output to be gained from it.

Given this vast outperformance of roads as against rail it’s possible to therefore conclude that governments vastly overspend upon rail infrastructure. We seem to gain 25 passenger km from every km of road as against 1 from every 1 km of rail. Investing only 60% more in roads is thus so much of a waste of money that it becomes a dereliction of duty to be spending upon rail.

We’re not sure that we would go entirely that far but it is the correct conclusion to draw from the information as presented by Greenpeace.

As with their earlier insistence that airplanes were 30 times better than trains.

Given their known predelictions we do think that we should accept this evidence too. As Greenpeace says, ‘planes for long distance, cars for the rest and stop wasting money on rail. After all, given their predelictions if it was possible to come to a different conclusion then they would, wouldn’t they?

Mazzonomics

We have another of those attempts from Mariana Mazzucato to redefine economics for our age:

Instead of seeing spending on education, school meals and other priorities – such as tackling the climate emergency, health crises or the digital divide – as an expense, it should be recognised as an investment. And one that can drive innovation.

Well, yes, except investment is an expense. Both current spending and investment are expenses. They are money out, being spent upon things - or if we prefer, resources being diverted to do things - which cannot then be spent on something else. They’re expenses.

This doesn’t then give free ride to investment as not being an expense. Sure, it might be a better thing to do than current spending. But that then depends upon what do we gain in the future from investing now? It is the output of the expense, the return on it, that matters.

Free school meals for all could be an excellent investment, one that makes the economy grow in the future. It could be a terrible one, one that makes it shrink. But whichever of those it proves to be it’s still an expense right now.

Investment is an expense and don’t let anyone tell you different - not even a fashionable professor.

Simplifying the UK tax system

Nigel Lawson left us with the memory of a Chancellor, one of the greatest of all time, who not only cut taxes, but simplified them in every budget. There are lessons to be learned today from his record.

One of the most disturbing features of the 2022 mini-budget was the announcement that the Office of Tax Simplification (OTS) would be abolished and replaced with a general mandate to HM Treasury and HM Revenue and Customs to focus on simplifying the tax code. A “general mandate” is meaningless unless there is a policy or series of policies with a team dedicated to implementing them. There is no such commitment within the Treasury and HMRC.

Simplifying the UK tax system is a complex and challenging task that would require significant political will and resources. Nonetheless, there are some initiatives on how the tax system might be simplified in key areas.

One option to simplify the income tax system would be to merge income tax and national insurance into a single tax, levied at the same rate and with the same threshold. This would remove some of the confusion around the different thresholds and rates for the two taxes and make the system easier to understand. The NI would simply be incorporated into current income tax, and if the misnamed “employer contribution” were to be retained, it could be done so as a payroll tax, which is what it is.

Another approach would be to simplify the income tax system by reducing the number of tax rates and thresholds. This could involve introducing a flat rate of tax, or reducing the number of income tax bands to perhaps just two, just as Nigel Lawson did. This would make it easier for people to understand how much tax they need to pay and reduce the administrative burden on HMRC.

The Treasury and HMRC will oppose this simplification because it would make more evident the level of tax that people are actually paying. The current complexity and confusion serve to hide that true level, and minimize the resentment that would be aroused if it were known. Nonetheless, it is a simplification that is long overdue.

Simplifying business taxes could involve reducing the number of taxes that businesses need to pay, as well as streamlining the tax rules and regulations that apply to businesses. This could involve simplifying the rules around capital allowances and other deductions that businesses can claim to reduce their tax bill. Ideally, full expensing would be permanent to encourage long-term investment. And we could thereby reduce the number of tax reliefs and exemptions that are available to businesses, which can be complicated and difficult to navigate.

If inheritance tax is not abolished, it could certainly be simplified. One option would be to greatly raise the threshold at which the tax is payable, meaning that fewer people would need to pay inheritance tax. It is the UK’s most unpopular tax because it is levied on savings that have been taxed as they were earned. A higher threshold would reduce the need for complex exemptions and allowances.

The rules on pensions are unnecessarily complex because they are based on a flawed system. Pensions can be taxed (T) or exempt (E) when payments into them are made, when they grow in funds, or when they are withdrawn in retirement. Currently the system is EET, allowing tax relief on in-payments, but taxing funds when they are withdrawn. This sets up a hugely complicated set of rules as to how much qualifies for tax relief. The system should be changed to TEE, so that payments into pension funds attract no tax relief, but no tax is levied thereafter on growth within the fund or subsequent withdrawals. This would not only simplify; it would be a massive boost for future investment.

Nigel Lawson was not only the great tax cutter, he was also the great tax simplifier. The time for revisiting his legacy is long overdue. Taxes should be simple and transparent, and there are huge savings to be achieved by making them so.

There're populists and then there are populists

Torsten Bell tells us that populists are bad, M’Kay?

Silvio Berlusconi may be dead, but Giorgia Meloni is running the show in Italy. Donald Trump wants back into the White House (it’s cosier than jail), and are we really confident that arch-centrist Emmanuel Macron in France won’t be followed by Marine Le Pen? Even the pope is worried about a libertarian former sex-coach taking power in Argentina.

I raise this because it should encourage anti-populists to focus on addressing the bad economic outcomes that help drive populism. If you need further encouragement, it should come from recognising the scale of bad economic outcomes that follow populists actually coming to power.

Those are all rightish, or at least arguably conservative, type populists. And while it’s easy enough to disagree with some or all of the things they do/would like to do we’re not sure that economic disaster can quite be pinned on any of them. So we thought we’d have a look at the source here. Which is this paper:

A widespread academic view is that populist leaders are bad for the economy and “self-destruct” quickly. Influential work by Sachs (1989) and Dornbusch and Edwards (1991) on Latin American populism in the 1960s, 1970s, and 1980s identified a “populist cycle.” Populist leaders generate a short-lived boom using expansionary fiscal policy that ultimately ends in an economic and political crisis.

Rudi Dornbusch writing a paper on right wing populists sounds a bit odd to us so we looked at that paper too. To find that his two named examples were Garcia in Peru and Allende in Chile. So not really noting right wing, or conservative, at all.

The middle paper, Bell’s reference, actually talks of economic populism as being the thing that goes wrong. Also known as spending all the money in one fell swoop because it’s gonna be great, this new society with its new economics. So, Chavez/Maduro, Mugabe, and so on.

Or, if we were to survey recent British politics, Jeremy Corbyn and his Magic Money Tree (courtesy Richard J Murphy). That’s the sort of populism that ordains economic disaster.

The researchers find that having a populist leader hits a country’s GDP per capita and living standards by about 10% over 15 years as the economy turns inward, institutions are undermined and risks are taken with macroeconomic policy.

Well, yes, it’s a good warning. But possibly a good idea to be a little more specific over what is being warned about? It’s not actually populism at all, it’s fiscal incontinence.

Scary piccies on the booze bottles

As the perceptive have noted the Puritans were not defeated in 1660:

Hard-hitting TV campaigns about the dangers of unhealthy eating and labels on alcohol are needed to curb the huge rise in avoidable cancers, charities and health campaigners have warned.

The World Cancer Research Fund (WCRF) said mass media campaigns, using tough messages mirroring the graphic photographs and wording on cigarette packets, were now needed to tackle the widespread lack of awareness that alcohol and being overweight are both major causes of cancer.

Weekly booze limits these days are what a journalist calls breakfast so we do think that perhaps people are going a little far. But japes and jollity aside, a serious point:

Ireland recently became the first country in the world to legislate to do that. In future, labels on alcohol products will warn drinkers that “drinking alcohol causes liver disease” and “there is a direct link between alcohol and fatal cancers”.

We all know what happens next. Ireland has done it therefore we must too. As when Scotland brought in minimum pricing (which we’ve never understood, why boost profit margins with minimum prices, why not raise tax instead?) then and therefore England must too.

Leave aside the specific policies here. Think about science for a moment. Hypothesis, experiment, evidence, confirmation or rejection of hypothesis. According to the evidence we’ve seen minimum pricing seems to kill people. So, let’s not follow Scotland in doing that. But we only know that because Scotland did the experiment and we all waited to see whether the evidence from it confirmed or rejected the original hypothesis.

Scary piccies on the booze bottles. Will it work? No, leave aside assumptions and all that. Ireland is starting the experiment. Excellent, let’s await the results shall we?

After all, if we’re going to pretend to use science in public health matters then let’s actually use science in public health matters, shall we? Idea, experiment, results - that’s how science works.

Of course, we can run with the alternative, which is to refuse to use science when discussing matters public health. But at that point there’s not much point in doing any public health, is there?

These people are incredible - incredibly bad

The attempt to use this as scientific evidence:

But snacks like bun rotis tend to offer empty calories without key nutrients. Ahmed, who often eats only one meal a day, has lost weight in the year since he moved to Dhaka. “That’s because these foods give them a quick burst of carbohydrates, but it runs right through them and they need another one,” says nutritionist Barry Popkin, who has observed similar trends in other developing countries as they become more urbanised and industrialised.

Bread and butter is terribly bad for you. This ultraprocessed food d’ye see? Our proof is this lad in Dhaka who has lost weight.

Ahmed used to eat a far more nutritious diet of fish and vegetables, but rising salinity in the rivers around his coastal home town of Bhola ended his livelihood in fishing and forced him into the city.

We’re not even sure about that bit of evidence - Bengalis do know how to fish in salt water. Yes, we have been there, do know this.

A sweet, butter-filled bread roll, neatly wrapped in plastic, has become the snack rickshaw rider Jewel Ahmed reaches for when he needs to eat while stuck in traffic in Bangladesh’s capital, Dhaka.

Bun roti, as the rolls are known, are sold for 10 Bangladesh taka (7p) at the same stalls where the city’s rickshaw riders buy heavily sweetened tea to ward off hunger and tiredness.

Ahmed has stopped being a fisherman in fresh waters and instead become a rickshaw driver in Dhaka. Bangladeshi rickshaws are large, heavy and pedal-powered - without gears. Again, we’ve been there and we even asked around as to why there were no gears - too expensive was the general agreed answer.

Snack attack: how the west exported unhealthy eating to Africa and Asia

Oh, right, capitalism, markets, globalisation, all at fault as bloke who takes one of the most physically exhausting, calorie consuming, jobs on the planet loses weight. Eh? What better proof can you desire than that? Proof perfect, innit?

It’s difficult to know whether we should be shouting at these people or laughing. But certainly we shouldn’t be taking them seriously.

Selective death rate

Selective Death Rate

The same thought that had occurred to Charles Darwin ten years earlier occurred to Alfred Russel Wallace recovering from a bout of malaria on an Indonesian island. Each had been considering Malthus’ theory that population growth would always exceed growth in food supply, dooming many to death. Both had the same question, “Which ones will die?” and both came up with the same answer, “The ones least able to live.”

They presented together the notion that evolution proceeds by a selective death rate. Those least equipped to survive and to breed would die off at a higher rate than those better equipped, leading to the development of new species that incorporated the innovation that improved their chances.

A similar selective death rate operates, when it is allowed to, in a market economy. Innovations occur in products, services and organization, and the most successful ones survive at the expense of those less well equipped to compete with them. In market economies, flux, rather than stasis, is the norm. Few of the companies in the top hundred remain there for decades as technological change combines with changing tastes to erode their market share.

Existing firms often use political clout to make life difficult for newcomers, using regulation to raise costs and barriers against new entrants. This is not the free market at work, but the use of legislative influence to thwart its operation. The coach operators lobbied Parliament to insist that the new motor cars must be preceded by a man on foot with a red flag. Progress, growth and consumer satisfaction are maximized when a selective death rate is allowed to cull the businesses that can no longer survive on merit.

Innovations which increase productivity and growth lead to job losses. It is the way of the world. Those job losses are resisted by political representatives more anxious to secure the support of present voters than to make life better for future ones. But countries prosper more if they allow that selective death rate to operate instead of trying to resist its effect by subsidies and trade barriers to protect extant businesses at the expense of future ones.

Sir Karl Popper made the famous observation that the aim of politics is not to select the wisest and best rulers, but to ensure “that bad or incompetent rulers can be prevented from doing too much damage.” In other words, the advantage of democracy is not that it allows the people to rule, but that it can apply a selective death rate to political ideas and their exponents. It enables failed rulers to be changed peacefully and to allow alternative ones to be given a chance. Because politicians in a democracy know they can be called to account at the next election, their behaviour is tempered. No such restraints are there to curb the behaviour of despots.

The methodology is a selective death date, as it is in evolution and free market economics. It is less efficient in the political realm because popular will is not as brutal as it is in nature or a free economy. The same failed ideas can resurface no matter how many times they have sunk in the past. This is because some ideas appeal in theory even if the real world discredits them repeatedly.

In scientific method, new theories are put forward and tested by experiment and observation. Those that are less successful at predicting what we shall observe are discarded in favour of those that do this more successfully.

A selective death rate operates by trial and error. In evolution it is blind, but in market economics, politics and scientific method it is purposive. But in all these areas it is by counting out the less adequate in favour of the more adequate that development and change take place. To interfere with this process is to mitigate its benefits.