The fault, dear readers, is not in our bankers, but in ourselves, that we are lazy

Anyone who’s been reading the more hysterical parts of the press this past year or two will have seen those shrieks that the banks aren’t raising deposit rates as fast as they are loan rates. At which point there’s the screaming that government must do something and even some bureaucrats stepping into that breach to something do.

This is, of course, the wrong way to go about things in a market economy. For the very feature, point even, of a market economy is that we adults not only have agency we also have the freedom and liberty to pick and choose. It is that very deployment of our agency in our picking and choosing - those things we can do as a result of the freedom and liberty that multiple suppliers offers us - which then keeps the capitalists in line. They can’t rip us off too badly because we’ll go elsewhere.

This does rather mean that we do have to be adult and deploy our agency. But then we are and we do, right?

From NatWest’s latest results announcement:

Bank net interest margin (NIM) of 2.94% was 19 basis points lower than Q2 2023 with the reduction largely due to changes in deposit mix as customers shifted balances from non-interest bearing current accounts to interest bearing savings accounts, particularly term, as well as the continued impact on mortgage margins as the higher margin Covid-era book rolls off and is replaced at lower margins. Bank NIM was 3.11% for the year to date.

We are - or enough of us are - moving our money from low interest accounts to higher. Which is eating into the margins, profits, being made by the bank. Good, this is as it should be.

Now, it is possible for us to insist that actually, government should be doing all of this for us. Several of us here have lived in a variety of countries where that is the deal. Believe us, those places are worse.

That very liberty of choice is what constrains the capitalists. If we’re too lazy to exercise our adult agency then we’ll not constrain them, will we - and if we do then they will be so constrained.

We even have the joy of not having to exercise said choices and those that do will do better than those that don’t. Great system, isn’t it? All under our, not their, control.

The aim of all economic advance is to destroy jobs

A worrying part of the current plans and suggestions over AI:

They raise the prospect of a levy on businesses that profit from replacing workers with robots amid fears widespread automation could trigger spiralling unemployment.

This would be phantabulously silly. For the entire aim and point of all and any economic advance is to destroy jobs. Therefore taxing people who do what we desire - kill jobs by automating a task - would be to be taxing the very thing we want to be happening.

Just as a side note here, producing something with the use of less labour is known as “raising productivity”. It’s a major preoccupation of current politics that productivity growth in Britain is slow. Yet here we’ve got a suggestion for a tax on anyone trying to solve that problem. Go figure.

To come back to the main point - we not just desire but positively lust after jobs being destroyed.

Firstly, if we gain the output we desire with the use of less human labour then that means there’s more human leisure to go around at that same collective standard of living. The work/life balance gets better in the modern argot. This is again something that politics tries to engineer but here they are suggesting taxing it.

Going a little deeper we again lust after that job killing. Say that - just imagine - we had a system where 90% needed to work in the fields to feed 100% of the people. Then we invented some set of machinery that means that we only needed 2% to feed all. We could, as a ragbag word for all that technology, call it “the tractor”. This then gives us 88% of the population without a job.

Or, 88% of the population can do something else with their time instead of scraping in a muddy field. Ballet, write computer games, run libraries, staff the NHS even, horrors, run diversity training courses. The tractor has made us richer not as a result of the food that arrives. Rather, we’re richer by the value of the ballet, computer games, libraries, NHS and diversity courses we now also enjoy as well as the food.

That freed up human labour does something else. The next set of human labour - say an AI that produces endless pomposity about diversity - frees up the labour currently devoted to that task to do something else. Anything else - we’re still all richer as a result. For we will now have diversity classes and also that something else - we’re richer.

As to what else well, what does anyone want done? Is every human desire and want currently sated? No? Therefore there are still jobs to be done, aren’t there? It is only possible for there to be and end to this when all such human wants are sated - and what would be the problem with no jobs if we all already had everything?

Taxing this process, attempting to deliberately stop people increasing productivity, killing jobs, is as we say, phantabulously silly.

Perhaps what we really need is an increase in the productivity of economic education. Perhaps we should be ladling the based ideas onto those Rolls Royce minds with JCBs instead of shovels - or the teaspoons presumably responsible for this foolishness.

Taxing productivity increases by automation, my gluteal fundament.

Down with prisons

At a time when prisons are overcrowded and magistrates are being told to impose sentences other than prison terms, it might seem counterintuitive to propose demolishing a dozen of them, but there is merit in the idea.

Many of London’s prisons are antiquated, some dating back to the Victorian era. They are difficult to man, to clean and to service, and modern technology has made it easier for inmates to be supplied with smuggled drugs. The solution is to replace them with new purpose-built prisons. But how might this be afforded?

Many of the sites occupied by some of the London ones could be sold or leased for huge sums of money to have office blocks built on their sites for business, commercial and residential use. This money could be used to fund the building of new prisons in economically-deprived areas such as the North of England,

This would generate thousands of jobs in areas that need them. Firstly to construct them, and then to man, service and supply them. If handled judiciously, they could be financed by the sale of the London sites they will eventually replace.

Of course, government contracts being what they are, the costs could escalate, but then so might the land value of the sites freed up by their replacement.

This would be a big step to the ‘levelling up’ campaign we were promised. The talk is of sending civil servants, BBC personnel and Channel Four to the North, but we should send the prisoners with them.

So, how long does it take for the State to decay then?

We think this is an interesting little guide:

A private police force has prosecuted 300 shoplifters with a 100 per cent conviction rate after police officers failed to crack down on the thefts.

The company, headed by a former Scotland Yard detective chief inspector, has expanded to cover 19 retail and business districts in central and outer London, where retailers pay for the firm’s detectives to patrol their area, catch shoplifters and then prosecute them.

The firm, TM Eye, guarantees that its plain clothes officers will be on the scene within minutes of a phone or app alert of theft and apprehend the shoplifter. They are prepared to use “reasonable force” under section three of the Criminal Law Act but will only do so if a suspect is aggressive or violent.

Given that the Metropolitan Police were started in 1829 we take it that it takes about two centuries.

Note that this is for a good idea - Bobbies - to go bad. Bad ideas like HS2 actually die sooner even if not soon enough.

This happens to all organisations of course. It’s just that in the private sector we’ve the culling mechanism - bankruptcy. Something that doesn’t happen with the public sector. Which leads us to an interesting and counterintuitive conclusion. In that private sector we do not need to have strong and vicious management, for there’s that culling of failure built into the system. But as we’ve not that killing ground in the public sector then and therefore public sector management needs to be much more ruthless - akin to Genghis Khan. Which isn’t the way it works out now, is it, even as it not only should but needs to.

Exactly because the public sector is the public sector it requires much more ruthless management.

But why would we use less cheaper energy?

A claim that confuses us. If we lard the world with renewables then we’ll all, in aggregate, use less energy. Well, that doesn’t confuse - if energy becomes more expensive then we’ll use less energy, yes. The confusion comes when we’re told that renewables will be cheaper and also that we’ll use less energy if it all comes from renewables. That’s not something that happens with our species.

But here we’ve the statement:

This is such an important and often overlooked point: A clean energy economy will use 40% less energy than a fossil fuel economy. As Hannah Ritchie writes in her newsletter this week, "Electrification is efficiency."

If we could just get someone at the back there to shout “Jevons!” for us?

But leave Jevons out of this because we’re not trying to be that sophisticated here. We might also insert that ritual mention of the Nordhaus work in lighting - as it has declined in price over the centuries the percentage of income spent upon it has stayed static - but again we don’t need to go that far into complexity.

We can just stay with really simple supply and demand. With us humans if something gets cheaper then we buy or use more of it. How much more depends upon the elasticity of demand with respect to price (which is what gives Jevons!) but stick with that very simple first order effect. Also, if something becomes more expensive we use less of it. This is true enough, often enough, that if we see falling demand for something then we can usefully opine that the price must have risen. In fact, if we assume that the price relative to alternatives has risen then we will be correct all the time.

OK. So, now we’re being told that humanity will use less energy if it’s all renewables. That jibes with - actually, flatly contradicts - the idea that energy will become cheaper when it’s all renewables. In fact, we’re on really safe ground if we insist that the only reason people will use less energy is if it becomes more expensive.

So, the assumption that the world will use less energy is that insistence that renewables are going to make energy more expensive. No, efficiency doesn’t change this. Even if we assume that there is greater efficiency that just means that we’ll all turn the thermostat up (or, for A/C, down). On the simple grounds that that’s what humans do in response to a change in prices.

Which is interesting, no? They’re not just indicating that maybe renewables aren’t cheap they’re flat out insisting they’re not.

If dengue is becoming endemic then why are we building mosquito farms?

A slightly worrying report:

Rising temperatures mean that nearly half the world’s population may now be at risk of dengue infection, new modelling forecasts.

Analysis from Airfinity, a science data analyst company, shows that the incidence of dengue has already increased by at least 30-fold over the past 50 years.

Half a million cases were reported to the WHO in 2000, rising to 5.2 million in 2019, with the true number of annual infections now estimated to be up to 96 million.

Once specific to small pockets of Asia, the disease is now considered endemic in more than 100 countries globally and its geographical reach is continuing to spread, according to the WHO.

If this is true then why is it that British government policy is to increase the number of swamps in hte country? The Somerset Levels are to be returned to that ague ridden swamp it was before drainage, beavers are being reintroduced to create swamps - even in the middle of London.

We all know how to limit the spread of mosquito bourne diseases, have fewer mosquitoes around. Do as is done in places like Singapore, make absolutely certain there’s no standing water for them to breed in. So why is it that government policy is to create swamps by the hundreds of square miles in this green and pleasant land?

Is it just that government is incompetent or is there really a plot to murder us all in our beds? And, umm, shouldn’t we find out?

Business rates and tax incidence

It is helpful to know the incidence of different taxes. We should identify the wallet or purse that it comes from because very often this is not the one that people think it is, or the one that the legislators intended it to fall upon.

For example, since corporations are not people, they don’t pay Corporation Tax. Its incidence is on the workers, who do not receive pay increases when the money goes in tax, on the shareholders, whose shares lower in value because the tax reduces profits, and on the customers, who pay higher prices as the firm increases them to make up for the money taken by the taxman. Numerous studies have shown that the biggest losers are the employees, with estimates showing that 60 percent of Corporation Tax is paid by them.

Most people think that they pay National Insurance and that there is an employer contribution. In reality the so-called employer contribution is a wage cost, and comes out of the wage pool that would otherwise be available for wage increases. Its incidence is on the employees.

Some people argue for business rates to be frozen or lowered, thinking this will help businesses, but in fact landlords are the beneficiaries when this is done because it allows them to put up the rents. Rents and business rates are inversely proportional. Rising rates make for lower or frozen rents, and rate decreases enable landlords to increase rents.

Knowing the incidence of the tax leads to a policy initiative that could direct help to businesses rather than landlords. Business rates could be frozen or reduced for 3 years, but only for businesses whose landlords agree to a rent freeze for 3 years. The rates would not be frozen or cut unless landlords signed up for this. The effect would be to direct the benefit to the businesses, and help them as they struggle with increased costs elsewhere.

At a time when the UK needs to boost growth by having its businesses prosper, this is a policy that could help them to do that.

Unleash the Bond Vigilantes!

We think this is much too gloomy about the prospects for that idea of a Scottish debt issue, of kilts bonds:

Scottish independence is about to be dealt a fatal blow

First Minister’s plan to issue bonds takes the SNP’s financial ineptitude to new heights

In fact we think the truth is entirely the other way around.

In reality, there are two big problems with the plan. To start with, Scotland’s credit rating will be terrible. We can forget about whether it is a single or double A. The alphabet doesn’t have enough letters to capture how poor a risk it will be: the CCC that is traditionally the lowest possible score does not begin to capture it.

That could well be true, tho’ perhaps CCC is to overstate it.

However, we should also recall that prices are information. We might not like the information that prices give us, but then that means that prices are - in such a case - that boot up the backside so necessary. Issuing kilts therefore becomes an independent source of information about the fiscal performance of the Scottish Government. Something that could well be useful, no?

Which is also a useful insight into what those bond vigilantes are. It’s not some shadowy cabal deciding upon what the price should be. Nor is it a political judgement on whatever it is that is being done. It’s simply people deciding, by putting down their cash or not putting down their cash, the price at which the more and less spendthrift can borrow money. As such it is that independent judgement of people waving their own wallets upon that fiscal stance.

Kilts would thus be hugely useful information to the Scottish Government. As we support more information to governments - one of their biggest problems, as we all know, is the lack of reliable feedback and information systems - then we support the issuance of kilts.

That the current answer might well be BB- or even CCC is information that is useful to have. And far from it then being a death blow to independence it is, we think, a necessary step towards it*. Independence, if it is to happen, requires a fiscally continent Scottish Government. If kilts produce the boot up the backside that produces that then why would any object?

Or, to put it another way. Kilts issuance might well show how terrible the financial position is of the current Scottish regime. At which point some might grasp the lesson that the bond vigilantes are giving - you’ve got to do much better than this, Matey, if you’re to have independence. Which would be good for of course doing better would be good whether independence happens or not.

The price of kilts would be a price and so and therefore useful information. We’re fine with that.

*We’ve no particular view on the independence of Scotland. Of course, we’ve all got independent views on the desirability or not of it but in that we’re like any other group concerning the point. We default down to Mencken on democracy - the point is that the voters get what they ask for, good and hard.

There's a simple solution for Mr. Sheeran here

Don’t play the Albert Hall:

Ed Sheeran has objected to plans by the Royal Albert Hall to sell dozens of seats at the prestigious London venue to investors, some of whom sell them on for inflated prices.

Currently, 319 people own 1,268 – almost one in four – of the Royal Albert Hall’s seats on 999-year leases. A bill going through parliament would grant the hall’s governing body the power to sell an extra 52 seats to investors.

Sheeran is “vehemently opposed” to the practice of these seat-holders selling their unwanted tickets at inflated prices, a letter from his aides said.

The star’s team has “worked tirelessly to get his tickets into the hands of his genuine fans at the intended price”, the letter said. It criticised “unscrupulous sites where tickets are listed at many times over the face value”.

This is not just us being trite.

Of course, we all know that the Albert Hall was actually financed by the debenture holders. The return on the capital put in being those free tickets associated with the seats and boxes that were financed. There’s even a market in said debentures.

But the wider point is important. For one of the glories of a free market is that we, as both producers and consumers, have choice. We can, if we should so wish - which usually means if we think the issue is important enough - change our behaviour so as to reward or punish any specific set of either producers or even consumers. By agreeing to purchase from, or agreeing to supply to, that is.

This does not only extend to mere matters economic. We are able to impose our ethical and moral beliefs and preoccupations in exactly that same manner. In fact, we have a duty to do so. For it is exactly by changing our own behaviour to accord with our ethical and moral preoccupations that we impose them upon the economic world around us.

We’ve the freedom and liberty to do so therefore we should do so. Even if that freedom leads to us thinking that it’s not an important enough issue for us to do anything about.

If Ed Sheeran doesn’t like the way the Albert Hall is run then don’t play the Albert Hall. London has a number of places that will host a popular beat combo after all. And here’s the trick at the end. If Ed’s not willing to change his behaviour in this manner that he obviously can then the issue’s not that important to him, is it?

Sometimes it's necessary to translate these reports

Solar’s great, no, really, it is:

New research suggests that solar power is set to become the dominant energy source by 2050. While this shift promises a cleaner energy future…

We know that the while will be followed by a but:

The world may have crossed a “tipping point” that will inevitably make solar power our main source of energy, new research suggests. The study, based on a data-driven model of technology and economics, finds that solar PV (photovoltaics) is likely to become the dominant power source before 2050 – even without support from more ambitious climate policies.

Can’t say that bothers us in the slightest. If solar’s the cheapest way to gain the energy we all desire then good luck to it. We’re wedded to a process, not a technology.

But that but:

However, it warns four “barriers” could hamper this: the creation of stable power grids, financing solar in developing economies, capacity of supply chains, and political resistance from regions that lose jobs. The researchers say policies resolving these barriers may be more effective than price instruments such as carbon taxes in accelerating the clean energy transition.

Ah, and here’s where we need the translation. For those four buts are all very expensive problems to try to solve. Meaning that solar is not, in fact, nice and cheap if it has four expensive problems to solve before it is the useful solution.

Solar might be cheap at generating a kWhr, but that’s not what we want. We want a system that can deliver a kWhr where and when we desire to use it. Thus bringing in those vast grid and storage costs. The system costs of solar are not low at all.

Which is why we’re wedded to that process. And also why this report tries to insist on something “much better” than the carbon tax. For what the carbon tax does - sticking that one crowbar into the price system - is makes all of these different costings transparent. We allow the market to chew through all of the complicated sums - not the planners - having already included the costs of climate change in the prices the market chews through.

The reason so many fully in favour of dealing with climate change don’t like - and some positively hate - the carbon tax is because they know that it will show up so many of their pet plans for the grossly expensive follies they are.

Which is why we’re so in favour of that method. For as the Stern Review points out, us humans do less of more expensive things, more of cheaper. Therefore we want to be efficient in dealing with climate change. Precisely because the more efficient we are, the cheaper it is to deal with it, then more dealing with it we’ll all do.

That’s just how our species works after all.