Are we being cynical enough?
It’s possible that TikTok is terrible. As with Twitter, Facebook, MySpace and Bebo (yes, it exists again). They are all just ways for humans to communicate and humans in groups can be pretty terrible at times.
But it’s always useful to think a little cynically. After all, the correct question for all adults, when viewing the world around them, is “Am I being cynical enough?”
At which point:
This trend is fuelling concerns that content on apps such as TikTok could drive anti-Semitism and radicalise young users, particularly as conflict in the Middle East drags on.
Some experts believe this could mean countries rue the decision not to shut out TikTok once and for all.
Sam Lessin, a former Facebook executive, says “far too many smart people” ignored the issue of misinformation on TikTok: “And now, a few years later, we are paying for this major misstep.”
TikTok competes with Facebook - or with one or other of their versions like Instagram or something, we can’t recall which. At which point a gentleman with at least an emotional investment in Facebook tells us that TikTok is the very devil which we should have banned.
Oh, right.
Or is that too cynical?
Now that is something that any sentient being can spot, what is being done there. But it’s necessary to go that one step further. As soon as we have a system of governance which takes upon itself the power to ban this or that player in any market then the attentions of every other player will be laser focussed on influencing that government power. As such lobbying (to use a polite word, rapine of the body politic we’d prefer to call it) is by definition zero sum then the activity is societally impoverishing. Effort expended which produces nothing nett just is such, again by definition.
In economic terms at least the problem with such government powers is simply that the effort to influence said powers reduces the common wealth. This is true either of subsidy of certain selected or of the banning of certain selected businesses. The effort that goes into capturing that government influence is a gross loss to us all.
So, don’t have a government with such powers and we shall all be richer. We might even get to the stage where it would be possible to believe the surface message in a news report, that would be nice, wouldn’t it?
Santa Claus takes over our Energy Supplies
“The biggest piece of energy legislation in the UK’s history has become law today… laying the foundations for an energy system fit for the future.” That will surprise anyone involved in the gas and electricity privatisations between 1986 and 1990. The truth of the matter is that the government will now be messing about with our energy supplies more now than they were before, increasing regulation and reversing the tide of privatisation. The six claimed benefits are:
The introduction of new business models for Carbon Capture and Hydrogen (CCH), which would create 50,000 jobs in Carbon Capture and 12,000 in Hydrogen.
We would become world-leaders in nuclear fusion regulation.
Energy network competition would be enabled through the introduction of competition to onshore electricity networks. This is predicted to save consumers up to £1 billion off their energy bills by 2050.
The expansion of heat networks through Ofgem, creating better pricing for consumers and businesses.
Better regulation of energy smart appliances.
The extension of smart metre rollout to 2028, saving consumers £5.6 billion.
There is no doubt that fossil fuel electricity will still be needed for a considerable period- in essence because the wind does not always blow nor sun shine. Current policy expectations for Net Zero means CCS (Carbon Capture and Storage) must be upscaled and extended until fossil fuels are mitigated by a sufficient baseload of alternatives. The fossil fuel providers should be expected to take care of this problem with its costs, and supply, in effect, green electricity to the national networks.
What is puzzling, and, frankly, nonsense is the idea that the Department for Energy Security and Net Zero (DESNZ) has to discover how that should be done and show helpless private companies how to do it. Of course, the fossil fuel generators are happy enough for DESNZ, and therefore the taxpayer, to take charge and pick up the tab.
Hydrogen is a more subtle issue. Contrary to popular belief it will not be efficient for heating homes (ever) or blending with natural gas for electricity generation (sometimes) except when it is virtually free because wind farms and / or solar are producing more than consumer / business demand needs. It also has uses for heavy goods vehicles but, because hydrogen’s storage space to power ratio is poor, not for aircraft- except the smallest. In short, the DESNZ claims for hydrogen are wildly exaggerated.
And so are its claims for fusion. Nuclear fusion, as distinct from fission, was discovered in 1922 and its use for commercial electricity generation has been receding ever since. There is no harm in government investing in scientific research, but the May 2022 Science Select Committee agreed there would be no commercial use by 2050. It might be commercialised in the next century, so why is it in the Act now?
DESNZ is correct in outlining that previous attempts towards energy market privatisation were only skin-deep. As energy analyst Ronan Bolton outlines: “The eventual market model and regulatory framework introduced in 1990 was a compromise. This was dictated by concerns about the risks that competition would pose to the coal and nuclear industries, along with concerns about the share price of the privatised companies if they were exposed to too strong a competitive threat.”
Yes, consumers had a choice of retailers but Ofgem and the National Grid, which bought the electricity and resold it to retailers at standard (wholesale) price, pretty much continued what the Central Electricity Generating Board had long done. Where DESNZ is wholly incorrect, is in moving the electricity market back to central control and regulation, rather than towards the full competition it claims.
The ways of achieving that include those suggested to the 2023 Energy Select Committee. One of them recommended that genuine competition nationwide (including Scotland) be introduced by distribution system operators (upgraded from today’s local “retailers”) whilst Ofgem and the National Grid retreated to simply balancing the books. In other words, DESNZ, having correctly identified the problem, recommends precisely the opposite of what is needed.
Domestic energy is about 40% of energy consumption and home heating (neighbourhood hot water – popular in Iceland) is 2% of that. 0.8% is not a large enough part of the UK’s energy problem to justify 17% of DESNZ targeting, though it clearly has room to grow, notably from local small modular reactors. In the five years to 2022, the number of people in government interested in home heating has doubled which may explain its appearance in the Act.
Finally, the Act addresses smart metres. In 2019, it became clear that only half of domestic energy metres were “smart” and the target to make 100% smart should be shifted from 2020 to 2024. By the end of March 2021, things were not going much better: a 1% drop since the previous quarter and 44% overall. Smart metres were turning dumb, installation costs were rising and being passed on to consumers. The 100% target date is now 2028. Thus claimed £5.6 billion saving per annum does not follow reasonable assumptions.
The Energy Act does, and does not, apply to Scotland and Northern Ireland which have their own legislation. The extent to which devolution applies is unfathomable. English and Welsh (presumably) consumers and businesses may save up to £16.6 billion but, as DESNZ has provided neither arithmetic nor rationales, their figures have the credibility of jingle bills. Absolutely no attention seems to have been given to dividing issues between what the free market can, and should, do for itself and where it is only the government that can bring some necessary public benefit.
Instead, the Energy Secretary, a.k.a. Santa Claus, claimed: “The Act also supports our new approach to make sure that families don’t feel a disproportionate financial burden as we transition to net zero, and forms a central part of our efforts to keep people’s bills affordable in the long-term.” In fact, as can be seen above, it does nothing for those objectives at all. And where are Chris Skidmore’s recommendations?
Why not waste another £400 million on AI then?
Image Credit: https://claudeai.uk/
It’s entirely true that we have government because sometimes it is useful that we have government. There are things that can only be done collectively and with that element of compulsion that government power provides.
We are not, after all, anarcho-capitalists.
It is also true that there are things that government can do which we do not wish government to do. Like do those things that can - and will be - done better, faster, bigger, by other mechanisms than government. At which point let’s save the oppressed taxpayers of the nation £400 million, shall we?
Rishi Sunak is poised to increase taxpayer spending on artificial intelligence chips and supercomputers to £400m as he strives to boost Britain’s technology credentials.
The Government is quadrupling a planned investment package to secure equipment for a national “AI Research Resource”, The Telegraph understands, which will also be used to launch a new facility in Cambridge and improve a site in Bristol.
The increased investment comes as the Prime Minister seeks to present Britain as a global hub for AI safety to world leaders at a summit at Bletchley Park on Wednesday and Thursday.
This is not investment this is wasting money.
From another source:
Google, Amazon, and Microsoft funnel billions into rival AI companies. There is just so much money flying in this colossal AI arms race.
• Microsoft has poured as much as $13 billion into OpenAI.
• Amazon recently reported a potentially $4 billion investment in the Google-backed Anthropic.
• Now The Wall Street Journal reports that Google will slide Anthropic a cool $2 billion over time on top of its previous investments in the company.
The government money - our money, that lifted from our wallets - will arrive in two to three years’ time, be miniscule in market size, shrunk by the inevitable multi-layers of bureaucracy and, in all probability, be spent upon the wrong things. Late, trivial and worthless.
There is indeed an argument - Professor Mazzucato does at least start from a logically firm position - that government should spend on useful things that market participants do not. Those public goods which are undersupplied by private economic actors. If we’ve $21 billion in just this week’s news story about AI then adding £400 million of our capital just isn’t relevant now, is it? It’s just an imposition on our wallets.
But more than this. AI is an investment frenzy right now. It’s possible to float a company - we really do see this all the time - where the addition of the word “AI” to the prospectus gains access to market capital. The AI company of great profit but no one to know what it is would raise money right now. Actually, someone’s already done that and raised $600 million.
Let’s not use government to do what the market is already doing bigger, better and faster. Horses for courses and all that, reserve governmental powers of compulsion and inefficiency for when there’s no other viable option.
Truly lousy analysis of profits in children's homes
Another year and another repeat:
The biggest private providers of children’s homes in England made profits of more than £300m last year, as concern mounts over the conditions some children are being placed in and the spiralling costs for councils.
Gosh, what horrors, the capitalists are making out like bandits. And now to make the same criticism the last time they told us this. This is not just to pick nits, this is a lousy analysis, entirely scabrous even.
For the report manages the remarkable feat of detailing the vast profits being made and also worries about the financial condition of the companies, whether they make enough to keep going as a valid concern. Which is, we admit, really a very wild piece of contortionism.
As we’ve said before:
It’s a report from Revolution Consulting which looks at the operating profits, not net profits, of the care home providers. That is, it looks at the excess of revenue over cost before accounting for mortgages, interest upon them, depreciation or maintenance of buildings and so on. You know, things that are a considerable portion of costs concerning anything with the word “home” in it. By using Ebitda as the measure it, in effect, looks only at the current account, not the capital. Which is, as a measure of profitability, absurd.
As this year’s version of the report says:
Some financial analyses go further in also looking to eliminate rental costs of property, but this study has not taken that further step. Several providers report sizeable operating lease costs, often in relation to rental of property used by the provider. These costs raise the possibility that and profit or loss on renting property to the operating business is not included in the reporting we have accessed.
They’re not including property costs.
Or even, they’re not including the costs of buying property via debt (ie, a mortgage or the like) when estimating profitability but are looking at debt levels when measuring going concern basis. Which is, as we say, a contortion too far.
The aims here are, obviously enough, to a) complain about the capitalists and b) insist that the bureaucracy should have more power over the sector. Which is why such effort has to be made to scratch that itch.
But then this is how government is done these days, isn’t it? A rickety construction of figures in order to sway opinion and logic and reality be damned.
There are things we’d like to know about the private, capitalist provision of children’s homes. Is this method better, cheaper or more responsive than council provision of the same thing? If it is then we should use it, if it isn’t then we should not. But note what this current reports says about such matters - nothing. It’s performative number crunching intended to persuade, nothing else.
But as we say, that’s how government is done these days.
But why wouldn't we cut the cost of bananas?
A very strange insistence here:
UK accused of plan to further cut cost of bananas at expense of poorest African producers
UK refusing to commit to EU pledge to stop cutting tariffs on big producers despite bananas being as cheap today as three decades ago
Are we sending gunboats to take the bananas cheaply or something? Not that we have any gunboats and we’d not do so if we did. But what’s the complaint here?
The government has now been accused of pursuing an irresponsible post-Brexit policy that could reduce the price of bananas further in the shops – but at the cost of the livelihoods of thousands of workers on small plantations in some of Africa’s poorest countries.
The British market is already dominated by the so-called “dollar banana” producers of Latin America who are able to sell cheaply having benefited from rolled-over EU-negotiated free trade deals that have cut the import taxes, or tariffs, on the fruit.
The EU, however, promised in 2019 not to cut tariffs imposed on the big producers any further in recognition of the impact on the smaller African competitors. The UK’s exit has freed it from that pledge to the world’s poorest.
According to Afruibana, the Pan-African association of banana producers and exporters, all the indications are that the result will be betrayal, with the UK government ditching the EU promise to protect them.
So, we have tariffs against banana imports. Presumably preferential ones too. Such tariffs make bananas more expensive in Britain - that’s what tariffs do. That’s what tariffs are, they’re a tax upon consumers. Logic would suggest that a British government, with the interests of Britons at heart, would not have a tax upon bananas. So, cutting those tariffs seems like an excellent idea. Britons will be better off.
The complaint then is that those African producers will be worse off. To which one response is and? Whose government is this after all?
Another, and a more subtle one, is that if people in Africa are growing high cost bananas then they’re trapped in a low value occupation. What is actually desired is that they move into a high value occupation. Maybe growing date palms, or oil palm, or maize. Or possibly flooding into the factories which is what made this country rich. Or, well, something, anything, else than adding very little value by growing high cost and thus low value added bananas.
But the insistence here is that by deliberately fiddling the terms of trade we should continue to trap those Africans in their poverty. Keep them on those high cost banana plantations where they earn little - because the value add is low.
So, actually, the policy being demanded here is that we trap Africans in poverty by making bananas more expensive for Britons. We tend to think that fails on both counts.
It’s also possible to be very much more basic about this. Don’t have a trade policy, don’t have tariffs. Simply leave free trade be in its totality. If we then also want to help poor Black Africans then let us then go and help poor Black Africans.
And finally, who really benefits from the preferential tariffs? Well, it’s the capitalists in Africa who own the banana plantations, isn’t it? And why do we want to benefit them at the cost of cheap fruit (yes, we know, it’s an herb) for Britons?
DESNZ Con-fusion
The Department for Energy Security and Net Zero (DESNZ) is enthusiastic about wasting taxpayers’ money. It allowed, and arguably caused, consumer energy prices to fly out of control by tying the wholesale price of windfarm electricity to Russian gas with which it should have had no connection. It failed to supervise the National Grid infrastructure so we may have blackouts this winter. So much for “security”. No decision has been made on any nuclear electricity generator since Hinkley Point C nine years ago which is now running three years late (operational 2026 maybe) and 50% over budget (so far). Not being in the business of learning from experience, DESNZ is keen to build its twin at Sizewell.
Britain needs over 20 times The Sizewell capacity that if it is to reach net zero by 2050 and its costs will be about 5 times higher than the small modular reactors (SMRs) now available.
If that catalogue of failure is not bad enough, DESNZ is hastening slowly down the SMR path, whereas it is now about to spend £650M on fusion reactors. That was announced a year after telling us that there was no guarantee fusion would work – not on a commercial scale that is. Con-Fusion will cost taxpayers £650M, two thirds the cost of one of the SMRs we badly need.
“Nuclear fusion was ‘discovered’ in the 1920s and the subsequent years of research focused on developing fusion for nuclear weapons. In 1958, when the United States’s war research on fusion was declassified, it sent Russia, UK, Europe, Japan and the US on a race to develop fusion reactions for energy provision.”
One of the questions is the availability of fuel. On 16th October 2023, DESNZ said “Fuel abundance: the fuels used in fusion reactions are effectively inexhaustible. Deuterium is readily extracted from seawater, and tritium is produced using lithium.” Just over a year earlier, Science magazine claimed “A shortage of tritium fuel may leave fusion energy with an empty tank.”
No one thinks fusion can make any contribution to net zero 2050. When Graham Springer MP asked, at the May 2023 Science and Technology Select Committee, “would it not make sense to put some of the money going towards fusion into more small modular nuclear reactors?” Dame Sue Ion agreed 3 or 4 SMRs should come first (they aren’t) and argued fusion was a relatively small amount for the basic science by comparison. That is what fusion enthusiasts have been saying for 100 years.
The truth of the matter is that they want to keep up with their opposite numbers in other countries which is the exact opposite of DESNZ policy on SMRs. Con-Fusion?
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.