Tim Worstall 20/12/2023 Tim Worstall 20/12/2023

It's the 15 months, not the banning of the deal, that matters

As we’ve pointed out before, it’s the time taken by bureaucracy that matters more than the actual decisions:

Adobe is ditching its planned $20 billion takeover of Figma, the app design business, after the deal’s future was thrown into doubt by UK and European competition watchdogs, which said they were minded to block it.

Maybe the block is the right decision, maybe it isn’t. We’d not even pretend to enough knowledge of the sector to know. But we would insist that the actual problem is here:

It (Adobe) will now pay Figma a $1 billion break-up fee, as set out in the agreement they made when the tie-up was agreed 15 months ago.

As we have indeed said before:

This productivity increase - it comes from either doing new things, or doing old things in new ways. As above, this has historically been 80% of total growth. The speed of GDP growth is the speed at which we do those new things or things the new way. This is also the same, in concept, as the speed of productivity growth.

So, now we’ve a bureaucracy taking 15 months to even decide whether they might have a concern about someone suggesting a new arrangement for doing something or other.

Sure, that new thing might be bad. Might be good too. But at some rate of bureaucratic cogitation the time spent to think through it causes as much damage to economic and productivity growth as simply allowing a bad thing to happen.

We’re not getting richer precisely and exactly because we’ve a bureaucracy deciding how we should be getting richer.

The answer is obvious - simply abolish the Competition and Markets Authority. Replace it, perhaps, with something efficient, that doesn’t, by definition, make us poorer. Or a coin toss, likely to do less harm.

Or, perhaps to revive that old joke about why’s there only one Monopolies Commission, we should ponder whether the correct number of CMAs is none or three. The multiplicity would provide the competition leading to thumbs being extracted and decisions reached in less than geological time.#

We’re ideologically opposed to an economy in which the main question about anything new is “May we?”. But if that is the way that it’s going to be can we at least start employing people who can make up their minds in, say, a week?

Tim Worstall 19/12/2023 Tim Worstall 19/12/2023

It's Taylor Swift with the monopoly, not Ticketmaster

It was difficult for people to buy tickets to Taylor Swift’s tour. Yes, really, the world’s biggest pop star sold out her shows - we’re all shocked, right? This is now leading to an insistence that it’s the monopolist selling the tickets which is the problem. We agree, it is. But the monopolist is Ms. Swift - only she can put on a Ms. Swift show - not Ticketmaster, the people who were selling the tickets:

But it also highlights the shortcomings of what critics say is a broken ticketing market that is creaking under the weight of high demand. Touts are able to buy up tickets and sell them on at exorbitant rates, while some concert-goers now face huge increases in ticket prices even if they go direct to the original seller.

Scrutiny is being levelled at Ticketmaster, which holds a dominant position in the market and has been branded a “monopoly” by its numerous critics.

As a bidding war kicks off for a rival retailer, is the ticketing market poised for a much-needed shake-up?

There’s absolutely nothing, nothing at all, in those complaints about how difficult it was to buy tickets other than that Ms. Swift has a monopoly upon being Ms. Swift.

Think on it. There were x million tickets on sale (apparently the tour grossed $1 billion and counting). There appeared to be more than x million who desired to see one of the shows. There’s an excess of demand over available supply.

Yes, it’s entirely true that the Swift organisation was, umm, swift to put on more shows where demand indicated. They tried to up supply to meet demand.

But what would change if there had been two organisations selling tickets to see the shows? Four, 100? Well, not much really. There was still that problem of x million plus desires being greater than the x million supply. Therefore shortages, rising prices, touts and all the rest.

Now, it could be that Ticketmaster has something of a monopoly, it could be that that’s a bad thing. We’re entirely willing to entertain such thoughts and an analysis of whether that’s all true. But it isn’t true that the Swift Tour is a proof of any of those contentions. Simply because the monopolist here isn’t Ticketmaster, it’s Ms. Swift.

Maxwell Marlow 18/12/2023 Maxwell Marlow 18/12/2023

The Adam Smith Institute's Response to the Smoke Free Generation Consultation

Following a call for evidence by the Department of Health and Social Care earlier this year, the Adam Smith Institute submitted a response urging the Government to be cautious with its reforms. Covering enforcement and liberty concerns, through to the importance of vaping flavours and heated tobacco for those looking to quit smoking, you can find a summary of our response below.

Click here

Tim Worstall 18/12/2023 Tim Worstall 18/12/2023

The OBR entrenches bias, not truth

The Office for Budget Responsibility is doing one thing right - using dynamic scoring. That is, employing the Lucas Critique. If you change the rules then people will change their behaviour. So, we must include changes of behaviour in our estimates of the effect of a change in policy. So far so good. Sadly, as Dr. Goodspeed of this parish (and also a former CEA Chair but that, of course, is trivial by comparison with a position here) tells us by email:

Check out their fiscal multipliers. Small wonder there is such bias in the UK government toward transfers and public "investment" over marginal tax rate reductions. These multipliers are so far removed from the latest estimates that they're almost laughable. For public investment, one of the best experts out there is Valerie Ramey (UCSD, soon to be Hoover), who has a new paper on the macroeconomic effects of public infrastructure investment here. Her work is super accessible here, including this excellent JPE article on multipliers being less than unity regardless of slack.

On taxes, Karel Mertens (Dallas Fed) and Morten Ravn (UCL) have made really important contributions to the study of the macroeconomic effects of tax shocks, including this AER article and this short study of the 2017 TCJA.

For the UK specifically, James Cloyne has done excellent work, eg. here. Cloyne also contradicts HMT's claims about (corporate) tax cuts and inflation here, with additional insights on the effects of corporate tax cuts here and here.

The changes in behaviour being claimed are wrong. As in, not true.

One answer might be to change the assumptions being used to reflect reality. But that’s to miss what the actual problem is. It is true that the OBR’s assumptions all militate in favour of an activist government doin’ stuff. That’s what using multipliers that are too high means - that government doin’ stuff is going to work and it’s going to work great - and so on through their other errors as above. We of course don’t agree and one of the reasons is that the assumptions are, when measured against reality, wrong.

But the problem is larger than just the OBR. It’s with the current style and structure of government - even the wider management of society. We have far too many organisations claiming to have a monopoly on the truth. Which they then impose upon everyone else.

The OBR is used to measure what the Chancellor says - and what the OBR says is observed as being some neutral truth. Which, as above, it actually isn’t. But far too much of life is being determined in exactly this manner. Natural England embeds into everything rather radical views about matters environmental - that’s why it’s run by Tony Juniper. The Climate Change Committee removes discussion of that subject from the front line and puts it into the backrooms of the cabal.

We see this in wider form too. All those fact checkers of what can be determined to be “the truth” that can then be said out loud on social media. About any issue we like to mention too - trans issues, say, or as the current inquiry is showing, what could be said and what could not about covid. It becoming very clear indeed that often enough what could not be said was actually the truth.

We are not about to claim that this is all a plot by Klaus and his Merry Elves from the WEF. We are micro-conspiracists, not macro. Once there is an organisation appointed to be the guardian of the truth then those with a vision for society will gravitate to it. The OBR will be run by the economics types who believe that government action is doin’ good. Who, after all, else would be willing to work for a fairly boring govt dept other than they? Natural England is always going to be run by those with pretty extreme environmental views - like let’s bring back the swamps with beavers just as climate change means the mosquitos will be back with malaria, dengue and Chagas. The CCC will always be the home of those who consider any price worth paying to prevent warming - like £15,000 fines for not selling an EV as is now being imposed upon car manufacturers. The factcheckers on the internet are always going to be those with views and dangnammit, everyone’s got to acknowledge the truth of them. By force if necessary.

By creating these positions with the power to determine that “truth” we have offered positions of power to every prodnose with a view they will insist upon imposing. Which isn’t how a free and or liberal society works. Therefore we liberals and desirers of a free society need to kick back against these positions of power.

It isn’t enough to correct their errors. It’s the positions themselves which are the fatal conceit. Therefore we must abolish the positions. The OBR, The CCC, Natural England, all similar and yes, all that factchecking of Facebook.

That this will allow error is obviously true. But it will also prevent the embedding of error which is what is happening now.

Not that this is an unlikely conclusion for us to reach around here - kill the bureaucracy has long been popular. But it is an important conclusion.

Tim Worstall 17/12/2023 Tim Worstall 17/12/2023

One of those interesting political promises

This is not an attempt to diss a particular political party. It is, rather, to examine what is being proposed:

Labour promises 1.5m more homes in its first term – affordable homes, social housing and new towns – with planning reforms to stop nimbys blocking building.

We, of course, would be delighted if there were 1.5 million more homes. We’d probably mutter that if there were that many new ones then they don’t, in fact, need to be affordable nor social. For if supply is increased that much then all homes will become more affordable. Rather the point of the exercise we’d hope.

But OK, nice ambition. But we’d go that one step further in examining it. Given the current planning laws there is no possibility whatsoever of gaining that amount of new housing in one 5 year parliamentary term. For it takes about 5 years from gleam in the eye of a builder eyeing up a green field to the removal vans arriving with the new furniture. Which means that substantial reforms to the planning process are required to be able to do this.

But if there are substantial reforms to the planning process to enable this to happen then the problem is already solved - we’ve reformed the planning system so that large volumes of new housing can be built. Huzzah!

The British housing problem really does come down to that planning process. Reform that (we suggest blowing the entire system up, properly kablooie!) and the problem is solved. This suggested solution will require planning reform. So, good, let’s do that, let’s reform planning.

Hey, we’re even willing to consider that there might be some loose ends that will then also need tidying up. But let’s crack that core problem first then see what else needs doing.

Tim Worstall 16/12/2023 Tim Worstall 16/12/2023

George Monbiot stumbles upon a great truth

As ever, George then picks himself up and marches on, ignoring the lesson just learned:

Between 2015 and 2020, financial institutions invested $478bn (£380bn) in meat and dairy corporations. But from 2010 to 2020, only $5.9bn was invested in plant-based and other alternatives. Astonishingly, the livestock industry also receives, across the EU and US, about 1,000 times more government funding than alternative products. This includes massively more money for research and innovation, even though meat and dairy are well-established industries, while the alternatives are at the beginning of their innovation phase. Why? Because the livestock industry’s political connections are umbilical.

This is the way politics always works.

Think of housebuilding in Surrey. Those who currently live there have the vote there. They’d like their houses to remain valuable, prefer to have those rolling acres - which they don’t own - to look at. Rather than the housing that people who do not currently live in Surrey but would like to would prefer. But those who would like to live in Surrey are not a political constituency, do not have votes in Surrey. Therefore more of Surrey remains under golf courses than housing.

Politics is driven by extant political power, not by that which might arise if the current order were overturned.

Livestock farming has lips firmly on the taxpayers’ teat because it exists, has votes. Plant alternatives would obviously like some of that cream but they’re not an organised political constituency therefore they don’t get it.

Shrug. This is just how politics works. It also shows why politics is such a lousy way to actually run things. For this kowtow to extant, the existing, is true of all political systems, however democratic or elitist (it will be true of dictatorships, theocracies, was absolutely true of Soviet socialism and so on). The reason this is such a lousy way of running things is that good economic management consists, in large part, of making sure that there’s room - free market entry, a level playing field, all that - for the currently non-extant to arrive.

The only way to get around this is simply not to have politics in business. Or, as above, learn the lesson of the truth just stumbled over. Politics will always favour the extant political community but what we desire is that room for the new to arrive. So, no politics in business. And yes, no politics means no subsidies, no grants, no innovation schemes, for they will always be run by that politics and those extant interests.

Monbiot’s just proved to us why laissez-faire works. Horrifying as he himself would find that conclusion.

Tim Worstall 15/12/2023 Tim Worstall 15/12/2023

Once again, to correct Shelter

No, this is nonsense:

Extra 40,000 people in England homeless this Christmas, says charity

It is constructed by being horrendously misleading:

Research by Shelter finds 309,000 people set to spend festive season ‘in a tiny hostel room or freezing doorway’ after rise in rough sleeping

We have pointed this out before and as long as people try to deliberately mislead we’re going to have to carry on repeating it.

The number of people homeless, as in rough sleeping, is around the 4,500 mark. Or, over a year, perhaps 8,500 pass through that state. That’s not good, we’d all prefer it didn’t happen and we all also need to realise that it is made up of two essential groups. Some number of runaways and the like who tend to get picked up, swiftly enough, by one of the many charitable groups. The hard core is of those with significant mental health, drug and alcohol addiction problems. For whom the problem is not the lack of housing it’s everything else going wrong in their lives. What we should probably be calling the result of closing the asylums and that care in the community provision of a bracing night in the good cold air.

Polly Neate, Shelter’s chief executive, said 309,000 people would be spending the festive season this year “in a tiny hostel room or freezing in a doorway”.

This is Worstall’s Fallacy in all its glory. Demanding what must be done without accounting for what is already done. To a rough and ready estimation some 304,000 people are being saved, by that welfare state, from a night sleeping rough in a doorway. We already have a system which deals with homelessness. One that deals with it pretty well in fact. A 1 - 2% failure rate is pretty good by any standard let alone government performance.

Now, could it be made better? Sure. Should it be? Sure. But it simply is not true that the country has 309,000 homeless people. So let’s not start our analysis of the problem to be solved from that untrue claim.

Tim Worstall 14/12/2023 Tim Worstall 14/12/2023

That poverty gets dealt with is apparently problematic

We are, around here, near pure pragmatists. If it works, it works, if it don’t then don’t do it. Apparently this isn’t how some others see the world:

Independent Food Aid Network warns of normalising charity as an answer to poverty after Princess of Wales volunteers at Berkshire centre

Yes, they really are saying that charity is a bad thing.

Sabine Goodwin, director of the Independent Food Aid Network, said: “There’s a fine line between soliciting donations with a positive spin and normalising a charitable response to poverty.

As we say, charity’s a bad thing to some people.

“The Princess of Wales’s heart is undoubtedly in the right place but we can’t afford to see royal patronage through rose-tinted glasses. We need to be collectively shouting from the rooftops that baby banks, like warm banks, fuel banks and food banks, shouldn’t be needed.

“If we are to put the baby bank genie back in its bottle, combining calls for systemic change with much needed efforts to fill the gap is critical.”

Graham Whitham, chief executive of Greater Manchester Poverty Action, agreed, saying “it is vital we don’t further normalise charitable responses to poverty”.

We’d just like to point out that the major cause of visits to food banks - as an example - seems to be the inability of the State to hand out free money on time to the right people. Therefore an insistence that the State must be exclusively responsible for what it is patently incapable of does seem to us to be a very strange insistence.

As we’ve also pointed out more than once we are insistent that food banks - to use the same example again - have not expanded because the need is greater than it was 30 and 50 years ago. Rather, because around the turn of the millennium this country imported that American technology of alleviating poverty through food banks. The expansion is not an expansion of need, it’s an expansion of efficient supply.

Charity makes the world a better place. As we’re in favour of better place we’re in favour of charity.

We’d also mutter along the lines of how Soviet this demand of systemic solution is. Sure, Comrade, you’re hungry, cold, dwelling in a shack. But rather than allowing any alleviation of that, first we build socialism, Da?

Tim Worstall 13/12/2023 Tim Worstall 13/12/2023

Bureaucracy kills productivity growth

Now, of course, this is a boss complaining that the bureaucracy won’t allow him to do what he wants to do:

The UK competition regulator is stifling innovation and entrepreneurship by taking too long to make decisions, according to a senior Adobe executive who is overseeing its $20 billion takeover of Figma.

In an interview with The Times, David Wadhwani, president of Adobe’s Digital Media business, said: “The process should not take 15 months to get to this stage. I think we can all agree that expediting these kinds of decisions is important for innovation and for doing the right thing by consumers and customers to make these decisions faster and move more quickly.”

In November, the Competition and Markets Authority (CMA) said it was minded to block Adobe’s multibillion-dollar takeover of the app interface design business Figma because it could harm competition in product design, image editing and illustration. A final decision will be made by the end of February next year.

We’re even prepared to accept, for the moment and for this argument only, that the concerns of the CMA are valid. Maybe it will cause problems in some corner of this market. You know, maybe.

But now the point we’ve made before. There are two types of economic growth, there’s simply processing more economic resources into more output. Not very green, it’s also how all of the Soviet Union’s growth turned up. More iron ore and coal to make the steel for the machines to dig up more iron ore and coal. There’s also becoming more efficient at our use of economic resources. This is what produced about 80% of the economic growth in the market economies in that long 20th century.

Becoming more efficient is also known as increasing productivity. We can talk about total factor productivity (how efficient we become at using everything) or the one that politics currently whines about, labour productivity. How much more value do we gain from an hour of human labour?

So, now we’ve a bureaucracy taking 15 months to even decide whether they might have a concern about someone suggesting a new arrangement for doing something or other.

We’re not getting richer precisely and exactly because we’ve a bureaucracy deciding how we should be getting richer.

Given that example we have of a sensible political reaction to bureaucracy in Argentina, so, where’s that chainsaw gone?

Tim Worstall 12/12/2023 Tim Worstall 12/12/2023

PPE costs more at a time of high demand, does it?

We note that the Good Law Project is having another tilt at the government:

PPE was on average 80% more expensive when the government bought it from firms referred through a special “VIP lane” by Conservative ministers, MPs and officials, new information has revealed.

The Good Law Project, which has long been investigating PPE deals during the Covid pandemic, said internal government documents showed that the unit price paid for items under VIP lane contracts was up to four times higher than average.

We agree, this could be possible. The idea that special contracting processes lead to mates getting great deals is not alien to us at all.

But there’s another possibility here as well. Think back - demand for PPE was through the roof as the pandemic hit the whole world at the same time. Supply was constrained, obviously enough. So, and therefore, prices rise. This is normal enough.

We also have that special lane. For those who can actually deliver, to spec (clearly, not all was to spec but that’s another matter). In a time of global shortage of supply when measured against demand. So, those supplies of PPE that come through this special lane, they’re going to be higher priced or not?

As we say, we don’t insist that the second be true, nor that the first not be. But we would insist that that second be explored, be thought about, the GLP claims adjusted for that somewhere between possibility and likelihood.

They have, haven’t they. Haven’t they? Or are they just claiming that deliveries during a supply shortage were more expensive?

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