Another planning failure

Mythically, there’s only been the one British public sector procurement project that arrived under time and under budget - Polaris. The myth is around the “one” for historically there may well have been others. But in modern times it probably is true.

The secret in that project was the importance of interfaces. Any part of the system could change their design, build, method, whenever and however they wanted. But changing the interface with any other part of the system was between verboeten and extraordinarily difficult. Everyone could - and did - do what they thought best, the limitation on changes was when such a change would act upon those similar freedoms of another.

The allegory with the free market, the liberal society, is obvious. Do as you wish except when it affects others. Supply goods and services by whatever method, it’s that interface with the wider population, the market, that matters.

But more narrowly, it’s also the thing that British government planning doesn’t do these days:

The UK’s beleaguered public libraries have been let down by years of indecision and delays over how to spend millions of pounds in funding earmarked for a nationwide website.

This was among damning criticisms voiced on Saturday by campaigners who have lost patience with the government, the British Library and Arts Council England (ACE) over their longstanding failure to develop a nationwide scheme. The “Single Digital Presence” (SDP) – renamed LibraryOn – was meant to bring together public libraries in one website to enable the public to access collections across the country.

The problem has been that there are 150 library authorities in England alone, each with their own technology and management systems.

The problem is that everyone’s been arguing about what such a site should do. Which goals are to be achieved? Rather than concentrating upon how to do it, which is a task of the utmost triviality.

All of the libraries are digitised - in their records at least. All have booking systems. All have the ability to create a queue, to allocate a newly freed up book to the next in it and so on. So, all of the hard work is done. All that is required is to enable all the 150 systems to speak to each other - the interface.

Simply define that interface. A library system should be able to output book data in this format here. Every such system should be able to import data in that same format. There, we’re done. This is something that could be knocked up over a weekend by the readership of The Register.

To emphasise the “another” in that headline. Back when there was that £11 billion to spend upon digitising the NHS. That £11 billion that was spent without delivering one single usable line of code. The mistake was to try to design that system. Instead of simply publishing the interface. All medical records systems must be able to out to this format, all must be able to import from it. There, we’re done. Over time and over the normal replacement and capital cycle all machines would then talk to each other across the NHS and we would have, successfully, digitised medical records. There was even such an American standard - a free one - that we could have adopted.

We are, just occasionally, willing to admit that there might be a purpose, a use, for government. Say, in the creation of interfaces which then allow everyone to get on with their own thing. But don’t, as experience keeps insisting, allow government to ever actually try to design or plan anything.

Socialists, having run out of other peoples' money....

….Now have their eyes set on other peoples’ pensions.

Will Hutton tells us that the UK pensions market is just terrible, not enough investment in actually growing British companies and therefore the state must direct matters:

….in 1990 UK pension funds owned more than £1tn worth of UK companies; now they hold less than £100bn. Increasingly, they invest in safety-first government bonds or in destinations overseas…….Absurdly, Britain has tens of thousands of pension funds: they are too small – they must all be consolidated into super pension funds, modelled on the existing Pension Protection Fund (PPF), which can spread risk……..A proportion – say, 5% – of pension fund assets should be organised collectively in a national growth fund to invest in startups, and backstopped by a public wealth fund.

And so on. As we can see, the base idea here is that more of our pension savings should be directed to where people like Will Hutton get to determine. Oh joy, eh?

All of this managing to entirely, wholly and completely, ignore what has actually happened here. The combination of demographic change and Gordon Brown’s varied raids upon defined benefit pensions funds mean that defined pensions benefit funds don’t, really, exist. Exist in the sense that they are still taking in new money, in volume, which they’ll then invest for 50 years to pay out as pensions when the time comes.

Those that do still exist are, pretty much, in run off. That’s why they’re in bonds, not equities. They’re paying out the money saved 30 years ago to the 75 year olds of today. Bonds suit that risk/cashflow profile better than equities.

The pensions that are still accruing current cash for future liabilities are defined contribution funds. Where the investment decision relies upon the individual, not the fund management caste. We do, after all, decide where our pensions savings go these days.

Which means that that problem of under-investment at home is also already solved. That one mention of “invisible hand” in Wealth of Nations is on exactly this point. Individuals tend to invest more at home than is justified by a strict economic appraisal - thus the move from defined benefit to defined contribution pensions funds is going to increase domestic investment.

The problem is already solved.

But of course this doesn’t stop the galactic megabrains from thinking that they should indeed be directing all. Some more Smith:

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

How prescient of Adam Smith to describe Will Hutton two and a half centuries before the fact.

This isn't AI, this is the minimum wage

Yes, OK, slow time of year, PR attempts to get a company written up will work well right now:

AI sparks revolution in how much supermarkets charge you for food

Digital labelling can pass on price fluctuations more quickly and cut waste

Yes, super and that might even be the effect. But the driver is, we very strongly suspect, this:

electronic shelf labels (ESLs), the first step towards dynamic pricing, had been introduced in a small number of existing shops,……..Retail expert Clare Bailey said the move to digital labelling is the first step towards a “dynamic pricing model” in supermarkets as they look to reduce labour, ….. costs

We’ve all seen this in a shop, an individual clacking out new price labels to stick on a shelf of something or other. That person costs the shop about £10 an hour this year, it’ll soon be about £11 just in wages alone (then add NI, benefits etc) and so the hunt is on to reduce labour costs. One central data entry to change the price on a whole shelf of product, job’s a good ‘un.

We can think of this as just tech reducing labour costs, or labour costs being forced up and thereby inducing the job killing use of technology. Either works.

Far more fun, to us at least, is that this begins to destroy a core tenet of New Keynesian economics. The idea of menu costs is central - it explains price stickiness. Prices do not smoothly change, they move in shuddery jumps. For there’s a cost to changing the price - the cost of reprinting the menu - so it’s only worth doing that when the underlying has changed enough to justify that cost of actually making the price change.

This is true too. It’s also why the New Classical and Real Business Cycle theories seem not to explain the world quite right, but New Keynesian seem to do better. Which is why every central bank and Treasury economic model is, by and large, New Keynesian.

That’s all a recent development, certainly recent decades. Which is where the fun comes in really. For those real world economic models have all zeroed in on a specific explanatory structure just as that structure becomes non-explanatory. If changing prices is now the one single entry in a central database for a shop, possibly for an entire chain, then menus costs are much less of an issue. The world is moving closer to those RBC and New Classical models where prices change swiftly and near costlessly and so the economy as a whole reacts near instantly to change.

Yes, obviously, these are all tendencies, not absolutes. But we really do think that it’s terribly fun that just as the orthodoxy narrows in on something generally agreed that it is also becoming untrue.

As in that old joke about economics exams. Universities still use the same questions they did a century ago - it’s the answers that have changed. Which, actually, they have.

We were told not to do it this way, so therefore we did it.....

The Stern Review was 1200 pages of, firstly, whether we should do anything about climate change and then, secondly, what. It’s remarkable the number of people who accept that whether but refuse, adamantly, to consider the what:

If the 2050 net zero target – the most consequential economic policy decision for generations, made by a piece of secondary legislation without a proper parliamentary debate – wasn’t restrictive enough, the Government is obliged to set binding, five-year carbon budgets which cap the maximum amount of emissions allowed during each period. Ministers face legal action if they fail to do enough to reach them, as judged in part by the apparatchiks on the Climate Change Committee (CCC) quango.

The what we were told to do was use markets and prices. On the grounds that they are more efficient than planning and bureaucracy. Humans have this weird tick, we’ll do more of things that are cheaper, less of those that are more expensive. So, to deal with a problem we want to use the efficient method - because then we’ll do more dealing with the problem.

So, having gained a general political agreement that something must be done about climate change everyone forgot the second part of the lesson on offer.

Which is something of a pity, obviously. But more than that - whatever the terrors of climate change we’re going to have more of them because politics decided to use the wrong tools to deal with it. A cheerful thought for the year end, no?

So planning does cause constipation in the viscera of the body economic then?

We have people telling us that it’s all the planning system:

Zero onshore wind plans submitted in England since de facto ban was ‘lifted’

So, erm, if they’re now allowed to why aren’t they? We have, after all, had it insisted at us that onshore wind is the cheapest form of electricity generation. Electricity prices are still high, there should therefore be vast profits to be had from building onshore wind. So, why isn’t there a rush?

Greenpeace UK’s policy director, Doug Parr, said: “As predicted, the government’s futile planning tweaks amounted to absolutely nothing and the de facto ban is still well and truly in place. Why would a developer risk putting their cash behind a project that remains beholden to woolly guidelines and the unworkable decisions made by some local councils?

“Onshore wind is the cheapest, quickest and greenest way to produce energy. Ramping up production would lower energy bills, slash emissions and bolster the UK’s energy security. We should be building them everywhere it makes sense to generate. But as things stand, you’ve got more chance of spotting a flying pig than a new onshore windfarm in the UK.”

Now, yes, we do know that it’s a category error to take Greenpeace at their word. But let’s just indluge ourselves for a moment and accept what they say.

So, what else are we short of? Houses. What else is also affected by the planning system? The supply of houses.

If the planning system causes that constipation in the viscera of the body economic over onshore wind - the cheapest, quickest and greenest way to increase electricity supply - then does anyone really want to be caught insisting that this affects just that and not also housing?

We do tend to think that that would be illogical.

It's not the Nanny State we're worried about here

We’d use a much stronger word to describe what is being insisted upon here. Perhaps those words more usually associated with jackboots and spiffy uniforms:

England heads for obesity disaster as minister frets about nanny state

The power that is being demanded is:

Until action is taken to curb the attraction and availability of ultra-processed food and foods high in fat, sugar and salt “their most serious by-product – namely obesity – will continue to rise”, he says.

The insistence is that they must be able to determine what you will be allowed to eat. A certain Blair got this right nearing a century ago:

Would it not be better if they spent more money on wholesome things like oranges and wholemeal bread or if they even, like the writer of the letter to the New Statesman, saved on fuel and ate their carrots raw? Yes, it would, but the point is that no ordinary human being is ever going to do such a thing. The ordinary human being would sooner starve than live on brown bread and raw carrots.

The modern panic is entirely confected:

Obesity is a devastating public health problem harming millions of people in the UK that will never be resolved by tips on what to eat and what to avoid. Two in three adults are overweight or obese and the problem costs £100bn a year.

The £100 billion simply is not true.

In England, two in five children are leaving primary school overweight

Nor’s that true as Chris Snowdon has been valiantly pointing out these years.

But the insistences are becoming ever more shrieking all the same. How much more “Tutto nello Stato” is it possible to get than that government determines what you may eat?

There really are people out there who gain a pleasure from ordering other people around, defining what may be done, insisting upon the rules that must be obeyed. The trick of a liberal society is to have them running the bridge clubs not the government. A trick we’re clearly failing to perform currently. Perhaps we should get better at it?

Billy Hague and citizens' assemblies

We’re told this is a great idea:

Yet the citizens’ assembly was established nonetheless, and over the following six months something fascinating and inspiring occurred. An appointed chairwoman and 99 “ordinary” people, chosen at random and therefore completely varied in age, gender, regionality and socioeconomic status, did a remarkable job. They adopted some commendable principles for their debates, including respect, efficiency and collegiality. They listened to 25 experts and read 300 submissions. They heard each other out and compromised more effectively than elected representatives.

We’d have a certain sympathy for the idea if we all went with only such assemblies and thereby managed to kill off, entirely, the parasitism of the current political class. To the extent that that’s not just the post-consumption grumpiness of the Christmas port kicking in.

On a more considered, umm, consideration we’re against it. From the Electoral Reform Society:

Members were given information on the topic, heard from 25 experts and reviewed 300 submissions (out of around 12,000 received) from members of the public and interest groups.

The problem with such sortition and committee is that the power to determine the outcome rests with the selection of the experts to do the speaking, with the pick and choose of the 300 from the 12,000 submissions.

This is just a replay of the commitology of Leacock or Parkinson. Or, for those who remember their student politics, how everything was really decided in the junior sub-standing committee on committee submissions, which was really all four members of whatever the Trot Party was called that term, meeting at midnight on a Sunday in the basement behind the beware of the leopard sign.

Citizens’ juries, assemblies, sound great. Until one realises that all the power will belong to those who feed the information to them. We’ve just removed political power away from elections, away from democracy and deep into the bowels of the junior sub-standing committee on committee submissions.

So, no.

Now it is possible that that second bottle of port was a bad idea and therefore this is a little more grumpy than should be taken seriously. But we have heard of an idea from Athenian democracy. Where anyone could propose a law, everyone voted on it and if it passed then, well, that was the new law. If it didn’t pass then the proposer was taken ‘round the back and strangled. No, too extreme. But it would reduce the number of damn fool ideas put forward, wouldn’t it.

Well, yes, those Sci-Fi dystopias

Charlie Stross tells us of how:

SF is a profoundly ideological genre—it’s about much more than new gadgets or inventions. Canadian science-fiction novelist and futurist Karl Schroeder has told me that “every technology comes with an implied political agenda.”

Well, yes, we’d run with that. Although we’d go further, a major strand of Sci-Fi is exploring the political agendas, even outcomes, that might come from a specific technological change. Many of which do become dystopias of course - partly that’s because “and then everything was lovely” isn’t a hugely gripping storyline.

But OK, there’s a lot of politics in there, at least there’s a lot of discussion of politics in there:

Science fiction (SF) influences everything in this day and age, from the design of everyday artifacts to how we—including the current crop of 50-something Silicon Valley billionaires—work. And that’s a bad thing: it leaves us facing a future we were all warned about, courtesy of dystopian novels mistaken for instruction manuals.

Which, well, we doubt we share many political thoughts or ideals with Mr. Stross so let’s just say that’s possible. But then Sci-Fi really has discussed many of the available dystopias along the way. Possibly the grandaddy of the genre, “We”, tells before the event how Stalinism isn’t going to work. “Brave New World” can obviously be read as a warning about the then very fashionable in left wing circles eugenics programmes (the Fabians were virtually founded upon the idea).

More recently “Fallen Angels” can be read as a warning of actually allowing any greens, anywhere, to hold the controlling reins of politics. There have been novels about how the govt of Earth tried to strangle any freedom among the space colonies by denying water for reaction mass (again, cod-green arguments) so they go corral a moon of Saturn. A whole series that has the UN controlling all new technologies.

Our point here is not that Mr. Stross is wrong in identifying some dystopias that result from a possible excess of corporate power. Rather, that the universe explored also includes those with an excess of government control. Which brings us to this:

We were warned about the ideology driving these wealthy entrepreneurs by Timnit Gebru, former technical co-lead of the ethical artificial intelligence team at Google and founder of the Distributed Artificial Intelligence Research Institute (DAIR), and Émile Torres, a philosopher specializing in existential threats to humanity.

Gebru is famous among those who pay attention to these things for insisting that AI cannot be allowed unless it accords to her definitions of what is moral. It must include - work by, produce outcomes that lead to - equity, for example. But as the universe is inequitable by those current standards of how equity is defined - equal outcomes - Gebru’s definition insists upon the only AI we’re allowed being an AI that doesn’t work. For it doesn’t describe, start from, the world that exists, it becomes a projection of the desired world. Desired by a certain set of morals and ethical stance, not a building upon what is extant.

We’d argue that the dystopias for us to avoid as described in Sci-Fi are not those in which Marc Andreessen gets to cackle at us mere mortals from his private space station. Rather, those in which bureaucrats prevent private space stations from ever existing.

But that there is to betray - just as we insist Mr. Stross is doing - our own ideological biases.

The real point we want to make here is that yes, Sci-Fi, among other things, explores dystopias. But many dystopias, formed by different stretches and exaggerations of current society and technology. They’re by no means all - or even mostly - about an excess of capitalist, corporate or even market power. There are many about that potential excess of state, bureaucratic and just plain foolish power too.

SciFi doesn’t tell us to worry purely about the current crop of Silicon Valley capitalists. It tells us to worry about all who would direct our society. A little more equity from Mr. Stross and others in the dangers faced here would be welcome. For we’re really very certain indeed that the potential dangers do not stem merely from those trying to make a buck or a billion.

It is a day to think about the children

Rather than, as the Observer is doing here, mislead about the children.

Profiteering fears as global investment firms increase stakes in England’s child social care

The first complaint is that governments with lots of capital - those sovereign wealth funds - are investing in children’s homes in Britain. We see this as being rather a good thing, capital being invested where capital is needed, but obviously opinions can differ on that.

Where this passes over into an untruth is here:

A recent analysis found that the Keys Group, whose services also include specialist care and education, had pre-tax profits last year of £27.7m on all its activities – 22.4% of its income. It also had net tangible liabilities of £128m.

The emirate of Abu Dhabi entered in the market in 2021, acquiring the Witherslack Group via its Mubadala sovereign wealth fund. Witherslack’s annualised pre-tax profits were recently estimated to be £39m last year.

This is not true. The report - it’s this one - said that EBITDA, that’s earnings before interest, tax, depreciation and amortisation, were of those amounts. As we’ve said before about this report:

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.

These companies are not making 22.4% of turnover as profits - nor the £39 million. They’re making that as operating profit before the costs of having a home to put children in, the property costs of interest, depreciation and so on.

Now then, it is possible that these people are simply too ignorant to understand the difference. It’s also possible that there is lying for political effect here. If it becomes an established part of the political conversation that massive profit margins are being made upon running children’s homes then politics will be driven by that outrage. Whether it’s actually true or not doesn’t matter to a political “fact” which is why so much effort goes into their creation.

We’re open to the idea that this is simple ignorance, as to that this is an attempt to deliberately mislead. Neither seem to us to be a great justification for taking the blindest notice of this rubbish.

Yes, this is that day of the year that’s about the Boy Child and all that. Be interesting if people used this season to be rigorously truthful, no?

Merry Christmas all.

We'd better hope that green hydrogen works

Somewhere along the line that is - a source of hydrogen that is both cheap and also fits in with whatever are insisted upon as the rules of our new green overlords.

The reason?

Lebensraum.

No, not the A. Hitler vileness, back a generation to Imperial Germany. The observation was that those nations with a higher population would survive (this doesn’t have to be true but it was thought so then). From that logically, and correctly, follows that more food supply is necessary in order to feed the higher population. But there’s a limit to how much food can be grown from a piece of land - therefore more land is required, that lebensraum. In Germany’s case, Poland and the Ukraine.

That was indeed the line of thinking in those 1890s and so on. And given the constraints of the time (and the refusal to believe in importing food in large quantity) we might not like what they believed but believe it they did.

This all changed with the Haber Process - being able to make ammonia from natural gas. CH4 into HN3. Now it’s not necessary to have more land, one can slather ammonium nitrate (NH4NO3 and made from that HN3) onto it instead.

Artificial fertilizers mean it’s not necessary to conquer more land in order to feed the population. Huzzah.

But as a part of the Mitsubishi Group is pointing out, the price of gas inside Europe is currently such that there’s pretty much no fertilizer production. And if we all stop, entirely, using that natural gas, the CH4, then that old way disappears. We then get back to fights over enough land to feed people.

No, going organic doesn’t solve this. Precisely because fertilizer is a substitute for that more land, organic requires more land than fertilized. We’d be back with the battles - and also have, to a useful approximation, no land at all left for wildlife once we’ve fed humans from our now more extensive but less productive fields.

We really don’t think we’d like that world at all. Our conclusion here being that we really do hope that some form of green hydrogen production does work. At scale and cheaply. For that’s the essential input to this process of being able to feed the 8 billion of us.

A cheery thought for Christmas Eve, eh?