We're cynics, this might not be about the climate

We tend to think politics is best viewed through that cui bono lens. Yes, this is cynical, but by identifying who does benefit from a policy it might be, could be, possible to identify who is driving the policy. And, of course, who is simply a fig leaf for that policy.

Joe Biden has, at least for a while, defused a ticking carbon bomb. Climate activists and the fossil fuel industry are now left wondering how long it .will last.

The decision on Friday by the Biden administration to pause all pending export licenses for liquified national gas (LNG) to consider the climate impact of the projects has been hailed as a momentous shift in the status quo by those concerned by the unfolding climate crisis

It is obviously possible to see that cheerleading, yes. But that climate idea is a very disparate benefit - this being one of the problems in the policy area itself of course. Further, as we all know, it’s concentrated interests who really win in politics. Therefore:

Critics, however, point to evidence that boosting LNG exports drives up domestic gas prices for Americans…

Ah, yes. We recall this from the ban on crude oil exports. Then it was legal to export oil products but not oil. So, the ban on crude exports made crude cheaper for domestic refiners to buy while their output prices were still world ones. That is, the crude export ban boosted refiner margins at the expense of driller profits.

Yes, natural gas is an input, a major price input, into a number of industrial processes. Fertilisers, a large swathe of plastics and so on. A ban on - new as here - LNG exports will boost the margins of those industrial natural gas users while not limiting their own production exports nor affect the prices they gain for them. The people who lose profits will be those drilling for natural gas. The frackers out there tend to be smaller companies than the industrial users - disperse and concentrated political interests.

Having identified the winners we then make the leap to the assumption that they are driving the policy. While that is indeed cynical our view of politics is that it is not excessively so. For being too cynical is indeed to be sad, but the correct question about politics is always “Am I being cynical enough?”

These people are insane, truly so

This can be described as a Brexit problem (or even, for those who wish to be arch, a “Brexit Benefit”). The correct description is insanity:

A post-Brexit trade deal with Canada has collapsed after negotiations lasting more than two years were halted by a row over meat and cheese exports.

Diplomats paused talks on Thursday with each side accusing the other of obstructing progress.

The major sticking points in the deal are understood to be exports of British cheese and imports of beef from Canada to the UK.

The naive might think that this means the Canadians are refusing to send their cheap (and Yummy!) beef to Britain, while we Brits are cruelly denying the Canucks our wondrous (and Yummy!) cheeses. To think that is to entirely misunderstand how politics views trade - which is through that lens of insanity.

Canada has been pushing for more UK access for its beef and pork producers and also wants the UK to relax a ban on beef treated with hormones.

Mr Trudeau, Canada’s prime minister, meanwhile, had promised his dairy farmers no more foreign cheese imports under its strict dairy supply management system, after making concessions to the United States in a North American free trade agreement.

See? Insane. The Canadian government is denying Canadians our super cheeses, our own government is denying us that lovely beef and pork (Canadian bacon is indeed the only North American version of that comestible worth eating). They are, as we say, insane:

The popular view that free trade is all very well so long as all nations are free-traders, but that when other nations erect tariffs we must erect tariffs too, is countered by the argument that it would be just as sensible to drop rocks into our harbours because other nations have rocky coasts.

Professor Robinson is echoing M. Bastiat there and is therefore correct. She is also correct in that politics inverts this - which is, again, why politics is an insane way of dealing with trade.

To recap. Mr. Britishploddingbureaucrattradenegotiator sits in front of Johnny Foreigner and insists that “If the Brothers McKenzie cannot have a stiltonburger then I will punish my people, Britons, by refusing them cheap beef and round bacon. Take that, dastard.” We also have to pay, at gunpoint, Mr. Bpbtn a very fine salary* for making us poorer in this manner.

This system is insane. The only logical attitude to have is unilateral free trade. So, let’s do that then.

*Plus the finest pension plan in the country and likely the kids’ school fees. Diplomatic Service gets full freight at Eton paid for all kids. We’ll also probably have to mint a CMG or the like for them at some stage. Which is rather rubbing it in we feel.

Since vapes work the fools want to ban them

There are those days when the entire idea of government is called into question - given how hard it seems to gain good government:

Half of young people using disposable vapes were not smokers, research has shown, as ministers consider a ban.

The UK study of almost 70,000 people shows a steep rise in the number of adults using the products.

Overall, the study found that from January 2021 to August 2023, the prevalence of disposable e-cigarette use grew from 0.1 per cent to 4.9 per cent of the adult population.

The figures show that among those aged 18 to 24, the proportion using disposable vapes is significantly higher. In total, 14.4 per cent of this age group used the devices, including 7.1 per cent who used them despite not having a history of smoking tobacco.

That all sounds to us like excellent news. We know that tobacco smoking is injurious to health, vaping is a vastly less damaging substitute, more vaping and less smoking seems like a damn good idea.

This is not, however, how government seems to see it:

The Government is considering banning disposable vapes, as part of efforts to prevent youth vaping.

Given the difference in health effects the correct reaction to the evidence so far would be to subsidise vaping, not ban it.

The charity said ministers faced a “complex balancing act” to keep vapes out of the hands of children and those who have never smoked, while ensuring help was available for those trying to quit smoking.

Why try to stop people who don’t smoke from vaping? This is the very thing desired, that people don’t smoke, yes? So, if people vape instead of smoke then they’re not smoking - job done.

And the thing is, alongside the rise in vaping over the years there’s been a collapse in the number of young and teen smokers. “Smoking rates among 16-24 year olds have only fallen by a half since 2000, from 32.9% in 2000 to 15.7% in 2020.” and “Regular smoking among males and females aged 15 in England has fallen steadily since 2011, from 11.0% for both sexes to 4.9% and 5.3% in 2018 respectively” and “The proportion of children who have ever smoked continues to decline. In 2018, 16% of 11-15 year olds (23% in 2012) had smoked at least once; the lowest proportion since the survey began in 1982, when 53% had tried smoking.” Different measures in different years provide different numbers of course.

We can even test this against the experience of other places:

The proportion of teenagers smoking has increased for the first time in 25 years in a situation health experts have labelled “alarming”.

Data analysed by Cancer Council Victoria’s Centre for Behavioural Research in Cancer (CBRC) has revealed a threefold increase in the proportion of 14 to 17-year-olds smoking tobacco in the past four years, from 2.1% in 2018 to 6.7% in 2022.

So, why might that be?

It is illegal to purchase any e-liquids or vaping products containing nicotine for personal use from any Australian retailer as it is classified as a schedule 7 – dangerous poision under the National Poisons Standard. The use of Nicotine is regulated by the Federal Government under the Theraputic Goods Act 1989. However, if the e-cigarette is for therapeutic purposes such as smoking cessation or alleviation of nicotine withdrawal, the e-cigarette must be registered by the TGA in order to be lawfully sold. This is only available by a doctor as a schedule 4 prescription only medicine under the National Poisons Standard.

Putting vapes - containing nicotine at least - on prescription only increases the teen smoking rate. Or, at least, is strongly correlated with it rising.

Britain has nicotine vapes widely available and a low and falling teen smoking rate. Australia has nicotine vapes on prescription only and a high and rising teen smoking rate. Therefore the British government is to control teen access to nicotine vapes in order to reduce the teen smoking rate.

Currently the UK government takes 37% of all economic effort by everyone in the country. Clearly too much of that is spent upon fools. The correct solution to government losing its mind is to have less government, obviously.

Yes, this is the correct answer

Electric cars will never account for more than a third of the market and consumers should not be forced to buy them, the boss of Toyota has said.

Akio Toyoda, chairman of the world’s biggest carmaker by sales, said that electric vehicles (EVs) should not be developed to the exclusion of other technologies such as the hybrid and hydrogen-powered cars that his company has focused on.

Speaking to employees in a question and answer session, Mr Toyoda called for a “multi-pathway approach”, adding: “The enemy is CO2.”

Well, that very first assertion might not be correct. We certainly don’t know and we’d not try to impose our ignorance upon everyone else either. Which is exactly what our actual governors have forgotten. No one does know what is going to be the correctly different technology other than the internal combustion engine. It could even be that the ICE remains but powered by manufactured petrol from renewables derived hydrogen. Again, we don’t say it will be but it’s a viable technological path.

Among us here we know alarmingly large amounts about the lithium for batteries market, have actually worked in the supply chain of the fuel cells for those hydrogen cars, are up to date on renewables and Fischer Tropsch and so on - and we still don’t know.

Except we do know the right way for the decision to be made. Which is to have the one, technology independent intervention to deal with the externality. Then leave the market be to sort through all the potentially viable alternatives and see which one wins. Instead of the current system of people with a great deal less knowledge than we’ve got picking the loser.

We can tell it’s the losing technology by the insistence upon its imposition - no law is necessary to force people to use a winner.

We’re even fortunate enough to not have to impose a new insistence or penalty. As repeated investigations from the likes of the IMF and so on point out the current UK level of petrol/diesel taxation is at or above the Stern Review carbon tax level. We’ve already done everything necessary as an intervention, now we just have to wait and see.

Or rather, we’ve already done far too much for as well as the correct carbon tax we’ve that legal insistence on most of the solutions not being allowed. Which is the error of course.

Markets do work and one of the times when they really, really, work is when we face technological uncertainty. Create the incentive to replace, sure, but then leave be to see what wins that replacement battle. The real and underlying logic to that being that we don’t, in fact, know what us the people want from the replacement. Therefore how can any planner possibly provide what is unknown? We need the period of market experimentation to find out…..

When is a privatised company not a privatised company?

Ofcom, the UK government agency that regulates the Royal Mail, has conceded that the national carrier can reduce its letter deliveries from six to possibly as few as three per week. The company was split from the Post Office and privatised a decade ago. I still have my shares in it. But in what is known as the Universal Service Obligation, it is legally obliged to deliver to anywhere in the UK for a fixed price — which, in the case of letters, is an eye-watering £1.25 for first class and 75p for second).

Of course, fewer people send letters these days, preferring email for important and personal communications. So letter volumes have fallen, and the Royal Mail is hurting as a result. Ofcom says the company could save £100m-£200m by cutting deliveries to five per week, and £400-£650 by cutting them to just three per week.

The British government has insisted that a six-day service should remain and that Saturday deliveries, in particular are (for some unspecified reason) “sacrosanct”. And the Communication Workers Union (CWU), which represents Royal Mail staff, says the three-day delivery idea is unacceptable, would destroy Royal Mail and cost thousands of jobs.

How can you privatise a company that is effectively a national monopoly of letter delivery (and, at the time, a near-monopoly in parcels delivery) only for it to get itself into debt and have to cut back its service? With a national monopoly and a national infrastructure system, you would expect it to be rolling in cash.

The answer is that it hasn’t really been privatised at all. Royal Mail was privatised, but it still isn’t allowed to operate as a private company. Politicians insist it must charge the same to carry a postcard from Land’s End to John O’Groats as it does to carry one from No.8 Acacia Avenue to No.13 Acacia Avenue. A government agency decides how much it can charge and what days and times of day it must deliver on. And the same powerful union that made the Royal Mail notoriously unreliable is still doing the same.

The point of privatisation is not who owns a company. It is about setting a state-owned organization free to explore innovative ways of providing its service better, quicker, faster, and of developing new services that give consumers even greater value. When you privatise something as a monopoly, though, it has very little reason to bother itself with that.

For a little while, Royal Mail relied on its lucrative parcel delivery service, Parcelforce, another near-monopoly, to keep the whole tub afloat. And yes, it is still the UK’s biggest parcel carrier. But Parcelforce has had the stuffing knocked out of it by other, more nimble and innovative carriers like Hermes, DPD, Yodel, DHL and Amazon. And many customers prefer those others as being quicker and more reliable (some even nickname the Royal Mail’s effort as ‘Parcel-farce’).

There are lessons to this for the future of other state industries too. Many years ago, when we had a pro-market government, I asked the head of a US-owned international hospital provider — whose clinics and hospitals were very impressive indeed — why they didn’t offer to take over and run an NHS hospital to show how it could transform the treatment and care of NHS patients. His answer was blunt: he would prefer to build a new hospital that might actually work efficiently, and hire management and staff that were steeped in the culture of customer service, rather than the gloomy culture of the NHS. And indeed, when one private company did take over an NHS hospital, though the improvements were tangible, the legacy culture eventually overwhelmed it.

Since then, looking at many other state organizations has convinced me that privatising an unreformed, monopoly service is a mistake. You really have to create the conditions by which you can grow something new — something innovative, competitive and customer-focused. That was the idea of the internal market in health and education: the government still pays, so everyone can access the service, but it is provided by various independent companies or non-profits, so that customers also have the benefits of choice and competition. Of course, it wasn’t long before the civil service stifled that sort of innovation by swamping the new providers with regulation. And that’s a problem we have seen often, from buses to schools. But it’s a problem we can solve.

A possibly harsh but necessary question

The Joseph Rowntree bods have another report about poverty. In which they say:

Larger families - 43% of children in families with 3 or more children were in poverty in 2021/22. A number of benefit policies, including the two-child limit and the benefit cap, have a disproportionate impact on larger families.  Families whose childcare responsibilities limit their ability to work – 44% of children in lone-parent families were in poverty in 2021/22, as were 32% of children in families where the youngest child was aged under 5. Families not in work – more than half of working-age adults (56%) in workless households were in poverty in 2021/22, compared with 15% in working households. However, because a high share of the population is in work, around two-thirds of working-age adults in poverty actually lived in a household where someone was in work. Part-time workers and the self-employed - amongst people in work, the poverty rate for part-time workers was double that for full-time workers (20% compared with 10%) and self-employed workers were more than twice as likely to be in poverty as employees (23% compared with 10%).

These things are highlighted because JRF think they are bad things. In fact, they think they are very bad things.

Note the definition of poverty being used, which is that 60% of median household income. Yes, adjusted for household size but perhaps not enough. The modal household in the UK is two earner and we’d not be surprised to be told - in fact would expect - that the modal number of workers in families with large numbers of children is one. This would also give us an insight into why one parent families have lower incomes.

We’re also really not surprised that those not working at all, or those working only part time, have lower incomes than those working full time.

We also have that rather hopeful insistence that has been repeated over the years - work should pay.

At which point, the possibly harsh question. How much should work pay?

We all know where the 60% idea comes from. It’s a 30,000 foot view from the egalitarians. A society which is more unequal than that pains them therefore they’ve adopted it as the standard by which they measure poverty. But it’s possible to approach the point from the other direction. So, if work should pay then how much should it pay?

How much more should two earner families get? Those working than those not? Those working full time than those part? We have a certain expectation that when asked - well, at least net taxpayers will say this - the answer will be greater than the differences in household income allowed by that 60% of median standard.

It’s even possible to suggest that the answer, when the question is put that way, will be that the Great British Public think there’s not enough relative poverty.

No, we do not say that’s so. But we do think it would be terribly fun to go out and ask. This 60% idea. Do you think it right that a household in which no one works at all should, by right, get 60% of what one where two adults work full time get? On average?

For that is what this measurement of poverty is insisting upon. Well, once we include the implicit insistence that government needs to solve this poverty so that no one is on less than 60% of median household income. So, is that what the people actually believe?

We’re really most uncertain that it is.

It isn't true that the rich won't move over tax rates

We’ll make a little prediction here. This research will be used to insist that the rich do not move over taxes. This is not what the research says, not at all. The research looks at why those who do not move over taxes do not move over taxes. That’s a different point.

The UK’s super-rich “would never leave the country for tax reasons” because they fear they would be “bored to death” in “culturally barren” tax havens, according to new research by experts at the London School of Economics.

No, that’s not what the research itself does say. Rather, they ask a number of such rich folk why or whether they would move. Current tax rates or thereabouts wouldn’t make most of the respondents do so. Corbynite, or 1970s style, would make many more of them do so.

So it’s not whether tax would make them move, it’s how much tax would make them move.

Which leaves us right back where we were before. Yes, if you’re rich then London’s an absolutely fabulous place to live. If you like that culture thing at least. Therefore there are things that anchor to London - as well as the obvious fact that many of those rich, as the report itself says, make their high incomes by being top of London’s pile - which is something we already knew.

Or, as again the report says, tax rates as against everything else in life are one of the factors that go into the residence equation. Change the tax rates and the result spat out at the end of the process will change. And who has ever said different?

It’s also possible to make a slightly different point. Which is that Sir Jim Ratcliffe did move, as the paper admits. Something we’d posit lost more revenue than is gained by these 35 who have, so far, stayed. So, while the number of people moving might be seen as tax rates are not too high tax revenues might well indicate they are too high.

By far the most interesting part of the paper to us was this - for the above is what we all knew before and the only change here is that people will claim the paper says what it doesn’t - about education:

Private schools also played an important role in the decision making of many interviewees.

While Inner London was of less importance here, as private schools do not have catchment

areas, the number and perceived quality of private schools in London and the South East

more generally were often cited in discussions about why people had decided to bring up

families in this part of the UK. Brad, for example, talked about wanting to ‘buy’ his children

‘a very good if not the best education’ and therefore targeted two particular very elite London

private schools. Similarly, Wendy talked about how ease of access to certain private schools

was the overarching reason why she decided to stay in one part of North London for such a

long time.

True, currently the decision is only about VAT and property taxation, but there’s a very strong strand of leftish thinking in Britain that private education should be banned altogether. This paper pointing out that that could have significant effects upon tax revenues - for that private education is one of those anchors which tie these rich to this country so they can be taxed. Abolish that and we’d be lightening the anchor and thus lowering the tax rate that can be charged before they do move.

Which is an interesting result, don’t you think?

We really don't think we believe this, no

From Will Hutton:

Economic dynamism comes not from low taxation but from high public investment and smart ways in which governments help high investment businesses better manage risks.

That would seem to militate against that idea of leaving the money to fructify in the pockets of the people. Which, given its source in the ideas of our namesake we do tend to have some agreement with.

Thus the US high tech sector is symbiotically linked to high US defence spending and in particular innovation spearheaded by the Defense Advanced Research Projects Agency (Darpa).

Well, yes, except Darpa tends to be small amounts to answer a specific question. A million here, a couple there, to see if one specific idea might be made to work, or whether a particular question can be answered. With no political over-ride and no government nor bureaucratic ownership nor intervention into use or roll out. Which isn’t the way any such system would work here of course, not under Mazzonomics at least.

Equally, whether in Singapore or Indonesia, the common thread across Asia is state-led investment and successful industrial policy.

That slightly gives the game away - looking at places which have had, even if only by claim, successful industrial policy does tend to ignore those places which have tried but where it’s been unsuccessful. Like, possibly, everywhere else?

Of course, genuinely confiscatory tax rates force enterprise underground – but the idea that the current British tax regime is that confiscatory is bonkers.

Ah! A testable proposition. So, currently the UK government takes 45% of everything, 45% of all economic effort and GDP.

The US government - at all levels - consumes about 28% of GDP, the Indonesian about 11% (yes, 11%) and Singapore’s some 17% or so.

So it would seem that economic dynamism is indeed associated with less than the UK’s confiscatory tax rates. Even, that fructifying idea has some empirical legs.

As ever, all economics is either footnotes to Adam Smith or wrong.

But we’re prepared to make a bet with Hutton. Even, to give him a free hand. Let’s cut that burden of Britain’s tax regime to the mid-point there, Singapore, and 17% of all economic effort by everyone in the country. We’ll also allow Hutton to play Fat Controller with industrial plans. We do indeed think the growth rate will improve - largely because with tax at only 17% of everything people will be so busy making money that no one will play a blind bit of attention to whatever it is the planners want to do.

As, we would point out, largely does happen in those other places.

Questions in The Guardian we can answer

Why have lithium, nickel and cobalt markets slumped despite the demand for electric vehicles?

The markets haven’t slumped at all. Volumes used and traded have risen substantially - because of electric vehicles.

Prices have slumped but that’s because we have a rational economic system.

It’s entirely true that demand for those varied metals has risen. So, ideally, we’d like a system that increased supply to meet that higher demand. As it happens we use an economic system that has increased supply by more than demand has increased. Therefore prices have fallen.

Ain’t that great?

Now, the details here. As we said yesterday in fact. There is no shortage - not at any likely level of demand for thousands of years - of the materials themselves. There could, conceivably, be a shortage at any one time of people digging holes to get them.

So, we’ve a system that gets people digging more holes. Capitalism means that those who own the organisation that digs the right extra hole get to enjoy hot and cold running LearJets and other necessary Big Boy Toys for the rest of their lives. Free markets mean that anyone who wants to try for that reward is free to do so. Prices provide the information for everyone as they consider whether to do so.

Thus a capitalist, free market, price driven mining and minerals system will have supply rising when demand does - thereby moderating prices again. It’s a great system and one that requires exactly no politics nor bureaucracy.

And here’s what’s really amazing about it. It works for near everything! How cool is that?

Someone should write a book about it.

We really did tell you so about lithium - no, we did

We’re going to do that unattractive thing again. Prance our egos around as we say we told you so.

Core Lithium has stopped mining and has warned of a big write-down on the value of its assets as the collapse in the battery material’s prices takes a heavy toll on Australian producers.

The Northern Territory’s only lithium producer told investors on Friday that it would revert to processing stockpiled ore and suspend operations at its Grants open pit mine.

There’s nothing particularly wrong with this Finniss mine. New, well made, decent deposit, they’ve been producing, the material is up to specification. It’s a fine lithium mine in fact. It’s also, as you can see, now closed.

For the lithium price is now below production costs. Which is one of those really pretty big signals that there’s no lithium shortage.

As we said back in September in fact.

There’s a list out there of some 300 would be lithium mining companies. For that’s what the market response has been - the lithium price rises, men with hammers go out to tap the world. And, amazingly, given that lithium is not in short supply, only in currently short extraction, they find it. The value of lithium in the ground falls further and faster than this 75% fall in the purified stuff too. The share prices of those would be lithium miners are falling - globally and near in unison. Because we’ve found enough and it only took a couple of years. It was also done without politics or even subsidy.

And a year ago. And 18 months ago.

It simply is not true that there’s a shortage of these critical minierals - not in any real sense of there not being enough atoms around. Nor in the sense of there not being enough mineable atoms around. There can be, sometimes is, a shortage of open holes in the ground that people are currently extracting them from. But we’ve a system to deal with that - prices. Prices go up more people dig holes. Supply increases, prices come back down. As the man said, the cure for high prices is high prices.

Now, if that were all then it wouldn’t be worth remarking upon. But every government and non-government is mithering about supplies of critical minerals. The UK govt, the one you and we pay for, has taskforces and ministerial reports about them. Of less than, as one of says elsewhere, sensible activity. The US, the EU and everyone else we’ve noted have similar wastes of bureaucratic egghead time and effort. The WEF and any number of NGOs have teams working on this same non-existent problem.

There is no shortage of minerals and the shortage of holes is cured by prices. There, we’re done.

So, could we please disband all these task forces? Gralloch the bureaucracies and ignore the NGOs? We don’t have a problem and we’ve solved it anyway - with that old one of liberty, markets and prices. As so many problems can be and as so many bureaucratic structures adamantly fail to recognise.

That last is at least understandable, you know, Upton Sinclair. But that’s no reason for us all to allow them to get away with it. So, let’s not.