Inverting the lesson to be learned

Not that we’ve actively got anything against John Naughton - or even The Observer - but this does seem to be an excellent example of taking the wrong lesson from events, even inverting it:

On Good Friday, a Microsoft engineer named Andres Freund noticed something peculiar. He was using a software tool called SSH for securely logging into remote computers on the internet, but the interactions with the distant machines were significantly slower than usual. So he did some digging and found malicious code embedded in a software package called XZ Utils that was running on his machine.

This then means that this open access software - which runs on pretty much every internet server in the world - is infected and poses a very great danger to us all, to civilisation and all that is right with the world.

This, however, is the wrong conclusion to draw from it:

Who knows? But two clear lessons can be drawn from what we know so far. The first is that we have constructed a whole new world on top of a technology that is intrinsically and fundamentally insecure. The second is that we are critically dependent on open-source software that is often maintained by volunteers who do it for love rather than money – and generally without support from either industry or government. We can’t go on like this, but we will. Those whom the Gods wish to destroy, they first make complacent.

Well, what’s the opposite to open source? Closed source, obviously. At which point a malicious actor might - imagine - introduce some similar malicious code into their proprietary software stack and we’d never know about it. Because we’d not be able to examine the source, not be able to see what they’d done. We’d just be victims without either knowing about it or being able to do anything about it.

Well, we might be able to do something about it we guess. If we knew about it. Which, actually, we just have done. We’ve ripped every Huawei chip out of the internet, haven’t we, on mere suspicion that this specific closed source manufacturer might do something like that?

Which is where we profess ourselves gobsmacked. Open source found the problem and a bit of software updating and we’re done. Closed source was merely suspected (No, Mr. Huawei, please don’t write in, we are not claiming you have or did) and we’ve had to physically rip kit out of the infrastructure. The gobsmacking coming from the conclusion reached, that closed source is therefore better and more secure?

Blimey.

Sure, we know things go wrong in open markets but closed designs for economies go wrong more expensively, for longer and worser……

Econ 101 for the win then

The Times gives us this headline and sub:

There has never been more music made — but most artists go hungry

Tech and streaming have made writing, recording and distributing a pop song easier than ever, yet reaching an audience of millions from your bedroom won’t necessarily make you rich

If only we had some form of human science that could explain this to us.

Ah, yes, that’s it, isn’t it? Supply and demand. Pages two and three (after the copyright page that is) of every introductory economics textbook ever. Econ 101 it’s called.

If there’s lots more supply - and if the cost of supply falls then there will be - then the price gained for that supply falls. A teen in a bedroom can now turn out a perfectly cromulent pop song on some few hundred pounds worth of equipment. We know this because some are indeed doing so.

Which is an interesting insight, no? Perhaps we should apply it to other things that we currently think are expensive in our society. Those that might, from those prices, be thought to be in short supply?

Houses? Make them cheaper to supply, see supply rise and prices fall.

We always did like the Sound of the Suburbs *

*No, not punk, competent musicians so disqualified

Everything, but everything, happens at the margin

Yes, yes, we know that neoclassical economics is just so out of style these days but the Marginalist Revolution was indeed correct - stuff happens at the margins:

It will cost jobs. It will harm the UK’s competitiveness. It will make the labour market less flexible. For those with long enough memories, the push back against Labour’s plans for a new deal for workers has a familiar ring to it. The same arguments were wheeled out before the national minimum wage was introduced a quarter of a century ago. All proved groundless.

Confounding the doomsters and gloomsters of the late 1990s, the minimum wage has raised the pay of millions of Britain’s lowest-paid workers by an average of £6,000 a year without lengthening dole queues. It has been described by one thinktank as the most successful economic policy in a generation.

It does rather depends upon the definition of success. As Chris Dillow pointed out back in 2005:

Tony Blair today announced plans to cut the jobs and hours of low-paid workers.

He’s going to raise the minimum wage, from £4.85 an hour to £5.05 in October. This as the Low Pay Commission recommends in its report today; it also recommends a rise to £5.35 in 2006.

The first rule of economics, of course, says that if you raise the price of something, you’ll reduce demand. And this means shorter hours and job losses for some of the low paid.

The Low Pay Commission pretends this won’t happen. Its chairman Adair Turner says: “Our analysis suggests that previous upratings [to the minimum wage] have largely been absorbed without adverse effects.”

Can I give Mr Turner some advice? Try reading your own report matey.

Now the effect is small at that labour price - the wage set back then might have cost perhaps 13,000 jobs, another estimate maybe 30,000.

Now, I’m not denying that some people will benefit from the higher minimum wage. Those who keep their jobs and hours will do so, at least marginally. And tax-payers will have a lower tax credit bill. But these gains come at a cost – of lower hours and jobs for some of the low-paid, and lower profits for many small businesses.

There’s no such thing as a free lunch. To pretend otherwise is either dishonest or economic illiteracy.

Now, perhaps that trade off is worth it to you - possibly less so to the 13,000 to 30,000 - but that’s an ethical matter and we can’t determine those for you.

The thing about those things that happen at the margins, those trade offs. At some point the balance swings to the deal being, on balance, more bad than good. The government went out and hired a respected minimum wage advocate - Arindrajit Dube - to tell them when this would be so with the rate of the minimum wage. That report is here. The answer is that when the minimum wage rises over 55% of median wage - and it’s the blended median, of full and part timers together - then on balance that rate is detrimental. No, not just detrimental to those poorest and least trained who are those who don’t get a job but detrimental to the society as a whole.

The current plan is to push the minimum wage up over 60% of the full time only median wage - very much higher than even advocates of higher minimum wages think optimal.

To adapt a commonly used metaphor - the government’s noted that jumping out of a ground floor window doesn't cause that much grief so they’ve decided to try it from the tenth.

Part of this is true, the conclusion is false on climate change

A mere 57 oil, gas, coal and cement producers are directly linked to 80% of the world’s greenhouse gas emissions since the 2016 Paris climate agreement, a study has shown.

We’ve not checked those numbers but perfectly willing to believe it, sure.

This powerful cohort of state-controlled corporations and shareholder-owned multinationals are the leading drivers of the climate crisis, according to the Carbon Majors Database, which is compiled by world-renowned researchers.

That’s bunk, even bunkum.

For the claim is that climate change is somethiing they are doing to us. If only those ghastly capitalists - and states actinfg as capitalists - were to wave their magic technological wands then the whole problem would disappear. Which is to entirely misunderstand what the problem is.

The actual problem is that we humans like being warm and toasty, enjoy travelling, being able to cook food and, in the case of cement, have some form of habitation to be warm and toasty in, in which to cook food and that place to travel to and from.

For all the claims that solar is really cheap, or that wind is, they’re not, not at all, not in the sense of being able to warm us, cook for us or transport us as and when we desire those things to be done. This is why energy prices continue to go skywards as we add more renewables to the mix.

As should also be obvious, if non-emittive forms of energy were in fact cheaper then we’d not have a climate change problem in the first place as we’d all have switched already. As that hasn’t happened then…..

The reason emissions exist, they continue, is not because 57 corporations are doing us down. It’s because 8 billion of us have a sharp eye for what produces what we desire. Therefore we buy these things.

It’s terribly human to go around insisting that the wotld’s not perfect because of them. They are doing this to us but it’s no more true about fossil fuel companies than it ever has been about the Rosicrucians, Trilateral Commission or the Illuminati. It us and our desires - toasty habitations and toasted food - causing the problem. So, it’s us that has to do something about it rather than piling the blame and the responsibility for action onto the capitalist scapegoats.

Perhaps we should pay less attention to the public health folks then?

Yes, yes, OK, this is something of a cheap shot, this is in The Guardian after all. Further, it’s by Devi Sridhar, so v cheap. But still:

For the past 75 years in global public health, one of the major priorities has been exponential population growth and Malthusian concerns that the supply of food on the planet won’t be able to keep up. In 1951, the world’s population was 2.5 billion, which increased to 4 billion by 1975, 6.1 billion by 2000, and 8 billion by 2023. Governments in the two most populous countries, India and China, even implemented, respectively, draconian policies such as forced sterilisation and a one-child restriction.

So global public health has concentrated, for the best part of a century, on being wholly, exactly and precisely wrong then?

How they went wrong is, of course, that they ignored economics. The Malthusian concern was wrong because they didn’t bother to look at agricultural productivity. Which increased faster than the population did - that’s why we’ve now 8 billion in a world awash with food. The exponential population growth was wrong because they didn’t understand the impact of both wealth itself and the economic liberation of women (two closely linked issues of course). The two, together, leading to the collapse in fertility rates.

No, really, it’s not contraception and it’s not abortion either. It is desired fertility that has fallen. As a result of that richer world - and greater liberation - leading to there being more things to do in a life. Therefore any one of them gets done less. That’s the flip side of opportunity costs and if we’re not going to include opportunity costs in our analysis then we might be doing something but it won’t be anything sensible.

So, if global public health has been majorly wrong pretty much since the inception of the field then how much weight should we put upon current obsession in the field?

As, yes, they’re trying to ban vaping so that more people will smoke cigarettes, aren’t they?

Which does lead to an interesting question. Is there any other example of a science getting worse a century in from its inception?

Defence Spending vs Tax Cuts?

Baroness (Pauline) Neville-Jones has issued a chilling warning about the ‘growing’ security threats and has called for the UK to spend 2.5% of GDP — even at the expense of tax cuts.

It’s a call to be taken seriously. She is a Conservative peer and former civil servant who chaired the Joint Intelligence Committee in the 1990s, served on the National Security Council, and was Minister for Security and Counter Terrorism in 2010-2011. She was also the first to argue that the UK needed to help Ukraine after Russia's 2014 attack on the Crimea. Ministry of Defence officials scoffed at the idea that Russia might have grander ambitions in the region. Now, the ongoing war makes that look recklessly optimistic.

In addition to Ukraine, there is currently an active war in Gaza, which could even escalate to Iran and elsewhere, plus over 35 major armed conflicts in Africa (including Burkina Faso, Cameroon, the Central African Republic, the Congo, Ethiopia, Mali, Mozambique, Nigeria, Senegal, Somalia, South Sudan and Sudan. . And China is throwing its military weight around in the South China Sea, the Pacific and the Indian Ocean.

Things are now striking very close to home. UK and European supply chains are being disrupted in the Red Sea and Straits of Hormuz. The UK’s National Cyber Security Centre has warned that the threat to vital UK internet systems is ‘enduring and significant’, with a rise in aggressive state-sponsored cyber-terrorism. And other western nations face the same threats.

It does indeed look like a very dangerous world. So are we doing enough about it? The international comparisons suggest not. For the first time in its history, the Russian government’s 2024 budget will set military and defence spending at 6% of GDP — more than goes on social spending. At the 14th National People’s Congress last month, China announced it would be raising its military budget by 7.2%. Not only does the world look very unsafe, it looks increasingly unsafe.

And all this is coming at the worst possible time. Donald Trump, who looks set to re-enter the White House at the end of the year, has already announced that he would turn off US support to Ukraine, and he has hinted that the US will not even suppose NATO countries unless they start spending more on their own protection. Meanwhile, the UK (like many other European countries) is deep in debt, thanks to a string of governments (including Conservative ones) that have put tax-and-spend and costly regulation ahead of entrepreneurship and economic growth,

Given the geopolitical and military threats around, that is not a great position to be in. And now, senior Conservatives like Neville-Jones are talking about strengthening defence even if it means sacrificing any growth-stimulating tax cuts. If only our governments had listened to the pro-growth, low-tax, balanced budget arguments much earlier.

If diversity increases profits then capitalists'll do it already

To remind of that idea derived from Adam Smith - capitalists are lazy, dumb and greedy. Not that he put it in quite those terms. Dumb in that finding the new profitable idea is difficult, lazy in that it’s an effort, greedy in that if someone else finds one then they’ll all copy it. This is, after all, why we have patents.

We also have Gary Becker telling us that taste discrimination - that’s the kind that’s just based upon gender, skin colour, prejudice in fact - is a money loser. It’s leaving rare and scarce talent on the table for someone else to use as a result of the prejudice of the discriminator.

So, we’d expect capitalists to not practice taste discrimination. For it’ll quickly become obvious that it’s a money loser, people ‘ll stop doing it. Obe of the proofs of this is the Jim Crow laws in the US last century. Those with the political power wanted to enforce discrimination. But to do so it was necessary to stop capitalists not doing so on the grounds of profit making.

More recently we’ve been told that greater diversity is in itself profitable. Further, that business needs to be between cajoled and forced into anti-taste discrimination and it’s for their own good. Despite all of the above the lazy dim and greedy are leaving money on the table.

Hmm:

In a series of very influential studies, McKinsey (2015; 2018; 2020; 2023) reports finding statistically significant positive relations between the industry-adjusted earnings before interest and taxes margins of global McKinsey-chosen sets of large public firms and the racial/ethnic diversity of their executives. However, when we revisit McKinsey’s tests using data for firms in the publicly observable S&P 500® as of 12/31/2019, we do not find statistically significant relations between McKinsey’s inverse normalized Herfindahl-Hirschman measures of executive racial/ethnic diversity at mid-2020 and either industry-adjusted earnings before interest and taxes margin or industry-adjusted sales growth, gross margin, return on assets, return on equity, and total shareholder return over the prior five years 2015–2019. Combined with the erroneous reverse-causality nature of McKinsey’s tests, our inability to quasi-replicate their results suggests that despite the imprimatur given to McKinsey’s studies, they should not be relied on to support the view that US publicly traded firms can expect to deliver improved financial performance if they increase the racial/ethnic diversity of their executives.

Ah, so, one of those ideas that doesn’t survive actual examination then.

It’s worth noting what Becker is insisting is the driving force - competition for labour and talent. That is, this is an effect we’d only expect to see in a market system for labour. One of us was there to see and work in the tail end of the Soviet system. Which was, as we all know a monopsony - the state was the single buyer of labour. In that system your nationality was listed in your passport, one of those possbile nationalities was “Jew”. To our certain knowledge the graduates of one of the Mosow computing institutes who had that nationality were not offered jobs in any of the nice areas of the country nor in any of the interesting jobs. Instead, and specifically because of their nationality, very boring heavy industry out in the boondocks of those newly created industrial towns. Come the failure of the revolution of course all that changed markedly and people got hired by talent again.

Such taste dscrimination will really only happen in such a monopsony. In a market system the benefits to the individual of not doing so are too great for it to persist. Which neatly explains the absence of replicability of the McKinsey results. Everyone is already hiring on talent therefore - given that talent is not racially nor ethnically linked - there is no link between race or ethnicity and financial results.#

Markets for the win once again.

The Scottish “Hate Crime” Law Means the Time Has Come to Enact the UK Free Speech Act

Three and a half years ago, the ASI published a position paper and draft law proposing a “UK Free Speech Act” which would, if enacted, forever remove the regulation of nonviolent political discussion from the remit of law enforcement in the United Kingdom.

The censorship provisions of the Hate Crime and Public Order (Scotland) Act 2021 (the "Hate Crime Act"), entering into force this week, are deeply offensive to freedom of expression, and the only way to stop them is to implicitly repeal these new rules with UK-wide protection for freedom of speech.

The Hate Crime Act contains three provisions in particular – “aggravation of offences by prejudice,” “racially aggravated harassment” and “stirring up hatred” – which are, at least as-described, descriptions of the sort of speech that most members of polite society would rightly oppose as a personal, moral matter.

However, if we look at the substance of the language employed by the new laws and its derivation from similar, viewpoint-neutral English rules – in the case of the stirring-up offence and the “racially aggravated harassment” offences,  the “alarm or distress” language from the English Public Order Act 1986, and in the case of the stirring-up offence only, the historic “threatening, abusive, or insulting” language from that same law – we know that these rules have proven capable of extremely overbroad application in England, and these new rules will prove just as terrible, if not more so, if allowed to stand in Scotland.

The position, outlined in a 2020 paper for the ASI, and the applicable English legal rules, remains entirely unchanged. It suffices for present purposes to note that existing English laws, which are nowhere near as intrusive as the new Scottish ones, have already been used in England to, variously: 

·      threaten a schoolboy with prosecution for nonviolently holding up a sign calling the Church of Scientology a dangerous cult;

·      arrest republican protestors in the vicinity of King Charles' coronation for nonviolent picketing;

·      convict a protestor for nonviolently saying David Cameron had “blood on his hands” for cutting disability benefit at an event where the then-PM was speaking;

·      convict protestors against the war in Iraq for nonviolently expressing their points of view in front of soldiers of the British Army returning home from that war;

·      arrest students for nonviolently saying “woof” to a dog;

·      arrest a woman for nonviolently praying silently; and

·      arrest a preacher for nonviolently reading from the Bible, in public, verbatim.

The existing rules should have been repealed years ago, but few UK lawyers, being unaccustomed to an American perspective on free speech jurisprudence and thus unable to see that the frog was starting to boil, seemed to notice very much as the English judiciary lost its way after issuing its landmark, pro-free speech decision of Redmond-Bate [1999] EWHC Admin 733. In a few short years, the English courts went from protecting controversial speech to routinely acquiescing to the criminalization of what, pre-1999 at least, would have been entirely lawful, if somewhat controversial, expression (see: Norwood v DPP [2003] EWHC 1564, and Abdul v. DPP  [2011] EWHC 247). 

The provisions of Article 10 of the European Convention concerning freedom of expression, enshrined in domestic law by the UK Human Rights Act, are little better than window-dressing. They have been of no assistance whatsoever in protecting English speakers of controversial ideas since that law's enactment; indeed, the Human Rights Act may have harmed the cause of free speech in the country by formalising the broad derogations from that right permitted under Article 10(2) which have been abused, time and again, to stifle discourse. 

Put another way, our experience with the English rules, in particular the Public Order Act 1986 but also the Malicious Communications Act 1988, and Section 127 of the Communications Act 2003, is that their application, especially in the last 25 years, has been subjective, unpredictable, inconsistent, politically-motivated, sometimes capricious, and thoroughly chilling to speech.

The Scottish law turbocharges all of these problems by abandoning viewpoint-neutrality and expressly targeting “culture war” issues around questions of identity within the four corners of the statute. This is particularly the case when we look at the “aggravation of offences by prejudice” law, which states that age, disability, national or ethnic origin, sexual orientation, and transgender identity are all to be considered when sentencing people in Scotland for criminal offences. 

The problem with this, of course, is that merely talking about these issues and causing offence is already capable of constituting a public order offence, both in England and substantially equivalent legislation in Scotland, and these provisions were used in both England and Scotland to suppress speech even before the Hate Crime Act entered into force.

Only last month transgender activists sought to have J.K. Rowling arrested there after English prosecutors declined to prosecute her for prior “gender critical” remarks. The Hate Crime Act now requires Scottish judges to take into account Rowling’s motivations when judging her speech, which we think would be fairly described as emanating from the identitarian, and therefore definitionally “prejudicial,” ideology known as second-wave feminism, and would require, in a public order or malicious communications-based prosecution for those feminist remarks, for a Scottish judge to consider a sentencing enhancement.

It makes no sense to criminalise these conversations. Indeed it makes sense to expressly legalise them, given that national politics seems, increasingly, to cluster around identity issues and, in a democratic society, require their open discussion in order for these disputes around the proper ordering of society to be satisfactorily resolved. 

On the gender theory question, in particular, the debate seems to be between, on one side, critical theory-informed intersectional activists who seek to view all power relationships through the lens of what they call immutable characteristics, and on the other, we see a coalition of classical liberals and religiously-minded traditionalists from the usual suspects like the Catholic Church but also newly aggrieved groups such as traditionalist Muslim parents of schoolchildren. As the fact that the Prime Minister himself felt the need to chime in on these matters this week plainly evidences, identity issues, whether we like it or not, now sit squarely at the centre of contemporary UK political discourse. 

We take no view on the merits of either "side" here, because taking a viewpoint does not matter and, in any case, is inadvisable, to the extent anyone here at the Institute plans on ever setting foot in Scotland again. This is because it is now quite unsafe, legally speaking, to take a vigorously-defended public position on these questions in Scotland from any perspective, as long as there is a hearer who is offended enough to file a police report against the hearer's perceived political enemies, or calculating enough to pretend to be so offended. 

To see how the Hate Crime Act potentially cuts in all directions, we need look no further than criminal complaints which have already been made under the new law. See, for example, the fact that Scottish First Minister Humza Yousaf, the law's primary advocate and promoter, was immediately reported by the Indian Council of Scotland to the police for thoughtcrime contained in a speech he himself delivered in Scottish Parliament in 2023 as soon as the Hate Crime Act entered into force. Under the new regime, even the First Minister will need to take care not to express those same thoughts in the same manner again.

There are not many reasonable people who wish to live in a country where the first response to any political disagreement is to call for a speaker's arrest. Nonviolent speech should never warrant a violent response. Yet, as was proven on day 1 of this new law, we already see that the Scottish law will be used, and is being used, to call down state-sanctioned violence, namely arrests and imprisonment, to suppress broad swathes of viewpoints from all political quarters. 

To the few back-benchers who are engaged by this pertinent issue: This is the hill to die on. Rishi Sunak, the Prime Minister, has said he opposes the Scottish law. 

Push the Prime Minister to back up that opposition with decisive action. Permanently abolish political censorship enforced at gunpoint. Enact the UK Free Speech Act.

We almost find ourselves agreeing with Willy Hutton

For he says:

Capitalism must be managed and regulated to work for the common good

Indeed so, indeed so. This bit where we start to disagree:

Of necessity enter the state, much better designed than at present.

Not that we’re going to get this cod Latin right, but the big questions is “Quis Regit?”

Not whether regulation is necessary, that we agree, but who regulates?

That regulation is the function of markets. Capitalism, pure unadorned and unregulated capitalism, would not be a fun time. But we as individuals, we in aggregate as consumers, regulate capitalism. Further, the free part of free markets, the freedom to enter the market as a supplier (or even a capitalist) regulates, through competition, what capitalists may do.

Willy’s answer to “Quis Regit” is Willy and correct thinking people like Willy. Our answer is us, we the people, by our daily actions.

Note that not even Willy thinks the state as it is currently organised can do that regulation. We simply apply that observation to all states, ever. We also have history on our side on that.

Sure, capitalism requires regulating, the people to do that are the people, the method is free markets.

It all sounds terribly sensible, yes, but.......

Rod Liddle tells us about the water companies:

Perhaps, you might ask, with a general election in the offing, we might have opposition parties who will start to put this right? Well, I wouldn’t count on it. You may have heard the usual edentate, spavined gibbering on the issue from the Liberal Democrat leader, Ed Davey, as well as lectures from a supposedly appalled Labour front bench. But neither of those parties is prepared to do what is morally, economically and practically the only sensible option, which is to take the water companies back into state ownership and restore a sense of priority when it comes to how and where the money should be spent and how much should be charged to households.

The but….being that we used to have exactly that system, politics deciding how much was to be invested in the water companies, politics deciding how much the workers would be paid, politics deciding how much households would be charged and even politics deciding how the resultant profits would be spent.

The result was worse.

No, really - which is why the water companies were privatised. Investment, since then, has risen. Water quality has risen substantially. Prices to consumers - households - have risen by less under the capitalist format to achieve those goals than they would have done under the old politics system.

As we mentioned yesterday, we can also prove this. For the Home Nations have four different management structures. Only England is that regulated but capitalist firms. The performance in England - quality of water in the pipes, quality of water in the environment, prices to households - is better than that in Wales, Scotland and Northern Ireland with their non- regulated capitalist systems, with their more politically decided systems.

This is all simply factually true. Yea even though the entire country is wholly convinced of the opposite. Another strike against politics as a method of management. That politics, as it is actually done, becomes unmoored from reality and facts.

The English water system is better than it was before privatisation. The English water system, capitalist as it is, has improved more than the other three water systems in the larger polity. This is the evidence being used to reverse the very action that improved the water system in England. This is a proposition that can be tested. Yet no one is doing so - politics just isn’t a good management system.