Our Word, Really?
Apparently certain rental properties in this country are not up to standard:
It started when we moved into a housing association flat on the Eastfields estate in Mitcham, south London, in 2018: my father, my two sisters, aged 17 and 20, and 19-year-old me. Before that, we were in temporary accommodation: a half-converted garage that had mould and damp on the walls and a bathroom the size of a cupboard. We had been there since 2016, waiting to get a permanent council property, but the new place was no better. The carpets and wallpaper were decades old. There were cockroaches, flies and woodlice. The mouse infestation in the kitchen was so bad, we didn’t want to use it. The glass patio doors were broken, so the place was freezing. We had lights that filled with water whenever it rained, especially in the bathroom, which had no windows. It wasn’t just us; the whole Eastfields estate was dilapidated, but despite residents complaining to Clarion, the housing association, nothing seemed to get fixed.
Our Word, that is bad. We can all think - should think - that something should be done about that. But the important part there:
Clarion, the housing association
As a non-profit distributing housing association, Clarion is subject to the Regulator of Social Housing's regulatory regime. The Regulator of Social Housing sets standards that social landlords are expected to meet. The Regulator focuses on economic regulation and will expect landlords to meet expectations on governance, financial viability, rent setting and value for money.
So, a bureaucracy, subject to bureaucratic regulation but not to market pressures, provides a lousy service, does it? Colour us very shocked indeed.
We can - should - all do something about that as well. Expand the private, not social, rental sector so that landlords are indeed subject to market pressures. Obviously.
As ever it’s entirely possible to make a case against private profit but such cases always do come up against that uncomfortable reality of what happens in the absence of private profit. As Joan Robinson pointed out the only thing worse than being exploited by a capitalist is not being exploited by a capitalist.
There’s an excess “Fortunately” in this phrase
Professor Mazzucato tells us all proudly that:
Fortunately, industrial policy is back in favor around the world,
For those who get to sit in offices and design industrial policy it is, of course, as in favour as it ever was. The rest of us are going to - are getting - get it in the neck having to pay for this series of disasters.
We think of the American and EU ideas about electric vehicles. Vast subsidies to try to make them cheap so that people will buy them allied with vast taxes on any Johnny Foreigner with the temerity to make cheap electric vehicles that anyone wants to buy.
Or there’s this from the world of computer chip making:
Semiconductor manufacturing subsidies announced in the past 2 years:
US: $52 bln, India: $10 bln, Japan: $25 bln, EU: $46 bln, S Korea: $19 bln, UK: $1 bln, China: $47 bln
The subsidies are greater than the total costs of the next two, possibly three, generations of chip fabs. All to make fabs that are less than economic in size - as with the analysis that gained Paul Krugman his Nobel there really are industries where the efficient producer size is global.
Then of course there’s Our Own Dear HS2, £100 billion and counting to knock 10 minutes off the time - currently about an hour - from a suburb of London to a suburb of Birmingham.
That “fortunately” doesn’t really belong in that phrase now, does it?
Bad climate science is still just bad science
That doesn’t stop people doing it of course. From Sir David King, former chief scientific advisor to the UK Government, now at CCAG:
Recent analysis shows that annual global GDP costs due to extreme weather events could rise towards 100% of global GDP around the end of the century.
Therefore we must do everything to avoid climate change, right?
It’s that second part that isn’t correct. The warning is drawn from this report to actuaries.
A relatively simple log damage function could be used that assumes 100% GDP loss at a certain level of warming, say 6˚C, 5˚C, or 4˚C, although some may argue that even 3˚C would be extremely challenging to adapt to, and certainly sensitivities should be undertaken at all of these.
That’s the 100% mention - we should model, as an outlier, that this might be true. Which is entirely and wholly different from a statement that damages will be that much.
It’s also not what some will think, that the entirety of the economy - a 100% loss - will disappear and so we all die. Aiee.
It is, instead, that climate change will reduce the size of the global economy in 2100 by about the size of the global economy today. We are talking of GDP then being reduced by 100% of GDP now. Which is indeed an entirely different statement.
For we also have to think about economic policy between now and 2100 and how much that will influence the growth of the global economy. Which has, in fact, been done, in the SRES, that report on economic models and climate change from the 1990s. In which we are told that globalised free market capitalism (A1) will lead to an economy 11 times larger in 2100 than in 1990. Or, a regionalised, more socially democratic system (B2) about 5.5 times larger.
Which economic system we use for a century has far more impact on the final size of the economy than climate change or not climate change that is.
Good science is about balancing those two gains and losses to produce the best overall outcome. Don’t, for example, use bad economic policy to avoid climate change damages where that bad economic policy produces more loss of GDP than the climate change damage does.
A balancing act which has also been done in that very SRES. A1FI (where we run out of conventional fossil fuels, don’t frack and so turn back to coal) has high climate damage costs. A1T (where we still use globalised free market capitalism but also move to fossil free energy generation) produces low heating, thus low climate change damages and also the highest GDP of the modelling set.
Another way to approach the same point. Sure, OK, Greenland melting will produce loss of potential GDP in the future. Now, these policies being recommended - how much potential GDP loss will they cause? The correct - economic - answer is, of course, whatever set of policies produce, on balance, the highest final GDP number.
As the IPCC’s own modelling shows, that’s globalised free market capitalism along with the transition away from fossil fuels.
OK. Sounds like a plan to us. So why are scientists not saying so?
Basic Economics in Education
Education, not unlike all sectors of industry, benefits from a free market understanding. The competition that arises from private and public schools is one that creates a more innovative and sensible product, that being students.
The value added tax (VAT) on private schools is another of many regulations attempting to downplay this competition. Christine Maxwell does not see it in this way listing three reasons she disagrees with those against the VAT on private schools through the lens of a proposed secondary option of giving free places to low-income students in independent schools in avoidance of paying the tax:
1. State schools will still need to exist, albeit with fewer pupils. This would result in budget cuts for them as their income is directly linked to the number of pupils on their rolls. In order to run effectively, they would have to cut staff, or the state would have to increase the amount paid per pupil.
2. Most independent schools select their intake. Independent schools that claim to act charitably when educating, at a discount, children from poorer families are more likely to take pupils with special education needs and disabilities or behavioural problems. Indeed, this is demonstrated in the statistics.
3. There is a benefit for all students, no matter their background, character, or make-up.
I do not believe that anyone is arguing for the dissolution of state schools, however, the line of thinking which is used in the first argument is incorrect. As highlighted in the ASI’s paper Short-Term Thinking: Analysing the Effect of Applying VAT to School Fees, the tax would not only generate no net revenue, resulting in no net change to the funding for state school staff, but further resulting in a greater competition for preferred state schools.
Christine Maxwell likens the absence of a VAT to pauperisation, instead it drives competition leading to a more efficient and productive market for everyone. With the VAT exemption, independent institutions may poach some pupils from state schools, leading to less state school funding, however this funding should correlate efficiently with the cost to the school for each student. Even if staff cuts happen, there should be an inverse need for staff at independent schools, resulting in no net market change.
While the second argument, that independent schools take only more able students (which is not true) is an issue which is not facilitated by some ableist form of thinking, rather, it stems from a lack of resources for students with special education needs and disabilities in state schools. While one cannot argue that the resources in which these pupils need is necessary, the competition that arises between the different types of schools, benefits students by offering a school that best fits their needs, which may be the independent school.
Furthermore, fairness is something difficult to discuss, through its apparent subjectivity, but looking through an economic framework there is still no net social benefit. When a tax such as the VAT is applied to only part of the independent sector, not to mention favouring the tax-funded supplier in state schools, it further distorts competition harming the little competition that the state has.
Finally, the last argument, which I believe to be true, goes both ways. In the same sense that there is a benefit for all students when there are more affluent families and more able pupils in the mix, one must also argue that there is an equal, or possibly greater, benefit to the inclusion of low-income students to independent schools.
Stick with Harris and keep the VAT off private schools.
The problem with a National Wealth Fund
It is entirely true that Norway has a ginormous National Wealth Fund. It would be fun if we had one too. That we don’t was really about the fact that we’re a much, much, larger country and economy than Norway. So, the flow of revenue from North Sea oil and gas into our economy was, proportionately, very much smaller. Even so there were those who worried - righteously - about the effects upon the exchange rate of all those exports of that oil and gas.
Which is the actual problem a wealth fund is trying to solve. Yes, it’s lovely if there’s some natural resource that the world wants to buy. Mere tricks and happenstances of geography provide and income to those who live above it. But if that amount is “too large” then the foreign exchange rate will rise so much that it will choke off all other domestic economic activity. First by making exports of goods in more competitive marketplaces too expensive, then as the resource gets larger killing even domestic production for domestic consumption in favour of imports.
The solution to this problem of geographic beneficence is that national wealth fund. To avoid what is called “Dutch Disease”. The defining feature of such a national wealth fund it that it is not allowed to touch that domestic economy. Indeed, the funds gained are never even transferred into the national currency.
The whole point of a National Wealth Fund is that it doesn’t invest in the domestic economy. So clamouring for a national wealth fund that does invest domestically is really very much missing the very point of the creation in the first place.
Of course, it’s wholly possible to insist that acshully, government will invest really profitably and so it should do so whatever we call the fund. At which point we ourselves would call for a little more proof, evidence of, the contention.
First as tragedy, second as farce
So there’s a proposal to reintroduce conscription then:
Every 18-year-old will be required by law to sign up for a year of National Service under plans unveiled this weekend.
Sigh. The first and most obvious point is that conscription is slavery. It might be slavery to the state, might be slavery to society but helotry is still slavery. So, let’s not do that.
But what moves this from tragedy into farce are the following two points.
We’ve, around and about, 800,000 18 year olds at present. The armed forces are, in total, some 138,000. The Navy, as with last time around, will take between none and very, very, few (stopping bored teenagers from drowning takes too much effort). The Air Force, perhaps some, but obviously the great bulk will be in the Army. Of those who decide to take the military route that is. Yes, we know, the British sergeant is incomparable and all that but we really simply do not have enough of them to cope with that influx.
The “community service” aspect:
Subbotnik and voskresnik (from Russian: суббо́та, IPA: [sʊˈbotə] for "Saturday" and воскресе́нье, IPA: [vəskrʲɪˈsʲenʲjɪ] for "Sunday") were days of volunteer unpaid work on weekends after the October Revolution, though the word itself is derived from суббо́та (subbota for Saturday) and the common Russian suffix -ник (-nik).
The tradition is continued in modern Russia and some other former Soviet Republics. Subbotniks are mostly organized for cleaning the streets of garbage, fixing public amenities, collecting recyclable material, and other community services.
The first mass subbotnik was held on April 12, 1919, at the Moscow-Sortirovochnaya railway depot of the Moscow-Kazan Railway upon the initiative of local Bolsheviks. It was stated in the Resolution of the General Council of Communists of the Subraion of the Moscow-Kazan Railway and Their Adherents that "the communists and their supporters again must spur themselves on and extract from their time off still another hour of work, i.e. they must increase their working day by an hour, add it up and on Saturday devote six hours at a stretch to physical labour, thereby producing immediately a real value. Considering that communists should not spare their health and lives for the victory of the revolution, the work is conducted without pay." This subbotnik prompted Lenin to write the article The Grand Initiative [ru], where he called subbotniks "the actual beginnings of the communism".
On April 12, 1969, to celebrate the 50th anniversary of the first Subbotnik, the Soviet Union revived the concept and millions of citizens volunteered for extra work at least as late as 1971.
That a manifesto pledge in a British election is derived from a 1919 “Resolution of the General Council of Communists of the Subraion of the Moscow-Kazan Railway and Their Adherents” is farce, no?
Now add in that this isn’t coming from the CPGB, the CPB, the NCP or even the CPB (Marxist-Leninist) but from, well, you guess…..yes, farce.
Mr. Chakrabortty has a plan
We’d not say we endorse the details but the base idea is correct:
The big picture is that the UK has been through a shockingly bad five years, in which people are on average worse off than they were at the start of this parliament, even while taxes are reaching a record high – and still rising.
….
Analysis by the Institute for Fiscal Studies suggests that, whichever of the two parties comes to power in July, day-to-day spending on everything outside health, defence and education is promised to fall by around £20bn. That is roughly equal to shutting the entire Home Office, or closing the Department for Environment, Food and Rural Affairs and the Department for Culture, Media and Sport. The next time a journalist interviews a Labour frontbencher they should ask which of those options they would prefer.
Taxes are indeed high and rising. Government is swallowing ever more, to the point of too much, of everything that everyone does. Changing this would be a thoroughly good idea. Partly because if people retain more of what they do then more will be done thereby boosting growth. Partly simply because people retaining more of what they do is a good idea in itself.
But it’s not possible to shave a little here, pare a tad there. Government, bureaucracy, does not work that way as C Northcote Parkinson so memorably analysed. The answer is to simply stop doing something. To close, entirely, some arm of the bureaucracy. Perhaps only catch and release for the bureaucrats but otherwise the Carthaginian solution - raze and plough with salt.
To reduce government expense means to simply remove government from some to many parts of our lives. DEFRA, DCMS, why not?
It is not possible to merely cut government budgets and therefore taxes - it is necessary to cut government.
The advantages of medieval farming
As The Guardian points out, there are some:
Farming is often seen as inimical to biodiversity, but these thin strips of land tell a more complex story. In the nooks and crannies of medieval farms, like the Vile, a wide range of plants and animals would have found the conditions they needed to survive. Ground-nesting birds could find cover and camouflage in the fields left fallow – something that was done every few years to allow the soil to recover. Baulks offered safe passage to small mammals as they navigated the cultivated land.
If wildlife is what you want then farming inefficiently is just great. As they also - rightly - go on to point out this isn’t useful to us today. If we farm inefficiently then billions will die of starvation. So The Vile is a useful example of the past, not something to be copied today.
Except in one interesting manner:
Studies suggest that hay meadows managed for nature are ultimately poorer in species than those tended to produce winter fodder. This is because the decisions of a hundred individual farmers, tailored to the precise conditions of their land – soil, shelter, wind direction, altitude – create more diverse landscapes than a set of centralised rules.
Or as we can put that - individuals deploying their own assets to maximise utility produce a better outcome than central planning. Yes, OK, that’s an, erm, plan that we can run with don’t you think? Those with the local knowledge should be left to apply that local knowledge to their area of expertise, their locality?
Not that the Guardian would ever admit it but one of those advantages of medieval farming is to prove Hayek right.
The planners still aren’t grasping the problem with planning
That the country desires more housing should be obvious enough - housing is expensive meaning that people would rather like more supply so that prices come down.
So, some planners at least are thinking that more housing should be built. That’s an advance from the previous situation where all too many seemed to think that the problem was hoarding by the capitalist elite or some such. But while an advance we still have very much further to go:
Labour’s plan for new towns looks likely to focus on the Midlands as much as England’s overcrowded south-east, with planners already considering areas near Nottingham, Stafford and Northampton, the Guardian understands.
Why build houses where no one wants to live?
This is not, despite the determined southernness of this particular author, some dismissal of the Midlands as being north of the Marylebone Road and therefore in reality somewhere Oop North.
We have an indicator of where people - the people who actually want to live in them - desire houses to be built. Where currently houses have high prices. That’s where the demand is, as evidenced by the prices - QED. So, if we’re to add more supply in order to bring prices down then we need to build the houses where prices are high not out in the middle of a field near where prices are already comparatively cheap.
One of those problems with planners is simple delusion. Why build additional houses where they’re currently cheap instead of where they’re expensive?
An interesting implication of happiness economics
Happiness economics is that idea that we shouldn’t prioritise mere economic growth, or GDP, but should instead decide to run policy by whatever makes people happier, or even happiest. That this is already incorporated into standard free market economics - everyone gets to build their own path to utility maximisation - gets lost by the ideologues. But, you know, let’s take the initial claim - happiness is what should run policy - and see where that takes us.
Clearly, we do need to have government - we are not anarcho-capitalists. There really are some problems that have to be solved and which can only be solved by governance. That, in turn, means that there must be tax revenues to pay for government. Obviously, much less than currently collected, much less governance than so badly done at present. But still, some, a modicum.
Adding that happiness idea to Colbert’s collection with the least hissing tells us something interesting.
Inheritance tax is the most unpopular tax in the UK, according to polling, despite less than 5 per cent of estates being liable for the tax, according to a House of Commons research briefing in March.
We will increase happiness by collecting taxes the least unpopular way. Therefore happiness economics insists that we must abolish inheritance tax. Sounds like a plan to us - Action This Day and all that.
It’s possible to note that the usual promoters of happiness economics don’t in fact say that. Which does make us think that perhaps the aim is to increase the happiness of the promoters, not the society which makes up the promotees. Which isn’t, at all, the way to run a democracy now, is it?