So, nationalisation - industrial policy with strong conditionalities - causes shortages, does it?

This would seem to be a problem:

Labour’s plan for a net-zero economy powered by wind turbines and electric vehicles (EVs) risks being thwarted by a huge drop in factory apprenticeships, British manufacturers have warned.

But clearly, this is a problem that could be solved by the government really taking a grip on apprenticeships. Instituting some industrial policy with strong conditionalities, say?

The number of new apprenticeships has fallen by up to two fifths since the introduction of the government’s “broken” levy system, new research shows.

There has been a 41 per cent decline in the number of apprenticeship starts for those under the age of 19 since the scheme came into force, according to analysis by the Chartered Institute of Personnel and Development (CIPD). For those aged between 19 and 24, participation has fallen by 36 per cent.

The levy, introduced in 2017, requires employers with an annual wage bill of more than £3 million to pay 0.5 per cent of payroll costs into a fund for training. It has come under fire from businesses such as AO World, Timpson, Tesco and the Co-op, which have argued that inflexibility, unsuitable courses and programme lengths are the biggest barriers.

As a result £4.4 billion raised by the levy had been kept by, or returned to, the Treasury over the past five years, rather than being spent on apprenticeships. It has also led to a decline in training opportunities and to the emergence of lower-quality schemes.

Ah. yes, the shortage of apprentices has been caused by the government getting a strong grip on the sector - the problem itself is industrial policy with strong conditionalities.

Such a pity we didn’t have any warning, some sort of heads up. After all, it’s not as if the Soviets nationalised farming and then everyone starved, is it?

Nationalisation causes shortages. Why didn’t we know?

Tim Worstall

Dale Vince is wrong here, for of course he is

In a debate with Dominic Lawson about what we should be doing over Net Zero Dale Vince says:

We need to declare that wind farms, solar farms and pylons are vitally important national infrastructure and put them into a completely different planning regime where there’s a presumption in favour of them happening.

This is of course wrong. Usually it’s possible to tell that something is wrong because Dale Vince says it but this here is a proof of that contention. That is, we can use it as a proof of Vince being wrong, not just assume that it must be wrong - as is more usual - just because Vince has said it.

The initial contention, that planning laws are so restrictive that nothing can be done, is true. But the idea that some things are so special - speshul - that the laws should be changed is incorrect. If planning laws are so restrictive that nothing can be done then the planning laws need to be changed for everything. For we’re not just short of onshore wind - we’re short of housing, tunnels, factories, data centres and a great deal else. All hamstrung by the idiocies of the current planning laws. So, for the benefit of all those things the planning laws have to be changed for all those things - for everything in fact.

A presumption in favour of things happening is a good start even if not sufficient. We’d go further and suggest that everything be approved except where there’s a damn good reason why not. “Damn good” being defined along the lines of maybe not an airport in Fulham level of damn good. But well above the level that would be against a power station on the Thames in the middle of London. After all, the next century might rather like a monumental building to amend into flats in Battersea.

If the current planning system is too restrictive to allow important things to be done then the current planning system is too restrictive. We need to free all things of that clammy embrace, not just things that Dale makes money out of.

Tim Worstall

Our word, if only there were a possible solution to this difficult problem

This seems just terrible:

A critical three-year period between the ages of 11 and 14 has been identified as the point at which talented children from low-income backgrounds fall behind their wealthier peers at school, according to new research.

The study tracked high-ability children from the age of five, from the lowest and highest income groups, and found that they progressed at similar rates until the first years of secondary school.

But by the time the two groups sat GCSEs or equivalent exams at 16 years old, those in the wealthier group were much more likely to gain top grades than those in the low-income group, and were more likely to take A-levels.

It’s terrible for the individuals, they don’t get to reach their full potential. It’s terrible for society as a whole - these individuals don’t get to reach their full potential.

We should do something about it. The question then becomes, well, what could be a solution to this terribly difficult problem?

What if, say, we identified these talented but poorer scholars? Offered them a more academic education better suited to their innate talents? Tested them - at, say, age 11 where the problem seems to arise - and then offered them that more academic education in a slightly different school setting?

That would appear to solve the problem, no? Call the exam the elevensies, or the eleventh, perhaps the 11 +. Hark back to the ancient times when the entire rigorous syllabus was named this, call the schools grammars perhaps. Seems to solve the problems being identified at least.

It’s a wonder no one ever thought of this before to be honest.

Tim Worstall

That Chevron decision looks right to us

No, no, this is nothing to do with fossil fuels. Rather, this:

The Supreme Court on Friday overturned a landmark 40-year-old decision that gave federal agencies broad regulatory power, upending their authority to issue regulations unless Congress has spoken clearly.

The old decision, overturned, was known as “Chevron”.

Not being lawyers we’d not comment on the legal reasoning. However, the basic idea seems to us to be entirely correct.

It won’t be a surprise to most adults that there are some out there who insist that there must be rules about everything. Nothing can be done without there being such a rule. As a basic idea we’ll accept that this is true about some things and not about the majority of life. But that’s not our point here.

Rather, if there are to be rules then who is going to make them? We would suggest that it shouldn’t be the bureaucracy. Which is what, essentially, the Supreme Court over in the still-rebellious territories has just decided.

For, by the very nature of the occupation, those who insist that there must be those detailed rules about everything are going to migrate into the occupation that writes and administers the rules - the bureaucracy. Further, when it is the bureaucracy writing them then the only consideration is going to be how precise the rules can be. There will be no consideration of, attention paid to the impact of, those rules on the more general state of the country and the economy.

As an example, say we had a bureaucracy concerned with rip offs in the financial markets. How people might be able to use the banking system nefariously and so on. The rules then written would end up being onerous, tight and very expensive. So much so that new financial organisations would find it between exceedingly difficult and impossible to get started - the necessary overhead of meeting those detailed rules is only supportable at large scale. Growth to being able to support it isn’t possible.

It’s even possible that right now we have such a bureaucracy with exactly such an outcome.

For there’s been no one with the overview, with oversight, involved in the creation of those rules. We’ve devolved the rule making to monomaniacs with a clipboard and no one at all is thinking about the effects upon competition, new firm creation and so on.

We could make similar noises about Natural England banning the building of 150,000 houses or whatever it was over nutrient rules. Or whichever idiots were allowed to change planning so that first floor and above window sills must be 1.2 metres from the floor. In isolation, to the monomaniacal clipboard wielders these might look sensible. To anyone interested in the overall system they’re madness.

The problem with the devolution of such rule making is that the inevitable trade offs - for all of life is a series of trade offs - get ignored for no one is responsible for the overall, only for their specific detail.

The rules should be made by politicians. In Parliament. We don’t say they’ll necessarily be better - we’ve seen some of the horrors in primary legislation - but it would mean that someone is actually responsible. So, we would know where to go to get idiocies changed and who to sack for having approved them.

Tim Worstall

As we’ve been saying for a couple of decades about childcare

This is true:

The Nobel prize-winning economist Claudia Goldin has shown that women are paid less not because they are discriminated against but because of the roles they often end up in: jobs with greater flexibility but lower wages.

People make different choices in life and they get paid different amounts of money. What is currently called the “gender pay gap” is in fact about the choice - or not - to be the primary child carer.

We can indeed go on to say that the feminisation of the economy is going to - should even - happen. This does not mean abandoning that masculine insistence upon logic and sums.

The trend since the pandemic towards more flexible working for men and women — for white-collar workers, at least — gives fathers more scope to share the caring burden with mothers and will help to narrow the gender pay gap.

But it won’t be enough alone to deliver a better economy for women, especially women in low-paid jobs in social care, hospitality and retail, who can’t work from home when it suits them.

If people change their behaviour then that’s great. After all, the very point of a liberal polity is that folk can do - absent third party harms - as they wish with their lives and the society we end up with is the aggregation of those individual choices. Pay gap or no pay gap - the point is construction from below but the choices from below.

The case for better childcare and social care has been known and understood for years. So why hasn’t any government delivered them? A handy rule of British life is that policies don’t happen if the Treasury opposes them, generally because it thinks they are too expensive.

But the argument being made is not better childcare and social care. It’s more paid childcare and social care. Further, there’s handwavey over how this will grow the economy. The thing being that the Treasury is right about the expense.

As we all know - as is the complaint in fact - for women (or, if we prefer, “primary child carers”) in the lower half of the earnings spectrum going to work, collecting the money, then paying for the childcare that allows them to work doesn’t, in fact, work. The costs of the childcare - or the social care - are higher than the income from the work.

Changing who pays these costs doesn’t change that expense. Sticking those care costs on the tax bill most certainly doesn’t change those costs - nor, importantly, that the costs are higher than the value of the work done. Increasing costs while increasing revenues by less than those increased costs is one of those not good economic ideas.

It is simply true that for some significant part of the workforce the most valuable labour they can perform is taking care of their own families - kids or social care. Which we can see by the fact that it costs more to provide the child or social care than they earn working doing something else.

If what everyone wants is increased feminisation of the economy then good luck to everyone - that is the liberal point. But there’s no reason to abandon logic and sums at the same time.

Tim Worstall

It’s time to update St Maggie about other peoples’ money

Margaret Thatcher, famously, said “The problem with socialism is that you eventually run out of other peoples’ money”. The actual quote is “Socialist governments traditionally do make a financial mess. They always run out of other people's money.” That’s how quotes work, often enough, after the initial statement a certain amount of reorganisation happens in the societal memory to heighten the pithiness.

We should update that. For here’s a demand:

A global wealth tax on billionaires would raise as much as $250bn (£200bn) annually, according to a report by a Left-wing French economist for the G20.

Around 3,000 people would be liable to pay an annual charge amounting to 2pc of their worldwide assets, said Gabriel Zucman, a French economics professor.

We should violate everything we know about deadweight costs and taxation in order to achieve what?

Global GDP is around the $100 trillion level. So, this would bring in revenue of 0.25% (yes, that’s a quarter of one percent) of GDP. A pittance.

The tax-to-GDP ratio varied significantly between EU countries in 2022, with the highest shares of taxes and social contributions as a percentage of GDP being recorded in France (48.0 %)

It wouldn’t even touch the sides, would it?

So, why? Well, yes, there is that obvious point that Zil-lanes don’t just pay for themselves you know. But if a system is already eating just under half of everything then another quarter of one percent isn’t going to aid in any significant manner.

Except - the problem with social democracy is that you eventually run out of other peoples’ money. Until and unless we start saying “That’s enough there, no more” then the demands for ever more to micturate up the wall simply will keep coming.

So, we should say “That’s enough there, no more”. And if not now then perhaps 50 years ago? 100?

Tim Worstall

A significant mistake by Willy Hague

Apparently science and technology is where it’s all going to be at. Which is something we’ll partially agree with. It is indeed advancing technology - the flip side of advancing productivity - which will determine future living standards.

Being a leader in technology has always been woven into the modern British story. We led the Industrial Revolution, and we survived the Second World War largely because we had such things as radar, Bletchley Park and Spitfire engines. But the next decade is likely to contain as much scientific advance as those last two centuries put together.

OK. So, how did we do all that technology and science stuff in the past? Well, Jethro Tull got to keep the benefits of the seed drill, Crompton’s Mule fees went to Mr. Crompton and so on down the generations. We had small government which meant that the returns to having invented, to having done science and technology, went to those who’d done the doin’.

Incentives do matter after all. And it’s possible to mutter that takin’ the rewards of success off those successful to then pay out to those not so rather blunts said incentives.

But this is a far greater error:

And while the great ideas will come from the private sector and academia, governments will be decisive in many ways: using procurement to favour innovative companies, speeding up regulators to clear new products for use,

The innovation cycle - the invention one if you prefer - doesn’t work on what regulators will clear for use. It works on the happy happenstance of someone finding a way of doing something that people want to do. And we don’t, in fact, know what people want to do until they’re able to do it. Which means before any regulator gets to stick their nose in and demand evidence that people do want the thing done.

The correct way to foster technological advance is to shoot - in the metaphorical sense, of course - those who delay it, the regulators insisting on the power to grant permission or not for something to enter the market. Razing that system to the ground and ploughing the land with salt afterwards is to be taken literally, of course.

Tim Worstall

That joy of the market - everything gets tested against an absolute standard

It’s entirely possible that the standard diversity argument works. That a business which employs a diversity of staff will find that it is better able to serve the increasingly diverse consumer base. We do tend to think that it will be diversity of view, not gender or ethnicity, that matters but maybe that’s just us.

It’s also possible that the diversity movement does not in fact increase profitablility at a company. That the claims it does are simply a method of smuggling in a social or societal desire by being, umm, misleading shall we say.

As we say, either of those could be true. What we desire is some emthod of working out which is true. Not claims and counterclaims made by partisans on either or any side, but actually verifiable and unfakeable results.

Behind office doors, HR departments at some of Britain’s biggest businesses have recently been feeling defensive and on the backfoot.

Increasingly laid at their doors is the blame for allowing toxic identity politics to enter the workplace, and wasting millions of pounds on pointless diversity, equity and inclusion (DEI) schemes.

….

Fuelling this blame game are recent findings that Britain’s diversity drive is “counterproductive” despite businesses spending millions of pounds on ultimately ineffective workplace initiatives.

We’d not say that the evidence is wholly conclusive either way as yet. We’d also point out that we don’t in fact mind what the answer is. If attention to diversity is profit increasing then great, do more of it. And, of course, profit maximising businesses will do more of it - it’s profit maximising, they’re profit maximising, see? It’s also possible that it isn’t and so folk should do less as they will do less.

Our point isn’t about the answer at all. It’s about the method of working it out. The system of answering a question. Does x increase profits? Great, do some x and see whether, in a market economy - that is, the plan having to meet the marketplace - profits increase? If so then great, x is value additive. If not then don’t do x - it’s just a cost with no benefit.

All we insist upon is that it’s very useful to subject all claims to this same test. Does it actually work? In business that means do profits increase by having done it?

That is, it’s grand to have a system - that market - that actually answers questions for us.

Tim Worstall

It’s possible they’re lying about water nationalisation you know?

At root a market economy is a method of conducting experiments. Which are then tested against a fairly demanding standard - does doing it this way add value? If not then, Ho Hum, let’s try another way.

As with the scientific academy that is becoming so polluted these days this does depend upon everyone agreeing to use the same standards for the testing of whether the method has worked. Comparing like with like and all that, to see which is the best method.

As we all know there’s a lot of shouting going on about the water companies. At privatisation England gained for profit and capitalist companies, Wales, Scotland and Northern Ireland variations on not for profits and direct government provision. Which does mean that we’ve one of those lovely natural experiments. We can test that government provision against that of the capitalists and see which performs better. That can then inform whether the capitalists or the government is a better solution.

Water companies in England and Wales have averaged five serious sewage spills into rivers or seas every day over the past decade, the Observer can reveal.

Analysis of Environment Agency data has found that the 10 firms recorded 19,484 category 1-3 pollution incidents between 2013 and 2022, the most recent year recorded, an average of one every four and a half hours.

Campaigners accused the water industry of “polluting our rivers and seas at a catastrophic scale”, while Labour said the government had “folded their arms and looked the other way” as the crisis worsened.

OK, maybe this is a good performance, maybe it isn’t. It’s certainly a better performance than decades back but that’s not quite the thing we want to know. Have those government run systems done better than the capitalist run ones? If so then the argument that the capitalists should be dispossessed might carry some intellectual - rather than merely rhetorical - weight. So, what is the comparative performance of the capitalists and the government?

Aaaand, what’s the one piece of information no one at all is putting forward? Quite, that comparative information about how the government run systems are doing as compared to the capitalist. That is, even here where we’ve one of those natural experiments that can be explored to answer the question for us - capitalists or government - no one is in fact arguing those facts.

One reason for this is that the government run systems aren’t under the same legal requirements to actually report. It’s not just people ignoring the data, it’s a refusal to even allow it to be collected.

When that information was collected and compared, ten years after privatisation, it was the capitalists who won. Which is presumably why the information is not collected today. For it would be so terribly inconvenient if the current rhetorical stance for nationalisation were destroyed by ugly facts, wouldn't it?

Now yes, we are quite obviously connected to, were involved with, that original privatisation. If it really didn’t work out then Ho Hum, that’s what happens with experiments. But why is it that no one - no one at all, not even the regulator - is collecting, let alone publishing, the information to let us all know whether it did work or not?

What are the sewage discharge numbers for Wales, Scotland and Northern Ireland? Until we know those we cannot evaluate the experiment, can we?

Clearly, it’s The Guardian that should pay for local journalism

The Guardian tells us that very democracy itself is in peril over the vanishing of local journalism:

In the past Akoto might have stopped off at the market town’s local newspaper office on the campaign trail. But the main Trowbridge office of the Wiltshire Times, part of Newsquest and ultimately US-based media group Gannett, closed in 2019 and was redeveloped for housing.

These days political campaigns are as likely to target local voters on social media as through the columns of regional newspapers or local radio or television, where cutbacks mean far fewer journalists having to cover larger areas.

According to the Charitable Journalism Project, there are probably fewer local newspapers in Britain now than at any time since the 18th century, and the number continues to decline: more than 320 local titles closed between 2009 and 2019 as local newspaper advertising revenue fell 70% between 2010 and 2020.

This is terrible, something must be done etc.

We suggest - nay, insist - that that what be that the billion quid in the Scott Trust Ltd, the endowment that supports The Guardian’s losses, should be directed toward saving local journalism.

You see, we’ve this awful habit. We read links. And footnotes. We even read reports referred to in links and footnotes. Such as this:

An independent report on the future of the British media by Dame Frances Cairncross in 2019 warned the industry’s collapse poses a threat to the long-term sustainability of democracy and concluded there should be an investigation into the dominance of Facebook and Google in the advertising marketplace.

Well, yes, sorta. That Caincross report is one of the very few that we’ve seen that gets to the economic nub of the matter concerning local newspapers:

The starting point for the financial problems of news publishers was the collapse of revenues from print advertising. Print newspapers have traditionally carried advertising in two main forms: display advertising – commercial adverts and spreads in the main section of newspapers; and classifieds – job vacancies, services for hire, car and house sales. The transaction of buying and selling advertising space generally involved only two parties: the advertiser and the publisher. In 2007, advertising in the national and local press brought in £4.6 billion, and accounted for 40% of total UK advertising spend.111 In 2017, the share of advertising appearing in the printed press had fallen from 40% to 12%, and generated £1.4 billion in expenditure – a fall of 70% compared to 2007.

Further:

Perhaps more fundamentally, it is local media, more than any other, that has lost its comparative advantage in the advertising market to new online players. Local news publishers have always relied more on classified advertising than any other news publishers, for the simple reason that geographical proximity is what most local news readers have in common.

A point we have made a number of times both for UK local papers and the American Big City ones. Classifieds were the big revenue source and a much larger than that portion of gross margin that paid for the newsroom. The classifieds have disappeared online. And not, not really, to Google and Facebook, but:

And unfortunately for them, online competitors, first Gumtree and Autotrader,

Aha. So, the local papers are broke because classifieds have moved online and to different people. One of those is Autotrader. It is the capitalisation of selling off those classified ads - the capital value of Autotrader when sold was the fact that it has taken those ads - that created the £1 billion endowment at the Scott Trust Ltd which then funds The Guardian’s losses.

But, if the people who nicked - sure, by free competition in a time of technological change - the ad revenue are the people who should pay to preserve local journalism then it’s The Guardian that has to pay to preserve local journalism, right?

Can’t get away from that basic logic now, can we?

So, there we are, that’s solved then. The logic being shouted at us is that the people who took local journalism’s revenue must support local journalism. As that’s The Guardian then that’s The Guardian.

True, this might mean a reduction in Owen’s, George’s, Aditya’s salaries (we suspect that a reduction in their output would be too much to hope for) or contracts but there are silver linings to every cloud.

Tim Worstall