We need better propaganda about renewable energy
The Guardian tells us that utility scale batteries are just great:
From barely anything just a few years ago, the US is now adding utility-scale batteries at a dizzying pace, having installed more than 20 gigawatts of battery capacity to the electric grid, with 5GW of this occurring just in the first seven months of this year, according to the federal Energy Information Administration (EIA).
This means that battery storage equivalent to the output of 20 nuclear reactors has been bolted on to America’s electric grids in barely four years, with the EIA predicting this capacity could double again to 40GW by 2025 if further planned expansions occur.
This is not wholly so. There’s a substantial difference here between what GW means for a battery and what a GW means for a nuclear power plant.
That 20 GW (gigawatts) of power. We use 20 GW of power in an hour and so we’ve used 20 GWh.
OK.
If it’s at night and the wind isn’t blowing so we get those 20 GWh from our batteries. After 61 minutes we have no power at all and civilisation collapses. If we get that 20 GWh from nuclear then at minute 61 the atomkraft hums merrily along and we start gaining our second hour of 20 GW, another 20 GWh. Civilisation does not collapse.
That is, nuclear capacity of 20 GW gives us 20 GW each and every hour. 20 GW of battery power gives us 20 GW once and once only in any on particular use. We’ve got to await wind or morning to get some more.
Battery power simply is not equivalent to nuclear output in any useful manner. They’re different concepts.
We therefore think that we need to have new and better propaganda about renewable power here.
Of course, it’s possible to be cynical - we prefer “realist” - and note that propaganda is the process of misinforming people so that they believe untruths. So, what we’re actually arguing is that we need worse propaganda about unreliables so that people are not fooled into believing those untruths.
Just to remind about dunkelflautes:
Dunkelflauten can occur simultaneously over a very large region, but are less correlated between geographically distant regions, so multi-national power grid schemes can be helpful. Events that last more than two days over most of Europe happen about every five years.
We need 48 times as much battery storage as nuclear output to cover something as foreseeable as the twice a decade opportunity for European civilization to collapse.
Better, worse, you choose, but more realistic propaganda please.
Tim Worstall
Bad Budget ideas - taxing urban commercial landlords less
The latest trial balloon and yes, it’s an absolute stinker:
Rachel Reeves is exploring plans to impose higher taxes on Amazon as the Government races to support Britain’s ailing high streets.
The Chancellor is believed to be considering increasing the business rates paid by online tech giants as part of a wider shake-up on property taxes.
As part of a review of how business rates are set, Ms Reeves could scrutinise how much Amazon’s warehouses pay in tax compared to high street stores.
It comes as retail bosses have also urged the Government to impose new levies on deliveries.
One critique:
And yet, even if it plays well with the focus groups, we should also be clear on one point. An “Amazon tax” is a levy on the most innovative, dynamic and successful sector of the economy. In reality, it will be final confirmation that Labour’s Britain is a hostile environment for growing businesses – and so long as that is true we can forget about “growth”.
Fair enough. But the problem is worse than that. As we’ve pointed out many times over the years business rates are paid by landlords. Yes, the tenant hands over the cheque but the incidence, the pain, of the tax is upon the landlord. No, sorry, if you’re not prepared to consider tax incidence then you’ve no business commenting upon a tax system.
Taxing urban retail less and suburban big boxes more just shuffles which landlords make or don’t. Adding a consumer tax to online sales in order to reduce urban retail business rates shifts that tax burden from landlords to consumers. And why on Earth would we want to do that? Well, unless we were urban retail landlords that is.
We generally tend to think that we stopped running this country in favour of the landed property interest a century and more ago. We should stick with that idea and aim - really, why do we want to tax commercial landlords less?
Another way to put this. Business rates are the closest thing we’ve got - and it’s damn close too - to a Land Value Tax. That most efficient and lovely of all taxes. People are proposing that we do less of this? Rilly?
Tim Worstall
We, gulp, find ourselves agreeing with The Guardian here
Obviously, not wholly and entirely agreeing with The Guardian but:
Instead, this column’s long-held view is that, under a privatised system, water companies belong on the stock market. Only three of the 10 that were privatised still have a listing, and nobody pretends they are all models of virtue (United Utilities’ woes at Windermere being the latest example). But, in the round, environmental performance has been better at quoted companies – boardroom accountability is easier to enforce, financial reporting is more transparent and borrowing is lower. Thames went wrong under Macquarie’s private equity leverage lash-up and then was holed under a slow-moving consortium of faraway funds that overpaid for the assets and attempted to manage by committee.
Publicly accountable capitalism seems like a good enough idea to us. This is in contrast to what is being said elsewhere:
Water companies in England could be banned from making a profit under plans for a complete overhaul of the system.
The idea is one of the options being considered by a new commission set up by the Department for Environment, Food and Rural Affairs (Defra) amid public fury over the way firms have prioritised profit over the environment.
Sources at the department said they would consider forcing the sale of water companies in England to firms that would run them as not-for-profits. Unlike under nationalisation, the company would not be run by the government but by a private company, run for public benefit.
Well, we’ve an example of just that, as the article says:
Welsh Water, which runs under this model, has no shareholders and any surplus money is reinvested back into the business or into customer services.
The problem with that model is that, as that second article itself points out, Welsh Water (tho’ they call it Dwr Cymru, possibly just to confuse) has above average costs right now and under the proposed price changes will be the most expensive.
It’s also not obvious - not enough monitoring is done in Wales for us to fully know but the indications even so are not good - that the environmental performance is any better. If we are to believe multiple George Monbiot columns about the Wye Valley, it’s worse.
We, here, are intensely pragmatic. Sure, we supported water privatisation, helped set it up. But if it turns out it doesn’t work and that there’s another model which does work better then we’ll support that instead, no problem. But if the not for profit model does not work better - as Welsh Water seems not to - then why on Earth are people trying to impose that across the industry?
Ah, yes, we forgot. Capitalism bad, see? Doesn’t matter what the actual results are, look you, it’s just Bad, M’Kay? Performative nonsense instead of what works - that’s really not the way to run a country.
Tim Worstall
Sir Michael Marmot will be most annoyed
An entire lifetime’s worth of theorising destroyed by the one ugly fact:
White people in Britain are dying at higher rates than ethnic minorities because of their drinking and smoking habits.
Analysis from the Office for National Statistics (ONS) of mortality rates by ethnicity across towns, cities and villages found that in almost all cases white Britons were dying in higher numbers, despite on average being more affluent.
Marmot’s insistence is, recall, that economic inequality leads to health inequality. Ineluctably, and that the health inequality we see is caused by economic inequality. Therefore we must raise taxation upon the rich considerably, send that cash to the poor and health will improve. This is also one of the core assertions in The Spirit Level. That it is the inequality itself which makes us iller.
The Telegraph has got the finding from the Office for National Statistics correct. It’s also not just because there are - still - more White Britons around, it’s relative rates. The cause, well, no one’s wholly sure, but a suggestion is that a large proportion of the non-Whites are first generation migrants and that explains their income levels. But also that those who bother to migrate might be generally healthier than the population left behind or arrived in. But it is still true that mortality and ill heath are not running in line with income.
Poorer people have lower mortality rates than richer. Marmot and the Spirit Delusion are wrong.
Ho Hum, well, better luck next time Sir Michael.
Tim Worstall
Will Hutton gives us wibble
Britain’s wealth gap is growing. Its malign effects seep into all aspects of life. It’s a national disaster
Will Hutton
This is from a new report from the “Fairness Foundation” where:
The great merit of the Wealth Gap Risk Register report (full declaration: I chair its editorial advisory board)
Hmm, well. From the report itself:
Rising wealth has created large gaps between those with wealth and those without it. While wealth inequality (understood in relative terms, as measured by the Gini coefficient) has remained relatively stable over recent decades (albeit at a much higher level than income inequality), the wealth gap (the absolute difference in wealth between rich and poor households) has increased significantly, because of rising asset values, and is likely to get worse.
That is, wealth inequality hasn’t increased at all. Their measure of the number of £s that makes up the gap is elsewhere referred to as since 2006. And we’ve had 68% inflation since then. So, yes, measured by pounds the gap is larger and that’s because each pound is smaller. We might well complain about that much inflation but the effect upon the gap perhaps not so much.
There’s also this:
Private wealth in the UK has experienced a remarkable surge in recent decades, with total household wealth more than doubling in recent years, from around three times national income in the 1980s to almost eight times national income today (£14.6 trillion).
True. Some 85% of that household wealth is house prices and pensions. House prices we know how to solve - build more houses. Pensions, well, why would we want to solve that? We really have changed lifespans since the 1960s (the relevant time for thinking about when people will save for their pensions) and we’ve gone from an average of three or four years of retirement that need to be financed to 20 or 30 years of it. So, obviously, people are rationally saving more of their current income to finance those golden years. This isn’t a problem that requires a solution.
We’d also make our now ritual complaint that any analysis of wealth that doesn’t include lifetime effects upon pensions wealth - those 55 to 65 are going to have the most of it, those 20 none - isn’t worth the electrons being spaffed upon it.
We’d also call this astonishing:
While households face a cost-of-living crisis with falling real incomes, many large companies are transferring record profits to shareholders. Dividends and share buybacks (two ways by which public companies return excess profits to investors) reached record levels in 2022, totalling £137 billion. These mechanisms enrich shareholders at the expense of the entire economy, as profits are ploughed into cash transfers rather than productive investments. A 1% tax on share buybacks (like the one implemented by the Biden administration) for FTSE-listed companies could raise £225 million annually. An additional £6 billion per year could be raised if taxes on dividends were levied at the same rate as taxes on income.
That money should move out of mature businesses so it can be redeployed seems obvious to us but perhaps not to some. But the ignorance of thinking that dividends are currently undertaxed relative to income. They are first taxed at the corporate level then taxed again at the individual. The combination - at the top end - ends up being higher than income tax rates.
So, you know, no. Back to Hutton:
Again, there is a spillover on cultural values and priorities; vocational training has a permanent Cinderella status.
Good grief. Britain used to have an organisation devoted to that, called the Industrial Society. Which was taken over by one Hutton, W, renamed the Work Foundation and we’re still awaiting the publication of the report into how it managed to need rescuing.
As damagingly, it sends a signal that the route to wealth is not the gruelling business of starting and growing a value-creating company, it is to buy and sell property,; the quintessential example, buy-to-let empires.
The Telegraph seems to think that Hutton’s late wife ran a buy to let empire. Ho Hum again.
But back to the base idea of this report and complaint. Wealth inequality hasn’t changed therefore we must do lots of things about wealth inequality. Fortunately, Hutton’s column is a weekly one so we’ll soon gain a top up to the nation’s vital supplies of Willy Wibble. Aren’t we the lucky ones?
Tim Worstall
We are saved, the government can borrow more!
The government has prepared the markets for an extra £80 billion of borrowing over the next five years to fund ambitious spending on infrastructure and green energy.
Investors in government bonds, or gilts, are signalling to Rachel Reeves that they can lend her that sum without prompting a Liz Truss-style panic in the markets as long as she sets out clear annual spending plans and explains the economic benefits of the projects to be funded.
And, well, yes. Going out and borrowing more - as the government finds out that it’s at or near the Laffer Curve peak on those taxes it will allow itself to increase - is something that has become part of the general conversation in the past month or so. This is also the period of time that the yield on the 10 year gilt has risen from 3.8% to 4.05%. Markets are forward looking, prices change when people say they are going to do things rather than awaiting that thing being done.
Now, it isn’t true that borrowing more is the only reason gilts yields have changed - it’s never true that there’s an omnicause in something so complicated as an entire economy. But let us just pretend for a moment - we might want to assign at least some of that price change to this cause after all. So, that’s a quarter of a percent. On a national debt of what, £2 trillion? £3 trillion? Yes, we can all argue about exactly what should be included in that but let’s plump for the lower, £2 trillion, as that’s closer to what the gilts market is.
It’s also true that the coupon on extant gilts doesn’t change as a result of this yield change. It’s only the borrowing of new money that changes the cost to the Treasury. But, in time, all of that is going to get rolled over - actual repayment of the national debt, even in part, is one of those aha, aha, aha, jokes - so just as a modelling exercise we can say 0.25% of £2 trillion. Which is, you know, quite a lot. £5 billion extra in interest a year to borrow £80 billion. To “invest”. There’re going to have to be some pretty startling returns on government spending - well known in its efficiency as it is - to cover a 6.25% funding cost. But it gets worse - because it’s necessary to pay both the extra interest on the new issuance as well as the increase in total interest costs. So, 10.3% then.
Sure, the markets are willing to lend but is it entirely sensible to be borrowing at such rates? We’ve had credit card offers better than that in our time.
Yes, yes, yes, this is not a fair model. Like all models it’s being used to illustrate, not to claim eternal truth. But it is true that borrowing more will have an effect upon the price that has to be paid, over time, for all borrowing. Therefore the cost of borrowing more is the interest to be paid on the new borrowing plus the extra that must be paid upon all borrowing. Anyone who wants to quibble with the exact numbers here is welcome to put their sums in the comments.
All of this before we even get to that elephant in the corner - the markets want to buy more gilts so, sooo, much that the Bank of England still owns £700 billion of them that it can’t sell as yet because prices would go wholly doolally.
So, yes, government can borrow more. But should it? Informed opinions differ on this……
Tim Worstall
To remind: The rich can’t afford big government
All this fuss about where a few billions can be found in the upcoming Budget should remind us of a basic fact. We can’t ask the rich to pay for big government. Sure, each individual rich person has lots of money - that’s why they’re rich, see? But there aren’t very many of them and in aggregate they’ve not got that much money.
So, we’ve those suggestions that Capital Gains Tax should be raised to be the same as Income Tax rates. This produces revenue predictions of a positive couple of billion to a negative couple of billion. That is, we’re around and about maxed out on what we can squeeze out of the rich that way. We could - if electoral promises had not been made - talk about higher rates of income tax but the best research there is tells us we’re about at the peak of the Laffer Curve on that too. And, well, there are all of those discussions of tweaking this or that tax upon those rich. All of which are predicted to raise, singly, again in that couple of billions level or, possibly, lose money.
There’s not much left that we can do to the rich to pay for more government that is. In fact, there’s not much left we can do to the rich to pay for the government we’ve already got. At which point:
Income tax thresholds are usually raised along with inflation, to take into account the fact that people’s wages usually rise year-on-year.
Freezing tax thresholds means more people are dragged into higher rates every year.
It is believed that freezes save around £7 billion a year.
Now this isn’t a tax upon the rich at all. Because once your income goes up into the 1% sort of area you don’t, in fact, get a personal allowance at all. So thresholds has little effect at those “rich” incomes. But this does raise lots of money. Why? Because of course the bulk of the population is where the bulk of the money is. Therefore, if we want to have lots and lots of government then we need to be taxing everyone.
This then gives us a certain problem. As with Adam Smith it seems fine that taxation might be more than in proportion to income. That is, a progressive taxation system. But, progressive taxation does top out because there really is that Laffer Curve. There’s a limit to how much can be gained from taxing just the rich because they’ll leave, stop being rich or stop making effort to be so. Thus there’s a constraint to how much government we can gain by having a purely progressive taxation system.
It is possible to raise substantially more revenue than that. By having a less and less progressive tax system. Which is what the icy social democracies of the Nordics do (and moving over to the truly absurd, what France does). Pile the taxation upon everyone to pay for more bureaucracy - what joy, eh?
It’s possible, like Sweden, to have a 25% VAT rate. The reduced rate of 12% applies to the foods that we here in the UK have at 0%. It is possible to raise more revenue but it does have to be the bulk of the population paying for it.
So, at some level of logic, we need to make a decision. We can have big government and a less than progressive tax system to raise the money to pay for it. We can have much smaller government and a more progressive tax system. In that second we have to limit the size of government so that we can pay for it out of what we can pluck from the rich in tax.
Yes, it’s possible to then go on and say that a lower government and less tax place will grow faster and all that but in reality this comes down to a choice. Which do we want? To be able to pay for government from the fleecing of the rich? Or so much government that all get dunned?
We have our preference here. We are liberals therefore we believe in progressive taxation, that more than in proportion. Therefore we end up desiring less government so that we can have that progressive taxation system to pay for it. Seems very simple to us to be honest.
Stop government doing about - ooh, just a little target here - about 50% of what it currently does, raze those buildings, plough that land with salt and release the public sector workers from their bondage. Then we can run the system on the taxation of the rich and for the rest of us our money can fructify in our pockets.
Tim Worstall
Taxing vaping is really very silly indeed
It probably is true that each and every budget, ever, has contained at least one piece of rampant stupidity. But in this run up to a budget perhaps it’s possible to head the Chancellor off from a mooted foolishness:
Rachel Reeves is considering raising the tax on vaping products in her budget this month as figures show that a quarter of 11 to 15-year-olds in England have used e-cigarettes.
The chancellor is looking at increasing the tax after a consultation carried out by the last Conservative government.
In his budget in March, Jeremy Hunt announced a tax on vaping products, which is due to take effect in October 2026, in a move to make vaping unaffordable for children.
We do not wish to make vaping unaffordable for children. Far from it in fact - we’d like teens to vape.
Economics distinguishes between two forms of correlation. Two things may well be linked, but how are they linked? A complement is where more of the one thing is likely to lead to more of the second. Say, tonic sales rising as gin sales do. A substitute is where more of the one leads to less of the other. More vaping leading to less cigarette smoking. And, yes, we do know this is true - vaping is a substitute for cigarettes, more vaping leads to less actual ‘baccy being fired up.
So, we’d like to reduce the smoking rate, especially among those impressionable teens. Thus we’d rather those rebels - teenage rebellion is not something we’re about to eliminate - vaped than smoked. We therefore want to expand the price differential between the two - less tax, possibly even subsidy, for vaping as taxes on cigarettes continue their rise. Raising taxes on vaping is contraindicated therefore.
Yes, it’s true, there are those in public health who insist that no one should ever touch a drop or whiff of that evil nicotine but in this country at least we’ve never allowed the prohibitionist end of the dissenting churches to make public policy. Well, not since the Puritans at least and we sent at least some of them off across the ocean such was our disgust.
We have real world evidence as well. Australia is famously restrictive on vaping. Nicotine containing versions are only available upon prescription:
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.
As compared to the US:
In 2024, current (previous 30-day) use of any tobacco product was reported by 10.1% of high school students (representing 1.58 million students) and 5.4% of middle school students (representing 640,000 students). Among all students, e-cigarettes were the most commonly reported tobacco product currently used (5.9%), followed by nicotine pouches (1.8%), cigarettes (1.4%), cigars (1.2%), smokeless tobacco (1.2%), other oral nicotine products (1.2%), heated tobacco products (0.8%), hookahs (0.7%), and pipe tobacco (0.5%).
More vaping, less ‘baccy among teens. Less vaping, more ‘baccy among teens. Vaping is a substitute for smoking tobacco, not a complement. If we actually desire lower rates of tobacco smoking among teens then we should subsidise vaping, not tax it.
Now it is true that tobacco smoking kills people and that this - therefore - saves the National Health Service money. But increasing the tax upon vapes now in order to save the NHS cash 50 years hence seems to us rather longer than the timescales politics normally considers. Other than that we see no useful justification for the silliness of taxing vapes.
As we say, we’re sure every budget has contained at least one piece of abject stupidity. But hopefully not this one in this one, eh?
Tim Worstall
Govt consultation on charging cables: Don’t do something, just stand there!
We realise that this is only a very small contribution to how we all solve that collective missing £40 billion problem but still, here we go:
The UK government is considering whether to require all new electronic devices to use the same type of charging cable.
A call for evidence launched in October is asking for views on the benefits of using a particular charging cable - such as USB-C, which is used by many modern devices.
It comes after the European Union passed a law on a common charging cable in 2022, which firms must adopt by December.
That consultation is here. We recommend that everyone write in - it’s a consultation, they’re asking for views - with the answer that not only should absolutely nothing at all be done but that the consultation be closed early as that correct answer is that nothing at all should be done. Save the money on the consultation, close the department responsible for it, raze the buildings, plough the land where it stood with salt and release those poor civil servants from their bondage.
Because the entire idea is, in itself, insane.
Now, that actual standardisation across the EU we’ve already said we think is very silly. Because a legal imposition of a single standard means that no one can or will ever innovate to a better standard. Instead of market experimentation leading to possibly marginal improvements, something which over time leads to something wholly new, if there’s the one imposed standard then there has to be a leap. And a leap large enough to merit fighting through the bureaucracy of an entire continent to get it adopted. It’s not, ever, going to happen therefore we are locked into technological stasis.
Not a good idea but then this is government of an entire continent by those too silly to be able to get into national governments - no, really, it isn’t the first raters who get sent to Brussels.
But OK, they’ve done that. Now, what should the UK reaction be? Absolutely nothing at all, obviously. We’re not a big enough market that global manufacturers of electronics are going to come up with something different for us. Whatever the benefits - claimed - or disbenefits - technological stagnation - are going to happen to us whatever decision we ourselves make here. We’re going to end up with USB-C come what may. That’s just the nature of being a market the size we are.
So, whatever decision this consultation makes we’ll get USB-C. We therefore don’t need the consultation and can all save that valuable taxpayers’ money to be spent upon the £300 bonuses for train guards who have the temerity to work a full week.
Seriously, we know what the answer’s going to be. It cannot be anything other than USB-C. Therefore what’s the point of spending the money on having the rule or even the consultation?
We will admit we did like the joke online that what this consultation should really do is insist that the UK adopt Lightning as the standard. But we don’t think there’s anyone in government with that puckish a sense of humour.
So, given that the answer - whether there’s a decision or not, a consultation or not, a law or not - is that we’ll all get USB-C then why in heck are we spending any money on considering the issue, let alone acting upon it?
As so often the correct answer is that government just shouldn’t be doing anything at all about the matter.
Tim Worstall
Saving the NHS with one market at a time
Or even, improve the NHS just by having markets in it. Two stories - we do not vouch for the absolute truth of either of them but do want to note the implications if they are indeed both true:
And:
Surgeons at one London hospital are performing an entire week’s operations in a single day as part of a ground-breaking initiative that could help tackle the record waiting lists in the NHS.
Guy’s and St Thomas’ NHS Foundation Trust has already slashed its own elective backlog in certain specialities by running monthly HIT (High Intensity Theatre) lists at weekends.
Under the innovative model, two operating theatres run side by side and as soon as one procedure is finished the next patient is already under anaesthetic and ready to be wheeled in.
These are both innovations, not inventions. To distinguish - invention is the creation of some new thing. A scalpel, forceps, that sort of thing. Innovation is the ongoing improvement in the way that things are used. Even, inventions to new uses - but still distinct from invention.
And we know the economics of this distinction from William Baumol. Governments, the state, can do inventions about as well as markets. But markets beat the state hands down at innovation. Partly because by their nature markets allow different ways of things to be tried out - the experimentation. Partly because markets - by their very nature - then produce the pressure to adopt more of those things that work.
For example, kiddie’s therapy, the people who maintain the old system with a year wait will be fine in a bureaucratic or planned organisation. In a market one they’ll be bust unless they adopt the policy that leads to the 7 week wait. So too the operating theatre idea - those who don’t do it in competition with those who do will go bust. The incentive to adopt best practice is therefore really up front and personal for all participants - which does make things happen.
We’ve said this before of course but truth bears repetition. One of the things that ails the NHS is the lack of competition - one of the ways to make the NHS better is to have more competition.
A little fun thing: The FT has a beat the Chancellor at the budget game. The rules are from the Resolution Foundation. One of those rules is that anything less than a 4% increase, per year and forever, in the NHS budget is treated as a cut. More markets, more innovation, greater productivity, is how we beat that.
Second fun little thing. Booker T and the MGs had a massive hit with Green Onions back in the day. A follow up record - for why not do more of what works? - was Mo’ Onions (we’ve been unreliably informed that that was titled “Scallions” in the US) which was, effectively, an inversion of the original melody.
So, you know, to follow up on our greatest hits, Mo’ Markets.
Tim Worstall