A Good African example

This is some excellent news. I've been trying desperately, as I wrote this, for it not to sound like an advert, but it's going to end up like one, because it pretty much exemplifies everything I've been going on about to do with development over the last few years (archive). So frankly, if I'm doing some free advertising for this company, I don't much mind. (I have no connection with the company.)

Good African is a Ugandan coffee producer which actually keeps its production in-country, and helps its farmers to develop their farms and mechanise, both of which are stark contrasts with the Fairtrade Foundation's approach. You can see a video with clips from its founder below (link):

The company's website is goodafrican.com, and the products are apparently available in Waitrose, Sainsbury, and all good Ugandan supermarkets! I found them on the Waitrose website, but not the Sainsbury one. Perhaps they're on the shelves; I couldn't say. The company also reports that it will be stocked by Tesco UK come July 2010.

If you're a Fairtrade coffee drinker, let me try and convince you that Fairtrade is doing worse than free trade here. Your Fairtrade coffee pays a minimum of the equivalent of 5,624 Ugandan shillings per kilogram to the coffee farmer. That's for 'robusta' beans, which are your common-or-garden beans. Good African paid a little less than that in '06 (src), at sh5,224 the kilogram, for 'arabica' which (so this inveterate tea drinker is told) is a superior bean. In other words, you get a better cup of coffee and the price paid to the farmers is not dissimilar.

However, the killer point is that whereas practically all the processing of Fairtrade coffees takes place in the West, Good African processing is all done in Uganda. From the link above, a kilogram of beans will give about eight hundred grams of roasted beans, which retail at about sh27,300. I don't know what the wholesale price is, so can't say what mark-up the retailer makes, but even allowing for that, you can see that paying farmers a little extra for their beans is missing the real game here, which is the addition of value from processing. By capturing as much of that processing in Uganda as possible, vastly more good is being done by purchasing Good African coffee than Fairtrade coffee.

Oh, and I forgot to mention: when I looked on the Waitrose website, I found Good African retailing slightly more cheaply than Fairtrade (at most £1.17 the 100g against £1.25 and more). So in conclusion, you're doing more good, getting a better cup of coffee, and paying a lower price. And all that, despite having a seriously adverse tariff barrier to cross, of perhaps as much as 100% for retail-ready coffee (*src*) as opposed to exemption for the full, unprocessed coffee bean which Fairtrade imports.

Good African is owned by shareholders (no idea who), having been founded and now run by Andrew Rugasira, an economist who wants to put his Christian faith into business practice. It is committed to sharing 50% of its profits with the communities where it operates, through social enterprises. If you watched the video, it was interesting to see that Good African is helping its farmers to set up co-operative savings as a tool for mutual assistance in mechanisation and agricultural development. This is another benefit of for-profit development work: in contrast to the charitable and government sectors, businesses are able to be far less precious about the routes they take to achieve the goal of profit. The Fairtrade Foundation insists on mutualisation of practically everything among its developing world contacts (notably, they don't flex that muscle so much in the West), but in a free market there is no need to be one-size-fits-all about solutions.

The company is understandably reluctant to criticise the Fairtrade Foundation, but they do have the following answer to the question of why they do not pursue Fairtrade status:

Whilst Fair Trade certification highlights the need for a better deal for third world growers, what Africa really needs is ownership of the value chain, which is the only sustainable route to empowerment and economic justice. Good African is both African owned and African based, which is critical in the fight against poverty and the creation of wealth for its people. It has also set up a processing plant which will retain most of the value as opposed to transferring value through the use of value addition plants overseas.

You can hear the complaint: these rich Westerners who think they know best are unconcerned about the real issues in African development, which are to stimulate mechanisation on farms and industrialisation in processing. Good African, on the other hand, is a working example of the right way forward, in helping its farmers to be more productive and in investing in plant and equipment to industrialise Uganda. Capturing more of the value is the only way that Uganda, or any other developing country, will grow and get richer, so good on them.

Would that we in Europe were more open to goods imported from these countries: as you can see from this report, we would improve on the way we currently do things, getting better products more cheaply and keeping more of the value in the developing world.

Liberty and equality: zero-sum, or not?

One thing I didn't mention in my last post, about Glover, was his treatment of liberty and equality as a strict trade-off. I don't, in fact, believe that this is entirely true. The following graph is an illustration, not intended to be taken literally, of the model I have in my head.

The grey area is where the sum total of government policies can land us: if you like, the 'available policy space'. This shifts all the time because of various developments in society, and tweaking one small policy could have a large effect: this is not meant to be a mathematical model in any sense!

Still, I hope it helps to explain what I'm thinking of. You can see that I conceive of an 'efficient frontier' between liberty and equality, beyond which we can't go. At that frontier, liberty and equality are in trade-off. Within that boundary, it becomes possible to increase both liberty and equality. It may not, of course, be desirable to increase equality: as I said in my previous post, complete equality isn't just unobtainable, it's also undesirable. I struggle more to think of conditions under which it may be undesirable, c.p., to increase liberty.

So the technocratic question in politics is how to get to the efficient frontier. The ideological question is where we want to be along that curve.

Of course, Labour has shown itself to be quite unconcerned about both liberty and efficiency, so my impression is that we are probably quite some distance from that efficient frontier. In other words, if I am right it should be quite possible from where we are to increase liberty without increasing inequality, or equivalently to increase equality without decreasing liberty. Trust Labour, though, to find all the ways of decreasing liberty.

Are liberty and equality fraternal?

A few days ago, a rather good column appeared in the Guardian. I remark on it because this is cause for celebration. It was written by Julian Glover, the paper's chief leader writer, and he argued that liberty and equality are implacably opposed to each other (link). It appears that, although he starts with the Government's bonkers Equality Bill, he is really thinking of economic liberty and economic equality.

Of course, he may be over-stating his case somewhat for effect, but his key point is that politics is essentially navigating between the Scylla of impoverished freedom (for some) and the Charybdis of enslaved equality (for all). Precious few people think that everyone ought to get a straight allowance from the State and then every penny that anyone earns goes back to the State. Very equal: not very free, nor indeed very practical. On the other side, you hear few voices advocating, say, the abandonment of universal education — even if we have very strong views on its provision. Between them, these illustrate that we are not on the territory occupied by either unreconstructed communists or foaming-at-the-mouth anarcho-capitalists. Even Bennite democratic socialism and 'night-watchman state' libertarians are fairly extreme by today's standards.

Nevertheless, Glover's argument proved very un-Guardian. The equality warriors came out in force almost immediately, arguing that 'liberty and equality go hand-in-hand'. But inequality is not inherently illiberal. It is inherently human. We are all different, and those differences will, over time, create inequalities. To try and erase those inequalities completely is to erase our distinctiveness as people: it is little wonder that communist countries managed to brutalise and dehumanise their subjects so effectively. Inequality is also inherently incentivising: it provides something to which people can aspire, and aspiration is a good thing for people to have. Inequalities in outcomes are good things, although it would be fair to say that extremes of inequalities can cause their own problems.

So some of the commenters turn to the newer account of equality: not outcomes, but opportunities. This is a better slogan, and certainly as a slogan I think we'd probably all agree with it. We'd all like for everyone to have a fair shake. But putting it into practice has serious, perhaps insurmountable, difficulties. For as soon as we aim to achieve equality of opportunity, we turn opportunity into an outcome, and in sneaks the very demon we had tried to exorcise. How can we guarantee equal opportunities without guaranteeing some level of equality of outcome?

Some end up falling back on the far older argument about freedom: economic freedom is inherently exploitative. Who said the left cannot be deeply conservative, when it wants to be? So here is one commenter, illustrating well how far some people will go in trying to avoid Glover's conclusion:

The difference between the libertarian left and the libertarian right is that the former recognises that the freedom of one person to make and spend money invariably involves the exploitation of others somewhere down the line. (src)

'Invariably' is a mighty strong word. Adding 'somewhere down the line' may make it easier to find 'exploitation', but at the cost of rendering it practically impossible to see how we could even begin to resolve it. We'd need to be sorting out 'injustices' from pre-history. And so his entire case is made to rest on the impossibility of a non-exploitative economic relationship, which is a very unstable position. The 'libertarian right' position is far more stable, in that it can acknowledge the existence of exploitation — e.g., slavery — without insisting on the non-existence of non-exploitation.

Equality, apart from in very specific areas like equality before the law, seems to me to give a pretty poor showing as a political concept: worse than useless in its strong forms, and impractical in its weak ones. Hence the left's drift to about the best that can be said towards any such concept: 'Try to moderate the extremes of inequality'. It's not catchy, but at least it's honest.

Zero-sum fallacy back again

Alex Massie is always a very sane read on immigration. Certainly, he is more sane than most of the Spectator's staff writers! I commend this blogpost of his to you (link), particularly for his rather cunning observation that an 'anti-immigration voter' should vote for Labour, because sending the economy down the tubes would do more to dry up the flow of immigrants than any amount of borders agency staff.

However, I dedicate the remainder of this post to Sir Graphus, who commented on his post to say, in part,

Your market forces theory works, but immigration will only stop when Britain is a worse dump than the place the immigrants wish to leave. So until Tooting is a less desirable place to live than downtown Karachi, or Somalia, the immigrants will still come. There are many non-racists who would like immigration to stop before this point.

Of course, this would be a legitimate objection if it were true. I would not wish to call anyone with this concern a racist. However, I would happily describe them as misinformed.

Firstly, Britain does not need to be 'worse' than Karachi, only (at the outer limit) as bad as Karachi. There's no point going through the upheaval of moving continents to end up in exactly the same position as you started.

Secondly, consider the place of frictional costs. Coming to the UK from Pakistan, say, costs quite a bit of money: it is a sizeable investment for an immigrant. Hence, the UK has to be sufficiently better to warrant the outlay.

Thirdly, let us assume for the sake of argument — and I don't accept this as a general proposition — that immigration has a negative effect on the UK. It still improves the immigrant's former community as they earn money to send home. That extra value enters the local economy, and is often invested in businesses and so on, making that local economy less unattractive to potential emigrants.

The truth, of course, is that immigration benefits everyone: the emigrant and his employers benefit, and through those, both communities benefit. It is not zero-sum, although I hope and believe that free movement of labour will help to close the gap between the UK and poorer countries without dragging either of us down.

I'd just like to add, on the basis of the fact that we didn't restrict immigration in the nineteenth century and liberals opposed restrictions, that it is both liberal and conservative to oppose border controls. Stick that in your nationalistic pipe and smoke it.

School choice at work in Harlem

Here's a video about a charter school, very similar to the KIPP school I mentioned yesterday. Based in Harlem, serves mostly poorer black families, extremely popular and highly-regarded, located near schools which parents frankly appear to despise… The power of school choice for parents is obvious.

Here's the report, and alink for any interested Facebook readers.

(Via LPUK blog.)

Shocking opinion poll

Will wonders never cease. Apparently, nine in ten Tory prospective parliamentary candidates (which means non-incumbents, folks) are in favour of rectifying the deficit through spending cuts rather than tax rises (1, 2, 3). Gosh, they'll be telling us the Greens are in favour of environmentalism next. Why Liberal Conspiracy is getting its knickers in a twist about the shock news that Conservatives are Conservatives is rather beyond me.

Other shock results include that one in five backing the re-introduction of the death penalty — not hanging specifically — and ninety percent favour a cap on immigration. Neither is very surprising, and neither agrees with me. The death penalty result is, it has to be said, a lower proportion than the British public. The proportion of US presidents, former and current, who are in favour is quite high, including one in one incumbents, so that doesn't prove an awful lot. The immigration result is also an unsurprising reflection of a rather nasty public attitude towards migrant workers. Here's a Wikipedia on the first time the UK tried to regulate immigration (link), and a nice little quote:

Liberals generally opposed restrictions, which were favoured by trade unions.

Quelle surprise!

Overall, for better or worse, Damian Thompson's conclusion, from the third link above, sounds about right:

Gay-friendly Eurosceptics who want to cut the public sector, curb immigration and are sick of Green social engineering? Sounds like a pretty good description of public opinion to me.

Mill on free schooling

Whether you call them free schools, Swedish schools or charter schools, here's Mill on what is and is not the proper role of government with regard to a child's formation:

If the government would make up its mind to require for every child a good education, it might save itself the trouble of providing one. It might leave to parents to obtain the education where and how they pleased, and content itself with helping to pay the school fees of the poorer classes of children, and defraying the entire school expenses of those who have no one else to pay for them. (On Liberty, Ch. V; src)

The State doesn't need to get itself into the messy business of providing education: it just needs to pay for it. Of course, it will want to know that the education is proper, but minimum standards will give a certain level of assurance, and parental interest is able to pick up a lot of the slack. The problem with schools in poorer areas isn't, generally, a lack of parental interest in their children's education, as experiments with this kind of schooling have shown in America, where as Rachel Wolf says in an article on ConHome, charter schools have improved results for poor black children in deprived urban areas (src). The example she gives is the KIPP schools, which are run through a charitable foundation set up by a couple of teachers and now spread across the States. The difference between the specific KIPP school she mentions, located atop a state school, and the school hosting it could not be starker.

Mill goes on to talk not just about getting an effective education, but about the dangers of letting the State control education more generally.

The objections which are urged with reason against State education, do not apply to the enforcement of education by the State, but to the State's taking upon itself to direct that education: which is a totally different thing. That the whole or any large part of the education of the people should be in State hands, I go as far as any one in deprecating. All that has been said of the importance of individuality of character, and diversity in opinions and modes of conduct, involves, as of the same unspeakable importance, diversity of education. A general State education is a mere contrivance for moulding people to be exactly like one another: and as the mould in which it casts them is that which pleases the predominant power in the government, whether this be a monarch, a priesthood, an aristocracy, or the majority of the existing generation, in proportion as it is efficient and successful, it establishes a despotism over the mind, leading by natural tendency to one over the body.

As Loyola famously said, give me the child and I'll give you the man. Appeals to a democratic will as justifying the State's overweening influence on education are not valid, as Mill points out, since it would still cast children in a mould acceptable to 'the majority of the existing generation'. Children should be free to flourish in their own way, and the people who are best placed to see that are parents and teachers. Leave politicians out of education!

Central planning and central control were rejected by Mill in the nineteenth century; they were enthusiastically embraced by politicians in the twentieth century; might we see them come to be more widely rejected in the twenty-first century?

Grieve on Tory civil liberties policy

Of the two chief Home Office shadows, Chris Grayling scares the living daylights out of me. The man's a menace to all free men and women everywhere. On the rare occasions that he actually remembers that we do still have some civil liberties in the United Kingdom, it's because Tory party policy requires that as a logical first step. The rest of the time, he gives the impression he'd happily lock the lot of us up just to keep the country quiet.

On the other hand, I'd vote for Dominic Grieve any day of the week. He's a lawyer, which isn't always a point in a politician's favour, but he's actually got a bit of humanity and is clearly a liberal, as this video shows. It would appear that he hasn't yet conclusively won the argument for his repeals bill, but I'm hoping he does: a Tory manifesto list of bad Labour laws they would repeal would be a sight to behold. I believe the Lib Dems may be doing something similar (src), so an arms race towards civil liberties (for once!) would be an extremely positive step.

I would add another desideratum. A promise to roll back the frontiers of state surveillance and not to allow the state to advance against us would also be very welcome. Policies like ID cards are a long-term Home Office plot against the public, and not merely the property of one party. Nevertheless, what Grieve offers is attractive. Whether Grayling is a price worth paying, now there's another matter…

Gove commits to scrapping Badman

Michael Gove did a web chat with TimesOnline readers today, and the following exchange took place (src) between Gove and 'Naomi'.

Home educators have no faith in government , after being treated so badly by Labour. How can that be rectified?

Dear Naomi
I think home educators do a wonderful job - they give up time and sacrifice so much for their children - Government should support them and we won't allow the current Government's plans to stigmatise home educators to get through

Thank you ,but can you promise us that clause 26/27 of csf bill will never be law?

Dear Naomi
yes

Thank you!!! From thousands of home educators throughout England :-)

It is highly unlikely that the government will succeed in getting its education bill through Parliament in time, but on the off-chance that they do, I can only take it that this means Michael Gove is committed to scrapping the relevant sections of the legislation, which give effect to Badman's pernicious recommendations, if he becomes the Schools Secretary. Home educators' vote is quite clear, if they want to make sure that this dreadful proposal doesn't get returned to after the election.

[EDIT: Let me be absolutely clear. There may be some recommendations of Badman which were not pernicious. Gove is committed to scrapping the mandatory register and 'safeguarding inspections' and all of that malarkey.]

When is a status symbol not a status symbol?

Paul Daniels is better than some of the Telegraph's celebrity interviewees when it comes to handling money, but here he is on his relationship with cars:

In my younger days I threw caution to the wind when it came to cars and I regret that now. I bought some expensive Ferraris and Bentleys, but I got rid of my last Bentley four years ago. It cost me around £150,000 in 2001 and I sold it four years later for around £30,000. A fabulous touring car, but what a waste of money. I don't need status symbols anymore so I drive a Prius. (src)

He doesn't need status symbols, so he has a Prius. Talk about a lack of self-awareness: he even makes sure to tell us all that he has a Prius.

The Prius is a status symbol: all that has changed is what status is being symbolised. The new status is environmental awareness, and the Prius is normally just that: a symbol, not the status itself. It is, if you will, a social fiction.

The well-to-do buy a Prius to show their friends and something a little better for actual day-to-day use. Daniels himself is performing in Hong Kong, New Zealand and LA this year. More power to him, I say, but all those air miles do rather make flashing his Prius a little silly, don't they?

Immigrants in!

Yasmin Alibhai-Brown is, let's face it, a bit of sputtering gasket. She can get it ludicrously wrong, but here's one where she nails it: If you don't want immigrants, will you then do their jobs? (link). Tonight at nine, BBC One is showing a programme which takes some unemployed white working class men and puts them into jobs which are typically taken by immigrants. Evan Davis is the presenter, and he has written a column in today's Times: Foreigners — they didn’t steal our jobs: they created them (link). This, too, is an important point about immigration which is not often enough made.

The programme sounds like it might be very illustrative. The jobs are local to the unemployed workers, so there is no great excuse for them not being able to take them. The results are somewhat unsurprising:

Half the British workers either failed to show up or turned up late on the first day. Thereafter, the tasks proved to be beyond the endurance of most of them. [Some came good, but] … most of the rest failed miserably even with kind bosses.

It reminds me in some ways of the series looking at the conditions of factory workers in the Far East which the BBC ran last summer (link). That put a handful of mostly middle-class British young people onto a succession of rice paddies, fishing boats and factories, to show how hard life is for people working in the industries which supply our food. They struggled and one broke, but with that exception they eventually pulled through, and came to appreciate a little better the place that the developing world has in our economy.

The key difference, if Alibhai-Brown's summary is accurate, is that of those taken from the white working classes, most do not come good. By contrast, the immigrants are willing to work hard, and Alibhai-Brown makes the same point in her column. Immigrants have taken the initiative to look for work overseas and they have taken the initiative to seek a better life overseas: it is not obvious that the eagerness to work should be less among those who have come here with the express intention of gaining for themselves a better life than among those who were born here and are entitled to fall back on a safety net.

The conditions these immigrants come from must be quite grim, if they are willing to do our dirty, back-breaking jobs instead of staying in their home countries. I fail to see why we should start bashing them for problems of our own creation: the benefits trap, the lack of opportunity to improve skills, and unreconstructed public services being chief among them.

It always strikes me as strange how we can pat ourselves on the back in the UK for being so charitable towards the developing world with our aid budget and our giving, and yet demand the closure of our borders to their immigrants who seek to earn money and to improve their skills here. What sort of kindness is it to deny people the opportunities to enrich themselves, and then to toss them a few scraps to salve our consciences?

Oh, Polly!

She was going so well, but then she went and ruined it. She managed to be fabulously even-handed at the beginning of her column. I have condensed a few paragraphs here, but they are a reasonable summary:

Everyone is for "fairness". The winner of the timeless tug-of-war between the parties is the one who best captures the spirit of "fairness" in their time.

Sometimes the centre of gravity pulls leftwards: sharing more fairly, we all do better morally and economically. But after years of a Labour government, the tug pulls in the other direction: goodness resides in individual endeavour, not to be outsourced to the state. (src)

But then we get to the end, and the old Toynbee shows through:

politicians need to be sure to appeal to both halves of the contradictory human brain – what the religious traditionally mythologise as the internal tug between a pro-social God and a pro-individual Satan.

Politicians neglect either at their peril. The left appeals more loftily to the higher impulse, but loses whenever it forgets to throw something to the lower beast too: many would say New Labour gave away far too much to the old devil.

Methinks the head of the Humanist Association Toynbee is imposing her politics on religious believers who are quite frequently to be numbered on the right. One could just as easily say that God is in favour of individuals — after all, he made us individuals — and it is the devil who favours collectivised control.

Something not far off this line of reasoning is what that reactionary bigot CS Lewis had in mind when he wrote, 'Aristotle said that some people were only fit to be slaves. I do not contradict him. But I reject slavery because I see no men fit to be masters.' He also wrote that if Christianity is true, then (liberal) democracy is better than dictatorship because the individual will last forever and therefore has more value than the State.

It is therefore telling that Toynbee ignores the rather more obvious issue in her politics: freedom. The libertarian and libertarian-ish will say that fairness and freedom align pretty well, whereas the left all insist, in various ways and to various extents, that freedom has to be curtailed in order to procure fairness, or that freedom means something different from what those on the right mean. What freedom and fairness are, their relative values and the way they interact have to be a part of one's political reflection, quite possibly as well as other matters. By focussing only on the question of fairness, Toynbee necessarily restricts her perspective. There are yet more things in heaven and earth (or even politics) than are dreamt of in her philosophy.

On taking a second look at Labour

So, how many of these Labour campaigns can you remember? And, er, how many have had the remotest effect?

(Credit: Bill Quango MP, link)

A political proverb

I'm sore tempted to make Proverbs 18:2 my new blog motto, but here's an observation appropriate to today's news:

The one who states his case first seems right,
until the other comes and examines him. (Prov. 18:17, src)

Last night, I heard about the National Bullying Helpline's unexpected intervention in the great debate (src): his detractors say he's a bully, his supporters say he's just obnoxious. Mandelson, of course, called him something close to a bully when he was out of government and is now telling us he's merely a very passionate individual.

A stony-faced Brown all but admitted that there had been allegations of thrown mobile phones at a very raucous PMQs last May, where he was skewered by a Conservative MP:

In other words, there have been very real questions about Brown's behaviour and those questions, while not directly substantiated, have an awful lot of circumstantial evidence behind them. Politically, that is a very dangerous place to be: a credible denial is not possible, while confirmation would cause an almighty problem.

In that context, the intervention of the head of the National Bullying Helpline was surprising for its happening, although less so for its content. That was last night.

This morning, we find out that the charity is linked — possibly not improperly — to a consultancy which does commercial work in the same area, as the charity's executive director is, with her husband, the head of the company. Hence the proverb. Labour, of course, has been using this to its advantage, whatever the actualité. The story is fast turning into a rat's nest, although the overall impression is that the head of the charity has tried to use this story to advance her commercial interests. What a Pratt she is.

The real shame, therefore, is that the genuine questions that exist around Gordon Brown's treatment of staff — and these stories have been doing the rounds for a couple of years — are being submerged in this swamp of who said what and whose interests are being served. The people whose interests are most directly affected, the staff at Number Ten, are ignored by the Westminster circus, and yet they are the ones, if any, with the real grievance. It seems unlikely that CCHQ put the NBH up to this; their own interests are enough of an incentive. Instead, focus on the real story, which is whether the Prime Minister is fit to run the government.

Religious freedom in China?

OMF, a mission agency which grew out of the nineteenth century missionary Hudson Taylor's China Inland Mission, reports on the developing Chinese attitude to religious freedom (link). China Daily is the official English-language news paper of the People's Republic and as you might expect, the Chinese authorities take a very close interest its content. So it is something of a surprise that the newspaper carried, in December '09, an interview with a Chinese academic with a long-standing expertise in the way the Chinese authorities administer religious affairs (link).

Both the mission agency's write-up and the original interview are worth reading; the headline of the latter is particularly informative: 'Rule of law best help to freedom of faith'. Liu explicitly compares religious freedom to economic freedom, and says that religious bodies should be allowed to operate freely, with the government only stepping in when something illegal happens. He goes further, noting that the constitution mandates the protection of 'normal' religious activities and saying that every legal expert he has consulted agrees that 'normal' here ought to be taken to mean 'legal' rather than 'state-sanctioned', and that therefore the constitution ought, at some point, to change in reflection.

Liu tells China Daily that by his estimate the 'house churches' (extralegally-organised churches, almost exclusively Protestant, wiki) count some fifty million members; OMF adds that with twenty million or so in the official Protestant church, that makes some seventy million Protestant Christians in China. There are thus more Protestants in China than people living in the UK.

The article closes with what are probably customary quotations from leading Communist party figures, illustrating (whether deliberately or not) the distance yet to travel: a quote from President Hu Jintao a couple of years ago shows him insisting that the leadership 'need to unite religious figures and believers around the Party and the government', and a more recent one from Premier Wen Jiabao saying something broadly similar (in fact, almost a verbatim repetition of another comment of President Hu's). Certainly, there is a long way to go, but the fact that a Chinese expert is talking constructively about his disagreements with official government policy, and that he is able to discuss increasing freedom for religious believers, are very good signs.

I have said it before and I stand by it: I do not believe China will grow to be a great superpower without increasing freedom for its citizens. Ultimately, either the economic power which is driving forward growth will stimulate increasing freedom and China will become the superpower we all foresee, or else social clampdown will repress the economic growth and China will implode. This is another example of the economic freedom stimulating, by various mechanisms, social freedom.

A final thought: When one considers that our own government has become increasingly meddlesome in religious institutions, laying down rules on finances and charity status and attempting to control recruitment practices, it is interesting to see that the Chinese authorities may just be starting to talk about giving churches, mosques, temples and others more space to operate freely.

BBC abandons journalism

The BBC reports, 'Police arrest 395 in Greater Manchester alcohol blitz' (src). The only problem? Parts of this story have been pulled straight from the police press release. I can tell you that without even reading the release, as the caption to the photograph uses a phrase which can only have come out of the police's euphemism phrasebook: for 'metal detectors', they have put 'safety arches'. Anyone looking at that and coming up with their own phrase would use the former; only someone with something to hide would think of the latter.

Journalists — to some of whom plagiarism is practically a way of life — nabbed from the Quakers the maxim, 'to speak truth to power'. As maxims go, it is quite a good one for journalists. Sadly, contemporary journalists appear rarely to speak truth to power so much as to egg power on and ask why so little power is being used. Hardly the noble end to which journalists once said their profession was bent.

So it is here. The BBC churnalist has accepted blindly the police's version of events. In other circumstances, this may be a comparatively innocuous thing to have done, but here Greater Manchester Police have subjected anyone wishing to walk through the city centre to a metal detector search. They have erected internal checkpoints in the centre of one of our major cities. Twenty or more years ago this would have been a live demonstration of what it was like to live under the Soviet communist state. Now, it is twenty-first century Britain.

This story shows an invasion of their privacy without so much as suspicion of criminal intent, and methods which were last seen in the eastern sector of Berlin. When the police use their power in this way, they should be held to account by the press, not uncritically applauded for having 'kept our streets safe'. What price this safety?

There is no by-line for this story, so I don't know whom to award the accolade, but its author has merited immediate induction into the Hall of Shame. While the rest of my journalidiots thus far have earnt their place through being deficient in their education, this one has done so through being deficient in his or her vocation: the journalistic equivalent of dereliction of duty. 'Journalidiot' is the smallest gong I can award one so uncritical of police power.

(Via Libertarian Party UK, Red Rag)

aka Why I don't invest in commodities

(src: Marginal Revolution)

I'm a long-term buy-and-hold investor: over my kind of timescale, economic growth and technological development matter more than short-term supply and demand shocks. As a result, the secular trend for commodities is downwards, although there are clearly short-term upward spikes which are possible.

EDIT: This of course implies that a long-term investor makes his money from commodities not by buying and holding onto commodities, but by investing in innovative production mechanisms, as they are where the money is. Of course, you can't invest in new technologies directly, but you can invest in the companies which develop and apply innovations. So primary resource producers are a sensible part of a portfolio. (But then, we knew that already.)

Labour's new slogan

We are told that if Labour wins the election, they are promising 'A future fair for all' (src). Well, I don't know about a future fair, but there'll certainly be a leadership circus if Labour wins.

In re numerous stories

Click on the picture to make your own.

Scratching the Hoover itch

I've done this before, but hey, I have economic-historical eczema. I just can't stop itching. Thomas Byrne asks why left wing hacks refer to 'Conservative economics' as 'Hooverite' (src). Byrne even gives a direct quote from Hoover's own autobiography where he points out that he was interventionist.

The answer to his question is simple: they don't know, and don't want to know, the history. Hoover was Harding's secretary of commerce, '21–'28; Harding was the president who nipped a recession in the bud, you may recall. Hoover served in the same post under Harding's Vice President, Coolidge, who ascended the office when Harding died in '23 of a heart attack, and went on to win the subsequent election on what must have been a similar economic platform to Harding's (see graph below). Eventually, Hoover won the presidency in '29. Watch what happened to government spending through the period:

(Src: Cato Institute, via Byrne.)

Of course, it is inconvenient to the left to acknowledge that Hoover actually increased government spending from the moment he stepped into the Oval Office. It is equally difficult for them to call the policy of cuts 'Hardingite', since Harding, for all his many flaws, did stop a recession in its tracks.

Hoover's policy, on the other hand, was such a roaring success that the depression spread around the world, and was only really checked by a war economy some ten years later. For those who are murmuring that a war economy is a massively State-driven economy, I would point out that a war economy involved intense restrictions on private consumption (not recommended by Keynesians) in order to increase the propensity to save (not recommended by Keynesians) and thus to cheapen credit for the State. Yes, it was State-driven, but in completely the other direction from the way a Keynesian would drive the economy towards recovery.

Let's face it, history is not on the side of the Keynesians. Even their favourite episode doesn't prove what they'd like it to prove, and the nearest incident of a government doing what they say we shouldn't do managed to stop a recession early on. Isn't it about time we learnt the lessons of history?

Inflationary inequality

I was thinking more about the Guardian's conversion to monetarism, and their dedication to an expansionary monetary policy. It occurs to me that it is also an engine of inequality. The argument below applies, mutatis mutandis, to a contractionary monetary policy, and is not intended to argue for either expansionary or contractionary monetary policies. Indeed, I think it best for us to pursue neither.

Real assets — for these purposes including houses, commodities, equity in businesses, you might even count index-linked bonds — are hedged, at least to some degree, against inflation. People who have debts will find that inflation erodes the value of their debt. By the same token, cash and savings have their value eroded by inflation.

Since we do not all have the same asset profile, some people will necessarily lose out and others will gain. It is not even a matter of personal net worth. Some wealthy people are financially in debt with lots of real assets (property nuts and businesspeople, for example): they will be better off. Some wealthy people hold mostly financial assets (pensioners!): they will be worse off. Within wealth groupings, the effects are unequal; between wealth groupings, the magnitude of the effects alters (smaller amounts of money are affected less in absolute terms) but the potential for differentials does not.

Thus inequalities are created by monetary policy. Wealth is taken from those with financial assets and distributed to those with financial debts. (The people who receive the new money also receive some of the wealth.) Note that the larger the financial asset or debt, the greater the effect. Hence, the biggest losers can be the financially wealthy, but the biggest gainers are the real-asset wealthy. This is not about transferring money form the poor to the wealthy, but about transferring from people with one asset profile to people with another asset profile.

I imagine there are studies on this: the effects of monetary policy on on the wealth Gini. I'm guessing that the effects at the upper level probably wash out, while the heavily-indebted are given a break with inflation; so probably Gini is inversely correlated with expansionism [1]. Nevertheless, monetary policy's scattershot redistribution surely must give pause for thought to anyone who thinks that the State ought not to treat people unequally simply because the way they have arranged their personal assets is different.

[1] Here is a paper which says my conclusion is right, although note that inflation is bad for inequality in the long-term (link).

Newsround, 18-Feb-10

The Falklands (BBC): I know we don't really want to escalate the situation unnecessarily, but it might be a sensible time to start planning a surprise goodwill visit by the military: reinforcing the goodwill already stationed there, of course.

Incidentally, the iBall team did one of their customarily quirky investment reviews of the company which is at the centre of the latest developments, Desire Petroleum. You can watch it at this link.

Elderly social care (BBC): It was not a little depressing listening the discussion about this story last week. The two left-wing parties kept telling us that this is so important we need to have a political consensus. I disagree. If something is really important, then the voters deserve a chance to have their say, rather than the parties colluding to offer a single policy which we cannot change. It is profoundly anti-democratic to tell us that our political elders and betters will decide for us and there is nothing we can do about it.

This is typical of how the health-and-social-care debate goes in the UK, as it is completely riddled with 'Nanny knows best' assumptions about the proper role of government, and a sinister attempt to bully people into 'consensus' rather than to engage in vigorous, open debate. We might expect that kind of assumption from some of the unreconstructed parts of Labour, but not even the Tory spokesmen can get shot of it, and as for the Liberal Democrats trying to engage in closed-door discussions which are neither liberal nor democratic, the less said the better.

Guardian columnist irrationally fears money!

In other shock news, dog discovered to have inflicted dental wounding on man, and analysis on woodland faecal matter reveals some to be of ursine origin.

The Guardianista is Tom Clark, who describes the Lib Dem/Tory policy of school choice coupled with the 'pupil premium' thus:

if it will make a difference, it will do so through market mechanisms that will upset parts of the party – the theory goes that money chases the individual pupil out of bad schools, and into the good ones, leaving the bad to shut down. (src)

The killer is the extremely active verb, which reveals practically everything about the Guardian-columnist mindset: money chases people. It doesn't follow the child as they (and/or their parents) make an informed choice about the child's schooling. No, it chases that child and forces the child to leave a bad school and go to a good one. It is not a passive thing to be used by its owner as they see fit: rather, money is a malevolently active commodity, harassing innocent schoolchildren into changing schools. Who knows what kind of wickednesses money, left untrammelled by human responsibility, can wreak?

I know the love of money is the root of all kinds of evil, but this kind of misargury (sp.?) is equally nuts. People do bad things with money and we do good things with money: we use it to bribe and cheat, and we also use it to build modern civilisation. I think we can do without the insidious use of language about chasing schoolchildren.

A brief note about the political thrust of the article as well. Clark is looking at Clegg's shopping list of policies which they would demand in exchange for supporting a minority government in matters of confidence, and he has picked on the pupil premium which is already Tory policy and claims that this 'proves' Clegg is only really prepared to talk to Cameron. Funnily enough, if you listen to Tories discussing Clegg's list, they focus on electoral reform and say it shows he is only serious about talking to Labour. I find neither side wholly convincing, but the Tories are more so than Clark, since there is nothing in Clegg's list to which Labour has declared itself opposed on absolute principle. It's not about what Clegg's potential partners have already said they'll do, but what they've said they'll never do. On that basis, Labour stands a better chance, although Brown's scalp is pretty much certain to be a part of any such deal. I can't see the Lib Dems surviving the public perception that they had kept Brown in office for as much as a nanosecond.

In a related story, the Guardian reports the saddening news that savers are being screwed by inflation (src). This is the same newspaper which has consistently taken an inflationist attitude to our economic situation, and argued that inflation is good because it makes debts worth less in real terms. The flip-side, of course, is that it makes savings worth less in real terms, since what is a savings account to you and me is transferred on by banks as a mortgage or a business loan elsewhere. Hypocritical, the Guardian?

Consistency is for wimps

I was thinking about this 21-hour week thing (at the moment I'm having to do my best to put in far, far more than that in order to write up a PhD: would they stop that, too?) and remembered that another of nef's insane ideas is to stop all economic growth.

There are two ways working hours can be cut. The first is through economic growth. As we get richer, we exchange some of those riches for leisure time. Different societies do this to different extents: the US and Korea have done less of it, and Europe more. If you want to get more leisure time for workers through this route, then you have to be aggressively pro-growth. But nef has already said it doesn't want to see economic growth: to be consistent with their own ideas, we are not allowed to get richer and use the increased wealth to increase leisure time.

Moreover, if you take this economic line that growth will give us more leisure, then you cannot put either a scale or a timetable to it. It will be whatever people make of it. Moreover, it is difficult to argue any sort of moral case for a given length of working week: it is simply a matter of choice, and of negotiation between employers and employees. The unthinking-tank, however, does present a moral case, asserting that it will be good for the climate, and families, and society.

So as much as they protest that they are not proposing imposed change, they must be doing so. If you read the detail you find out that this is true: they want to increase the minimum wage, which will result in some people having a lot of free time; to increase taxation and redistribution, which will have a similar effect; to incentivise different working patterns, which will screw up the efficiency of labour employment; and to 'standardise' working hours, which is straight down-the-line coercion.

Let us consider the broad sweep consequences of this kind of wages and hours policy. If you want some level of imposition on the working week, then you would be forcing people to work less than they might want to. In consequence, there would be fewer goods and services produced and consumed: we would be poorer. This effect is already with us through the working time directive (the forty-eight hour week), although I would guess that it is not very significant, especially given the UK's opt-out (long may it remain!). Certainly, restricting weekly hours to forty-eight would not do anywhere near as much damage as restricting them to twenty-one.

So in conclusion, nef wants to make us all poorer. That's the only consistent conclusion one can draw from their reports. How can we get journalists to start asking them how much poorer their barmy proposals will make us?

Cameron's TED talk

David Cameron spoke at TED recently, and while it wasn't unpublicised, coverage in traditional and new media was slimmer than it might have been because publication of the video was delayed. The video is now out and available to watch. For all the political hiccups and the difficulties over the past few weeks, this I think does sum up what Cameron sees in politics: using information technology to give individual citizens real control over their use of public services and genuine choices, and forcing government into greater openness and accountability.

Does this mean that he is consistent? No, his centralising control of the Tories suggests not.
Does it mean that he has the rest of his party with him? Not all of them, no, although he will get support in this from some unlikely quarters.
Does it mean, assuming a Conservative win, that his ideas will survive a first encounter with the enemy (aka the Civil Service)? No, I expect that the civil servants will immediately start breaking up projects into £24,999 chunks, and power can have a dehumanising effect on even the most liberal of ministers.

However, for all that I do think that Cameron 'gets' the idea of how information technology can change things. They say that if you can fake sincerity you have it made, but he was speaking without notes, and appears to have quite a clear view of where we have come from and where he thinks we ought to be going.

If the Tories get into government, I will still be a member of the loyal opposition. I can only give half a cheer for the Tory 'libertarian paternalism' Cameron references in his talk: the half a cheer is because Labour believes we should have no choice, while the Tories want to structure our choices, which is only half a glass. Nevertheless, I think that it is fair to say that, most often, they will need opposing because they have drifted from the agenda Cameron set out in this talk.

It's fourteen minutes, and it is recommended watching for anyone who is interested in the interface between technology and politics. (I've been having problems getting this to play, so here's a link just in case.)

(Thanks: James Forsyth at Spectator Coffee House.)

Social conservatism and the Labour party

There was an interesting discussion about a possible shift among evangelical Christians in their political allegiance at John H's blog over the weekend (link). One of the facts I 'prayed in aid' was that Labour has had a history of social conservatism (and that is personal conservatism, not moral authoritarianism). I would say that stems from its roots in the chapels, especially in Wales. As someone once commented, the Labour party owed 'more to Methodism than to Marx.' Here is another piece of evidence supporting my thesis that the Harman agenda is something of an aberration when it comes to Labour's history and profile:

For all that Labour have been accused of undermining the institution of marriage by allowing civil partnerships for gay couples, their voters are in fact the most likely to be married, with 56 per cent having tied the knot, and the least likely to be co-habiting outside of marriage, at just 12 per cent. (src)

I think the party is out of step with its electorate in a number of ways. Whether this is enough to propel Labour voters away from Labour is another matter: being married doesn't necessarily make one supportive of recognising marriage in the taxation system, or make one think that coshing single parents is a good idea. But it does make me wonder whether Labour is hæmorrhaging goodwill. If it is perceived as not caring about even the people who vote for it, then it starts to lose its credibility as people ask what the party is really for. It could be as long a wilderness for the red corner as it has been for the blue corner, before they make themselves electable again.

Stossel on crony capitalism

The UK is not immune to this sort of thing. It may not be big business, but don't forget that the trade unions have very close links to certain government ministers, and how many directorships have former ministers been picking up? Even if we don't think that politicians are directly corrupt, government aid for business ends up going to those with loud voices and political clout, rather than those with a good business case.

(link)

Big government just loves big business: it's so much easier to deal with. And big business just loves big government: it keeps nimbler, smaller rivals at bay without their having to sully themselves with anything so dirty as being competitive.

And it's not like governments lack mechanisms for creating big businesses. (Note, I'm not saying that big businesses are the sole creation of government.) Practically anyone winning a succession of contracts from central government is going to grow fairly large, relative to the competition at least. Regulations tend to cut into small companies more harshly than big ones, unless governments specifically act to avoid this. Governments will always offer disproportionately large bale-outs to, and work disproportionately hard to avoid the bankruptcies of, large companies like car manufacturers and banks.

People often complain that capitalism isn't on the side of the little guy, but I think what they're missing is that the real damage is done by a collusion between business and government. Big business and big government: they're as thick as thieves.

(Thanks: Don Boudreaux.)

Mediæval messages

This is the sort of thing we would miss out on if we lose palæography. An historically highly interesting message dating from the Middle Ages has been dug up and the text deciphered. Here it is:

Richard I, by the grace of God, august King of England, sends his most kind greetings.

Because I know that you especially desire to hear from me and to learn the state of my prosperity, I think it fitting to first tell you of this. Due to our most precarious state, I ask that you maintain the utmost secrecy regarding this sensitive correspondence.

I have hidden in France a large sum of foreign gold worth at least 300,000 pounds silver. Regretfully, I find myself unable to convey this wealth back to England. To be brief, I have been imprisoned in Germany due to a hostile regime. In addition to the indignity of false imprisonment, Henry VI has demanded an unreasonably cruel ransom of 65,000 pounds silver.

Therefore, I offer the following arrangement. If you will send the ransom of 65,000 pounds silver to Henry VI, on my release I shall procure the aforementioned gold. On our return to England, you shall receive one half of the foreign gold I carry. Let my seal on this letter be proof of my honesty in this matter. Once more, I would entreat you to maintain the secrecy of this matter to better ensure that we return with the gold without interference.

In brief therefore, God willing, I shall return to England. I render to you the gratitude which you deserve for the very great fidelity which you have shown to me. And with the full intention of worthily rewarding your services, I ask you to continue the same.

Rumours that it was postcoded NRI CDXV are apparently unfounded.

Thanks: squiffy at the Motley Fool forum.
UPDATE: Thanks also to the original source, who requested that I post this link to his original. Request gladly granted.

Short housing

Also known a bungalow. Ba-dum-ching. I'm here all week.

The Times reports, 'RBS will let investors bet on property falls' (link). It's actually been possible to do this through spread-betting for some time already. Perhaps I'm missing something, though, because I don't see the economic benefit in terms of the housing market. (There is always an economic benefit in offering goods and services which consumers want; my question is whether this one will help the housing market.)

Some economists have noted that one of the problems with the housing market is that it is not possible to go 'short' housing. That is, in the stock market you can borrow someone else's stock and then sell it. In addition to paying them 'rent' for the stock, you also promise to pay them their dividends, and basically ensure that they don't notice the difference in terms of cashflow. You hope to make your money by buying the stock back at a later date and a cheaper price. This process goes towards making the market more liquid and more efficient, and provides a kind of elegant balance between buyers and sellers. It also relies purely on the existence of a market in the underlying: you don't need to create products to go short (although institutions have done so, to make the process simpler for retail speculators).

In housing, you can't do that: who ever heard of borrowing someone's house and selling it again! It doesn't make sense. So unless I'm missing something, this will be a help to people who want to hedge their exposure to house prices (for some reason), but it is not going to do anything to make the housing market more efficient. The only way around that one, I'm afraid, is to reform planning. We could do worse than adopt CentreForum's proposal for a mechanism which would recoup some of the return from planning permission for local communities (link).

My closet class warrior

I think I probably qualify as middle class [1], but honestly, there are times when I think I'd sooner not. Here, for example, is a snippet from an unutterably jejune, middle class Telegraph article about a baby who has started to walk aged six months:

Mrs King, from Cambridge, said of her first child: "Xavier is more advanced than most babies his age." (src)

How middle class can you get? Pretentious baby names, the stupid obsession with trying to get your three-month old into the BBC Philharmonic, Cambridge: it could only be worse if the infant had learnt to use the Ocado website, or had taken up organic farming. It's funny: politics is almost certainly not going to make me into any sort of champion of the proletariat against the bourgeoisie, but face me with a metropolitan middle class professional with mandatory baby in tow (probably called Chrysanthemum, and already having won a scholarship to Harvard) and I'll be a class traitor lining up backs against the wall in a trice.

There, I'm glad I got that off my chest.

[1] For the benefit of my American readers and any passing left-wingers, the British class system is not so crass as to be a simple mapping onto income brackets: parentage, history and culture all go into the defining of our class strata. Large amounts of mobility are entirely possible between generations, but only more mutedly within an individual.

Self-defeating Unitarianism

Unitarians give me theological dyspepsia — they are the religious version of self-righteous liberals, offensively inoffensive and devilishly pious — so it causes me no end of amusement to read the following:

All creeds and confessions restrict belief… (src)

Yes, that's a direct quotation from a document which serves as the confession of faith for the Unitarian Christian Association. Presumably, restricting belief isn't a bad thing. Or something.

They do, though, go on to say, something I can work with:

unity is to be sought, not in uniformity of creed, but in a common standard of righteousness and obedience to the commandments which Christ Himself has laid down.

I can work with the first bit, because it gives me licence to accuse them all of believing a mass of self-contradictions, and tell them that they're all idiots for trusting their own intellects over God's word. They can't complain, because that would belie their apparent unconcern with creeds, doctrines and anything remotely belief-like. I can even go along with the conclusion, since we do all attain a unity when it comes to 'the common standard of righteousness': for there is none righteous, no, not one (Rom. 3:10, src). The only problem is that Unitarians would take issue with the Apostle Paul on that point.

I never have quite worked out how they get away with calling themselves Christians.

A brief announcement

In the light of today's news, I should like to make the following announcement:

I have only voted Tory 0.1 times.

Thankyou.

Economics: it's all Greek at the Observer

Now here's an interesting mix of views, from Gary Younge in yesterday's Observer.

In October the [Greek] Socialists won elections with a clear majority, promising to make the rich pay more tax, award above inflation pay rises for government workers and provide more support for the low-paid and pensioners. Whether this was a wise choice or a sustainable set of policies is not the issue. Democracy is not predicated on the idea that voters will make good decisions but that the people have the right to make their own decisions and live with the ­consequences. The trouble is that in the eurozone the Greek electorate doesn't matter that much. (src)

Younge is willing to assign to the collective responsibilities he does not wish to give to individuals. He is happy for national electorates to bear the penalty for their own collective bad decisions, but does not wish individuals within countries to bear the penalties for their bad decisions (columns passim), preferring to impose bale-out costs on the rest of us. Liberalism — proper liberalism, not the milk-and-water version — treats the individual as an individual, rather than lumping us together in predefined groups, or pandering to special interests, or talking of 'group rights'.

Mine is the direct opposite of the sentiment found in Kerry McCarthy's twitter comment, criticising the Lib Dems for being 'focused on [the] individual, rather than [the] collective, and I'm a socialist!' (src) Given a choice between the individual and the collective, I'm on the side of the individual every day. What a thought if her electorate decide to take an individual view as well!

Yet there is more. Younge is also taking a rather fatalistic view of the European situation, as though Greece has to accept the terms and the money of any Franco-German bale-out. In truth, the country could do neither, and instead take the bitter medicine as Ireland has had to do. That is their choice.

What is not their choice, which is what I suspect Younge would prefer, is for Greece to continue to borrow like there is no tomorrow, without cost and without strings. The Greek people cannot defy economic gravity nor the consequences of their choices. One would get the impression from economically-illiterate left-wingers that the nasty old markets are responsible for Greece's woes. But no-one is forcing anyone to lend Greece money: people only do it to the extent that they are confident in Greece's ability to repay. If Greece is struggling, then they only have themselves to blame. And if they want to get money from some other source, like France and Germany, then they have to expect that those countries will equally want to ensure that they get a reasonable deal, whatever 'a reasonable deal' means for those two countries. (A firmer commitment to the Eurozone's stability strikes me as one of the things they may be seeking.)

Younge may say that Greece should bear its own consequences, but one of the consequences of being heavily in debt is, as was observed thousands of years ago,

The rich rules over the poor, and the borrower is the slave of the lender. (Prov. 22:7, src)

It's never nice, and sometimes it's not even fair: the studiously even-handed presentation makes it clear that the proverb's author is not condoning either indebtedness or its sad consequences. It's certainly not very fair for Greeks who have been careful with their own money and have not voted for profligacy, but they have clearly been a minority. For the majority, what else can they expect who have been voting for governments which refuse to deal with indebtedness? Greece chose to enter the Euro. Greece chose to cook its books. Greece chose to pay itself more than it earnt. And, to quote another verse of Scripture, having sown the wind, Greece is reaping the whirlwind.

That nef 'think-and-do' tank

I was contemplating the nef's name. They call themselves the new economics foundation and a 'think-and-do' tank (src). Well, their proposals are generally not new. Whatever they say they're up to, it's certainly not good economics. There's precious little thought going on. And I bet they're not doing what they tell the rest of us we ought to do, like working twenty-one hour weeks. Is there a case under Trade Descriptions?

nef strikes again

The new economics foundation has a brilliant idea: let's all work 21-hour weeks (link). Genius, except for a small number of teensy problems.

Firstly, does this allow for overtime? Secondly, people on hourly wages won't have their rate increased, so they have just been given a mandatory pay cut of 50% (this will also go through for salaried workers, but the mechanism is slightly different). Thirdly, the self-employed get to work as many or as few hours as they like, thus earning as much as they wish: why bar employees from, through negotiations with their employers, achieving something similar? Fourthly, professionals work far more hours than their contractual hours, as I know from working in a university. Fifthly, hospitals and many schools only survive because their professionals work far longer than twenty-one hours: what will become of the health service and education? Sixthly, the lump of labour fallacy (wiki), about which one might have expected a self-described economics group to have known. Seventhly, the French experience with a simple 10% cut is not universally positive. Eighthly, laws to restrict people's working patterns are illiberal; we need the law to put employees in a position to refuse demands, rather than the law refusing negotiations on their behalf. Ninthly, technology and capital investment have been the main driver behind the reduction in the industrial working week by a factor of fifty percent from 1840 until now: why use the law to make us all poorer, instead of investment to make us all richer?

Bryan Caplan commented — my summary! — that crazy libertarians exist to make moderate libertarians look sane (src). Is this the function of nef with regard to the left wing? Because otherwise, I can say this with confidence: it would be no great loss to society if nef cut its working week to twenty-one hours. The corresponding fifty percent decrease in the output of vapid and insane policy papers which merely serve to embarrass the sensible and thoughtful side of the political left-wing would be a gain to us all.

Critical thinking required

About this 'Robin Hood tax' (stealing from businessmen and giving to the government). Frequently, one sees comments from people who say, effectively, 'I don't know about all this economics stuff, but they say it'll help poor people and I'm all for it.'

I've got a newsflash. Just because they say it'll help poor people doesn't mean it will. I could say giving me all your money would help poor people. Well, it would help me, and it's odds-on I'm poorer than you. But there's no reason to believe that I'll use it to help poor people.

Likewise with these campaigners: so what if they say it will help poor people? You could raise any tax and give it to the poor, and you could use this money to do anything, including buying a few new duck houses. The fact is that you cannot justify any tax by reference to what you will spend the money on: the source of revenue and its destination do not alter the moral or ethical status of each other.

Stephen Colbert defined-or-popularised the term 'truthiness', meaning intuitive 'knowledge' in the absence of facts or evidence (wiki), and used it brilliantly to skewer some of Bush's more — how to put it? — emotionally-driven ideas. Here's a video:

Video Games | | Truthiness- The Colbert Report

XBox 360 | Playstation 3 | Nintendo Wii

However, the worm turns, since here is the left using its 'gut' reaction to justify a bad policy: gumming up the capital markets, and at a time like this. (I don't want to make this unduly partisan: truthiness is a cultural disease, rather than being limited to one political stripe or another.) To justify it because 'They say it'll be good for poor people, but I don't want to think about it too hard' is absolute nonsense.

Sounding brass

There's probably about zero people who'll enjoy this, but it's tickling me. I'm looking through a hymnbook for hymn tunes written by Arthur Seymour Sullivan (him of Gilbert and Sullivan fame). The one I've got open is Praise!, which is a fairly middle-of-the-road hymnbook: modernised language and some new material, but mostly hymnic and theologically thoughtful. It also has psalms and hymns-based-on-psalms at the front, which is very good. Anyway, that's enough advertising. In the index of hymnwriters, I see 'Swann, Donald Ibrahim'. 'Eh?' I think, 'the Donald Swann?'

The hymn tune listed is called 'Flanders'. Well, it would have to be, wouldn't it.

Raising student fees without breaking the bank

Further to the comments on universities, funding and students, Philip Booth of the IEA has an article in today's Independent giving his view on how fees can be raised without causing immediate pain to students (link). Essentially, he proposes putting the extra students' fees on top of their student loan, and letting them pay them off through PAYE. This delayed payment would then be an asset for the university against which the institution could borrow, raising funds for expansion and so on. It's not a bad idea, and certainly would allow universities to vary their fees without forcing people to save up immediately.

A letter to a Tory

Dear Tory,

You ask, Would libertarians snoop on benefits cheats? (link) I'm not a libertarian, but I'm on that side of the aisle, and I think you conflate a number of things which ought not to be conflated.

Firstly, you conflate what libertarians would do with whether the policy of paying people to turn in benefits cheats is a good one. I cannot see why someone who is committed to the rule of law should be opposed to reporting criminals, and theft is a crime. Of course, one may take a more lenient view of someone who was slightly over-paid and chose not to report the discrepancy, over a harsher view of someone who systematically, knowingly and dishonestly milked the system over a number of years. Nevertheless, it is a crime, and turning in criminals is a social good.

Secondly, you conflate turning in criminals with snooping on them. It may be a breach of another's privacy to snoop on them, but what if this person is bragging locally about how they have defrauded the system? What if you come across this information without their knowledge, but nevertheless innocently? (For example, you are a welcome visitor to their house and notice an ill-health payment for someone you know to be fighting fit.) Turning in a benefits cheat is a different matter from snooping on them.

Thirdly, you conflate the civic duty to turn in criminals with the motivation by reward. People may take a different view on this, but I do not think I would change my behaviour on this matter because a reward was in the offing: I would probably claim the reward, but I hope I wouldn't be more likely to do the decent thing. Not everyone thinks this way of course, and some may well be motivated by a reward to offer up information they would otherwise have kept secret.

Fourthly, you conflate what a libertarian would do in the current circumstances with what a libertarian would do given control over the tax and benefits system. Here, people disagree a lot, but I am quite favourable towards the idea of a fairly flat rate of taxation coupled with as few basic payments as possible: preferably, only one. Every single benefit can then be rolled up in this tax-free, universal payment, and you will not get benefits traps and wildly varying marginal rates of withdrawal. The way a libertarian would behave within our current system is different from the way they would arrange the system.

You miss the fact that this is what our benefits systems will always lead to. If we have a system where people are paid on desert, then there will always be people who try to cheat that system, and there will always be a desire to stop the cheaters. Not least, those who cheat on benefits are imposing a cost on all those who work and pay taxes. Means-tested benefits systems will always lead to this kind of solution: if not people turning in their neighbours, then something like it.

Only a system which does not try to distinguish between people, such as a universal basic income, can avoid this kind of problem, as well as the high costs of administration which are brought about. For example, you don't hear much about people defrauding the basic state pension, because its administration is so easy. It consequently also costs very little to administer.

I recognise that it is very difficult to imagine moving an entire nation straight over to such a system, but I read a good speech by Sir Roger Douglas, Minister of Finance in 1980s New Zealand (wiki), in which he suggested something similar, with a dual system being run (link). (Douglas is an interesting character, having moved from being a Thatcherite Labour Finance minister to involvement in a classically liberal party, the ACT.) Then people could go from the old system, with its high taxes and high spending, into a new system, with a basic income and a lower rate of tax. (We would have to think carefully about how to let people back in again: perhaps they could opt back in but would have no entitlements for a certain period of time.) You would be expected to take more care of yourself and rely less on the State, but your taxes would be lower so it would be easier to arrange this. We can let each individual decide which system they want to live under, rather than forcing everyone to live according to the will of the majority.

Yours,

Phil

Someone help me out here

Binyam Mohammed, Will Smith. I bet you've never seen them in the same room.

Newsround, 10-Feb-10

Quantum machines, coming to a plant near you (link)

The quantum world is a bit freaky, and we think of it as being somehow rather remote from us: it's the world of the very small, the very short-lived, and very low energies. Here's an example of its freakiness. When you and I think of subatomic particles moving (every day, I'm sure), we think of billiard balls. But in the quantum world, it's more like the billiard ball spreads itself out and goes down every available route at once. Then, when it reaches its destination, the route it turns out to have taken is the most efficient one. The thing is, we always thought that this kind of behaviour died out as temperatures rose, because everything gets so much more energetic.

'Here's the science bit,' although experts should note that I'm going to wave my hands furiously. The two key constants for this question of temperature and quantum systems are Planck's constant, h (which links the 'quantum energy scale' with time), and Boltzmann's constant, k (which links energy and temperature). Their ratio is about 5×10^-11 K s, which means that we expect systems at room temperature (about 300K) to behave as quantum systems only over timescales of a mere 10^-13 s. Previously, we had thought that that was unrealistic for anything useful on a biological level. (This is the quantitative reasoning people use to oppose Penrose's view of consciousness.) It turns out that one of the processes in photosynthesis lasts only that long, so it is within the realm of quantum processes. The benefit of this is that the step is therefore able to be far more efficient than a classically-equivalent process, where electrons just barge their way across like a ball in a pinball machine.

While we're struggling to build quantum machines, nature already has shedloads of them, growing around us. Whatever your view of the provenance of those natural machines, it's a thought which should put us in our place.

A presidential leader in No 10? Bring him on (link)

Danny Finkelstein writes about the changing face of the executive branch of British government, and argues that it could be time to separate powers formally, so that the Prime Minister is elected directly, and separately from MPs. John H and I had a good discussion about Cameron's plans for Parliament yesterday (src), in which context it is interesting to read the Fink touching on a similar theme:

First, the Conservatives are going to be professional and disciplined, with a strong central political leadership, projecting a modern party and delivering on their promises. Second, they are going to restore dignity and strength to Parliament. There will be fewer MPs, but they are going to have more power and independence and more control over the agenda. And third, they are going to decentralise, providing local institutions with greater freedom and local activists with more responsibility.

The problem, of course, is that these all go in different directions.

A fringe benefit of globalisation (link)

Cheaper goods cut, or at least, alter, crime. Household burglaries are down, as DVD players and televisions are no longer such high-value hauls. Personal robberies and muggings, on the other hand, have not seen such a slump, as the high-value electronics are generally about the person, as an iPod or similar. Indeed, as everything gets more affordable, which is to say, as labour's productivity improves, there is less incentive to steal, since honest work is more remunerative. Just another example of freedom cutting crime.

Okay, so explain this one to me

We just invested spent borrowed billions propping up the banking sector. We were, quite specifically, worried about the money markets shutting down. And now someone has this great idea to put a 'tiny' tax on those markets: 0.005% of currency transactions. And they tell us it could cause activity to subside by 14% (src). Why would we want to do that, having just spent billions avoiding a similar fate?

Again, we're told that this tax is 'tiny', but we're also told it would raise $400bn, and that the profits of the entire banking sector were $800bn, which means that this 'tiny' tax on one set of the sector's activities would actually sock half the entire sector's profits. And yet its proponents tell us that it 'will not impact on personal banking or on retail banking.' Since it takes half the sector's profits away from it, and would doubtlessly throw some banks into insolvency, how can that possibly work?

They tell us they're against big business, but they want currency transactions to be forced to go through registered exchanges in order to regulate this tax. Last time I checked, the London Stock Exchange was FTSE-listed and a rather big business itself. Feeding big business is a funny way to be against big business, isn't it?

Shutting down trading in the currency market will increase the 'spread' on currency trading: the difference between the buying and selling prices. The lower the spread, the cheaper it is to change currencies. You get low spreads when traders are most active, because they're always trying to make money on the turnaround. Given that retail currency transactions are not known for their low spreads, clobbering forex traders will simply push retail spreads further out. If it really hits the markets for six, it will also make transactions slower. That will cause problems for anyone trying to do anything with a foreign currency, and especially those trying to deal in thinly-traded currencies. At a guess, that will mean most developing world currencies. Isn't it a bit silly to call this a Robin Hood tax, when its consequences will hit everyone who ever has to change money, and especially people (charities and immigrants, for example) trying to deal in developing world currencies?

If you click on either link in this post, there is a poll where you can tell them whether you think this is a good idea. (link) I endorse the answer 'No'.

(Thanks: Tim Worstall.)

How to save a Palæographer

The Today programme's closer this morning was on the developing story of the loss of the English speaking world's sole Chair in Palæography (which, as my erudite readers need no reminding, is the study of ancient documents, and is thus essential to any historical enterprise) at King's College (1, 2, 3, 4). Apparently, not many students are that interested in the bedrock of history, and as it can't pay its way, it has to go. Mary Beard reports the two dynamite quotes from the university administration (and yes, I bet they talk like this all the time):

King's aims "to create financially viable academic activity by disinvesting from areas that are at sub-critical level with no realistic prospect of extra investment", and King's will be investing "in a number of key areas where academic priorities correspond to student demand, and to Hefce/Research Council agendas". (src)

The English is certainly below the standard of Chaucer, or even McGonagall, but it is financially reasonable stuff, unless you really think King's ought to go to the wall over a single chair. Let me use this to illustrate a point I made a few days ago. The sector is utterly dominated by the State, through Hefce (student demand only matters when Hefce will stump up) and the research councils, and so universities are forced to ask, 'How high?' whenever they say, 'Jump.' If the chair were independently-endowed, as some other famous chairs are, then it would be able to survive budgetary cuts. Anyway, back to Today, because it illustrates another aspect of the financial problem.

Dr. Irving Finkel was the programme's voice 'agin'; he wants the post to stay because he thinks it's important and, more constructively, because there is a back-log of ancient manuscript work. But wait, what's this?

Dr. Irving Finkel is Assistant Keeper of Ancient Mesopotamian artefacts at the British Museum (src). Could it just be that the British Museum, along with other museums, has been enjoying getting something for nothing (or at least, something for a pittance) out of King's palæographer? If there's so much work to be done, you'd have thought that there would be the funding to ensure someone can do it: if there isn't that funding, then one can only conclude that the museums aren't willing to pay what it takes to get their work done. I don't know how palæography works, but I surmise that museums could, and should, be bearing a good proportion of the financial burden here. So, if my suggestion is right, whom ought we to blame for the impending loss of palæography: King's administration, or the skinflints at the museums?