Panem et circenses

We think it’s very nice of the Guardian’s subeditors to offer us this opportunity to point to and giggle at Polly Toynbee:

Only the BBC could give us Bake Off and Strictly. We must protect it

Polly Toynbee

Because someone, somewhere, was always going to attach that headline above to it.

Yet there’s more to this than just a giggle. For it betrays Polly’s very patrician idea of what the State is for. It is to provide the entertainments, the diversions, which stop us plebs from rising up and throttling said patricians. Rather than our view of what said State is for, which is to do those few things which both must be done and can only be done by government.

And what really grates is that at least the Romans insisted that it was the patricians that paid for the bread and circuses, Polly’s insistent that we must be charged for what she insists we must have:

If the BBC is to be truly independent, it should have written into its charter a permanent guarantee that it will always get a licence fee uprating to cover inflation – so as to keep off the interfering hands of governments, and all the threats and snarls that besiege it from Westminster.

In 100 pages, the BBC defends in detail its need to do the things heavily targeted by its enemies as ripe for selling off. But no commercial channel approaches Radio 1’s 65% new and live music, or the breadth of Radio 2’s specialist niche music. Radio 3 has depth and range but only 10% repeats, compared with unadventurous Classic FM’s 40%.

Read this document when it goes online at midday today and be amazed at what our public broadcaster does for so little cost. It’s a fine reminder of what you get for £12.13 a month,compared with Sky’s average bundle at £61 a month.

If we want it then we’ll buy it, thank you so very much, Lady Bountiful.

Why Theresa May be wrong

Theresa May’s Conference speech on Tuesday made some… strong claims about the harms of immigration, and attracted an array of excellent critiques in the media.

I want to highlight one flaw that these reactions didn’t discuss in detail. Her argument relied on a constant blurring of the difference between the volume of immigration and the size of net migration flows. The problems she highlighted with immigration fall into two categories – problems with net migration, which generalise to population growth of any kind, and problems with the level of immigration – an influx of foreigners into our society.

She talked about immigrants putting pressure on government finances and education systems. Conspicuously absent was any mention of the fact that (unlike those of us who are scroungers born-and-bred), the majority of immigrants are actually net contributors to the state. Nor did she extend her logic to the hordes of babies and children in the UK who are net burdens on government services – perhaps because, like the children of immigrants, those children will grow up and pay taxes in the future.

The main thrust of the speech, though, focused on the social impact of immigration – the difficulty of creating a ‘cohesive society’ in the face of the 641000-strong huddled masses that came to the UK in 2014. May’s treatment of empirical research on the social consequences of immigration also leaves something to be desired. (For a more nuanced review of the literature, you might be interested in James Dobson’s ASI paper The Ties That Bind).

Approximately 330000 people moved to London in 2013 (including newcomers from elsewhere in Britain, as well as abroad). This is much higher as a percentage of the population than the 485000 outsiders that came to the country as a whole, and a much larger rate of social churn than in, say, the average town in the North-East of England. And yet the collapse of the social fabric has spectacularly failed to materialise. Indeed, London’s schools are better than elsewhere in the country and improving more rapidly, and there is substantial reason to believe that immigrants have a positive influence on this trend.

No one ever seems to worry about a tide of Scots flooding in and diluting our culture, destroying our values. But are they really like us in some fundamental way that French, Spanish and Polish graduates aren’t? Is there something in the water that hardworking Nigerian cleaners have failed to absorb?

The other assumption that went unexamined in May’s speech was that immigration is ‘high.’ There is some level of immigration at which the costs begin to outweigh the benefits. But with every wave of immigration, such claims have been made. In the 1930s: “Thousands of Huguenots were assimilated, but that was over the course of decades – there’s no way the country can cope with tens of thousands of Jewish refugees!” Each time, British society has proved its resilience and tolerance. Why would there be a sudden tipping point when immigration reaches about 1% of total population? There aren’t any compelling reasons to suspect that this time will be different – which might go some way to explaining May’s failure to provide any.

In which we sympathise with a letter in the Telegraph

We find ourselves nodding in agreement at this letter:

Mr Walters said there are some benefits to being a member, but that the level of bureaucracy is a heavy burden on the state.
“If we get ourselves out of the bureaucratic nightmare Europe creates, that would be beneficial. And the amount of money spent propping up that bureaucracy. There would be no worries about an exit.”

Because of course “Europe” is a political union with people who do this:

Four French bakers have been found guilty of working too much and hit with fines after sparking national debate over their desire to stay open seven days a week.
A court in Dax, south-western France, handed €500 (£368) fines to the four from the town and nearby Saint-Paul-les-Dax saying they had flouted a 1999 prefectural order obliging any bakery to remain closed for at least one day per week.

Note that this is not about giving the staff (nor even the boss) a day off or two. This is an insistence that the actual premises must close for one day a week. Supposedly so:

Jean-Pierre Crouzet, head of the national baker’s and confectioner’s confederation backed the status quo, saying it encouraged competition by obliging people to buy bread elsewhere at least once a week.

That is, in the view of the French Bakers’ union, the French people are too stupid to understand the concept of shopping around. A problem which can only be solved by having one seventh of the country’s bread, confectionery and patisseries plant and capital inoperative on any single day.

We really are of the opinion that this is something that the market unaided can solve. And, further, should be left to solve.

The EU closes the shop again

The bureaucrats in Brussels do not care for the constructive way Britain has fostered vital, young entrepreneurial businesses and their financing.  Their latest move is to specify how small companies can use the financial support they receive.  In a free and fair market, you might imagine that SMEs should be able to use their funding in any way the funders agree.  UK Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS) legislation broadly does this.

Nanny Brussels knows better and has decided that these funds may not be used for “replacement capital”, e.g. one generation of SME owners selling out to the next, and company acquisitions. Continental countries, notably Germany, do not use the financial market so much as state handouts which you might think more reprehensible, but oh no.  If you did not know for whose benefit the EU operates, wake up now.  If there was any doubt, the Association of Investment Companies reports that the Commission has warned HM Treasury that they will be watching the UK implementation quite specifically.

Fresh financing often involves an element of replacement capital, whether the entrepreneur wishes to sell the business, or reduce his personal financial risk, or simply grow the business. Using the financial services market to grow the wider economy is precisely what the EU should want. Releasing some equity may be the only way that an entrepreneur can develop the business.

As a company grows and develops, its financial profile changes and so does that of the management team. Replacement capital is crucial for facilitating such development.

Business growth must not be limited to the organic. Sales and acquisitions are vital for a healthy market.  The weak are reinvigorated by the strong.  This is where value comes from, notably for consumers who will be short-changed by the Brussels meddling.

To differentiate between growth capital and acquisition finance is, in many instances, completely artificial. VCT and EIS finance are major sources of capital in an investee company.  Outlawing such activity, often their main source of funds, will certainly reduce growth at a time when most commentators think that growth is what the EU most needs. A company, like any organism, is constantly evolving; many grow, some shrink, but as they change, so do their finance needs develop and alter.

In the UK version of the legislation in the Draft Finance Bill 2015-2016, HM Treasury has sought to water down the prohibition through negotiation with Brussels.  Needless to say, that compromise was ineffective and does not solve the problem. We should not have to play this off the back foot anyway:  the EU’s position is simply anti-competitive.

A guest worker programme for Syria’s women

I have previously written that we should let Syrians come to work in Britain through a guest worker scheme, arguing that the effects for natives are unlikely to be very bad, and I suspect may well be positive. But how might such a scheme work?

Typically guest worker programmes are seasonal, allowing workers to migrate during harvests to work in agriculture. The UK ended its Seasonal Agricultural Workers schemes in 2013 when it was scrapped alongside work restrictions on Romanians and Bulgarians being lifted. New Zealand’s programme has supplied workers for its growing wine industry, which quadrupled in size between 2004 and 2012 (from NZ$300 million to NZ$1.2 billion).

Britain’s agriculture sector is growing less quickly, and shows less of an obvious need for new workers. But we do have a problem with high childcare costs and, perhaps relatedly, low native fertility rates leading to an older population.

So I suggest we set up a guest worker programme for Syrians to come and work in the childcare sector here. This would reduce costs – labour costs account for around 78% of total childcare costs, in part because we have such tight regulations about things like staff:child ratios compared to most other Western European countries.

But interestingly, this could have a significant knock-on effect on fertility. A paper released last year found that, by reducing childcare costs, immigrant inflows can boost the fertility rate of high-skilled native women. By reducing the cost of having children, highly-educated women are able to have more of them (and may be less inclined to leave the workforce when they do have kids.)

Virtually all childcarers – 98% of them – are women, so the visa programme could be opened to women only without distorting the existing shape of the UK labour force.

This would have the added benefit of avoiding most of the crime that people (possibly exaggeratedly) worry about immigrants causing – the UK’s male prison population is about nineteen times the size of the female one (i.e., women account for 4.6% of the prison population). Of course we could require that applicants have English language skills as well.

This would also significantly boost the incomes of Syrians back home or in refugee camps – the New Zealand guest worker programme led to per-capita income gains of 30-40% in countries like Tonga and Vanautu with per capita GDPs significantly higher than Syria’s.

I have heard objections to this that Syrian women would simply not be allowed to come by their families, which seems to me to be a misreading of the strictness of Syria’s religious culture. But even if I’m wrong and there’s not much take-up, the few people who do come would still be made better off. The main downside might be what would happen to the men in Syria if the gender ratio became significantly lopsided – an argument against doing this on a massive scale, perhaps, but not against taking an extra twenty or thirty thousand people.

A programme like this is obviously going to be limited in scope. It won’t solve the Syrian crisis, but it could be very good for the people who take part. And it would have the nice bonus of reducing costs for British families and boosting the birth rate among high-achieving British women. So what are we waiting for?