Rowan Williams falls into the old climate change logical trap

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For someone who trained as a theologian and philosopher this is rather sad: Rowan Williams has, in his retirement, fallen into an all too common logical trap in discussing climate change and what we ought to do about it. His piece is here and that trap is that while it's entirely possible to prove that climate change is a problem that we should do something about (a view largely held here at the ASI) that is not the same thing as saying that because climate change is a problem we should do anything about it. Anything here meaning not that we should do nothing, but that we end up giving credence to the more ludicrous suggestions about what we should do. This is an extremely important point and it's one that is desperately misunderstood too.

OK, so climate change is a problem and we should do something about it. Please, no, let's just take that as a starting assumption for the rest of this discussion. Excellent, does that mean we should follow Greenpeace and abolish industrial capitalism? That would be to embrace the "do anything" option and it would be ludicrous. The costs in human tragedy of starving a few billion of us as we return to an agrarian feudalism would be worse than anything that climate change could possibly foist upon us.

That is, the merits of doing whatever to deal with climate change depend not upon the merits of beating climate change but upon the merits of doing that particular thing.

And that's where this pernicious logical error comes in. That some things might or should be done to deal with climate change is, in our opinion, entirely true. But this does not then mean that every brainspasm that issues from a politician or environmentalist is worth doing due to the threat of climate change. We have to go through each and every suggested action to see whether it does make sense, or not, given the costs and benefits of that action.

The past year has seen the obstacles blocking action on climate change beginning to crumble. Opposition on scientific grounds looks pretty unpersuasive in the light of what has come from the experts on the Intergovernmental Panel on Climate Change. Their seven-year study states that they are now 95% certain that human activity is a significant and avoidable element in driving climate change around the world. Predicted changes in the climate are now being observed in the most vulnerable countries, confirming the predictive models that have been used.

The suggestion that action on this would have too great an economic cost is likewise looking increasingly shaky.

No, absolutely not. Proof that some action is required, proof even that some actions would be justifiable, is not proof that all actions are desirable or justified. It depends upon the economic cost of each action itself to determine that.

Or, to put it in a shorter and simpler manner. Just because climate change might be real it doesn't mean that the world of Caroline Lucas, George Monbiot or Bob Ward makes any sense. We're not entirely sure that a world that contains Bob Ward makes sense come to that.

Learning from history

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In the Keystone Cops comedy that is the contending parties in the Scottish Independence referendum campaign, it seems that the Scottish No team have been making all the same mistakes that Canada's No team made on Quebec independence back in 1995. True, the Quebec referendum campaign ended in a narrow No decision – but so narrow that it kept the independence issue alive and grumbling. Next week's Scottish referendum has become too close to call, but most polls are predicting a No majority - though again, one so narrow that it keeps the independence issue alive and grumbling here too.

It seems the No team have learnt nothing from Canada's experience of nearly twenty years ago. Andrew Coyne of the National Post lists the similarities:

  • The same early complacency in the No camp.
  • The same unbridled panic as the Yes side surged in the polls.
  • The same unappealing mix of threats and dubious accounting claims.
  • The same blurring of the issues (devo-max, keeping the currency).
  • A charismatic Yes leader and a seemingly distant No Prime Minister.

As in Canada, says Coyne, an unwarranted legitimacy was conferred on the separatist project; then came attempts to pacify it with more powers and more money, only to see it grow more ravenous in response. And once again,  a Yes vote is probably forever, while a No vote just marks the start of fresh campaigning.

It all looks like one of the slow-motion car crash in those early comedies. Except this particular farce is deciding the UK's future political and economic reality.

Strange fruit

Vishal was the 2014 winner of the Adam Smith Institute’s Young Writer on Liberty competition.  The free trade of all goods and services seems likely to be optimal—however, given that there are countless lobbies and political pressures that make this situation currently infeasible, I will argue for the abolition of tariffs and restrictions on the trade of fruits and vegetables.

A global abolition of import tariffs and restrictions on fruits and vegetables would, on a static analysis, reduce tax revenue derived from them and increase demand for fruits and vegetables as their prices decreased. But dynamically, reducing the revenue derived from tariffs on fruits and vegetables may well be more than offset from the gains in labour productivity and the increase in national income (and tax revenues) that may result.

David Blanchflower, Andrew Oswald & Sarah Stewart-Brown (2012) found that, after controlling for various other factors, individuals who eat 7 fruits and vegetables a day are found to be significantly happier than those who do not. They further found that this improvement in psychological well-being is nearly as much as the increase in happiness from being employed versus being unemployed!

On top of psychological well-being, greater fruit and veg consumption may also improve general health—itself a benefit—and potentially freeing up healthcare funds. Furthermore, Andrew Oswald, Eugenio Proto and Daniel Sgroi (2009) found that there is evidence to suggest that happiness does raise productivity.

An increase in happiness would also be amplified by the dynamic, contagious effect of happiness: it would spread through the population, further amplifying the economic gains from the easing of import tariffs and restrictions. This phenomenon has been well documented, including in James Fowler & Nicholas A. Christakis (2008).

Some countries already have low import tariffs on fruits and vegetables (in the US tariffs on fruits and vegetables average less than 5% according to Renée Johnson (2014)). But there are several economies where the tariffs are substantially higher; more than three fifths of EU and Japanese tariffs on fruit and veg are between 5-25% and nearly a fifth exceed 25%. Other countries with relatively high import tariffs on fruits and vegetables include China, Egypt, India, South Korea and Thailand.

Perhaps most importantly, the abolition of tariffs and import restrictions on fruits and vegetables would be a big boost to society's least fortunate, a group particularly hard up during an economic crisis like that from which we are only just recovering.

The abolition of tariffs on fruits and vegetables would reduce their price and increase their consumption. The initial drop in tax revenue would be offset by both the direct improvement in psychological well-being and its contagion that would work to enhance labour productivity, national income, health and happiness. Let's pick the low-hanging fruit!

Some evidence that sweatshops are good for Bangladeshi women

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I recently read an interesting paper by Rachel Heath and A. Mushfiq Mobarak, of the Universities of Washington and Yale, which looks at the impact that the garment industry has on young girls and women in Bangladesh. 

The results are quite amazing. According to the study, girls in villages close to garment factories (or sweatshops, as they are sometimes called):

  1. Delay marriage. On average, a young girl living near a garment factory was 28% less likely to get married in the study year than the average Bangladeshi girl. This effect was strongest among 12-18 year olds.
  2. Delay childbirth. On average, a young girl living near a garment factory was 29% less likely to give birth in the study year than average. Again, this effect was strongest among 12-18 year olds.
  3. Are much more likely to go to school. Exposure to garment factory jobs was associated with a 38.6% increase in school enrolment rates. Broken down, this translated into a slightly lower enrolment rate for 17-18 year old girls, who presumably were more likely to be in work, and a considerably higher enrolment rate for girls younger than that.

According to the study’s authors, these findings are probably due to some combination of wealth effects (richer families need to marry off their daughters less early, and can afford to send their daughters to school for longer) and the fact that garment factory jobs reward skills, increasing the value of education.

The paper is an important reminder that sweatshops may provide significant benefits to their employees and the places they are located. They are by no means all good, but they are not all bad either, which well-meaning campaigners against sweatshops would do well to remember. A working version of the whole paper can be accessed here.

It's a good policy but it's not enough

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Around here we welcome good policy whoever suggests it. So, given that this is a good policy we welcome it but would also insist that it doesn't go far enough:

 The Liberal Democrats are looking at the decriminalisation of all drugs for personal use and allowing cannabis to be sold on the open market.

Launching his party's draft election manifesto, Nick Clegg, the deputy prime minister, said the party would consider such options after they were advocated in a policy paper due to be discussed at the Lib Dem conference next month.

The paper said the Lib Dems "will adopt the model used in Portugal, where those who possess drugs for personal use will be diverted into other services". The southern European country decriminalised personal possession of all drugs in 2000.

The document also said the party "welcomes the establishment of a regulated cannabis market in Uruguay, Colorado and Washington state".

That we should end the entirely ludicrous policy of jailing people for ingesting their substance of choice into their own bodies is obvious. Government should no more be regulating this than it should be regulating the ingestion of cake, apples and pan haggerty (not that that stops the usual fruits and nuts from arguing that it should of course).

However, simple decriminalisation is not a sufficient policy: for markets do of course require regulation. No, regulation is not "what government does", it's entirely possible for markets to self-regulate. However, for them to do so it's necessary for there to be (in this case at least) brands.

For one of the great problems with drugs being illegal is that no one ever quite knows what they're taking. That heroin might be cut with icing sugar in which case little harm is done. It might be cut with rat poison in which harm is done: and they might have run out of both and not cut it at all in which case you'll be dead soon after injecting. The same is true of all of the other drugs that people like to take (that they like to take them being, obviously, the reason why they should be allowed to take them, it's their life, their body, not yours). Inconsistent quality.

And we saw this before, with the industrialisation of food back in the 19th century. Yes, from the 1870s on (with some very small baby steps a couple of decades earlier) we did have a series of laws about what could be put into what form of food. Alum into bread, that sort of thing. However, by the time the laws came into being the regulation was already happening. By people branding their products so that people could decide for themselves who they trusted to provide a decent and consistent quality. This was in fact the original purpose of manufacturer branding: not to feed excessive consumption but to identify those feeds that wouldn't kill you. As you would know by still being alive a week after you'd had your last portion of that nourishing beef broth from Rat and Catcher's Patent Manufactory.

That is, to regulate product quality, something we desperately desire in this field of currently illegal drugs, we need one of two things. Either legislation providing a testing system (something that's simply not going to happen) or freedom of supply as well as consumption. For only with that freedom of supply will there be that branding and thus regulation of quality that we need.

Decriminalisation is better than the current situation (and your humble author does live in Portugal and has done throughout the decriminalisation process) but it's not enough, we need to move to full legality. Controlled distribution, fine, taxed, fine, limited, fine, but regulation of quality must be done in some manner. And the best way is for producers to compete on quality just as was done 160 years ago with food.

Do we need state children's services?

Our children need care and protection from abuse.  The question is whether the responsible bureaucracies give value for money, or indeed provide that care and protection at all.  Following each scandal, we are told that no one is to blame: the problem is systemic.  Then we are told that the bureaucracies will work better together in the future.  Then history repeats itself.  Rotherham should be a wake up call. In fact, the problem really is systemic and it needs a systemic solution. It is not a question of money. From 2001 to 2010 English and Welsh councils’ child social care expenditure nearly doubled from £4.7bn to £8.6bn at 2010 prices (while the number of under 15s fell slightly). Would anyone suggest that the quality and extent of childcare has doubled?

Of course the problem is hugely complex and there is no single, simple solution but surely one factor is the excess of bodies paddling in the same swamp: Local Authority children’s services, schools, doctors and hospitals, police and charities such as Barnardo’s and the NSPCC.  Each case is like Gerard Hoffnung’s performance by solo violin and massed conductors.

Serious child abuse of any form is a crime.  Where a teacher, doctor or any social worker believes that a crime may have been committed, or may still be in progress, then that should be reported to the police like any other possible crime. The police should investigate without fear, favour, concerns for being branded racist or other politically correct excuses for doing nothing – or passing the buck to social services.

The bigger question is then whether children’s services are necessary at all.  If the current Local Authority bureaucracies did not exist, what would we put in their place?

Rotherham demands a systemic solution and that in turn suggests we start with a blank page.

Clearly we need the youth justice system and adoption facilities alongside those offered by the voluntary sector (e.g. Barnardo’s).  But Local Authorities’ manifest incompetence in adoption suggests maybe that should be turned over to the voluntary sector and perhaps arrangements for fostering too.

If taxpayer value would be improved, as it is being for schools, by channelling taxpayer funding through the voluntary sector, then why not?  Equally well if something like the existing services can be radically rebuilt to give our children the protection they need, then so be it. But if we just go on tinkering and adding more boxes to tick, more Rotherhams could follow.

So the State schools can't manage to teach the kiddies to read then, eh?

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So here's a little fining that adds to the shine of our glorious state. Despite the fact that we spend some 5% of all of the value created in the country on education each year that glorious state school system can't actually manage to teach the kiddies to read:

The fear that 1.5 million British children will reach the age of 11 unable to "read well" by 2025 has prompted the launch on Monday of a new campaign backed by a coalition of businesses, charities, bestselling authors and teaching professionals.

The Read On. Get On campaign is aimed at making a radical improvement in reading standards one of the central goals of politics and education in the next decade. It is being spearheaded by Save the Children, the CBI and the Teach First charity and is unusual in the diversity of its supporters – they include authors JK Rowling and Michael Morpurgo plus a host of book publishers, the Sun newspaper and the Premier League.

One aim is to get the main political parties to include in their 2015 manifestos a commitment to improving the reading of the most disadvantaged.

So let's attempt to draft something for the manifesto of any party that wishes to pick it up shall we?

How about: "Schools that do not manage to teach children to read within a year of that child's entry to that school will be closed and all of the teachers fired"?

Or perhaps "Schools will teach children the value of self-structured play after they have taught them to read"?

Possibly even: "No teacher will receive a teaching qualification until they have demonstrated that they can teach a 5 year old to read"? With the obvious proviso that all of those who currently have a teaching cert must prove this over the next school holiday?

Something needs to be done after all: that education system does get 5% of everything and the State does claim a rightful monopoly on education (sure, they let a few slip away but they still claim that they should be educating everyone). So why on earth are we letting them get away with not performing their most basic duty?

After all, the Church schools of more than a century ago managed it, why can't "highly trained well resourced professionals" manage it? Education systems in other countries, many of which get considerably less money, also manage it.

Could it, possibly, just maybe, be because the current school system just isn't very well run?

Another reason the Home Secretary can go hang

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  No one actually does manage to serve as Home Secretary without the innate authoritarianism of the department infecting their views. We could have Peter Tatchell there in office and within months he'd be demanding that we lock 'em all up. But despite our knowing this, despite our understanding that the greatest threat to civil liberty is that very department tasked with overseeing law'n'order, there's still times when it's necessary to point to excesses too great even for them. This is one of them:

Failing crime tsars could be sacked by the Home Secretary under radical plans to rescue the Conservatives’ tarnished law and order policy.

No, absolutely not:

Granting the Home Secretary the power to sack PCCs in extreme circumstances, such as in South York-shire where Mr Wright is clinging to his job despite key figures insisting his position is untenable.

No way.

We simply do not have, and should not have, a system in which one part of the governing apparatus gets to fire an elected official.

It's fine to have basic rules about what might happen if someone were convicted of a crime: an MP has to go if they get sentenced to a year and a day in prison for example (think that's right). But we absolutely cannot have a system whereby one group of politicians, or one officer of the state, can decide that an elected official must go simply because they're a bad'un.

The Home Secretary does not have the power to sack an MP: because we elect MPs. The Home Secretary does not have the power to sack the First Minister of Wales: and it is right and proper that she doesn't.

It might be that we should have PCCs and it might be that we shouldn't. It might be that they should be appointed and it might be that they should be elected. But given that we do have them and that they are elected.....well, it's us that hired them by voting for them and it'll be us that fires them by not voting for them and the Home Secretary can go hang.

Imagine if someone suggested that at some future date a Labour Party Minister should have the ability to sack the duly elected Member of Parliament for Maidenhead? Theresa May would be first upon the barricades protesting this vile intrusion into the democratic process. Which is a useful point for all to remember. When in power never try to claim powers that you really wouldn't want your opponents to have next time around.

Explaining (part of) the UK labour productivity puzzle

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Apologies, this is slightly wonkish....one of the puzzles of the current economic recovery is that labour productivity appears to be falling. This just isn't what we would expect to happen at this point in an economic cycle. Yes, we do expect it to fall substantially in an actual recession: employers lay off workers more slowly than output falls, meaning that each worker is producing less (the reason for the slowness of the layoffs being that firing someone now and rehiring in the good times costs money, there's stickiness in what happens here). And productivity we expect to grow strongly in the early stages of a recovery as people sweat that labour they've got as output increases rather than immediately going out to hire more people.

So we can happily explain much of what's happening in that chart using our standard assumptions. Then we get to 2011 and beyond and we're not sure what is happening there. We really don't expect to have falling labour productivity at that point. So what is happening?

We can't tell you exactly and precisely what is happening here: we can't even tell you how important this next point is to what is happening. But we can tell you that this is absolutely one of the things that is going on. Public sector wages are falling relative to private sector ones. That is part of the cause of that fall in labour productivity.

Here we enter a rather Alice in Wonderland area of economic statistics, the measurement of  public sector labour productivity. In the private sector this isn't actually easy but it is at least logical. Stripped to its essence we add up the value of what is produced, look at the number of hours of labour required to produce that and divide one into the other. If there's more production from the same number of hours then labour productivity has risen. Obvious, really.

The important part here being that that "value" is "at market prices". But we cannot use this method for estimating public sector output. Because most of what the public sector does doesn't have market prices: how can we "value" the output of a diversity adviser?

Therefore we don't even attempt to do this. The output of government is defined as what we spend in order to gain this output. Thus public sector labour productivity is equal to, exactly the same as, the wages we spend on public sector labour.

This has, obviously, perverse effects. If we pay a nurse £25 an hour then we record her output as being £25 an hour. If we double her wages to £50 an hour then her output doubles: even as she ignores the same number of patients to do her paperwork. And note what happens to her productivity: it's just doubled just because we are paying her more.

There is no difference whatsoever in the output: but because of the odd way (through necessity) that we measure labour productivity in the public sector that productivity has just doubled.

This effect will also obviously operate in reverse as well. If we cut public sector wages then we will be cutting public sector productivity. It might be that we get the same actual output in terms of government from those newly more lowly paid civil servants. And that would normally be regarded as an increase in labour productivity: we're getting the same output for a smaller input. But this method we use to measure public sector labour productivity means that we actually record the opposite effect: lower public sector wages means we are spending less on government and thus we record that value gained from that labour as having fallen. We record labour productivity as falling when we cut public sector wages.

And what has been happening since 2011? Yes, that's right, there's been a deliberate attempt to reduce, relative to the private sector, public sector wages. As ONS tells us:

The average pay difference in favour of the public sector has narrowed since the year 2010, which in part reflects the restraints on public sector pay over this period

And we can look in more detail here (page 19 of the .pdf on that page). By the (controversial) way that ONS measures public sector pay (controversial because while it tries to measure qualifications, organisation size etc it's not adding in pensions accruals and job security etc.) this was lower than private sector in 2001 or so, grew higher than private through the years of the Brown Terror and now there's a deliberate attempt to manage it down again.

Whether you think those actions of the Brown Years, or the current ones, are justified or not is entirely up to you. But the implication of this for our recorded labour productivity figures is that some portion of that growth in labour productivity over the period 2001 to 2010, and some portion of the fall in it since, is simply the result of the boom and then restraint in public sector pay.

It is, in short, a measurement fault rather than an actual description of anything that is actually happening to labour productivity.

As at the top, we can't tell you how important this is: that would require a great deal more research. We can however tell you that this absolutely is at least a piece of the puzzle. Why is UK labour productivity falling? Simply because we measure public sector labour productivity by the amount we pay them in wages and we're deliberately squeezing those wages currently.

My thanks to the prolific commenter Luis Enriques for sparking this line of thought.

Sir Paul Nurse has finally decided to fire Paul Ehrlich from the Royal Society

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We have to say that we're not quite sure whether "fire" is quite the right verb for getting rid of a Fellow of the Royal Society. But given the manner in which Paul Ehrlich has been wrong in every single prediction he's ever made about human beings, population levels, wealth, the economy or the environment it is about time that Britain's leading scientific organisation dispensed with his services. So we can only say Hurrah! to this statement from Sir Paul Nurse, the leader of that most prestigious of Britain's scientific organisations:

Britain's most senior scientist has launched a fierce attack on influential figures who distort scientific evidence to support their own political, religious or ideological agendas.

The president of the Royal Society, Sir Paul Nurse, said scientists must challenge serial offenders from all spheres of life who continually misused science to support their preconceived beliefs.

Speaking ahead of an inaugural speech he will give next week as the incoming president of the British Science Association (BSA), Nurse said it was not enough for scientists to sit on the sidelines and sneer when public figures expounded unscientific nonsense.

Quite right too and we might even add to that Hurrah! with a "Well done Sir Paul" and even an "about time too".

We could mutter something about why on earth was he there in the first place, possibly even grumble about it taking so long to do the right thing, but as the Good Book tells us more joy in heaven over one sinner that repenteth etc. So we should simply rejoice.