Milk markets are not hard to udderstand

You can lead a cow to a supermarket, but you can't make it raise its prices. The supermarket, that is. Because if one supermarket did, its customers would all desert to the ones that didn't. So what's the point of the farmers' protest? What will change? Dairy farming is yet another industry going through a technological revolution; and when that happens, some lose out. But the ultimate result is cheaper (and better) products for consumers. And as Adam Smith reminded us, the sole end of production is consumption. Why undertake the bother and expense of production, otherwise?

True, there are other factors. The world is pretty flush with milk right now. And Europe is particularly flush, thanks to EU subsidies. Yes, there is less subsidy than there was, and it is less related to production – remember the Milk Lake and the Butter Mountain? An obscene waste of animal products. But we still have the Basic Payment Scheme, all those Agri-Environmental Schemes, Private Storage Aid (i.e. bribing processors to hold milk products back when prices are low), the School Milk Scheme, not to mention Import Tariffs against other world producers.

The result is that today, about a third of the income of England's dairy farmers comes through subsidies. If they sold their herds and retired to Bournemouth they wouldn't get them any more, so they carry on, producing more milk than the nation actually wants.

The dairy farmers' argument is that milk is difficult to transport – it is bulky and you have to keep it cool – so we need to produce milk locally. There is some truth in that, but it is a two-edged sword: because since supply sources are so restricted, you need to be prepared for some pretty spectacular price rises and falls from time to time. Like now. And if consumers cannot get dairy products from other producers because of import tariffs, consumers lose out too.

But back to technology. Britain is a terrible place to produce milk. The winters are cold and wet, so you have to bring your herd into shelters and give them heat, silage and hay (and muck them out), all of which adds to the cost. It's Adam Smith, again: why try to produce wine in Scotland, at thirty times the expense of vineyards in sunny France?

To cut the cost, some enterprising dairy famers are creating farms that are a hundred times larger than the norm, usually sited in sunnier parts of the country, with huge winter sheds and new technology such as dry bedding, feed derived from other farm by-products, heat recycling, and capturing methane for fuel. It is no wonder that small-scale dairy farmers are complaining that they can't compete.

If we scrapped the web of subsidy that featherbeds inefficient production systems, we would produce what we needed, in the quantities we needed, at a sustainable price, and with very much greater efficiency. And taxpayers would be better off, too. Yes, some people would have to find new jobs. It happens. Ask the people who used to sell encyclopaedias.

The sex industry is now larger than the housebuilding one

Cathering Hakim has a wonderful paper on the sex industry over at the IEA, a paper that contains this delightful fact:

The Office of National Statistics (ONS) estimates that the sex industry in Britain adds £4.3 billion (US$6.9 billion) per year to the economy (more than the amount spent on the construction of houses in the first decade of the 21st century), and adds over 0.4 per cent to national GDP.

Which gives a useful insight into how silly this idea of making the purchase of sex illegal is (the "Swedish Model"). No good at all is going to come from criminalising an economic sector of that size, not when it's almost entirely the activities of consenting adults making it up.

Our point about prostitution has always been that, however much it may be not to our taste as an activity, it is the actions of consenting adults and as such it's something that a free and liberal society will leave alone.

Hakim's paper is worth reading not only for its good sense. It also manages to trample on a number of sacred assumptions common about sexuality:

Nonetheless, the plethora of nationally representative sex surveys carried out around the world in the two decades 1990-2010 greatly increased information on sexual practices and sexual markets (Wellings et al. 2006). For example, national surveys show that the vast majority of men and women self-identify and act as heterosexuals: 97 per cent in Britain, the USA, Australia, Scandinavia and Western Europe generally. The tiny sexual minorities that are often the focus of attention in academic sexuality research and journals do not affect patterns in the majority heterosexual market. The sex survey results demolished many misconceptions, new and old (Vaccaro 2003; Hakim 2015). One supposed ‘myth’ that was shown to be a continuing solid reality in the 21st century, long after the contraceptive revolution, is the idea that men typically have stronger libidos than women (Hakim 2015). Male demand for sexual entertainments and activity greatly outstrips female sexual interest, even in liberal cultures. This gives women an edge, although many are still unaware of it.

Yes, this is a fairly common economic view. If you're the supplier of something in short supply then you do indeed have an edge over those who are seeking it. The paper's worth the fun of reading just to see quite so many modern beliefs being discarded as untruths.

The final recommendation we thoroughly agree with: the sex industry should not only remain legal many of the current restrictions upon it should be lifted. but with this paper there's also great joy in the way that the points are argued.

Nationalising the energy companies works so well, doesn't it?

Jeremy Corbyn tells us all it would be lovely if the gas and energy companies were nationalised:

The cost to taxpayers of renationalising the UK's gas and electricity sector, as desired by aspiring Labour leader Jeremy Corbyn, would total as much as £185bn, according to city experts. Peter Atherton, analyst at Jefferies investment bank, said that the cost to take control of just the UK assets of companies, which include British Gas owner Centrica and network operator National Grid, would drain about £124bn from the nation's coffers. Mr Corbyn has stated that he would nationalise British Gas, SSE, Eon, RWE, Npower, Scottish Power and EDF if he became Prime Minister in 2020. He said he would also put National Grid back into public hands.

This is because public policy should decide how these companies work, not the cut and thrust of the purely commercial world.

Hmm:

It was not too long ago that Gazprom, Russia’s state-controlled energy conglomerate, was one of the Kremlin’s most powerful weapons. But those days now seem like a distant memory. Today, Gazprom is a financial shadow of its former self.

The speed of Gazprom’s decline is breathtaking. At its peak in May 2008, the company’s market capitalisation reached $367bn (£237bn), making it one of world’s most valuable companies, according to a survey compiled by the Financial Times. Only fellow Exxonmobile and PetroChina were worth more. Gazprom’s deputy chair Alexander Medvedev repeatedly predicted that within a decade the Russian energy giant could be worth $1 trillion.

That prediction now seems foolhardy. Since 2008, Gazprom’s value has plummeted. In early August it had a market capitalisation of $51bn – losing more than $300bn. No company among the world’s top 5,000 has suffered a bigger collapse, Bloomberg Business News reported in April 2014, and by the end of the year net income had fallen by an astonishing 86%.

Why's that then?

Experts say Gazprom’s main problem is that it continues to serve as Putin’s favoured geopolitical weapon. Examples include the company’s purchase of major Russian media outlets that were then turned into Kremlin mouthpieces, bullying or buying the loyalty of neighbouring states and sponsoring the egregiously expensive Olympic Games in Sochi.

Most ominously for the company, the Putin administration still keeps pushing Gazprom to implement new projects that are important for the Kremlin but risky from a financial viewpoint. Two prominent examples concern Ukraine and China.

Because Gazprom is run according to public policy, not the cut and thrust of a purely commercial world.

That it would be public policy running the energy companies is exactly why Crobyn suggests their nationalisation. That it would be public policy running them is exactly why it's a bad idea for them to be nationalised.

Using what we know to solve what we don’t

Every two days we generate an equivalent amount of data to that produced by the whole of human history up to 2003. Such a scale of data is almost daunting, with much, if not most of it, recorded consistently and ubiquitously through sensors embedded into the tools of our everyday: mobile phones, tablets, barcodes and travel passes. As global mobile phone penetration reached 95.5% in 2014, and 90% for developing nations, this advancing use of mobile phones is providing researchers with a veritable feast of data from users. The data are collected not only directly through the sensors in smartphones, (GPS, gyroscope, accelerometer, microphone, camera and Bluetooth) but also indirectly through the cellular infrastructure, creating enormous streams of ‘big’ datasets. This big data represents a new form of research methods for scientific endeavour. The sheer size of datasets calls for novel ways of interpreting, analysing and discussing the knowledge it creates. Distinguished by its volume, velocity and variety, much big data will be geographically referenced and in real time - a sea change in statistical analysis from small-scale studies that comment on static data from the past.

So what can big (mobile) data do? Already, the data generated through user internet searches has been used by marketers to enhance our online advertising experience with ‘targeted’ ads specified to our frequently searched phrases - a development that is thought of by some as useful, and by others as unnerving. As mobile phone penetration has skyrocketed, so has the opportunity to further understand consumer behaviour and create personalised advertising. With a vast amount of people using their mobiles as their primary internet source, clickstream data (which monitors the browsing habits of users by recording a tiny text file of search/viewing history) grants access to the trends in internet searches for shopping, information and entertainment purposes. The development of Google Now demonstrates such a use of big data collection in action for users: a function of the Google search application, it works by recording the frequent actions of users (common locations, popular contacts, calendar appointments etc) providing relevant information to the user such as nearby attractions/events, product listings, developing localised news stories, traffic alerts and event reminders, mostly in anticipation of the user’s location and schedule.

Social behaviours

The data deluge is clearly extremely valuable for marketing applications, but also has the potential to provide new areas and methods of researching social behaviours. Mobile big data has been used to understand the structure of social groupings and how they adapt during critical times. Research in Oaxaca, Mexico analysed cellular data of social responses to an urban earthquake in 2012. Research on the volume of calls, call duration and extent of social circles found that in the minutes after the quake volume increases, duration decreased and social circles expanded widely. The change in call behaviours is easily explained - a panic situation begins during the earthquake, with call volumes increased (larger increases seen in cities closer to the epicentre) as inhabitants rapidly make short calls to their immediate family and then wider social group to confirm their safety. Previously, this kind of information could only be gained via self-reporting - the ability to provide data-based evidence is thus a step forward.

Mining data from smartphones and the cellular infrastructure now allows us to access detailed knowledge about people, things and events that are currently happening, potentially anywhere in the world. The dissemination of new scientific information across the globe is another social behaviour investigated with the use of mobile big data. De Domenico et al.’s 2013 paper ‘The anatomy of a scientific rumour’ crawled worldwide Twitter feeds after the announcement from the research team at CERN Switzerland of the discovery of a Higgs-boson like particle. The data enabled researchers to model the spread of information across the network via the methods of tweets and retweets, with users commenting and giving their personal opinions as well. Clearly, mining big data for analysis is opening up new methods and areas of scientific inquiry.

City planning

What attracts people to places is other people. Big data can further our understanding of why locations work as they do, opening doors for us to see deeper into the meanings behind places, consider new reasons for what makes some areas successful (busy but efficient and safe) or failures (congested or desolate, with a high fear of crime), and see the ways in which the public interact with space and infrastructure. Roth et al (2011) created a map of the flows of pedestrian movement across London as passengers used Oyster cards to travel on the tube. A polycentric spatial arrangement was found comprised of large flows organised around a limited number of activity centres- rather than one central hub of activity. Knowledge such as this about an area allows city planners to better orientate their designs to locals’ actual use of space. Understanding individual traffic movement patterns will allow planners to look to increase efficiency of public transport routes, answering questions such as where to ease congestion by creating new lines or directing new lines to existing stations. The Array of Things team is an urban planning project hoping to ensure central Chicago’s ‘success’ as an area using this idea. The plan includes installing hundreds of sensors across the city that would capture data such as: light level, ambient volume, pollution, humidity, pollen count, smartphone usage, and parking availability. Collecting real-time data on the activity, environment and infrastructure surrounding a sensor has potential uses including providing locals with more fine-grained weather updates and quicker and safer walking/driving routes through the city. All the data recorded would also be openly available for public download, so that it can be used by app developers and researchers too.

Big data for development

The outcomes of big data mining projects have not been a solely developed nation phenomenon. Global Pulse, a UN initiative launched in 2009, is a program with the aim to mine data for assisting development and humanitarian projects in developing countries. The areas of research in this project are vast: food and agriculture, humanitarian action, economic well-being, climate and resilience, gender, and public health. This research therefore helps us explore issues including immunisation awareness, trends in workplace discrimination, estimating migration flows, early warnings of conflict, disaster management during floods, seasonal mobility of populations and measuring global engagement on climate change. Here, big data has been able to go beyond targeted ads and assisted governments and humanitarians in receiving up to date policy feedback and greater knowledge of the groups they strive to assist.

Much of the work in such a project is focused on aiding humanitarian projects in response to major environmental events or violent conflict. Intervention planning for emergencies depends greatly upon knowing where people are. With this in mind, mobile data, which provides a geographically located ‘tag’ of phone users, can enable researchers to describe trends in the macroscopic behaviour of populations through creating relatively cheap population maps in emergency and data scarce situations. This feature of mobile data can be incredibly useful in low-income countries where directed big data sourcing by governments may be infrequent, (e.g in the Democratic Republic of Congo, the last census was taken in 1984, however mobile phone penetration here is 64%). A team working with Antonio Lima as part of the Orange Data for Development Challenge utilised a dataset of mobile phone calls from Ivory Coast and found that social ties are an incredibly useful tool to be manipulated in intervention planning. When vital information needs to be disseminated rapidly (e.g. at the beginning of a disease epidemic), ‘social beacons’ (individuals that make a large number of calls to a wide social set) in communities can be contacted to ensure greater spread of information such as the nearest vaccination centre and suggested hygiene practices to prevent transmission. With knowledge of phone user location, as well as the prime candidates within a population for information spread, governments and organisations tasked with responding to crises are equipped with greater ability to reach vulnerable people more quickly.

Though big data analysis, as an emerging discipline, has not come without its concerns. Our mobile devices are with us for a significant portion of our daily lives, acting as witness to many private moments. Thus issues of privacy abound as sceptics and proponents debate the ability of personal information to be de-anonymised and individuals identified from their activity on social media, particularly with mobile data mined from geo-social media (when users tag themselves on location). Experimental results have found that identification strategies can achieve an accuracy of more than 80% using only 10 ‘check-ins’. One can argue that by participating in location based social networks, users are implicitly agreeing to the privacy disclosure agreement, as they are sharing their location and information to all other users. However there is clearly a call for greater public awareness and information campaigns concerning this, as many users will remain unaware of the potential uses of their data.

This could be partly addressed for the future with the introduction of more computer science based classes in schools, as an attempt to demystify the technology and aims of research in this discipline, as well as encouraging greater interest in the emerging field. Currently only few university institutions in the UK are able to offer course at undergraduate level, despite widespread agreement that computational social science is a fundamental skill for the modern workplace. Educating the public of the technology, developments and potential issues would surely only make them more aware, better informed, and able to decide when to update their social media status.

Sarah Willson is an undergraduate student of Geography at University College London, and can be contacted on Twitter at @SarahWllsn

So, voluntary cooperation works again then

There really is, as Garret Hardin pointed out, a problem called the Tragedy of the Commons. When a resource is exploited on an open access basis (ie, a Marxian one) and if demand on that resource is greater than the regeneration capacity then some form of management is required or the resource will be exhausted. In the modern era this means that the bureaucrats get to write lots of regulations. However, as Elinor Ostrom went on to get the Nobel for pointing out, it doesn't have to be this way:

The local Vezo people subsist, on average, on $1.72 a day, well below the $2 a day official poverty line, and depend on fishing. After detailed discussions with the charity .and in village meetings, they decided to institute a series of two to three month closures of just a fifth of their octopus fishing areas, to give stocks time to recover. Just a single, experimental such closure, in 2004, has so far been followed by more than 100 others along the southwest coast. The results, the study shows, have been dramatic. Octopus catches in the month after the closures – carried out under traditional laws, and enforced by the local communities themselves – are seven times as great, on average, as in the month immediately before them. Partly this is down to a big influx of fishers to the newly reopened areas, but – even so – individual catches almost doubled. Average incomes shot up by over 130 per cent, and did not fall significantly during the closure periods because the people then directed their efforts to the 80 per cent of their areas that remained open.

An octopus fishery is hugely well suited to such a system. Relatively short lived creatures (perhaps 6 months in the wild) and they usually die shortly after their one mating extravaganza. But Ostrom's point was much more than that, it was that voluntary cooperation, in a group small enough to be able to cooperate properly (up to some few thousand people perhaps), can indeed solve these sorts of problems. Perhaps, as here, people might need to be told how to do it but that's fine, none of us know everything.

Of course, as all three of Hardin, Ostrom and Coase have pointed out, not all problems of this type can be so solved. Which means that our necessary trick is to work out which ones can be and to leave those to voluntary cooperation to solve. Those that absolutely do require government intervention (which would need the cooperation of tens of millions perhaps, thus requiring that element of compulsion that only government does have) would, well, they'd need government action.

That is, we should be cutting government back to only those things which must be done and which can only be done by government. The rest of it, the stuff we can do for ourselves, we'll get on with ourselves.

The new politics is interesting, isn't it?

Edward T. Walker is an associate professor of sociology at the University of California, Los Angeles.

And what does this sociologist have to tell us all?

The nasty battle between Uber and New York' Mayor Bill de Blasio's administration over its proposal to limit how many drivers Uber and other ridesharing companies could put on the streets has ended, with the city and the ride-hailing giant agreeing to postpone a decision pending a "traffic study." There's no doubt who won, though. The mayor underestimated his opponent and was forced to retreat. It wasn't just conventional pressure — ads, money, lobbying — that caught the mayor off guard. Uber mobilised its customers, leveraging the power of its app to prompt a populist social-media assault, all in support of a $US50 billion ($68 billion) corporation. The company added a "de Blasio's Uber" feature so that every time New Yorkers logged on to order a car, they were reminded of the mayor's threat and were sent directly to a petition opposing the new rules. Users were also offered free Uber rides to a June 30 rally at New York's City Hall. Eventually, the mayor and the City Council received 17,000 emails in opposition. Just as Uber has offloaded most costs of operating a taxi onto its drivers, the company uses its customers to do much of its political heavy lifting.

Yes.....

These practices are redefining what it means to take part in politics. Social-media platforms were briefly perceived as democratising tools, engendering transparency and empowerment in the digital age. But these new protest-on-demand movements blur the distinction between genuine citizen organising and what often is called "astroturf": participation that looks grass roots but actually isn't, because it's been orchestrated to benefit a well-heeled patron. This Uberisation of activism allows corporate sponsors to call the tune: Consider how for-profit colleges leaned on vulnerable students for political pressure, how Comcast enlisted its philanthropic beneficiaries to support the Time Warner merger or the way that the beverage industry hired protesters to oppose soda taxes. Technology may be neutral, but grass roots should mean bottom up, not top down. The #blacklivesmatter movement is a genuine grass-roots civil rights campaign, mobilised through social media. So is the environmentalist Bill McKibben's 350.org, with its blend of online organising, social media strategy and in-person campaigning around climate change. But Uber's corporate populism is not. We should learn to recognise the difference.

Hmm. Apparently the actual users of, customers, of a service shouldn't be allowed to tell politicians what they think about regulating that service.

Only those who have no direct interest and thus know nuttin' about it should have a voice.

Sociology is a very interesting subject these days, isn't it?

Finally, something we can agree with Ha Joon Chang upon

That the Hitchhikers' Guide to the Galaxy is indeed a great piece of science fiction comedy and satire.

As an economist, what delighted me especially were the representations of economic theories. The story about people paying large sums of money for Antarean parakeet glands, which taste revolting, only because they are “very rich idiots who want to impress other very rich idiots” is a reworking of the 19th-century American economist Thorstein Veblen’s theory of conspicuous consumption. The wildly profitable planet-building business of Magrathea forced into hibernation for 5 million years because its own success impoverished everyone else, thus destroying its own market, is a clever way to describe the “under-consumptionist theory” that was popular in the 19th century. This theory has actually become much more relevant since Adams wrote H2G2, with the rise in inequality to shocking levels in many societies.

Veblen and under-consumptionist theory we will agree are being made fun of, used, in the comedy. But the application to our world of today, the economics we should take note of, we think should be the Golgafrincham B Ark:

MANAGEMENT CONSULTANT: Since we decided a few weeks ago to adopt leaves as legal tender, we have, of course all become immensely rich.

FORD: No really? Really?

CROWD MEMBERS: Yes, very good move…

MANAGEMENT CONSULTANT: But, we have also run into a small inflation problem on account of the high level of leaf availability. Which means that I gather the current going rate has something like three major deciduous forests buying one ship’s peanut. So, um, in order to obviate this problem and effectively revalue the leaf, we are about to embark on an extensive defoliation campaign, and um, burn down all the forests. I think that’s a sensible move don’t you?

MARKETING GIRL: That makes economic sense.

We feel this has a certain relevance for Peoples' Quantitative Easing as proposed by Jeremy Corbyn and as designed by Richard Murphy. Let's print lots of money so that the government can buy us all nice things. Nothing could possibly go wrong, it makes economic sense, doesn't it?

As to who it was on the B Ark:

CAPTAIN: Oh precisely yes. So it was decided to build three ships, three Arks in space, anyway…where’s the soap? Ah! Thank you. Ah! So the idea was that into the first ship, the A Ship, would go all the brilliant leaders…

NUMBER ONE: The scientists…

CAPTAIN: Yes, the great artists, you know, all the achievers. And then, into the third ship, the C Ship, would go all the people who did the actual work; who made things and did things you see. And then in the B Ship -

NUMBER ONE: That’s us.

CAPTAIN: Yes. Would go everyone else, the middlemen you see. And so we were sent off first.

Yes, a certain relevance for a monetary and fiscal system devised by a retired accountant from Wandsworth. We're not absolutely certain quite why it's relevant but we're really pretty sure that it is.

Notes from a 'slum-dweller'

Yesterday was quite a heavy one for the ASI Twitter accounts, with what seemed like the world and his politically-correct wife piling onto one the student winners of our ‘Young Writer on Liberty’ competition for his suggestion that Britain could benefit from the creation of slums.

Clearly, 'slums' is an evocative and emotionally-charged word: As the author conceded, there probably wouldn’t have been any pushback if he’d just titled the piece ‘Britain needs more microflats for dynamic urban communities’. And perhaps the title was ultimately misleading, because the post didn’t actually agitate for open sewers, no electricity and dysentry for the UK’s most vulnerable, but instead relaxing restrictions on the type of homes which may be built. Still, the competition asked for bold and original thinking, and that’s exactly what we got.

A common response to the article was (in more safe-for-work terms) ‘Pah! I'd like to see the author actually live in the kind of odious accommodation he calls for!', and other retorts based on the idea that living in a sub-regulatory optimal stock of housing would in fact be unbearable. So, at this point I’d like to take one for the team, and say a few words in defence of slums. For, you see, I’m something of a ‘slum dweller’ myself. (You know what, I very much object to suggesting that where I live is a ‘slum’. But it fits the definition by reference of the original article, namely housing which fails to meet 'acceptable'/ legal living standards, and would be labelled as such by critics).

I’m part of a growing group of ‘property guardians’, who protect and look after a range of disused buildings—from houses to churches to schools and offices—while they’re unoccupied and waiting to be refurbished, demolished or repurposed. With the company I'm a guardian for, none of the properties have gas, and they have only limited hot water points. They're unfurnished, often with stripped-out floors, walls and kitchen equipment.  When they first come to be occupied they're usually grimy and dirty, with broken light fittings and rubbish left by the original inhabitants. And, perhaps most controversially, guardians only need receive two weeks notice before they can be kicked out of their current place.

Most people instinctively recoil when they hear all this. But in exchange for these kinds of conditions, guardians get a place to live at far-below market rent, often in a prime location, and with a amount of living space otherwise unobtainable.

I'm currently living in an old library-cum-theatre-cum-community space in South-East London (see picture above), which was initially inhabited by squatters after the council closed it down. The first guardians to move in reported mouse droppings (from cannibalistic mice, it turns out, for they proceeded to eat my taxidermy collection), people’s urine and general filth. It's covered in warnings about the asbestos, and we wash in temporary showers by the old cubicled toilets.

There's no way in hell that these kind of properties would get built for human habitation.

You wouldn't be able to put a tenant in one, either: The property guardian business only works by circumventing all the regulations and restrictions which apply to the rental market, instead registering guardians as live-in security and granting them a ‘temporary licence agreement’ for a particular room.

But instead of being trashed as exploitative and unconscionable, these property management companies (rightly) win awards for the innovative and socially beneficial service they provide. In London, such schemes are so oversubscribed that prospective guardians sometimes literally race to a new property to claim a space in it. I genuinely love being a guardian.

I’m lucky: I could afford a decent room in a normal flat, but I’d honestly just rather not spend close to 50% of my pay packet on one. The people I live with range from students to freelance artists to young professionals, some of whom have also signed up for the ‘luxury’ of lower rent and the excitement of living in unique spaces. For others, the scheme has allowed them to move to London to study or set up their business; an opportunity they otherwise wouldn’t have been able to afford.

That’s the kind of chance we want more people to have. Property guardianship will only ever be a niche offering available to some, while the current system restricts the type and level of further experimentation that can be done with alternative living setups.

The point of this post isn’t to prove that those with lower incomes can get by in far lower living standards, thankyouverymuch. Instead, it’s to show that there already is clear demand for affordable housing which doesn't conform to current rental standards, and which may fall below the 'acceptable' or accustomed living standard for much of the population.

There’s more than one thing we can can do to help the UK’s housing crisis, some of which are more long-term or politically palatable than others. Personally, I still think building over some of that damn green belt is the best way to go. But underneath the clickbait title of Wednesday’s piece, there’s more than a kernel of truth to the idea that given the choice, some will willingly tradeoff regulations and protection for rent. And I'm one of them.

Farmers and the milk price: this is how markets are supposed to work

We've another of those pieces complaining about the fact that dairy farmers cannot make money producing milk these days:

As I write this, the future of our dairy farm is bleak. It must be a crazy concept to keep borrowing money to produce something that almost all of us use and which is, somewhere along the line, making money for somebody. But farmers’ lives and homes are so entwined with the production of food that they continue doing it when most serious business people would have thrown the towel in. As a result, they are exploited. How long will it continue?

What is being missed is that this is exactly how markets are supposed to work. There is, as there has been for some time, a surplus of milk production around the world. More people are willing to produce it at current prices than are willing to consume it (or perhaps, volumes produced and consumed) at this current price. Thus some of the people who are currently producing it at this price should stop doing so. And that farmers cannot make money at this price is the incentive, the impetus, for some to stop doing so.

Making a loss really is the market's method of telling you to go do something else with your life and capital. This is true whether you produce milk, wheat, jet engines or buggy whips.

As to who benefits from these current low prices obviously that's the consumer. And given that the aim of having an economy at all is so that the consumer is able to satisfy as many wants an desires as possible given the scarcity of the factors of production this is just fine. In fact, more than just fine, this is the point of the exercise.

Milk can be sold for less than the cost of production? Then stop producing milk then.

This blessed isle, this England

Sometimes we forget how lucky we are to have so many keeping watch over us.  An elderly woman running a B&B up here on the Norfolk Costa Geriatrica has not been paying attention to this good fortune.  Someone comes in from the village to help with making beds and the like.  As an employer she should have been complying with the rules on Legionnaires’ disease but, and I know it is hard to believe, the guidance had escaped her attention.  Its six pages are merely an introduction to “the Approved Code of Practice (ACOP) and [the] Legionnaires’ disease: The control of legionella bacteria in water systems … technical detail.” These rules apply to every employer. Specifically she should have been:

• identifying and assessing sources of risk;
• preparing a scheme (or course of action) for preventing or controlling the risk;
• implementing and managing the scheme – appointing a person to be managerially responsible, sometimes referred to as the ‘responsible person’;
• keeping records and check that what has been done is effective;

There are about 300 cases of the disease a year about 40% arising from overseas travel.  The UK cases arise in clusters, i.e. one faulty water system typically infects about 10 people who use it.  The numbers have been falling from a high of nearly 600 in 2006.  There are less than 20 cases a year in East Anglia which probably means, allowing for clusters and overseas travel, no cases in Norfolk at all.

This disease is clearly a local problem and, if regulations are needed at all, they should be local and focussed.

But the urge to regulate is a general UK problem not limited to health and safety.  It has grown massively since Margaret Thatcher invented regulators, originally for the utilities, in the 1980s.  We blame the EU but most of it is home-grown.

Universities provide a very different example.  Should they be truly independent as they were for hundreds of years?  After all, the whole point of a university is freedom to pursue knowledge unfettered by bureaucracy. And if they should be regulated at all, by whom?

If you were choosing a university for yourself or a loved one, which regulator would give most confidence in the integrity of that university?

The Open University proudly boasts, on its home website and emails “The Open University is authorised and regulated by the Financial Conduct Authority.”  No better guarantee than that.