Ten bad arguments for staying in the EU

There are good arguments on both sides of the EU debate, both for staying and for leaving. Unfortunately, many bad arguments are being made. Here are 10 of the arguments for remaining in the EU that do not stand up.

1. A leave vote would cost jobs

It is commonly claimed that if the UK were to leave the EU, some 3m-4m jobs would be "at risk." Nick Clegg is among those who have claimed that some 3m jobs are "dependent on our EU membership." This is incorrect. As Ryan Bourne has shown, these jobs are dependent on our export trade with other EU countries, not on our membership.

If the UK left the EU, it would negotiate a trade deal with the EU, and exports would continue. It is not in the interests of other EU countries to cease trading with the UK, since trade benefits both partners. Countries as different as the US, Peru and Mexico all have trade deals that grant their goods access to EU markets and allow EU goods to sell in their own markets.

There is a case that UK jobs might increase if it left the EU. The EU share of UK exports has been declining, and is now less than half of what we sell elsewhere. It would be in our interest to expand trade with global partners such as China, and untrammelled by EU trade rules, it would probably be easier for us to do so.

Some of those predicting job losses previously predicted that the UK would lose 2m jobs if we failed to join the euro. They were wrong. There is no evidence of any job losses attributable to our keeping the pound. In fact that decision made it easier for the UK to deal with the Financial Crisis. We were able to implement policies denied to the euro countries, and were able to create more jobs in several years than the euro countries combined. The UK has seen job gains, not losses, because it kept its currency.

The numbers of alleged "job losses" if the UK left the EU are plucked from the air, making the completely false assumption that our trade with the EU would cease if we did. It could even be argued that the £20bn we pay annually to the EU would generate more UK jobs if it were spent here instead. ____

2. The UK would lose influence in the world

The thinking behind this is that in a world of continental powers, the UK is a small island without much impact. By being part of the EU, it acquires that body's collective strength and bargaining power, and can thus exercise more influence than it ever could unaided.

This notion derives from an age now past. It was true in the 1960s and 1970s that the UK's influence had much diminished and was still diminishing. The country had the lowest growth rate in Europe and the highest strike record. Beset by costly and unresponsive nationalized industries, and plagued by aggressive and powerful trade unions, Britain cut a pathetic figure and was sometimes called "the sick man of Europe." One of the motives for joining the EU (then called the EC) was the widespread feeling that we couldn't cut it on our own.

This changed in the 1980s and early 1990s as the UK reformed itself. It went from the lowest growth to the highest, from the highest strike rate to the lowest. It acquired a confidence it had lacked before, and became more influential as other countries noted and admired its progress.

The UK is not currently very influential within the EU. When it votes against measures proposed in the Council of Ministers it is defeated. Its interests compete with those of 27 other nations, many of whom often combine to promote their own interests. Increasingly the Eurozone countries combine to pass measures inimical to the interest of those not in the currency union.

Outside the EU the UK would negotiate its own position instead of having that position buried among the interests of others. It would take its own seat on international bodies such as the World Trade Organization and be able to lobby and bargain for its own advantage. It is highly likely that the UK would use that position to promote lower tariffs, more free trade, less protectionism and more opportunities for enterprise on a global scale. It cannot do that as 1 in 28 members of a body that currently monopolizes its representation. Outside the EU the UK would almost certainly be more influential in the world, not less. ____

3. Firms would leave the UK

Although some argue that firms would leave the UK and relocate within the EU if Britain voted to leave, there is scant evidence that this would happen. Only 5 percent of UK firms trade with the EU, but all firms currently have to obey EU rules and accept EU regulations. Many small and medium enterprises complain that they are adversely affected by those rules, and that extra costs are imposed upon them when they have to comply. They would stand to gain if the UK took control of its own business climate, and they would have no reason whatever to leave.

Among the 5 percent who do trade with the EU, there are many who would like to see control over trade deals taken back into UK hands. There are, it is true, a few large companies who favour remaining in the EU because its rules raise barriers that potential new competitors find it difficult to surmount. They are a minority that has strong influence over the Confederation of British Industry, whose "surveys" of opinion have been exposed for using flawed methodology to make them seem more representative. Even among these, there are hardly any that threaten to leave, and almost certainly none that would actually do so.

It was said that is we failed to join the euro, many businesses would leave the UK. In the event it did not happen.

Most business leaders, when asked, deny there is any question of them leaving the UK for elsewhere in the EU in the event of a UK withdrawal. These include big employers such as Vauxhall, Nissan, JCB, Airbus and GE. Any who did so would be at a huge disadvantage with respect to those who did not. They would have to follow EU regulations for their trade with the rest of the world, whereas their still UK-based competitors would only have to follow them for their trade with the EU.

There are considerable costs involved for most companies in relocating to another country. The perceived advantages of leaving the UK to move to a country still in the EU would have to be massive to justify such costs, whereas the reality is that they are not. Indeed, in most cases they are negative, and the advantage would lie in remaining in a UK that could now control its own regulations and negotiate its own trade deals. ____

4. The UK would lose inward investment

The theory is that if the UK were no longer located within the EU, foreign firms would transfer their investment to countries still inside it. Even if firms retained their factories and facilities already here, it is argued, the UK would lose new investment because those firms would choose to expand within the single market rather than outside it.

If the UK did decide to leave, it would negotiate a trade deal with the EU that allowed reciprocal access to each other's markets, just as the US, China, and many other countries have already done. International firms would therefore have no reason to consider the UK as a less attractive investment opportunity than it is presently.

Although the claim is made that they would pull out investment, there is a paucity of international investors announcing plans to withdraw investment, or even talking of doing so, if the UK votes to leave. On the contrary, car makers and others have said they have no plans to withdraw present or future investment if it does so.

Ernst and Young's Attractiveness survey found that 72 percent of US investors and two-thirds of Asian investors would like the UK to have "looser" relations with the EU. This means that instead of wanting to keep the UK bound tightly within the EU and its rules, investors would be relaxed, even favourable, to a looser relationship such that the UK might enjoy outside the EU, but with a trade treaty negotiated with the EU.

The UK is the favoured destination for foreign inward investment in Europe because it enjoys certain advantages, linguistic, cultural and historical, as well as business and financial. Those advantages would not be eroded if the UK decided to leave the EU. On the contrary, the odds are high that they would be enhanced if the UK were free to offer deals and terms that it is currently prevented from doing by the need to comply with EU rules and directives.

A UK outside the EU would need to think globally, taking links with the wider world as no less important than its deals with the EU. Its advantage would lie in seeking out and attracting more inward investment, not less, and there is no evidence to suggest that it would fail to do so. ____

5. If we came out, the UK would have to obey EU rules without any say in drafting them

Lord Heseltine recently flew this particular canard on the Radio 4 Today programme. He actually said that if the UK voted to leave, "our trade policy would be made in Germany without us having any say in it." It is certainly not true that America's trade policy is made in Germany, or Switzerland's, or Mexico's, Peru's, Australia's or the other countries that trade with the EU without being members of it.

A UK outside of the EU would similarly negotiate a trade deal with the EU. It would, like the other countries, comply with EU rules for the goods it traded with the EU, but not for goods traded outside it. The EU in turn has to meet the standards of the countries it exports to for the goods it trades with them. Some 95 percent of UK firms do not trade with the EU, so would not have to comply with EU rules, or have their trade policy decided in Germany without having any say in it.

The UK's trade policy would be made in the UK, not in Germany or Brussels, and would be such as to aid and encourage UK firms instead of tying them down with many pointless restrictions. Some people seem to assume that the UK would have a "Norway-type" relationship with the EU, or a "Switzerland-type" relationship, but if the UK did leave the EU it would develop and negotiate its own relationship with the EU, like many other countries have done.

The claim that the UK would lose its ability to influence the rules presupposes that it has any significant influence as things stand. The UK has 8 percent of the votes in the EU Council of Ministers. It has tried to block 72 measures over the past two decades and has been outvoted every single time. Each of them has passed into EU law. The notion that the UK has valuable input into the drafting of new EU laws is not really supported by the facts. Our presence within the EU basically means we are forced to comply with laws made by others against our opposition. Outside it we would not. ____

6. We'd have to negotiate with each of 27 separate EU countries

This has been said by some of those who support the UK remaining within the EU, including Lord Heseltine, even though it is obvious and palpable nonsense. Assuming that the other member states remain within the EU if the UK decides to leave, the EU will continue to exist, although containing 27 members for the time being instead of 28.

The UK would not have to negotiate with them one by one because the EU negotiates on their behalf. We would negotiate a trade deal with the EU, a deal that would then apply to all of the remaining members. UK firms would gain access to the single market via that trade deal, and their goods would then be able to enter each of the individual countries that make up the EU on the same terms. Similarly the goods from each of them would be able to enter the UK, all on the same terms as will then apply to the others.

UK citizens have their preferences, of course, as to which EU countries they favour more than others. Character, culture and history play a part in their choice of countries to visit, as does climate, and obviously the cost of living plays its part. These preferences would continue to be exercised, and doubtless to change over time, if the UK were no longer a fellow member of the EU. But the rules governing visits to them by UK nationals would be decided centrally by the EU, not by the 27 countries individually.

The Schengen Agreement for borderless travel between countries within the area does not currently apply to the UK because it, along with Ireland, chose not to join. This would be unchanged if the UK left the EU. UK citizens would have to show passports on entering other EU countries, as they do now. The difference would be that UK travellers would walk through the lines marked "non EU members." This also would not require negotiation with individual EU states.

It would be up to the UK if it left the EU to decide for itself whether to retain separate entry lanes for EU members as opposed to those entering from elsewhere in the world. It might be convenient to do so. ____

7. We'd lose access to EU markets, hitting our exports

Some commentators seem to think that if the UK voted to leave, then the EU would act vindictively to punish it for doing so by cutting trade links. Such an outcome is far-fetched to the point of fantasy. Countries to not behave like that, especially with friends and allies. They work together for mutual benefit and self-interest.

The EU has signed free trade deals with many countries, giving them access to its single market in return for its members having access to theirs. There is no doubt whatsoever that it would do the same with the UK if it chose a future for itself outside the EU.

Some pro-EU activists deny this. Stephen Kinnock MP recently said in Parliament that the UK would get a "punishment beating" if it left. This is unfounded. Punitive tariffs are banned under WTO rules. The EU's Lisbon Treaty states:

" The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation."

Britain is too important a trading partner for much of the EU for them ever to consider ending that economic interdependence. Similarly the UK's trade with the rest of the EU, although now less than our trade with the rest of the world, still represents almost half of our total trade. It is in the interests of both parties to allow mutual access to each other's markets, and there is no question that this would continue if the UK voted to leave. A free trade deal would be negotiated with the UK, just as the EU has already negotiated similar deals with other countries.

The reality is that if we left the EU, the economic relationship would continue, but the political relationship would be changed to one in which the UK made its own decisions instead of being obliged to accept collective ones. ____

8. Our ability to control immigration would be worse if we came out, not better

If we left the EU, there would still be constraints upon our ability to control immigration because of our commitment to international human rights and asylum conventions. We would, however, be able to restrict the numbers of EU citizens allowed to move and settle here. Whether we would want to do that is another matter, but we would no longer be forced to allow free movement of EU members if we were ourselves no longer part of the EU.

In some areas we would negotiate with other countries, but our ability you do so would be enhanced rather than diminished if we were able to do so independently, instead of having to do so collectively through the EU. There is no doubt that an independent UK policy on immigration would give it greater control than it could achieve through an EU wide immigration policy imposed upon it.

Some strange claims have been made, including one that the French would stop policing the migrant camps near Calais if the UK quit the EU. They would apparently do this to punish us for leaving, leaving Britain at the mercy of mass attempts to infiltrate into the UK. There is no evidence at all that anything like this would happen, or that it would have the effect predicted. No officials or spokespeople have indicated an intention to do this; the idea is empty and utterly implausible speculation.

There is a very good case for saying that immigration into Britain, especially skilled immigration, is a good and helpful thing. For centuries we have admitted those fleeing persecution or seeking to better their life. If this were under UK control, it is likely that we would continue with such a policy. But it would be easier, not harder, for the UK to be able to control the numbers, the rate of flow, and the type of immigrants we wanted to give priority to. We would be able to do so in ways that made it easier to absorb and integrate such people into our society and our culture. ____

9. UK citizens living in Europe would have to leave

It is difficult to see where this idea comes from because there is nothing to support it. If the UK opted out of the EU, there is no way that our ex-partners in that union are suddenly going to deport all UK citizens living within their borders. They would have no reason to do so. Nothing in our relationship with the EU, either now or following a withdrawal, would cause this to happen. British citizens living elsewhere in the EU are a positive asset, with most making a significant and positive economic contribution to the countries they reside in.

Similarly there would be no expulsion of EU citizens currently residing in the UK. Again, there would be no reason to, and nothing arising from the negotiations would imply it. The overwhelming majority of them make a similar positive contribution to our economy, and it would be very much in the interests of both parties not to change the status quo of those currently residing in each other's territories.

Anyone who lives in another EU country for 5 years or more gains the right of residence, and this right would not be rescinded, either for UK citizens who have chosen to live abroad, or for EU citizens who have settled here.

The UK remains part of Europe, whether or not it retains its membership of the EU. Undoubtedly UK citizens will continue to wish to take jobs in Europe, even if the UK leaves the EU. It is equally certain that EU citizens will be attracted by employment in the UK. In many businesses these days staff are often rotated through different foreign branches of an international company, gaining both experience and promotion opportunities. This will continue whether the UK remains in the EU or chooses to leave it. People from non-EU countries such as the US, Australia and Japan, come to live and work for a time in EU countries. The same would be true of UK citizens if we ourselves became a non-EU country.

UK citizens in the EU will not be forced to leave. On the contrary, they will be joined by fresh arrivals from the UK, and the same will be true of EU nationals living and working in the UK. ____

10. We'd all find it more difficult to visit EU countries

It would probably be no more and no less difficult for UK citizens to visit EU countries if the UK were to withdraw from it. We are not part of the Schengen area with its passport-free travel. UK citizens have to take passports and show them at frontiers. They are subject to possible customs and immigration checks. The same is true of EU visitors to the UK. This will continue. The EU has visa-free reciprocity with several countries, and would be virtually certain to achieve similar reciprocity with the UK if it ceased to be an EU member.

UK citizens would need passports, not visas, as they do at present to visit EU countries, and their citizens would similarly enjoy visa-free travel to the UK, with admission on showing passports.

Again, some make the specious claim that the EU would 'punish' the UK for leaving their club, and would retaliate spitefully against UK tourists. The reality is that many EU countries count UK tourists as important for their economy, and would not allow their governments to make travel more difficult for such visitors. It seems extraordinary that the people who make this false claim are happy to remain in association with countries as spiteful and vindictive as they believe them to be.

There might just be the minor difference of UK visitors having to walk through the line for "non EU members" when they arrived in EU countries. But just as UK visitors are usually allowed currently into Schengen countries with a nod and a cursory glance at the passport, so they would almost certainly be treated in future as they entered EU countries.

Given the numbers of EU citizens who wish to visit as tourists, it might even be advantageous for both sides to agree to continue the present arrangement both ways.

Post-war town planning: how to kill a city

In the UK the end of the second world war led to increased efforts by planners to shape the direction of cities. Destruction in the Blitz was to many town planners and architects 'a blessing in disguise', allowing them to reconfigure cities in a more rational way. But cities are a good candidate for an example of 'spontaneous order'—that amorphous concept popular with libertarians—where information is dispersed so widely that central plans don't work as well as a common knowledge framework and private direction.

What I hadn't realised until recently was that this process went on extensively even in the USA. The University of Oklahoma's Institute for Quality Communities has a wonderful set of pages comparing aerial photographs of cities 60 years apart—in the 1950s and the early-2010s—and the destruction wrought by planners is evidence even from a cursory glance. The pictures of Midwestern cities are particularly striking.

Kansas City, which in 1955 has the look of a hardboiled-era Los Angeles from above, all consistent blocks, leafy but fairly densely populated, is saddled with an incredible set of highways and junctions right through the middle of the city (I-70 and I-435). Some Spaghetti Junction-esque interchanges required what looks like a dozen blocks to be bulldozed.

In the US, this movement came partly from Harry Truman's Housing Act of 1949 and surrounding bills. This provided huge federal funds ($3trn in today's dollars) to buy up and demolish housing—local government would pay the remainder to get new buildings up. It also came partly from Dwight Eisenhower's Federal Aid Highway Act of 1956, which did a similar thing but for giant roads.

Perhaps the most striking lesson from these illustrations is one that should already be well-learned: density needn't be unattractive. Just as Pimlico and Chelsea are packed with people but among the most desirable places in the world, the 1950s versions of great US cities were denser but prettier. A lot was lost when trying to reconstruct them from the top.

Tax codes tell us what tax rates can't

Changing tax rates is quite hard. It's a big deal. I still remember Gordon Brown's 'twopenny budget' back in 2007, when the then-chancellor cut 2p off the basic rate of income tax and corporation tax (while scrapping the 10p introductory rate of income tax but partly muted that by beefing up tax credits). But changes in tax code technicalities and language are much less salient and widely-noticed, and may well be a more fruitful way of improving tax policy. The job market paper (pdf) from Elliott Ash, a JD/PhD candidate at Columbia university, tackles this question by looking at the text of 1.6m statutes from state legislatures from 1963 until today. He tries to discern the effective tax code "the set of legal phrases in tax law that have the largest impact on revenues, holding major tax rates constant". Essentially his approach allows him to quantify elements of the tax regime that would otherwise be only qualitative—like when people quote the length of the tax code to measure its complexity.

He then associates terms with more or less revenue. For example, the phrase 'buildings and structures' has one of the strongest positive associations with extra revenue from the personal income tax, perhaps because it clarifies what kinds of property can be claimed for deductions. Similarly, 'certain motor vehicles' has a strong negative association with sales tax, presumably because the phrase is generally used to make particular automobiles exempt from sales tax.

His main finding is that Democratic takeovers of state legislatures tend to increase the overall progressivity of the tax system, by switching the language of the state tax code towards effectively raising more from income taxes. By contrast, Republican takeovers shift tax codes towards language associated with more revenue from sales taxes—more efficient but less progressive. This approach is much finer grained than the fairly blunt tool of looking at rates, which are much stickier.

It's not all that surprising, but it's a fascinating approach, and one I expect to be mined for more interesting findings in the future.

Oxfam's whining on about wealth inequality again

We think it rather sad to see the decline of an organisation. This is true whether we're talking about the steel works at Port Talbot or the frantic scrabbling around that Oxfam is indulging in:

The vast and growing gap between rich and poor has been laid bare in a new Oxfam report showing that the 62 richest billionaires own as much wealth as the poorer half of the world’s population.

Timed to coincide with this week’s gathering of many of the super-rich at the annual World Economic Forum in Davos, the report calls for urgent action to deal with a trend showing that 1% of people own more wealth than the other 99% combined.

As we mentioned last year when they proffered the same numbers there's almost certainly more of the 1% working for Oxfam than there are billionaires in the world. However, to that point about tempus mutandis, eheu fugaces. We do not glory in the jobs that are being lost as a result of technological change in the steel industry, nor do we cackle with glee at the sight of Oxfam's thrashing around for a new mission. But we will describe the situation as being exactly the same: the problems that brought each organisation into being have largely been solved, or at least we now know how to solve them. Therefore said organisations are attempting to find some new mission to keep the show on the road: Oxfam more successfully than Tata Steel.

Blast furnaces, now that we recycle much more old iron and steel, well, we simply need fewer of them. So, thus, some of those blast furnaces are closing. Very sad, the people working in them deserve and will get our help in reorganising their lives. Oxfam faces a different problem. It was originally set up to provide emergency famine relief and then morphed into being more about general development work in the poorest parts of the world. A worthy cause, both in fact, no doubt about it.

And yet that alleviation of poverty, that aid in development, we now know more about how to do it. It is, as Madsen Pirie here continually describes it, a matter of us all buying things made by poor people in poor countries. Let that free market, globalised in tooth and claw, rip and almost miraculously development proceeds and poverty recedes. As has in fact been happening over this past generation. We've seen the largest reduction in human poverty in the entire history of our species as we've simply allowed market forces to take effect. The World Bank announced in the autumn that, by the end of 2015, we would have less than 10% of humanity still stuck in that utter destitution of abject peasant poverty, for the first time ever as either a species or a civilisation.

We know now how to achieve Oxfam's task: and it doesn't require Oxfam to achieve it. Thus their thrashing around to find something else to do: for as C. Northcote Parkinson pointed out the only purpose of any organisation or bureaucracy is to perpetuate the existence of that organisation or bureaucracy. Which is why Oxfam is protesting that wealth inequality, the result of the very process that it was originally set up to achieve. As the world is becoming richer, as global income inequality is falling, it's entirely unsurprising to see wealth inequality rising. Oxfam was set up to achieve the first: now that it's working and we don't need them any more they struggle to find something else to do and thus the switch.

All rather sad really but there it is: technological change in poverty reduction leaves some marginalised just as much as technological change in the steel industry does. And our reaction should be the same too: aid those affected in making the necessary changes, don't prop up the organisations that are no longer needed.

Students should not be treated as immigrants

Some interesting figures emerge today in a City AM piece by Baroness Jo Valentine of London First, who commissioned a poll by ComRes to discover if Londoners think foreign students should be treated as immigrants. In the case of non-EU students studying in Britain, only 17 percent of people think of them as immigrants.  For EU students the figure drops to 15 percent.

Furthermore, their view of foreign students here is highly positive.  Some 66 percent of people think that foreign students provide useful global networks to promote trade with the UK.  The proportion thinking they pay tuition fees and make a valuable contribution to the UK economy rises to 72 percent.  And the number who think they bring valuable skills to the UK after graduation is 68 percent.  These are all very positive numbers.

The negative outlook is shared by only a minority.  Only 32 percent think they take places from UK students.  Only 25 percent think they should study in their own countries, and only 19 percent regard them as having a negative impact on public services.

This confirms something the ASI has said all along.  The UK has a multi-talented and diverse workforce, and should act to sustain its high skills talent pool.  Some who campaign against immigration add students to their numbers to augment them, even though the public agrees that international students constitute a great asset.  We should re-classify them as temporary visitors and look favourably on those who want work visas after graduation.

Of course we don't want bogus "English Schools" bringing in unqualified immigrants illegally, but we do most certainly want the talented, the skilled - those who qualify for admission and study at our academic institutions.  It is a small step to stop treating foreign students as immigrants, but it is one that would be beneficial to Britain and help keep our businesses competitive.

The Amy and Vicky Act: as naked a financial theft as you shall ever see

One of the things we must constantly guard against is one or other of the special interest groups managing to carve out for themselves some juicy little rent opportunity. It might be landlords arguing that we shouldn't have business rates because that's a tax landlords pay. It might be that we must have very special pensions for MPs, the people who determine MPs pensions, because MPs are very special people. But all such attempts to slice a juicy little piece off the body politic, from our hides, are to be resisted. And the latest attempt to do so is riding on the horrors of child abuse.

The Amy and Vicky Act, which has been passed by the Senate and is now before the House of Representatives, seeks to secure damages for victims of online paedophiles who possess indecent images of them.

We find ourselves in the societally odd position of being in favour of child pornography because we are against child abuse. All the evidence there is points to the fact that the porn is, on balance, a substitute for the act. Thus the way to reduce the number of acts is to increase the number of images in circulation. Obviously, that should be created digitally, not in any form of reality.

However, leaving that aside, this proposal is in fact one of the most naked attempts at carving out a rent, at securing a steady and consistent flow of other peoples' money, we have seen:

The Children’s Charities’ Coalition on Internet Safety – which includes the likes of the NSPCC, Barnardo’s, Action for Children and the Children’s Society – will on Monday publish an open letter to Michael Gove, the justice secretary, urging him to study legislation being drafted in America that would force internet paedophiles to make financial reparations for their actions.

You get caught with child porn then you should have to pay damages for the pain caused to the abused child caused by the knowledge of your possession. Looks pretty tenuous to us and the courts have thrown the idea out. However, look a little deeper:

John Carr, the coalition’s secretary, said a new law was urgently needed. Estimates suggest that paedophiles in the UK alone could be holding between 150 million and 360 million images of child abuse. “Conventional law enforcement methods are not working in this area, so we have to look for new deterrents,” Carr said. “I think this could be a very effective one. If guys know they could lose their house or their pension, they’ll think twice.”

They can certainly see a golden pot of money there. Further:

They explain that it would also help to take some of the financial burden off the state. “The sort of financial orders we envisage might cover an element of compensation to the victim, but also make a contribution to the cost of any necessary therapy or ongoing support the abused victim might need. Typically, this would relieve the state of some or all of the cost of providing such therapy or support.”

Oh, therapy and support eh? Our word, wonder who might be the providers of that? Possibly:

The Children’s Charities’ Coalition on Internet Safety – which includes the likes of the NSPCC, Barnardo’s, Action for Children and the Children’s Society....

Well, yes, obviously.

So to tell the story in a simpler fashion: if you change the law as we suggest then there's a vast pot of money that can be confiscated by us urging the change in the law, which will keep us, those urging the change in the law, providing therapy and support services at fat hourly rates from now until kingdom come. With lovely pensions to boot and all without any oversight from anyone at all. Which is why we propose this change in the law.

The correct response to this proposal is a sustained outburst of that Anglo Saxon invective which so enriches the English language followed by a "No". Even a "No!"

For some reason we also want to say something about sex and travel.

This is a rum one from Corbyn

  Well, perhaps not all that strange, given what little we think Jeremy Corbyn knows about business and economics. He's decided that companies should not be allowed to pay dividends to shareholders unless all staff are making the living wage. This fails on two counts: on the detailed knowledge of how the business world works and upon the underlying economics of wages works.

Here's the ramblings:

Companies should be banned from paying their shareholders dividends unless their staff earn the living wage, Jeremy Corbyn has said.

The Labour leader wants to ban chief executives from handing financial returns back to investors if they rely on “cheap labour” for their profits.

Well, partnerships don't pay dividends: thus partnerships, and there's a lot more of them out there than most people think, won't be covered while that small portion of limited companies that do are. It's simply not sensible to divide the economy in this manner.

But it's the misunderstanding of the economics that's so painful. For of course this will lower the amount of capital that is put into British business. But more capital going into British business is what raises wages. Good grief, even Marx got this right, it's the capitalists competing for the services of the workers that raises the price of labour. Thus we want more capital coming in, not less.

Corbyn's proposal will, over time, lower UK wages. And the tragedy is that he simply doesn't understand this, nor does his coterie.

A simple guide to us all being fatty lardbuckets

Allister Heath has picked up on the excellent work that Chris Snowden has been doing over at the IEA on the obesity issue. Weights are indeed rising but it is not because we are all eating more. The reason that's not the reason is that we're not all eating more: calorie consumption is falling as it has been for a century. The current median diet is today well below the level at which people would lose weight under WWII rationing. Something else has changed and it's actually the amount of energy we expend, not what we consume, which has. As regular readers will know we think that it's central heating which is the big issue here, not in fact exercise. Which, given that the main energy expenditure of mammals is temperature regulation makes a lot of sense to us.

However, Heath makes clear something that can be used as a very useful little tell tale:

We aren’t addicted to high fructose corn syrup either. For reasons relating to tariffs and agricultural policy, Americans consume 25 kilograms a year, against less than half a kilogram for us.

If anyone starts going on about how it's fructose which is the problem, or HFCS, then we can immediately dismiss them as a crank. Or at best, woefully misinformed. Because people are turning into fatty lardbuckets at similar rates in the US and UK. And across Europe too, where HFCS consumption rates vary. So, given the huge variance in fructose consumption, but the same problem everywhere, then it cannot be the fructose causing the problem.

This is not, obviously, a startling revelation, but it is a handy little mnemonic. Warbling on about fructose just doesn't cut it we're afraid.

Scrapping deposit insurance is a perfectly respectable idea

Our friends the Centre for Policy Studies have a report (pdf) out today, by banker/adviser Andreas Wesemann, which argues for the abolition of deposit insurance. This shocked and appalled some, including All Souls professor Kevin O'Rourke, who asked Twitter if Wesemann and the CPS could possibly be serious.

Yes, they could be serious. Scrapping deposit insurance is an idea with a fairly impressive pedigree. O'Rourke is presumably aware of the hugely-cited 2002 paper "Does deposit insurance increase banking system stability? An empirical investigation", in the prominent Journal of Monetary Economics (the 22nd highest impact econ journal by ideas.repec.org's most sophisticated ranking system). If he wasn't, Garett Jones pointed it out to him on Twitter. It looks at 61 countries between 1980 and 1997 and finds that explicit deposit insurance tends to lead to more banking crises.

This is, of course, precisely what the CPS paper argues. And one of the JME paper authors, with different collaborators, updated the analysis in 2015, looking at data from up to 2013 from across the world, with largely unchanged results (pdf). They point out that insuring deposits may restrain bank runs, but it encourages worse sorts of instability, and drives bank risk-taking. We might add that if debt is a worry, then subsidising deposits but not equity is yet another intervention encouraging debt over other, potentially less worrisome, ways of funding investment.

It's true that not every paper supports the CPS conclusion. Some find that deposit insurance cushions the market in bad times, even if it makes these bad times worse. Others find that the runs that a no-insurance regime allows are a key element of discipline in the system, working toward higher long run stability even as they destabilise in the short run. In the absence of systematic reviews and meta-analyses I can only give my own impression of the literature, which it seems to me sides mostly with the 2002 finding from Demirgüç-Kunt & Detragiache.

But whatever the overall tenor of the research, it's clearly an academically popular position that deposit insurance brings with it clear dangers. So I'd ask O'Rourke and others to tone down the shock and horror—abolishing deposit insurance is a perfectly respectable position. Now how about reconsidering all that Basel III business...

If only Owen Jones actually understood economic numbers

We do find it difficult to understand Owen Jones. He has, in recent years, told us that Syriza in Greece, Podemos in Spain, Chavez and Maduro in Venezuela have all been economic examples we might want to copy. Quite why such a collection of basket cases have been held up for admiration we're really not sure. But today we are at least beginning to have an inkling. Jones simply doesn't know: he doesn't know the numbers, doesn't understand what the various economic numbers are telling us and him. This might seem like a minor example we're to show you but it's part and parcel of that, well, that ignorance in fact.

But consider the plight of the majority of Americans. We know that, six years into his presidency, poverty was still higher than before the financial system near-imploded. While child poverty has been alleviated for many Americans in the past five years, for African-Americans it has remained stubbornly constant.

The link for the child poverty is to this report. And that's not a measure of child poverty at all. It's a measure of how many children would be in poverty before the things the US government does to take people out of poverty.

To understand: there are now two measures of poverty in use in the US. The Official Poverty Measure, which is three times a basic but nutritious diet in the early 1960s upgraded for inflation since then, adjusted for family size. It is an absolute measure of poverty: it does not consider how lifestyles in general have been improving over that time. The other is the Supplemental Poverty Measure: this is very much more like our own measure, one of relative poverty, relative to the median income. The SPM also includes the various things that the US does to try and reduce poverty and under that measure child poverty rates are quite similar to what they are here in the UK.

However, the thing about the OPM, which is what Jones is considering, is that it does not include those poverty alleviation measures:

The income and poverty estimates shown in this report are based solely on money income before taxes and do not include the value of noncash benefits, such as those provided by the Supplemental Nutrition Assistance Program (SNAP), Medicare, Medicaid, public housing, or employer-provided fringe benefits.

That it doesn't include taxes also means that it does not include the EITC, the US equivalent of our tax credits. And pretty much all of America's poverty alleviation efforts come through either that EITC or the direct provision of goods and vouchers: all the things not considered in this estimation of poverty. They spend about $800 billion a year or so on them, they do alleviate a lot of poverty. In fact, the one thing that the US poverty alleviation system is very good at is the alleviation of child poverty. When we measure against that OPM, but add in those benefits in tax and in kind, child poverty in the US pretty much disappears in fact.

The error that Jones is making, as so many others do, is akin to looking at the British figures before all taxes and benefits. Something that is done here. Figure 1 tells us that (using our relative poverty measure of less than 60% of median household income) fully 40% of Britain is in poverty. Which is of course a nonsense. Because we cannot measure, usefully, poverty before the things we do to alleviate poverty.

We can also test this in another related manner. The Gini is not quite the same thing but it is indeed related. And if we look at the pre-tax and benefits inequality of various countries the US does not stand out in any remarkable manner. It is, before that redistribution, less unequal than France or Germany, only a little above Sweden or the UK.

Is the final outcome in the US more unequal? Yes, indeed it is. They do less redistribution than most European countries. However, to go around measuring poverty by the gross numbers for the US, before tax and redistribution, and then try to compare it to the net numbers, after tax and redistribution, for other countries is simply absurd. Or, of course, ignorant.

As Mark Twain pointed out, it's not what you don't know that's dangerous, it's what you do know but ain't that is. And thus we think we've found our solution to the conundrum of Owen Jones. He simply doesn't know the subject he's pontificating upon, just doesn't grasp the economic numbers. And thus his being led into the error of being a socialist.