Our rulers are convinced that we are all morons

This is not an exhaustive search, this is just the stories lifted from one newspaper on one random day:

Ten-pack cigarettes will be banned from Friday after an EU directive comes into force this week while packaging will be forced to become bland and standardised.

Then:

The tradition of throwing a mortarboard into the air after graduation has been scrapped by a university because of health and safety concerns, according to a student newspaper.

The University of East Anglia in Norwich said a number of graduates had been hurt by falling hats in recent years, which gave rise to "avoidable injury", according to a statement published in student newspaper The Tab.

And:

Councils could force tends of thousands of takeaways and coffee shops to get rid of all their seating unless they install a toilet, after a judge ruled a lack of facilities in two Gregg's branches was giving them an “unfair advantage”.

A recent High Court case in which Newcastle Council beat Gregg's in a legal battle over whether local branches of the bakery chain should install toilets has set a "precedent", lawyers say, which means other councils can demand take-aways remove tables and chairs if they do not have washrooms.

We are too stupid to know whether we'd like to buy our cancer sticks by the ten or the twenty. After 16 years of education at the hands of the state we are all too stupid still to be able to throw our hat in the air. And we're definitely too stupid to be allowed to sit down and ingest a pastie if we cannot, in the same place, sit down to expel a pastie. 

This simply is not how adults rule themselves. It is, however, how those regarded as morons will have rule imposed upon them. The reason it happens this way is, of course, just a little more complex than the total contempt for the intellect of the electorate held by the elected classes.

It is that there are undoubtedly things that government can do, there's also a class of things that must be done. The things that we actually wish government to do are those which only government can do and which also must be done. Unfortunately those are also the difficult things to do: things which severely tax the limited intellectual capacity of those who would rule us. Therefore they don't do them: instead they do the simpler things which do not need to be done by anyone, let alone government. And then they can pat themselves on the back and claim their incomes, expenses and pensions for having ruled us.

What we need is to return government to doing only those things which must be done and which can only be done in that manner. For example, having nationalised the provision of health care it is incumbent upon government to organise health care:

A system of “bribes” which saw GP earnings soar to six figures worsened patient care while increasing death risks for some conditions, a major Lancet study suggests.

Experts said the controversial £1bn-a-year “pay for performance” scheme introduced under Labour constituted an “incredibly expensive experiment” which had failed.

Yes, same newspaper, same random day. Given that they can't actually do the tough stuff they have been hired to do they instead just treat us as morons and do the easy stuff and claim success.

This is not how a nation of adults rules itself. Time for us to return to the days of yore when we were trusted both to make out own mistakes and also to glory in our own successes. We could make this some grand call for an eruption of civil liberty but as an interim stage we'd like to just gently work toward the idea that government treat us not as the morons and children they currently do. Given that we currently pay some £700 billion for the pleasure, we're most certainly all taxed as adults, we don't think this is too much to ask for.

The Sun makes Beyoncé sweat

This week man-devil Sir Philip Green was in the papers yet again, dragging Beyoncé down with him. Following the destruction of BHS the media have been quick to pick up on the latest moral balls-up from super villain and Felonious Gru lookalike Sir Phil. 

An investigative piece from The Sun this week revealed that the workers manufacturing Beyoncé’s new athletic clothing line, Ivy Park, work up to 60 hours a week on just £4.30 per day. 

The Sun claims that the garments are being produced in inhumane conditions at the MAS Holdings factory in Sri Lanka, although the brand has denied the claims of poor conditions and assured that Ivy Park has a rigorous ethical trading program. 

Despite not being a Bey, or Bee, or whatever unsettlingly twee name the ravenous Twitter mob has given themselves, I don’t think Beyoncé is in the wrong here, and thus by proxy I suppose neither is Sir Philip unfortunately. 

It’s completely understandable that when you hear of sweat shop workers getting paid pittance and working in grim conditions for exorbitantly long hours your immediate reaction would be the desire to protest with your purse and spend your money on clothes “truly ethical” in their manufacture. But that’s where you’d be wrong, it would be a terrible thing for you to do. 

Anti-poverty campaigns can sometimes work as a blunt tool and end up hurting the people they mean to help in these situations. We have to remember that working in a sweatshop is often a considerably better economic option for those workers than the next best thing, namely subsistence farming in many cases, or other low paid factory jobs. It’s worth noting that while £4.30 a day wouldn’t get you far in the UK, the MAS Holdings workers making Beyoncé’s ugly sports bras are actually on double Sri Lanka’s minimum wage.

Sweat shops are not a good option, but they are the least bad option currently available to many people. Washing our hands of the situation and just closing the sweatshops would make their workers worse off, potentially much worse off. If we want to help people, we should give them new options, not take away existing ones.

One MAS worker also found Ivy Park’s message of female empowerment deeply disingenuous, a fair point when you’re making £100 leggings by day and staying in a boarding house with terrifying unisex showers by night. She said: “When they talk about women and empowerment this is just for the foreigners. They want the foreigners to think everything is okay.” And frankly it’s not, we need to give these women more options, but the answer isn’t taking the best one they currently have away to make ourselves feel better.

There is also research to suggest that while sweatshops are far from providing the “empowerment through sport” Beyoncé’s clothing line promises, sweatshop work does actually help improve women’s lives in other arenas; delaying marriage, delaying young childbirth and extending schooling, particularly amongst teenage girls. 

If we really want to help workers in developing countries lift themselves out of poverty we should buy more of what they produce, not less, and not just Fairtrade either. The boycotting of sweatshop-produced items or the campaigning for closure of factories can in fact have devastating effects and push the poor further into poverty.

So for now at least you can wear your Beyoncé branded swimsuit to the park with peace of mind that you’re not actually making it any worse, for workers anyway. 

There's a reason fintech companies like the European Union

The Guardian tells us that those unicorns, those privately owned and venture capital funded companies over in the tech sector, like the European Union and wouldn't want Britain to leave it. There is, of course, a reason for this over and above that general love of a centralised European superstate. That reason being that much of the London scene in this sector is, given the background of The City itself, involved in financial technology. And there's one specific rule that greatly aids such fintech within the EU:  

None of Britain’s so-called unicorns, private companies with a valuation above $1bn (£710m), will support Britain leaving the EU, the Guardian can reveal.

Of the 14 companies on the list, five have come out as explicitly against Britain’s exit from the EU, while the rest either remained officially neutral or declined to comment on the matter.

Taavet Hinrikus, the co-founder of the financial technology (fintech) startupTransferWise, said: “We believe it would be crazy for the UK to leave the EU, both for businesses and consumers.”

Funding Circle, another fintech startup, said: “A successful, well-functioning Europe is crucial to a business like ours and we believe this is best achieved by remaining part of the EU.”

That rule being that if you have a licence to offer financial services in any one EU country then you, by definition, have a licence to offer that in every EU country. This is as opposed to the US system, where you must gain a new, and different, licence state by state.

So, yes, an obvious reason why fintech would like the EU. 

We might not think that we want to make such a momentous decision as Brexit or not purely on the desires of one small section of the economy of course. But we could also observe that it's not in fact necessary for Britain to be in the EU to gain that benefit for British companies.

As an example, Facebook, still an American company we are pretty sure, started its money transfer network here in the EU, not in the US, on exactly that licencing basis. They gained a money transfer licence through their Irish subsidiary and were good to go across the EU. And of course, this is something possible for any company to do, unicorn, British based or not,, Britain in the EU or not.

There are indeed things that are useful and possibly even good about the EU. And one of the joys is that you don't actually have to be a member of the EU to take advantage of them.

Slack in the USSR

It's funny how some things just slip down the memory hole. It's now been more than a quarter of a century since the Soviet Union collapsed, so it feels like ancient history. It's completely intangible, and the world it inhabited is totally gone. We know the USSR failed, but does anyone think much about why and in what ways?

Lucky for us, Jose Luis Ricón has, in a series of posts, combed through the evidence on communist Russia's healthcare, GDP growth, and food consumption.

On healthcare, he concludes:

The Soviet healthcare system heavily underperformed most of the countries that we can use as meaningful comparatives. Relative to other countries that began from the same situation of poverty as the SU, its performance wasn’t better than the systems of those countries. After the 70s, health outcomes deteriorated, and the utter failure of the system became apparent.

Despite the high number of hospital beds and physicians, the Soviet Union wasn’t able to deliver better healthcare outcomes to its population, relative to developed countries, even though they made great improvements in the 20-50s era. This should make us wary of making hasty comparisons based just in some indicators instead of considering the bigger picture.

On GDP growth:

Given this data, the Soviet Union was the mediocre economy economists say it was, not a healthy, growing, superpower. If the USSR had an impact in the world, it was due to its size, natural resources, population, and strong military, not because it was more productive than other countries.

And on food consumption:

Was Soviet caloric intake higher than the US’?

No. In saying this, I’m saying the FAO is wrong, and that Robert Allen, who based his calculations in FAO data (and used their multipliers), didn’t notice. To say this, I had to go through a full literature review, and I come to this opinion. Before reading my post, you were totally justified in believing that caloric intake was higher. Not anymore. Unless some FAO official tells us why did they used their coefficients, that seem to go against the Sovietological literature.

Go read the whole things!

Can we stop this nostalgia for manufacturing jobs please?

We're told, endlessly, that we must do more manufacturing here in Britain. The underlying argument being that manufacturing jobs are good jobs, that they pay well, and that given that we'd like to have more well paid jobs therefore we must do more manufacturing. This argument is really just evidence of the ghastly conservatism of large portions of the British commentariat. For the truth is that the marginal manufacturing job is not well paid.

OK, so these figures are from the US but the same basic story will be true here too: Recent research by the National Employment Law Project (NELP), however, found that manufacturing production wages now rank in the bottom half of all jobs in the United States. In decades past, production workers employed in manufacturing earned wages significantly higher than the U.S. average, but by 2013 the typical manufacturing production worker made 7.7 percent below the median wage for all occupations. During the same time period productivity in the U.S. manufacturing sector increased at a rate one-third higher than in the private, non-farm economy overall. The median wage for production workers in the manufacturing industry in 2013 was $15.66, with 25 percent of these workers earning $11.91 or less.

The actual figures themselves can be checked in this table here.

There are of course very well paid manufacturing jobs: just as there are very well paid services jobs. But the marginal manufacturing job pays less than the average wage. Meaning that if we expand this sector, move people into it, then we will be lowering the average wage of the country. This is also known as making us all poorer.

We could argue two different ways about why this is so. One would simply be that there's people half a world away willing to do those manufacturing jobs for £1 an hour. That inevitably puts pressure on whatever anyone is willing to pay labour here. The second would be that we appear to value the marginal production of more services more than we do the marginal production of manufacturing: thus we are made richer by having more of those services.

But whichever argument we use to explain it it is still true that the marginal manufacturing job these days is not a well paid job. Thus we're not going to increase the number of well paid jobs by increasing the amount of manufacturing we do.

Who has actually gained from globalisation?

An interesting restatement from Branko Milanovic of his earlier work on who has actually gained from the process of globalisation. In effect, absolutely everyone except those on around and about less than median income in the already rich countries as that chart shows. Or, in more detail, it can be seen here.

Real incomes more than doubled between 1988 and 2011

That's globally of course, but that's a vast improvement. 

...it is still the first time since 1820 that global inequality is deemed to have gone down..

For those that worry about inequality that is also a vast improvement. It seems there really is something to this neoliberal globalisation thing then. In detail:

...but whatever adjustment one does, the essential features –the supine S shape—with the peak around the global median and the trough around the 80th -90th global percentile, remain. It is precisely the growth in the middle, fueled by the resurgent Asia, and the quasi-stagnation of incomes around the 80-90th percentile of the global income distribution where Western middle classes are, that have attracted most attention. 

It isn't quite true that "middle class" bit. Not in the English sense that is, although it might be true in the American. It is really those on less than median incomes in the rich countries, that 80th to 90th percentile. And it's worth noting that they have not become worse off in any absolute sense. Sure, their relative position has declined, given the large rises in income of those both below and above them in the income distribution. But their absolute position hasn't changed at all: that's actually the thing being complained about.

We have a word, or phrase for this. If we're able to make someone better off without making anyone worse off then this is a Pareto Improvement. And Pareto Improvements are thought to be a good thing. And what we've managed to do with this neoliberal globalisation stuff is make 90% of humanity better off, 10% no worse off even if not better off. It's thus, quite possibly, the largest Pareto Improvement ever. And thus, of course, this neoliberal globalisation is a good thing. Even, a Good Thing.

No, everyone’s tax returns should not be public

Following the Panama Papers scandal, publishing tax returns is in vogue. The pressure on politicians to release theirs has reached the point that it has essentially become a necessary pre-condition for leading a party or running for President. Those who don’t are assumed to be suspicious and those who do are scrutinised as immoral for paying too little or, apparently, immoral for paying too much because they’re too rich. 

Without being hyperbolic, it is fair to raise concerns about the effect this can have on how people judge what the grounds for electing someone are. Much more worrying, though, is the idea that all tax returns should automatically be in the public domain. As in Scandinavia, the details of how much each taxpayer declares and pays would be available for anyone to peruse online. 

One argument is that fear of scrutiny would reduce evasion and avoidance. In the case of evasion, which is illegal, this makes little sense. The fact that HMRC see your return is enough of a disincentive to evade tax. And if your accounting is good enough to get past the government, it can probably outwit over-zealous armchair tax experts.

As far as avoidance, which is legal, goes, it is ambiguous how much of a difference this would make. Would the ‘shame’ of your co-workers and neighbours knowing that you use offshore banking or pay yourself through a shell company be enough to dissuade most people to stop avoiding tax? For those who were dissuaded, it is just as likely that they would declare less rather than pay more, which would perversely promote more law breaking. 

In any case, a far more effective solution would be to simply close perverse or unfair loopholes. However, the real intent of ideas like this is to affect a societal shift that promotes the idea that obeying the law is insufficient and that there is a moral obligation to pay as much tax as you can.

This could result in unexpected and arbitrary changes in the tax system to respond to immediate public anger and increased focus on populist, rather than efficient, tax shifts. It would also foment an unhealthy culture of envy, resentment, and suspicion. Perversely, it could also entrench class divisions and snobbery towards people with below average incomes. Furthermore, Norway and Sweden have had to restrict availability of tax returns, as complete transparency abetted burglary and promoted tabloid voyeurism. 

The sentiment that ‘if you having nothing to hide, you have nothing to fear’ is always sinister and we are already in an era defined by a creeping erosion of privacy. Further attacks on the ability of individuals to conduct their own affairs without being constantly monitored by everyone else can only be negative.

Why shouldn’t companies sue governments?

Trade deals are always controversial and increasingly excite populist rage on left and right alike. The negotiations of the TTIP (between Europe and the US) and the TPP (between the US and East Asia) have attracted an even greater level of hostility than normal, with people who should (and do) know better jumping on the anti-trade bandwagon.

Admittedly, some of the criticism is well deserved. It is not necessary or wise to have conducted the negotiations in secrecy, with details being leaked incrementally. Increased protection for intellectual property may prove problematic. And both deals are regional as opposed to global deals that add to the growing spaghetti bowl network of exclusive deals, adding to complexity and undermining efforts at comprehensive and uniform global liberalisation.

However, the greatest ire magnet is the provision for facilitating investor-state dispute settlement (ISDS). Essentially this allows foreign companies to claim against governments who cause them to lose profits. Pressure has already caused ISDS to be dropped from the TTIP proposals, although it is likely to be brought back, given the US favour it and the EU’s mooted alternative of an investment court system has been held to be illegal by the German Association of Magistrates.

Although ISDS already exists and has been part of most trade agreements, the idea of corporations being able to sue governments is anathema to many people. Surely allowing multi-nationals to sue whenever their profits are curtailed is an attack on democracy, consumer protection, egalitarianism, and the environment?

Equally, though, governments should not have the power to act arbitrarily. Investors and businesses require a predictable environment that does not change at a bureaucrat’s whim. If, for instance, a country shuts down its nuclear power plants unexpectedly and without good reason, the owners of the plants are not being unreasonable in seeking compensation, given that they invested on the reasonable assumption that this would not happen.

Whilst companies act out of self-interest, this can produce good results. It may be popular for a country to, say, pass laws against smoking. A tobacco company seeking compensation may only be interested in its own bottom line. But the effect of this threat can be to prevent an incursion into the lives of individuals who should decide for themselves whether to take risks like smoking.

The biggest fear is that TTIP will force privatisation of state assets. This is mostly incoherent nonsense. It is true that companies who are victim to nationalisation of their assets will be able to sue for recovery of lost profits, hence the popular meme that, ‘privatisation of OURNHSTM could never be reversed’.  This is a distortion. 

ISDS does not give investors the power to change government policy, and allowing other providers to compete with OURNHSTM has been expressly ruled out. All that would be required is compensation of companies losing out from re-nationalisation, which is eminently fair. Also, privatisation would actually need to happen in the first place, which is highly unlikely, given the quasi-religious fervour surrounding OURNHSTM.

Execution of government policy is regularly challenged through judicial review. Suing for lost profits, and even loss of prospective profit, is a standard remedy in contract law and tort. The fact that ISDS is arbitrated through confidential international tribunals is necessary given the international nature of the disputes and often positive given it is governed by institutions like the London Court of International Arbitration, which more reliable than many national courts. Not to mention that all arbitration is confidential and much of it is conducted internationally anyway. 

Nothing about ISDS is especially radical. 

What did anyone think would happen with a higher minimum wage?

That the Chancellor insisted that the national living wage came into being is true. That this is a rise in the minimum wage for those over 25 is also true. And that there will be some adaptation in the labour market to this is also blindingly obviously true. How could it be otherwise? It is thus with some astonishment that we see people who in general would support a higher minimum wage complaining about the effects of a higher minimum wage. For example, this letter from Liz Kendal MP:

The workers told me that the premium rates for night shifts, weekend and bank holiday working and overtime have been cut and in some cases would ultimately be phased out. Each and every one of the workers present was deeply concerned that they would end up worse off as a result of these changes, despite recent increases in the national minimum wage.

It's not despite such increases, it's because of such increases. The employers gain some amount of value from employing that labour. If they must pay more in direct cash wages for said value then they will attempt to cut back on less direct payments, those which go to make up total compensation even if not direct wages, to compensate. For the value of the labour to the employer has not changed: thus that same total compensation is still the amount they are willing to pay in total for that labour.

Surely there's nothing very difficult about this?

At the meeting Mr Davey and Mr Fletcher did not deny that the the changes to employee contracts were at least in part influenced by the impact of the higher minimum wage. They confirmed that around 15% of the 2000 people who work at you Bradgate Bakery will be worse off - that is 300 people in total.

Yes, who thought it would be different?

I want to emphasise how extremely concerned I am that at least 300 people who work for Samworth Brothers in my constituency will be worse off, when they should be getting a pay rise because of increases in the national minimum wage.

But there's the thing  eh? They are getting a pay rise as a result of the national minimum wage. It's just that the combined effects of the pay rise and the reactions to it leave them worse off. Which is rather what we've been saying all along about minimum wages, is it not?

You'll not make everyone better off by forcing employers to raise wages.

Lenny Henry's plan for BBC privatisation

This isn't quite what Lenny Henry has said about the BBC. But it is what he means about the BBC. The organisation needs to be punted off into the private sector as soon as possible. For what he says here is entirely true:

 On Sunday night at the Bafta TV awards we all heard impassioned pleas to protect the BBC from government intervention – let the TV people make great, award-winning programmes, while the politicians can do politics. We don’t want politicians interfering with Saturday TV scheduling. We don’t want the government deciding the running order of the Today programme.

Quite so, we don't want politicians involved in any of those things. And yet the BBC is funded by a tax upon us: yes, Gordon Brown finally admitted that the licence fee is indeed a tax. And politicians will always insist that they should be allowed to determine, indeed that they must determine, how tax money is spent. Thus, as long as the BBC is funded by taxation politicians will keep sticking their oar in.

The inevitable conclusion of Henry's demand is therefore that the BBC must be privatised in some manner. And how glorious it is to see that all the assembled luvvies agree with him. This might be the first time that both the ASI and the arts establishment have ever been in agreement.

It's really very simple: if you don't want politicians telling you what to do then you cannot have politicians telling you how much money you've got to do things with.