So the ASI was right then!
London acts like a magnet, drawing enterprise, industry and talent to its orbit, and leaving other cities, especially in the North, with fewer jobs and opportunities. The proposed “Northern Powerhouse” is designed to redress this situation to some extent. Young people below the age of 25 find it particularly difficult outside London because of a shortage of starter jobs.
A further initiative would be to allow selected Northern cities to opt for “Charter City” status, under which they would acquire a series of powers to determine locally things that are otherwise decided nationally. This would include business rates and a raft of regulations. Start-ups would be made easier, with specific measures to reduce the costs of starting businesses and the time it took to do so.
The idea would be to attract investment and jobs, and to create new opportunities for local residents and those who chose to move there. Young people would benefit from this along with the rest of the population, but there could be specific measures under the “Charter City” status targeted at the under 25s in particular. They could be exempted from Council Tax. They could be given assistance with accommodation. Firms that took on people aged under 25 could be rewarded for doing so by lower rates and taxes. Planning and zoning regulations could be eased for them.
The proposal for “Charter Cities” borrows something from the Enterprise Zones of a generation ago, but would in addition learn from some of their shortcomings and improve upon the original idea. Much could be learned from a study of how successful cities abroad manage to make themselves attractive to new businesses and to draw in investment. For the most part this consists not of handouts and subsidies, but of government, both local and national, removing some of the burdens it imposes on business, and lowering the barriers they must cross to establish themselves.
Germany’s “bonfire of restrictions” post World War II led to the German economic miracle, and Hong Kong’s famously liberal approach to businesses led to an explosion of wealth and opportunity. The “Charter Cities” would aim to capture some of that approach and achieve some of that success. Governments, local and national, would have to think long-term, postponing some of the revenues they could achieve in the present for the prospect of much greater revenues in the future, and the expansion of businesses generated by the measures would provide young people with the prospect of advancement.
Jeremy Warner is probably right about the outcome of COP21 here, that great gabfest to talk about climate change:
Ever clearer is that the debate on climate change is essentially over. Whether just a modern day delusion or not, virtually all political leaders now buy into the idea of man-made warming, and most of them seem willing to do something about it.
The question, as always, is what should be done. We have long taken the above view: the truth or not of climate change is not the important point. Politics is about what people believe, not the truth. Thus we’ve been advocating a carbon tax on the grounds that we know they’re going to do something so we might as well tell everyone to do what will cure the problem, if it exists, at least cost. Usefully, it’s also what every economist looking at the problem has also said, from Stern through Nordhaus to Tol.
However, there’s an implication of that:
Much fiercer carbon taxes are coming, driving huge change not just in energy consumption and production, but in all the myriad industries that depend on hydro-carbons, from plastics to automotive, metal bashing and even many service activities, which can be surprisingly energy intensive.
That’s actually not true, not here in the UK at least. Because we largely already have a carbon tax. It’s not distributed correctly, this is true (too much on petrol, not enough on farming) but overall we’re already coughing up about the “correct” amount as calculated by Stern (and more than Nordhaus or Tol would suggest for today). The combination of the fuel duty escalator, the EU’s cap and trade, the minimum carbon price and so on, while they’re not quite exactly the way it should all be done, do have roughly the right effect and size. According to Stern’s numbers the UK should be paying something like £30 billion a year in carbon tax given the roughly 500 million tonnes CO2 a year. We’re already paying that much when you tot everything up so we’re done.
Yes, it’s entirely true that some other people might have a lot of work to do to meet whatever is agreed in Paris. But as far as the UK is concerned we’re done, we’ve already put the correct and recommended policies into place. We’ve nothing else that we need to do except perhaps a little tinkering here and there. There’s most certainly no justification for significant rises in the general tax level, whatever COP21 agrees. Not that that’s what we’ll be told of course….
Much excitement as the US decides that it’s just fine if people go space mining. Which is interesting of course, for the UN rules say that while you’re entirely free to go mining you’re not to do it for a profit, it must be “for the benefit of all”. Which slightly puts a damper on things. But there’s another problem which the new US rules don’t address: it’s still not possible to own a deposit or resource up there. You are, now, under the new US rules, which the rest of the world doesn’t recognise, allowed to explore, find and mine something, for that potential profit. But as soon as you start doing that then anyone else who can get there is entirely allowed to go mine that same deposit. That puts another damper on the economics of the adventure.
However, as we’ve said around here before there’s a rather more basic problem with the idea:
If that proposal is too large to take seriously, your horizons may have become too Earth-bound. The would-be asteroid miner Planetary Resources launched back in 2010. Its investors include Larry Page and Eric Schmidt of Google, whose bet on driverless cars sounded pretty silly a few years ago as well. While space mining remains a moonshot, with vast challenges for its pioneers, the potential rewards are stellar. One estimate suggests a single asteroid could contain more platinum than has ever been mined on Earth.
Mining asteroids to provide materials to build something in space sounds like a great idea given the cost of getting mass into space. Very early American houses were built, sometimes, of brick carried as ballast across the Atlantic: it didn’t take long for people to realise that digging up some American clay and baking it was a more sensible idea. So it will be up there, use the resources there, not carry everything with us.
However, those starry eyed at the idea of those vast resources of platinum. What is the Earth bound price of platinum going to be if we double the amount that humanity has to play with? Somewhat lower than it currently is would be our prediction. And the elasticity of demand is, with respect to price, quite low for this metal. Meaning that a large increase in supply will lead to a very large decrease in price.
Again as we’ve said before, finding a bit of platinum up there would allow it to be sold down here for a high price, but a bit wouldn’t cover the fixed costs of going. And finding a lot would depress the price possibly sufficiently that finding a lot wouldn’t cover the price of going.
Doesn’t mean we shouldn’t go, doesn’t mean we shouldn’t go mining, but our slide rule tells us that mining for precious metals ain’t gonna be the way to pay for it all. Rather an interesting twist on Adam Smith’s diamonds and water paradox really: the truly valuable thing up there is likely to be the water that humans desperately need and is currently in very short supply.
It’s not unusual to find people arguing that the State should be given near fascist (in some cases, actually fascist) powers over the economy: but only if the right people are in charge. The right people being defined as those who would use those oppressive powers in only the manner that those proposing the powers desire. The usual answer to this is that that’s not quite how democracy works. If you don’t want your enemies (ideological or actual) to have such powers as the electoral cycle turns then you’re really no business arguing that your folks would do just fine with them.
Shuffling all the Social Justice Warriors off into the Bedlam they need to recover is admittedly appealing. Yet we do not recommend such precisely because such powers might be used against us, those who froth at the mouth over the joys of free markets and voluntary cooperation, in the fullness of that time and variance of who the public elects. Better that none have such powers, eh?
At which point we have this rather plaintive cry from Jeremy Warner (or perhaps the subeditor who wrote his headline), someone we usually rather agree with:
If the state must meddle, it should do it better
Given the pedigree of those who do go into politics and other forms of “public service” that meddling never will get better. The answer is therefore as we have long suggested. Yes, there really are things which need to be done and which only the State can do. Said State should limit itself to only those things covered by that intersection and refrain from doing things which can be done by the State but do not have to be done, and also avoiding those things which do need to be done but which will not be well done by the State.
Limiting government to what it must do seems suitable given the limited skills and talents of those who govern us.