This picture is illegal in California

Or rather, the action being performed in that picture is illegal in California. It’s not that the lettuce is not organic or anything. It’s that it is evidence of someone working during their lunch break:

I mentioned earlier that we had struggled to comply with California meal break law. The problem was that my workers needed extra money, and so begged me to be able to work through lunch so they could earn a half-hour more pay each day. They said they would sign a paper saying they had agreed to this. Little did I know that this was a strategy devised by a local attorney who understood meal break litigation better than I. What he knew, but I didn’t, was that based on new case law, a company had to get the employee’s signature every day, not just once, to avoid the meal break penalties. The attorney advised them they could get the money for working lunch AND they could sue later for more money (which he would get a cut of). Which is exactly what they did, waiting until November to sue so they could get some extra money to pay for Christmas bills. This is why — believe it or not — it is now a firing offense at our company to work through lunch in California.

Eventually a system becomes so encrusted by such nonsense that nothing useful can ever be done and all that can be is to chase the paper around in ever decreasing circles. That is arguably what happened to the Ottoman Empire, various incarnations of the various Indian and Chinese empires and so on and on. It’s one of the reasons that we here shout so loudly about regulation and the necessity of a bonfire of much of it.

We do not say that there should not be regulation, not at all. But we do say that we need to carefully consider who is doing the regulating. There are times and circumstances when it does need to be the bureaucrat or the politician. But far more often tasks that they take upon themselves will be better regulated through what we might call simple market processes. Markets are, after all, just the interaction of voluntary behaviour and surely we can trust two adults to agree between themselves about whether someone might usefully check a spreadsheet, or not, while munching on a salad?

Rules and recipes are different things Mr. Burnham

We tend to think that there must be some special dictionary out there, one hidden from us mere mortals, that allows politicians to say whatever they damn well please and yet not use the words that we all do. Almost as if there’s some other foreign language they use to speak to us mere voters.

Take this from Andy Burnham for example:

As Burnham correctly said last week: “For change to work in a market context, all players need to be following the same rules.”

This is in the course of The Observer managing to get absolutely everything about obesity, sugar and fatty lardbuckets entirely wrong. We all consume fewer calories than our grandparents did, sugar is not addictive (we consume less of it than in the past) said fatty lardbuckets do not cost the NHS money (dying young saves the NHS money) and so on and so on throughout the entire litany. And, of course, they’re entirely wrong in the basic theory of what they are talking about for the role of government is not to tell us how to live our lives but to enable us to live our lives as we would wish.

But specifically what Burnham is talking about there is that manufacturers should be forced, whether by taxation or by regulation, to put less sugar, less salt, in our food. And no doubt to throw some organic lentils in there at some point as well.

Which is where that special dictionary comes in of course. Because that’s not “rules” that’s “recipes”.

Is it too much to hope that one who would rule the country actually speaks the language of it? Sure, Willie the Conq and George I didn’t do so well on this basis but aren’t we supposed to have moved on?

Modi’s development key: agricultural land rights liberalisation

Narendra Modi has stated that growth, controlling food-price inflation, improving farmers’ incomes and developing infrastructure are top priorities. Agricultural Land currently makes up ~60% of India’s total land area. Liberalising agricultural land usage laws has the immense potential to accomplish these, amongst other things:

1. Liberalising agricultural land usage rights increases both use and trade value for investors, developers etc. – farmers’ and landowners’ wealth will increase.

2. Enables farmers and landowners to develop their land and diversify their income and, since they know what parts of the land are relatively unproductive or infertile, they will be able to diversify their income (tourism, hospitality, factories etc.). At the moment, a lot of land remains uncultivated because agriculture is not financially feasible but undeveloped because of land usage policy.

3. Developing rural and semi-rural transport infrastructure becomes legally possible and, therefore, private entities will be more likely to invest in its development.

4. Further connecting the Indian hinterland via the aforementioned liberalisation of the private development of rural transport infrastructure.

5. Combating food-price inflation. Food-price inflation in India is not due to a shortage of food per se but, rather, the fact that the transport, storage and maintenance infrastructure is so poor or even non-existent in places. This means that close to 1/3 of the food rots or spoils before it even reaches the market. If it becomes legally feasible for interested parties to build and improve roads, storage facilities and so on, then this will efficiently preserve stock and connect the source of produce to the markets; food-price inflation will naturally decline via this supply-side reform.

6. Reducing farmers’ suicides and debt. Since farmers will have alternative sources of income, increased wealth and also increased income from actually being able to transport their food to market, more farmers will be able to service their debt and are less likely to commit suicide.

7. Economic counter-terrorism against Maoists. Maoists are scattered across rural and semi-rural parts of India and are particularly concentrated in areas that are rich in natural resources and where there is high unemployment. The aforementioned points in 3 and 4 will make it easier to combat them and alleviate the economic pressures in that lead to the violent backlashes.

8. Diversified employment opportunities. Opportunities for diversifying land use and earning through alternative sources of income means there is a chance to have jobs that require different skills and education in rural areas.

9. Easing pressure on urban India to accommodate migrant workers. From 7, there will be less incentive for younger migrants of rural origin to travel to cities for jobs (or at least the rate at which migration increases may not increase as much).

10. Increased private incentive to educate. 7 implies that there will be a greater need for certain skills and education to prepare workers for different types of employment.

It’s a pity to see Larry Elliott going off the rails

We always thought that Larry Elliott was a little oasis of comparative sanity over at that small part of The Guardian that has actually heard of the basic concepts of economics. So it’s something of a pity to see him coming off the rails over the desirability of limited liability:

Finally, there’s the nuclear option: stripping companies of the protection provided by limited liability. The owners, the shareholders and those running companies wield enormous power but don’t bear full responsibility for their actions because their liability is limited to the size of their investment in a company or partnership. But limited liability is a privilege not a right, and in return for granting it society should get something back in return. The argument the Thatcher government used when it said employers could sue unions for damages caused by strikes was that there was no such thing as a something-for-nothing world, and the same argument applies to companies.

The deal should be that companies get the protection limited liability provides in return for looking after all their stakeholders: the workers they employ, the customers they serve, the companies that form their supply chains, the taxpayers who pay for the transport infrastructure and the education system that businesses require. The deal should not be limited liability in return for boardroom greed, running rings round the taxman and breaking the law.

As Prem Sikka said in this series, any change to limited liability would be fiercely resisted. But even the suggestion of change would concentrate minds. Imagine, for example, that a future government set up a royal commission to look into the issue. Would this lead to companies treating their staff better and paying more tax? You bet it would.

Limite3d liability has been called the third great invention, after agriculture and the scientific method. That might be rather overegging the argument but we do face Chesterston’s Fence here. We shouldn’t be thinking about removing something until we’ve worked out why it was introduced in the first place. And the reason we have limited liability isn’t particularly because it’s a necessary feature of capitalism, neoliberalism, corporatism or any other -ism that might currently be unfashionable. It’s because it’s a necessary precondition of having any large scale economic activity.

Some economic projects require the mobilisation of the assets of tens of thousands to tens of millions of people. Or some reasonable fraction of those individual assets. And it doesn’t matter, for our argument here, whether that’s done through the State, a workers’ coop, a capitalist style corporation or any other method. If all those thousands to millions are to be held jointly and severally liable for all of the risks of however many projects their assets support then that mobilisation simply will not happen. Limited liability is simply a precondition of being able to have large scale projects undertaken.

So Prem Sikka is howling at the Moon here but then we knew about the Professor’s tendency to do that already. what’s disappointing is Elliott’s support for the argument. For Elliott is missing something we’ve mentioned around here a number of times. The value to us of an organisation that produces things is not in the tax they pay, the wages they cough up, the manner in which they treat their suppliers. The value to us of a producing organisation is in what they produce. And, as above, limited liability allows large scale producing organisations to exist. And that’s the benefit that we the wider society get from it.

Nothing else is necessary.

It’s time the government let adults – even the smokers – grow up

While the under-12s and orchestras hit the jackpot in yesterday’s Autumn Statement, tobacco companies were subtly thrown under the bus, as the Chancellor quietly committed to a consultation to determine how much more money tobacco companies should be contributing to public services; a pledge Labour has already signed on to as well.

Specifically, the consultation will look at the “introduction of a levy on tobacco manufactures and importers,” which could raise taxes on tobacco companies by millions of pounds a year.

From the Independent:

The tobacco industry should pay for the costs it imposes on British society, the Chancellor has said, signalling that the Government will back a levy on tobacco manufacturers and importers.

In a low-key Autumn Statement announcement, George Osborne committed the Government to a consultation on how tobacco companies could make bigger contributions to the public purse.

Specifically he said:

Smoking imposes costs on society, and the Government believes it is therefore fair to ask the tobacco industry to make a greater contribution.

The Government will shortly launch a consultation on introducing a levy on tobacco manufacturers and importers.

My colleague Ben has just recently addressed these ‘costs on society’ the Chancellor references, and debunked a fair few of them. He also pointed out the known, positive effects of nicotine, and reminded us that, despite all the lies perpetuated around smoking and NHS spending, smokers, on average, take up less health expenditure over their lifetime than non-smokers do.

My two-cents goes something like this: What cost on society? Sure, there’s a cost on the smoker, who will deal with the consequences that come from inhaling all sorts of questionable stuff – but adults get to make those personal decisions and take those risks. All choices have a cost, but in the case of cigarettes, the individual bears the brunt of the consequences; not the public at large.

But more powerful than the adults trying to make decisions about their personal lifestyles is the government, which is treating cigarettes the same way children tend to treat stuffed animals – labelling them with human-characteristics; acting as if objects are inherently bound to be good or bad.

And when it comes to cigarettes, the government has deemed them inherently evil. And it’s the tobacco companies, of course, that are proliferating them (remember, public demand matters very little to paternalists), so naturally, they must be taxed to the death.

But you know who’s really going to suffer when push comes to shove and levies are imposed? Low earners – who probably will, but can’t afford to, see cigarette prices rise when the levy comes into play. Because, at the end of the day, these levies aren’t coming in to save public health; they’re there to save vulnerable public budgets. It’s time the government came clean on that—childish, indeed.