Stop saying 'virtue signalling'

It has become popular to describe certain behaviour as ‘virtue signalling’. By this people mean, in the words of James Bartholemew (who helped to popularize the term, and who I like very much in every other respect), writing or saying things 'to indicate that they are virtuous'. As popular as it is, it’s a stupid term that misuses the concepts it invokes, it encourages lazy thinking, and it’s hypocritical.

The term signalling does not mean the same thing as 'saying' or 'showing off' when it is used by economists or biologists. Signalling means credibly giving information that is difficult to prove just by saying it. For example, banks used to have very grand buildings. Any bank could claim to be safe, but only a bank that had lots of money could afford a grand office.

Education is a classic example of signalling. It’s difficult to show to a potential employer that you’re smart and hard working, but only smart and hard working people can get a good university degree (in theory). Good university degrees might be partially about signalling ability to potential employers.

That’s what signalling is. It’s a very useful concept. It means exactly the opposite of what virtue signalling means – it’s credible and honest. The whole point of virtue signalling is that it’s disingenuous and cheap. A better term would be ‘showing off’. How many times where the term virtue signalling has been used would ‘showing off’ not have just as accurately sufficed? It’s not exactly a novel concept.

For something to actually be virtue signalling, rather than just showing off, it would need some sort of sacrifice, like a sacrifice of knowledge by pretending some obvious falsehood is true.

The other problem with the term is that it assumes your opponents are disingenuous. This is of course very common but it is probably the single worst thing about political debate.

It comes from an underlying assumption that the world is straightforward and your views are obviously correct. To many people it’s obvious that letting Syrian refugees in to Britain is a bad idea, because if even a few of them are terrorists we’re endangering our own people's lives. The people who ignore this are most likely trying to show off how much they care and what good people they are – hence virtue signalling.

To many people it’s obvious that welfare cuts are cruel and unnecessary, and indeed hold back the recovery by taking money out of the economy. If you support those cuts you’re putting ideology ahead of real people, and that makes you a heartless scumbag.

But it’s possible to disagree honestly and sincerely about complicated questions with lots of different moving parts. In a world as complex as we libertarians say it is, it would be astonishing if the truth was obvious about almost any contentious policy issue. Disagreeing with me and being a bit right-on does not mean you are disingenuous. Voting Labour while not spending your life doing volunteer work doesn’t either, nor does being a libertarian but not signing up to join an anarcho-capitalist seastead.

Giving money to wasteful charities might count as virtue signalling, but only if you know that the charities are wasteful. I suspect most virtue signalling accusers assume that it’s obvious that groups like Fairtrade are wasteful or harmful. In fact it probably doesn’t even cross most people’s minds that that might be the case.

Accusing others of virtue signalling encourages you to not interrogate your own beliefs. If you think people only disagree with you because they’re trying to show off how nice they are to their mates, why would you even consider that what’s obvious to you might actually be wrong? As well as being rude and stupid, virtue signalling gives people another mental shortcut to dogmatism.

Finally, saying virtue signalling is hypocritical. It’s often used to try to show that the accuser is above virtue signalling and that their own arguments really are sincere. Of course, this is really just another example of virtue signalling!

Dismissing other people’s false beliefs as virtue signalling means you won’t consider them properly and means they have every right to do the same to your beliefs, which as far as they’re concerned are also obviously false. Sometimes beliefs are honestly, sincerely held, however stupid they seem to you, and if there’s any value to debate at all it requires that we at least consider the possibility that we might be the stupid ones.

At best, virtue signalling is a pretentious way of saying 'showing off'. At worst, it is mental armour against self-doubt. People should stop saying it.

Cannabis is a consumer product – that's how it should be regulated

I spoke at an event, "Regulate: But How?" last night held by VolteFace, a new magazine that is working to bring a bit of sanity to the drugs debate and hopefully in doing so militate for drug reform. The theme of the event was what the key regulatory considerations ought to be if and when we do legalise cannabis. Here are my opening remarks:

---

Ladies and Gentlemen:

Harm reduction is an important goal but it cannot be our only consideration if cannabis regulation is to be a success. 

Most cannabis users smoke not because they are addicted but to have fun. If our regulatory framework does not put this insight at the heart of its structure it will fail to deliver the benefits that legalisers promise, and further drug reforms will be hindered. 

It is crucial that cannabis is regulated according to what it is: a low-harm consumer product that most users enjoy without major problems.

Where this hasn’t been done legalization has had, at best, mixed success. Colorado has seen improvements but high taxes and regulations, and a fundamental aversion to anything that might actually increase the user base has held that back. 

So don’t just legalise it to better stamp it out in the long run, like many people wish to do with tobacco. Accept it as a normal part of the lives of the people who choose to use it, as we do with alcohol.

The lighter our regulation, the more scope there is for business to improve the quality and delivery of the product. Once we accept that using cannabis is not, in and of itself, a bad thing, our phobia of letting capitalism in should fade away.

Of course kind of approach would seem anathema to those people for whom even very limited legalization is a hard sell. But this largely misses why people object to cannabis.

Public use is most people’s biggest concern by far. A Pew poll last year found that while 62% of Americans said they’d object to people using marijuana in public if it was legal, only 15% would object to people using it in their own homes. Even among people who oppose legalization, a majority say they would not object to people using it in their own homes. 

This point, I think, militates against the model recently proposed by the Lib Dems for cooperatively-run high street shops to be the primary vendors for cannabis in the UK. 

We don’t want to be accused of turning the UK into a gigantic Amsterdam-style red light district; and we certainly don’t want to make it more convenient for people to smoke on the street than it is for them to smoke in their own homes.

Indeed this model does not appear to be particularly commercially viable either, and when we consider the power that local government planning committees wield over places like this it should be fairly obvious that this is a non-starter, at least as the dominant way for people to buy cannabis.

When I need to buy electronics, books, a takeaway, or indeed legal drugs, I go online. Just today I had a new phone battery delivered via Amazon Prime, less than 24 hours after I ordered it. 

Online shopping allows for greater competition and economies of scale, which reduce costs and offer greater accountability because reputation matters so much.

Indeed there is already a large and relatively healthy marketplace for illegal drugs, albeit one that suffers from unreliability and risks precisely because of government prohibition.    

I suggest that online sales and delivery seem to be the most viable way of making cannabis accessible to those who want it. 

And that is an accessibility that steers people towards using it in their own homes. Indeed it might be most politically saleable for us to continue to outlaw street consumption and, of course, sales, and presume that creating a safe legal alternative will drive most people into the privacy of their own homes, or their friend’s.

But apart from these restrictions on the hard issues of where people can buy and use cannabis we should favour as much free-wheeling capitalism as possible. Plain packaging, price controls, advertising bans, restrictions on preparations and dosage – all these things continue to treat cannabis and cannabis users as the enemy, and will dull the effectiveness of legalisation.

In many respects cannabis will be seen as the test case for further drug reform, so it’s crucial that we get this one right. Red lines where they matter and where people actually care, but not the medicalization in all but name that many well meaning campaigners want. The object isn’t harm elimination, it’s not even harm reduction alone, it’s utility maximization. 

This problem is too important not to leave to the market. 

We must regulate the internet because, well, because, you see?

One of the great joys of this internet upon which you are reading this is that it is regulated. Regulated in exactly and only the manner in which it needs to be regulated. There are certain rules that you must obey to be able to get onto it: asking us to explain the technical bits would be a bit of a stretch but we believe that acronyms like TCP/IP might be involved. But it is regulated only in that manner: aside from the usual civilisational rules like no incitement to murder and so on the regulations extend only to those technical matters of how the thing works. What you do when you reach those intertubes is entirely up to you.

This is something that profoundly irritates people of a certain type of course. What? People just getting on with it? Without guidance? But they must be told what to do!

Which brings us to Richard Watson in The Guardian:

But underneath the rhetoric of modernity, openness and progress there’s a problem that technology can’t fix. Relatively young white males overwhelmingly run Silicon Valley firms and they are stealing the future from everyone else.

The recent Facebook furor over its “trending topics” is a case in point. It was alleged that the supposedly impartial algorithms used to curate its list of trending news stories were being softly manipulated by people with a left-leaning libertarian agenda.

“So what?” you might say, but Facebook is more than a social hub. It has become an important centralising authority for news. More than 40% of Americans adults now rely on the social network to stay on top of the news according to PEW research. With great power comes great responsibility, so Facebook, and other large technology companies like Google, Amazon and Netflix need to be watched, critiqued and regulated if necessary, just like any other corporation or petulant adolescent.

Another example of Silicon Valley bias is the almost complete absence of the female perspective. The same might be said of other genders, geographies, races, income brackets, or ages.

Watson has entirely missed two things. The first being the purpose of regulation. It is not, as he seems to think, in order to make good things happen, good things according to whatever lights the regulator might see by. It is also not to prevent potentially bad outcomes. It is to prevent known to be bad outcomes. That is, we must know exactly what it is that we are regulating against in order to be able to regulate. For, quite obviously, if we don't know what we're doing then we can't write the rules to do it, can we?

The second thing he's missed is that this is just all too knew for us to be able to regulate it. One of the reasons that free markets work is that they explore the available technological space far faster than any other organisational method. Technology does change (these intertubes being a good example) and somehow we need a method of exploring what is possible with these new abilities. Markets do that vastly better than anything anyone has ever come up with. Thus it is precisely the new that we don't want to regulate out of such experimentation.

There is of course a third point, which is that this just isn't the way that free people govern themselves. You must not do that because some random bloke says so isn't quite the thing. But then that argument is going to be difficult to get across to someone writing a Guardian column, isn't it? 

We all owe a significant debt to Richard Murphy

We have, we have to admit it, at times been less than respectful of the ideas of Richard Murphy, the noted tax campaigner. We certainly thought that his genesis of Corbynomics was worth a giggle or two at the time. But here we have to admit that we all owe a significant debt to him. For it has been a most vexing question, this one of well, just what actually is tax avoidance? 

Tax evasion we know about of course: that's whatever is illegal. Avoidance though is a blurry area. At times it has seemed that the definition is anyone paying less than the respondent, say Richard Murphy, thinks people should be paying. Fortunately we now have clarity in this matter.

As background Richard Teather, a long time friend of ours here, had a look at Oxfam's rather tortuous process of claiming Gift Aid at the IEA blog. It's obviously not tax evasion as we're not hearing the clang of prison doors closing on the perpetrators. But it does look very like avoidance: a complex process with no economic or business justification other than to claim a tax relief. Others have been accused of tax avoidance on less evidence than this.

Thus confusion and Richard Murphy has come to our aid here and that's why we owe him our thanks. For he has given us a written in stone definition of what actually is tax avoidance:

So the test for Oxfam is whether or not the government intended, or knowingly permits, the arrangements that Oxfam uses. 

Which is excellent. Because this equates to our own definition of tax avoidance. Avoidance not actually being a thing or a state, but something a little quantum. There are two states: there is obeying the tax law and not obeying the tax law, being tax compliant and tax evading.  Tax avoidance is that uncertain state before we open the box to see if the cat has died. And here the test is not the dead cat but whether the arrangements have been looked at and found not to conflict with the law. Avoidance collapses down to the state of tax compliance.

This is extremely useful of course. Starbucks and the royalties to Holland, margins on coffee beans to Switzerland. Both have been looked at by HMRC, both are within that law, both are thus tax compliance, not avoidance. Boots loading up on debt: entirely legal thus not avoidance. Vodafone and the CFC rules: legal, not avoidance. David Cameron and the Panama fund: wholly and absolutely legal and thus tax compliant.

And of course Amazon, Google, Facebook and Uncle Tom Cobleigh selling into the UK from Ireland and other points:

Non-resident trading companies which do not have a branch in the UK, but have UK customers, will therefore pay tax on the profits arising from those customers in the country where the company is resident, according to the tax law in that country. The profits will not be taxed in the UK. This is not tax avoidance: it is simply the way that corporation tax works. 

Which is why we really must thank Richard Murphy. Because we've now got a strict measure of what tax avoidance is, one we can all agree upon. If HMRC looks at it and says that's fine then that is fine. It is not avoidance.

And so thanks to Richard Murphy. There's pretty much no tax avoidance going on, only some criminal amount of tax evasion and the vast majority of the economy is entirely tax compliant. And, of course, if we cannot believe the noted tax campaigner, inventor of country by country reporting and the Professor of Practice in International Political Economy at City University on such a point then who can we believe?  

Startups fail for the same reason markets succeed

In the current jargon a unicorn is a private company, usually venture capital backed, which has a valuation above $1 billion. They are what everyone wants to create, what all lust after investing in. However, it's also interesting to look at what happens at the other end of that success scale:

It’s a common adage in Silicon Valley that 90% of startups ultimately fail. To understand why that’s the case, a pair of researchers meticulously pored over 193 blog posts—startup postmortems, if you will—written by founders examining what went wrong.
...
But taken as a whole, the insights from the research project are intriguing. For the failed startups analyzed in this study, the factor most often cited by founders, even more often than running out of cash, was that their business models weren’t viable.

It's not obviously true that we wish such adventures to fail. But that reason so many of them do fail is precisely and exactly why markets work so well in making us all immensely richer over time.

Times change: technology changes, desires change, fashions do. At any one time there's a certain technological space therefore and that shape and size of that space changes with the passing moments. We thus want some system of sorting through the possibilities to see which do in fact add value. Which options take scarce resources at their current prices and then add value to them, that added value being what we call making us all richer? 

Well, another name for finding something that does ad such value is finding a viable business model. For if you are adding value to those resources then you're making a profit. Which is indeed what we generally describe as a viable business.

Any such system of sorting through the possibilities must have a method of rejecting those that don't add value: we might also terms this as closing down those experiments which don't have a viable business model.

That is, exactly how those failing start ups fail, by not having that viable business model, is precisely how the system of market experimentation makes us all richer. Because we're exploring all the new opportunities of the greater technological space and rejecting those that don't add value.

Child Benefits and Immigration

I am not sure why we are paying parents more than £712 p.a. per extra child when they have two already.  When the population is shrinking, encouraging the birthrate makes sense but when the population is expanding as fast as it is in the UK and we have pressures on schools, housing, roads, trains and the NHS, to name but five, why are we doing this to ourselves?
 
Most of UK population growth is due to children born here rather than net migration from within or beyond the EU.  Yet we are besotted with the migration issue which might even determine the outcome of the EU referendum.  What would be the ideal population size for the UK?  And how should we achieve that?
 
It is not as though destiny forces these extra children on parents who therefore need our help.  They have a choice in the matter and there is no shortage of products to assist them.  They decide to have extra children to please themselves, no matter how much they burden, and even annoy, the rest of us.  Any grandparent knows that, whilst one’s own grandchildren are wonderful, everyone else’s are dreadful and the world would be a better place without them.
 
Limiting the number of children per family receiving state benefit is not a new idea.  When the French did it, it proved too successful and they had to revert. The UK growth is too fast for that to be a problem here.
 
No doubt the loony left will tell the rest of us that large families have a “right” to child benefits for all, that it is a fair and necessary transfer from wealthy families, typically with few children, to the poor.  But children typically cost more than £13.70 a week to rear so actually large families make themselves poorer, especially when there is only one working parent.
 
Part of the reason for large families is cultural and imported with the parents or grandparents.  For most people in the world, notably India and Pakistan, children are their pensions.  But we have adequate pension provisions in this country and there is no need also to pay for these extra children.  And there are plenty of reasons why the Chancellor should stop doing so.

Counterfactuals matter

Alex Tabarrok at Marginal Revolution has a really great post on car safety in India, which illustrates a major problem with attempts by government to protect consumers by regulating unsafe products out of existence.

According to the Global New Car Assessment Program, 5 out of 7 new cars made for the Indian market lacked airbags and would fail basic UN crash tests. Tabarrok quotes Global NCAP Secretary General David Ward "Global NCAP strongly believes that no manufacturer anywhere in the world should be developing new models that are so clearly sub-standard".

But demonstrating that a product is unsafe is not sufficient to show that regulating it would make people safer. As Tabarrok shows, counterfactuals matter:

Let’s take a closer look. These cars are very inexpensive. A Renault Kwid, for example, can be had for under $4000. In the Indian market these cars are competing against motorcycles. Only 6 percent of Indian households own a car but 47% own a motorcycle. Overall, there are more than five times as many motorcycles as cars in India.

Motorcycles are also much more dangerous than cars.

The GNCAP worries that some Indian cars don’t have airbags but forgets that no Indian motorcycles have airbags. Even a zero-star car is much safer than a motorcycle. Air bags cost about $200-$400 (somewhat older estimates here a, b, c) and are not terribly effective. (Levitt and Porter, for example, calculated that air bags saved 550 lives in 1997 compared to 15,000 lives saved by seatbelts.) At $250, airbags would increase the cost of a $5,000 car by 5%. A higher price for automobiles would reduce the number of relatively safe automobiles and increase the number of relatively dangerous motorcycles and thus an air bag requirement could result in more traffic fatalities.

Substitution effects are basic economics, but regulators often ignore the fact that consumers responding to incentives will switch to cheaper and often (less safer) alternatives.

Take the European Union's recent Tobacco Products Directive:

Cartridges and tanks of e-liquid will be limited to 2ml, a incredibly small amount, and refill containers to 10ml, completely preventing bulk-buying and outlawing the products users find most convenient. The maximum strength will be 20mg, ruling out high strength varieties that most closely approximate cigarettes.

The regulators who drafted this law hope to see the public's health improve as vapers switch to safer, lower strength E-Cigarettes, but it could very likely have the opposite effect. As E-Cigarettes, which are 95-99% safer than traditional cigarettes, become weaker and less convenient, consumers have less of an incentive to switch from tobacco to e-liquids. 

Likewise, attempts to improve public safety by banning low-risk tobacco products like Snus have backfired spectacularly.

Or take for instance, Austin, Texas. Its City Council imposed onerous regulations on private ridesharing companies like Uber and Lyft with the stated aim of protecting the public from unsavoury drivers. One of the key sticking points was a finger-print background check requirement that went far beyond what was expected for standard Yellow Cabs.

Uber and Lyft responded by going Galt. They left Austin altogether. What happened next shouldn't surprise anyone. The Drive reports:

Though the city frightened voters with terrifying depictions of a plague of Uber-rape, it’s now come out that people with sexual assault convictions, and even drunk-driving arrests, are actually allowed to drive cabs in Austin, few questions asked. "If you have ever been convicted of theft at any point, you could never get a chauffeur's permit,” a city council member told a local news station. “That just seems like too much.”

Then there are the opportunists who are actually thriving. I talked to one driver who seemed to be enjoying himself in this bizarre ecosystem of random auto-barter. Because of his “local media presence and history of bartending in the city,” he immediately scored an under-the-table gig providing two to three rides a day to executives from a prominent entertainment company, as well as whatever else he could cadge up on Facebook.

Attempts by government to protect the consumer too often fail to consider the counterfactual, if policymakers and regulators took substitution effects seriously, many regulations wouldn't see the light of day.

Fighting for control of our purse strings

The UK’s Crown Prosecution Service says that a new law is needed to stop terrorists and other criminals using Bitcoin-style digital payments for illicit purposes such as money laundering.

Really? We have more than enough laws already, and a quick way to cut crime would be to scrap two-thirds of them, but that’s another story. But the thinking behind this particular proposal is clear: our authorities feel that, because of technical innovation, they are losing control of money, and want to reassert it. Hence all the dire talk to bolster this new power grab. "Shock horror: Drugs are being traded on the ‘dark web’” – that sort of thing. Of course, if drugs were legal (even if regulated, like alcohol) this would not be a problem. (Yet another story.)

But the CPS proposal is another thin-end-of-the-wedge issue. Sure, we all want a way of dispossessing scumbags who pile up secret funds to finance terrorism or to conceal gains from fraud and corruption. But should the authorities be allowed to barge into everyone’s accounts, Bitcoin or regular, as they please, or on some fishing trip, or on the allegations of someone with a grudge? No.

In the early days, many authorities wanted to close down Bitcoin and other digital payments entirely. Again, the excuse was that criminals would use them. Pardon? Since most of the world’s crime is done in regular currencies, that arguments would put the entire boards of the Federal Reserve, the Bank of England and the European Central Bank in the slammer. A neat idea, but not exactly justice.

I remember decades ago, before cellphones and stuff, when Citizens Band radio came out – to the delight of long distance lorry drivers, who could not talk to friends while on the road (and warn others of police patrols). There were appeals to ban it in Parliament, on the grounds that criminals could use it to plot robberies (I’m not making this up). Well, we might as well have abolished telephones and letters (and while at it, heliograph or any other communication device). Again, it was fear of the technologically new.

The Feds say they have cracked the iPhone codes, though MI6 boffins still seem to be scratching their heads. Again, there have been demands to open up the codes so the authorities can snoop at will. Do we really think their snooping will stop at bad guys? Or will junior officials just not be able to resist prying into the text messages of a few celebs that the Sunday tabloids have interest in?

Apple was right to resist the Feds’ legal challenge, on the grounds that people’s privacy and people’s security are intimately bound up and too important to be given over to government politicians and officials. I think the same is true with money, of any kind. One of the joys of cash is that we can use it without the government keeping a track of our spending: after all, control people’s spending and you control their lives. Let’s keep it a private and secure as we possibly can.

New paper: Nothing to Hide

Today marks the release of a new paper by Nicholas Cowen of Kings College London: Nothing to Hide: The case against the ban on extreme pornography. In it, Cowen makes a robust case against the current prohibition on acts that are legal to perform—and yet not to record—show it to be expensive, dangerous, and illiberal.

Read the paper here.

Can you trust Treasury forecasts when they struggle with basic arithmetic?

The Treasury are playing a key role in the referendum campaign. They have published two reports which explicitly campaign for remain. The first looked at the long term impact. The second report published yesterday, looks at the immediate impact. Both reports are all doom and gloom. They claim our economy will quickly be pushed into a recession and we will be £4,300 poorer in the long term.

Like the Government’s referendum leaflet (which cost £9m to publish), this analysis isn’t balanced. It is openly designed to promote Project Fear. It also cost taxpayers’ money to produce. Civil service staff are being diverted to fight the remain campaign. These are vast resources which aren’t at the disposal of the other side, essentially circumventing the funding limits. A team of 20 treasury wonks would cost around £1m a year. 

Experts often make errors. From Corbyn’s recent election as Labour Leader, to the 2015 Tory majority or 2007-8 financial crisis – the establishment often get predictions horribly wrong. Philip Tetlock, a professor of political science at the Wharton School of Business is one of the world experts on forecasting. From 1984 to 2003 he tested 284 experts from government, economics and wider academia. On the 28,000 predictions they made, they were "roughly as accurate as a dart-throwing chimpanzee". We have little reason to believe the Treasury predictions are any better.

As a concerned taxpayer, I submitted an FOI request to the Treasury. We have a right to know how much this all costs. I asked them how much they are spending on the EU referendum and in particular for staffing numbers. Their (late) reply speaks for itself. 

“It is not possible to identify full time equivalent staff numbers involved in the production of HM Treasury’s analysis because of the range of staff who contributed on an ad-hoc basis from across the Department. We have not yet received the publication invoice.” Information Rights Unit, HM Treasury.

It is not possible to count up the team involved. But it is possible to predict the next 30 years to the nearest pounds and pence, complete multivariate macroeconomic modelling, and work together as a pan department team to quickly turn this around into 290 pages of reports. Either they can't do basic arithmetic or they are hiding the amount they are throwing at the campaign.

Naturally I have asked for a review, and will be writing to the information commissioner in due course. Having worked for the government in various forms, I know that they have this basic data. If the number is so great as to defy a count, they could ask HR.

Whilst people may have provided support on an ad-hoc basis, this is true of most organisations, projects and reports. They could still count the number of authors and core team members involved. They could even estimate the wider support. If the treasury is incapable of approximating the number of staff involved in an internal project, what can be said for assumptions used in their reports?

290 page reports aren’t conjured out of thin air, a team would have been created, or existing teams would have taken on the task. Often departments have to approve a business case and set aside funding before diverting resources to a major project. 

The Treasury’s forecasts have been criticised from many angles – their poor forecasting record (consistently missing borrowing targets), use of fishy assumptions, focus on grabbing headlines and use as ‘independent statistics’ whilst being instructed by a biased government. Either way, the public has a right to know the facts, including how much taxpayers’ money is being spent on promoting remain.