How excellent that people are trying to build houses where people want to live

Here is a complaint about something, a complaint about something that we rather cheer. Indeed it cheers us to see this thing happening. The complaint is that builders and developers are trying to build housing where people want to live. It is this thing which we both cheer and cheers us:

Swathes of Home Counties green belt could be buried beneath bricks and concrete under plans to build thousands of new homes in the region, environmental campaigners have warned.

Nearly 200 sites on green belt land across Hertfordshire, Surrey and Essex are under threat of development.

Campaigners say the proposals threaten to fundamentally weaken the protection against urban sprawl enjoyed by since the creation of the green belt around London.

The Campaign to Protect Rural England (CPRE) will published a map this week showing the extent of the threat to the capital’s green belt and the Home Counties.

It shows plans for 41,500 homes in Hertfordshire; 20,000 in Surrey and 27,000 in Essex. There are also plans for a further 29,500 homes across the green belt in Berkshire, Buckinghamshire and Kent.

People desire to live and work in the South East of England, near London. That such housebuilding as is happening is happening there seems to us to be quite the thing to be happening.

After all, the entire point of the existence of either or both of government and or an economy is to maximise the amount of, and number of people who can, people being able to do as they wish. Subject only to that restriction that their doing so does not restrict the rights of others to do the same. Thus if people desire to live near London then that's where the houses should be built, no? 

It may well be that the CPRE thinks Surrey looks better covered in gold courses than housing (it is actually true that more of Surrey is covered with golf courses than it is with housing) and they of course are at perfect liberty to say so. Yet given our general desire to maximise utility we also have that right to tell them to toddle off and do something else. 

While we get on with the implementation of a sensible planning policy, the entire destruction of the Town and Country Planning Act 1947 and successors.

It's nice to see a good idea: they being so rare

We tend not to think that the passing scene is oversupplied with interesting and useful ideas for government policy. Thus when one does appear we think we ought to note it:

Every household could have to pay an annual "insurance premium" for access to the UK electricity grid, under plans to overhaul the way networks are paid for.

Energy regulator Ofgem is worried that people who can afford to install solar panels and generate their own power for much of the day may end up not paying their fair share of the costs of the UK’s electricity pylons and cables.

We're not sure we would call it insurance, nor that we'd mutter about fairness. But as a basic economic idea there's much sense in it.

Traditionally the cost of the power generation and then the transport of it are bundled into just the one price that the consumer sees. When all energy did flow across that same system this obviously made sense. When some to much energy is locally generated and locally consumed and thus does not use the transmission network then it makes much less.

But people still want the network and access to it, however little of their energy they are getting from it. That solar system isn't much use at turning the lights on at 4 am. Thus, yes, it seems sensible that they should be charged a fee for access to that network.

That is, unbundle the current system. Sensible and logical: but there will be an awful lot of screaming about this. Because such unbundling is going to, as unbundling always does, reveal the true costs of the various parts of the system. Meaning that, sure, your solar panels might offer you electricity at times: but here's the true cost of having 24/7 availability. That's going to come as a shock to quite a lot of people.

Renewables can be reasonably good at generating electricity at times. They're really not all that good at making sure that you've always got electricity when you desire it. And ensuring that costs a fortune.....

Oh yes, excellent joke from Respublica here

This is a bit of a blinder from Phillip Blond's little don't think too hard tank. The proposal is that Google and Facebook should be paying into a fund which will support traditional journalism. There're two problems with this idea.

The first is the obvious: who gets to decide what journalism gets done with that fund? I think we know, don't we? The sort approved of by Phillip Blond and the like. And isn't that lovely, they propose that they get a chunk of other peoples' money to play with.

The other problem is that they've entirely misunderstood the economics of what is happening here:

He argues that the UK newspaper industry is undergoing an existential crisis. Revenues are declining. Titles are being closed. Editorial staffs are being cut back. The result is that public interest journalism is endangered.

By contrast, online media giants such as Google and Facebook, which take newsfeeds from newspapers, are making huge profits.

In the UK alone, he writes, Google generated more than £7bn of revenues in 2015 while, in 2014, Facebook registered £105m in revenues. Much of this income came from advertisers that once supported news publishers.

Schlosberg contends that a portion of those revenues could be used to build a fund in order to help Britain’s ailing journalism industry.

He said: “Google gains traffic by using stories generated by the media but it pays nothing for the articles. At first glance this seems okay because readers can clearly see the story source, but for journalism and the media industry this is proving harmful.

We should note that Google News doesn't actually carry any advertising. So what revenue?

But there's more to this ignorance. One of us earns the daily crust in exactly this industry. Producing electronic journalism for the modern audience. And we positively lust after being mentioned in Google News: a prominent placement of a headline there will bring 50,000 readers to a piece: more than the daily circulation of a local newspaper. Something going mildly viral on Facebook will being 500,000 readers to a piece: more than the daily circulation of a many a national newspaper. And crucially, it is not Facebook nor Google which sells the advertisements that those readers see: it is the publication which is hosting the article.

That is, both Facebook and Google are driving money to the publications, not extracting from nor displacing revenue. Which is, of course, why absolutely every news outlet on the planet now trains its journalists how to write copy that is likely to be picked up by Google News and has the potential to go viral on Facebook.

The electronic aggregators drive revenue to the newspapers, not deprive them of it. So why on Earth should the be charged for the privilege of doing so?

We even know what would happen if the attempt was made. In Germany the law became that a publisher could charge Google News a copyright fee for inclusion. Google said charge us and we won't include you: all the publishers agreed that gaining the traffic was worth it to them and thus they do not charge. In Spain the option was removed: Google must pay. Google closed the service leaving the publishers most miffed.

We like think tanks, we are one in fact. But we do think the emphasis should be on the think part there.

Why it matters what entrepreneurs think about Brexit

Campaigners for Remain and Leave are keen to ally themselves with entrepreneurs. And the media regularly and willingly reports what individuals and groups of entrepreneurs think about the EU Referendum. But should we value their views above the general population?  

I think we should. After all, entrepreneurial companies often produce higher quality innovations, are more efficient and generate a disproportionate share of employment and productivity growth. To a greater extent than most of the population, entrepreneurs are more tuned into the factors that will impact Britain’s future economic success. Afte rall, they also have more skin in the game. If you were to build a scale of people whose views on the EU Referendum deserves to be listened to most, entrepreneurs would be near the top. What public sector workers approaching retirement think about the EU Referendum has less to tell us about what’s good for society than what entrepreneurs think.

So, what do entrepreneurs think about the EU Referendum? Headlines have been made by a few high-profile statements by individual or groups of entrepreneurs, but these – because of the relatively low numbers – should be dismissed. On the level of the individual, two entrepreneurs can have diametrically opposite views. And it’s easy enough to bring together a group of entrepreneurs who are principally motivated by ideal like sovereignty or the European ideal – even ahead of the success of their business. These motivations are legitimate but not unique to entrepreneurs and so not special.

Surveys offer the greater insight. And in survey after survey entrepreneurs are decidedly split on the benefits of leaving the EU. In most surveys, entrepreneurs running large businesses tend to be more favorable to the EU than smaller businesses. Should we take them more seriously? After all, they are self-evidently more successful. Perhaps, but working against this is the fact that entrepreneurs running large businesses are more likely to have the characteristics of managers as opposed to entrepreneurs. This suggests that the pros and cons of Brexit for entrepreneurs – and so for society at large – are more balanced than many on the extremes of the debate would have you believe.

The Entrepreneurs Network is running an event on 16th June with Jacob Rees-Mogg MP, Raoul Ruparel, Co-Director of Open Europe, Allie Renison of the Institute of Directors and Roland Smith, Fellow at the Adam Smith Institute – all of whose opinions we should value very highly. (Perhaps even more than entrepreneur.)

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:

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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.