How excellent! Off you go then

Apparently that difficult problem of what we should do about the British economy has been cracked. All doubt resolved, we've now got a plan. To which our answer is great, how excellent!

What we need is “bulldozer money”: long-term investment in housing, infrastructure, energy, healthcare and transport. Investing in real assets creating real jobs, and delivering an economic multiplier effect over the long-term, where every £1 invested in infrastructure generates £3 of economic activity.  

One quibble, healthcare spending is not investment, that's current spending. But it is good to have a plan, isn't it?

 This £100bn could be used far more productively elsewhere. Instead, we should focus on the “G’s”. Green, clean, cheap energy from solar, wind and other renewables – technological advances in wind power, fusion, photovoltaic cells and batteries will drive costs relentlessly down. A Great Northern railway programme would ease travel and improve commerce from Liverpool to Manchester, Sheffield, Leeds and on to Newcastle. And Gatwick, where a new runway could be started by 2019.  

Super. So, what we'd like to have happen therefore is to get some of those people who know how to evaluate potential investments involved. Do such projects actually have a positive net present value, are they actually going to make us richer? That's the sort of thing that investment managers do for us. Which is useful because the man with the plan is an investment manager:

Nigel Wilson is the chief executive of Legal & General

Which is just absolutely great. He's got the skills and the network and the staff to undertake the task of what to invest in. He's also got a considerable pot of money to do it with. And we can be very sure that he's only actually going to invest in things that will make money, will add value, rather then splurge it around for political reasons.

That is, we, as in we collectively, don't need to do anything at all. All of the resources and incentives to make us all richer are already aligned in this one figure. If he can't find plans that will make money then he won't do them, if he can he will. 

So, Nigel, your plan, how excellent! Off you go then.

The oddity of closing the Tiger Temple

That we'd like the tiger to survive as a species is true: magnificent beings that they are. Which is why it's so odd that the authorities are closing down that Thai temple which breeds and keeps tigers:

Forty dead tiger cubs have been found in a freezer at a Thai Buddhist temple accused of wildlife trafficking and animal abuse.

Police and wildlife officials started an operation on Monday to remove all the living tigers at the Tiger Temple.

Pictures from journalists at the scene posted to social media showed the 40 cubs lined up on the floor.

The site in Kanchanaburi is a popular tourist attraction but has been closed to the public since the raid.

Finding newborn cubs on the site is pretty good evidence that they were not in fact wildlife trafficking, but wildlife creating. Which is, if saving the tiger is one of the things you desire to happen one of the things which you would thus hope someone would be doing.

Further, the way to save the tiger is to make having tigers more economically valuable to people than not having tigers. Thus creating potions from tigers is the way to save them.

Thus closing down a place which breeds tigers in order to make potions is simply most odd.

It's as if people haven't noted one of the salient facts about our world: there's a lot more cows around than nature alone would provide because we eat them, because they are economically valuable to us. Want more tigers? Make them more valuable.

Stop the facade, it's time to come clean about national insurance contributions

Tax Freedom Day, which measures the total tax burden compared to Brits' total incomes, falls on June 3rd this year. Everything we earn from every source for 153 days goes to the government and its programs; everything from today to the end of the year we spend ourselves. This is the latest it has been for fifteen years, and the evidence suggests a big government is an unwieldy one, and one that reduces growth. One way we could reduce it in a way that the average person will really feel is by raising the threshold you have to earn before you pay national insurance.

Britain used to have a contributory welfare system, driven by the recommendations in the Beveridge report, a surprise best-seller in 1942. People paid in, through national insurance, and gained eligibility for various social insurance and welfare benefits: pensions, the dole, sickness benefits, and so on. 

We still pay national insurance contributions, fooling many into believing that there is still a pot in which these pile up, ready to pay for our needs when we age, or lose our jobs. This is a façade; the pot no longer exists. The contributory system has effectively withered away, and we should cut some of the complexity out of our tax system by making that official.

People pay national insurance if they earn above £155 a week (equivalent to £8,060 a year). The fact that eligibility is determined by weekly pay, rather than annual salary, hearkens back to the system's 1940s origin. But these contributions have become tied only nominally to the receipt of benefits.

The last government did away with most of the complexities in the state pension to do with different levels of payment. That means it is all-but universally given at the same level now: £155.65 per week, and will in principle be given only to those with 35 years of national insurance contributions. But the current system gives national insurance credits not only to those earning above £155.65, but also those claiming jobseeker's allowance, employment and support allowance, child benefit for kids under 12, or carer's allowance, as well as those earning above £112, and so not paying.

The government, thankfully, is no longer trying to do the job of pension providers. It is trying to guarantee that no pensioners need to live in poverty. In so doing the contributory link has been broken on both payments; you don't need to pay to generate eligibility and the amount you pay does not affect the size of the payments you're eligible to. But because people are told they're contributing, some still believe they are saving up for their retirement, or for difficult spells, when they hand over NICs to the government.

We should acknowledge this disconnect by rolling national insurance contributions into the income tax, and starting them at the same threshold, so people know exactly how much they're paying. What's more, this should be our main strategy for tackling low pay, rather than the national living wage. The Adam Smith Institute’s recent paper 'Abolish the Poor' showed how simply lifting those working full time on the minimum wage out of income tax and NICs would bring them to the living wage income, without the risks of unemployment or an early shift to automation that come with wage price fixing.

The government has already made impressive steps on income tax, taking many low paid workers out of the levy entirely, but NICs have been left by the wayside. An NIC cut would boost work incentives and return money to the badly off at the same time, without risking unemployment.

The link between contributions and benefit receipt is gone in all but name. It was a system built for a time when a single earner was expected to support a family, and where the biggest problem was unemployment, not low wages. In practice, the welfare system has adjusted to the new reality, but the language and framework remain. We should recognise the situation as it is and cut away the final remnants of the old contributory link, rolling NICs into income tax and raising the NIC threshold so that we are taking less tax from the lowest earners. Doing so could give minimum wage workers a living wage, without the unemployment that risks. Beveridge's ideas may have been good for 1942, but they are not a good fit in 2016.

We rather disagree with this estimation of Bitcoin

We're rather techno-optimists around here: largely because we know a bit of economic history. 250 years back the average human was able to consume some $3 a day of current value. Today that's more like $30 and we in the rich countries are doing very much better than that too. All driven by technological advance: sure, that itself incentivised by markets, economic freedom, the price system and getting the institutions right. But it is technological advance which is the direct cause of our current wealth.

However, we're rather less optimistic about the prospects for Bitcoin. We're sure that the blockchain will be used to do some interesting things, although pretty certain that it will be a less clunky version of it which is. Bitcoin itself we don't think is going that far. And we're really pretty sure that it's not about to eviscerate banking:  

New technology such as artificial intelligence and blockchainwill utterly shake up the fundamental principles of banking, challenging the entire industry according to former Barclays chief Antony Jenkins.

He believes the innovation in finance could eliminate the need for maturity transformation – the process by which short-term deposits, such as current accounts and instant access savings, fund long-term loans including mortgages.

That is a fundamental principle of the industry as banks can offer a low interest rate to savers while charging more to borrowers, profiting from the gap between the two rates. Yet in 10 to 20 years’ time, he believes the need for banks to perform the function might no longer exist – already some investors are sidestepping banks by using websites to match borrowers and savers directly.

That there will be peer to peer lending we have no doubt about. But look at what the prediction really is: Bitcoin, or alt-currencies, or the blockchain, will wipe out fractional reserve banking. We will end up with a system instead of only 100% reserve banking. That's what no maturity transformation means. And we really do not think that is going to happen.

Simply because that maturity transformation is too damn useful. The desired maturity and liquidity of savings is rather lower than the desired such of borrowers. Thus, somewhere in the system we need maturity transformation. And as Brad Delong likes to point out if you borrow short and lend long then you are a bank: that being the definition of what banking is. Further, if you're not, you're not doing banking.

The blockchain might have all sorts of fun uses but it's not going to replace that basic desire we have for maturity transformation. Thus it's not going to replace banking.

Organic food is worse for the environment

Not that this should be much of a surprise to anyone but nice to see it confirmed again. Organic food is worse for the environment than conventionally farmed.

Organic food is not better than other produce in Britain because food standards are already so high, a leading expert in food sustainability has said.

Professor Louise Fresco, author of Hamburgers in Paradise, argues that European standards mean that pesticides are used so far before the harvest that no residues remain when they reach shoppers.

She also warns that organic farmers are wasting land by not using fertilisers which boost crops and says there is little evidence to show organic food is healthier.

99.9% of the pesticides in food are those naturally created by the plant itself: to avoid it being eaten by all the little beasties that proliferate out there in the countryside. 
Modern conventional farming applies so little in the way of extra pesticides at any point anywhere close to where they will still be in the food at the point of being eaten that it's not really measurable. 

Organic and pesticides is not really an issue.

It is true that there seem to be certain health benefits to organic milk: this is not a result of it being organic though. Rather, organic farmers sow clover into their grass as a fertiliser and it is the cows eating that which raises the Omega-3 content. Conventional farming which used clover in the same manner would achieve exactly the same result.

And then of course there is that pesky fact that organic yields are lower, meaning that more land must be used for any particular level of output. And that, of course, means less land available to be enjoyed by all those other little beasties out in said countryside.

Which leaves us with why Britons spend the thick end of £2 billion a year on such nonsense. People are entirely at liberty to spend their money exactly as they wish and so they should be. But we would suggest that here they're really falling prey to a particularly effective snow job by the Soil Association. The only people who really benefit here are the organic producers who get to charge higher prices by engendering that terribly smug feeling in their customers. By all means participate if you wish but do recognise what is going on. 

Another reason to vote Leave: they're insane

You might think there's more important things to think about over this decision to stay in or leave the European Union. The questions over sovereignty perhaps, cooperation, the economy, our place in the world.  But here's one that is to us quite striking. Whoever it is that is actually running the European Union is certifiably insane:

A new European Union regulation that came into force on 1 May is causing chaos among holidaymakers heading to Switzerland who hire a car.

The rule bans EU citizens from driving non-EU registered hire cars in the EU. But with Switzerland, a non-member, at the heart of Europe there are problems at car hire offices: a Swiss-registered hire car cannot be driven across the border to France, Germany, Italy or Austria by an EU citizen (such as a Briton). If the driver behind the wheel is Swiss, that it is permissible – as it is if the hirer has come from outside the EU.

It is not possible to discern one iota of a scintilla or sense in that law.

If granny starts stuffing pencils up her nose then we know that the cruel affliction of dementia has arrived and we call the doctors. When the dog starts frothing at the mouth and avoiding the water bowl the rabies is the diagnosis and a swift and merciful end the solution.

When a law making body decides to make laws that are insane then we should leave that law making body.

As we say there are other considerations as well: but this alone is convincing to us. As so often it is in the small things that madness first appears.

It's official, Uber saves lives

Tomorrow, the European Commission is set release its findings from a year long investigation into the Sharing Economy. Interestingly they're expected to go against many European cities who are increasingly trying to regulate ridesharing out of existence.

Last week, I argued that attempts to protect consumers by regulating supposedly unsafe products often backfired, because those products are often substitutes for even riskier products and behaviours. In particular, I pointed to Austin's fingerprint background check requirement that made Uber and Lyft prohibitively expensive to run in the city, and led to consumers taking even riskier journeys. But, if anything the harms of driving Uber and Lyft out of town are even greater than I made out.

At least that's according to a new Working Paper from Angela Dills and Sean Mulholland, which investigated the impact of Uber's entry to a city on vehicle accidents and crime. They looked at data across 150 cities and counties on a range of metrics, from vehicle accidents and DUI arrests, to drunk and disorderly conduct and aggravated assault. 

Dills and Mulholland point out that there's a range of ways that Uber might affect crime and accident rates. Maybe it'll increase accidents because Uber drivers are more likely to be distracted both by smart phones and passengers. Maybe it'll increase driver-on-passenger assaults as unsafe drivers sneak through lax background checks. Maybe it'll increase assault widely, as more folks get their drink on, safe in the knowledge they don't have to be the designated driver.

But the data doesn't bear out any of these fears. Dills and Mulholland came away with two major findings.

First, the rate of vehicular accidents falls quite dramatically when Uber enters a city, with traffic fatalities declining by 16.6 per cent over a year. This can be explained by both a reduction in the number of people driving under the influence, as well as the fact that the people most likely to use Uber (i.e. millennials) are terrible drivers and anything that keeps them off the road is a good thing.

Second, they find declines in arrests for both assaults and disorderly conduct. This may be because Uber reduces passenger wait times, lowering the risk of someone being attacked while waiting for a cab. This finding is especially important as governments have attempted to impose minimum wait times on ridesharing services with varying success (thankfully, TFL's proposals were roundly rejected).

As city governments increasingly move to crack down upon ride-sharing services like Uber on the grounds of public safety, legislators should take these findings very seriously. Bans on Uber aren't just bad economics, they can kill.

The BBC’s output, management, and quality are irrelevant, the license fee should be scrapped regardless

Arguments about the BBC seem to invariably focus on whether it is biased or genuinely neutral. Zionists think it is anti-semitic. Anti-Zionists think it supports Palestinian genocide. The right thinks it disseminates Cultural Marxism and Europhilia. The left thinks it is little more than a cheerleader for the Tories, an establishment mouthpiece, and/or part of the Blairite-media conspiracy to undermine Comrade Corbyn.

Maybe all of this true; probably it is all paranoid nonsense. No news can be perfectly objective, and no network can please everyone. In fact, the BBC probably does comparably well compared to the likes of MSNBC and Fox News.

However, this is not a good argument for making everyone who owns a TV pay for a license fee. Neither is the popularity or quality of the BBC’s programming. The fact that some (even the majority of) people enjoy and benefit from what a network produces does not mean that other (even a minority of) people should have to subsidise it. If someone only wants to watch ITV, Channel 4, and Sky, then they should not have to pay to fund a network for others.

The solution from a policy perspective is simple: make payment voluntary. How to handle this should be left to the BBC itself. Introducing advertising may prove unpopular. Instead, it could be turned into a subscription only service. Perhaps people could choose to purchase TV and online subscriptions either separately or as a single package. 

Setting aside that it is entirely subjective whether ‘Strictly’ is better than ‘X-Factor’, or if ‘Doctor Who’ is better than ‘Game of Thrones’, there is no reason that the quality of programming would fall. Netflix has proven extremely successful from charging a fraction of the license fee. There is no reason to think that many people who currently pay the fee would cease to do so. And, if they did, that would be because what the BBC was not offering a service worth paying for.

Some on the left would object that the purpose of having a state controlled network is to provide ‘higher class’ services to those who could not afford it otherwise. Regardless of the merits of this view, it does not support the license fee. There are no concessions for being poor. In fact, many of those convicted for non-payment are people who cannot afford to pay. Concessions for the over-75s are one of the many benefits offered to a proportionately well-off section of society. Concessions for the blind and care homes could be maintained, if the network or government saw fit.

Equally, cultural conservatives may trumpet the virtues of having a network that unites the nation and creates a sense of belonging and unity. This vision is woefully out-dated. The fracturing and pluralisation of the market means that the 1950s picture of families around the country crowding around their TV sets to watch the same thing is long dead. This is a positive development. People have always had a diversity of tastes and preferences, and yearning for more ‘community’ at the expense of the freedom of choice is a miserable ideal.

Unfortunately, when critics of the license fee attack the BBC for being too competitive or for falling short on impartiality, they are arguing on their opponents’ terms. They will lose these arguments. The proposals in the government’s White Paper to abolish the BBC Trust and replace it with a largely government appointed unitary board will only be unpopular. It does not matter whether the BBC is successful, popular, impartial, independent, or innovative. The license fee still needs to go. 

We are deeply, deeply, confused here

We simply do not understand why people are so dead set against the TTIP, TPP and in this latest example, CETA. Those jumbles of acronyms being the various free trade treaties that are under negotiation. The usual bands of hippies and Teenage Trots seem dead set against them. Greenpeace has been climbing towers and the Trots writing in The Guardian.

Sure, these deals are not very good: the only logical trade stance is unilateral free trade of course. But making trade a little bit easier in the absence of that sensible policy doesn't sound like a bad idea. So what is it with these people?

For example:

Like the US deal, Ceta contains a new legal system, open only to foreign corporations and investors. Should the British government make a decision, say, to outlaw dangerous chemicals, improve food safety or put cigarettes in plain packaging, a Canadian company can sue the British government for “unfairness”. And by unfairness this simply means they can’t make as much profit as they expected. The “trial” would be held as a special tribunal, overseen by corporate lawyers.

We're not really sure what to call this. A mistake? Oversight? Lie? For in the treaty itself:

1. For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity.

2. For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section. 

There's a specific clause in the treaty itself that flat out states that the allegation is not true. so why are these people continually repeating something that just is not true?

What is it that some innocent trade treaty has done to them that it should be misrepresented so grievously?

 Finally, through something called a “ratchet clause”, current levels of privatisation would be “locked in” on any services not specifically exempted. If Canadian or EU governments want to bring certain services back into public ownership, they could be breaking the terms of the agreement.

Not true in the slightest:

A Party shall not nationalise or expropriate a covered investment either directly, or indirectly through measures having an effect equivalent to nationalisation or expropriation (“expropriation”), except: (a) for a public purpose; (b) under due process of law; (c) in a non-discriminatory manner; and (d) on payment of prompt, adequate and effective compensation. For greater certainty, this paragraph shall be interpreted in accordance with Annex 8- A. 2. The compensation referred to in paragraph 1 shall amount to the fair market value of the investment at the time immediately before the expropriation or the impending expropriation became known, whichever is earlier. Valuation criteria shall include going concern value, asset value including the declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value. 

As today a government can nationalise anything it likes. It must simply pay for it, that's all. The government's allowed to force you to sell your house in order to drive a train line through. But they must pay for it.

And thus our confusion. We know that what is being said is not true. What we cannot work out is why people are propounding such untruths. Anyone got any ideas?

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.