We're told, endlessly, that we must do more manufacturing here in Britain. The underlying argument being that manufacturing jobs are good jobs, that they pay well, and that given that we'd like to have more well paid jobs therefore we must do more manufacturing. This argument is really just evidence of the ghastly conservatism of large portions of the British commentariat. For the truth is that the marginal manufacturing job is not well paid.
An interesting restatement from Branko Milanovic of his earlier work on who has actually gained from the process of globalisation. In effect, absolutely everyone except those on around and about less than median income in the already rich countries as that chart shows. Or, in more detail, it can be seen here.
Following the Panama Papers scandal, publishing tax returns is in vogue. The pressure on politicians to release theirs has reached the point that it has essentially become a necessary pre-condition for leading a party or running for President. Those who don’t are assumed to be suspicious and those who do are scrutinised as immoral for paying too little or, apparently, immoral for paying too much because they’re too rich.
Without being hyperbolic, it is fair to raise concerns about the effect this can have on how people judge what the grounds for electing someone are. Much more worrying, though, is the idea that all tax returns should automatically be in the public domain. As in Scandinavia, the details of how much each taxpayer declares and pays would be available for anyone to peruse online.
One argument is that fear of scrutiny would reduce evasion and avoidance. In the case of evasion, which is illegal, this makes little sense. The fact that HMRC see your return is enough of a disincentive to evade tax. And if your accounting is good enough to get past the government, it can probably outwit over-zealous armchair tax experts.
As far as avoidance, which is legal, goes, it is ambiguous how much of a difference this would make. Would the ‘shame’ of your co-workers and neighbours knowing that you use offshore banking or pay yourself through a shell company be enough to dissuade most people to stop avoiding tax? For those who were dissuaded, it is just as likely that they would declare less rather than pay more, which would perversely promote more law breaking.
In any case, a far more effective solution would be to simply close perverse or unfair loopholes. However, the real intent of ideas like this is to affect a societal shift that promotes the idea that obeying the law is insufficient and that there is a moral obligation to pay as much tax as you can.
This could result in unexpected and arbitrary changes in the tax system to respond to immediate public anger and increased focus on populist, rather than efficient, tax shifts. It would also foment an unhealthy culture of envy, resentment, and suspicion. Perversely, it could also entrench class divisions and snobbery towards people with below average incomes. Furthermore, Norway and Sweden have had to restrict availability of tax returns, as complete transparency abetted burglary and promoted tabloid voyeurism.
The sentiment that ‘if you having nothing to hide, you have nothing to fear’ is always sinister and we are already in an era defined by a creeping erosion of privacy. Further attacks on the ability of individuals to conduct their own affairs without being constantly monitored by everyone else can only be negative.
Trade deals are always controversial and increasingly excite populist rage on left and right alike. The negotiations of the TTIP (between Europe and the US) and the TPP (between the US and East Asia) have attracted an even greater level of hostility than normal, with people who should (and do) know better jumping on the anti-trade bandwagon.
Admittedly, some of the criticism is well deserved. It is not necessary or wise to have conducted the negotiations in secrecy, with details being leaked incrementally. Increased protection for intellectual property may prove problematic. And both deals are regional as opposed to global deals that add to the growing spaghetti bowl network of exclusive deals, adding to complexity and undermining efforts at comprehensive and uniform global liberalisation.
However, the greatest ire magnet is the provision for facilitating investor-state dispute settlement (ISDS). Essentially this allows foreign companies to claim against governments who cause them to lose profits. Pressure has already caused ISDS to be dropped from the TTIP proposals, although it is likely to be brought back, given the US favour it and the EU’s mooted alternative of an investment court system has been held to be illegal by the German Association of Magistrates.
Although ISDS already exists and has been part of most trade agreements, the idea of corporations being able to sue governments is anathema to many people. Surely allowing multi-nationals to sue whenever their profits are curtailed is an attack on democracy, consumer protection, egalitarianism, and the environment?
Equally, though, governments should not have the power to act arbitrarily. Investors and businesses require a predictable environment that does not change at a bureaucrat’s whim. If, for instance, a country shuts down its nuclear power plants unexpectedly and without good reason, the owners of the plants are not being unreasonable in seeking compensation, given that they invested on the reasonable assumption that this would not happen.
Whilst companies act out of self-interest, this can produce good results. It may be popular for a country to, say, pass laws against smoking. A tobacco company seeking compensation may only be interested in its own bottom line. But the effect of this threat can be to prevent an incursion into the lives of individuals who should decide for themselves whether to take risks like smoking.
The biggest fear is that TTIP will force privatisation of state assets. This is mostly incoherent nonsense. It is true that companies who are victim to nationalisation of their assets will be able to sue for recovery of lost profits, hence the popular meme that, ‘privatisation of OURNHSTM could never be reversed’. This is a distortion.
ISDS does not give investors the power to change government policy, and allowing other providers to compete with OURNHSTM has been expressly ruled out. All that would be required is compensation of companies losing out from re-nationalisation, which is eminently fair. Also, privatisation would actually need to happen in the first place, which is highly unlikely, given the quasi-religious fervour surrounding OURNHSTM.
Execution of government policy is regularly challenged through judicial review. Suing for lost profits, and even loss of prospective profit, is a standard remedy in contract law and tort. The fact that ISDS is arbitrated through confidential international tribunals is necessary given the international nature of the disputes and often positive given it is governed by institutions like the London Court of International Arbitration, which more reliable than many national courts. Not to mention that all arbitration is confidential and much of it is conducted internationally anyway.
Nothing about ISDS is especially radical.
That the Chancellor insisted that the national living wage came into being is true. That this is a rise in the minimum wage for those over 25 is also true. And that there will be some adaptation in the labour market to this is also blindingly obviously true. How could it be otherwise? It is thus with some astonishment that we see people who in general would support a higher minimum wage complaining about the effects of a higher minimum wage. For example, this letter from Liz Kendal MP:
This isn't quite what Lenny Henry has said about the BBC. But it is what he means about the BBC. The organisation needs to be punted off into the private sector as soon as possible. For what he says here is entirely true:
I’ve become extremely pessimistic about the Leave campaign lately as it has latched on to Faragist arguments about immigration as a major reason to get out of the EU. This is not just naïve liberalism – on virtually every count, the critics of EU immigration are wrong.
A new paper from the LSE’s John Van Reenen and others summarises the existing research.
In normal times we wouldn’t expect immigrants to take natives’ jobs. But what about during and after the Great Recession?
Nope. Well, it doesn’t look like it anyway. None of the other more sophisticated studies from before the crash show a relationship between immigration and native unemployment, and certainly an eyeballing of the post-crash data doesn’t suggest that that’s changed.
Local authorities also don't show any statistically significant association between immigration and native unemployment.
The national figures don’t seem to suggest a wage depression effect, but it’s less clear – since the Recession immigration has been rising and wages have not. So let’s look at local authorities and see whether areas with high levels of immigration have had lower wage growth.
Again, no. There’s a very mild downward slope that is statistically insignificant (indistinguishable from zero). The same trend exists at the local level for jobs too, and for “NEETs” (young people Not in Employment, Education or Training).
Even unskilled Brits, who some previous studies have shown suffering a small negative wage effect from immigration, don’t seem to have clearly suffered since 2008 because of immigration.
This isn’t terribly surprising, even if we take a fairly simplistic supply and demand view of things. Immigrants supply labour, yes, but they also demand labour – they spend their incomes on groceries and other things, creating about as many jobs as they’ve taken. That’s a very crude way of putting it, but it might help us to understand why the empirics look so benign.
In both jobs and wages you can correctly say that these don't tell us what the counterfactual is – maybe unemployment would have been even lower without those immigrants. Maybe, though the local authority data undermines that. But there's certainly nothing here that suggests that this is the case.
Taxes and the welfare state
I think most readers of this blog will be unsurprised to hear that EU immigrants make a fairly significant positive contribution to the public purse – most enlightened free marketeers realise that the big costs to the state are of looking after old people, not benefit scroungers.
But the actual contribution of £15bn in the decade up to 2011 (ie £1.5bn/year) is quite something, especially when you consider that we had a hefty deficit for much of that period, so the average person in Britain was a net drain on the public finances.
In other words, as the paper points out, EU immigrants are subsidizing the welfare state, allowing the deficit to be a little bit lower now than it would be otherwise. They don’t increase NHS waiting times, don’t slow down the education of native British kids (poor language skills are offset overall by good old fashioned hard work and determination), haven’t driven up crime disproportionately, and are less likely to be in social housing than native Brits, though that last finding might control for too much.
One area where EU immigrants may make things worse is house prices. (And a plague on yours if you think higher house prices are a good thing.) In fact, even though they add to pressure on aggregate they don't drive prices up locally, but only because natives move away, which certainly isn't a good thing. But readers of this blog, again, know the real cause of, and answer, to the overall problem: build more bloody houses.
Of course, none of this matters
The paper is worth reading in full, and as a comprehensive guide to what we know about EU immigration it’s incredibly useful. In particular its discussion of the impact of immigration on productivity is useful and clear.
I doubt this will change anybody’s mind, though, because anti-immigration types have a very annoying tendency to employ motte and bailey arguments about immigration: they make strong, testable claims that immigrants hurt the poor, are a drain on the state, etc, but when you show them that they’re wrong they retreat to woolly arguments about the social impact of immigration.
Those social impacts are very important too, but if those are what anti-immigration people care about, then they should stop making false claims about the economics! As it is I can only assume that they don’t care about the truth and see themselves as fighting a war where dirty tricks are acceptable.
Many also seem to conflate the social problems we have with, say, Eritrean refugees with the social costs of EU immigration. As Ed West reminds us, that’s silly. And although most people imagine that Eastern European immigrants dominate EU immigration, they actually account for less than half of EU immigrants in the UK; and around half of current inflows from the EU. Your social case against EU immigrants had better be as much about the harm caused by Spanish university graduates as by Polish builders.
As for the people saying that we simply need ‘control over our borders’ in principle, that would preclude us from ever signing any free movement treaty with any country, and tearing up the ones we have with Ireland, the Channel Islands and the Isle of Man in order to protect this principle.
On this front at least the Leavers are barking up the wrong tree. There are many good reasons to want to leave the EU. Curbing immigration isn't one of them.
We are not, to put it mildly, supporters of Donald Trump nor of many to most of his policies. We are enjoying the shellacking he's giving to the political establishment and that enjoyment extends to that on offer from Bernie Sanders too. But to enjoy the show is not to endorse the specifics on offer. However, we do think we need to correct Mitt Romney on a point here. There is very little that disqualifies The Donald (or Bernie) from the Presidency. And tax returns definitely aren't it:
Donald Trump is under growing pressure to release his tax returns after Mitt Romney, the Republicans 2012 presidential candidate, said failure to do so disqualified him as president.
The issue threatened to become overshadow Mr Trump’s scheduled meeting with senior Republicans on Capitol Hill on Thursday after the candidate backtracked on a previous pledge to make his returns public, as is traditional for presidential nominees.
Mr Romney, who has already said Mr Trump should not be the Republicans’ candidate, hit out on Facebook after the property tycoon - who claims to be worth US$10 billion - said he was unlikely to release his returns before November’s election because they are currently being audited by the authorities.
“It is disqualifying for a modern-day presidential nominee to refuse to release tax returns to the voters, especially one who has not been subject to public scrutiny in either military or public service,” Mr Romney wrote.
It's perfectly fine to state "I do not think he should be President because...." but not to throw up some idea that this or that "disqualifies". Because you've got a set of rules about who may or may not be President already:
No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty five Years, and been fourteen Years a Resident within the United States.
Someone who meets that and gets a majority in the Electoral College gets to be President. That's actually what this democracy stuff means. That, subject to those simple rules, whoever the people choose gets the gig. Whether you or other members of the establishment agree or not. It's not just what democracy means it's the entire point and purpose of it. That the people get to choose the ruler free of the constraints of order of birth, membership of a particular class, considerations of race, wealth, and yes, even relationship with the tax or any other form of law. Or, of course the filtration system of the establishment.
We can think of all sorts of reasons why President Trump may or may not be a good idea. But it is absolutely wrong to say that he is disqualified in any manner: until we hear the results back from that Electoral College of course.
With air pollution linked to nearly 40,000 deaths every year, tackling London’s air quality crisis will be one of new Mayor Sadiq Khan’s biggest priorities. It’s a shame then to see that he’s neglected one free market solution on offer. Using market demand to set parking charges could bring emissions down by reducing congestion and encouraging more people to use public transport. It’d also raise more revenue for Borough councils, allowing them to bring council tax rates down.
People often talk about parking spaces as if they were public goods, yet as MarketUrbanism’s Emily Washington points out, parking spaces are not a public good like clean air. By breathing in clean air I don’t diminish the amount of clean air available for you, yet this isn’t the case with parking: every person who parks deprives everyone else of that parking space. Giving away a scarce resource for free should be anathema to conservatives, yet bizarrely it’s often Conservative politicians who make the case for either free or heavily underpriced parking. As UCLA Urban Planning Professor Donald Shoup keenly observed “Staunch conservatives often become ardent communists when it comes to parking”.
For example, last year former Community Secretary (and former ardent communist) Eric Pickles imposed a series of regulations on local councils, making it harder for them to raise revenue from parking charges, with restrictions on parking enforcement and ring-fencing for what the money raised by parking charges can be spent on. Pickles argues that keeping the cost of parking low will benefit both motorists and the high street.
But, the evidence doesn’t stand up. What underpricing parking actually causes is excessive congestion as the scarcity of parking spaces encourages drivers to cruise around looking for an empty space. Prof. Shoup looked at sixteen different studies, which measured cruising behaviour in the central business districts of major cities. He found that they average time spent cruising for a parking space was around 8 minutes, and that at any one time 30% of cars in the traffic flow were cruising for a parking space.
This is no less true when the parking is provided by a council, and not a private landowner or business—we should want government organisations to ape private firms by using prices to clear markets as much as possible.
Cruising isn’t the only way underpriced parking causes congestion. Cheap pricing acts as a subsidy to motorists at the expense of the tax payer. 95% of parking away from home is free to the motorist, and households spend on average £47 a year on parking, a very small fraction of the £1,600 per vehicle spent on fuel each year. Yet Shoup’s research suggests that the value of a parking space in a major city, is something in the range of tens of thousands of pounds. If motorists bore the true costs of car travel, they’d be much less likely to use their car and more likely to switch to public transport, further reducing congestion.
This reduces air pollution in two ways. By reducing both the total number of cars emitting fumes and the amount of fumes each car emits. As cars stuck in slow-moving traffic emit more than those in free-flow.
What about the risk to the high street? Advocates of free parking argue that charging more for parking will hit high street retailers and further contributing to the long term decline in high street retail. But the evidence is weak. Free parking advocates typically rely on surveys of what drivers say they would do if parking prices change, however as economists frequently find out, revealed preferences can differ widely from stated preferences.
One study in the German city of Herford found that when free parking was introduced it had no effect on overall sales, but did increase traffic. Shoup’s own research suggests free parking can actually reduce the number of visitors to an area, as free parking encourages long parking stays restricting the number of visitors who can actually park. In fact, in many cases it’s the local workers who take advantage of the free parking spaces., reducing the number of spaces available for consumers.
Pricing parking based on market demand would encourage a more efficient allocation of a scarce resource. It would mean less congestion, cut air pollution, and reduced taxes for Londoners. It wouldn’t hurt high streets and with new technology, it’s easier than ever before.
Goethe famously wrote that architecture is frozen music. It is a compelling metaphor but if architecture really was music then we would all be able to choose to inhabit an urban environment composed entirely of buildings of beautiful, picturesque or sublime quality. With all other art forms, you can seek out what is good and shun the rest.... but escaping bad architecture is much more difficult. You may even, if you are unlucky, have to live in it.
If architecture is frozen music, how then might one characterize the architecture that was the concrete ‘muse’ of most European architects in the early post war era and still survives today as the urban environment for millions, especially in poorer areas? Step inside a UK architecture school to pose this question and you might get a shock. Particularly if your question relates to the so-called ‘fathers’ of the International Style in general and Le Corbusier in particular (he of the tabula rasa concept of urban renewal in which everywhere “must” be “totally rebuilt” using only concrete) and their legacy for the UK residential housing stock.
Architectural treasures are to be found across the globe and (in a Western context) from St Petersburg to Manhattan but I have a particular appetite for seeking out the finest frozen music of my own nation that still abounds despite the ravages of mid 20th century architectural vandalism. If UK property prices are any indication of perceived aesthetic value then the mature English suburb is highly prized architecture indeed. But try taking any of this as inspiration for your UK architecture school design project and you can expect an aesthetic dressing down from your tutors.
To be fair to the profession, I would come to the defence of much of more recent public and commercial architecture in the UK - most of it by architects that the public has never heard of but also by famous ones like Norman Foster. (It is Foster’s verbalisations that irritate me, not his buildings.) Granted there are also the misconceived and perversely misplaced alien ‘carbuncles’ complete with impenetrable pseudo-intellectual rationales – the Liverpool Ferry Terminal Building, for example, (‘angular fun’ we are told) or Drakes Circus in Plymouth (just don’t go there!). And the recent past has not been such a bad time either for the UK built environment more generally, all things considered. It is important to remember that building - like art and music - never has been of a uniformly high standard and the search for some aesthetic final solution leads inexorably to something out of the set of a sci fi B movie. The aesthetic and build quality of mass speculative housing – typically‘traditional’ brick-clad boxes with pitched roofs laid out along residential roads and cul de sacs - may fall short of one’s ideal but it is probably as good now as in the 1930’s and certainly infinitely better than the 50’s to 80’s.
Between the pre-war past and the reasonably benign present we had the Blitz – by which I mean the three decade long blitz - as the bombs of Modernism, social engineering and megalomaniac town planning rained down across poor war-weary Europe. At least it’s over now? Well, yes and no. Certainly the arrogant certainties of utopian collectivism mercifully crumbled in course of the 70’s. Almost everyone now understands that to give architects and town planners licence to decide wholesale what society’s ‘needs’ are and then dream up megalomaniac schemes for the wholesale satisfaction of these needs is akin to kitting your small child out with a set of power tools and a bag of cement and setting him loose to decide what your pride and joy home needs. Wiser people, of course, never stopped understanding this in the first place but their warnings were drowned out at the time and dismissed as ‘reactionary’ and insensitive of the supposed brave new 20th century zeitgeist.
Almost everyone now understands that the Le Corbusian legacy was entirely malign, even if they have never heard of the man himself. Everyone, that is, except in the ivory towers of architectural academe; its luminary authors of revered set texts and in the more high brow professional journals. I had first-hand experience of this at architecture school in the 1980’s. In my school, the status of ‘Corb’ (as we were encouraged to affectionately call him) as your ultimate architectural hero was, quite simply, a given and dissenting from this position was risky. Such is the power of group-think which universities are, sadly, no less prone to than anywhere else. To be fair, nobody was still plugging the megalomania aspect of their hero; his knock-down-the-centre-of-Paris side. All those undeniably God awful tower blocks for ‘rationally’ housing ‘the people’ that sprang up all over Europe in his name? Well, we were assured, they could not be blamed on ‘Corb’; it was just that his more pedestrian architectural acolytes hadn’t properly understood what he had meant. Anyway, all must be forgiven on account of him being such an innovative ‘genius’.
The mind-boggling power and reach of the totalitarian intellectual mindset in academia in the middle decades of the 20th century is hard to overstate. The literature - in the field of architecture alone - is as vast as it is dispiriting; the pompous, vacuous theorising, the ‘we must totally and utterly’ manifestos, the arrogant, ivory tower intellectuals casting themselves as champions of ‘the people’.
Unless you have - as I was at architecture school - been force-fed the Le Corbusier mythology, you might well struggle to comprehend just how bizarre is the basis of his iconic status. The man himself - according to a fairly typical 1988 assessment in the architectural literary canon - "ranks with Darwin, Freud (and) Einstein among major figures who have ever affected the world to which we belong.”
So here are a few snippets of the great man’s thinking:
“the plan must rule, the street must disappear” (especially all those Parisian street cafes)
“we must create a state of mind for living in mass production housing”,
“man must be built upon this axis....in perfect agreement with nature and probably, the universe.”
The fallacious nature of all such prescriptive moralising about architecture was laid bare in David Watkin’s seminal work: Morality and Architecture (1977); a ground breaking scholarly analysis of its whole history, from Pugin, to Le Corbusier and Pevsner.
The Modernist utopian, collectivist fallacy may have eventually been debunked in the course of the 1970s but – in addition to the ‘Corb’ hero worship - two related and cancerous aspects of the faux radical mindset have survived intact in our schools of architecture. One of them is the idea that an architect aspiring to greatness must also aspire to novelty. The other is the idea that building design has sociological, psychological and macro-economic dimensions which the architect – simply by virtue of his being an architect – is competent to judge. What really matters to your average architecture student is drawing - but they are emphatically not deep-thinking psychologists, not economists and not sociologists and never will be because, for the most part, they are not really that interested in these disciplines. Which is fine and just as it should be until, that is, the idea is implanted that their drawings represent some kind of implicit vision for mankind. If architects are in need of a statement of their mission they need look no further than Vitruvius’s ancient and eloquent aphorism - Firmness, Commodity and Delight – which still stands as a sufficient theoretical basis for any architectural project. But a required part of any architecture student’s design presentation, these days, mustinclude a verbal rationale – often post hoc and invariably half-baked - of how the form, massing and materials of the design are expressive of such imponderables as the supposed psychological ‘needs’ and ‘aspirations’ of the users and the wider ‘community’ which the building is to serve. I wish I could recall some of these comically glib and shallow rationales from my own student days but, of course, the memory has a natural tendency to consign trash to its trash can. The students were, in any case, simply reciting the bogus language of their tutors - in which buildings might be said to be ‘fun’, ‘thought provoking’, ‘democratic’, ‘inclusive’ and other such nonsense.
In a similarly glib fashion, tradition was, by the late 1980’s, once again recognised as an important aspect of an architect’s education – at least in theory. Of course, by then had come a visceral reaction in society against crass modernity – especially tower block utopia – and Conservation was fast becoming the new vogue. In architecture-school-speak, however, respect for tradition does not mean quite what you might imagine; it might mean, for example, that you still propose to insert some manifestly alien infill development into a gap in a row of period terraced houses - perhaps even the proverbial upended shark, at least metaphorically if not literally. But crucially now, instead of bragging of your iconoclasm, you would go to equally verbose lengths to demonstrate that you were merely respectfully ‘reinterpreting’ the traditional forms. Architects now ‘must’ reinterpret tradition, with ‘must’ being the operative word. I have known of architects who feel compelled to add ‘contemporary’ sticky-on-bits (onto what are, in all other respects, traditional pitched-roof, brick-walled dwellings), for no better reason than their belief that this somehow lifts them above the level of mere speculative housing and into the more rarefied realm of ‘contemporary architecture’. There is of course nothing wrong with innovation per se; it is the knee jerk compulsion to innovate, or ‘reinterpret’ - as a kind of moral imperative - that is the malign 20th century aesthetic legacy. So beware of architectural academics espousing ‘tradition’.
You might think architectural academia’s saving grace is its very isolation from the real world and note that most practising architects ditch much of its baggage when faced with the need to make a living. Partly true - but the persistence of this quaint reverence for octogenarian ‘Modernism’ is symptomatic of a much broader malaise – the persistence (in large measure) in our academic institutions of the kind of cultural Marxist/social engineering assumption currently manifest in Jeremy Corbyn and his devotees.
Of all the Modernist fallacies, perhaps the greatest was lumping together all building types into a single mould. Many people, including myself, are quite happy to be dazzled by steel and glass in their airport or corporate HQ but not in their residential neighbourhood. A person’s relationship to their home is a unique and complex psychology, well beyond the grasp of crass architectural theorising. If an individual desires to inhabit a dramatic spaceship of steel and glass, then that is fine – providing that they don’t insist on plonking it on your cherished avenue of period Edwardian villas. I am fond of the print on my wall of Frank Lloyd Wright’s Falling Water and can imagine it being someone’s dream home. For the great majority however, their dream of domestic bliss is located in some-or-other variant of an archetypal pitched roofed dwelling house – and it is this that deserves to be ‘respected’. To insist that the aesthetics of dwelling ‘must’ be ‘modernised’ to suit some perceived advancing zeitgeist is almost as absurd as proposing that any of life’s simple pleasures ‘must’ be modernised; that maybe even sexuality be modernised? Come to think of it though, I do believe there are some in our society today who may indeed be advocating something just along those lines too.
Graham Cunningham March 2016