Come spend your year with us!

Almost a year ago today I had the incredible luck to google ‘Gap Year Economic Internships’ and find the ASI Gap Year page. And even more fortunately, just a day before the deadline as well. Feeling the impulse to go for it I sent off an application and quickly found myself in one of the most peculiar and enjoyable jobs I think I will ever have. 

If someone had told me what it would be like to work here before I started, I would not have believed them.

While my peers were slaving away in their local pubs to earn enough money only to bleed thousands on trying to escape coronavirus lockdowns after just two weeks in Australia, I was enjoying the metropolitan Westminster life complete with wine tastings, glitzy events and, most importantly, free drinks at the MoG. 

From meeting MPs to ‘giving comments to the press’ and even appearing on radio, my school friends could only look on with envy as the sum of their year amounted to cleaning up vomit in their local’s loo.  

While the perks are great, you also spend your time being productive both in output and personal development. Being part of the process of writing briefing papers will give you research and formatting skills necessary for success later at university. The opportunity to research and write articles will also allow you to explore your favourite niche political and economic topics which, even if they don’t give you a possible head start in your degree, will make you more rounded and informed about the world you live in. 

The combination of the confidence and skills you learn throughout this year will make you invaluable to future employers. 

ASI President Madsen Pirie often quips that ‘the question is not whether our gap year students are ready for the world, rather, whether the world is ready for them.’ 

So to spend a gap year having fun, gaining prized skills and earning some money at the same time, apply here now.

Abandoning inflation targets isn't the way to promote growth

Jim O’Neil is proposing something that doesn’t actually make sense. That the Bank of England should abandon its inflation targets in order to concentrate upon economic growth. The reason this doesn’t make sense is because it ignores the difference between inflation and growth in the first place:

One of Britain’s most prominent economists has urged Rishi Sunak to scrap the Bank of England’s inflation target to make economic growth its primary goal as Britain attempts a recovery from the pandemic.

Lord Jim O’Neill, a former Treasury minister who is understood to be in talks with the Government about the creation of a new state investment board for the North, called on the Chancellor to change the Bank’s remit to target nominal GDP instead of inflation. In an interview with The Sunday Telegraph, the former Goldman Sachs chief economist suggested the radical move would help engineer a V-shaped recovery from the coronavirus recession.

What we’re interested in is real GDP growth. The difference between nominal and real GDP growth is, by definition, the inflation rate. Inflation, above the rate that greases the wheels of relative price changes, being something that is harmful.

It’s fine to change emphasis, to say that we’d like NGDP to be rising, with some modest portion of that being inflation and the rest real growth, but that’s just setting the same target we already have. We desire maximal real growth with minimal inflation. But to say that we should abandon inflation as a target doesn’t make economic sense. It also doesn’t make political sense as inflation is very much easier to engender than real growth and do we really want politicians to be able to say they’re hitting the targets just by making everything more expensive for us?

Social care comes with a cost we should care about

Everyone agrees that social care has always been the poor relation to hospital care—starved of funds despite a huge surge in the elderly population. And it’s seen as unfair—hospital care is free to all, but families with savings must pay for social care themselves.

So, many people argue that social care should become part of the National Health Service and be provided free to everyone.

But this idea is utterly impractical.

Though much social care is already financed through taxation, most is delivered privately. That’s quarter of a million places in care homes 190,000 in nursing homes—plus all the care delivered to people’s doors. If the NHS took that over, it would be the biggest nationalisation since the 1940s. The compensation bill for care homes alone would be over £30 billion, the running cost would be over £5 billion a year, and the NHS would grow to 2 million employees. 

Nor does it solve the core problem that 80% of our care homes are old and no longer meet current standards—with narrow corridors and poky rooms without bathrooms. Reckon on another £20 billion for rebuilding. Would taxpayers be happy with that, when only a third of them will need any social care at all? Unlikely.

And if social care became free, millions more people would demand it. Like all those thousands who presently look after elderly or frail relatives at home. That addition to already growing demand would overwhelm the system. 

Universally free social care simply isn’t the answer. 

Of all the strange things it is possible to desire

We just think this is one of the truly strange things that someone could aspire to.

First, note that British popular music has indeed been wildly successful. Both as a business and in its primary function of annoying and being incomprehensible to anyone 5 years older than those currently making it. Secondly, note that this has come about through the chaos of entirely undirected personal and private effort. Markets that is, entirely free and bounded not just by no regulation but also no guidance nor even taste.

If British music has a soul, it resides in small venues. In hundreds of pub backrooms, grotty gig venues, DIY spaces and sweat-soaked basement clubs where lives are changed and, occasionally, history made. Alongside more established mid-sized venues, these places are talent incubators, providers of joy and a significant source of economic activity. More important, they also crystallise, if not trigger, profound cultural shifts – and have for almost 70 years.

From the Beatles at the Cavern or the Sex Pistols at the 100 Club, to dubstep focal point FWD at London’s Plastic People (RIP), or Optimo’s legendary Sunday nights at Glasgow’s Sub Club, we live atop a thriving, ever-mutating underground that shapes how the UK looks, sounds and is.

Anarchy in the UK being not just a number 38 chart pick by a popular beat combo but also an extremely successful business model. At which point, the bit we don’t understand in the slightest:

If government fails to intervene, far-sighted councils may water their own grassroots. The Local Government Association has objected to the taskforce’s lack of localism, and London mayor Sadiq Khan has pledged £2.3m to save, among others, music and LGBTQ+ venues. Could Preston or Sheffield steal a creative march on rivals such as Manchester? Will Manchester continue to fall behind cities such as Berlin, where public funds are supporting club culture?

True, all men kill the thing they love but who would be so enamoured with pop music to ask the government to get involved? Seriously, why the demand to destroy the model that has been so productive - in outrage even if not music - for the past 70 years?

Today's glaring non sequitur

We’ll admit to being more than a little puzzled by one of the claims being made here. That young people are being hard done by and require subsidy. Well, perhaps, perhaps not, that’s arguable. It’s this little bit:

Then millennials came along. Born between 1981 and 2000, with the oldest now pushing 40,

We cannot think of any useful manner of classification that has 40 year olds as young people. There are grandparents out there still below that age. Without some near terminal level of infantilisation we really do have to consider people entering their fifth decade as being adults.

This part though doesn’t puzzle us it’s just the standard evidence of not thinking:

Wealth taxes make sense.

The argument being used is that young people need subsidy, wealth taxes would largely be paid by older people therefore they make sense. But that’s bad logic. Whether or not we wish to tax a particular activity or state of being depends upon whether we wish to tax that activity or state of being. Whether we wish to subsidise some group is equally dependent upon whether we wish to subsidise that group. The two decisions are entirely independent of each other.

To claim that wealth taxes are a good idea because the young - or more accurately the middle aged - require a subsidy is a complete non sequitur.

Happy (sort of) Tax Freedom Day!

Tax Freedom Day is a measure of when Britons stop paying tax and start putting their earnings into their own pocket. For 2020 we’ve estimated that every penny the average person earned for working up to and including May 29th went to the taxman—from May 30th onwards they are finally earning for themselves. 

British taxpayers have worked a gruelling 149 days for the taxpayers this year. More than in any year under New Labour, and one day longer than last year. Britain’s tax burden is moving in the wrong direction.

Government tax choices fall on UK Taxpayers, this year they will fork out £773bn—representing 41.17% of net national income. 

Unfortunately for Britons, this Tax Freedom Day cannot yet take into account the tax costs of measures taken to tackle COVID19. All borrowing is a form of taxation deferred and the hundreds of billions of pounds borrowed to tackle this viral threat will only begin to be borne in future years and as the government begins to unlock economic activity. 

Tax Freedom Day remains over a month later than in the USA, and the UK has fallen behind Canada where their Tax Freedom day was on May 19 this year.

In April 2020 we commissioned Survation between 15th - 16th April 2020  to undertake a nationally representative online poll of 1,001 UK adults (margin of error +-3.1%) to investigate the financial impact of the lockdown, views on developing an economic recovery and lockdown exit plan, and tax policy after the lockdown.

There is popular support for reducing taxes after the lockdown to help boost the economy and jobs. Younger cohorts are the most supportive of tax cuts after the lockdown. Almost three-quarters of respondents (72%) think that the Government should reduce taxes after the lockdown to try to increase economic growth and jobs, while fewer than one-in-ten (8%) disagree with reducing taxes.

Of those aged 18-34, two-in-five (44%) “strongly support” lower taxes after the lockdown, compared to just one-third (33%) of those over the age of 65.

Fortunately there are some tax and regulatory changes, that we set out in a recent report Winning the Peace, that would boost growth post-lockdown and the pay packets of Britons right across the country:

1. The UK Government should respond to dire warnings on unemployment by immediately raising the threshold for employer’s National Insurance to £12,500.

2. Abolish the Factory Tax, by allowing for the immediate full write off on capital investments, to encourage business investment. ASI estimates show abolishing the factory tax would boost investment by 8.1 percent, and labour productivity by 3.54 percent (£2,214 per worker) in the long-run.

3. Governments across the UK should abolish stamp duty (in Scotland the Land and Buildings Transaction Tax). Britain’s most damaging tax, Stamp Duty destroys 75p of wealth for every pound raised. 

As our very own Dr Eamonn Butler puts it:

“Borrowing in a crisis is easy, making sure we balance the books and stop passing the buck to the next generation will be the hard bit. An economic recession and even the possibility of a depression cannot be ruled out. There will be calls for grand plans and spending like the clappers, but what we’ll actually need is the economic freedom to make choices for ourselves. We’ve all seen the damage in recent weeks of Whitehall deciding what’s good on our behalf. 

“As we remove short-term restrictions we also need to remove the long-run burdens of government on transactions, investment, employment and our access to goods and services. We should not risk turning the last few months we’ve lost into a whole lost decade.”   

Happy Tax Freedom Day!

We think this is absolutely fascinating

The Financial Times is attempting to pull together the numbers necessary to judge upon national reactions to and policies about the coronavirus. In the course of which we get this:

The UK has suffered the highest rate of deaths from the coronavirus pandemic among countries that produce comparable data, according to excess mortality figures.
The UK has registered 59,537 more deaths than usual since the week ending March 20, indicating that the virus has directly or indirectly killed 891 people per million.

They are comparing excess deaths - the deviation from the norm expected at this time of year. Thus this includes those killed by Covid-19 and also those killed by the health service - in any place - essentially being closed to anything not Covid-19. As they say it’s the best approach - although we ourselves make no claim for their specific numbers - to get a handle on the overall effectiveness of the battle against.

Given the information it is then necessary to try and work out why? In the case of a pandemic the first place to look, we submit, would be at the health care system. Either and at the delivery of health care itself or the system supposedly preparing for public health and pandemics. That second would be Public Health England and we’ve not heard much either from them or about their performance here.

But rather more importantly, Britain is unique in its delivery of health care. No one else has anything quite like the National Health Service - this being something we are told so repeatedly that it has become the national religion. OK, so suppose it is, unique and entirely different. This evidence of it performing worse than any other system would be good reason to think through whether we actually want to have a system so unique, wouldn’t it?

What we think absolutely fascinating is that even if the FT is correct, that the British outcome has been worse for some reason, the one that absolutely won’t be examined is whether the NHS, by its design, made that be so. It’s a religious matter, d’ye see, not one subject to evidence or examination.

Can't we all be Keynesian about this?

This may have been more than a little impolitic but can’t we all agree on one thing?

Environmental advocates have reacted with outrage after a provincial energy minister in Canada said that coronavirus restrictions on public gatherings make it a “great time” to push on with a contentious pipeline project.

During a podcast hosted by the Canadian Association of Oilwell Drilling Contractors, Alberta’s energy minister Sonya Savage was asked about the Trans Mountain expansion project, which is under construction despite despite fierce opposition from environmentalists and some Indigenous groups.

“Now is a great time to be building a pipeline because you can’t have protests of more than 15 people,” Savage said.

“People are not going to have tolerance and patience for protests that get in the way of people working. People need jobs and those types of ideological protests that get in the way are not going to be tolerated by ordinary Canadians.”

Her comments prompted disbelief and indignation among environmentalists.

It is a standard application of crude Keynesianism that troubled economic times are exactly when we should go build all that lovely infrastructure. You know, the multiplier effect and all that. Even - as Krugman with the alien defence system even if aliens don’t exist - that spending upon something entirely wasteful and useless still makes us richer because Keynes.

Now the insistence is that it does matter what is built. We agree - it does matter what is built. The what, the why, the wherefore, they always matter. Even if we accept - which we usually don’t - the existence of that multiplier it still does matter what is built and whether it is useful in and of itself.

Which is very cool - we now need to examine each and every idea for government spending as to whether the thing being spent upon is worth having in itself, it is no longer enough to just shout “Stimulus!” Or at least that would be true if these people were consistent and perhaps we should hold them to being so?

An Australian-style co-payments system for healthcare

Britain's love for the NHS must not blind us from the systematic faults during this crisis. From the difficulty in sourcing and delivering personal protective equipment, to the ill-fated discharge of Covid-positive patients to care homes — something is not right with our supposedly perfect system.

Even during normal times, the NHS can struggle. A perpetual complaint is the many days, if not weeks, it can take to get a GP appointment. Many of us who use it, many who work in it, find it totally dysfunctional. But it doesn’t have to be this way.

Those clapping every Thursday night in support of the NHS should speak to foreign visitors. 

The NHS too often levels down. It refuses to acknowledge anything outside of itself. There are plenty of other countries out there, developed and Western, that provide timely and universal access to healthcare. There are plenty of friendly countries to learn from. 

During this crisis we have heard much about Germany. They have a decentralised, insurance based system. While this may be a better model for the UK in the long-run, as long as there is healthcare for those who cannot afford insurance, it will be difficult to jump to this system in a single leap.

Another alternative is Australia’s world leading mixed public-private system. Australians who visit and live in the United Kingdom cannot understand why they cannot simply book an appointment at any GP practice at any time. At home in Australia they can opt for a fully state funded appointment (“bulk billing”), or pay a small fee to see a private GP which is subsidised by a state supported co-payment. This means practically anyone can access quality healthcare in a timely manner.

In this country, people with a range of incomes have to pay for their housing, food, gas, electricity and clothing. All of these are basic human needs, provided at various qualities. For those struggling, we give them cash payments but do not direct how they spend the money. But somehow we have become obsessed with the false promise of healthcare that is perfectly fair and evenly distributed irrespective of the ability to pay.

The priority should be ensuring that everyone has access to a minimum standard of healthcare — not that everyone has access to the same, but lower, level of care. Our goal should be to lift the quality of healthcare for everyone, not to bring those at the top down. This can be achieved with a co-payment system, in the Australian mould, that provides broad swathes of people access to high quality, private healthcare. This would both take pressure off the public system and provide much greater patient choice. This means everyone ends up with a higher standard of care.

Opponents to such a system would scream about the creation of a “two tier system”. But, in reality, we already have a two tier system. A relatively small number can currently opt for healthcare from private GPs and hospitals in the United Kingdom. Because the current two tier system is not encouraged, and indeed it has been positively discouraged by various government policies, those in power can claim plausible deniability that they have allowed the two tiers. 

I have worked in private general practice for over 25 years in central London. If the NHS provided adequate care no one would need to use our services. Many of our patients are not someone wealthy or famous, but a young working person on an average London salary who does not have the time to see a GP near to where they live. They pay our fees because they want to get back to work quickly.  

Many of these patients have never bothered to register with an NHS GP. If NHS GPs were allowed to see their own patients privately (banned since 1948), this could allow a co-payment system which would enable many patients to pay a top up fee to access faster medical care, likely using a remote consultation such as email, telephone or video. NHS dentists and hospital consultants have no such restrictions.

General practice is changing. Younger doctors are not opting for full-time work, but are working part-time in the NHS and privately for providers such as Samedaydoctor or video apps such as Babylon. Since these doctors have made the choice to work this way, it would make sense to not have an artificial separation.

During the pandemic the private sector made their hospital beds available to the NHS. In practice, like the Nightingale hospitals, these beds were not needed. It is time now to build on this form of collaboration and finally to remove the stigma of “privatisation,” whereby the NHS contracts to private providers. 

During the last election campaign the term privatisation was regularly used as a scare tactic to imply that at some point people will be forced to pay for medical care. We have many people in this country who cannot afford to pay anything for additional medical care. The basic ethos of the NHS, universally free at the point of use, should not change. But we do need to have a broader debate about the involvement of the private sector in the provision of high quality healthcare.

Dr Laurence Gerlis is the Chief Executive Officer and Lead Clinician at Samedaydoctor

The problem with this is what Ms Villiers?

We are warned:

British farmers “will go out of business” as a consequence of a trade deal with the United States, former environment secretary Theresa Villiers has warned.

Admitting that she had "great fears" about "unfettered competition between domestic farmers and US imports", she said it would be very difficult for domestic farmers to compete on price.

The bit that puzzles is, well, what’s the warning about? For what is being said is that food from British farmers is more expensive than that from American - and other places around the world. This means that the living standards of us Britons are lower than they would be in the absence of the import restrictions that protect those British farmers.

That statement actually is that the “protections” to British farmers impoverish the rest of us. And when it’s put that way the problem with us all getting richer by their absence is what?