Disqus or Wordpress for comments? Let us know

We're going to be moving over to a new, Wordpress-based site shortly. One of the things we're trying to decide is whether to keep Disqus for comments, or to use a native Wordpress-based comments system.

As I see it, the issues are this:

  1. Wordpress is simpler, requiring no login or registration. Disqus does allow guest comments but it can be quite fiddly.
  2. Disqus allows users to upvote their favourite comments and downvote others.
  3. All our current comments are kept on Disqus, though I'm not sure if we'll be able to bring these over in any case.
  4. Some users find Disqus to be extremely annoying to use; whether this is a specific Disqus problem or a more general problem I don't know.

Since ASI writers very seldom comment on the site, preferring to allow readers to discus among themselves (maybe that should change?), I thought the best thing to do would be to open it up to you — do you like Disqus? Hate it? Which would make you happier — the status quo, or a Wordpress-powered comment system? Let us know in the comments. Of course, the fact that those comments are currently powered by Disqus may skew the results...

The surprisingly Hayekian Charles Koch

This is an interesting interview with Charles Koch. Yes, he of Koch Industries, according to some the antithesis of all that is democratic (and certainly Democratic) in the US economy. He's very Hayekian for example:

The expansion seems like a vote of confidence in Wichita when other large companies — Boeing, Coleman’s corporate headquarters — are moving away. What makes Wichita a good fit for Koch Industries? How’s that worked for them? People underestimate the tacit knowledge, the local knowledge that people ... it’s the way people think about government, “The Fatal Conceit,” that a few geniuses are telling everybody what to do — it doesn’t work that way. The people who make it go are the people doing the work who have the hands-on knowledge. And all you can do at the top is set a vision and standards and try to hire the right people. And then they make it happen. That’s what so many companies are missing and what I think we’re missing in the country in a big way.

That is of course a direct reference to Hayek there but I have a very strong feeling that there's more to it than just having read the book. 47 years as a CEO is likely to give you some opinions on how business and companies really work over and above what one might have read in an academic study.

And this is lovely:

I think one of the biggest problems we have in the country is this rampant cronyism where all these large companies are into smash-and-grab, short-term profits, (saying) how do I get a regulation, we don’t want to export natural gas because of my raw materials ... well, you say you believe in free markets, but by your actions you obviously don’t. You believe in cronyism. And that’s true even at the local level. I mean, how does somebody get started if you have to pay $100,000 or $300,000 to get a medallion to drive a taxi cab? You have to go to school for two years to be a hairdresser. You name it, in every industry we have this. The successful companies try to keep the new entrants down. Now that’s great for a company like ours. We make more money that way because we have less competition and less innovation. But for the country as a whole, it’s horrible.

And for disadvantaged people trying to get started, it’s unconscionable in my view. I think it’s in our long-term interest, in every American’s long-term interest, to fight against this cronyism. As you all have heard me say, the role of business is to create products that make people's lives better while using less resources to do it and making more resources available to satisfy other needs. When a company is not being guided by the products they make and what the customers need, but by how they can manipulate the system — get regulations on their competitors, or mandates on using their products, or eliminating foreign competition — it just lowers the overall standard of living and hurts the disadvantaged the most. We end up with a two-tier system. Those that have, have welfare for the rich. The poor, OK, you have welfare, but you’ve condemned them to a lifetime of dependency and hopelessness.

Not that I tend to get offered the chance to have a beer with a billionaire but I can imagine that if it did happen we'd bore each other stupid by agreeing with every word the other said.

For that is indeed exactly the point. Large companies just love regulation because it prevents the upstarts from disrupting their comfy businesses. Being anti-regulation is therefore determinedly pro-poor: not that you'll ever get one of the Statists to believe or admit it.

Yes Polly, training the untrained is indeed expensive

Polly Toynbee tells of us of a marvellous scheme by which the young and untrained get trained and thus gain decent employment. However, the real message of this story is not quite what Polly thinks it is I fear:

The shadow work and pensions secretary, Rachel Reeves, and Stephen Timms, the shadow employment minister, were in Cardiff this week to study it, as they plan their own similar job guarantee scheme. They visited Sapiens, an international software company that has taken on 12 trainees from Jobs Growth Wales. All these young IT graduates were lost temping in part-time, low-level jobs. One had been stuck working part-time in a bingo hall for a year, others in shops and pubs, each applying for hundreds of jobs without getting interviews: "Everyone wanted people with experience. If you haven't any, you've no hope," said one. The company said it would never have hired these 12 without the programme, because training raw recruits costs so much more than taking on experienced staff. But with Jobs Growth Wales covering six months of intensive training, Sapiens ended up keeping 11 of them permanently.

You can indeed read it the way that Polly does, the Glorious State taking over and making things better where the market simply bumbles ineffectually.

Or one could try to look a little deeper. For example, all of these "young IT graduates" had been in compulsory education for 11 years of their lives, presumably an additional two to get into university and then three once there. So what the hell is our State run education system managing to do over those 16 years if it cannot prepare them for an entry level job opportunity?

The second and more major point is that yes indeed, it does cost money to train people. And the cost of that training can indeed mean that people would prefer to hire the already trained. Which is why it is so stupid to put a minimum price on untrained labour. For that pushes the total costs of untrained labour, wages and training costs, above the costs of hiring someone who already has their act together.

That is, a minimum wage will, if it is high enough to actually matter at all, will by definition be crippling to the employment prospects of the young and untrained.

As Britmouse so graphically points out here.

Perhaps instead of adding another layer of State interference we sould undo the cause of the original problem?

I have to say that this fills me with a great deal of confidence about dietary advice

As I mentioned yesterday the WHO has come out with a couple of little recommendations about the amount of sugar we eat. Don't swill too much around your moth because of caries and do remember that sugar does indeed have caloties. Too many calories, compared to your activity levels, makes you fat. That is indeed what they said. So today we have one of those campaigning prodnoses in The Mail:

On Wednesday, for instance, no less an authority than the UN’s World Health Organisation came out with the firm recommendation that we should all be aiming to cut our sugar intake by half and that children should not be given fizzy drinks at all.

No, that isn't what they said at all.

That came just one day after Dame Sally Davies, the Government’s Chief Medical Officer, proposed that a sugar tax needed to be introduced if we wanted to cut sugar intake and reduce obesity.

She did indeed say that but there doesn't seem to be any evidence to back it up.

And it came on the same day that an eminent New York cardiovascular research scientist warned that the long-running demonisation of fats, and saturated fats in particular, could be entirely misplaced. The real killer, according to Dr James DaNicolantio, particularly when it comes to heart disease and Type 2 diabetes — those two scourges of the modern age — is sugar.

And isn't that just wondrous? Absolutely everything we have been told about diet and health for the past 50 years turns out to be, in your words, untrue. So we should immediately abandon that 50 years of advice and hop aboard your bandwagon?

It doesn't really have the ring of confidence around it this idea, does it?

Oh, and here's a little challenge. If you can find those doctors who tell us that eating as much fat as we like, including those saturated ones, if just absolutely fine for us, indeed that pig lard is better for us than sugar, then we might start taking this all a tad more seriously. Indeed, we would, if this were true, we certainly should if this were true, find Action On Sugar telling us to fill up on beef dripping.

Which, amazingly, they ain't so clearly not even they believe the tosh they're spouting. In which case why should any of us believe it?

Five intriguing papers I discovered this week

In what might become a recurring feature, I am going to summarise the findings of a few research papers, potentially of interest to ASI blog readers, that were either first released this week, first published this week, or first come upon by me this week.

1. Fernandes, D., Lynch, J. G., and Netemeyer, R. G., "Financial Literacy, Financial Education and Downstream Financial Behaviors" (Jan 2014)

This paper is a large meta-analysis of 168 other papers, which in turn refer to 201 different studies and experiments. They find that at least 99.9% of financial behaviour in life cannot be explained by differences in financial education, or conversely at most 0.1% of the difference in people's financial decision-making and choices is down to education interventions designed to improve their financial literacy. In the words of their abstract: "even large interventions with many hours of instruction have negligible effects on behavior 20 months or more from the time of intervention".

While other correlational studies appear to show some relationship between financial behaviour and educational schemes (i.e. one explaining more than 0.1% of the variance between individuals) they explain that this is only because those typically getting financial education already have various psychological traits associated with careful management of finances. They therefore suggest that big schemes designed to improve lifetime financial decisionmaking are futile and a waste of money; the best we can hope for is "just in time" interventions, perhaps at the point of financial transactions, that are more likely to be taken in and not forgotten.

2. Wang, M-T., Eccles, J. S., and Kenny, S., "Not Lack of Ability but More Choice: Individual and Gender Differences in Choice of Careers in Science, Technology, Engineering, and Mathematics" (May 2013)

In this paper the authors find that a substantial fraction of the male-female "gap" in STEM (Science, Technology, Engineering and Medicine) fields can be explained by the fact that women who are talented at maths tend to also have high verbal skills, skills that mathematically talented men are much more likely to lack. This means they have a wider range of choices available to them, and also possibly identify less closely with maths as part of their personality, and it is this choice not to pursue STEM further that drives the gap, rather than, for example, discrimination in the area or a perceived unfriendly atmosphere.

3. Liu, S., Huang, J. L., and Wang, M., "Effectiveness of Job Search Interventions: A Meta-Analytic Review" (Mar 2014)

Liu, Huang and Wang found, reviewing 47 different experiments testing if schemes "teaching job search skills, improving self-presentation, boosting self-efficacy, encouraging proactivity, promoting goal setting, and enlisting social support" could boost the unemployed's chances of getting a job. In fact, on average those in the treatment groups—i.e. those actually subject to the intervention, and not in the control group—were 2.67 times more likely to get a job. Since the studies all used randomness of quasi-randomness to assign treatment, this suggests, they say, that schemes that develop skills and self-motivation can be effective. However, the schemes were more likely to help the young than the old, the short-term unemployed than the long-term unemployed, and job-seekers with special needs, as compared to the population at large.

4. Karwowski, M., and Lebuda, I., "Digit ratio predicts eminence of Polish actor" (Jul 2014)

In a slightly surprising study, the two authors looked at 98 Polish actors, both male and female, and compared the ratio between their second and fourth digits on their hand (a measure of prenatal testosterone exposure) and their productivity and fame. For both men and women, even controlling for age, a higher ratio predicted more pre-eminence.

5. Aisen, A., and Veiga, F. J., "How Does Political Instability Affect Economic Growth?" (Jan 2011)

In a classic example where economists do extensive research to tell us what we already know, this IMF paper from 2011 shows us how bad political instability is for economic growth. Actually, the paper is a great one because it allows us to estimate the size of the impact of different political elements on instability and then the size of instability's own impact on economic aggregates.

Their findings are highly interesting: whereas primary school enrolment has a pitifully small impact on economic growth, and the impact of investment, economic freedom and the security of property rights comes out quite small, violence, political instability and cabinet changes have substantial negative effects, as does, surprisingly, population growth. And while the most productive regions in Europe are the most ethnically diverse, in this study ethnic homogeneity is very strongly associated with growth. Of course, the conclusions of the paper—that countries should address the root causes of political instability—are much easier said than done!

The WHO is actually quite reasonable on sugar

You'll have seen the signs of a demonisation campaign going on. That sugar is addictive, that it has no nutritional value (as if calories are not nutrition), that we must tax it, or possibly ban certain uses, that AHHHRGH! we're all gonna die! and so on.

And then we get the actual sciency bit from the World Health Organisation which looks just fine to me:

Free sugars contribute to the overall energy density of diets. Ensuring energy balance is critical to maintaining healthy body weight and ensuring optimal nutrient intake. There is increasing concern that consumption of free sugars, particularly in the form of sugar-sweetened beverages, may result in both reduced intake of foods containing more nutritionally adequate calories and an increase in total caloric intake, leading to an unhealthy diet, weight gain and increased risk of noncommunicable diseases (NCDs). Also of great concern is the role free sugars play in the development of dental diseases, particularly dental caries.

Sugar has calories, too many calories can be bad for you and sugar can, if swilled around the mouth, rot your teeth. There's nothing here that we've not all known for decades if not centuries.

And it really is worth our noting that this is the sciency bit. The WHO is not saying that sugar is addictive. It's not stating that fructose is worse than sucrose or glucose. It's not insisting that we're all being hooked on it by the dastardly food manufacturers. All of these are inventions by the public health campaigners interfering prodnoses who would rule our lives and diets for no better reason than that they enjoy doing so.

The importance of noting ths is of course that we cannot allow said prodnoses to now start telling us that the WHO has indeed backed up all of their phantastical claims. The actual advice is don't eat too much and remember to brush your teeth. Which is the sort of nannying which most of us can manage to put up with. And to hell with those who want to insist upon more such nannying.

Freedom Forum 2014

It's that time of year again- building on last year's fantastic conference, Liberty League Freedom Forum 2014 is only a month away!

Put the 11th- 13th April in your diaries, and head down the the UCL Institute of Child Health for a weekend of seminars, workshops and socialising with liberty-minded individuals.

The line up for this year's Freedom Forum is looking the be the best yet, with speakers coming from across the world. Amongst those confirmed are Cody Wilson, creator of the 3D-printed gun and bitcoin annonymising DarkWallet, and fellow American and serial liberty-promoter Dr Tom G. Palmer. There's also world expert on the universal basic income Phillipe Van Parjis, Detlev Schlichter, author of Paper Money Collapse, director-general of the IEA Mark Littlewood, and pro-drug law reform ex-cop Tom Lloyd, with loads more to be announced - and of course, there's the ASI's own Sam Bowman. 

Seminars cover topics from lifestyle freedoms to macroeconomic policy, immigration to the age-old question: But who will build the roads? Plus, there's workshops in journalism from City AM's Mark Sidwell, public speaking from Peter Botting, and an entrepreneurial session curated by The Entrepreneurs Network. 

All of the above, plus meals, drinks and evening events from only £29- and accommodation tickets a mere £39.

To find out more visit the Liberty League website, and book your tickets here.

Event: Liberty League Freedom Forum 2014
Date: Friday 11th April (7pm) to Sunday 13th (5pm)
Location: UCL Institute of Child Health, and Clink78 Hostel


Unwinding the Energiewende

The Energiewende or “energy transition” in Germany is a cautionary tale in many respects not least the unintended consequences of policy.

The German energy policy has been guided by three European directives. A target for reduction in carbon emissions, an effort to increase energy efficiency and critically a target for renewables in the energy mix. The desire to cut carbon emissions may be laudable if somewhat ineffective if China and India continue to increase their output of CO2, and a push to reduce energy efficiency seems sensible. However it is the third of the EU directives that has possibly led to most harm. A target for renewables in the energy mix has forced EU governments to pick and support the only technologies that are scalable within the present timescale, regardless of cost. So Germany has offered large subsidies for solar and wind which has led to a huge increase in German energy prices but then had to offer subsidies to German heavy industry to shield them from the increasing costs of power. But then these energy subsidies to industry have in turn been challenged by the EU. Furthermore, the German government’s stance on energy includes decommissioning its nuclear power stations. This combined with an increase in renewables which by their nature provide intermittent power and which have priority access to feed the grid has destabilized the energy market. Gas plants previously providing base load power are now only used to balance renewables making them uncompetitive and leading to the bizarre consequence that Germany is now building new lignite coal power stations to provide this back up generation capacity for its large renewable sector.

So the end result is that due to the skewed policy response caused by EU energy policy, Germany is locked into very heavily subsidized solar and wind production causing energy prices to rise whilst at the same time building more coal fired capacity to back up the intermittency of its large renewable sector which negates the central plank of EU policy to reduce carbon emissions. And the increasing price of energy is seeing large German energy users turning to the US to invest in new plant and further carbon leakage to the developing nations

All this is in stark contrast with the US.  Cheap and abundant shale gas has pushed much of the  dirtier coal energy production out of the energy mix, so without heavy market intervention the US has dramatically reduced its CO2 emissions whilst slashing its energy costs. And whilst once the energy debate in the EU was in part characterized by showing the world how policy directives could lead the way in effective CO2 reduction the result seems to prove the exact opposite.

It's the usual piggies squealing about business rates

There's a lot of squealing going on about the system of business rates at present, most of it coming from the usual little pigs. The oinks are actually loud enough and coordinated enough to be considered a campaign to get the basics of the system changed. Which would be a bad idea given that rates are actually one of the better parts of our current taxation system:

Business rates are not fit for purpose and need a complete overhaul, MPs say in a report on Tuesday. Joining a chorus of critics, they call for the Government review into the future of business rates to be extended to consider whether retail taxes should be based on sales rather than the rateable value of a property. The MPs want the review, set up by Chancellor George Osborne, to look at the merits of giving retail its own business taxation system.

The first and most obvious point to be made is that we don't want to give any segment of business its own taxation system. We want all business to be competing upon exactly the same level playing field. For the obvious reason that we want not just new businesses to open, but also people to cross the boundaries of the various sectors as technology and incentives change. We certainly don't want people either being confined by their tax treatment to one sector, nor are we all that keen on people arbitraging across parts of the tax system.

But as to rates being one of the good parts of the tax system: they're a tax on using expensively located property. That is, they're akin to a land value tax (not entirely, but close) and are thus among the least distortionary taxes possible. This is, we should note, a Good Thing.

The real background to this is that those currently operating physical retail stores find their lunches being eaten by those who retail online. They want to pull some of the load off those physical locations and onto the drab warehouses round the back of town that we increasingly get our goods from. And you might think that that's fair: they're both doing retail after all, so why not tax equality?

But that's to misunderstand what is happening with the online retail revolution. We have found that we can , now, with better logistics and the internet itself, serve peoples' retail desires while using rather less of an expensive input: that high value retail space. This is a technological change that makes us all richer: for it frees up ever more of that high value urban property to be used for other things. Offices perhaps, burger bars or, if anyone's willing to get the planning system right, rather more of those houses and flats that we're all told we've such a short supply of.

We want to tax scarce things: precisely because it makes people more efficient in their use of that scarcity. Which is why, as I say, business rates are a rather good part of the tax system. And we shouldn't change it just because those getting the mucky end of the current stick are whining about it.

Bitcoin and the English legal system, part I

Commercial lawyer and ASI Fellow Preston J. Byrne explains why, despite the cries of his inner libertarian, more government involvement in Bitcoin would be a step forward for the cryptocurrency-cum-payment-system, rather than its end.

When Mt. Gox went offline last week, taking half a billion dollars’ worth of bitcoin with it, many of the cryptocurrency’s public advocates – some of whom lost “life-changing” sums –  moved swiftly to its defence. Erik Voorhees’ rallying cry, in particular, was a standout piece of Austrian rhetoric, warning against the near-universal social-democratic impulse to “cry out for Leviathan’s intercession” to remedy every petty inequity and misfortune.

This reaction should not be a surprise. Many early adopters, and practically all bitcoin users I know personally, are libertarians (Roger Ver, in his video-recorded post-Gox appeal for calm, can even be seen wearing a voluntaryist lapel pin). Many are mathematicians; few are lawyers. From this outside perspective, I’ve therefore arrived at a conclusion with which most of them will disagree.

To achieve its full potential, cryptocurrency needs a legal system in the traditional sense. It therefore needs a state.*

This view is unpopular. “Regulators,” writes Voorhees, “are men too, and wield the very same evil and incompetence” that destroyed Mt. Gox, “only enshrined in an authority from which it can wreak amplified and far more insidious destruction. Let us not retreat from our rising platform,” he cries, “only to cower back underneath the deranged machinations of Leviathan.” The alternative, in the purist view, is to decentralise everything – financial institutions, the courts, the state – and replace them with mechanisms governed by voluntary consensus. This means new rules, new judges, new modes of enforcement, and indeed a new legal order mediated entirely by the blockchain.

Though this solution makes sense to my inner libertarian, and could function well in limited applications, it makes no sense to my inner commercial lawyer. Despite its day-to-day derangement, Leviathan’s rules are extremely well-suited – and in my view essential –  to commerce.** We would be foolish to not employ them. As I will explore in the coming months, wholesale decentralisation, though ideal in principle, will in practice cause many more problems than it solves: changed circumstances and market demand will not countenance a payment, asset transfer and contract mediation system which lies entirely beyond legal control. Monday’s HMRC brief on the tax treatment of bitcoin is a case in point.

First, the bad news: making money in bitcoin has tax consequences.

Before recoiling in horror, we should consider the improvement this position represents. Just last month, HMRC mooted classifying bitcoin as a voucher, in respect of which VAT on any transfer would be charged at 20%. This, as any user of cryptocurrency will know, diverges widely from how cryptocurrency is actually used. By contrast, the March 3rd guidance accords it numerous VAT exemptions, and treats profits and losses on trading as being subject to income, capital gains or corporation tax (as applicable) in such a way as to render it – in the words of the International Business Times –  “treated almost identically to other currencies, in terms of taxation.”

I don’t propose to go into the guidance note in detail here, save to say that I think HMRC qua regulator is on the right track.*** But I will also say HMRC’s work is far from complete. Though its assessment shows the tax authorities have acquired a basic understanding of how the technology works, the guidance falls well short of constituting a comprehensive framework for its taxation across cryptocurrency’s existing applications.****

Building that framework requires dialogue. Sympathise with Voorhees though I may, the alternative between his position and the pragmatic one is stark; had we followed the purists, HMRC might still see bitcoins as a gift certificate rather than the dynamic and multifaceted technology it actually is. What actually happened was substantial engagement between industry and the government – “months of meetings” – which produced a highly favourable result for cryptocurrency.

Long may it continue. Whether we like it or not, people and corporations have long paid taxes and obeyed the law, irrespective of the merits, because the cost of not doing so (reputationally or otherwise) is prohibitive. Legal architecture is therefore a prerequisite to adoption, not an impediment. The development of new, legally-minded protocols will allow the cryptocurrency community to capture the attention and investment of existing market players, including financial institutions (who would benefit by using cryptoledgers for, e.g., automation of research and quantitative labour, or structuring smart derivatives and smart securitisations) and governments.

New blockchains, so designed, would offer the efficiency savings of the technology while possibly mitigating its significant deficits (e.g., allowing the reversal of fraud, and inclusion of consumer protection, where used to transfer title by way of proplet a la Nick Szabo). What such a blockchain loses in anonymity and irreversibility, it gains in accountability and legal certainty, the kind of stability cryptocurrency desperately needs. And none of this prevents the technology from being used extra-legally or in achieving its original, and in effect progressively redistributive, aims of reducing transaction costs on (e.g.) remittances, providing banking for the unbanked, acting as a hedge against inflation or even in applications which have not been predicted, or only foreseen by a few.*****

Rejecting the trusted third party and decentralisation dogmatism of Voorhees and others is, however, a necessary first step. We shouldn’t fear legalisation of this technology.

There is nothing to lose and practically everything to gain.

*Bear with me here. Same team, right?

**English law is already competitive for financial applications with its concept of equity, and in particular the trust, which continental jurisdictions lack. Increasing the UK’s competitiveness in this regard is to be encouraged.

***If you have tax questions this blogpost is not an adequate summary. You should hire a lawyer.

****HMRC still has a ton of work to do. Issues include:

(1) blockchain, transaction and contract situs and implications;

(2) how units of currency awarded by way of transaction fees (once a currency is fully mined) are to be treated for tax purposes;

(3) accounting for trading losses and gains in respect of trades made solely between cryptocurrencies (i.e. no element of fiat);

(4) determining what sort of trading is of an income or capital nature, particularly in respect of cryptocurrencies like Ethereum where units will be used not only as units of currency, but primarily to distribute, manage and settle smart contract applications;

(5) whether a consumer purchase made in cryptocurrency constitutes a chargeable disposal or realisation of profit;

(6) how cryptocurrency is taxable as part of a decedent’s estate;

(7) how, if at all, DAOs [ http://blog.ethereum.org/2014/03/01/daos-are-not-scary-part-2-reducing-barriers/  ] are to be treated as being sited, incorporated, or taxed, in which case all of the above need to be asked again (with the exception of (6)).

*****Zachary Caceres of the Startup Cities Institute has proposed using cryptoledgers – through a program called MuniBit – to improve transparency of government finances in the developing world. A developed private sector cryptoledger infrastructure in the West would, due to the increased availability of software tools and trained manpower, make such a program considerably more straightforward to implement.


Commercial lawyer and ASI Fellow Preston J. Byrne explains why, despite the cries of his inner libertarian, more government involvement in Bitcoin would be a step forward for the cryptocurrency-cum-payment-system, rather than its end.