A useful answer to a shortage is to make it easier to supply

If there’s a shortage of something then a useful response is to make it cheaper to supply the item. That should increase the number supplied. Cost here, the thing we would reduce, comes in many forms of course. We’re not just talking simple £ and p, but things like regulations, form filling, time to gain a qualification and so on.

At which point we can proffer some advice to Polly Toynbee:

Before anyone gets carried away by Boris Johnson’s eulogy for his life-saving angels, the facts of nursing life are brutal and it’s worth recounting them in detail. In recent years, leavers have outnumbered joiners by up to 3,000 and the more nurses quit, the harder it becomes for those who stay in understaffed wards. Remember this epidemic began with the highest ever number of nurse vacancies: 44,000 in February. But, says Anne Marie Rafferty, the president of the Royal College of Nursing and professor of nursing policy at King’s College London, that’s not a true reflection: “Those vacancies run on affordability. That’s only the number of nurses they can pay for, not the number needed.” Even the 10,000 retired nurses who have returned to help out in the crisis, mostly not on the frontline, don’t cover those lost since 2010, she says.

Nurse training was an early casualty of George Osborne’s axe-swinging 2010 budget. Despite recent efforts, numbers are still down on 2010, though the decade saw a huge increase in patients, who are far sicker in a population with 25% more over-65s. After the 2016 cavalier removal of nursing bursaries, applicants fell by 24%

We have fewer nurses than we might like to have. Why? Well, no, it’s not just that the Tories hate Angels:

All new nurses in England from 2013 will have to be educated to degree level from 2013, the Department of Health has announced.

The before the Tories government - yes, for the young, such a thing has happened in our green and pleasant land, non-Tories have been in government - decided to make becoming a nurse a hugely more expensive enterprise. As happens with these things humans, when faced with something more expensive, do less of it.

Worth noting that exactly this move of nursing to all graduate entry was something roundly - even enthusiastically - praised by Ms. Toynbee when it happened. Indeed, our own memories insist that she agitated for it before it did.

It’s entirely possible to insist that there is more than one factor at work here. But it’s impossible to be even vaguely truthful and try to insist that making nursing a more expensive - in that training time - occupation to enter has nothing to do with the perceived shortage of nurses.

By the way, one of us has direct experience of family members training under the old and new systems. No, the new is not better. We’re not even getting an increase in quality out of the greater expense and lower supply.

There's a question not being asked here

We’re subjecting ourselves to a certain amount of headscratching here:

On one level, the argument about what Sir Simon McDonald said to the foreign affairs select committee this week can be dismissed as a storm in a Whitehall teacup. Hours after the head of the foreign office had called Britain’s refusal to join the European Union’s procurement efforts during the Covid-19 pandemic a “political decision”, McDonald retracted his words. Whitehall-watchers are fascinated. The wider world has bigger things to worry about.

But on another level, this week’s row is political dynamite – and for two main reasons.

First, and more immediately, the McDonald affair is another challenge, this time from the Whitehall high command itself, to the government’s increasingly desperate attempts to show that ministers have successfully gripped the effort to secure life-saving medical equipment and protective kit for the fight against the virus. At its most serious, it comes down to an admission that ministers who previously said that the UK did not take part in the ventilator procurement programme because of “communication” errors were actually in a position, early on in the pandemic, to save more lives by joining the scheme, and yet deliberately chose not to.

As we’ve pointed out before around here we are pragmatists. We should do more of what works and less of what doesn’t. So, the important question here is has that EU scheme saved any lives?

As far as anyone knows that joint and several buying scheme has delivered not one single piece of equipment or protection to anyone at all. Not joining an ineffective scheme seems like a sensible thing for a government to do to us.

But that is to be pragmatic, isn’t it? Instead of being political where the desirability of a course of action is determined by matters other than those of effectiveness. Here, those who think there should be more European cooperation insist that such cooperation is a good in itself, whatever the outcome. Therefore, whatever the outcome or effectiveness of the cooperation or not those who don’t do more of it are to be castigated. Even, scarce resources at a time of emergency must be devoted to doing so.

Which is why we continue to insist that politics isn’t a good way of doing things. Because the politics is never about either the doing of things or the things that need to be done.

Khayyam and Revolutions

There’s one stanza in “The Rubaiyat of Omar Khayyam” by Edward Fitzgerald that resonates politically. It is this one:

“Ah Love! could thou and I with Fate conspire

To grasp this sorry Scheme of Things entire,

Would not we shatter it to bits -- and then

Re-mould it nearer to the Heart's Desire!”

Similar thoughts have occupied the minds of many revolutionaries from Robespierre onwards, and maybe even before. The drive for a better society starts with the destruction of the current one. Some people look at society with all its perceived imperfections and injustices, and want to do away with it, and replace it with a better society, one they can conceive of, that will lack those drawbacks and blemishes, and in which people will be able to lead fuller and more rewarding lives.

Hayek criticized this approach, and regarded human societies as too complex to be just thought up from the imagination. His account of the Three Sources of Human Values took the ones that people think up as trivial, compared to the ones that have emerged as societies have developed in practice. Although the values of the hunting tribe had millions of more years to embed themselves into our psyche, Hayek thought the values transmitted culturally since humans first domesticated grains and farm animals were more important. 

They have enabled a society that sustains a complex web of relationships, one that allows us to interact to mutual advantage with people we shall never meet. When intellectuals suppose they can conjure up in their minds a better society than those that have had the inputs of billions of people over long periods of time, Hayek called it “The Fatal Conceit.”

Of course society can be improved. This is what we do. We look at its shortcomings and propose innovations to overcome them. We test them in practice, and retain the ones that work. But we don’t smash up existing societies and put dreamed-up ones in their place. We improve them instead. Popper called this “Piecemeal social engineering,” noting its record of success over time. Things are better in the modern age because we have done this, eliminating in the process many of the unnecessary causes of human suffering. Free market capitalism has done more to lift the human condition from squalor and deprivation than all of the vaunted claims of socialism.

It stands in striking contrast to the attempts to achieve instant utopia. Lenin and Trotsky thought they could do this, as indeed did Stalin, Hitler, Mao Zedong, Pol Pot and lesser pocket dictators who’ve sought to usher in Heaven on Earth in short order. They all led to bloodshed, tyranny, oppression, intimidation and mass murder, along with the shortages and the corruption that degraded both the physical and the moral quality of life. All of them set out to smash the societies that had evolved, and to replace them by ones that seemed alluring and full of promise in theory, but which proved disastrous when tested in the real world.

For those who would improve the condition of humankind, the lesson is that instead of smashing it to bits, we should build on what has been achieved, and has endured, and try to make it better than it was. It won’t be perfect, but it will be better, which is more than has been achieved by the fanciful rivals that sought utopia.

So, when does Wagner's Law kick in then?

Wagner’s Law is the idea that as a place becomes richer the inhabitants desire - and get - more government:

Wagner's law, known as the law of increasing state spending, is a principle named after the German economist Adolph Wagner (1835–1917).[1] He first observed it for his own country and then for other countries. The theory holds that for any country, that public expenditure rises constantly as income growth expands. The law predicts that the development of an industrial economy will be accompanied by an increased share of public expenditure in gross national product.

That is, that government is a luxury good. No, not a luxury, but something that we spend more of our incomes upon as our incomes rise. If you choose a wide enough band of incomes everything is an inferior, normal and superior - that latter being synonymous with luxury - good at some point in that distribution. We ourselves would hesitate to say that government itself is the thing desired but some things that governments oft provide certainly are luxury goods, public health to health care itself, social insurance, education systems and so on. Many of our own arguments revolve around whether it should be government trying to provide - badly and expensively as it does - those things we agree a richer populace wants more of.

But let us accept the argument, the Law, as it is. Richer places desire and get more government. Thus the inevitable rise of taxation and political direction of resources as the economy grows.

OK, now the economy is shrinking - has shrunk. Which means we need to slash government, doesn’t it? If GDP falls by 25% - not far off what is likely to happen in this short term - then that means we need, to accord with the law, to cut government by more than 25%. Not just to cut the cloth to suit our means, but because as poorer people we desire less of that luxury good, government.

Of course, we believe that swingeing axes and slashing swords should be applied to government and political budgets under near all circumstances but this law does move the idea from an expression of our preferences to a scientific truth. If it is true that government should naturally be a larger part of a richer economy then it must be equally true that it should be a smaller portion of a poorer one.

A silver lining on homelessness from this crisis

The pandemic and the lockdown have given us the chance to think about some of the long-term problems we might solve. We should decide not to go back to having homeless people sleep in shop doorways. We have the chance to try a new approach to solving the problem.

It’s important to understand what the problem is. National Audit Office figures show that a high proportion of rough sleepers who had needs assessed were prone to alcohol addition, drug addiction, or mental illness. These three factors were among the reasons underlying their situation.

In the past efforts have been made in many countries to help street sleepers solve some of these problems so they can be allocated secure accommodation. But Finland now does it the other way round. It’s called “Housing First” because they house rough sleepers first, and then address their problems.

The reasoning is that if people are in secure accommodation with trained helpers and therapists on hand, it is easier to solve problems like alcohol and drug addiction and mental illness than it is trying to deal with people sleeping on the streets.

Tenants are housed in purpose-built or adapted blocks, with their own private space, and crucially, with support services on hand. The programme costs money, but the technique is reckoned to lower the costs otherwise incurred for emergency services and the criminal justice system.

The success of the Finnish programme, running for 13 years, has been remarkable, and has inspired pilot schemes elsewhere, including several in the United Kingdom. Charities assisting these efforts report positive results, with steep drops in the number reporting “bad or very bad” physical health of users, and an even bigger fall in the numbers for mental health conditions.

The pandemic has provided an opportunity to extend this by the use of empty hotel rooms. Some funding allocated to deal with the coronavirus has been used to secure hotel safe spaces for rough sleepers to self-isolate in. There are on-site cleaning facilities, and charities have stepped in to assess needs and provide support. Thousands of rough sleepers have been taken off the streets and housed in hotels block-booked for three months to accommodate them. Modelling by University College London shows this is significantly more cost effective than treating individuals in hospital.

St Mungo's charity describes it as an unprecedented opportunity to stop people returning to the streets. Howard Sinclair, their CEO, says the virus has provided an unexpected opportunity to take people off the streets and provide support for mental health problems or addictions.

The lesson to be drawn from this is clear. It is that providing accommodation and support for rough sleepers is an effective way to address their problems and to help ease them into safer and more comfortable lives. We should make it a priority after the pandemic to pursue this vigorously and to provide accommodation and support for those whose only other option would be to sleep in shop doorways on the street. It works, and we should do more of it.

Incentives matter, really, they do

We’re told that a disaster like Deepwater Horizon could happen all over again. Because the regulations on what people are allowed to do have been relaxed and that just does make gushers on the sea bed more likely:

But experts say an incident of similar scale could happen again and has been made more likely by the Trump administration’s decision to loosen Obama-era safety rules. Those standards had grown from an independent commission’s damning findings of corporate and regulatory failures leading up to the spill.

This is to succumb to the bureaucratic, perhaps statist, delusion. If everything is written down on little bits of paper, if government determines, in detail, what people may do, then nothing bad can happen.

This is not how we humans interact with reality. Incentives really do matter:

BP said on Tuesday it would take a new charge over the 2010 Deepwater Horizon spill after again raising estimates for outstanding claims, lifting total costs to around $65 billion.

That’s around 65 billion reasons why a repeat of Deepwater Horizon is less likely than it once was.

Do note that we’re not saying that there is no value to regulation. At the very least a listing of best practice contains value and we’re even willing to agree that insisting people don’t do stupid things is of benefit. But it is still true that hom. sap. responds to the total set of incentives faced not just the chatterings of the clipboard wielders.

The loosening - or tightening - of drilling regulation is as nothing compared to that fear of losing, again, 65 large. Something we need to recall when designing those regulatory systems of course. It’s that total set of incentives that matter.

Answer the call!

Legend has it that Drake’s drum, the one he left to the nation, can be heard to beat at times when the country is in crisis or at war. It calls for people across the nation to rise up to defend it.

We’re beating that drum now. The nation is in crisis as never before. The economic heart of the nation has slowed, and it needs major and urgent action to revive it. We are beating the drum now to rouse as many of us as possible into action. We look not to those on high to save us, but ideas and initiatives from the little platoons Edmund Burke correctly said made up a nation — the people who, added together, are all that makes us great. 

That drum call goes out to you: a vast army of people with ideas and with energy. We want to hear all of them. Companies stand on the edge of ruin and our prosperity with them. The best way to ensure that our firms survive the lockdown and thrive after is to ensure that they're as free as possible to transact and trade — provide goods, services and increase our wealth once more. 

So we want to hear from you of every tax cut that can lift a burden, and every regulatory change that can lighten the load on businesses that want to grow again. Let us hear of every bureaucratic impediment that stands in the way of renewed growth and expansion, and let us hear of the ways in which it might be suspended or permanently extinguished.

• What regulations should we suspend during and after the lockdown?

• What taxes should we suspend and cut?

• What measures could help restart the economy?

• How should we unwind state interventions?

• Is there anything the Government or public discourse has missed?

Let us have those ideas and initiatives from many and diverse groups, and let them collectively constitute a volume that can be a handbook for rebuilding the economy, and a blueprint for the new Britain that must emerge.

Please answer our call via the link below, send it on to anyone and everyone you know, everyone who everyone you know knows, their dog too if it has a brilliant new tax idea to shout about!

Science should determine the weight of the pig

The government claims that lockdown exit will be triggered only by science. Science today gets the reverence that the middle ages accorded to religion. We need to look more closely. The experience of other countries leaving lockdown will be truly valuable. We must learn from Italy, Denmark and Germany and also Sweden which has had no lockdown at all.  

The government’s chief scientific adviser, Sir Patrick Vallance, has pinned his colours to the R mast: on 1st April, he stated we must get and keep “R, which is the average infection rate per person, below one.”  R, the reproduction number, “is an indication of how much an infectious virus will spread in a population, and various things impact that value,” said Jonathan Ball, professor of molecular virology at the University of Nottingham. “The susceptibility, size and density of the population that the infection is introduced into matters, as well as the infectiousness of the virus itself.”

Estimates of R across Europe vary, not least because, as Imperial College modelling concedes, no one has any idea how many Covid-19 infections there have been. Their report, with over 50 authors, estimates R to have been about 3.87 before lockdowns.  Following lockdowns and other interventions, they estimated a 62% fall to 1.43. As an example of facts not being allowed to get in the way of a good theory, the 30th March their report stated (p.6): “The estimated reproduction number for Sweden is higher, not because the mortality trends are significantly different from any other country, but as an artefact of our model, which assumes a smaller reduction in Rt [reproduction number at time t] because no full lockdown has been ordered so far.”

By contrast, on 1st April the London School of Hygiene and Tropical Medicine, also part of the government’s scientific advisory team, estimated pre-intervention R0 to be around 2.1 and a 70% reduction to 0.62 would result from lockdown and other interventions, e.g. social distancing. They asked 1,300 individuals in lockdown to list their contacts for the previous day and compared the results with an unrelated study in 2006.  The research is not peer-reviewed and a number of caveats will be apparent but at least an effort was made to anchor it in reality.

In short, science is widely divided on pre-intervention reproduction numbers: on 13th March, the Journal of Travel Medicine reported “Our review found the average R0 to be 3.28 and median to be 2.79, which exceed WHO estimates from 1.4 to 2.5.”

Bandying R about is scientificating a simple measurement of whether the number of cases is increasing or decreasing and, if so, at what speed. Is infection accelerating or decelerating and by how much? It has nothing to do with the rate of deaths nor with prediction. And it is undermined by not knowing how many cases there are.  As Jeremy Hunt in The Times on 21st April, has rightly pointed out, contact tracing is critical. That, as the Lancet on 28th February confirms, would also provide the necessary data for estimating, via sampling, and controlling total infections. It is odd that there has been little or no mention of contact tracing from the government or its scientific advisers.

We do not need to track R, just the number of cases.  Whatever the ideal, we must use the numbers we have. Deaths, sad and important though they be, are not relevant for our purpose. Non-hospitalised cases are not known and, again, do not impinge since those infected can recover at home as they do for common colds or flu. Remember that the object of lockdowns and other interventions is to moderate the effect on the NHS.  Hospitalisations, or the “cases” numbers published, are the only leading indicator we have. Monitoring that needs no more than a simple graph, viz.;

The big bogey is the second wave. It is foolish to suggest that can be avoided, or even should be avoided.  Minimising, or at least moderating, it is what matters. Whenever the lockdown exit begins, and contacts increase, a wave of some kind will follow.  The issue is not when exit begins but how it is managed. It is extraordinary that such a simple distinction escapes the government’s scientific advisers.  Furthermore, exit management needs to focus, for the reasons above, on the number of hospitalisations, or the closest proxy available. As that trails infections by between a week and 10 days, the exit should be in fortnightly steps to allow response to significant changes in trend.

Advice from the scientists has been questionable all along. On 20th March, the Scientific Advisory Group for Emergencies (SAGE) stated: “In fast moving situations, transparency should be at the heart of what the government does. We have therefore published the statements and the accompanying evidence to demonstrate how our understanding of COVID-19 has continued to evolve as new data emerges, and how SAGE’s advice has quickly adapted to new findings that reflect a changing situation.”

They then went on to say that the modelling could not be published as the modellers may wish to do so later in academic journals.  Secondly, the site does show SAGE’s current understanding of the situation, but not its evolution. Thirdly, they present possible (guessed) scenarios but neither science nor proposals for government action. Their estimates of public compliance proved wildly wrong and even their estimate that 75% of 80+ year olds would not go to work or attend schools were, surprising as it may seem, low.

All this is reminiscent of the time the Ministry of Agriculture decided that too much guesswork was involved in estimating the weight of pigs.  A committee of science professors from obscure universities was formed. After deliberation, they recommended the acquisition of a plank with the pig tied to one end and a basket to the other.  The plank should be carefully placed with the mid-point on a low wall and the basket gradually filled with stones.  When the plank is balanced, the farmer should guess the weight of the stones.

Private benefit is a public good

I’m often asked how bad the impending recession is going to be. The answer is that nobody has the faintest idea. If they say they do, then they’re either lying or mistaken. 

We’ve had a whole range of figures from the forecaster. From a 5% decline to a 35% decline this year. With things changing so fast, it’s impossible even to guess. 

We might be able to get a clue from the Spanish flu of 1918-9 which was actually far more lethal than Covid-19. US industrial production then  fell by 25% but it had mostly recovered within a year. I don’t expect a quick bounce back this time. 

In previous recessions, business has at least kept going. This time we have closed it down. And our economy is much more integrated than it used to be. Rupture any bit of it and you dislocate the whole. 

Government can help the recovery of course, mostly by getting out of the way: cutting regulations like the land planning rules and taxes like VAT and the taxes on capital and investment: the factory tax. 

Some people might worry about the loss in government revenue doing that but unless we encourage new businesses to spring up and replace the old ones that have been killed by the recession then there won’t be any government revenues anyway. And what does that mean for the funding of welfare benefits and indeed the healthcare system. 

Fortunately most people agree. In polling commissioned by the Adam Smith Institute and conducted by Survation under BPC rules, 72% of people say that they’re supportive of tax cuts designed to boost the economy and jobs after lockdown ends. The largest cohort of support came from the youngest in society. We’re going to need the private sector to survive and thrive if we’re to have a prosperous future, that means reducing the cost of government.

Perhaps Sadiq Khan should have a chat with Trevor Phillips?

Sadiq Khan wants to know why BAME folk are being hit by the coronavirus rather worse than non-BAME in our fair and pleasant land. We’d offer the simple observation that pandemics tend to hit concentrations of population, the BAME population is largely in the big cities and that’s at least a reasonable start to the answer:

It’s by no means a revelation that there’s a link between health and socioeconomic inequalities – certainly not for those who live these lives, or for all the charities, campaigners and organisations, including City Hall, that have been fighting these injustices for years. But one of the unexpected consequences of this crisis is that the depth of these inequalities is being laid bare in such a stark fashion.

Mr. Khan is a politician on the stump and so we get structural problems, inequality, racism - Vote For Meee!

As it happens, Trevor Phillips, who is not a politician with an election all too soon, has also been looking into the same matter:

Concern about this known unknown was etched on the face of the chief medical officer as he addressed the issue at the weekend; factors like genetics, culture, language and religion could be quietly undermining scientists’ attempt to predict the spread of infection. Public Health England has rightly begun an inquiry. But however hard they try, scientists can’t keep pace with the rumour mill and must ensure the emerging conspiracy theories and knee-jerk victimhood do not go unchallenged.

That seems a reasonable point to us.

The pattern isn’t easy to explain. Assumptions about racial biology are unlikely to hold good across a range of non-white groups who are in most ways more unlike each other than they are different from whites. As for poverty, the list of the seventeen most afflicted local authorities includes low-income Brent, but also features multi-ethnic Wandsworth, where median weekly earnings, at £720, are 50 per cent above the national average. And of the virus hotspots, only two appear in the list of England’s ten most overcrowded boroughs. The most significant hotspots outside the capital, Liverpool and Sheffield, are 35th and 107th respectively out of 126 boroughs in order of population density.

That would be both Mr. Khan’s and our own suggestion dealt with then.

One puzzling finding in our report concerns not who is being infected, but is who is not. Were poverty the key determinant, we would expect the virus to be running rampant among Britain’s Pakistani and Bangladeshi Muslim communities. Yet they are conspicuous by their absence in the list of hotspots — no Blackburn or Bradford, no Rotherham, Rochdale or Luton. The London borough of Tower Hamlets is more than a third Muslim — the highest density of any in England — and is sandwiched between two Covid-19 hotspots, Newham and Southwark, both home to substantial non-Muslim minority communities. Yet Tower Hamlets lies in the bottom third of the capital’s infection list: 22nd out of the 32 boroughs.

The surmise that the religious ritual of washing immediately before the five times a day prayers might have something to do with it seems reasonable to us.

The surface point here being that perhaps Mr. Khan would like to have a word with Mr. Phillips - the latter does seem to be doing the research that the former desires, even if the results aren’t quite the electoral gold dust first thought of. This does presuppose that Mr. Phillips could bring himself to converse with Mr. Khan of course but where there is hope and all that.

The deeper point is that a politician on the stump doesn’t appear to be all that good a place to go looking for solutions or even reasoned analysis. Which does rather mean that politics itself isn’t, doesn’t it?