The European Single Market created Donald Trump and Bernie Sanders

Apparently so: that's the latest news from one of the more interesting corners of academia. That the rise of politicians like Donald Trump and Bernie Sanders, the populists, is linked to the European Union's Single Market. No, really:

In recent research with Michèle Lamont at Harvard University and Elyas Bakhtiari at Boston University, my coauthors and I link the success of Trump’s kind of politics to the worldwide adoption of neoliberal economic policies.

Neoliberal policies are government measures that shift control from the state to the market. Examples are the privatization of health care, the gig economy and the deregulation of the energy market. Our research describes how like the U.S., European countries rolled out many such neoliberal policies in the 1990s and 2000s.

The figure below describes this trend for Eastern and Western Europe from 1990 to 2010. Values on the vertical axis are scores on the Chinn-Ito index of capital account openness, which are a commonly used measure of neoliberalism. The chart shows the growth of neoliberal market reforms across Europe. The trend started in the West, but Eastern Europe is catching up.

They then go on to show that everyone's getting much more beastly to immigrants, Muslims and other outsiders and there we have it. Neoliberalism is to blame. No, really, that is their logic:

Citizens’ diminishing solidarity with the poor, the rise of anti-immigrant sentiments and the growing populist vote are different aspects of social exclusion. We link these to the adoption of neoliberal policies across Europe.

And pretty silly logic it is too. Because quite obviously the largest influence on that Chinn-Ito measure is the EU's single market over those years with a close runner up being Eastern Europe's recovery from half a century of idiot autarkic socialism. Thus we can indeed say, using this logic, that the EU is responsible for the rise in populist politics and racism. QED.

Except of course it's ludicrous to use a measurement of how open the capital account is in this manner: when the entire point of the whole political structure has been to insist that the capital account must be entirely open.

It's even worse to then go on and claim that this is related to mistrust of outsiders. For there might be other reasons for such mistrust of course: like, umm, perhaps there's been many millions more foreigners to interact with over this period?

No, we are not convinced by this product of academia at all. And the more we look at what academia is producing of this type then the less we think that more education is going to be the solution to anything quite frankly. Unless it's as a place to keep those who cannot think off the streets. A useful purpose of course, but we do think this could probably be achieved at less cost in some other manner.

Did we actually knock all those asylums down?

Can he fix it? Yes he Khan

The new Mayor of London Sadiq Khan has a tough job on his hands. Though London is thriving, the capital faces some serious headwinds. I explored some of these in a series of articles for Forbes.

As I wrote for Forbes: 

Ask any young Londoner who wasn’t born with a silver spoon in their mouth about the biggest challenge of living in London, and the reply will be near unanimous: the cost of housing. A growing population, constrained by a greenbelt with insufficient new builds has pushed prices, wallets and purses to breaking point. Many young people have no prospect of getting on the housing ladder.

Khan vowed not to build on London’s greenbelt in the election campaign, but hopefully this was just political posturing to nullify Zac Goldsmith’s green credentials. At least 50,000 houses need to be built each year for the next decade just to meet demand, but Khan has so far only prioritised redeveloping brownfield sites. Though we might be able to squeeze 365,720 new homes out of brownfield land within the Greater London Authority area, it would be difficult, expensive and take up to 10-15 years to repurpose for housing. However, as analysis from Centre for Cities has shown, more than 430,000 homes could be built at suburban densities, close to train stations and on just 2 per cent of London’s greenbelt. But it’s not just housing. We also need more commercial property. The rising cost of business rents is depressing enterprise, investment and growth.

Besides building, Khan needs to continue Boris Johnson’s work of ensuring London’s public transport is fit for purpose. It might cost a lot of money, but given that all private capital has been crowded out of the sector, all we can do is throw money at the problem until someone comes up with a better idea of idea. Khan’s idea of freezing Londoners’ fares isn’t top of the list.

In his role as representing Britain’s largest city, Khan should also lobby central government hard. Immigration policies and the inability to access the right talent are critical issues for entrepreneurs and start-ups. Pat Saini of Penningtons calls for the introduction of a Third Party Sponsorship (TPS) visa, which would “allow overarching entities such as accelerators, incubators and venture capital firms to sponsor migrants on behalf of companies in which they have invested or for whom they are providing services/resources and to bring the necessary skills to the UK for the benefit of that company.” We suggested something similar for entrepreneurs in our report Made in the UK.

Khan might not have the charisma of Boris, but if he gets stuck into the nitty gritty of policy he could go one better than having a bike named after him – he could make London the best city in the world to live and work.

How might Britain change by 2050?

Scott Sumner notes that the USA's demographic profile in 2060, which some people on the right are worried about, looks quite a bit like Texas's profile today:

Neoreactionaries seem to think the America of 2060 will be a particularly inhospitable place for white people. And yet white folks are moving to Texas in droves. Indeed the only other state that comes close (in terms of absolute population growth) is Florida, which also has lots of blacks and Hispanics (but not very many Asians). The Texas economy is also highly successful. Even during the oil bust, people continue to move to Texas and its population continues to grow rapidly, up by nearly a half million (almost 2%) in the most recent year (mid-2014 to mid-2015). The unemployment rate is only 4.2%, close to the 4.0% considered optimal by Bernie Sanders. And this was accomplished despite the hemorrhaging of oil jobs.

In the UK, some people are worried about the number of Muslims. Pew Research reckons that by 2050 about 11% of the population will be Muslim, which is about double what it is today. London is about 13% Muslim, and it's among the best cities in the world. There isn't any major civil unrest, though Tower Hamlets (which is 30% Muslim) has had some pretty serious problems with its politics.

Those Muslims aren't evenly distributed around the country, though: about 40% of England's Muslims live in London and the others are mostly in cities like Bradford, Birmingham and Luton. Perhaps if London's Muslim share of population doubled it would be quite a bit different to how it is now, which people might not want.

This is mostly driven by birth rates, not by immigration – there isn't actually a large amount of permanent Muslim immigration to the UK anymore. It seems like people concerned about this should want more, not less, immigration from places like Eastern Europe.

Didn't we already solve this blood minerals problem?

We're absolutely certain that this coltan, blood minerals, problem has already been solved. I mean didn't they pass a law about it, something that was to solve the point?

House of Cards star Robin Wright has launched a campaign with Congolese and American activists to end the pillage of Congo’s vast mineral resources and break the cycle of devastating wars that have claimed more than five million lives.

The campaign will target US tech companies and political leaders in an attempt to push for greater transparency in the mining of so-called “conflict minerals” such as coltan that have aggravated the violence in the Democratic Republic of Congo. Wright has produced and narrated a new film, When Elephants Fight, to be shown in 50 university campuses around the US as part of what she and her fellow campaigners hope will become a movement for reform under the banner#StandWithCongo.

Dodd Frank included a section about this. Backed by the Enough Project and Global Witness we were told that if all American listed companies had to list whether they were using conflict minerals or not then this would drive said conflict minerals out of the supply chain.

We have been somewhat dismissive of this claim here and elsewhere. But of course we were shouted down, the law was passed and it has come into effect. The SEC itself estimated the costs of this law at $4 billion (yes, $4,000,000,000) in just the first year. We said it wouldn't work and that it was a very expensive way of not dealing with the point to boot. We might even have made the point that a division of Marines would be a cheaper and more effective solution.

Apparently we were right, at least according to campaigners on this issue we were right. and yet their conclusion is to do more of what has provenly not worked.

What was that Einstein quote again? As, yes: "Insanity: doing the same thing over and over again and expecting different results."

Is it too much to ask that we have a little less insanity in public policy?

Will Wilkinson on The Great Enrichment

Over at The Niskanen Center, Will Wilkinson has written an interesting piece on libertarian attitudes to social justice, giving a Bleeding Heart Libertarian take on what Deirdre McCloskey calls The Great Enrichment (Watch her give the annual Adam Smith Lecture on that very topic). 

Here are a few highlights:

Humans may be natural cooperators with a built-in instinct for distributive fairness, but we’re also natural opportunists who will negotiate over everything, including the very idea of distributive fairness, to increase or preserve our shares. “That’s not fair!” is always a bargaining move and only sometimes a fact.

When people talk about “social justice,” sometimes they’re really talking about “distributive justice.” The immense influence of socialist ideology in the 20th century encouraged the idea that social and distributive justice pretty much came to the same thing. But 1991 was a long time ago, and these days when people agitate for social justice, or refer derisively to those who do as “social justice warriors,” they’re likely to be talking at least as much about the distribution of rights and dignity as they are to be talking about the distribution of material resources and economic opportunities. That’s a healthy development.
You know what’s nuts? What’s nuts is that nobody kicks off a discussion of justice, distributive or social, with the fact of the Great Enrichment. Because the upshot of our best accounts of the most important thing that has ever happened to the human race seems to be that equalizing the distribution of rights and liberties, powers and prerogatives, respect and esteem led to an increase in the scope and productivity of cooperation, generating hugely enriching surpluses.

Read the whole thing here.

The Sun makes Beyoncé sweat

This week man-devil Sir Philip Green was in the papers yet again, dragging Beyoncé down with him. Following the destruction of BHS the media have been quick to pick up on the latest moral balls-up from super villain and Felonious Gru lookalike Sir Phil. 

An investigative piece from The Sun this week revealed that the workers manufacturing Beyoncé’s new athletic clothing line, Ivy Park, work up to 60 hours a week on just £4.30 per day. 

The Sun claims that the garments are being produced in inhumane conditions at the MAS Holdings factory in Sri Lanka, although the brand has denied the claims of poor conditions and assured that Ivy Park has a rigorous ethical trading program. 

Despite not being a Bey, or Bee, or whatever unsettlingly twee name the ravenous Twitter mob has given themselves, I don’t think Beyoncé is in the wrong here, and thus by proxy I suppose neither is Sir Philip unfortunately. 

It’s completely understandable that when you hear of sweat shop workers getting paid pittance and working in grim conditions for exorbitantly long hours your immediate reaction would be the desire to protest with your purse and spend your money on clothes “truly ethical” in their manufacture. But that’s where you’d be wrong, it would be a terrible thing for you to do. 

Anti-poverty campaigns can sometimes work as a blunt tool and end up hurting the people they mean to help in these situations. We have to remember that working in a sweatshop is often a considerably better economic option for those workers than the next best thing, namely subsistence farming in many cases, or other low paid factory jobs. It’s worth noting that while £4.30 a day wouldn’t get you far in the UK, the MAS Holdings workers making Beyoncé’s ugly sports bras are actually on double Sri Lanka’s minimum wage.

Sweat shops are not a good option, but they are the least bad option currently available to many people. Washing our hands of the situation and just closing the sweatshops would make their workers worse off, potentially much worse off. If we want to help people, we should give them new options, not take away existing ones.

One MAS worker also found Ivy Park’s message of female empowerment deeply disingenuous, a fair point when you’re making £100 leggings by day and staying in a boarding house with terrifying unisex showers by night. She said: “When they talk about women and empowerment this is just for the foreigners. They want the foreigners to think everything is okay.” And frankly it’s not, we need to give these women more options, but the answer isn’t taking the best one they currently have away to make ourselves feel better.

There is also research to suggest that while sweatshops are far from providing the “empowerment through sport” Beyoncé’s clothing line promises, sweatshop work does actually help improve women’s lives in other arenas; delaying marriage, delaying young childbirth and extending schooling, particularly amongst teenage girls. 

If we really want to help workers in developing countries lift themselves out of poverty we should buy more of what they produce, not less, and not just Fairtrade either. The boycotting of sweatshop-produced items or the campaigning for closure of factories can in fact have devastating effects and push the poor further into poverty.

So for now at least you can wear your Beyoncé branded swimsuit to the park with peace of mind that you’re not actually making it any worse, for workers anyway. 

Slack in the USSR

It's funny how some things just slip down the memory hole. It's now been more than a quarter of a century since the Soviet Union collapsed, so it feels like ancient history. It's completely intangible, and the world it inhabited is totally gone. We know the USSR failed, but does anyone think much about why and in what ways?

Lucky for us, Jose Luis Ricón has, in a series of posts, combed through the evidence on communist Russia's healthcare, GDP growth, and food consumption.

On healthcare, he concludes:

The Soviet healthcare system heavily underperformed most of the countries that we can use as meaningful comparatives. Relative to other countries that began from the same situation of poverty as the SU, its performance wasn’t better than the systems of those countries. After the 70s, health outcomes deteriorated, and the utter failure of the system became apparent.

Despite the high number of hospital beds and physicians, the Soviet Union wasn’t able to deliver better healthcare outcomes to its population, relative to developed countries, even though they made great improvements in the 20-50s era. This should make us wary of making hasty comparisons based just in some indicators instead of considering the bigger picture.

On GDP growth:

Given this data, the Soviet Union was the mediocre economy economists say it was, not a healthy, growing, superpower. If the USSR had an impact in the world, it was due to its size, natural resources, population, and strong military, not because it was more productive than other countries.

And on food consumption:

Was Soviet caloric intake higher than the US’?

No. In saying this, I’m saying the FAO is wrong, and that Robert Allen, who based his calculations in FAO data (and used their multipliers), didn’t notice. To say this, I had to go through a full literature review, and I come to this opinion. Before reading my post, you were totally justified in believing that caloric intake was higher. Not anymore. Unless some FAO official tells us why did they used their coefficients, that seem to go against the Sovietological literature.

Go read the whole things!