It's amazing what people will try as a protectionist excuse, isn't it?

Chinese electric cars imported to the UK to help hit net zero targets will enable Beijing to spy on British citizens, ministers have warned.

With car companies facing quotas for zero emissions sales from next year ahead of a ban on new petrol and diesel vehicles in 2030, China is predicted to dominate the UK market because of its prowess in providing cheap electric cars.

However, sources at the heart of government have raised concerns that technology embedded in the vehicles could be used to harvest huge amounts of information, including location data, audio recordings and video footage, while also being vulnerable to remote interference and even being disabled.

Meanwhile, a cross-party group of MPs warned the Government that Britain is poised to cede control of the “critical infrastructure” of its car market to Beijing “with all the attendant security risks”.

Therefore - and we have no doubt at all that this will be next - Jaguar Land Rover must be subsidised so that the Indians can have the data instead. Or Ford, so the Americans, BMW the Germans and so on. Or, for the truly weird, there will be an insistence that British Leyland be revived.

Because Johnny Foreigner might find out that location - a British car is being driven in Britain - therefore cars in Britain must be vastly more expensive through either the taxes to pay subsidies or the banning of the cheapo version made by J Foreigner.

The actual answer here is for government to butt out. Anyone worried that the sojourn on Lover’s Lane is being tracked in Guangdong won’t buy a cheapo Chinese. The rest of us can get on with our own trade offs over data, cost, privacy and the rest.

After all, it’s probably better that someone on the other side of the world has that Lover’s Lane tape than someone inside our own government, isn’t it? Shenzen really isn’t going to care while locals might well try to use it.

Incentives do matter, yes, they do

Matthew Parris:

Mental health crisis may not be all it seems

We must ask whether generous benefits for conditions such as stress have made opting out of work too attractive

Parris then has to very delicately tiptoe through his explanation. Yes, of course some suffer dreadfully from problems, society rightly supports them, but is it vaguely, just possibly, just a bat’s squeak of a chance there, rumoured to be even the sniff of some not being quite so ill that they could not work? In fact, would not, if it were not that the benefits are large enough to make not working - or even claiming while working - worthwhile?

Even with all the qualifications Parris has to shovel in we fully expect there to be a massed chorus of shrieking about how terrible he is for even bringing up the point (J Portes was quick off the mark “faux concern combined with complete and wilful ignorance” - as we said).

At which point we can be a bit more blunt than is possible in a Times column. Of course some are blagging it. Humans respond to incentives, d’ye see?

No, really, humans do, to the point of deciding when they die:

In 1979, Australia abolished federal inheritance taxes. Using daily deaths data, we show that approximately 50 deaths were shifted from the week before the abolition to the week after (amounting to over half of those who would have been eligible to pay the tax). Our findings suggest that the scheduled abolition of the US inheritance tax may lead some deaths to be shifted from the last week of 2009 into the first week of 2010.

Incentives matter. No, really matter.

Some who perhaps should not be claiming illness or disability related payments will be - the government’s handing out free money so obviously some will.

There is also no absolute solution to this. We desire a system which picks up every single case of those who do require the help. That means that the rules are going to have to be relaxed enough that some who don’t will also be able to get it. We don’t want a system where the truly ill cannot gain help - we therefore have to put up with system leakage.

We can change how much leakage there is, sure, at the risk of blocking out some of the deserving. But that’s just the standard point that all of life involves trade offs.

Two of the grand lessons of economics in the one story then, incentives matter, there is no solution only trade offs.

Except that’s not the end of it. For we also have those looking at the working disability numbers and therefore insisting that there’s a problem with the NHS. Or with social services. Or that government’s not spending enough money on antiracism, community outreach or the rest. Which means that we do actually have a useful lesson at the end of this. Which is that the current working disability numbers are not a result of government spending too little, but of it spending too much. Perhaps rightly too much - taste can vary as to how much blagging we’ll accept in order to make sure no one deserving is missed. But government spending lots on a relaxed definition of disability is not an argument that government must be spending more on disability.

Now gosh, yes, this does surprise, doesn't it?

We must regulate artificial intelligence. Despite the fact that we still don’t know what it can do, what the benefits might be, even who will produce the one we want to use, we must regulate:

These same principles should extend to investors funding newer entrants. Instead of bankrolling companies that prioritise novelty over safety and ethics, venture capitalists (VCs) and others need to incentivise bold and responsible product development. For example, the VC firm Atomico, at which I am an angel investor, insists on including diversity, equality and inclusion, and environmental, social governance requirements in the term sheets for every investment it makes. These are the types of behaviours we want those leading the field to set.

We must even regulate the flow of money to those who might be innovative!

Dorothy Chou is head of public affairs at Google DeepMind

Our word, we are surprised. The incumbent, worried about the insurgents snapping at its heels, suggests that the law should be used to hobble that competition. Nothing like this has ever been seen before has it? That man with the red flag in front of a newfangled automobile just never happened.

What’s worse, they may well get it too. Because the incumbents exist and so are a political pressure group whereas those who will exist are not. Nor, obviously, those who will benefit from the innovation lost because no one, as yet, knows what that will be.

Which is that basic problem with regulation, isn’t it? Those who will benefit from there being regulation are a political force, those who will benefit from there being none are not. Therefore politics naturally produces over-regulation.

Bud Light's woke and broke

By the standards of a mature beer business these numbers are near insane:

The owner of Bud Light has revealed a steep drop in US sales after the beer’s collaboration with a transgender social media influencer sparked a backlash.

The world’s biggest brewer, Anheuser-Busch InBev, revealed that US revenues dropped by 10.5pc in the second quarter of the year.

Inflation makes that YonY comparison worse of course.

On the specific issue we are, of course, the liberals that we always are. The entire aim of the liberal project is that consenting adults get to adult consentingly. As long as we’ve no breaches of Mill’s fist/nose interface problem then get on with life as you wish. We do only get the one pass at it after all so make it a good time by your lights.

This does indeed mean blokes in frocks - or, a different description, trans rights. Use whichever you prefer. The duty of everyone else is to allow and tolerate.

But we also illuminate a more general point here too. Who actually has the power in a capitalist and free market economy? Quite clearly it’s us as consumers. Even something - as here - as trivial as an ad for a beer can lead the capitalists, the producers, losing substantial amounts of money. Billions off the market capitalisation in fact. And all just because some of us consumers decide to switch where and how we’d like to spend our money.

That is, it’s us out here with the power over what gets produced. We’d even go so far as to insist that we have a duty to use it too. Maybe Lush and their greenie vibes do it for you - then spend your money there. Maybe the use of a trans influencer is right up your street - Bud Light’s pretty cheap at present so buying by your principles might even save money. Or, of course, the opposite could be true. Your values are met by some other combination of acts, influences and claims. So, go for it.

It’s the market part of the system that gives us the power over the capitalist part. So, yes, we should use that. Boycott, or buy by preference, according to your desires and views about life, production and everything. No, not according to our, but to your. The end result will be that liberal society we so desire - one designed and made by the revealed preferences of the 8 billion people around us.

And that is, in the end, what the liberal ideal is. The world that results from everyone having the freedom to, well, to be free.

The newspapers are being terribly cakeist here

Meta has begun the process to end access to news on Facebook and Instagram for all users in Canada, the company said on Tuesday.

The move comes in response to legislation in the country requiring internet giants to pay news publishers.

Meta’s communications director, Andy Stone, said the changes will roll out in the coming weeks.

Canada’s heritage minister, Pascale St-Onge, who is in charge of the government’s dealings with Meta, called the move irresponsible.

The demand is that if Facebook or Google have a link to a newspaper article on their site (s) then Google and or Facebook must pay the newspaper for that link.

Which just does sound terribly cakeist to us. Having actually worked for a number of new outlets - including some you might even have heard of - gaining a link for mention in Google and Facebook is the aim of much writing in the online press. Getting something to “go viral” can mean an extra half a million to a million readers. All of whom then get to see the advertisements on that particular page of the news site.

The idea that Google and or Facebook should be forced to pay a newspaper for sending them the traffic that then makes the newspaper money is absurd.

Do note, this is not about someone publishing a full article and thus breaching copyright. This is about a link to the piece so people can go and read it.

What’s really happening here is that newspapers still have considerable political power. Therefore they’re able to get the law bent to their economic interests and dang anyone else or even the consumer. Which is, of course, that classically liberal argument about not having special or preferential laws. For it will always be those with political power who are able to gain such privileges. If even the ability to gain privileges exists then it will be the politically powerful who gain them. Therefore, don’t allow economic privilege.

Simple rules that apply to all - anything else is just cakeism.

Thurrock Council is providing more transport than HS2

Yes, of course we are being provocative. Yet it is still true. Thurrock Council, who have gone bust by doing this, are providing more transport than HS2:

A businessman cheated a council out of tens of millions of pounds and went on a spending spree with the cash, an investigation has discovered.

Leaked documents reveal how Liam Kavanagh used Thurrock Council's money to buy luxury goods, including a yacht and a private jet.

The council has been made effectively bankrupt after investing £655m in Mr Kavanagh's solar farm business.

Well, a yacht, a ‘plane, and we’re sure we’ve seen reference to a Bugatti as well, will provide more transport than HS2. Of course, yes, we know, HS2 is not finished yet and all that which is what makes our snark true. And yet, well, it might even still be possible that those three will provide more useful transport than HS2 is ever going to deliver.

But that is not our actual point here. Thurrock invested hugely badly. No, it’s not just that they did with this guy, they were Simple Shoppers:

The idea was that the council would get regular interest payments from the profits and its cash would be safe because it was secured against the value of the solar farms.

That’s just not the way that you do it. If you’re investing the capital - they were - then you get the profits, not the interest. You buy equity that is.

Except what was actually happening here was an arbitrage. Local councils could borrow from the Treasury at below market interest rates to “invest”. So, many did:

Thurrock is one of a number of councils that have got into financial difficulties since the coalition government gave local authorities more freedom to raise funds and invest in 2011.

Woking, Slough and Croydon have all been forced to stop all non-essential spending after losing public money on risky investments.

They’ve all become croppers through having done so.

Now there is a larger point here - an extremely important larger point. It’s entirely true that government can borrow more cheaply than any private sector organisation. After all, government has a population of near 70 million that it gets to tax unto eternity to pay back the borrowings - not something a capitalist business can do. So, a fairly standard Keynesian to a bit further left analysis is that government should borrow in order to do the investing in society as a whole.

Which is great, until we actually see what is invested in. Recall, these local councils got the same privilege Warren Buffett did. To borrow at below market to invest at market. Yet even with that privilege the genii we have as politicians managed to lose money. Apparently all of it too.

And that’s what the problem with that government investment idea is. Sure, in theory, lower finance costs should lead to greater profit. But that’s not how it works out because politics - and politicians - do not know what to invest in nor how. Which is why they keep making losses by trying.

And no, pushing the decision up to national politics, where the talent pool could, logically, be larger doesn’t work either.

We have mentioned HS2, yes?

Solving the UK's Energy Crisis

 The government’s decision to award about 100 new licences for offshore oil and gas drilling is a welcome move towards addressing the UK’s energy shortfall, and the announcement of a major carbon capture initiative is a significant step on the road to developing technological solutions to address environmental concerns.

The UK’s energy problem is that it needs abundant and affordable energy, while simultaneously meeting environmental concerns. The government wishes to reduce its reliance on fossil fuels, while building up renewable energy sources such as wind and solar power, and building up non-polluting nuclear power.  There is a problem, in that while renewables are reducing in cost, they are still much more expensive than their fossil fuel alternatives, especially due to Britain’s lack of storage capacity.

Although people publicly express support for policies designed to reduce the energy environmental impact, their revealed preferences differ from their expressed preferences. It seems that they still want affordable transport, and the ability to heat their homes in winter and cool them in summer. This suggests that promotion of, and reliance on, behavioural change will not be sufficient to address the problem, and that more attention should be paid to increasing supply, rather than to reducing demand.

The energy supply can be a diversified mix of different sources. This diversification can include a combination of renewable energy, nuclear power, and cleaner fossil fuel technologies such as natural gas with carbon capture and storage. By diversifying its energy sources, the country can enhance energy security while reducing environmental impacts.

It makes environmental sense to phase out the most polluting sources first. Coal pollutes more than oil, which pollutes more than gas. This suggests that gas could be the bridge to maintain the supply until lower cost renewables can be developed and rolled out alongside nuclear power.

Increasing the nuclear proportion of the energy mix is important, since it is clean, reliable, and not dependent on foreign suppliers. The UK nuclear proportion is 15%, compared to France’s 75%. Since nuclear power plants, even SMRs, take time and great expense to plan, build and go on-line, gas is the obvious bridge until the UK reaches that point.

There is a treasure trove of natural gas beneath us, and the technology in the shape of hydraulic fracturing to access it. The government caved in before environmental lobbyists and set the tremor limit far too low to make it viable. Any tremor over 0.5ML [local magnitude] on the Richter scale requires fracking to stop and testing and monitoring to commence. Some commentators have pointed out that this corresponds to a lorry passing by in the street, or a cat jumping off a wardrobe in the next room.

Dr Brian Baptie, of the British Geological Survey (BGS), and Dr Ben Edwards, of Liverpool University, have argued that the limit could be raised safely to 1.5ML, which, they said, was unlikely to be felt. Politically, this could be implemented if compensation were given to households in the area any time it might be exceeded. It could be a cash sum, or a reduction in fuel bills.

Development of extraction technology should run in parallel to carbon sequestration technology, with awards available for those developing practical techniques for achieving this. In addition, research should be instigated to explore the suggestion that some geologists have made that it might be possible to access parts of the gas field offshore, or from the Isle of Mann, which would probably welcome the extra jobs and opportunities it would bring.

Energy storage has a role to play in handling the intermittent nature of some renewable sources, and a programme to encourage firms to develop the appropriate technologies is yet another item in a co-ordinated, multi-source strategy for ensuring a continued supply of affordable and reliable energy into the future. The use of an interconnector, such as that proposed by Aquind, to link Britain and France, offers the UK 5% of its demand in clean nuclear energy, and the possibility of selling to the European electrical market. It could help achieve our energy needs - if it is permitted to be built.

Those renewables really are so cheap, aren't they?

Trains are a good way to get freight around the place. Better for large volumes of low value materials of course on an island our size. But still, nice and environmental:

Escalating energy costs are holding back electrification of European rail freight, which supply chain insiders warned could force more freight back onto roads.

On Monday, UK operator DB Cargo mothballed its fleet of 24 electric locomotives, CEO Andrea Rossi informing colleagues the decision was based on the “current economic climate”.

He told them: “It simply doesn’t make sense incurring additional cost of running and maintaining the Class 90s when we have an alternative fleet of Class 66 locomotives at our disposal.”

Or as another report puts it:

But those aspirations were dealt a blow last week with the news that DB Cargo UK, one of Britain’s biggest rail freight operators, was pulling its electric trains from service and replacing them with diesel models because the high cost of energy meant they were becoming too expensive to run.

DB Cargo, owned by German state railway Deutsche Bahn, said last week that its 24 class-90 electric engines would either be sold or scrapped and its class-66 diesel locos would be used instead.

If renewables really were cheap electricity then this wouldn’t be happening of course (yes, we do know that trains run on red diesel, lightly taxed).

The actual problem here is that a single unit of power or energy (we failed physics so hard we don’t know the difference there) is indeed cheap. If it arrives at the specific place and time you want to use it that is. But for power that you insist arrives when you need to use it then it’s actually quite expensive. Because not only is there the cost of the renewables generation there also has to be the backup system for when that doesn’t work.

The actual cost of an electricity system with sufficient dispatchable power is the cost of the entire system that makes dispatchable power available. Not the generation cost of the sometimes but not always renewables.

And thus as we grow out the provision of those ever so cheap renewables we have people dropping electricity use simply because it’s too expensive. Here on the grounds that freight trains pausing outside Didcot when the wind stops blowing, no movements at night - well, the unions achieve those things for us already, why would we have a power system that gave us more?

And thus the task for those who tell us that ever more renewables will make electricity cheaper. If this is so then why are hard headed businessmen dropping electric trains for diesel on the grounds of the mounting expense of electricity? After all, a theory must be able to explain the observable facts. Trains are going diesel - why?

It's the little throwaway lines that are so revealing

Our Sam Bowman takes to the Sunday Times to point out how comparatively poor Britain is.

Why has Britain become so poor?

Even eastern Europe is catching up with our sluggish GDP. Our politicians have been slow to act, but economists say there’s still reason for hope

Indeed so. But while we can point out that Britain is poorer than Mississippi - the poorest US state - that doesn’t necessarily hit home with people. But little throwaway lines might, indeed should.

Like this one:

Bilodeau and scores of other women online are bragging about their work setup using the hashtag #lazygirljob. To fans, the ideal lazy-girl job is one that can be done from home, comes with a chill boss, ends at 5 p.m. sharp and earns between $60,000 and $80,000 a year—enough to afford the basic comforts of young-adult life, yet not enough to feel compelled to work overtime. Veterans of such jobs say roles such as “digital marketing associate,” “customer-success manager” and “office administrator” are good bets for achieving the lazy-girl lifestyle.

Clearly, there are a number of comments possible here. One being “In your dreams”. Another being that the money isn’t everything crowd are quite right, people will work less and enjoy other parts of life when given the chance - when their income meets the physical lifestyle they desire.

We can even think of that target income as just that, a target (a target that appears easily achievable working in a Texas supermarket). But think about what that target means. The basics of the young adult life are $60 to $80k. That’s the standard of living they’re expecting.

That’s a rich, rich, country compared to the median pay of £27k or so ($34k, at market FX rates) in Britain. In fact, that lazy girl income, the one defined as covering those young adult basics, is in the top 10% of UK incomes.

Which is the proof of what we are missing by not having that economic growth. The proof of how comparatively poor we are. Even, compared to the US we’re all in relative poverty. In fact, we pretty much are. Median US household income is some $71k. Median UK is £34k. Or £57k to £34k, which means that, given the definition of relative poverty as below 60% of median household income then yes, the median UK household is in poverty by US standards.

That’s what we’re missing out upon. And it’s difficult to start arguing that the UK is more free market, less oppressed by politics and redistribution than the US is. Therefore, logically, to gain that living standard they’ve got we should be more free market and less burdened by politics and redistribution.

Government in the United States takes some 26 to 27% of everything to feed its maw. Here in Britain at present it’s more like 45%. Which gives us that very interesting target - let’s slash government by 20% of GDP so we can all have lazy girl jobs. Wouldn’t that be fun?

The perils of lithium batteries

We do indeed agree that lithium batteries pose fire perils. Yet there’s still something about this suggestion here:

In the first three months of 2023 alone, fires started by battery-powered scooters and bikes killed four people in the UK, according to Electrical Safety First, a charity.

Damage to the batteries leads to rapid heating called thermal runaway, setting fire to the rest of the pack. Flammable gases can be released, hastening the spread of the fire in a home, where scooters are often kept.

The charity said the devices should be more strictly regulated and assessed by a safety authority before being put on sale in a move mimicking rules in New York.

Possibly - although we’re really very unsure about how the sort of inspection that can be carried out on every battery can be detailed enough to find those with cells that might fail. But, a subject for discussion perhaps.

Perhaps our lives have been too sheltered because we didn’t know who Electrical Safety First are. So we had a look:

Total income of £5,624k included the £4,740k share of profit from Certsure LLP, the charity’s Joint Venture with the Electrical Contractors Association.

Certsure is:

Certsure offers industry-leading certification services

When this happens in financial markets we call it “talking your own book”. No one thinks very much of it because all do it at some time or another. Bigs up the things one is long of, denigrates those short and so on. But the important point is that no one thinks very much of it. The behaviour is so prevalent that no one does bother to think that anyone’s making a serious suggestion other than talking one’s own book.

Matters political are a little different. For here a charity is suggesting that the law be changed so as to possibly benefit the profit making subsidiary of that charity. Or, if we are to be fair here, that would be a cynical reading of the suggestion.

That then brings us to the only important question in politics - are we being cynical enough?

Discuss