New export strategy is a good start but imports too much of the old model

The new UK export strategy has much to commend it. The incoming top team has listened carefully to business representatives and summarized those views as Annex A testifies. The revised 35% of GDP target (up from 30% now) is realistic, not least because no date has been set for achieving it. Export shares of GDP vary somewhat from source to source but the World Bank found in 2016 that most of the large EU countries clustered around 30% with Poland and Germany well ahead at 52% and 46% respectively. Germany’s world ranking is 49 with all the high shares held by small economies.

In other words, we could get to 35% without any change to exports simply by reducing our imports, or GDP as a whole, as some claim Brexit will achieve.

The new strategy is also realistic in focusing government on doing what only government can do, namely:

  • Encourage and inspire businesses that can export but have not started or are just beginning; placing a particular focus on peer-to-peer learning;
  • Inform businesses by providing information, advice and practical assistance on exporting;
  • Connect UK businesses to overseas buyers, markets and each other, using our sector expertise and our networks in the UK and overseas; and
  • Place finance at the heart of our offer.

The finance side (UKEF) has long been a strength of the Government’s export support and having an ex-banker (John Mahon) appointed to lead this strategy must be welcomed. Encouraging firms to export, or export more, and networking from the UK into chosen export markets are fundamental and good to see at the top of the agenda.

But, I am sorry to have to say, there are four concerns:

  1. The Secretary of State rightly calls this plan “ambitious”. The 42 pages of things that the Department will do, along with other Whitehall Departments, trade associations, export providers (they mean consultants), Trade Commissioners, Export Champions, the Export Strategy Partnership Group and other organisations, look like a spider’s web of confusion. As reported in Annex A, the difficulty firms have encountered in navigating the existing complexity is one of the main reasons the previous strategies did not work. The new strategy seems to be even more bureaucratic. Networking overseas is vital to exporting but this UK-based plethora reminds one of Gerard Hoffnung’s Concerto for Solo Violin and Massed Conductors. Most of it could be swept away and replaced by partnering the British Chambers of Commerce.
  2. Baroness Fairhead’s admirable Foreword makes it plain that firms export, government does not. The strategy should be governed by providing what business needs, not imposing top down plans. Yet the strategy is to prioritise (p.13) resources according to DIT Regional Trade Plans confected by Trade Commissioners, Ambassadors and High Commissioners. Admirable diplomats as these people undoubtedly are, how will they know the minds of exporters better than exporters do? Elsewhere the strategy is to push the wishes of DfID and developing countries ahead of what UK exporters may want. Whitehall fat cats do not change their spots.  
  3. Similarly, DIT seems to have absolute faith in supplying potential exporters via the “Great” digital platform despite continued evidence of its inadequacy. There has long been an academic debate about whether exporters should begin with economic and market analyses and formal plans or getting into the most likely market(s) and networking. The simple truth is that one cannot plan the unknown. How can one possibly estimate the number of widgets that can be sold into a market when that capacity, as much as anything, depends on how it is marketed. No digital platform will ever be able to do that, no matter how much is spent on it. Many countries do make good use of databases but they're best used as a supplement to networks and introductions, which are the true cornerstone of any real business relationship. 
  4. Finally, the strategy does acknowledge that financial incentives are needed because most small firms consider, rightly or wrongly, that they have neither the time nor the finances resources to export. It addresses that merely by telling firms to look elsewhere for those incentives themselves: “assessing the potential for financial incentives such as vouchers, grants and loans, and by improving signposting to the relevant export support in the public and private sector.” Baileys Irish Cream was only launched because of the then Irish Government’s tax incentive and the Portuguese government used to make generous allowance for firms engaged in trade. Surely it is obvious that a government free of the EU should be providing the necessary tax or other financial inducements at home to motivate potential exporters.

This new export strategy has good features but when it gets down to the nitty gritty too much of it is the same old. Baroness Fairbairn misquotes the modern version of Abraham Lincoln’s governing principle (Government should only do what only government can do) by missing out the crucial first “only”. From that omission, flow all the excesses in this strategy which is not the radical focused provision that we need. But maybe, just maybe, we are getting there.

As we've been saying, advancing technology saves the NHS money

Some of us here are men of a certain age, those others of us male here hope to reach that maturity. So, this is good news:

Anew five-minute steam treatment for an enlarged prostate has been hailed as a breakthrough by NHS surgeons following tests on British patients.

The simple procedure was found to shrink glands on average by 36 per cent - but while the result is similar to other treatments, it has far less side effects.

The process, conducted by surgeons at Imperial College Healthcare NHS Trust in London and Hampshire Hospitals NHS Foundation Trust on 150 men, involves injecting an enlarged prostate with jets of steam without the need for surgery.

Current procedures, while effective, can lead to loss of sexual function,bleeding and incontinence with patients kept in hospitals for days at a time. 

It was reported that health watchdogs are ready to give it the green light for NHS use.

This is indeed the sort of thing that men of a certain age welcome. Also those who desire to reach age. 

However, we're all aware of the current mantra. That as technology marches on the NHS needs ever more money to be able to deploy those new technologies. This is though just the standard bleating from a bureaucracy that they must have more of our money. For look at what the effects upon costs are of our new technology:

Professor Hashim Ahmed, a consultant urological surgeon at Imperial, said other hospitals are poised to roll out the treatment as soon as they get the okay from health watchdog NICE.

"It frees up huge NHS resources because you need much less theatre time," he told the Daily Mail. "You are also opening up tens of thousands of days of bed occupation around the country."

As is true of new technologies in general - it's cheaper. For that's rather what a new technology is, being able to do that old task with fewer inputs, to be able to do it cheaper.

This technological revolution is going to reduce the costs of the NHS, not increase, and don't let anyone tell you different.

Quite what anyone thinks we do in a market.....

This is a common enough misapprehension but we're surprised to see it in the pages of The Times.  Hmm, given our varied interactions with those who write that newspaper, perhaps not.

On the subject of new technology, the suggestion is that we should consider both the benefits of it and also the downsides

There is another response, though. Radical as it may sound, we — consumers and governments — could choose to have less of this connected technology in our lives. Not stubbornly preserving ourselves in the aspic of 2018, but being more discriminating about which innovations we wish to welcome into our lives; which are necessary; which are worth the risk they may bring.

What is it that anyone thinks we do when we consider a technology? Or a purchase, or even a choice in life? Us humans being at least somewhat rational beings a portion of the time?

That's right, we consider how much we'd like that thing and what we'll have to give up to gain it. Opportunity costs in the jargon but it is the way that everyone does think. We know that extra gallon of beer comes at the cost of a headache, having a smartphone or email account means that people can spam us. 

As it all works out those things we don't think are worth it - New Coke, Ford Edsels, MySpace and socialism - end up not happening, those we think are worth the costs do. Look out the window at those mighty works to see which we do consider of such value.

The suggestion is thus that we should consider new technology in just the same manner we do anything else in life. Well, yes, and?

We're still not enamoured with politics being the way to plan things

We are all familiar with the argument stemming from over to our left - that politics really should be running life, the economy and society. For if people get to vote on what they want then that democratic economy and society will provide what it is that people say they want.

We've a number of problems with this, starting with the freedom and liberty argument. The minority, absent third party harm, should be allowed to live their lives as they wish absent those insistences of everyone else - the tyranny of the majority argument.

To leave such lofty logic aside, there's also how these things work out in practice. For it's important to note how politics does end up framing an issue and thus decisions about it. Take the idea of building upon brownfield or greenfield land:

A£200million Government fund to pay for more homes on industrial land has resulted in the opposite effect, with fewer homes built on brownfield areas than before it was set up.

Official Government’s land use change statistics show that the proportion of new homes registered on previously developed land has fallen by 4 percentage points since 2014, when the fund was set up.

Yet over the same period the number of new residential addresses on supposedly heavily protected Green Belt land has increased by the same proportion - 4 per cent.

Thus, obviously, all government action upon housebuilding is a failure and we must build however many hundreds of thousands of council houses it is:

However John Healey MP, Labour’s Shadow Housing Secretary, said the figures showed that the Government had gone backwards on its pledge to encourage more building on brownfield sites.

He said: “If hot air built homes then Ministers would have fixed our housing crisis. Despite big promises to get building on brownfield land, official Government figures show we’ve gone backwards.  

“It’s clear that Ministers are failing to get good value-for-money for taxpayers.

“By giving developers a free rein to do what they want, the Government is failing get homes for local people built where they are needed.”

Matt Thomson, Head of Planning at the Campaign to Protect Rural England, backed the findings, saying that “promises to build the homes the nation needs while protecting the countryside are not being carried through.

“Our analysis of the government’s new ‘planning rulebook’ suggests that despite a lot of warm words current trends will continue, to the detriment of both town and country.  

“The government must stick to its guns and end this constant cycle of broken promises.

“They need to rein back greenfield development where suitable brownfield land is available, and discourage growth where it cannot happen without compromising their own policies intended to manage sprawl and protect open land.”

A fairly clear set of political demands there.

It is entirely possible that the government plan isn't working or is even counterprodutive. It's, well, possible at least, that central building and planning is the solution. Neither of those are our argument today. Rather, the proponents of the democratic planning idea tell us that this will be more efficient. That it will be the bright, committed and impartial technocrats who do the work on telling the rest of us what to do, guided by those preferences of the populace.

And yet what is it that is actually motivating this set of whines bout current policy? From the statistics release being used here:

These proportions tend to fluctuate from year-to-year, as shown – including conversions - in Table 1 below. This is due partly to variations in the location and timing of developments between years.

The figures tend to bounce around just because houses are built and put onto the market in gobs, possibly gobbets, not as a consistent flow of individual units. But this bouncing around between time periods simply because the counting is not entirely granular is enough to insist upon an entire change of policy?

Now d'ye see why we're not such fans of that political planning as a result of democratic decision making? The process simply isn't that disinterested technocracy determining things, is it? It's the result of whatever a propagandist can mine out of the passing scene. Which, we are really very sure about this, isn't the way to run a country.

The problem with that democratic economy and society is that it is and will be politics that runs it. Which, given the way politics works, isn't a good idea. 

 

Venezuela Campaign: The tragedy of failing zoos and starving strays

Animals in Venezuela are suffering from acute malnutrition in a country where even most people find it difficult to feed themselves. They are often simply allowed to starve to death, despite efforts to transport them abroad to better conditions.

As early as 2016, more than 50 animals in the Caricuao zoo in Caracas died of starvation. After an inspection in February 2018, the Zulia Metropolitan Zoological Park was declared ‘unsuitable to receive visitors’ and was closed until further notice. Some of Zulia’s weaker animals were being fed to bigger ones. Several of their specimens were eating each other out of sheer desperation. Of its 1000 animals, 80% are still in critical condition.

‘What is being seen in Zulia can only be understood in countries with armed conflict’, said the zoo’s chief veterinary officer, Dr Carlos Silva. Dr Silva was later arrested without a warrant for “obstruction of justice” when he published a damning report on the park’s management.

It is not only Venezuela’s zoo animals that have suffered. Footage emerged in January 2018 of a crowd of people stoning a cow to death in an open field, hacking at it with machetes when it fell. There have been dozens of incidents in the state of Merida of cows being slaughtered in a similar way. In 2015, a kilogram of meat cost more than 40% of the average person’s monthly wage. Venezuela’s price control regime has meant that the costs of basic items is spiralling out of control, which is why people are turning to unconventional sources of meat to sustain themselves.

Yet another sign of the suffering in Venezuela is the situation faced by domestic pets. El Nacional reports that the cost of basic pet food as well as vaccines has forced owners to abandon their animals. Families who leave the country have to leave their pets behind. The high cost of dog food due to price controls and difficulty importing goods from abroad have pushed families to abandon their pets, which in some cases have become meat for a desperate population.

Marlene Sifontes who is responsible for workers at Venezuela’s zoos, has said: "The story of these animals is a metaphor for Venezuelan suffering." It remains to be seen, however, if any action will be taken to alleviate the suffering of the humans and the animals, as the country slides deeper into crisis.

More information on the Venezuela Campaign can be found on their website

Why shouldn't China do as Britain does?

There's some spluttering as China decides to copy something that we already do here in Britain. Sure, obviously, we'd not want them to do everything we did - gunboats off San Francisco insisting upon the rights to import fentanyl wouldn't go down well whatever history. But this is something that we do already:

Two Chinese academics have proposed a controversial idea to encourage childbirth as their country faces an ageing population: Make people childless people or parents of just one child pay into a "maternity fund".

...

The two academics made their suggestion in Tuesday's edition of the state-run Xinhua Daily, calling for those below the age of 40 and with fewer than two children should contribute annually to a fund that would offset childbirth costs for others.

The point being that we do this ourselves, it's that combination of a progressive tax system and a welfare state that does it. We even, nominally, have a fund for it, the national insurance one.

Women who don't have children tend to earn more than those who do - this we know very well. They will, under a progressive tax system, pay more into the pot therefore. We have a number of benefits that support lower incomes, we have some specifically to do with parturition and its aftermath of children. Thus those with children take more out of that communal pot. As men tend to make more than women this redoubles there.

We already have a system whereby those without children subsidise those with. And anytime anyone questions this, "Why should I pay for your children?" we are told that children are society's future, society as a whole should support them. Indeed, this is the basis of that bleating about child poverty (inequality of income among households which contain children, nothing more and most certainly not actual poverty). Other people should pay for these children.

There's nothing remarkable about this Chinese suggestion at all.

The NHS as an elegant exposition of the failure of government

The National Health Service has something of a shortage of doctors. More specifically, of general practitioners. How many general practitioners are trained up out of the British population is something entirely and wholly under the control of the government:

The average GP now works less than three-and-a-half days a week - and just one in 20 trainee doctors intends to do the job full-time, research shows.

Patients’ groups said the rise of the part-time GP was “terrifying” given the national shortage of family doctors - fuelling ever longer waits for an appointment. But GPs said the job has become so intense that full-time working was increasingly “untenable”.

The survey of more than 2,000 family doctors shows that on average, they are now carrying out 6.7 half-day sessions a week - the lowest figure on record.

This is a known and obvious result of the feminsation of the profession.

No, we do not thereby mean that there's anything wrong with such feminisation. We really are liberals, how people wish to earn their livings, run their lives, entirely up to them. Nor is it to say that the consequences of the feminisation make it unappealing, unworthy or unwelcome. It is only to point out that there are consequences.

For this move to rather more part time than full time working is about that feminsation. Women do tend to take time off to bear their children, it is true enough often enough that they then - if the opportunity arises - work part time for some years after that bearing.

Again, there is nothing wrong with any of that, that is not our point.

Rather, the GP workforce has over recent decades moved from being - at that entry level, the population as a whole obviously dependent upon the ageing process - from being majority male to majority female. How many GPs there are being a function of government planning. 

You and I, being rational, would have said that as a consequence we need to be training more GPs. We're going to get fewer labour hours out of each GP we train, thus we need more of them. Government did not do this, or at least not enough.

As to why, we can blame anything we wish. Tory Austerity if that floats your boat, although given training times 2010 really wasn't the start of the problem. Misogyny if that's what you wish to blame. Politics is always a good one, the incompetence of a bureaucracy could be the issue. The BMA's insistence on limiting the number of doctors, make up your own explanation.

The point though is that, despite the obvious problem coming down the pike that planned and rational government system didn't do the obvious thing to solve it. Thus planned and rational government isn't a very good solution to problems, is it?

If something as obvious as fewer labour hours per trained worker  means we need more trained workers doesn't impact upon those who swallow 40% of everything everyone does then perhaps we really should be back looking at those non-governmental solutions again? 

Or as we really shouldn't need to point out, sure, markets fail at times, government really is necessary sometimes. But then government fails at times too, what's the answer then?

So it appears that we've solved that London house price problem then

As we know, that unaffordability of London housing is a major problem facing our society.  Fortunately, it appears to be something being solved:

House prices in London fell 0.7pc in the 12 months to June - the largest annual fall in the city’s house prices since September 2009.

Three of London’s central boroughs had double-digit drops in prices as the reversal in the capital's fortunes continued. The City of London fell 23.8pc, Kensington and Chelsea dropped 13.9pc and the City of Westminster slid 12.1pc, according to data from the Office for National Statistics and the Land Registry.

Note that these are nominal prices so we must ad inflation in to get to real ones. That's a 3.5% reduction or so in London housing prices then. And yes, that's a proper number because wages have been, just about, keeping up with inflation.

So, our problem, London housing is too expensive. The solution is to fin some manner of reducing that excessive price. We've just ha all London housing becoming some 3.5% more affordable. Which is pretty good in a market so large and doubly so for government work.

Hmm, what's that? But you don't want the price of housing to fall while you want it to become more affordable? That's not really an option reality allows you, sorry about that. We might not have your solution to this problem but we do seem to have a solution to it. Which is good, right?

And just think how much less in untaxed capital gains are going to be enjoyed as a result.

 

Whose fault is it if the children don't know things?

On the subject of food banks, school meals and their provision during the school holidays we get this:

Then came years on the dole and as a carer, giving Davison a solid grounding in the reality of being broke. When he started cooking lessons, “nobody in their 20s or 30s had seen fresh food”. People would complain that his team was using obscure ingredients. What were these “spices” they kept going on about?

To prove them wrong, he ran over to the local grocer and asked for the spice rack. “The supervisor came over and took me to the Oxo cubes. He thought Oxos were spices.

“That’s the kind of food intelligence you’re dealing with. People are so disconnected from what they eat. If people don’t know what a spring onion is, don’t talk to them about five a day.”As they spotted the white van pull up at Quayplay in Flintshire, children broke off from sliding down the hill on cardboard sleds and began speculating about what was for lunch. On being told it was chicken and noodles (wrongly), one said, hesitantly: “I have Super Noodles, and they’re chicken-flavoured. Is it like that?”

...

“We hand-make fish fingers sometimes and some parents will say, ‘Don’t give them that healthy crap, give them Bird’s Eye.’ If I turned up with spinach and quinoa they’d tell me to stop feeding their kids shite.”

As if on cue, a blond boy of around seven held out his fork to me. “What’s this?” It was a slice of courgette – something he said he’d never seen before. Unlike my school meals, which looked like they had suffered death by blender, the meat and veg rested in their sweet sauce in thickly cut chunks. His mate held out his fork. “What’s this?” It was half a button mushroom.

The British state has been in total control of the education system for well over a century now.

Doing a helluva job, aren't they?

And to think, there are those who think this same state is competent to take on more responsibilities.

Sadly, The Guardian cannot even get free trade right

For a paper with its antecendents this is not a good look:

Do trade deficits matter?

Many economists would argue trade deficits are an irrelevance, although surpluses are often seen as economic virility symbols.

Persistent deficits require funding via international borrowing, which becomes harder if confidence in a country falls.

No, absolutely not, go to the back of the class. Given the paper's history this is bad too. For it was founded, as the Manchester Guardian, to argue against the Corn Laws. That is, in favour of free trade.

It is entirely true that a trade deficit must be financed but that it requires borrowing is a horribly misleading untruth. Any current account deficit must be - and will be - offset by an equal and opposite capital account surplus on the grounds that the balance of payments really does balance (yes, it's more complex, but really, this suffices).

OK, but doesn't this require that we borrow money from foreigners? Nope, no it doesn't. It requires that foreigners send their capital into the country. And they can buy stuff. Or even build it. Foreign Direct Investment for example, say a Japanese car factory built Oop North, or some Johnny Foreign buying a flat in London to leave empty. This is capital flowing into the country this finances that trade deficit £ for £ because that's just how that balance of payments thing works.

Of course, we might end up selling the entire country, as Warren Buffett has posited with his Squanderville idea.

The UK trade deficit is some £30 billion a year. Hey, why not exaggerate, let's call it £100 billion, whatever. We must therefore sell that amount of our wealth to finance it each year - in the most restrictive version of this story that is. How much wealth do we have?

Aggregate total net wealth of all households in Great Britain was £12.8 trillion in July 2014 to June 2016

Oh, we can do this for a pretty long time then. A century and more before we're broke.

up 15% from the July 2012 to June 2014 figure of £11.1 trillion.

Actually, we can do this forever. Note that households do the consuming so yes, household wealth is the correct stock we've to use to pay for it. We're creating new wealth at some £1.5 trillion every two years, £750 billion a year say. Of which we've got to flog off £30 billion (hey, why not, call it £100 billion!) to foreigners to finance the trade deficit.

We can not only do this forever, as we do so foreigners will end up owning an ever smaller portion of the capital owned by the people of the country. For we're creating the wealth faster than we spend it.

So, err, yes, trade deficits are an irrelevance. Free trade it is then.