Well, of course, a union would say this

From the GMB General Secretary (via press release):

“But, our future requires a mix of energy sources – new nuclear, renewables, hydrogen, and oil and gas.

“It would be a huge mistake to put all the nation’s eggs in one energy basket.“

We can’t say we disagree with that and we do indeed think that the replacement for fossil fuels is going to be a bit of this and a bit of that. The grand joys of fossils is that they are general purpose, the problem with so many of the mooted replacements is that they solve specialist problems. So, we’ll need a number of solutions. Assuming there’s a problem that needs to be solved, of course.

However, we vehemently disagree with this:

“They believe in plans not bans.

“Plans built around unionised, decent jobs.”

We don’t want any jobs associated with these plans at all. Think on it. If someone invented a magic box that provided the nation’s energy desires with the labour of just the one bloke turning the knob every Monday morning we’d be overjoyed. We’d have hundreds of thousands of people who could go do ballet, teach kids, work in the NHS, play footie and prepare puddings for us to enjoy rather than labouring in the electricity mines.

Jobs, that is, are a cost, not a benefit.

Unionised, decent, jobs are even worse as they cost us even more.

Now, of course, a union leader would say the above, obviously. But that doesn’t mean that the rest of the society needs to be taken in by the special pleading. Whatever it is that we do about climate change - or any other thing - we want to employ the minimum of human labour possible in doing that thing.

After all, the art of economic advance is in working out how to destroy jobs, kill ‘em stone dead.

The difference between the Stern and Nordhaus approaches

One of the joys of economics - as with any science, social or other - is that it is possible to draw rules from one example. Those rules are then generalisable across other examples. This means we can use the difference between the Stern and Nordhaus approaches to climate change to opine on the size of the Irish dairy herd.

Irish farmers are rebelling against a proposal to cull tens of thousands of cattle a year to help Ireland meet its climate change targets.

The Irish government wants to reduce emissions from farming by a quarter by 2030. Media reports last week suggested that one option being considered was to reduce the national dairy herd by 10 per cent – meaning a cull of 65,000 cows a year for three years, at a cost of €200 million (£170 million) annually.

When considering climate change a number of different responses are possible - it’s not happening, it’s not us, it doesn’t matter etc among them. But leaping over all of that consider the difference in construction between the Review and the Nobel on the subject.

Stern tells us to have a relatively high carbon tax now - $80 per tonne CO2-e. Nordhaus that we should have a low one now (“now” being when these plans were suggested) of perhaps $20, rising much higher, to $240, in some decades. The difference is that Stern is saying we should deliberately kick start the capital replacement cycle, Nordhaus that we should work with it.

We’ve got bits and pieces of perfectly good kit lying around the economy, it has cost money to make them, they’ll carry on working well for years to decades. We can rip those all up and replace them with non-emitting kits at some cost- Stern. Or, we can wait until they fall part, as kit does, then replace them with non-emitting kit - Nordhaus.

It will clearly be cheaper to do this the Nordhaus way. For the cost of the non-emissions part will only be the marginal costs of making it non-emittive, rather than the total cost of the kit - because we’re waiting until we’ve got to build a new one anyway. We’re doing this with cars (however badly etc) by not banning petrol cars from the road, but not allowing new ones and letting the fleet age into obsolescence.

It’s also true that within Stern’s Review is an intriguing insistence that Nordhaus is right. For Stern points out that humans do more of things which are cheaper, less of things which are more expensive. We must therefore be efficient in our approach to emissions reduction. For, by being efficient we make the change cheaper, therefore we do more dealing with climate change. Yes, this does produce the odd result that Stern should be in favour of the Nordhaus approach but then demanding an entire and perfect consistency from an economist really is asking a bit much.

So, we’ve a generalisable rule - working with the capital cycle is cheaper, more efficient, than trying to force it. Therefore it is also preferable as it means we have more resources to do more about climate change, we do more climate change dealing with.

As we understand it, admitting that our rural knowledge is pretty limited, dairy cows have a working life of 6 or 7 years in Ireland. The capital stock is therefore going to be entirely replaced by 2030 anyway. Which means that this Stern approach - let’s start reducing that capital stock right now! - is contraindicated. We should use the Nordhaus. As the dairy herd turns over simply don’t allow the full replacement.

This will cost nothing, saving the €200 million to reduce climate change elsewhere. Or even fructify in the pockets of the people.

Sounds like a plan really. Work with the capital cycle, not against it. Then again this is a suggestion that politics doesn’t pay money to farmers, something that doesn’t have a good track record.

Renewable energy and the very basics of trade

As David Ricardo pointed out, if we all do what we’re least bad at and trade the results then we’ll be better off. That is what the lesson of comparative advantage is, yes. Forget the cloth and wine, that it’s between countries and all that. Whatever assets there are lying around should be put to their best - least bad - uses and then we swap around the resultant higher production. Division and specialisation of labour and the resultant trade from Smith, Ricardo telling us how that division should be logically underpinned.

At which point, something about Morocco wanting to become a renewables superpower or something:

Morocco also plans to harvest bright Saharan sun through conventional solar panels. These can generate three times as much power in the North African country than they would in the UK.

So, the solar panels should be in Morocco not on the north facing roof of some building in Hebden Bridge then. For whatever amount of money - or subsidy - spent on solar panels we’d get three times the electricity, we’re richer.

This is not, clearly not, how public policy actually works currently. We’re bombarded with insistences that Britain must produce the power that Britain consumes. That local power delivered locally is better.

Note that this is nothing, nothing at all, to do with renewables or fossil fuels. The logic is that whatever it is that we use as a power source should come from whoever, wherever, is most efficient at producing the power we intend to use. Local makes us poorer, trade makes us richer.

So, to be richer we should trade. Given that that is the opposite of the current political and cultural insistence we are left with the one big question. How on Earth did the entire society end up getting this so wrong?

Introducing the Snowdon Curve

We are all familiar with the Laffer Curve, the insistence that there is a tax rate - dependent upon the tax, the structure of the society and so on - which maximises tax revenue. Other rates, either higher or lower, gain less yield. When put like that the observation is unarguable. It’s only when the insistence is that we’re above that rate is made that the arguments start. We can have analogues of this, perhaps the Scully Curve which gives us the growth maximising tax rate. Going wider, the Tabarrok Curve for patent strength and innovation rates.

Or, as we think we’re coining today, the Snowdon Curve. As Chris Snowdon of the IEA notes:

New data from Australia, which pioneered plain packaging and has the highest cigarette taxes in the world and has always banned nicotine vapes, shows that youth smoking has increased six-fold since 2019.

There is an optimal amount of regulation, taxation, meant to discourage an activity. Going further than this actually increases the amount of the undesired activity, not decreases it.

If, for example, spirits were taxed so highly that it was near impossible to afford them then how much would home distillation rise? It’s possible to think by more than the drinking discouraged. We do not insist on that particular example, it is just an example.

But here with smoking the thing that everyone wants to discourage most is the teen smoking of cigarettes. On the logical grounds that it is addictive, those who become addicted are likely to shorten their lives as a result and yes, probably the world would be a better place without such. But that doesn’t mean that really strict regulation and really high taxation actually achieve that goal.

We are, after all, dealing with human beings. Who do have a propensity to lying, cheating, tax dodging, if they think the impositions of the killjoys and anal retentives are too high to be bourne. Prohibition did not stop booze consumption after all. High brandy taxes in the past just led to Poldark.

Australia, as the news keeps reminding us, does have a large illegal tobacco sector. The taxes, the restrictions, are worth people working in and supplying it - which leads to the real price of smokes and baccy to be considerably lower - thus consumption higher, than the legal status would suggest.

There really is a curve here. Restrictions can be so onerous that the society simply declares “Bugrit, millennium hand an' shrimp” as with this example of teen smoking and Australian tobacco restrictions.

It’s possible to generalise this further too. Some of us have lived in societies where everything is so tediously regulated that no one bothers to obey any of the laws. This explains the Soviet economy and Italian driving.

There really is this Snowdon Curve, it is possible to have non-optimal levels of tax and regulation which end up increasing the amount of the undesired activity. As with the base Laffer contention, this is unarguable. That we are now beyond this point in many aspects of society, well, let the arguments begin.

If only people would bother to get recycling right

News from the depths of the stock market.

The success of the latest trials support Primobius' goal of being the first to achieve the proposed recycling recovery requirements in the pending EU Battery Regulations. These regulations will mandate recycling of all batteries placed on the EU market. Once legislated, authorised recyclers will be required to recover at least 90% of contained nickel, cobalt, and copper by 2026, increasing to 95% in 2030, 35% for lithium in 2026 increasing to 75% by 2030.

This is nonsense. We have a perfectly good system to work out how much of, to what level of metals recovery, the lithium battery market should be recycled. That method is called “prices”. If copper, nickel, cobalt and lithium are valuable then they will be extracted from batteries to be used again. After all, those millions of tonnes of them would just be money lying around the countryside. There is no barrier to people doing said recycling. The world recycles some 99.9% of all gold ever used (the usual exception noted is that which weathers off gilt onion domes on certain churches) and perhaps 90% of copper and 60% of iron and so on. The decision to recycle is on whether the process of doing so makes a profit - profit being the value added by undertaking the activity.

There are no externalities here that need to be incorporated, the pure market system, driven by prices alone, takes care of everything. So, why do we have an EU target for the recovery rate that must be achieved?

The asnwer being that the EU - and, to be fair, near all other governmental organisations - thinks that there’s some looming shortage of metals about to arrive. This is untrue, it is simply wrong. But they’re planning on the basis of their ignorance - which is one of the reasons why state planning is such a bad way to run the world. That state planning is done by the ignorant, usually in the grips of some fashionable fad. We out here all get poorer as resources are devoted to sating the plans created by that lack of knowledge of the real world.

The optimal recycling and recovery rates are those the free market would arrive at unaided.

Yes, it does get worse too:

… the process flowsheet to meet the ambitious new 2030 recovery targets of the EU Battery Regulations. The goal post shift from 85% to 95% during the drafting of the legislation was challenging

Even if we accept that the bureaucrats knew what they were doing (no, we’ve met many, they don’t) the political process then moved from that bureaucratically determined optimum to one defined purely by the fantasies of babykissers.

This is not an efficient method of running the world. We’re fine with the idea that where markets don’t work then use other methods of management. But we do insist that where markets unaided work just fine, even optimally, then we should use markets unaided. That markets don’t work for everything is entirely true, but let's use them where they do.

This message brought to you by Extinction Rebellion

Just to widen the information gathering network for us all:

Why We Need to Abandon Industrial Farming

Many will argue that chemicals are needed to feed the population, but this is a false dilemma.

Well, that’s not a dilemma, it’s an assertion. So, perhaps it is a false assertion and if it is why is it so?

It doesn’t have to be this way. There are other futures we can choose.

OK, so, tell us, what is that - or those - alternatives?

Something much more likely to succeed would be a return to our roots. The share of people employed by agriculture has dropped precipitously since 1800. U.S. agriculture has gone from almost 60% of the workforce to 1.36% in 2019. In Britain, barely 1% help to satiate hunger. Globally—since 1991—the share of agricultural employment dropped from 43.7% to 26.76% in 2019. As artificial intelligence begins to strip humans of their worth, imagine if humans began working the land once again. What could be earthlier than returning to the land and reconnecting human animals with the natural world that gives them life?

Ah, yes, we thought it might be something like this. We all get to be peasants again, working those 12 hour days in the fields in order to scrape a living from the recalcitrant soil.

by our switch to plant-based diets

Ah, yes, we forgot, vegan peasants.

Simon Whalley is an educator in Japan, the co-founder of Extinction Rebellion Japan,

Well, there we have it, there’s the plan. Forward to the Middle Ages!

Here’s the bit that is always forgotten in these pastoral fantasies. We all consume the labour of others. The NHS is 10 or 12% of the total labour force of the united Kingdoms. And so on and on - everything we get to consume was created by the labour of someone else, just as our own labour goes off to be something that others can then enjoy. So, if we stick 60% of the population back on the land, as opposed to the current 1%, we then lose 59% of everything that is currently created and that we then consume and enjoy.

We are not just vegan peasants that is, we are poor vegan peasants.

We don’t want to be entirely negative though. It is, as we were taught, necessary to find something positive to say about everyone and every situation. Yes, that is lovely and so on.

Around the world, whether the U.S., U.K., or Japan much of the population living in urban areas tends to be more progressive than those in rural areas. As we have seen with the polarization of the United States, this divide desperately needs to be bridged. What better way than for progressives to move back to the heartlands and get their hands dirty along with those with more conservative leanings?

We’re not sure if the countryside is going to agree but if everyone to the left of, say, us is going to be moving there then it’s sure going to improve urban life, isn’t it?

People - even The Telegraph - believe things that are just flat out wrong.

We are told that:

Phosphorus is integral to modern agriculture; you can’t grow anything without it. But the element is also finite; it cannot be made and cannot be substituted. As we eat ever more, demand is rising nearly twice as fast as the growth of the human population.

Scientists have suggested that production may have peaked over a decade ago and reserves will have been completely depleted by the end of this century. What happens then? We probably don’t want to find out.

We do not face some problem of peak phosphorous. That reserves might run out is only because reserves are what has been prepared for imminent usage. Or, as the US Geological Survey puts it “World resources of phosphate rock are more than 300 billion tons. There are no imminent shortages of phosphate rock” Even if there were such shortages of phosphate rock that wouldn't matter - phosphorous is, as we’ve pointed out in Nature, 0.1% of the entire lithosphere of the planet. Quite enough to be going on with. We’ve also explained this in Forbes, even at (free!) book length.

It is indeed entirely possible to have too much phosphorous in the wrong place - algal blooms and all that. But the idea that we’ve some shortage of the element either looming or even possible on anything less than multi-millennial scales is simply nonsense. It is one of these things that just is not true.

Which does open up an interesting can of worms really. If the entire political and cultural sphere is infested with such untruths then how good is government or government planning going to be? A usual hope - clearly oft dashed - about such things being that they at least start from reality.

All we’re asking for here is basic informational competence - too much, eh?

A suggestion for the Tony Blair Institute

Apparently there should be a grand new scheme for pensions. Which, by centralising pension fund investment decisions would make it much, much, easier for the political classes to direct pension fund investment decisions. Even if no one else does we see a little problem in that.

But here’s what makes this plan rank well up there in the Annals of Chutzpah:

A series of changes were made in the early 2000s to a UK pension system that, while imperfect, was largely working for both its members and the companies that sponsored them. There were three specific changes that had a profound negative impact over the following two decades and leading to the situation we have today.

First, in 1997 the government eliminated the dividend tax credit to encourage companies to reinvest profits rather than pay them out in dividends. An unintended impact of the move was to make it less attractive for UK pension funds to hold shares in listed UK companies.

Second, in 2003 legislation converted what had previously been natural risk-sharing between employers and employees with respect to pension payments into a “hardened” contractual obligation for companies, covering all obligations of their pension funds.

Third, with pension-fund obligations now having the status of a hard liability for employers, the Accounting Standards Board introduced new requirements for UK companies to include pension-fund assets and liabilities on their balance sheets. Through this change, assets would be shown annually at prevailing market value (that is, with no allowance for future returns) and, crucially, total future pension liabilities would be discounted by, in effect, a fluctuating long-term bond rate.

That is, Britain had a perfectly good pensions system which was entirely and wholly ruined by the government of the time - Proprietor one T. Blair at that very time. However much bullied by one Brown, G., that was who was PM. The answer to the problems created by this is a New Grand Plan from the new minions of Blair, T., which will entirely solve everything and have no ill side effects unlike the last one, no siree!

Please do call us Mr. Picky here if that’s the way you want to roll but we just can’t help but think that perhaps undoing the past mistakes, now they’re properly identified, might be a better idea than making a whole load of new mistakes.

Perhaps that’s Mssrs. Picky given that we use the communal voice here.

What price caps achieve

The nominally Conservative UK government in the UK is talking to the supermarket owners with a view to seeing prices of essential foodstuffs being capped.

We have price caps on energy, and there is talk of rent controls such as exist in Dublin and Stockholm. There are many bad ideas in economics, but price caps must rank as one of the worst.

In 1978 my colleague, Dr Eamonn Butler, co-authored a book entitled “Forty Centuries of Wage and Price Controls.”  It chronicled 4000 years of attempts to cap wages and prices, from Hammurabi in ancient Babylon to the attempts by Edward Heath in the UK and Richard Nixon in the US to fix wages and prices. The one consistent feature is that all of them fail. They fail because prices are a signal that changes behaviour. If something is in short supply, a price rise encourages people to use less of it. It also encourages producers to bring more of it onto the market. A price cap prevents that signal from being sent, and does not encourage less consumption and more production. A price cap on energy does not persuade people to use less of it or for producers to search for more of it.

A price cap on rents guarantees a shortage of rental properties. It tells landlords that they can make better returns on their capital elsewhere, and to take their properties off the market.

Prices signal the interaction of supply and demand. They tell us what is happening in the economy. To set that artificially is to lose that information and the behavioural changes that it engenders. It is akin to trying to control the temperature in the room by blocking up the thermostat. You stop the signal, not the reality that it should be measuring.

It is part of the sad reality of broken Britain that we are looking to policies that we know from experience simply do not work and never have.

Light pollution and Goodharts's Law

It may well be that as we’re all getting richer we use more light and therefore we can see fewer of the stars in the night sky:

It was not to be. The night sky was not so much black as dark grey with only a handful of stars glimmering against this backdrop. The Milky Way – which would once have glittered across the heavens – was absent. Summer’s advent had again revealed a curse of modern times: light pollution.

The increased use of light-emitting diodes (LED) and other forms of lighting are now brightening the night sky at a dramatic rate, scientists have found.

Perhaps expanding the area in which the drunk can look for his keys is worth not being able to see the stars. But we’d just like to point out that it’s not LEDs causing this. Quite, quite, the opposite.

The biggest change in lighting in recent decades has been the ongoing replacement of the old sodium/scandium bulbs for street lighting with LEDs. The big difference - other than the base technology - is that LEDs are directional. The older technology threw off light in any and every direction, the new one directs - almost always downwards. For any given level of lighting we therefore gain less, not more, light pollution.

As we’ve pointed out before one of the little absurdities of this life is that one of us used to run the shadowy international scandium oligopoly - to the extent of, for a couple of years at least, supplying 100% of the world’s non-China light bulb industry.

We can approach a proof here from the other end as well. Measuring GDP growth by measuring the light that can be seen from satellites was first a new idea, now it’s become standard to the point that the World Bank uses it. At first it was a useful idea too. But then comes Goodhart’s Law.

Goodhart’s being the point that once we start to use a measure as a target is ceases to be a good measure. A strict application of that here would imply those who would fool us about economic growth shining searchlights at satellites. No, we do not suggest that is happening.

But we have had this technological change. From omnidirectional to unidirectional street lighting. Which disrupts the relationship between observed public lighting and economic growth. There is even a way to correct for this (we’ve suggested it to at least one researcher, look for the specific spectral markers Sc produces and alter for that, we don’t know whether it has been adopted) but it is true that the link between light and growth is changing. Some are taking this to be growth which is, perhaps, being lied about more. We would insist that at least some of it is because lighting technology has changed.

Unless we’re going to call into evidence some extreme version of Jevon’s Paradox here LEDs are part of the solution to this problem, not the cause of it.

BTW, the LEDs don’t use scandium, it was this exact technological change that broke the oligopoly part of that shadowy international scandium conspiracy. As all monopolies and oilgopolies always do get broken, eventually, by technological change.