The art of electoral politics

There is an art to this whole idea of electoral politics. Which is to identify what certain sections of the voting public desire and then promise it to them. Identify enough such groups, promise them enough, and you will be elected. A lovely example of which just in from the Australian Green Party, who are suggesting that there should be a living wage for artists.:

If the Australian Greens have their way, the nation's creatives will be more likely to be able to afford food, rent and maybe even heating under its plan for a living wage for artists.

In more detail they're really saying two things:

Given the insecure nature of employment in the arts, many artists will at one point or another in their career find themselves unemployed and in need of income support. During these times, work done to perfect their craft will increase employability in the future, but it currently goes unrecognised by the social security system. Furthermore, the requirement to spend time complying with extensive Centrelink mutual obligation requirements leaves less time to develop skills.

Time spent doing art will qualify as seeking work for the purposes of being on the dole and:

The Greens have previously announced that we will support artists’ incomes by investing $20 million over four years into a fund so that organisations can pay artists fees for works that are publicly displayed, loaned to a non-selling exhibition or used on other occasions when art is shared with the public.

Artistic work that people will not voluntarily pay for should be paid for by a compulsory levy on all taxpayers.

Even in urban Australia we don't think that starving artists who wish to continue to bludge their way through life are a significant voting bloc but who knows? Still, this is a good delineation of that whole art of politics thing. Assemble enough such groups and promise them enough and you too can get elected to dine off the taxpayers' cash while distributing it to those who vote for you.

One point we would make though, one piece of advice. The real trick is to do this efficiently, to only bribe those who might but probably won't vote for you rather than waste resources on those who will come what may. And won't most of the low end artistic community be voting Green anyway? 

Thus this particular plan is a waste of money. Even from the political point of view.
 

The Dangers of Health-Fetishism

The Dangers of Health-Fetishism

The ideology of the nanny state can perhaps be summarised as coercing people to be healthy. Complaints about the first half of this (coercion) are well known: people should be able to make their own choices even if this involves them opting to smoke or drink or eat sugar. However, most people would regard the second aspect (health) as uncontroversial. Whilst the means of nudging, taxing, banning, and regulating may be objectionable, the end of promoting health is obviously a ‘good thing’.

I’m not so sure that this is true. Obviously, health has its benefits. Most people would prefer to not have typhoid. A healthier population may also be more efficient and happier. And, if you enjoy your life, it’s rational to want it to last and to die at 80 rather than at 40.

Another reason to hate planning

Regular readers do not need another reason to despise Britain's complex planning system, they will of course know that it – increases rents massively, retards economic growth, and produces deeply ugly buildings. But like a balcony in a London new build, you're getting one whether you like it or not.

Economists Matthew Kahn and Edward Glaesar found that denser cities are greener cities. That is to say, when you add up the environmental costs of transport, heating and household electricity usage, densely packed cities New York and San Francisco impose dramatically fewer costs on the environment.

This graphic from a 2014 Washington Post article, illustrates the issue perfectly. Barcelona and Atlanta have comparable populations, yet Barcelona is able to cram that entire population into just 1/25th the total size of Atlanta. Leading to Barcelonans making fewer, shorter trips in cars and instead using public transit and cycling more frequently. As a result, Barcelona emits dramatically fewer tonnes of CO2 on transport. And it's not just Carbon Emissions that fall when cities become more dense, according to the World Resources Institute a move to denser cities could save $15tn in infrastructure spending.  

Unfortunately, the article presumes that the only way to achieve denser cities is by careful government planning. Yet, as Glaesar and Kahn show, it's often planning that's the biggest obstacle to greater density. The greenest parts of the US, were also the parts with the toughest land-use regulation, blocking development within green cities and pushing it to brown suburbs (San Francisco's restrictive planning laws deter local developments, but do nothing to prevent development across the US). 

Instead of subsidising renewable energy and dictating new energy efficiency standards, the Government could tackle climate change much more cheaply, by doing two simple things. First, radically simplify our planning system by scrapping most, if not all, restrictions on new developments that artificially limit the supply of housing. Second, encourage councils to allow more building by, once again, letting them fully retain their revenue from business rates and council tax, giving them a financial incentive to avoid using the planning system to block new developments.

Paul Krugman has gone too far this time: let’s re-train him as a cosmonaut

Paul Krugman has gone too far this time: let’s re-train him as a cosmonaut

I admit it: I have never been a big fan of Paul Krugman. I do not care for his vulgar Keynesianism or his vulgar rhetoric. His humourless sanctimoniousness, his angry ad hominem attacks, his lack of courtesy and his cavalier attitude to the facts are not to my taste. 

All this said, I cannot deny that he plays a useful role in the economists’ ecosystem: everyone needs a bogeyman. His proposal in 2011 that we should solve the economic crisis by faking an alien space invasion was a hoot. But whereas sensible people had a laugh and took his proposal as the logical outcome of Keynesianism pushed ad absurdum, he really meant it. If he didn’t exist, we would have to make him up. 

However, his recent slurs against the Cato Institute are a step too far even by his standards. 

How Negative Income Tax could lead us towards material abundance

How Negative Income Tax could lead us towards material abundance

120 years ago American factories electrified their operations, triggering the Second Industrial Revolution in which steam engines were replaced with motors. This general purpose technology (GPT) – a technology that can affect an entire economy, usually at a national or global level – created new advantages for factories and prompted the invention of new work processes, allowing for increased growth and productivity. Innovation researcher Erik Brynjolfsson outlines three major GPT since the 18th century: the steam engine, electricity, and the internet, and along with Andrew McAfee, has coined this era The New Machine Age and produced a highly praised book of the same name. In this New Machine Era, they identify growing decoupling of productivity and employment: productivity is growing, but employment is decreasing. Correspondingly, wealth is increasing, but work is decreasing.

The year of the insurrectionists

The year of the insurrectionists

This is very much the year of the outsider, and the year in which the establishment machine politicians are rejected by angry voters.  Donald Trump is a complete outsider, yet in a series of bruising battles that make up US primaries, he has seen off every single establishment party-machine politician ranged against him.  Now there is only one more left against him, and that is Hillary Clinton whom he now faces in November. 

She is almost the embodiment of machine politics, and has the misfortune to face a populist outsider in a year when conventional politicians are mistrusted.  Furthermore, she is tainted as well as mistrusted, with enough doubts about her probity to dampen her support.  The chances must be very high that come November, Donald Trump will be elected the 45th President of the United States.

Why Britain’s company law is not fit for purpose

The closure of British Home Stores shows not only how badly managed the company has been. It shows how Britain’s company law is not fit for purpose.

Founded in 1928, the company was one of Britain’s longest-established high-street department-store brands. But it has ended up with a £571m pension deficit, all its 163 stores will close and 11,000 jobs will go. Sure, the high street is unforgiving? But how can such a giant be brought so low?

Step forward Sir Philip Green and Dominic Chappell, particularly Green, the high-profile businessman so regularly pictured with supermodel Kate Moss on his chubby arm aboard his superyacht. Green and other investors took more than £580m in dividends, rent and interest payments during his tenure at BHS; Chappell’s Retail Acquisitions consortium was paid millions in fees and salaries. Meanwhile, Green did not close BHS’s defined-benefit pension system (as most other large and small companies have done, following Gordon Brown’s disastrous change in the regulations while he was Chancellor). What on earth was he thinking? Was he thinking about the future at all?

It’s a bad advertisement for capitalism, right enough, when the reality is that most businesspeople scrimp, save, mortgage their homes and watch every penny to help their companies grow. 

But it’s an even worse advertisement for all the UK (and, dare I say it – EU) regulation around business governance. Designed to keep businesses transparent and well run, our company law now has the opposite effect. It has tried to substitute official rules for shareholders. And shareholders are the best regulators – after all, it is their business, and their money at risk. 

Sadly, UK and EU politicians did not appreciate this regulatory role of shareholders (though the rising volume of shares held by corporatist-minded pension funds did not help either). Shareholders were seen as merely money-takers; their power was curbed and the powers of boards and executives grew – with everyone being told that’s fine, because there were so many rules to control them.

It is not a new problem. Philosopher and corporate law expert Dr Elaine Sternberg pointed it out in the ASI report Competition in Corporate Control as long ago as 2003. Let shareholders run their businesses as they want, she argued. If some mess up – paying too high salaries, say, or giving executives too much control – nobody is likely to do that again. Competition in corporate control is self-regulating: good systems crowd out the bad. But our regulatory system, substituting top-down rules for market-driven competition, kills that self-regulating process.

It really is time for a bonfire of controls. At least then when we see CEOs sipping G&Ts on their £100m superyachts, we could be confident that deeply interested and farsighted share owners figured they are worth it.

If corporations have all this power then where the heck is it?

Peter Walker points out that there's a certain problem for those who would claim that corporations have some vast amount of market power which they use to lord it over the rest of us. If this were true then we wouldn't see corporate disasters:

Part of the idea here is that large corporations have power over markets and their consumers. When "corporate power" get mentioned I sure people think of companies like Microsoft, Google, Coca-Cola, Pepsi, and McDonald’s etc and the control these firms are said to have over their sectors of the economy. One aspect of this power is the control these corporations are claimed to have over their consumers, but if these "powerful" firms produce spectacular failures, then perhaps consumers are not as docile as some would suggest and we overestimate the extent of said corporate "power".

The latest example might be Microsoft's entirely dismal failure with Nokia. And it really has been an absurd failure as this rather hopeful email details:

Microsoft and Nokia created opportunity for companies in need of ICT professionals
1,000 ICT professionals available in Tampere, Finland, for any industry

Recent news about the Nokia and Microsoft layoffs are good news for those in need of experienced and international ICT professionals. The City of Tampere, Tampere Region Economic Development Agency Tredea and Invest in Finland (Finpro) address this unique opportunity with #Tampere4ICT campaign to attract foreign investments.

Microsoft Mobile and Nokia (Alcatel-Lucent) will release highly experienced technology professionals in the Tampere Region, Finland. There will soon be around 1,000 ICT professionals available, with experience of 10-20 years and with ability to build new, innovative solutions for any industry. Especially companies looking to set up product development, and willing to move fast, there is now a unique opportunity to acquire fully functioning product creation teams to develop advanced connected products.

They bought the company, played around with it for a couple of years and are now effectively closing the whole thing down. That simply wouldn't have happened to a corporation that was wielding great market power. And the explanation for why it did happen is simply that no more than some trivial fraction of us consumers were willing to use Windows for Phone. We beat one of the largest corporations on the planet and all their tens of billions of expenditure just by saying "Nah, think I'll have that one over there instead, ta very much." 

The notion of great corporate power over us consumers doesn't really stand up to close examination.