This all sounds a bit colonialist to us - thought we'd stopped doing that?

There was indeed a considerable period of history in which we pinkish European types told most of the rest of the world - poorer and possibly slightly differently tinted - what to do. We then started calling that colonialism a bad idea and so stopped doing it. Or, at least, we thought we’d all stopped doing that:

Pesticides banned in the EU because of their links to human health risks are being exported and used on farms in Brazil supplying Nestlé, an investigation has revealed.

Europe is home to some of the world’s biggest and most profitable chemical companies, including the Swiss-based Syngenta and the German multinationals BASF and Bayer.

But a number of the pesticides and fungicides they produce have been banned by European health officials after they were linked to cancer, reproductive problems and neurodegenerative diseases.

Despite the ban, millions of pounds worth of the products are still being exported to Brazil, where they are used on farms that supply the international sugar market, according to a new investigation by Lighthouse Reports and Repórter Brasil.

Brazil has been independent for over two centuries now. Brazil gets to make up its own mind as to how it wishes to regulate pesticides - and herbicides, fungicides and the rest.

It’s certainly possible to imagine seasons why different decisions might be reached. As a poorer country perhaps the risk/reward trade off is different? Possibly the climate leads to greater problems that must be solved? Or maybe, and we know this might come as a shock, Brazilians have a different view of the good life from the more puritanical Europeans?

About the only thing that doesn’t seem to have changed here is that pinkish Europeans are telling Johnny Foreigner what must be done. Even using the same justification - it’s for your own good you know.

We really did think we’d all agreed to stop doing that. So, why haven’t we?

Adam Smith wrote another book?

Adam Smith (1723-1790) is best known today for his pioneering work of economics, The Wealth of Nations (1776). But in fact, he soared to international fame earlier, with The Theory of Moral Sentiments, published on this day in 1759.

It was a sensation. Moralists had struggled for centuries to work out what it was that made some actions morally good and others morally bad. To Clerics, the answer was obvious: The Word of God. And believers relied on the Clerics’ moral authority to explain exactly what that meant.

Sceptics, on the other hand, speculated about whether we had a sixth sense, a ‘moral sense’ like sight or smell, that would guide us towards the good. And there were many other unsatisfactory ideas.

Smith’s breakthrough was to see our moral judgements as part of our social psychology. As social beings, he argued, we have a natural ‘sympathy’ (today we would say ‘empathy’) for others. That empathy prompts us to adjust and moderate our behaviour in ways that please others. That is the basis of our moral judgements and what we understand by virtue.

It also promotes social harmony. Smith was not sure why such socially beneficial behaviour should prevail over any other. He put it down to providence. Today — thanks to Charles Darwin’s The Origin Of Species, published a century after Smith’s book, we would attribute it to evolution.

The Theory of Moral Sentiments became a best seller and it so impressed Charles Townsend, a leading intellectual and government minister, that he promptly hired Smith, on a salary of £300 a year for life, to be tutor to his stepson, the teenage Duke of Buccleuch.

To a Glasgow academic, it was a fortune—and it gave Smith the independence and experience to start writing the work for which he is best remembered today: The Wealth of Nations.

Are EU imposed reporting requirements actually worth it?

A report from the Warsaw Enterprise Institute. With some numbers and an interesting question:

New standards under the Corporate Sustainability Reporting Directive (CSRD) make it mandatory to report non-financial indicators to assess a company's impact on the world around it, including the climate and the environment.

As we all know, this is quite the modern insistence. At a superficial level, well, why not? More information is usually thought of as a good thing. And yet:

WEI warns in the report against extending, as some Eurocrats are proposing, ESG reporting to the entire economy. If CSRD were extended to all SMEs excluding sole proprietors with up to 9 employees, the annual direct burden would be between PLN 9.8 and 23.6 billion,

Well, not that many of us will have the zloty FX rate directly to hand but that last, and highest, number is some 5 billion euros. Around and about, good enough for us here. Polish GDP is, just to give an inaccurate sense of scale, around 500 billion euros, perhaps a little more. So, the costs here - at the extreme - are being noted at perhaps 1% of GDP.

This is to do nothing, nothing at all, except the paperwork. Nothing at all is produced other than a report. Nothing is done other than people shuffle paper.

We’re reminded of the solution to Blood Minerals that was instituted under Dodd Frank. Solving the problem of warlords enforcing slavery to mine coltan a system was instituted. In which every US listed company wrote to every supplier at a cost of $4 billion by the SEC’s own estimation. Nothing was achieved by the paperwork - the sales of the minerals simply go to Chinese companies who are not quoted in New York.

Of course, it is possible to argue that in a market economy more information is better. But we’ve also a method of working out how much more information is better - a market economy. If investors and consumers desire this information then those companies that provide it will gain more sales, those revenues will attract a higher multiple, the companies will be worth more. So, the market economy already contains the pressure to produce these figures if - and only if - consumers and investors desire it. If everyone’s Rhett Butler about it - no one gives a damn - then a market economy won’t produce such numbers and won’t carry such costs. After all, 1% of everything is rather a lot. Especially if no one other than the clipboard wielders gives that Rhett about it.

The voluntary revelation of such effects? Sure, go for it. The imposition of them - but the imposition is the proof that, in a market economy, no one is really interested. Because a market economy will already produce them if people are interested in having those numbers. QED.

To repeat Mr. Sowell's question - compared to what?

Europe is failing its children when it comes to air pollution, exposing nearly all children across the continent to air that falls below healthy standards and delaying the clean-up of the sources of pollution, research has found.

Breathing dirty air causes the premature death of at least 1,200 children across Europe each year, and many thousands more are afflicted with physical and mental health problems that could have lifelong impacts, according to the latest assessment of air pollution by the European Environment Agency.

Sure, that’s not good. We’ve managed to get over our feeling that the problem with modern capitalism is the absence of chimneys up to stuff waifs. We’re with the idea that less pollution is - on its own as an idea - a good thing.

But we do still insist on asking that question from Thomas Sowell - compared to what?

Fortunately we’re given a number here. 1,200 children a year. Deaths. No, we do not think that child deaths are a good idea. We do think we should be working to minimise them.

But now think about what would happen in the absence of a modern civilisation. In fact, just think back a couple of hundred years before a modern civilisation. The usual rubric is that 50% of children died before completing puberty - say, age 15. We’ll use that age simply because that is one of the cut off points that the usual population demographics does use.

The 0-15 age group is about 15% of the EU’s 450 million people. Translating that to the 750 million of Europe will be wrong but still instructive. 110 million children, of whom we would expect 50% to die before they are 15. Divide that by 15 to gain an annual toll from the absence of civilisation.

7.3 million children a year dead from not having modernity. 1,200 a year dead from the pollution - just the air pollution - effects of having modernity. We’re probably onto something of a winner here. Not that a civilisation or socioeconomic system should be judged solely by the child death numbers but we think that would be something usefully very high up indeed any shortlist if we’ve got to pick the one and only measure.

No, this is not to say that we shrug and accept those 1,200 choking their way into an early - possibly white coffin - grave. Rather, we concentrate on the idea that everything, but everything, has costs and benefits. So, we must be aware that yes, reducing air pollution might well reduce the number of grieving parents. But rolling back modernity will increase those funereal processions. We should only be doing the things - if we are to use this sole measure of child deaths - which reduce the net number of them. Or, as we so often say, where the benefits outweigh the costs.

Having fewer coal powered electricity stations might well be a good idea concerning air pollution. Not having dispatchable power 24/7/365 might well kill more. We do not say it will, we suggest it might and that that’s the sort of decision making that has to be done.

Or, as we insist at a higher level of abstraction. Anyone at all who insists that we must solve this particular and specific problem regardless of the cost is wrong. For the cost might well be greater than the problem being complained about - compared to what is the grand question to be asked of everything.

Never buy today what will cost the taxpayer more tomorrow

HM Treasury has this motto above the entry door. It should be re-named the Ministry of Prevarication. 

Examples such as HS2 are many, but nuclear reactors currently lead the way. Hinkley Point C apart, the last reactor to be built was Sizewell B, announced in 1969 but not approved until 1980. After three years of wholly unnecessary wrangling, building commenced in 1988 costing just £2bn at 1987 prices.

25 years later, the Treasury got around to approving another of similar size at an estimated cost of £12bn. It was, according to Dame Sue Ion at her Gresham’s lecture in April, the most complex ever and, we can infer, doomed to be late and hugely over budget.  

After several postponements, opening is now expected in September 2028 (but don’t hold your breath) with spending also up to £32.7bn and counting. Insanely, the government has announced a duplicate at Sizewell C with an actual decision sometime in the next Parliament.

“The Department for Business, Energy and Industrial Strategy said today [29 November 2022] that the lower cost of financing a large-scale nuclear project through this scheme was ‘expected to lead to savings for consumers of at least £30 bn on each project throughout its lifetime’ compared with the existing arrangements governing the financing of Hinkley Point C.”

That is clearly fantasy, not least because it is based on the discredited Resource Asset-Based (RAB) financial model - which HM Treasury likes. At £33bn for 3.2 GW, the cost per GWh would be more than £10 billion compared with £50,000 for small modular reactors (SMRs).

Under the RAB model, users have to start paying for the electricity years before they actually get it and then will have to pay “whatever level is necessary, however high, to generate enough income to provide the plant owners with their guaranteed income,” defined as return on investment. 

This is another version of the cost-plus model which, in defence procurement, has cost the taxpayer billions. So no wonder EDF are happy to see building costs sky-rocket. The point here though is that if HM Treasury had approved another 3 GW reactor when they should have done, 20 years earlier, it would have been built at 90% less cost and we would not now be panicking about the lights going out.

More recently, the Prime Minister announced Great British Nuclear (GBN), but it took a full year for the Chancellor to approve it. The good news is that after years of refusal to even consider SMRs, they are suddenly top of the agenda. Pig-headedly, Ministers still want more Hinkley Point Cs, but the new flavour is SMRs. The interim chairman of Great British Nuclear hosted the first meeting of potential SMR suppliers on 19 April. But there is more dithering in the pipeline. 

The following examples of prevarication are all taken from the slides used on that occasion.

First, there are less than a dozen potential suppliers, but it is going to take six months to issue and receive tenders. It will then take up to six years, until the end of the next Parliament, to reach a “Final Investment Decision” (slide 19). HM Treasury will help with (unspecified) development costs but to save money, only wants one SMR supplier, but also a competitive market. To his credit the Interim Chairman has pointed out that just one supplier does not make a competitive market.

When Boris Johnson announced GBN, he said: “Our aim is to lead the world once again in [nuclear] technology”. But on this timetable, we will not be world-leading but world-following.  Most other top nations are either installing, or planning to install, SMRs right now.

Mr Johnson said nuclear power would supply 24GW, or 25% of Britain’s electricity needs in 2050. Someone present said he had just snatched those figures out of the air, and they may have been right.  Those figures have been used ever since despite no clear justification. The 25% may be about right, but the electricity market in 2050 will need to be about six times larger than it is now, as other forms of energy convert to electricity. Arithmetic is, strangely, not one of the Treasury’s skills. We shall need closer to 60GW than 24GW.

According to slide 10, due to the closures of existing plants, nuclear will provide just 7.8% of our electricity needs in 2035. Yet somehow it will provide 25% (using the 24GW figure, never mind 60GW) by 2050.  That is about as likely as my becoming a prima ballerina. An additional 52GW is about 230 SMRs (assuming 400 KW each), not just a small fleet from one supplier, starting at the back of the queue.  

HM Treasury needs to do a bit of re-thinking – and do it fast.

But why would poor people buy the average item?

There’s a certain obviousness to this:

Suncream prices a third higher in April before families jet off on summer holidays

Well, yes. The reason producers charge more at different times of the year is because they can. So that’s solved then.

This though is a very common mistake:

Skin cancer charities have expressed concern that, with the average cost of a bottle of sun cream now at £19.95, poorer families are being priced out of sun protection.

We see this about all sorts of things. The average cost of housing, or average household groceries bill and so on. It doesn’t greatly matter which average is being talked of either, mode, mean or median.

Why would - or even should - the poor even be attempting to buy the average product? We did check this, Lidl offers perfectly acceptable suncream at €3.99 in its Irish stores. At least one of us has stuck the same stuff on grandchildren in other countries.

That is, the affordability of something to the poor isn’t, in the slightest, determined by the average price across the economy. For there are brands designed to extract the maximum from the richer, just as there are those designed to extract a few pennies from those poorer. What matters for availability to the poor is not the average price in the least, it’s the lowest price.

Poor folk cannot, for example, afford the average house. So what? What matters is whether the poor can afford housing, some of which will be smaller, cheaper, in less appealing places - you know, for the poor. The poor can’t afford the average grocery basket - so what? Is the diet affordable by the poor still sufficient?

All of this before we even examine the numbers themselves - someone really thinks the average bottle of suncream costs £19.95 do they?

This strikes us as being grossly silly

Britain's biggest banks have failed to pass on higher savings rates to customers, despite repeatedly increasing costs for mortgage customers.

That strikes us as blindingly obvious. Perhaps that’s just because we actually understand such things.

Banks live off the interest rate margin. The gap between what they charge to those who borrow from them and the amount they pay out to those who lend to them - or deposit with them. It’s entirely a commonplace that as interest rates in general have been rising recently then that rate margin has been expanding. It’s in literally every single one of bank financial reports and all commentary upon them.

The reason why is that the artificially low rates of the past decade and a half compressed those margins. On the very simple grounds that few are willing to deposit at a negative interest rate. Yes, such did exist in some places these past few years but here in the UK deposit rates tended not to actually go negative - they stuck at 0%. But of course lending rates dropped like a stone, those margins were compressed.

This is all a result of QE and as QE is unwound therefore those margins are increasing again. Back to what they were in fact. Shrug, seems simple enough to us. This is all a part of a return to normality. So, quite why the complaints about it we’re not sure.

But then we get this:

In its letter to MPs, the FCA said that its new Consumer Duty rules will “require firms to be able to justify and explain the rationale for the speed with, and degree to which, they make changes to their various savings rates”. The new rules take effect on July 31.

Firms operating in an open - yes there are new banks, there are new places to make deposits - competitive and free market now have to justify their pricing decisions to the bureaucracy? No, that strikes us as being very silly indeed.

If there are concerns about the possession of market power allowing non-market prices to be set then change the amount of competition so that the market power doesn’t exist. If that problem does exist then that should be done anyway. But having to explain prices to the clipboard wielders is to give those bureaucrats the pricing power themselves. That’s what’s really meant by “justify” here, that banks will have to change their prices at the whim of the civil service.

No, that didn’t work in the Soviet Union nor has such price setting ever worked anywhere.

If the analysis is that market power exists allowing non-competitive pricing then change the market structure so there is no market power. Anything else is very, grossly even, silly indeed.

Use prices to regulate things, not clipboard wielding

That Socialist Calculation Problem ever confounds the bureaucrats. That we know that it’s impossible to do - efficiently - the things we want done by employing a blizzard of paperwork doesn’t stop those who love form filling from trying. It’s simply not possible to track the entirety of something through the economy. That’s why the manufacture, supply, handling, of something cannot be done by planning in detail. The world’s just too large and complex for that. So, we have to use prices to provide the incentives to get the thing done:

Retailers have expressed concerns over proposed changes to the extended producer responsibility scheme due to start in April next year. It is estimated they will add an overall £1.7 billion cost to businesses.

Under the plans from the Department for Environment, Food and Rural Affairs, businesses that supply goods with packaging, from giant cardboard boxes to coffee cups, will be fully responsible for the full net cost of dealing with the waste, shifting the cost away from people paying council tax.

Companies that supply branded packaged goods to the British market or import products in packaging must track that packaging through its life cycle and collect an official note from a reprocessor to confirm the waste has been recycled. The costs will include a waste management fee based on the weight of packaging and a charge payable to the environmental regulator.

This is simply abject nonsense. It is assuming, at the start, that it’s even possible to track a bit of packaging wrap through the system. It isn’t - it’s not something that can be done. Therefore we’re going to have that blizzard of paperwork, those armies of clipboard wielders, achieving nothing at vast cost.

Now, we’re really very certain that packaging isn’t a problem that has to be dealt with. But imagine, for a moment, that it is. The way to do it is to have a price attached to packaging. Add, if we wish, a deposit to the packaging at the point of production (or import). Then that deposit is paid back to whoever brings it into the recycling or other disposal centre. We have now created the financial incentive for people to get the packaging back to that recycling or disposal point - job done.

Most businesses will return for the cash. Those that don’t will find that the Bob A Job week (although that’s now probably the Ton A Task week these days) or the impecunious looking for an income will collect up the remainder and deliver it. As happens in countries with a bottle deposit return scheme.

The abject nonsense here is that we already know how to achieve this task - add a price to it. Instead we’ve got people trying the Soviet answer circa 1955 to it.

Remind us - did we import our bureaucracy after 1989 from East of the Berlin Wall or is the education system really so terrible that civil servants think such a scheme will work?

Who's the boss

“To whom do civil servants report?”  

Back in 2012, Dame Margaret Hodge, then chairing the Public Accounts Committee, asked this simple question. 

They certainly report to the permanent secretaries of their departments but then to whom do permanent secretaries report? Their respective Secretaries of State? Or the Cabinet Secretary? Or because they are usually the “accounting officers” for their departments, direct to Parliament? And if so, to whom in Parliament? Or maybe the Civil Service Governance Boards are in charge? 

The question has yet to be definitively answered.

According to a government guide, civil servants “help and support” ministers but they are “independent of government”. In other words, they are consultants and not part of government at all. “The head of the Civil Service is supported in this by all his permanent secretaries through the Civil Service Governance Boards.’’ That makes the Cabinet Secretary a sort of CEO. But not quite. 

In 2010, the House of Lords Constitution Committee heard strong representations that being head of the civil service was incompatible with being, in effect, the permanent secretary of the Cabinet Office, i.e. the role of Cabinet Secretary should be split. Unsurprisingly the recent Cabinet Secretaries supported the current status quo and the Lords consented. The muddle continues.   

Ministers cannot sack civil servants however incompetent they prove to be: 

“It is a firm rule that ministers cannot dismiss civil servants that displease them or offer unwelcome advice. It follows that, if a Secretary of State falls out with their Permanent Secretary, there then needs to be a triangular discussion involving the Secretary of State, the Cabinet Secretary and the civil servant.   Where possible, this leads to two or more Permanent Secretaries swapping places.’’

So if ministers cannot dismiss civil servants, who can? This is Alice in Wonderland territory.  They are, technically, servants of the sovereign so the King can but clearly wouldn’t. The “four years in post” rule was introduced in 2004 but it turned out civil servants only stay two years in post anyway - not long enough to gain the relevant experience - so that was largely abandoned.

“Civil servants are not however covered by the statutory redundancy payments scheme available to other workers, but are instead covered by the much more generous Civil Service Compensation Scheme (CSCS). Indeed, the CSCS provides that those covered by the CSCS never receive less on redundancy than they would under the statutory scheme. The Government attempted, in 2009/10, to make the CSCS less generous but one out of the six main civil service unions resisted the changes. The courts then held that the legislation under which the scheme was made required that the scheme could not be altered without the agreement of all of the civil service unions.’’

Most permanent secretaries are the “accounting officers'' for their departments. Meaning once policies are decided, usually based on their advice, they are responsible for their execution including all financial aspects. Notably this responsibility does not fall on the minister.  

“The post carries personal (my emphasis) responsibilities to manage the organisation efficiently and effectively and to report to parliament accurately, meaningfully and without misleading.’’

Nothing, really, to do with the departmental Secretaries of State. In practice, “Parliament” normally means the Public Accounts Committee.

What with civil service uncertified days off sick being over 40% higher than the private sector, discipline being regarded as bullying, and most civil servants now working from home, It is a wonder the civil service gets anything done at all. It is high time the Hodge question was answered.  

Whitehall needs modernisation. If policies are to be implemented swiftly and cost effectively  sensible reporting lines and up-to-date HR practices need to be introduced.

Pathological failure

COVID-19 highlighted the flaws in UK pandemic preparedness. Yet the Government is still yet to take action to mitigate future risks.

The risk of biological threats is increasing due to several factors, including population growth, technological advancements, and increased global tensions. Advancements in synthetic biology have made biological materials more affordable and accessible to malign actors seeking to create bioweapons.

A biological threat can emerge from many reasons including a deliberate attack - seen in 2001 during the Salisbury attacks - an accidental release from a life sciences lab, or a zoonotic spillover, all of which have increased in likelihood.

As evidenced by COVID-19, nations such as our own are ill-prepared for major biological threats. In contrast to other deadly pathogens, COVID-19 was relatively mild and a deliberate biological attack could be far more dangerous and much more overwhelming for any state.

To reduce the chance of a future biological threat, a more effective biosecurity approach is needed. This requires strong prevention, detection and response capabilities that together can significantly enhance the UK’s residence against biological threats. 

Below, I propose a set of policy suggestions that I believe would strengthen our biosecurity and are therefore split into three sections; prevention, detection and response.

Prevention

Prevention is the most critical component within a biosecurity approach. Stopping biological threats before they emerge is preferable to mitigating them after the fact. 

Essential prevention strategies include:

• Regulating the purchase of synthetic biology technologies

• Including requirements for actors purchasing DNA synthesis and gene editing technologies to undergo full screening to ensure these materials are not being misused to synthesise dangerous pathogens.

• Invest money into creating computer software that can be installed into all DNA synthesis or gene editing devices that can immediately detect when materials are being misused.

• Enacting international agreements and export controls on materials and technologies that could be used to create bioweapons. 

• Regulate gain-of-function research:

• Gain of function research involves manipulating pathogens to increase their lethality in aim of understanding the potential threat to the population better. Due to the high risk of laboratory spillages, this type of research is often deemed controversial and has the ability to harm society greatly. 

• To control gain-of-function research, an independent government agency should be established that regulates and ensures that only essential and proven beneficial research is being conducted. 

Detection

The detection of potential pathogens can most efficiently be done through establishing strong early warning and monitoring systems. Currently detection strategies in the UK are limited; a monitoring system that is pathogen-agnostic (not looking for one specific pathogen but looking for all nucleic acids that could potentially generate into sometime dangerous) needs to be established. 

• An expansion in the Ministry of Defence’s budget for Research and Development to be spent on creating a biosurveillance system. This system would be on a national scale and would take data from a variety of sources, including looking at waste water in areas prone to a biological attack (urban areas, areas near BSL-3 and BSL-4 labs), testing the blood of patients in blood banks, screening passengers in airports. Testing could also expand to factory farm animals to detect potential pathogens in animals that could easily be spread to humans.

• Establish an online system that collates all the data from each source and turns them into information that can be easily interpreted by decision makers.

• Strengthen the Biological Weapons Convention (BWC) and work towards creating an international collaboration scheme that establishes regular communication, data sharing and global surveillance between countries. Data needs to be shared on a global scale so that if a country detects a pathogen early, other countries can shut down connections with them to properly isolate them - this leads to a quicker response and containment of a potential virus. 

Response

Once a potentially dangerous pathogen has been detected, a quick and effective response is needed to contain and control its spread. Covid-19 demonstrated the UK’s inability to do this efficiently, leading to countless more deaths than what would have been given the following suggestions were in place. 

• Increased investment into building highly effective, easy to use, cheap and abundant PPE which can be readily enforced if a new pathogen is detected. Once established, PPE should be stockpiled and given to healthcare/essential workers during a pandemic. Current PPE standards are low, they are not designed for extreme biothreats, expensive and short in supply. 

• Invest money into portable, easy to use ventilators and create a drone delivery scheme that would allow medication, ventilation, vaccine and PPE delivery for those living in remote locations. 

• Use the Operation Warp Speed model to develop vaccinations and PPE rapidly. OWS was a successful public-private partnership that led to a rapid response to COVID-19, resulting in the creation of Moderna, Johnson & Johnson and Pfizer-BioNTech vaccines. 

• The IFP identified four components of the OWN model: clear goal setting, market shaping mechanisms, whole-of-government strategy and streamlined regulations. These components can be applied to develop a biosecurity plan.

• A unique feature of OWS was an independent board with decision making authority, allowing for faster decision making without bureaucratic red tape which if similarly used against a biothreat, could allow for the quick creation of vaccines and PPE.