To critique neoliberalism it helps to understand neoliberalism

Danny Boyle, he of the NEF* and such associated centres of economic illiteracy, has a new book out telling us all that neoliberalism is responsible for all the modern world's ills. We here being proud neoliberals rather take issue with it being responsible for the ills of course. The most striking economic fact of the past 40 years is the decline in absolute poverty around the world and we're really very sure indeed that that is a result of this neoliberal globalisation stuff that we believe in.

We prepared to discuss whether absolutely and totally everything about neoliberalism is just shiny perfect (Yes!) but we do rather object to people missing its crowning glory.

However, that's not the only mistake being made by Boyle. Take this for example:

Even more seriously, Friedman argued that monopoly didn’t matter, and – if it did happen – it was the fault of the government for over-regulating.

No, really, just no. A contestable monopoly doesn't matter that much, for sure, and government regulation can most certainly create monopolies. but to have St. Milt arguing that monopoly power doesn't matter is to butcher reality.

We also get this:

The first error led to the great heresy of neoliberalism, that corporations should be treated like human beings in legal terms.

Which is a category error. Because the very point of having something called a "corporation" is to create a legal form that can then be treated as a person. If we didn't want to create a legal person then we wouldn't need to have the legal form we call a corporation.

The basic point about the law is that you must be a "person" in order to partake of that law. My dog is not a legal person although I am, as the person being kept by it, responsible legally for its actions. If it bites someone, poops on their lawn, nicks their sausages, then they can come after me. I am not responsible for the actions of my cat in the same manner - the law usefully distinguishes between animals that might possibly be controlled and those that cannot be.

But the law is also quite clear that neither the dog nor the cat can be a litigant, sign a contract, be held responsible for their actions themselves. Simply because they are not people.

Only people are people. Which causes a problem when we have an economic organisation. We do think that an economic organisation should be able to sign contracts. More importantly, we think that an economic organisation should be answerable for its actions in a court room. That is, we want to be able to sue them. For this to be possible an economic organisation must be a person.

We then distinguish between natural persons, that's you and me and other peeps, and legal persons, that's companies and charities and governments and football clubs and the police and.....they must all be persons of some form simply because if they're not then they're not organisations governed by the law.

Because the law applies to people. 

This does not then mean that legal persons and natural persons must have the same rights. Assisted suicide of a company is called helping out in bankruptcy proceedings, assisted suicide of a natural person is a crime. That Citizen's United case in the US was not about whether corporations or organisations are people. It's about whether free speech rights and political speech apply to legal persons as they do to natural persons.

Which rights that natural people have which should also apply to legal persons is a very interesting discussion. But the idea that corporations should be legal people is absolutely nothing at all to do with neoliberalism. It's simply the cornerstone of the legal system. Creating a person subject to the law, with rights under the law, is the entire and whole point of having something called a "corporation" in the first place.

And if Boyle's going to get such basic matters wrong then we don't need to spend that much time on his other effusions, do we?


*They say it stands for new economics foundation, we say, along with Giles Wilkes, that it means not economics frankly

You go spend your own money matey

It's Nobel week so of course we have someone complaining about all of this:

If Dr. Paine, who passed away in June, had been a physicist, chemist or cell biologist, such a fundamental, broadly applicable and hugely influential paradigm would probably have put him in contention for a Nobel Prize. But Paine was an ecologist, so he had no shot at the prestige, power and wealth that the Nobels bestow. The same can be said for the world’s top geologists, oceanographers, meteorologists, climatologists, crop scientists, botanists, entomologists and practitioners of many other fields.

So the story goes at least, Alfred's wife ran away with a mathematician which is why there is no Nobel for Mathematics. And? It's Alfred's money, to be spent as he wished. and it's not that difficult to substitute. The Fields Medal is considered rather grander in fact.

But our correspondent wants those other sciences to be recognised too.The first computerized weather model was produced only in the 1950s, and climate science has grown exponentially since the danger of global warming was first recognized some 60 years ago. Discoveries in those fields are increasingly critical for addressing today’s most pressing problems, from conservation of endangered species to earthquake and hurricane prediction. And yet the Nobel Foundation has taken no meaningful steps to recognize them. Forests and oceans are essential to making the planet hospitable, yet there is no scientific Nobel that a forest or ocean researcher could remotely dream of winning. Nor is there a Nobel for science education or outreach.

There are no Nobels for these things because Alfie didn't want there to be. and it really is his money being spent here. The solution is therefore for you to raise the money for an institute your own prize. And the eminence of the prize will come not from the name you give it but the reputation of those first few hundred you give it to. It is their reflection which later recipients glory in.

But then we get:

In 2009, 10 prominent scientists and engineers, including a Nobel laureate,wrote an open letter asking the foundation to recognize more areas of science. They pointed out that a similar evolution was recognized with the 1968 establishment of a Nobel-caliber prize in economics, defusing the counterargument that the foundation was constrained by Nobel’s will.

Ah, no, that's to misunderstand what happened. The Foundation is still constrained by the will. The Riksbank bunged them $30 million odd (about right for a $ million a year prize in perpetuity plus admin expenses) to set up the Econ Nobel. And if our complainant were to raise a similar sort of sum we've no doubt they would at least listen politely.

Or, as we might put it, if you want a prize for a certain science or sectors of science then spend your own money matey.

The perils of industrial farming

The Guardian is running a series by Felicity Lawrence about how we're all mugs for going for this industrial farming thing. If only we actually counted up things properly we'd find that near peasant, organic, agriculture would be much better than this pesticide laden monoculture.

This ignores the fact that we have a method of adding up all the costs. The price system. That's actually what it does for us - measures all the costs of something. And given that the organic stuff costs more then we've got to assume, at least as a starting point, that the organic method costs more.

However, we are wrong - at least so we are told - because

Research has found that over a short period yields per hectare for individual crops are greater in intense agricultural systems. But over a longer period, and when you look at total farm output, more mixed and diverse farming produces more.

We are referred to this report as proof of the contention:

Agroecological systems also tend to be more labour-intensive, especially during their launch period, and spread labour more evenly throughout the year, allowing for full-time employment of farm labourers. 

So we must use more human labour, more resources then. And one of the problems with peasant agriculture is that the people doing it have to live as peasants - exactly what our gg grandparents fled and we thankfully have escaped. The aim of this being:

Industrial agriculture and shifting consumer habits have helped to facilitate the emergence of mass food retailing, characterized by the abundance of relatively cheap highly-processed foods, and the year-round availability of a wide variety of foods. In many countries, consumers have become accustomed to spending less on food. For example, food now accounts for as little as 11.4% of US household expenditure. In parallel, consumers have become increasingly disconnected (physically and emotionally) from food production. 

We should rather be more emotionally connected with our food by paying more for it. Because, as above, the price system does in fact work. We get higher prices because non-industrial farming requires greater inputs and thus costs more.

At which point it's obvious that industrial farming is the more efficient method. Their own report insisting that we should stop using that system contains the very proof that it is more efficient. Industrial farming produces cheaper food at the cost of less human labour. Why on Earth would we want to move to a system which requires greater inputs, more people labouring in the mud, to provide us with more expensive food?

Answers on a cluebat to any of your Green friends please. Or, if you should be so unfortunate as to know any, people at The Guardian.

If women are more reliant upon social security doesn't that mean the system is biased in favour of women?

The guardian has one of those usual rants about how, really and candidly I tell you, we have to destroy capitalism in order to reach true gender parity. OK, well, just add that to he list of reasons why we've got to destroy capitalism we suppose. However, there's one line in there which has an odd implication:

Rather, women are more likely to be reliant on social security and insecure work, and thus end up hit hardest by austerity measures.

If a reduction in government redistribution disproportionately hits women then doesn't that mean that the current structure of government redistribution is skewed in favour of women?  

We can't actually see how that cannot be true. Sure, the social security system doesn't actually work upon gender lines. We don't say "you're a man have less money". We do say that if you're taking care of dependants then you can have more money. And it does generally turn out that women do more of the taking care of dependants than men do.

At which point we can say that the society seems to have some sort of bias in it. But if we look specifically at the social security, of the redistribution, system, then that initial statement cannot be taken as evidence of bias against women but in favour of them.

If reducing government spending disproportionately hits women then the current system, before reduction, must disproportionately benefit women. Given that first statement how could it be otherwise? 

There's a point at which we've got to give these people the Anglo Saxon Wave

Given the anecdotal link with Welsh archers at Agincourt we might call it the Celtic Wave, but most today will associate it with Churchill's cheeky transformation into the V for Victory sign. Or, that general two finger wave at people who have simply lost the plot and who need to be told to travel. And we are rather getting to the point where we need to be deploying this sign language in a serious manner to our rulers:

Restaurants, cafés and pubs will be named and shamed unless they make food portions smaller or less sweet, the government has said.

Chains such as Pizza Express, Starbucks, McDonald’s and Gourmet Burger Kitchen have been told to “step up” by cutting sugar from food and reducing the size of desserts, cakes and croissants. Calorie-reduction targets for fatty, savoury foods will also be set.

Jeremy Hunt, the health secretary, told a private meeting of more than 100 food companies yesterday that “going out to eat is no longer a treat” because it is so common. Takeaways and sandwich shops would therefore be expected to take the same action as supermarkets and food manufacturers in tackling Britain’s obesity problem, he said.

As we have pointed out innumerable times we are not all fatty lardbuckets because we eat more than our forefathers. We are so because we expend less energy than they did - this we know because we know that we ingest fewer calories than they did.

Further, there is no reasonable excuse for government intervention here. That usual excuse of the cost to the NHS of obesity is nonsense. People whose arteries pop or clog as a result of being 10 stone overweight save the rest of us money by consuming health care for many fewer decades than the slimmer among us. As is true of smokers and boozers by the way.

Finally, of course, there is the point which we consider to be important. It's no damn business of the government's what we decide to consume.

The only solution to this is to just generally ignore them. And if their hectoring becomes to shrill we recommend that Anglo Saxon Wave. Rather more vituperation from the rude mechanicals is what the prigs and prodnoses deserve - and who knows, perhaps enough of it will shut them up.

One part of the Swedish model we firmly reject

We have noted a number of times around here that the Swedish model is not quite what people think it is. The economy as a whole is more vehemently free market than our own for example. We don't share the taste for a high tax, high redistribution society but there's still no doubt that, along with that greater insistence upon economic freedom, it's a place that works.

However, there is one aspect of that model under discussion which we adamantly oppose:

Sweden’s government on Wednesday proposed the reintroduction of compulsory military service, as the country continues to rebuild its national defenses amid rising tension around the Baltic Sea.

Absolutely not, not under any circumstances. And yes, for some of us at least, we do mean any circumstances - WWII did not justify conscription.

At one level it's simply a violation of that good ol' specialisation and division of labour. There are those 20 year olds who like and are good at controlled violence. Where we need controlled violence then we should be using those talents, not simply dragging anyone in off the streets.

But at a much more important level it is simply slavery. Slavery to the desires of the state rather than to some individual Massuh to be sure, but slavery all the same. And no, slavery does not have any place in our modern society, we're all better than that.

If Sweden cannot get enough volunteers in the current circumstances then they should be offering more money to those who do join up. And if the taxpayers aren't willing to bear that burden then they won't get defended, will they?

No, Uber doesn't increase congestion

I'm a big of fan of Uber. As I've written elsewhere, Uber should be encouraged not over-regulated. It might even be saving lives.

It's becoming increasingly clear that Uber's very noisy opponents aren't persuading anyone when they argue that Uber's a threat to public safety. As a result, they're changing tactics.

Earlier this year, cabbie union the Licensed Taxi Drivers Association (LTDA) blamed record levels of congestion in London on Uber and called for a cap on the number of private hire drivers on the road.

But, according to a new study from Arizona State University the LTDA's fears about congestion are completely unfounded. In fact, the study found that ridesharing services like Uber actually decrease total congestion.

By looking at cities where Uber entered at different times, the researchers were able to identify changes in congestion due to Uber and control for general economy-wide increases in car use and the like. 

So why were the LTDA so wrong about Uber and congestion? Well, it seems obvious that increasing demand for private hire cars will mean more cars on the road and more people getting stuck in traffic. The study's authors offer a few reasons why this isn't necessarily the case.

First, recent data suggests that Ubers tend to have higher occupancy levels than traditional cabbies. Think of innovations like UberPool where multiple users who otherwise don't know each other are brought together in the same cab for cheaper fares. 

Second, because Uber iss so cheap many people are giving up on driving altogether. So Uber is displacing the number of cars on the road not adding to them.

Third, Uber's much criticised (but not by economists) Surge Pricing system encourages people to delay peak time trips and make journeys at less congested times. As the authors say "Since the price of ride sharing in peak hours can surge quite high, riders who are price sensitive and flexible in their schedule may delay the travel time or choose to use public transit instead."

Finally, Uber is just straight-up more efficient than traditional cabs. Research from Cramer and Krueger found that Ubers spend much more time on the streets with a fare paying passenger in the back. That means they'll cause much less traffic while searching for fares.

Of course, if the LTDA really cared about reducing congestion (opposed to just wanting a stick to bash Uber with) they'd call for pricing roads at market rates (like we've done for years) and doing the same with parking.

A neoliberal acrostic

Madsen and I have written an acrostic about what we neoliberals believe in:

Nurturing freedom
Embracing globalisation
Optimism for the future
Liberating entrepreneurs
Incentivising innovation
Borderless trade
Encouraging competition
Real choices for all
Accelerating growth
Lifting aspirations

You can see why Corbyn and his friends hate us so much. 

No, this isn't the way to do it - money, not tampons

There is a claim from Scotland that women on benefits cannot afford menstrual products. This may or may not be true but let us, arguendo, assume that it is. The suggested solution is that there should be a state distribution of free to the user menstrual products. This is the wrong solution, entirely incorrect.

If people do not have the money to buy something essential then the solution is to give them the money to buy it, not to provide that thing "free". There are two reasons for this. But the suggestion first:

Tampons and other sanitary products should be given free to women receiving working age benefits, the Trussell Trust charity has said as the Scottish parliament held its first debate on “period poverty”.

Ewan Gurr, the Scotland development officer for the trust, called on the SNP government to consider making feminine hygiene products available free to women in receipt of certain targeted benefits.

Monica Lennon, Scottish Labour’s inequalities spokesperson, who tabled the motion with cross-party support, has championed the issue of menstrual inequality since her election last May as the MSP for Central Scotland.

On Tuesday evening she called for a “firm commitment” from the Scottish government to undertake a comprehensive assessment of the accessibility and affordability of feminine hygiene products.

The first reason against this idea is agency. All of us, without exception, prefer to deploy whatever resources we have as we think they will be best deployed. This is to have agency over our lives. The inevitable effect of this is that we value things that we are given less than we would value the money they cost, or than the receipt of the money they cost. This is the standard argument against the American system of welfare where instead of people getting benefits to buy whatever they receive food stamps which can only be used to buy certain foods. Inevitably there is a black market in Snap cards and the most common sale is $1 on the card in return for 50 cents in cash, the cash then being spent on nappies (there are also those who spend the cash on heroin, beer and so on but that's agency for you).

Even the US Census when measuring poverty admits, somewhat sheepishly, that recipients value goods and services in kind at less than they cost to provide. We can thus make all richer by giving people in need cash to cover said needs rather than offering goods and or services. Either the poor are richer because they value the cash more or we are richer because we can give less cash and they achieve the same level of utility anyway. 

The second is from personal experience: we're of the sort of age and experience where we've done that quick run to the shops. And inevitably come back with or without wings, or applicator, or of the wrong brand, or type. So which of all of these should it be that the state should stock and provide? Some admixture of all? Each store with the free supplies copying that supermarket aisle containing all those choices? Or should those who know which type they prefer simply have the resources to go to that supermarket aisle to collect and pay for the type they prefer? 

Quite clearly that second option is going to work rather better in fitting product to desires. For we've rather a lot of evidence that state planning of what people want to have is rather less efficient than the market's provision, driven by that lust for filthy lucre, of what people desire to have.

So, if we assume that the original charge is true, that women in Scotland do not have the resources to purchase menstrual products the solution is to increase the resources available, not to try to have a state system of "free" provision of them.

Leaving only the important question left. Is it actually true that women in Scotland do not have such resources? 

Three neoliberal ideas from Barack Obama

Here’s another reason to be cheerful: Barack Obama’s final days as President are taking a neoliberal turn.

  1. He’s just spoken out against planning regulations in America’s cities. This is a huge limit on growth – maybe bigger than in the UK. By constraining the supply of housing in places people want to live, like New York and San Francisco, and keeping people in less-productive places, building and zoning regulations are an significant drag on productivity growth – a recent NBER working paper estimated that the costs were equivalent to 13.5% of GDP lost every year. If you could cut those regulations to the level of the median US city, allowing more houses to be built and workers to move, you could boost US GDP by a whopping 9.5%. The "toolkit" of evidence and policy fixes he's released to help people fight back against NIMBYs is a great first step, and his bully pulpit could be even more effective at getting people to realise that blocking developments has a wider cost.
  2. He’s driving ahead with TPP and TTIP against strong opposition. I’m a big fan of these trade deals, which seek to reduce regulatory barriers to trade as well as tariffs. These are really important, because while the WTO requires member states not to put high tariffs on goods, they can be sneaky and protect their domestic firms from better foreign competition with regulation (stringent or time-consuming safety approval processes for things already sold safely in other countries, for example – the FDA does this a lot with drugs and medical instruments). In TPP, the biggest gainer will be the poorest country – Vietnam, and as Tyler Cowen writes it’s a good thing to attach many of the countries involved to the global liberal trading order. 
  3. His White House issued a report last year attacking occupational licensing laws. In America 29% of jobs, including things like hair-braiding and interior design, require licenses that are often expensive or difficult to acquire. (Fourteen states require licenses to braid hair.) The laws seem bonkers, mostly. According to Ramesh Ponnuru, “more than 1,100 occupations are regulated in at least one state, but fewer than 60 are regulated in every state” – a sign that for almost all of them it’s possible to get by without, and a big barrier to migration between states, which helps people to find the right jobs for them (see point 1). We’re lucky in the UK that these aren’t as big of a problem as in America, although some I do suspect some licensed professions, like lawyers and black cabbies, of operating a bit of a racket.

I don’t think Mr Obama will be remembered as a great president, but we may miss him when he’s gone.