Bad economic policy impoverishes

In this modern world there’s really no excuse for population poverty other than bad economic policy. Sure, it takes some time to reverse however many centuries of such bad policy there have been but it can be done. As those booming recently poor places, growing at 5 and 10% a year, show us. It’s also possible, of course it is, to institute bad economic policy which then, over time, will make a place poorer - Venezuela and Zimbabwe have shown us the dangers of MMT for example.

Or there are slower versions of bad policy:

The EU executive is considering a target that would see 40% of the bloc’s clean tech made in Europe by the end the decade, as part of a response to a wave of subsidies from the US and China.

According to a draft of the EU’s Net-Zero Industry Act, which is due to be unveiled next week, 40% of green tech needed to meet the bloc’s climate and energy targets should be made in the EU by 2030.

This is to get the point and purpose of production entirely the wrong way around. This is to assume that producing something makes us richer. It doesn’t. Being able to consume something is what makes us richer. As Adam Smith pointed out, the sole purpose of all production is consumption. Once we’ve grasped that then the purpose of trade becomes clear. If someone else can produce what we desire to consume better, cheaper, faster, than we can, then we should gain our consumption from that production of that other person. This does not change whether it’s the other adult in the same household, someone in the same village, county, country or some near random stranger 11,000 miles away. If we can gain our consumption better by gaining it from them then it’s from them that we should gain our consumption.

Here the EU is making the opposite assumption. That gaining our more expensive, later, worse, consumption from someone nearby is better. That it is going to be more expensive, worse, later, is proven by the very fact that they’re looking to have a law about this. If it was already going to be preferable on speed, cost and quality grounds then there would be no need for a law, would there?

Basic economic theory really does matter. Otherwise the political types are going to institute bad economic policy, that very thing which makes us all poorer.

Oh, and it’ll reduce the amount of climate change mitigation done too. As the Stern Review pointed out, humans do less of things as they become more expensive. So, limit climate mitigation within the EU to the more expensive domestic production and less of it will be done.

Both broiling us and impoverishing us just isn’t a good outcome from economic policy now, is it? But as we’ve already said, bad government is really the only cause of poverty in this modern world. Perhaps we should stop having bad economic policy?

All the single (household) ladies

According to a 2019 government report, fewer than one in five of all new mothers follow a full time career after maternity leave. Women who were previously in full time employment often either choose to become part time or stop work altogether. This might seem normal and a result of them having a child, not being a woman. 

However, if we compare women's work trajectories after having a child to new fathers, the gap is wide. 3 years after having a child, 90% of men are in full time work or are self-employed compared to a mere 28% of women. So why are women so much less likely to return to the working world?

The childcare crisis in the UK is a big part of the problem. The cost of childcare in the UK is the highest in the OECD, with a UK couple where one parent earns the average wage and the other earning ⅔ of the average wage spending 29% of their combined income on full time childcare. 

It then becomes more economically logical for one parent to stay at home and look after their children themselves. Largely a result of the wider societal and cultural trends, it often lands on the women to stay home and look after the children.

As women stay at home to look after their children they are sacrificing potential skill development time. Fathers on the other hand, who go back to their full time role continue with little chance and thus, as women stay stagnant and men progress in their careers, the gap between them widens.

Not only do women suffer by losing transferable skills and end up with less savings in their pensions, but wider society also suffers from lost economic output. The Centre for Progressive Policy found that the UK is losing at least £9.4bn in additional earnings per year through mums not returning to work after having a child.

The best way to give women the chance to reach their full potential and rejoin the workforce after having children is to reduce the cost of childcare. This can be done by relaxing the child:staff ratios in the UK. Our current minimum child:staff ratio in the UK is 4.5:1 which in comparison to countries such as France (whose child:staff ratio is 8:1) is one of the most restricted in Europe. By relaxing child:staff rations by simply one child, costs could reduce by 9-20%, providing working mothers with ways to balance their work-family life.

Another method would be to adapt the current government subsidy schemes for childcare. The UK government aims to provide payments to struggling families to help them afford childcare. However, the scheme is deeply flawed and is filled with strict, inflexible requirements for parents to follow. This includes only allowing them to access the scheme through approved childcare providers and only for 38 weeks (the equivalent of school term time). So all parents looking to work throughout school holiday time are once again faced with a difficult decision and taking that length of time away from work is not an easy task.

Instead of continuing with this dysfunctional subsidy scheme, a much more beneficial scheme for parents would be to provide parents with direct cash payments that they can use in the way they choose. They can access the child providers they want and at the times they want. This is a much more flexible system and provides parents, particularly mothers with greater ability to rejoin the workforce while affording childcare services.

As it's International Women's day today it's the perfect time to reiterate that the childcare crisis needs addressing. On this day we celebrate billions of women and the contributions they make to our society, yet there's always that thought at the back of our minds that there would be many more contributions if we just simply fixed this issue.

Excuse us while we shriek with laughter

We’ve spent at least a decade pointing out that iron fertilisation of the ocean is a possibly useful, if partial, reponse to the dangers of climate change. We’ve also been pointing out that it is, by the usual readings of international law, illegal to even experiment to find out how useful, how partial, an aid to a solution iron fertilisation is.

Over that time more theoretical work has been done but no practical, at least as far as we know. That paucity of iron in the Southern Ocean is now thought to be a driver of the glacial cycle for example.

And then there’s this:

The creeping threat of the Great Atlantic Sargassum Belt

Visible from space, an explosion of harmful seaweed now stretches like a sea monster across the ocean. Could robots save us from it – and store carbon in the process?

Yes, a part of this is indeed from iron fertilisation - naturally:

Increased sea surface temperatures, upwelling and changing currents have combined with nutrients caused by human activity such as sewage and soya farming in the basins of the great rivers of North and South America, and Africa. Sand blown from the Sahara also brings with it iron and other essential minerals.

More biomass, more fish, some at least CO2 sunk to the bottom of the ocean. The basic premise does stand up, even if we’ve a natural experiment here, not a controlled one.

And sargassum’s ability to suck up carbon is behind what it probably the wildest and most ambitious plan to date: capture it using robots, bundle it up and sink it to the bottom of the sea.

Well, one of the things we really would like to do is work out whether other biological routes work better at that carbon sequestration thing. Maybe diatoms for example,. Or plankton. Does deliberately adding iron (probably ferrous sulphate, free from a number of people, the distribution method being a lascar shovelling it over the side) aid in creating more of this benefit and by which biological route?

Oh yes, that’s right, isn’t it? We’re not allowed to go and test any of these things because ferrous sulphate into the oceans is dumping waste at sea and that’s far more important than actually solving climate change. Silly us we forgot that.

Alternatively, we might start wondering whether there are those who don’t want to actually solve climate change. The alarum is far too convenient a political power to lose. But to think that would be cynical now, wouldn’t it?

Clarity of thinking might aid in designing political policy

From New Zealand:

Let me use an example: it will be almost impossible to farm in a world that is three degrees warmer.

That’s an absurd statement. Temperature differences across viable farmland are already larger than three degrees. So, we know that we can farm at three degrees warmer. True, we might need to change cultivars, or even exactly where specific crops are grown, but the idea that farming is impossible - or even near so - with a three degree increase is nonsense.

As can be proven more locally. The temperature variation across New Zealand is already larger than three degrees. Perhaps Auckland methods might move south to Wellington and so on but the claim of impossible is that nonsense.

Sadly, this gets worse.

A slew of opportunistic right-wing voices is lining up to use recent disasters to argue that the government should shift its efforts away from cutting emissions towards adaptation. This is as unscientific as it is dangerous. It is also utterly out of touch with the needs of the people they purport to represent. It is a disingenuous, harmful and bad faith argument that distracts from the conversations we need to be having.

The claim is then that mitigation is the thing, that adaptation simply isn’t the solution at all. Which could even be true - no, we do not believe that but we’re willing to at least consider it as a logical position - but what then follows is again nonsense:

Second, even if we limit warming, there will be effects we cannot avoid. The world has already warmed by about 1.1 degrees. Even if we stopped polluting the atmosphere tomorrow, the climate will continue to change. Extreme weather events will increase and overlap, each one testing the limits of our resiliency and recovery. We need to plan for this.

Our focus needs to shift from short-term preparedness towards creating stronger communities. Resilient, affordable, inclusive communities that can meet everyone’s needs despite the challenges of the disrupted climate.

We need to get serious about this new approach. Otherwise, the changes we experience will be forced on us by extreme weather disasters, rather than our efforts to create vibrant, connected communities, even as climate change shapes how we live.

The solutions must be necessarily wide ranging. Some will require changes to our legislation, so developers stop building in high-risk areas. New rules, so that when we do build, we’re constructing more resilient homes and buildings designed to handle extreme weather. Greater use of areas that filter and store water for increasingly long and severe droughts will be critical. More housing is essential for our cities, but we also need to make sure we’re meeting this demand without car-dependent sprawl that concretes over natural areas, or builds in flood-prone areas.

The nonsense being that that’s all adaptation. The very thing we’re told that we shouldn’t be doing instead our efforts must be on mitigation. Don’t do that but also gird your loins to spend a fortune on doing that - logic, eh?

James Shaw is New Zealand’s minister for climate change

Ah, yes, that clarity of thinking just is so useful in the construction of political policy, isn’t it?

As we’ve been saying for a couple of decades now. Assume that the insistences of a problem are correct. The answer is a carbon tax at the social cost of carbon. They gave Nordhaus the Nobel for pointing this out, we are supposed to all follow the science, aren’t we?

Everyone’s entirely at liberty not to believe the insistences but those shouting that we’ve got to do so and also follow the science might like to try doing so.

No, we want to drive inefficient producers out of business

The Great Salad Shortage of Winter 2023 has been met by a claim that we must subsidise inefficient salad producers. Or inefficient farmers:

“We need to find a more sustainable way of trading fresh produce," he says. "When I say sustainable, that's got to be sustainable in terms of viability for small producers, in terms of the social impact, food prices, and sustainable in terms of not imposing a negative impact on the environment.”

No. Simply no. The particular part that is wrong is the “sustainable in terms of viability for small producers”.

The background assumption being made is that small producers are inefficient producers. That’s why they need that special care and loving attention to stay in business. But fixing the marketplace so that inefficient producers stay in business is the very definition of stopping us all from getting richer.

We are - of course - made richer in every very real sense by using the least inputs possible to the maximum output we can lay hands upon. That means that our aim in the economy is to destroy jobs. We want to reduce, to whatever irreducible minimum is possible with the current state of technology, the amount of human labour that has to go into whatever it is that we desire.

That labour can then stop growing cucumbers and go off and be ballet dancers, nurses in the NHS or, heaven forfend, produce something useful. We are made richer by now having ballet, nurses and or something useful plus the cucumbers now being more efficiently produced.

Far from wanting to fix the system so that inefficient producers stay in business we desire, lust after, their failing and as soon as possible.

The aim and method of economic advance is to kill jobs, d’ye see? To drive inefficient producers over the cliff edge into bankruptcy so that we can redeploy those ill-used scarce economic resources to do something else.

It is not necessarily true that small producers are inefficient producers. But if the assumption were not being made that they are then there would be no need for a call for a new system to make it viable for small producers, would there?

Make Britain richer, kill a job today.

Evidence first, policy second

One of the reasons we’re so out of step with the modern world is that we do think that evidence first, policy second, is a useful manner of approaching that difficult task of governance. It’s possible that we’re the last people standing who do still think that the way to order things.

Take The Guardian:

Landlords accused of ‘making up stories’ in drive to change UK tax rules

Lobbyist who warned of landlord ‘exodus’ found to have acknowledged to allies sector is actually growing

We are then presented with evidence that more people are living in rental accommodation so what exodus could there possibly be? Thus is the idea that the taxation of landlords be reduced refuted.

Note, when less government - either revenue or power or interference - is suggested then the number of landlords is said to be increasing.

In the same issue of the same newspaper we also have:

Or they may sell up: there is evidence of landlords exiting the buy-to-let market, which may reduce the stock of rental properties available.

But this article isn’t talking about reductions in the taxation of landlords. This one is talking about an expansion of the state housing sector, about more spending - and power and influence - of the state over how and where people live.

Presumably this is something quantum. When the desired policy is no diminishment of the state then the number of landlords is increasing. When it’s convenient to the argument in favour of more state then the number of landlords is decreasing. A nice example of that policy-based evidence making performance art.

We can’t help but insist - however mansplaining, colonialist or even just plain evil that makes us - that better policy is going to be crafted by agreeing upon the facts first then allow them to inform the policy rather than the other way around.

Yes, yes, this is absurdly 20th century of us, possibly even 19th, but we do assure that it’s true. Evidence first, policy second.

This seems eminently sensible to us

Certain Germans are arguing that instead of banning a technology, it should be possible to use any technology which solves the problem being complained about. So, climate change might mean that we should stop burning saved CO2 in the form of fossil fuels. OK, so any solution which stops the use of stored CO2 release should be used. The question becomes which is the best - ie, least cost - method of doing that.

Finance minister Christian Lindner and transport minister Volker Wissing have called for combustion engine vehicles to be exempt from the ban if they can run on so-called e-fuels, synthetic concoctions which some automakers are touting as an alternative to battery-powered cars.

Environmentalists say the intervention is a cynical attempt to woo FDP voters and extend the lifetime of a technology that has had its day.

As we’ve just noted about air travel. Perhaps that e-fuels idea is indeed the solution? In fact, for air travel we’re pretty sure - for whatever our thoughts are worth - that e-fuels are the answer.

Perhaps they are for cars as well? We’d be able to retain the entire current infrastructure after all. Retain personal mobility. We already have all the refuelling stations. We just need to change the source of the fuel. As per the Royal Society report about air travel.

At which point we go right back to basics. What is or should be our decision making method here? We argue that it should be markets. Set the target - net zero CO2 if that’s the thing we want. Then leave be and see which technology does win out in that competition in the marketplace.

For the alternative to that is the obviously absurd idea that those who are good at kissing babies know what’s best for all 500 million of us Europeans - or 430 million EU-ites perhaps. Politicians shouldn’t be deciding upon technologies even if there is room for them to be setting the targets that a technology must reach. So, set the target and anything that meets it is allowable.

Simples.

How gloriously rich China is making us all

This is a strange thing to worry about:

China leads in 37 of 44 technologies tracked in a year-long project by thinktank the Australian Strategic Policy Institute. The fields include electric batteries, hypersonics and advanced radio-frequency communications such as 5G and 6G.

The report, published on Thursday, said the US was the leader in just the remaining seven technologies such as vaccines, quantum computing and space launch systems.

Not wholly convinced about hypersonics to be fair. One of us did work for the Americans on the subject 15 years ago. Which seems like a reasonable head start. But that’s nitpicking:

It said the findings were based on “high impact” research in critical and emerging technology fields, focusing on papers that were published in top-tier journals and were highly cited by subsequent research.

“Our research reveals that China has built the foundations to position itself as the world’s leading science and technology superpower, by establishing a sometimes stunning lead in high-impact research across the majority of critical and emerging technology domains,” the report said.

“The critical technology tracker shows that, for some technologies, all of the world’s top 10 leading research institutions are based in China and are collectively generating nine times more high-impact research papers than the second-ranked country (most often the US).”

That’s getting entirely the wrong end of the stick. Science, knowledge, technological advance, they’re public goods. That is, they’re non-rivalrous and non-excludable. Once a new piece of knowledge arrives then anyone who can read the paper containing that knowledge has that knowledge and their having it does not reduce the amount available to anyone else.

It is for this reason that such advances in knowledge are terribly, terribly, difficult to make money out of. Because there’s no scarcity nor ability to exclude which allows a significant charge to be made. Which is then the argument for public subsidy of knowledge seeking because free markets unadorned will undersupply this lovely, enriching, thing which private incentives under-stimulate.

That’s what the argument in favour of public subsidy of research is. That research is a public good therefore it must be subsidised. For research makes consumers richer but not the producers of the research.

Now the complaint is that China is doing lots of research, making all of us richer at that cost to them of the subsidy of the research. Which is absurd, of course it is. The correct response is to applaud and if we’re feeling really generous send a thank you note.

The institute also called for democracies to establish large sovereign wealth funds for research, development and innovation in critical technology that they add to each year. It suggests allocating 0.5% to 0.7% of gross national income, with co-investment from industry.

Because China is making us richer through the production of public goods we must spend more of our money producing public goods.

What?

Don't Look Up?

We generally try to reduce risks in our everyday lives. If you’re like me, you might have the following thoughts daily:

I should try to not to get run over today by making sure I stop at traffic lights.

I should try and exercise moderately to decrease my risk of heart disease. 

I should save a bit more money in case an unseen financial expense catches me by surprise.

But the degree to which we think about risk is dependent on our perception of it. Rather than how risky the actual risk is… If we believe something is significantly more unlikely than it is we could walk headfirst into a serious accident.

This can also be seen with the UK government. Why? Because it is difficult to make political arguments about tackling huge risks which may be seen as unlikely when there are so many tangible (and politically important) problems facing the government right here and right now.

* * *

Don’t Look Up?

What is the chance that you die from an asteroid striking the Earth? Well it turns out that the odds of dying due to an asteroid are higher than you may think, at around 1 in 250,000. How could we respond to this?

There are 3 things to consider when looking at potential responses:

1. Cost - this one is quite simple. How much do the different proposals cost in relation to their supposed effectiveness?

2. Trade-Offs - for an intervention to be beneficial the weighted reduction in risk must be greater for the initial risk. Risk-risk trade-offs can regularly be seen in decisions relating to health, the environment and government regulation. 

3. Timeline - if you’re a government, and you don’t imagine an asteroid will strike the Earth in the next century, there’s probably an incentive to palm this off to the next administration. Current government’s have short timelines and are incentivised to allocate their political capital towards things that are electorally successful.

A worthwhile interception

One idea is to crash a spacecraft into the asteroid, several million miles from earth. At a high enough speed the aircraft can cause a slight change in the angle of the asteroid. Diverting it off its collision course with earth. Because of the relative simplicity, it keeps costs to a minimum and there is very little risk to giving it a go. Making it a strong leader in potential solutions. 

It has also been proven to be successful with NASA deflecting an asteroid in late 2022. However it should be noted that it requires a fairly long lead time, and as such there needs to be sufficient warning systems. Such that the change in angle from the collision has time to divert it of course with earth.

The Nuclear option (literally) 

What happens if that doesn't work? The closer an asteroid gets to earth, the greater risk it presents., and more importantly the harder it is to solve. It is no longer sufficient to adjust the trajectory by fractions of degrees - such that they can take effect over many thousands of miles. There needs to be a bigger shift, so what better way to do that then with a bigger impact: a nuclear strike.

Scientists estimated that the nuclear solution could still be used even with warning times of less than a week. The risk-risk trade off here is an important consideration, after all nuclear weapons are incredibly destructive and nuclear war is the first existential risk we have created. 

So what should be done?

The nuclear option could act as a placeholder for the time being, but should not be relied upon in long term plans. Afterall the risk-risk analysis is inconclusive. Because of this we need to ensure that there are sufficient detection systems in place such that other techniques can be employed.

Expanding on the Asteroid Terrestrial-Impact Last Alert System (or ATLAS) in Hawaii would be a good starting point. As it stands, it can offer a one week warning for an asteroid which could level a whole city. Along with a more global approach to both detection and prevention. It should not all be left in the hands of NASA and the Americans.

But one thing we know for show: the Government should look up!

Why we don't believe a word of most pressure group reports

The Food Foundation tells us that so many more families have been plunged into food poverty that we just really must institute free school meals for all on universal credit. State canteens must be lashing out the hash to make up for this dreadful failure of markets and capitalism.

Except, well, it’s tosh, not nosh, under discussion here. As The Guardian tells us:

The number of UK children in food poverty has nearly doubled in the last year to almost 4 million, new data shows, ramping up pressure on ministers to expand the provision of free school meals to struggling families.

According to the Food Foundation thinktank, one in five (22%) of households reported skipping meals, going hungry or not eating for a whole day in January, up from 12% at the equivalent point in 2022.

Except that’s nonsense. That’s not even what The Guardian’s own chart shows, nor what the report says.

What is actually said is that 21.6% are reporting overall food insecurity (note, not skipping meals, going hungry or not eating for a whole day), which is made up of 14.9% relied on low-cost food, 10.5% did not have balanced meals, 3.4% did not have enough to eat and 2.6% skipped meals (some reported more than one).

That 3.4% did not have enough to eat, or 2.6% skipped meals may well be something we’d like to try and do something about. A few more donations to food banks might be that thing of course.

But try this as logic. Food prices go up, people substitute to cheaper food, this is the justification for school meals? Really? A household moves from filet to rump steak and this means more school meals? Switching out the extra-virgin for rape seed oil means taxes must rise? Moving from branded premium to supermarket own brand is a failure of the welfare state?

That is the logic they’re using there. That’s their evidence and they’re sticking to it too.

We agree that we’re being horrible here, why this is almost amounting to mansplaining. But this is a good example of why we don’t believe near anything stemming from pressure group reports.

Seriously, the claim here is that a household moving from organic milk to regular silvertop means that all must have free school meals. The correct reaction here is peals of scornful laughter, isn’t it? That or the Carthaginian Solution.