The Stern Review tells us not to do it this way

There’s little point in our having 1200 page reports about something if everyone’s then going to ignore the central lessons of that report.

Note that we don’t say findings. The Stern Review, for example, makes a number of “should” statements. Should is always arguable. But there are also simple statements of fact in there. At which point, trying to agree with those “shoulds” while also attempting to dismiss those facts, that becomes a significant problem. As is being done here:

“You can’t think that you solve the climate crisis and then attend to racial justice or racial discrimination,” Achiume said. “What you have to realise is that every action that is taken in relation to ecological crisis – environmental, climate and otherwise – has racial justice implications, and so every action becomes a site of undoing racial subordination.”

We’d dispute the entire concept of racial subjugation. But let us follow the logic being employed here a little more:

After Achiume’s final report was filed to the UN general assembly in October, delegates at the Cop27 climate change summit in Egypt agreed to a loss and damage fund to help underdeveloped countries adapt to climate-related disasters. These provisions were a positive step, and even “a way of forcing some engagement with reparations”, Achiume said.

“I see it as a wedge, you know, a way in the door, and a way to create space, for accountability for the historic injustice that brings us to this moment of the climate crisis.”

The demand is that both climate change and also historic racial injustice be cured at the same time. This is wrong, incorrect.

Even if we assume that both exist, both must be cured, it’s still incorrect.

For one of those central points made in the Stern Review is that we must be efficient in our manner of dealing with climate change. On the very simple grounds of the most basic of economic insights. Humans do less of more expensive things, more of those that are cheaper. That’s just how the species rolls.

Dealing with that historic injustice might be that moral imperative but it’s clearly an expensive one. The request - nay demand - is for a very large sum of money after all. So, by demanding this be wrapped into dealing with climate change we are adding expense to dealing with climate change - we’ll do less dealing with climate change therefore.

By insisting that we deal with climate change in a more expensive manner we’ll do less dealing with climate change. That’s not the way to do it, no, really, Stern himself told us so.

Why blame BP for what BP does?

Or, perhaps, why blame BP for sticking to its knitting?

BP criticised over plan to spend billions more on fossil fuels than green energy

Company’s oil and gas investments for 2023 will be as much as double those on renewables

BP, as an organisation, is optimised to stick straws into fossil fuel reservoirs. Find those reservoirs, work out how to extract from them, do so then ship, refine and market the fossil fuels.

That’s simply what it does, what it’s good at.

Things like windmills, solar cells, batteries, hydrodams, tidal energy, fuel cells and on and on - they’re all different businesses requiring different skills. There’s no reason to suppose that BP is going to be any good at those other things - no more reason than thinking that Ford, or IBM, me, you or the baker around the corner are going to be good at them.

“Where you spend your money says a lot about your priorities,” said Mike Childs, the head of policy at Friends of the Earth. “It’s astounding that in the middle of a climate emergency BP is planning to invest billions more dollars on planet-warming fossil fuels than on clean, green renewables.”

Complaining that anyone is investing in fossil fuels could be wrong, sure, but it’s not a logical fallacy. That no one is investing in renewables - or not enough - equally has logical merit. But that BP, an organisation, isn’t spending on something it’s not optimised for is simply stupid.

If we do want more spent - sorry, “invested” - in renewables then we want the profits from fossil fuels to flow out of BP and into an organisation optimised for renewables. That is, BP ceases renewables investments and goes into run off - there’s no good reason why an organisation should outlive its usefulness - and simply shovels the cash out the door to the shareholders. Who then reploy that money into investments in renewables, through organisations optimised for that task.

But at that point everyone would be complaining that BP was sending money to shareholders to redeploy into the new forms of investment, wouldn’t they?

This insistence that oil companies must do not-oil is to grossly misunderstand how business works. It’s to think of it all as “big-stuff” which can just be retasked. The same logic which would have Siemens making bicycles, Airbus trains, Tesla airplanes and Raleigh the cars. After all, they’re all just transport businesses, right?

We'll venture a little prediction here

We’re told that China manages shipbuilding, that the managed shipbuilding is all to joint use standards - military and civilian - and that this gives China power over the European Union:

China’s domination of international shipping and control of key European ports would enable it to choke global trade in the event of a conflict with the West over Taiwan, an EU research paper has warned.

The paper, which draws on Chinese government documents, found that “there is a growing politicisation and militarisation of China’s civilian maritime sector” at a time of heightened geopolitical tensions.

Therefore, as sure as eggs is eggs, there will be a call for the European Union to manage shipbuilding in its turn:

The European share of shipbuilding has shrunk to 4 per cent from 45 per cent in the 1980s. The continent’s share of the global shipping fleet is down from 20 per cent to 16 per cent. EU governments ban state subsidies for shipbuilding but China has stepped up state aid.

“The pursuit of political control and security — maritime nationalism — has remained prominent,” Holslag said. “China considers maritime power as an important building block of its national power and crucial for its national economic security. China has vast maritime power. Contrary to other countries, most of its maritime assets are controlled by the state.”

Slippery slope arguments are only logically valid if it really is inevitable that the second stumble will follow the first. It is indeed inevitable that someone will start calling for the management - and subsidy - of shipbuilding within Europe as a result of this analysis.

This always does happen when a mineshaft gap is spotted. So, there’s that to look forward to in the New Year then.

Things that might be true but aren't obviously so

One of the reasons we structure science the way that we do is that there are many things that seem to make logical sense. Theories that can be floated, ideas that seem to run along entirely sensible lines. But it’s not always true that sensible and true are quite the same. So, we need to test the theories against reality. Much of science - when done properly - is in constructing the experiments to try to disprove the idea being floated. Also, the mark of good science is that when reality differs then it’s reality that wins.

Childcare and fertility rates is one of those things:

Affordable childcare is one way to boost Britain’s birth rate

Well, could be, yes. We can all see the logical connection there. If having a child becomes less costly to those having the child - the expenses don’t go away here, of course, they’re just rather more charged across the society though the tax burden - then we might well assume that more children will be had. Given the abortion numbers we can observe that the higher fertility rate is there in potentio, it’s an active choice being made for the children not to arrive. So, yes, could be childcare, could well be.

Except there’s no actual evidence that this is so. Society 50 and 70 years ago had less of that affordable childcare than it does now. The birthrate is lower now than it was then. Looking across European countries we don’t seem to see any correlation between childcare provision in the here and now and the fertility rate.

It’s not even true that the wider issues of maternity leave, maternity pay, the gender pay gap and so on correlate with fertility rates. Among the rich countries Sweden and the US can be considered as being at the opposite ends of the policy spectrum concerning those issues and yet their fertility rates are statistically virtually indistinguishable. And no, immigration (first generation immigrants tend to bring with them their home country fertility rates) isn’t the answer as Sweden has a similar to the US rate for that too (both countries about 14% foreign born).

Childcare costs limiting fertility just seems to be one of those theories that doesn’t have any actual evidence to support it - however sensible the logical process itself.

The mistake being made by the Effective Altruists

Given the day, an examination of a moral insistence:

This is the season for giving – a time when charities call for donations and the gulf between the haves and the have nots becomes particularly apparent. But how much good can – or should – you do, by opening your wallet?

Such are the questions posed by effective altruism (EA), a movement thrust into the spotlight by the arrest of its high-profile exponent, billionaire Sam Bankman-Fried, after the collapse of his cryptocurrency exchange.

That a seeming charlatan coopts a moral idea is not a reflection on that idea of course, charlatans do as charlatans can get away with.

However, there’s an error - a gross one - at the heart of this effective altruism idea.

“It’s really important to give to the most effective charities,” Singer contends, “because they can be not just 10 times but hundreds of times more impactful in what they do.”

The same utilitarian logic means the EA site 80,000 Hours (of which Singer is not a part) suggests supporters choose a high-paying career so they can donate more during their lifetime (a practice known as “earning to give”).

That’s where that problem is. There’s a more minor one here:

Many critics focus, in particular, on the enthusiasm of some EA advocates for “longtermism”: the argument that, because far more people will exist in years to come, maximising good means allocating a greater importance to the future.

The other way of describing - OK, one other way - longtermism is that we’re using a low to very low discount rate. If we use market interest rates then things that happen half a century out or more have very little value now. So, our actions now can - should even - disregard that half a century out and more. We should worry much more about alleviating hunger now than soil quality in 100 years’ time, more about shelter and heating for the cold now than CO2 levels in 200 years’ time - ah, you see the problem here?

We are also being told, at this very same time, that society should be using a low discount rate concerning that future in order to deal with climate change. The whole insistence of the body politic is that discount rates should be low - then people start to criticise longtermism?

Seriously folks, make up your minds.

The larger error though. The claim being made by effective altruism is that you go make the money then give it away. There absolutely is a place for charity, yes indeed (To break the collective identity here, the One Taka Meal floats my boat). But if the aim is to do the most for the most people then that’s not quite the thing to be doing. Growing a business that makes a profit is.

No, bear with us. Think of Schumpeterian Profits in the American Economy. Of the value created by entrepreneurial activity some 3% or so sticks to the hands of the entrepreneurs. On average, across economies and time of course. The vast majority of that value created flows to consumers in the consumer surplus they enjoy. That creation of the new or more efficient - which is what entrepreneurialism is - leads to consumers being able to have more than without that new and or efficient. They’re better off.

Two examples, as Jason Furman pointed out about Walmart the benefit to American consumers of the simple existence of the stores is some $263 billion a year (2005 numbers). The net present value of that might be around the $5 trillion level. That the inheritors of Sam Walton’s shares have $150 billion between them is trivial by comparison. The Amazon Effect is that online shopping, by squeezing inefficiencies out of the retail chain (in much the same base manner as Walmart, even if using the next technological step to do so), has lowered the inflation rate, per year, by perhaps 0.2% for a decade and more. Two decades possibly. That’s a 2 to 4% reduction in the cost of living for all Americans. Each and every year. In a $23 trillion economy. That’s somewhere in the $500 billion (OK, $460b) to $1 trillion range. Per year, we’ll let the net present value of that be an exercise for the reader. However much Jeff Bezos has is a triviality compared to that.

Back to that point about effective altruism - do what creates the most value for our fellow human beings. Making a pile of cash to give it to charity isn’t the point at all. The process of making the pile is. Of course, there are certain constraints here, must be by actual entrepreneurial activity, not the capturing of economic rents or political corruption and so on. But within the normal dictates of free market capitalism the creation of an organisation that produces value to consumers aids far more people far, umm, morely, than whatever is done with the pile of capital captured from that activity.

This is true whether the organisation is a workers coop - so not producing the grinning capitalist winner atop the pile of gold - or a charity or a capitalist organisation. The value created by the activity is far greater than the amount that is captured to then be given away.

Make the world a better place? Sure, a valid, even wondrous, goal. Providing something better, or cheaper, or previously unavailable, is making the world a better place.

WhatsApp is free and it provides some 1 billion humans with some to all of their telecoms desires. That’s a pretty good piece of altruism right there. Last time we checked Facebook employs a couple of hundred engineers to provide that. This is a greater or lesser piece of altruism than whatever the Zuckerberg Foundation is going to blow the cash upon?

In a free market and capitalist economy the way that money is made is by producing something that other people, voluntarily, purchase. They do so because what is being offered to them adds value to their lives. Creating a successful organisation (we carefully do not use “business” here, but by successful we do mean an organisation that adds value, that profits. The profit being the added value of the output over and above the costs of the inputs - by definition) that salves or sates some human desire is the most effective form of altruism there is. Beats charity by some orders of magnitude - simply because the benefits of that added value are so much larger than any sum that can be appropriated from the activity then given away.

Effective Altruism as a philosophy manages to entirely miss this really rather important point. The way to add more value to more lives is, well, to produce more value that people can enjoy and which improves their lives. The amount of this that is done by making stuff is vastly greater, by those orders of magnitude, than the amount that can be abstracted from it to then be shuffled off to Tristram and Jocasta to pay for the Land Cruisers with which they play Lady Bountiful.

What’s being missed in the philosophy of effective altruism is the effective part - which does seem to be a strange bit to miss for a philosophy so named.

What if today's strikers really are like the miners?

We think this is a very odd comparison by Ken Capstick:

The media damns striking nurses and ambulance staff as the enemy, just as they did the miners

For of course the miners were the enemy. The enemies of Gaia that is. Those coal mines all did need to close. The very same wokes and luvvies who used to collect money for the striking miners now collect to oppose the opening of that Cumbrian mine today. On the simple grounds that Britain has no place for coal mines - and, obviously, no place for coal miners.

Leave all that stuff about Thatcher and Scargill and battles aside. The mines needed to close.

Which is why we think this is so odd:

When mineworkers took strike action in 1984 to save their industry from a government policy aimed at its total destruction, Margaret Thatcher was quick to refer to them and their families as the “enemy within”. As strikes take place across Britain, the government’s response echoes the past.

Whether it be rail workers, train drivers, Royal Mail workers, barristers, postal workers, refuse workers, London Underground workers, air transport workers or our wonderful NHS nurses, the government finds itself determined to force through cuts in wages.

Odd because the comparison being made is, well, which of these groups should now be considered the people we should deliberately put out of work? For that is the comparison with the miners.

It’s possible to muse on this, obviously. Automation might well mean we need fewer train drivers and London Underground workers. The fall in rail travel might mean we need fewer rail workers overall. While we recognise the necessity of lawyers it is conceptually difficult for us to support their fees. Apparently, given those same Gaia concerns as trapped the miners, we should be having many fewer air transport workers as air transport is to become verboeten.

Which is, as we say, most odd. For if we are to consider how the current strikes are indeed exactly like those of the miners then the obvious comparison is with which of these groups should we soon enough stop employing altogether?

Which isn’t what we think Mr, Capstick means but it is what he says.

Ahhh, there we are, our Laffer Curve spotted in the wild

There are those confused enough to deny that the Laffer Curve exists. Which is only the idea that tax rates can be high enough to reduce the amount of tax collected. Note the “can” there, along with the equal point that tax rates can be low enough that revenue can be increased by raising such tax rates. The implication of this being that we’d like to know where we are with any specific tax - the answer will depend upon that specific tax and the structure of the society surrounding it. That peak rate will be lower in a country where people can avoid income tax by leaving the country than it will be where changing residency doesn’t free from the tax system as one example. So too the revenue maximising rate of a transactions tax will be very much lower than that of a consumption tax, both again lower than an income tax. The EU once found that a financial transactions tax of 0.01% was above the Laffer Curve peak while not even we would suggest that’s the revenue raising maxima for a VAT or PAYE.

But rates definitely can be high enough for us to spot Laffer Effects - that is, the withdrawal of labour which may or may not lead to that reduction in total revenue collected:

Rishi Sunak has been urged to lift “bonkers” tax rules on the size of pensions to stem the tide of over-50s retiring early.

Senior Tories have said the Prime Minister should increase or even scrap the lifetime allowance because it acts as a “perverse incentive” to quit.

Number 10 is attempting to reverse a sharp rise in the number of older people choosing to leave the workforce since the Covid pandemic.

Mel Stride, the Work and Pensions Secretary, has been told to come up with ways to incentivise over-50s to stay in and return to their jobs.

The lifetime allowance currently stands at £1,073,100, having been reduced from a high of £1.8 million just over a decade ago. Pensioners are typically taxed 55 per cent on any earnings they withdraw from their pension pot above that amount.

Highly - and expensively - trained and experienced doctors are retiring when there’s still a decade and more of use in them simply because the tax rates are too high. The obvious answer is reduce the tax rates.

So, let’s do that, reduce the tax rates. The simplest method of doing this is simply to abolish the lifetime limit on pension pots. After all, we like people saving. At that macroeconomic level savings will equal investment and no one observant has been complaining that there is over-investment in the British economy in recent decades.

This is not a political point, nor is it some creation of neoliberal phantasies or anything. This is plain and obvious evidence, like a nose upon a face level obviousness. People are withdrawing their labour because the tax rate upon the income from that labour is too high to produce the incentive to work. So, they don’t.

We would add in some little piece of neoliberalism though. Which is an observation about these tax rates faced by these highly paid professionals and which produce this obvious effect. The combination of taxes and benefit withdrawals produces very similar marginal rates amount the poor. Who therefore also don’t supply their labour - or more of it perhaps - into the market. We are not therefore stating that we should ease off on taxing the rich alone. Rather, we’re shouting that we should lower the tax burden on all in order to make us, in aggregate, richer.

You know, stop taxing people so much that they stop working.

Porsche has just solved climate change for us

Or at least a very large chunk of the climate hange problem is solved.

As Steiner explained, the e-fuel plant will use wind power to electrolyze water into hydrogen and oxygen. The hydrogen is then combined with carbon captured from the air or industrial sources to synthesize methanol, which in turn can then be converted into longer hydrocarbons to be used as fuel. The synthetic e-fuel is a direct drop-in for pump gasoline,

As we’ve been saying for some time now if we can have cheap green hydrogen then we are indeed done. True, there then has to be some Stinks work but nothing difficult. If we’ve hydrogen and CO2 then we can make methanol, gasoline, aviation fuel and, obviously, methane. All of which will be net zero carbon.

The synthetic e-fuel won't be exactly cheap—Steiner thinks at current prices, it works out to around $8 per gallon ($2/L),

We’d not want to run the world’s airfleet on something at that cost but we most certainly could do. And it would almost certainly be cheaper to do so than to junk everything we’ve already got and start using Zeppelins instead. Most of Europe has been paying €2 a litre recently and while it’s a dent to the pocketbook internal combustion engines are still cheaper than electric cars right now covering all running costs.

This also largely solves the battery problem. We know how to stock, store, transport and use at our leisure - gain dispatchable energy from - such chemical constructions.

So, we’re done. As long as all of those laws banning ICEs, banning gas boilers and all that are rescinded.

This also shows us exactly why we should deal with the problem through the carbon tax, not through planning and the government picking of losers. We desire to use the solution to the problem which does that solving at the lowest cost. Which is why we use the - suitably adjusted - price system. To work out which is doing the solving at the lowest cost.

Our intuition here - intuition being a posh word for lightly informed guess - is that at these prices this solves aviation and comes close to dealing with cars. But doesn’t sort out the house heating problem. But that’s OK, this is the first plant, the pilot one. As we keep being told about solar, windmills and all the rest, it’s the building of them in volume that reduces costs. So we’ve still that to look forward to.

That gender pay gap wholly and entirely explained

On single sentence here aids in explaining the gender pay gap:

They started living together only two weeks before Sonny was born, and got married when he was 14 months old; they now have four more sons. At about the time they became a couple, Richard and his bandmates formed the Feeling. “I definitely felt a massive drive to up my game,” he says.

“They” include Sophie Ellis-Bextor which gives us the opportunity to parade our age and dodderiness. We’ve been around to see that whole cycle of “Who?” “Rising talent” to “Established star” and back to “Who?” again. In fact, we’ve been around long enough to recall the scandale bénin concerning Ms. Ellis-Bextor’s brother.

This does mean that we’ve also been around long enough to note that often enough there’s a gendered reaction to the arrival of children.

As the TUC says:

Fathers working full-time get paid a fifth more than men with similar jobs who don’t have children, according to a new report published by the TUC

That’s before accounting for age, education and so on - higher ages are associated with a greater probability of being a father of course. But the effect is still there when all of those other factors are accounted for.

The report shows that dads who work full-time experience, on average, a 21% ‘wage bonus’ and that working fathers with two kids earn more (9%) than those with just one.

The findings are in stark contrast to the experience of working mothers, says the report. Women who become mothers before 33 typically suffer a 15% pay penalty.

That mothers have that pay penalty is just one of those standard scientific facts:

Mothers tend to receive lower wages than comparable childless women. This ‘motherhood wage gap’ has been reported in numerous studies.

The possibly excessive period of child helplessness - even for mammals - among humans means that we’re, largely enough, descendants of those who pair bonded. That appears to have effects among us now over who does what.

At which point Occam’s shaving kit comes into contention. We would like to explain this world around us and the simplest explanation is often the best. It is possible to explain the entirety of the modern world’s gender pay gap with just these two points. Fathers get paid more, mothers get paid less. Not men get paid more, women less, but that event of parturition leads, on average and across the society, to slightly different behaviours among men and among women.

This isn’t inevitable, if men and women acted differently - say, there was an entirely equal distribution of primary child caring on average across all couples - then the effect would disappear.

We can also muse on whether we should change this, how we would and even whether we could. But it’s still true that a significant part of that gender pay gap is simply that the arrival of children incentivises men to up their game. Yea, even bass players.

Now what?

On this idea of climate funding, climate reparations

One of today’s insistences is that the rich nations - you and me effectively - must pay up to the poorer countries for climate change. Amounts vary. Some say $100 billion a year and rising in order to pay for the expenses that climate change will visit upon the poor. Others are talking trillions to cough up for reparations for this and that. And, well, there’s a certain problem with that idea.

We know very well that some countries aren’t going to gain such cash. Assume - just for the giggles - that the trillions per year are offered up. It’s still true that North Korea isn’t going to get a cheque because that would just mean more missiles being fired over Japan.

Hmm, OK. But what’s the cut off point of who doesn’t get the money? That’s where it gets interesting.

Agreed, we’re somewhat out of sync with the zeitgeist on this, the only reason we know of for continued national poverty is bad government. Others differ on that. And yet, well, there are some that wouldn’t gain cheques under even the most liberal of such regimes. Or at least should be some.

This is a decade old and more but:

Equatorial Guinea has become the richest country, per capita, in sub-Saharan Africa since the discovery of oil and natural gas reserves in the 1990s, yet the majority of its people remain extremely poor. Despite its increased wealth, the realization of the rights to food, health and education has declined. These retrogressions are documented in CESR's statistical analysis of the country's economic and social rights outcomes relative to its resources. According to official UN data, GDP per capita is over US$26,000, yet almost two-thirds of Equatoguineans still live on less than US$1 a day. Access to health and education has deteriorated as the country's economy has boomed. The proportion of children dying before age five has risen in the last 15 years and is now higher than some of the poorest countries in the region.

There are rumours - rumours mind! - that the oil money goes to the Presidential family and little further. There have been mutterings that earlier Angolan governments might have done something like that, maybe. A daughter of a previous President of that country has been declared, more than once, to be the richest woman in Africa for example, owning many Portuguese assets. Burma’s a military dictatorship again isn’t it? So no money for them.

And so on and so on:

Eskom, the state power provider, was hollowed out by plundering and mismanagement under much of the rule of the African National Congress (ANC).

Sending money off to either prevent or even make up for climate change does rather depend upon the idea that the money sent off will either prevent or make up for climate change. So, which places are poor enough that they need or deserve such but also well enough governed that they’ll make good use of it?

One of us was at a university talk shop just recently and we were told that COPwhateveritis had decided that $8 billion was about the right sum for South Africa. Well, OK and maybe. But who believes that if Jacob Zuma were still in power then the $8 billion would do much useful? Or if Mugabe were still deciding on what to do with however much Zimbabwe were to be awarded?

Entirely true, there are places doing well from a standing start. Bangladesh has been growing at 6 and 8% a year for a couple of decades now - Pakistan not so much. It’s not obvious that a place growing at 6 and 8% a year can usefully absorb much more outside cash and the places that are still at that startline quite possibly wouldn’t use it well.

It’s obvious that even if the cash is stumped up then some won’t get it on the grounds of incompetence, venality or plain barking madness. Which does lead us to that very interesting rumination.

OK, who?