Brexit hasn't increased food prices

The problem here is not Brexit, it’s the reaction to, the policies that follow, Brexit:

Brexit has fuelled surge in UK food prices, says Bank of England policymaker

Not really, no. There is a sense in which it has, the pound fell in foreign value, so imports become more expensive. But that’s not the manner in which we’re being told that prices have been forced up:

Researchers at the LSE’s Centre for Economic Performance warned last week that Brexit had added almost £6bn to UK food bills in the two years to the end of 2021, with border delays, red tape and other costs increasing the price of food by about 3% a year.

Dhingra said three-quarters of UK imports were from the EU, which meant “naturally, if non-tariff barriers start to kick in there, we are going to see that – not fully but manifest to some degree – in food prices.”

We agree that all of those are bad things, will have pushed food prices up. But they’re not the result of Brexit. They’re the result of policies adopted after Brexit. One of the major points about Brexit being that we’re able to make our own policies for ourselves of course.

So, if we find the costs of these non-tariff barriers to be too high to bear then let’s stop having these non-tariff barriers. On the grounds that we find them too high to bear.

Perhaps the benefits of those barriers are higher than £6 billion. We think it doubtful but then we’re free traders after all. But if no one can point to any result from them which is worth the £6 billion costs to us then let’s do away with them.

After all, the aim and point of Brexit was that we can have local policies for local people. So, let’s do that, have local policies that benefit local people.

Galton's Ox and free speech

Apparently the new bill isn’t going to be very good:

It has changed from its initial intention – to focus on online abuse and harassment – into a clarion call for “free speech”, thanks to the work of Kemi Badenoch, an excuse that is often used by those who spew hatred as a shield for their online abuse.

Free speech has its moral and ethical value of course. But it’s also an intensely pragmatic issue. As Galton’s Ox illustrates. Galton observed that the crowd, estimating the weight of the ox, did, on average, get very close to the real number. That is, the average of all guesses was close. As the full Wisdom of the Crowds argument goes on, it’s necessary to have the uninformed and even wildly wrong guesses included for this to be true. As soon as we limit the sampling to the in crowd, or the cognoscenti, then we get both groupthink and a decline in the accuracy of that averaged set of guesses.

That is, if we’re to worry about hate speech - say - in free speech then we need the free speech, in all its glory and vileness both, so that we can work out what actually is hate speech. Just as we need the free speech in that larger sense to be able to make sense of the world around us. It’s precisely that all can have their say which provides the accuracy.

Fortunately this also speaks to this idea:

We are, in a sense, getting the bill we deserve from the politicians we deserve: not a very good one, from not a very good lot. It’s a shining beacon of mediocrity; of people too stupid to understand the nuance of one of the most nuanced-filled areas of our modern lives, over-promoted into positions of power and thinking they know better than researchers who have spent their lives looking at these issues.

Well, yes, we share the suspicion that the sausage making machine doesn’t lead to good things being enacted by the clever people. But then if that is true then that’s an argument for not allowing politics into those areas of life where we’ve got any better possible solution. Use politics only where we absolutely have to and leave everything else - speech say - to be free. Oh, and researchers who have spent their lives etc. will merely be that groupthink we need to avoid.

Which does leave the solution here rather simple. Retain those two common law ideas - however encoded into legislation - of libel and incitement to immediate violence and leave everything else well alone. Or, you know, the speech problem is solved by leaving speech to be free.

The problem with that detailed governmental management

The particular problem being that government isn’t very good at it. Nesrine Malik, in the usual Guardianista complaint about it all being racism and money, does make one good point:

…. a limited number of university places to study medicine

Well, yes. It’s been obvious for some decades now that medicine - especially GP services - is becoming (sorry, has become) a majority female occupation. Nothing wrong with that, the flowering of individual talent is to be welcomed in fact. Except there are obvious changes that also have to be made. Given maternity leaves, choices about part time working while children are young and so on, it’s necessary to train more doctors in order to have the same number of hours and days of doctoring being done.

Nothing wrong with those choices either - it’s just that whoever it is that plans the training system for doctoring needs to adapt that system for the changes. Government does that planning and government didn’t. So much for the efficiency of government planning then.

It’s also possible to note bad planning the other way:

Plans to overhaul NHS pension rules have been set out by the government in an attempt to retain more senior doctors in the health service.

The problem is the limitation on the size of lifetime pension pots. Save enough from a working life to breach this limit and pay for additional work can be taxed at vast rates, 80% easily and for some unfortunates over 100%. This particularly bites on doctors for three reasons - generous pensions, high rates of pay while working and the third, well the third is that we actually notice a shortage of doctors in a manner we don’t some and many other professions who might be in the same situations.

That root problem is the lifetime limit on pensions pot sizes. But government management is, as evidenced here, to fiddle around with the rules for doctors only. Instead of the obvious solution, to lift the limits on lifetime pensions pots. For there are other professions and working lives which are affected, in exactly the same way, by those same rules. So, planning would be to change the rules causing the problem, not fiddling at the edges with special rules for the one manner of earning a living.

As we can all note, that’s not what is being done. The root problem is not being addressed.

So, the problem with govenment planning? That government planning isn’t very good both in what it doesn’t take into account in its plans and also in what it does do when it does plan.

Not exactly grand recommendations for a system there. Perhaps we should stop using it?

Dominic Lawson misses a little trick here

It’s entirely true that public sector wages, properly measured, are higher than private sector:

It is true that the pay of public sector workers has been squeezed, relative to the private sector, since the Conservatives came to power in 2010. But at that point what the Office for National Statistics calls the “modelled average public sector earnings premium” (compared with the equivalent job in the private sector) had risen to 10 per cent. Given the typically superior job security, holiday allowances and, above all, pensions in the public sector, that was clearly unsustainable.

That is after all those necessary adjustments for age, jobs done, educational levels and so on. They, being paid by us, are living better than we do.

However, there is still that trick being missed:

One thing these disparate groups have in common is a form of pension that has now all but disappeared outside the public sector: the TOCs’ employees are highly unusual in this respect. I mean the defined-benefit variety, whose beneficiaries are guaranteed a pension linked to their earnings and indexed to inflation.

Yes, entirely so. But isn’t that included in the ONS calculation? It does say including pensions, doesn’t it? Well, no:

Employer and employee pension contributions

For ONS is measuring what is paid for those pensions, not the value of what is received in those pensions. The point being that - as a result of taxpayer subsidy, of course - each £ of public sector pension contribution buys more value in pension paid than the equivalent £ paid in the private sector does. Because defined benefit pensions are more valuable than defined contribution ones.

The truth is that - on average and across the sector - public sector workers are vastly better paid than private sector. Over and above that measured premium and as a result of the greater value of pensions paid, rather than pensions paid for. At which point, of course, it’s possible to ponder whether that earnings gulf is something we’d like to continue.

Possibly, when the economy is less than stellar, we should be asking the public sector to share our pain? Or at least, force them to tell us, in detail, why they shouldn’t?

How wondrously glorious that farmers make such small profits

We do think this is an absurd thing to complain about but then the modern left, you know:

UK farmers making tiny profits as supermarkets boast record takings

As the report itself, from Sustain, goes on:

For a 480g pack of mild cheddar purchased in a supermarket the dairy farmer has high production costs of £1.48 yet receives in profit 0.02% (much less than a penny) of the selling price of £2.50.

For a 350g four-pack of beefburgers….receives in profit 0.03% (far less than a penny)

For a loaf of bread, the cereal farmer has costs of 9.03p yet receives an almost negligible profit

For 1kg of apples purchased in a supermarket (about 6 apples), the apple grower has costs of 76p, yet receives in profit just 1% (3 pence)

Isn’t this glorious? For it’s the proof of the free market creed. It’s entirely true - as Steve Keen keeps pointing out - that there’s no truly free market anywhere. As we don’t have an infinite number of producers of anything with zero costs of market entry then we don’t have anything that truly and wholly meets those theoretical strictures of what is a truly free and entirely competitive market.

On the other hand, with farming we do have some billions of farmers globally which is probably enough to at least asymptotically approach such an infinite count of suppliers. Entry costs at the small scale are really very low - most local councils will rent you a starter farm for £100 a year or some such even if we do normally call them allotments.

So, we’re really very close, with farming, to that model of a truly free and competitive market. The end result of which is that the producers make from near no to no profit. Well, there we go then, our proof of the desirability of a free and competitive market. In one the capitalists, the producers, make near no profit. Job done, extraction and exploitation - expropriation of the worker’s sweat of hand and brow even - destroyed.

Given that we’ve now got our proof all else that is necessary is to insist upon having free and competitive markets in every other area of life. At which point the cruel rapine of capitalism is destroyed. Super - job done.

Next question?

We can't help but think there's a simple solution here

One of us is a millionaire, the other a care worker. The cruel divide between rich and poor disgusts us both

Julia Davies and Winsome Hill

Well, let’s see now. We doubt that it’s beyond the wit of womankind to work out how standing orders work. A couple of hundred pounds a week sent from one account to t’other - £10k a year say - would seem to solve matters. After all, a large part of the initial observation is that such a sum would make no difference to the one while it would radically change prospects for the second:

The cost of living crisis affects all of us, but it doesn’t affect us equally. One of us struggles to afford the spiralling price of the weekly shop, while the other can shop as before, unaffected by rising food prices. One of us fears turning on the heating to keep her house warm, while the other can heat her home and travel for some winter sun without a second thought.

Well, get on with it then.

Or even, as we’ve been pointing out for 16 years now.

Economists have a handy term called “revealed preferences”. In colloquial English it means “look at what people do, not what they say, and certainly never take notice of what they say others should do”.

Yes, and this leads to the idea that we can test who really believes by what they do:

LAST YEAR there were five people in Britain who thought that their taxes were too low. No, this isn’t the number of people who have called for higher taxes. Rather, it is those who were so convinced of the righteousness of state spending that they voluntarily sent extra money to the Treasury.

That’s not a large portion of the population there. It’s not even a large portion of the millionaires in the country.

Cheques, by the way, should be made out to “The Accountant, HM Treasury”, and sent to 1 Horse Guards Road, London SW1A 2HQ. A 2nd-class stamp is sufficient and you are encouraged to add a covering note so that your donation is spent in the way you like.

When the tax’n’spend brigade show us their thank-you notes, we should listen: until then we should ignore them and insist that our money remains, fructifying, in our pockets.

Not that we’d actually put it in this manner, dreadfully demotic and even crude as it is. But until we do actually see those voluntary sums - and the thank you letters - we’re likely to conclude that those moaning in this manner are full of it.

Politics isn't a good way to do things

Sometimes politics is a necessary way of doing things, but it’s still worth remembering that politics is a bad way of doing things. The necessary part meaning that sometimes politics is merely the least bad way of doing things.

Take investment. Thurrock council took upon itself the task of investing. This did not work out well:

A Tory-led council has admitted a series of disastrous investments in risky commercial projects caused it to run up an unprecedented deficit of nearly £500m and brought it to the brink of bankruptcy….which reveals it has lost £275m on investments it made in solar energy and other businesses….Thurrock had become one of the most indebted of all English local authorities in recent years after borrowing £1.5bn – 10 times its annual spending on local services – to enable a string of investments in solar energy and other businesses…..including hundreds of millions lent to companies owned by businessman Liam Kavanagh to invest in 53 solar farms….. borrowing cheaply from the Treasury and investing….

They’ve managed to borrow at below commercial market rates, invest in one of the country’s boomingest industries - solar is nine times cheaper than other forms of electricity generation isn’t it, while it still gets paid full market rate? - and by doing so lose some vast portion of the cash?

OK, good, so government doing the investing on behalf of wider society isn’t something that works then.

We’ve also George Monbiot shouting at us again:

The three sectors that appear to be most responsible for the collapse of ecosystems and erasure of wildlife are fossil fuels, fisheries and farming. In 2021, governments directly subsidised oil and gas production to the tune of $64bn (£53bn), and spent a further $531bn (£443bn) on keeping fossil fuel prices low. The latest figures for fisheries, from 2018, suggest that global subsidies for the sector amount to $35bn a year, over 80% of which go to large-scale industrial fishing.

Let us take fishing as our example there. This is an area where government and politics is necessary. Simply because we face a commons problem. As Elinor Ostrom gained her Nobel for: inshore fisheries, with their low number of resource exploiters, can largely be left to social pressure and management among that small number of exploiters. This is not a system that works at larger scale, on high seas and deep ocean fisheries. There the number of would-be exploiters is just too large therefore we’re in Garrett Hardin’s world of the commons tragedy. This requires political action - either the creation and allocation of property rights or detailed regulation.

As it happens we know the solution here. Regulation to insist upon - large - no fishing areas and individual transferrable quotas for fishermen in those remaining areas which may be fished. The reason for the private property, rather than direct regulation, approach is that the most profitable stock levels in a fishery are well above the sustainable population levels in that same fishery. People make more money by leaving a higher than necessary to merely replicate bioload because then it’s easier to catch fish that way.

But our problem is that while we’ve known that this is the solution for a couple of decades now politics is remarkably, pathetically, weak at delivering it. It’s really only the Australasians and some parts of the Alaska fisheries that have. The entire EU - which insists that fisheries is one of those central (no, don’t laugh) competences - both knows this and also insists that it’s not the system to be used.

Politics isn’t a good solution even when it’s the necessary one.

We could even have a glance at emissions:

Free pollution permits worth €98.5bn were given to energy-intensive sectors including steel, cement, chemicals and aviation from 2013-21. This is more than the €88.5bn that the EU’s emissions trading scheme (ETS) charged polluters, mostly coal and gas power stations, for their CO2 emissions.

In theory cap and trade should be as good as a carbon tax. There are differences - cap and trade produces a known emissions level at an unknown price, tax produces a price but an unknown outcome. But they should be equally effective - given the correct price - at reducing emissions. We here have long favoured the tax route because it means less politics. Politicians have long preferred cap and trade because it means more politics. As we can see more politics makes things worse - for the politicians never have been able to bring themselves to do the necessary, charging for all emissions permits. There’s far too much fun and power to be gained by listening to the importunings of those who would have them for free.

Politics is just a terrible way to get things done. Therefore we should reduce our use of politics as a method of getting things done to that irreducible minimum of where that politics is the least bad method of dealing with the real problems the universe throws at us. That is, if there’s any other possible solution at all, other than politics, then use that instead.

Who knows? If we restrict the remit of politics enough, strictly confine the political process and politicians to only those things that absolutely must be done through that process, we might end up with decisions informed by the occasional damn clue.

JOLTS and job markets

There’s an American report called JOLTS. It’s a deeper look at the labour markets over there. Not just how many are unemployed, but how many have been fired, how many hired and how many quit and how many hired. So, it’s a look at the flow through employment - the unemployment number being those who are fired or quit but don’t get hired, the stock of unemployment.

ONS tracks the same numbers over here but not in quite such a regular or even noted fashion.

Over 55s most likely to lose their jobs to robots, study finds

Up to 10 million UK workers could be replaced by artificial intelligence within 15 years

There are those who work beyond retirement age, we agree, but we’d expect the number of over 55s who will lose their jobs within the next 15 years to be asymptotically approaching 100%. But that’s just headline writing. The underlying:

Staff aged over 55 are more likely than any other group of workers to lose their jobs to robots, the first study of its kind has found.

The research by University College London (UCL) economists found nine in 10 workers aged over 55 were made redundant as robot technology replaced humans for “routine” tasks.

By contrast, 70pc of younger workers kept their jobs after retraining and switching to higher skilled more “abstract” jobs either within their own firm or another business, according to the study of 16,000 firms employing millions of staff.

It follows industry estimates that as many as 10 million UK workers are at risk of being replaced by robots within 15 years as the automation of routine tasks gathers pace.

We don’t see anything all that unusual there. The incentive to retrain - whether from the worker or the employer - when there’re 30 years of working life left to amortise that retraining cost will be higher than when there’re merely those few years to retirement anyway.

But back to JOLTS and the ONS figures. What we really want to know is whether this is all some terror, the headlight on the train approaching through the tunnel, or merely some glimmer of daylight. Those flow numbers of employment telling us that around and about 10% of all jobs get destroyed each year, around and about 10% of all jobs are newly created each year. A rough number, yes, but it’s not 1% and it’s not 100% - we’re in the right order of magnitude there at least.

The jobs created are very rarely exactly the same as those destroyed - there’s near always at least some technological shift or movement across sectors involved.

We expect, in this coming 15 years, to see 150% of the jobs in the country destroyed and recreated with that jump to the left or the step to the right. The claim here about 10 million is some 30% or so of all jobs over that 15 years. We’re also told what the compensatory mechanism is - folk get retrained when it’s worthwhile their being so.

We might well mutter that we’d prefer technological change to move a little more slowly so that there’s no one left unemployed - for those technological reasons - in the run up to the Golden Years. We might also insist that we want it to work faster. Technological change is not just akin or related to rising productivity it is rising productivity.

Our point here though is different. There’s nothing very unusual about this. We’ve been doing it these past 250 years as that capitalism and free market mix brought about constant and consistent technological advance. Given that there’s nothing very different going on now than has been happening this past couple of centuries we tend to think it’s not something greatly worth worrying about.

The absence of it, now that would be that light at the end of the tunnel and it wouldn’t be the daylight.

If only John Harris would think for a moment

In the corner of Somerset where I have lived for nearly 15 years, life in late-Tory England grinds on.

This is Frome, a place the surrounding locals think is more than a little different. Almost like Wiltshire if such a horror can be imagined.

Meanwhile, a lot of local angst is now focused on an ever-increasing number of new housing developments: a huge local story….

Indeed so, much the same is happening in Peasedown St John too.

The Conservatives’ 2019 manifesto promised that the government would trigger the building of 300,000 new homes a year, which inevitably entailed a sizeable loosening of the planning system. But proposals for drastically changing the rules and introducing new liberalised “development zones” were dropped after revolts led by Tory MPs, largely from the south of England.

Yep.

If you live and work in a city, imagining the opponents of new development to be a bigoted shower and endlessly shouting “nimby” at them is easy. But take a closer look at what is actually happening across the country, and you might come to a more nuanced opinion.

Ah, nuance. No, there’s no nuance here at all. It’s simply the result of rank idiocy.

Last Thursday I went to a packed-out meeting organised by our town council to discuss plans for a huge “garden community” of 1,700 homes – housing about 7,000 people – to be built on fields beyond the edge of town that many people see as the area’s green lung.

The mere idea that there are 7,000 - more - people who wish to live in Frome is a shocker to those who know the locality. So, something must be called into evidence to explain that. As well as the absurdity that people seem to be, voluntarily, buying new builds in Peasedown St John of all places.

The answer being that no one is allowed to build housing where people would actually like to live. Midford, Freshford, Monkton Farleigh, Monkton Combe, Combe Hay, South Stoke and so on (for a moving pictures view of these places, the area the Titfield Thunderbolt was filmed in). Or even Lyncombe Vale - all would still avoid Combe Down of course - and other such delightful areas as Dunkerton etc.

So, why is the housing not where people would like it to be and why is it therefore dumped in Frome, where the locals don’t want it and those who will have to live in it don’t want to be?

Because the Green Belt is not just around London. There’s one around Bristol and Bath as well. Peasedown and Frome are just outside it. So, all the housing that could be, would be, where people wish to live is now where they don’t.

There’s no nuance to this at all, it’s simply the imposition of the metropolitans and their prejudices upon the people who actually live - or perhaps better, would like to live - in England’s green and pleasant pastures.

Given that there’s no nuance to the problem there’s no nuance to the solution either. Simply blow up the Town and Country Planning Act 1947 and successors. Proper blow up, Kablooie.

Nobody does actually want to live in Frome so why have a system that forces them to do so?

It's amazing what people will complain about

We’ve had some years now of direct action against landlords of residential properties. Limitations upon the deductibility of the costs of running such a business- the finance costs on a mortgage for example. The loading on of capital costs - at the same time as limiting the deductibility of finance costs - in the form of legally mandated energy efficiency standards. Mutterings about how people really shouldn’t be allowed to either market as they wish, nor change their minds about who they are renting to - there’s that considerable movement arguing that “no-fault” evictions should be banned.

All in all the costs of owning a property which is then rented out are rising. Therefore:

…adding that buy-to-let landlords face a severe financial squeeze over the next few years and many could sell up, further reducing supply.

Reduced supply and, as a result of other factors, increased demand (other factors including 500k net immigration, working from home leading to more space being desired for each resident, falling house prices making purchase seem unattractive and so on) then leads to:

London estate agent Foxtons has reported a 22% year-on-year surge in rents in the capital in the first nine months of 2022. The average rent hit a new high of £571 a week – about £100 higher than at the beginning of the year.

Record numbers of new renters registered in the third quarter: there were 30 for every property listed, which is around three times recent levels. At the same time, supply has dwindled: new instructions from London landlords have fallen by 18% in the first nine months compared with a year ago.

And of course everyone is complaining that the rent’s too damn high. That is, people are both cheering the restrictions upon supply and also complaining about the effect upon prices of that restriction of supply. Which does lead to a certain amusement at what people will complain about.

Perhaps, in order to clarify this for people we need to produce some sort of academic study here. Or even invent a whole new field where we can outline that interaction of supply, demand, pricing, of housing.

One minor problem would be what to call this new study. Inventing some -ology sounds a bit too Maureen Lipman really. Something Latinate would revolve around familiar procuratio and procuring has an unfortunate echo in English. Perhaps we should delve back into that Greek so beloved of the last PM but one (or however many it is by now) and modify ο'ικονομία in some manner.

The major problem would be that faced by any new such academic exercise. How many centuries would it take people to believe a word of this new science? Past experience suggests too many.