Submission: Competition and Markets Authority's Facebook, Inc / Giphy, Inc merger inquiry

Submission: Competition and Markets Authority's Facebook, Inc / Giphy, Inc merger inquiry

The Adam Smith Institute has joined with the Competitive Enterprise Institute in a submission to the Competition and Markets Authority’s (CMA) investigation into the completed acquisition by Facebook, Inc of Giphy, Inc. The submission was jointly submitted by the ASI’s Head of Research, Matthew Lesh, and the CEI Vice President and senior fellow Iain Murray.

Life With Covid: Boosting vaccines, injecting resilience and protecting liberty

The Adam Smith Institute’s latest paper, written by Senior Fellow James Lawson and Head of Research Matthew Lesh, outlines how to protect human life while not re-entering lockdowns in the face of endemic Covid-19:

  • The rapid rollout of vaccines against Covid-19 is protecting the vast majority of vulnerable people and the wider adult population, significantly reducing the virus’s capacity to spread and kill, and accelerating the end of the pandemic.

  • Covid-19 is becoming endemic with substantial ongoing community spread. The virus is also mutating, producing variants. There is uncertainty about our capacity to respond to a rise in cases over the winter months.

  • We must learn to live with the virus while maintaining liberty. This can be enabled by boosting the UK’s vaccine campaign and developing greater societal resilience against Covid-19 and future pandemics.

  • The UK is enjoying a “vaccine dividend” which is disrupting the link between Covid-19 cases and deaths by as much as 90%, saving around 50,000 lives in the most recent wave of cases.

  • It is imperative to ensure restrictions are withdrawn and not reintroduced by building sufficient resilience. 

  • The UK’s vaccine campaign was a success but could have gone even faster. There are lessons to be learnt in multiple areas including around “war-effort” style distribution, use of spare doses, pacing, dosing schedules, reward mechanisms, new supplies, mix-and-matching doses, vaccine centre ventilation and safety, and countering misinformation. 

    • There are about 2.1 million vulnerable (“Phase I”) individuals who are entirely unvaccinated and 600,000 yet to have a second dose. There are 10.4 million adults who are entirely unvaccinated — which, if they catch the virus, could result in 39,600 deaths and 148,000 hospital admissions. 

    • There are many receptive to vaccines yet unvaccinated and growing evidence that there may be waning efficacy over time.

    • The UK is falling behind other countries that have vaccinated more people, such as France, and begun providing booster shots, such as Israel.

    • There is also a lack of transparency about forthcoming vaccine supply and efforts to update or procure next-generation vaccinations.

Recommendations

  • If the Government wants to maximise the effectiveness of the vaccine campaign, protecting human life and increasing resilience, they should take the following steps: 

    • 1. Redouble efforts to vaccinate those in the “Phase 1” vulnerable group who are due a second dose and/or completely unvaccinated, including using mobile vaccination units and home visits — providing protection to those most likely to be hospitalised or die. This would make the most immediate contribution towards reducing hospitalisations and deaths, and building resilience.

    • 2. Begin providing boosters, which are essential to maintain protection against waning antibody immunity, the Delta variant and future threats; prioritising the vulnerable but also offering a booster to the entire adult population.

    • 3. Publish a detailed roadmap for Covid-19 vaccinations over the next five years, including an upcoming delivery schedule with plans for a backlog of boosters.

    • 4. Update regulatory process to enable rapid approval of vaccine updates every time there is a new variant of concern, following the annual flu vaccine process.

    • 5. Purchase a diverse range of new Covid-19 vaccines including updated Delta-variant specific vaccines and oral/nasal and “universal” vaccines. 

    • 6. Embrace “mix-and-match” doses, to enable greater supply flexibility and enhanced protection.

    • 7. Offer vaccination to children aged over 12, with parental/guardian consent. This should be undertaken without coercion or implied restrictions, mirroring the rules of other vaccines offered to children and as a lower priority initiative than boosters for the vulnerable.

    • 8. Counter misinformation to address vaccine hesitancy and enhance targeted marketing and distribution for those who are ready and willing to be vaccinated but have yet to make bookings. 

    • 9. Offer the flu vaccine across the entire population — not just to those aged over 50 and vulnerable — to build resilience against winter spikes in respiratory diseases, hospitalisations and deaths.

    • 10. Permit pharmacies and private doctors to purchase, distribute and register vaccines from the international market, enabling more flexible boosters, greater vaccine choice and enhanced distribution capacity.

    • 11. Support expanding human challenge trials to rapidly test updated and new vaccines.

  • If the Government wants to avoid ongoing restrictions, protect liberty and increase broader societal resilience, it should take the following steps: 

    • 12. Allow the ‘Coronavirus Act’ to automatically lapse and introduce new limited emergency mechanisms, including extensive parliamentary oversight, for future public health-related emergencies.

    • 13. Reject ‘vaccine passports’, a form of state-sanctioned discrimination that would effectively coerce some people into undertaking a medical procedure without informed consent (but maintain venue-customer and employee-employer freedom of contract).

    • 14. Establish an enhanced antibody testing capability, better informing individuals about their levels of protection and public health officials about overall societal resilience.

    • 15. Simplify travel restrictions further to encourage global economic activity, with better collaboration with airlines, a further easing of restrictions for the vaccinated, and a simplification of the “test to release” scheme.

    • 16. Encourage, using guidance, ventilation through continued al fresco retail, hospitality, and leisure activity, use of outdoor heaters and better ventilation in schools as they reopen.

    • 17. Encourage, using guidance, for vulnerable people to use masks with respirators, such as N95, KN95, FFP3, and FFP2, rather than less protective cloth or surgical masks.

    • 18. Proactively invest in new and emerging treatments to tackle Covid-19, such as monoclonal antibody therapy drugs (i.e. Ronapreve, Sotrovimab, AstraZeneca’s AZD7442), antiviral treatments (i.e. Pfizer’s PF-07321332/Ritonavir), and other emerging drugs (i.e. fluvoxamine).

  • If the Government wants to ensure medium to long term resilience against pandemics, it should take the following steps:

    • 19. Review medical regulatory processes to accelerate the assessment, approval, supply and distribution of new vaccines.

    • 20. Expand manufacturing and logistics capacity for rapid production of vaccine updates and new vaccines against future pandemics.

    • 21. Invest in vaccine platforms and proactively assess viral threats on an ongoing basis, developing fast-moving responses.




It’s easy being green: Embracing nuclear energy, a border-adjusted carbon tax, and clean free trade

The Adam Smith Institute’s latest paper, in conjunction with the British Conservation Alliance (BCA), and authored by BCA policy director Connor Tomlinson outlines a market centric approach to tackling environmental issues such as climate change:

  • Market environmentalism uses the engine of free markets to tackle environmental challenges. This provides practical, sustainable and highly effective solutions.

  • The market system naturally drives towards good environmental stewardship — through the profit mechanism that rewards innovation that produces more using less resources and waste; property rights that rewards protection of valuable land; and wider prosperity that creates wealth and political pressures for protection.  

  • State-led, socialist economic models have consistently failed the environment. Nobody takes care of unowned resources, as demonstrated by the Tragedy of the Commons. Resources are overexploited, as demonstrated by the Soviet Union’s continuing whaling (the Soviet Union were responsible for 98% of all blue whales killed between 1967 and 1978, after the 1966 global ban). The economies are less efficient and therefore more environmentally exploitive, as demonstrated by the Eastern bloc economies or modern day Venezuela.

  • The best, in fact the only way to tackle the challenge presented by climate change, including the Government’s Net Zero by 2050 target, while maintaining modern prosperity is to embrace a market-led approach.

1. Nuclear energy

  • The United Kingdom, like many countries, is struggling to reduce dependence on fossil fuel energy sources. The existing renewable options, solar and wind, are undermined by lack of storage capacity and grid inertia generation. 

  • The backup battery capacity to power a renewable-only grid in the UK would cost £2.9 trillion, a sum larger than the entire UK economy for a year.

  • Nuclear power is a safe, cost-effective, efficient, and emission-free source of energy production.

  • Nuclear power currently produces one-fifth of the UK’s annual electricity; but almost half the country’s current capacity is set to retire by 2025. This risks being replaced by dirtier fossil fuel power stations.

  • Nuclear power is held back by high fixed costs to design, achieve regulatory compliance, and build reactors.

  • If the Government wants to achieve the Net Zero target, they should take the following steps in relation to nuclear energy:

    • Allow energy production companies to implement a Regulated Asset Base model as a method for funding new nuclear plants (beyond initial projected construction costs) to make construction financially viable and reduce reliance on state funding under feed in tariffs; and

    • Make sustainable construction projects (particularly nuclear plants) eligible for private sector income-tax-exempt loans, enabling flexible funding to account for additional escalating costs incurred after planning.

2. A border-adjusted carbon tax 

  • Britain’s tax system requires reform to facilitate a transition to a carbon-free national grid.

    Fossil fuels benefit from tax breaks and a reduced rate of VAT.

  • Carbon emissions are a negative externality — a cost suffered by a third party, neither the producer nor the consumer. It is standard economic policy to discourage this behaviour by forcing producers to internalise the costs.

  • A tax on carbon would incentivise market actors to substitute away from using fossil fuels and innovate by developing new low-carbon energy products. This is superior to a state-led approach involving heavy subsidies of particular products or regulation that bans certain behaviours.

  • A carbon tax will fail if it is perceived to be a revenue-raising exercise: consumers must be the winners from lower corporate and income taxes.

  • It is necessary to border-adjust to ensure that goods produced overseas, in jurisdictions without sufficient policies to tackle climate change, outsource Britain’s carbon usage. This should not be regardless of country of origin.

  • If the Government wants to achieve the Net Zero target, they should take the following steps in relation a border-adjusted carbon tax:

    • Levy a border-adjusted carbon tax on imported goods and energy manufactured using fossil fuels. This tax would also be applicable to developed nations failing to meet Paris Accord emission reduction targets. Prices would be predicated on regularly adjusted carbon pricing mechanisms, accounting for multivariate analyses of social, environmental, and economic cost. Compatibility with World Trade Organisation guidelines would determine whether a consumption levy or production charge form of taxation is more viable;

    • Revert fossil fuels to the standard VAT rate of 20%, eliminating an indirect subsidy for the industry;

    • These changes — the border-adjusted carbon tax and full VAT on fossil fuels — should be revenue neutral by lowering or removing other taxes; and

    • Create a Carbon Credit Market, allowing market actors to offset carbon taxes by spending revenue on approved conservation and reforestation efforts (constituting ‘nature-based solutions’ to carbon capture and storage). A cap should be placed on percentage deductible, as to keep in place the incentive for businesses to transition to sustainable practices. This rate should be inversely progressive during the COVID-19 recovery period, as to provide equal opportunities for small businesses decimated by lockdowns.

3. Clean free trade

  • Liberalising trade enables more sustainable economic growth by encouraging efficient production and allowing transfer of knowledge. 

  • For example, because transportation accounts for a relatively small carbon footprint, New Zealand lamb has a lower carbon footprint then Welsh lamb. New Zealand produces dairy products with half the energy per tonne, lamb at a quarter the energy, and apples at a third the production costs of the UK.

  • If the Government wants to achieve the Net Zero target, they should take the following steps in relation to Clean Free Trade:

    • Abolish tariffs and quotas on all goods that the OECD designates as having environmental significance;

    • Seek membership of Agreement on Climate Change, Trade and Sustainability (ACCTS);

    • Encourage — but keep voluntary — carbon/eco-labelling for consumer goods; and 

    • Ensure ascendance to CPTPP does not undermine climate policy related goals by providing excessive protection for the fossil fuel industry.