More than just a linguistic point, optimum means best, not fastest

This is very much more than just a linguistic little quibble, this is actually a vital point about the economy and the world. Optimum does not mean fastest - nor highest, cheapest, flattest nor any other -est than best.

Just 44 postcodes out of 1.7m are using optimum broadband speeds, Ofcom figures show.

Analysis of internet speeds suggests that a tiny minority of British households are accessing the "gigabit speed" broadband, which is more than 20 time faster than the current average. 

Best here meaning the least bad combination of the various different attributes of whatever it is that we're talking about.

Yes, the FT's map of broadband speeds is interesting. But to say that gigabit speeds - meaning fibre to the door - is optimum is to miss entirely that meaning of best.

What is the cost of gigabit speeds? What is the value of having gigabit speeds? Equally, what are the costs of having slower speeds - say using ASDL - and the benefits of doing so? Actual research here seems to be a bit (sorry) out of date here but we can show that 2 Mbits definitely increases economic growth, anything more than that we're just projecting the effects from that earlier proof.

The larger point of course being that in the economy, as with life in general, we've always got some number of competing interests. Price/performance being only one such but an important and obvious one. That McLaren  is definitely faster than the Fiesta and definitively more expensive. It's not obvious that either are optimum - depends upon the task. One would be better for doing the shopping, the other perhaps to impress.

So it is with broadband. Faster is nice, sure, but we've still got to ask ourselves what the marginal benefit is as compared to that marginal cost. That's the only way we can work out what is the optimal solution. To forget this would mean that we'd festoon the country with fibre to no very good gain.

And no one would want to do that, right? 

The National Health Service: A Cultural U-Turn

The National Health Service: A Cultural U-Turn

Contemporary Britain has redefined and extended the roles of the National Health Service from simply treating illness to its prevention, educating the masses and extending life. In its plight to meet all of these criteria, or face torrents of criticism, the NHS has reached a stalemate on its 70th anniversary. Despite receiving £116.4bn in funding (2015/16), it is under fire for shortages of staff and beds as well as prolonged waiting times.

Now, there are calls to modify the NHS from the likes of Mark Pearson (the OECD’s Deputy Director of Employment, Labour and Social Affairs). Others, such as Dr Kristian Niemietz of the Institute of Economic Affairs, have advocated the complete discontinuation of the NHS and its replacement with universal healthcare. The latter may not be necessary if significant changes are made to British attitudes towards health and the norms and practices within medicine.

Increasing the accountability of British citizens by adopting an insurance-based healthcare system is a possible solution to the high demand hospitals face, especially the pressures felt during the winter months. If people have to make insurance payments to receive treatment, the financial commitment is likely to cause a shift in British attitudes towards health, i.e. people will be more compelled to maintain their health without professional medical intervention.

Lifestyle-related illnesses in particular would see a significant decrease. Giving people more personal responsibility for their health could be the key to increasing general health by establishing a more health-conscious culture in Britain, reducing long-term costs to the NHS.

Switzerland exemplifies this: each individual pays insurance premiums worth up to 8% of their annual income. As of 2014, Swiss people are spending an average of 6% of their income on healthcare (this is predicted to increase to 11% by 2030) compared to 5.7% of taxable income in the UK. The system is aimed at promoting health, reducing costs, and encouraging each individual to be responsible for their own health.

Right now the NHS is hampered by the mantra that it is truly “the envy of the world” and any reform from its current model would amount to dismantling Nye Bevan’s legacy.  If this idea is maintained, an insurance-based system will be politically infeasible.

This is not to say that paid healthcare, co-pay or insurance systems would result in a utopian society in which nobody is sick - for instance, diabetes is equally prevalent in Switzerland and the UK (approximately 6%).

But sustaining life is arguably the most vital function of health services, and it appears to be a greater strength of insurance-based healthcare. Switzerland has one of the highest life expectancies in the world and one of the lowest mortality rates in Europe. Notably, the 2015 Euro Health Consumer Index described Swiss healthcare as excellent.

In Defence of Uber

It hasn’t been a great 18 months for Uber. Both Transport for London and Sadiq Khan indicated that they would prefer unions in the ongoing dispute; even the European Court of Justice waded in with attempts to regulate the disruptor.

Despite the fact that Uber had been used over 2 billion times by the end of 2017, policymakers seem determined to inhibit the company’s growth.

However, regulating Uber will not only have a detrimental effect on consumers, but also on its workers and the future of the gig economy in general. The ASI’s Sam Dumitriu opposed regulating Uber even before the feeding frenzy, warning that calls to treat drivers as employed staff rather than self-employed sole traders would harm those who are “looking for increased flexibility, the ability to be their own boss, to choose their own hours, and to be able to reject any job” – and that’s not to mention consumers who often rely on Uber’s lower pricing and tracking tech to ensure a safe ride home from work or a night out.

Among those who criticise Uber, there is often a lack of consistency in their arguments. It is unreasonable to complain that Uber (or similar gig economy disruptors) are working to the detriment of workers’ rights. As I’ve previously mentioned, drivers have increased flexibility and set their own terms. They dictate their own office space – you won’t see Uber drivers working 15-hour days in dubious conditions unless it’s their choice to do so, and if it is, they can earn an average of £16 an hour for it. Some may claim that leaving Uber unregulated has led to an increase in sexual assaults – this is not true. Despite some issues, Uber is the safest way to travel on the road and has been linked to reductions in assault and the harms of drink driving. Even pro-green campaigners struggle to make complaints – Uber tends to fill its cars, meaning less congestion and less pollution. Additionally, Uber plans to send a fleet of electric cars into British streets in the near future.

Essentially, Uber epitomises disruptive technology and the gig economy, which we should be welcoming, not rejecting. The benefit of a free market is that it allows companies like Uber to innovate and drive up standards through competition.

Green, profitable employment and higher standards of consumer safety: the fact that all this is available for a lower price than that of a black cab is proof that the gig economy (and, whisper it, capitalism) is still working – provided we let it. The government should do so, and listen to ordinary taxpayers and workers rather than taxi unions.

Matt Gillow is runner-up of the 18-21 category of the ASI's 'Young Writer on Liberty' competition. You can follow him on Twitter here.

Good intentions and the road to hell

Saint Bernard, the 12th Century Abbot of Clairvaux in France, is cited as saying ‘the road to hell is paved with good intentions’. Legislators often forget (or ignore) this saying when they introduce regulation and legislation, often as a knee-jerk reaction to some perceived problem.

Regulation is often the result of good intentions: the apparent need for legislators to send moral messages and to save people from themselves and their own choices.

A stark example of ill-considered regulation is from America’s attempt to prohibit alcohol in the early 20th Century. Urged on by the Temperance Movement and the Anti-Saloon League, who perceived alcohol and drunkenness as a national sin, the United States banned the production, movement and sale of alcohol. Within minutes of prohibition taking effect in January 1920, armed criminals started raiding warehouses to steal whiskey.

Americans discovered that there was a big difference between using the law to prohibit something and actually enforcing that prohibition. The illegal manufacture and sale of alcohol boomed. Criminal gangs expanded, corruption blossomed with police and politicians being paid to turn a blind-eye to various profitable, illegal activities.

As Mafia-style gangs expanded, so did their criminal activities, including prostitution and gambling. Al Capone was estimated to be earning $60 million a year from his criminal operations.

As the profit of criminals went up, revenue to the government decreased significantly. Washington State University estimated that in 1914, the government income from alcohol tax alone was $226 million. Rather naively, it was believed that the reduction of revenue from alcohol would be offset by increased sales of soft drinks. This never happened.

Alcohol production had been a big business in America, with factories and large workforces employed. Overnight these factories closed and thousands of workers were made unemployed. The negatives significantly outweighed the positives and prohibition itself was abolished 13 years later.

The lessons from prohibition do not seem to have been learnt. The UK’s Misuse of the Drugs Act 1971 has not prevented the large scale misuse of drugs. It has allowed untaxed and unregulated substances to be consumed by vulnerable people. The State of California estimates that it could raise $643million annually following its recent legislation of recreational cannabis. However, in the UK, drug supply is now often just one source of a vast income enjoyed by high-level criminal organisations.

Nobody would suggest that it would be wise for crack cocaine to be freely available to be consumed by all. But generally speaking, governments need to trust their citizens to do the right thing.

Emmie Lowes is runner-up of the Under-18 category of the ASI's 'Young Writer on Liberty' competition.

Lord Blencathra is only half right here

It is obviously pleasing to be able to note a politician who is at least half correct - given, you know, the average propensity for truth and knowledge among that tribe. But it is still only half right, sadly:

He said: 'It is nonsensical to retain these grossly excessive calorie levels now. What's worse is they are being exceeded.'

He added: 'We seem to be waiting for a magic pill so we continue our gluttony and lazy lifestyle and hope that the NHS will fix it for us without having to change our behaviour one iota.' 

'If we scoff more calories than we burn off then we get fat and obese. Obesity is not an illness, it is a lifestyle choice.

 From Hansard, it's this part which isn't correct:

We are creating a nation of fat, idle people who will bankrupt the NHS, and we should have the courage to say so in blunt terms. Our strategy must be threefold. First, it must tax excessively sugary foods—all of them, not just some—and penalise excessively large food items. Secondly, calorie intake guidance must be revised downwards to recognise our indolent, lazy lifestyle. We need constant campaigns on that. Planning guidance should force councils not to have high streets full of takeaway food shops; research suggests that locations with supermarkets provide better diets than streets without such shops. Thirdly, we must have a uge campaign to get the whole nation exercising. Exercise alone does not compensate for overeating but it has a part to play. I too commend the Daily Mile initiative, which gets children exercising for a mere 15 minutes per day. It should be compulsory in all schools. My wife has tried to force me to do it as well.

There is no easy answer, but at the moment I do not think we are even asking the right questions.

That list of what must be done follows from the incorrect assumption being made. That obesity costs the NHS money. It doesn't. As we've pointed out before:

The researchers found that from age 20 to 56, obese people racked up the most expensive health costs. But because both the smokers and the obese people died sooner than the healthy group, it cost less to treat them in the long run.

On average, healthy people lived 84 years. Smokers lived about 77 years and obese people lived about 80 years. Smokers and obese people tended to have more heart disease than the healthy people.

Cancer incidence, except for lung cancer, was the same in all three groups. Obese people had the most diabetes, and healthy people had the most strokes. Ultimately, the thin and healthy group cost the most, about $417,000, from age 20 on.

The cost of care for obese people was $371,000, and for smokers, about $326,000.

Yes, those are American numbers but they apply here too.

We thus have the proof of Hayek's contention, that government provided health care will mean government trying to run our lives so as to suit the government health care system. But worse than that we've also got the basic arguments being based upon untruths. Fatties save the NHS money, thus trying to reduce the number or wideness of fatties to save the NHS money just doesn't work. That even despite whatever concerns we might have about healthcare serfdom.

Young Writer on Liberty 2018 Winners

We're delighted to announce the winners of our 2018 Young Writer on Liberty competition, and will be showcasing some of their work in the coming days! The theme of this year's competition was 'Ideas for a Freer, Better, Richer World'. Entrants wrote three, 400-word articles on this theme, each focusing on one of the ASI's three areas of policy priorities for this year: boosting productivityinnovation without permission, and practical liberalism.

As usual, we received many entries and competition was fierce. There were categories for the Under-18s and the 18-21s, with a winner and a runner-up in each.

The runner-up of the Under-18 category is Emmie Lowes, and the winner of the Under-18s is Caitlin Keenan. The runner-up of the 18-21 category is Matt Gillow, and the category winner is Adelina Fendrina.

Runners-up will have one of their entries showcased on the ASI blog tomorrow, and category winners will have all three of their pieces posted next week.

Category winners will also receive £150 prize money, whilst both winners and runners-up will receive boxes filled with liberty-related books.

Keep an eye on the blog to read their entries!

There's a reason that wages are as they are

Quite why wages are as they are seems to mystify some people. Why isn't it true that the people doing every and all jobs get to live rich and fulfilling working lives? The answer being, well, let one of those who stands around gape mouthed in amazement at the workings of markets take up the story:

Aqueue was already forming by the time Isaac Oti turned up for work before dawn that May morning. He came back a couple of hours later and – “boom!” People were spilling out of Queen Mary college, past the gates, past the engineering faculty. They were standing out on the road three or four deep, almost reaching the tube station.

“It was crazy.” Even 10 years later, Oti’s eyes shine at the memory. “CRAZY!”

Those excited masses were not lining up for a house, the latest iPhone or a glimpse of Beyoncé. They were waiting for the chance to be a cleaner at Queen Mary University of London (QMUL).

This was pre-crash, pre-Brexit London, in its days of pomp and prosecco, those days when it felt like you could score some kind of job in the capital just by leaving the house. One solitary post on the small-ads website Gumtree had drawn this huge crowd to the East End – for cleaning jobs. But these positions were no ordinary cleaning jobs. They were what Oti calls “gold standard”. The lucky few successful applicants would start on the London living wage; at a full 30% above the minimum wage. Equivalent positions paying that rate were rarer than hen’s teeth. Not only that, but rather than working for some cowboy contractor, they’d be university staff – earning a decent pension, good holidays and sick pay.

Add in those benefits and a reasonable guess is that those jobs were paying 60% above market wages for those cleaning jobs.

Meaning that the students - in our loan financed system - are having to pay more for their education than if the cleaners were being paid the market rate. Or in a tax financed system, the taxpayers would be fleeced even more to pay for it all. Making things more expensive isn't quite the way to raise living standards now, is it? 

But there's more to it than that. Note the entire missing of the more basic point about why we use markets and prices in the first place. We desire to arrive at the market clearing price for whatever it is. Here, the price at which the desired amount of cleaning takes place, all those who desire to clean for a living being able to do so. That's what the market clearing price actually means, that we're matching supply with demand.

Which is, of course, why we use markets and the price system more generally. Because if we don't, as here, then prices and market clearing still happen, we've just replaced the clarity of money with the miasmic effects of queues. This is not an improvement in matters as the Venezuelans trying to use the supermarket have found out.

We positively desire employers to pay market prices as wages just as we want all markets to clear. Because the systems which don't are worse. 

An interesting view of how government works

Apparently we're all right to be sceptical of how that 0.7% of everything everyone does is spent. That official development aid budget is indeed wasteful, even corrupt. This is something admitted by the bloke in charge of spending the cash extracted from us.

Well, that's nice, so, what are we going to do about it? Reduce the amount? Do it better? Stop wasting it? Ah, no, that's not how government works, is it?

Public criticism of foreign aid spending as "corrupt" and wasteful is "valid", the civil servant in charge of the International Development department has admitted.

Matthew Rycroft, Dfid’s Permanent Secretary, also suggested that politicians are out of touch with ordinary people by not being more sceptical about the aid budget.

Dfid is so concerned that it is trialling a new programme which involves British aid workers telling their own stories in local papers about the value of their aid work.

Not wasting money isn't what government is for. Instead, we should up the propaganda so that money can continue to be wasted upon corruption.

Which is an interesting thing to know about government, isn't it? 

Systems have to be good enough, not perfect

One of our bedrock beliefs around here is that humans are fallible, so therefore will be any system for anything built, run and maintained by humans. It's one of the reasons we're so in favour of market solutions, markets containing the feedback mechanisms to kill off the truly dreadful mistakes in a manner that planning - with its fondness for reinforcing failure - just doesn't.

We're thus entirely fine with systems which are just good enough, not perfect. Sure, we struggle more, search for ever less tolerance of failure the greater the stakes at issue but still, we've got to accept that we should only struggle so far.

Tens of thousands of EU migrants could lose their right to be in the UK after Brexit - and the authorities will not know who they are, a new report warns.

EU citizens must register using an online system to secure "settled status" when the UK leaves next March.

The government has said it expects about 3.5m applications.

But the Migration Observatory said ministers had no precise figures for how many EU citizens were living in the UK and how many plan to stay.

The think tank, which is based at Oxford University, has previously warned that thousands of EU citizens could inadvertently become illegal residents in the UK after Brexit despite meeting the required criteria to stay.

The claim is that we must now go and find who these tens of thousands are and, well, do something. Our reaction is rather different. Objectively, asking people to use an app, upload a photo and pay a reasonable processing fee seems reasonable. And an error rate of tens of thousands among 3.5 million sounds remarkably close to perfection for government work. We'd suggest that this is about as good as it gets, better left well alone in fact.

That idea that the perfect is the enemy of the good applies here. For how intrusive would the State have to become to approach solving the last 0.8% or so of the problem? We don't even manage that for investigating murders, do we?

At least some of what we needed to do about house prices has already been done

That British house prices are too high is one of those generally accepted parts of the political conversation. It's even one where we agree that something must be done. The part where we might disagree with the consensus is over what must be done. For - OK, part of at least - what must be done has been done.

House prices are too high, something must be done to lower them. Great:

The value of Britain's housing market has fallen by £26.9bn, or 0.33pc, since the start of the year, as growth in the North East and Wales has failed to counteract falling prices in many other regions across the country.

The nation’s homes decreased in value by an average of £927 each between Jan 1 and June 30 this year, and are now worth a collective £8.2 trillion, according to figures from property site Zoopla.

Something has been done therefore. Whether enough has is still open to question, certainly, although it's worth noting that those are nominal prices, we can add another percentage point or two to the decline for general inflation. So too to affordability, given that while real wages aren't rising strongly they're not falling much either.

Housing is becoming more affordable.

This rather means that we don't need to nationalise the entire housing stock (something we've seen suggested in The Guardian), nor use taxpayers' funds to build 300,000 council houses a year, as seems to be the official policy of more than one political party. In fact, it means that something which needed to be done has been done.

As our own analysis of this problem, repeated ad nauseam, has been, the problem is not the price nor cost of houses, it's the value of the planning chitty to allow a house to be built. We're not short of land, we're short of land which can be built upon. The solution is therefore to issue more such permits.

Policy in recent years has been to issue more permits. Not in the manner we would prefer, the destruction of the structure of the planning system itself, but more have been issued and in areas people might actually want to live in too. As we can see, prices are becoming more affordable.

As we say, something needed to be done and something was done. Remarkably for government action the right something was done too. As ever with government action the right thing being for government to do less. Stop banning people from building where people desire to live and house prices will come down. We did, they have, why not do more of what works?