There's a reason to have private ownership of something like Hastings Pier - to cover the losses

The "community organisers" who lost out in their bid to purchase the bankrupt Hastings Pier are complaining. Yet there's a good reason to have such things in private hands. Shareholders, private such, don't just collect the profits when there are any, they also pay the losses when there are such:

Campaigners fighting to save Hastings pier for the community are “devastated and furious” over its sale to a businessman for a fraction of what it cost to rebuild.

The Eastbourne hotelier Sheikh Abid Gulzar was reported to have paid £50,000 for the pier, which was rebuilt with £12.4m of lottery money but went into administration last November.

Well, yes, but why did it go into administration?

Partly funded by donations from 3,000 local residents, it was subsequently hailed as “the people’s pier” by Ben Derbyshire, the Riba president, and credited with “evolving the idea of what architecture is and what architects should do”.

But now Hastings Pier Charity, which employs 44 people, has admitted that it has been unable to agree a new three-year business plan with its major stakeholders — the Heritage Lottery Fund, which provided £11.4 million for its restoration, Hastings borough council and East Sussex county council.

The organisation, which became the first community benefit society in 2013, had hoped to raise £800,000 to become self-funding but entered insolvency when it fell short of its target.

Nonetheless, it said it felt it would be wrong to ask its 3,000 community shareholders, each of whom donated £100 to get the project started, for more money to meet the pier’s operating costs.

Ah, so they've already tried that community route and despite massive subsidy it failed. Which is where this private shareholder thing comes in. We can, and should, assume that more capital will be put in. For without it it will go bust again. And with private shareholders there is at least the possibility of their stumping up more such capital, something which a community organisation clearly has great difficulty in doing.

The importance of those shareholders being revealed once again. Sure, they take the profits, but they also provide the capital to cover the losses, don't they? 

Wood and trees - Tesco the best, Waitrose the worst for food waste, apparently

An interesting little insight into how some think the world should be run. The underlying subject is food waste in the supermarket supply and retail chain. An odd thing to be worrying about really, as the very existence of that supermarket supply and retail chain is what reduces food waste to minimal levels in the first place. Any reading of FAO and the like reports reveals that it is their absence which leads to 50% and about of food rotting between field and fork. Their existence leads to  some being tossed from the shelves, to be sure, also to odd bags of salad rotting at the back of our fridges. But the efficient food collection and distribution systems which are supermarkets is the very thing which reduces food waste.

But, you know, far too many people with too much time on their hands:

Another day, another supermarket-bashing report – even if this latest one is slightly unexpected. This time it’s aiming at the upright, conscientious, middle-class shoppers’ favourite. But now Waitrose has been criticised by the campaign group, Feedback Global, for being the worst performer out of 10 UK supermarket chains at tackling food waste.

According to Feedback Global’s findings, Waitrose provides no public data on food waste. It redistributes a small quantity of food compared with other retailers, has done limited work with suppliers to reduce food waste, and has no programme to send permissible food surplus to serve as animal feed. This is in striking contrast to Tesco – the supermarket all right-thinking people like me are supposed to hate. Tesco was the first group to produce third-party audited food-waste data, and in 2017, according to the report, increased its food surplus distribution network by 40% on the previous year, donating 7,975 tonnes of food to people in need.

The full report is here.

The problem with this is that the report is noting how well the varied supermarkets do the form filling and box ticking. Where's the report on how near out of date food is given away to the homeless, do we have that document detailing stuff sent off for animal feed? What the report doesn't do is provide any information at all on who is throwing how much food away.

For example, imagine for a moment. A supermarket chain has an aggressive discounting policy. Anything getting near to the end of shelf life, close to sell by date, is discounted so much that crowds of the impecunious storm the stores and cart it all away. The chain has no food waste at all in fact. They therefore don't fill in all the forms as there's nothing for them to form fill about. By the standards used in this report that supermarket chain would be bottom of the listing. 

No food waste at all, no concomitant documentation about disposal of food waste, bad marks.

We do not, not in the slightest, claim that Waitrose emits no such waste. We haven't a clue whether it does or not in fact. But a measurement system which cannot even tell how much food waste there is isn't going to be all that useful in measuring food waste now, is it? 

As up at the top the issue of how much emanates from the supermarket chains we think entirely unimportant, as it's their very existence which reduces the original problem of food being wasted. But if we do want to worry about it let's do so by studying reality, shall we, not the paperwork?

Perhaps it should solve the problem, but does it?

We can all think up solutions to varied societal problems, methods of achieving desires. Some of them are even based upon reasonable logic. For example, if the gender pay gap is the creation of gender different reactions to the arrival of children, will insisting upon gender neutral responses lea to the eradication of the gap? Seems a reasonable enough insistence to be honest.

It's also largely our own view - men and women tend, note, tend - to react differently to the arrival of the little ones and the intersection with that working world out there. That's what causes that gender pay gap. If that reaction were entirely gender neutral - if, for example, 50% of fathers became primary child carer - then we do think that the pay gap would disappear.

That doesn't though mean that mandatory paternal leave is going to do away with that gap

In the family of Canada’s provinces and territories, Quebec has long been the noisy, rebellious child. In 2006, it divorced itself from the country’s complex and lacklustre parental leave programme. The province created its own system, the Quebec Parental Insurance Plan (QPIP), a model influenced by Scandinavian countries and with the aim of improving gender equality.

Well paid paternity leave which can only be taken by the bloke. This has more than a small resemblance to things being proposed here, doesn't it?  But the important question isn't whether the logic seems reasonable, it's whether it actually works. You know, that testing of a hypothesis against reality?

Among the provinces, P.E.I. is the standout performer. The province gets a "B," but with a wage gap of 10.7 per cent it places fourth overall, after Belgium (3.3), Denmark (6.3), and Norway (7.1). Manitoba rounds out the top five with a wage gap of 13.2 per cent.

The next highest-ranking province, New Brunswick, places 9th overall and also gets a "B" with a gender wage gap of 14.3 per cent, in line with peer country the Netherlands (14.1). Ontario (16.2), Quebec (16.4), and Nova Scotia (16.4) get “C” grades with gender wage gaps comparable to those in the U.K. (16.9), the Switzerland (16.9).

Hmm. Quebec has greater paternity leave than places with lower gender pay gaps. And, also, places with higher. We actually appear to see no effect at all, no even correlation, between better paternity leave and the gender pay gap.

Agreed, it might all be a little early and all that. Perhaps a society of displaced Frenchmen is different. Or a still largely Catholic society is. But we don't have any evidence that the policy works, do we? 

Our own reading of this and the situation in general is that it isn't maternity or paternity leave itself which causes the pay gap, it's the decades long difference in life and work priorities that does. Something we think might be rather harder to change in a sexually dimorphic species.

The document that changed the world

Forty years ago, in 1978, 18 farmers from the village of Xiaogang in China, met at night in secret. They had seen subsistence and famine. Exhausted and emaciated, they lacked the energy to work the collective fields as Party discipline required. A few years earlier they had seen 67 of their 120 population starve to death in the "Great Leap Forward" Now they took matters into their own hands. By flickering lights (none had seen electricity), they came forward in turn to sign a document dividing up the collective farm into individual family plots, whose owners could keep most of the proceeds of their labours.

They knew the dangers, and added a clause to the contract pledging that if any were betrayed and executed, the others would raise their children until aged 18. Following that historic contract, the village produced more food next harvest than it had in the previous 5 years combined. Surrounding villages spotted what happened, and the farmers of Xiaogang were exposed.

Had Mao-Zedong been in power, they would undoubtedly have been exposed and executed for betraying the principles and cornerstone of Socialism. But Mao had died, and Deng Xiaoping, the great pragmatist, was consolidating his power. He held off punishment until their illegal experiment had been studied, and pledged to adopt their innovation across China. Famously Deng had said, “It doesn't matter if a cat is black or white; as long as it catches mice, it's a goodcat.” Xiaogang's practices were good; they caught mice.

China leapt from being a net importer of food into being a net exporter, and the Chinese economic miracle was launched. Its growth rates since have ranged between 7% and 10%. India and other nations followed suit, and the neoliberal hegemony began. Living standards doubled. Life expectancy doubled. Deaths from disease and malnutrition went down to a tiny fraction of what they had been, as did deaths in childbirth and infancy. It has constituted the greatest economic advance the world has ever seen, and the greatest improvement in history in the living standards and life chances for ordinary people.

It began with a piece of parchment secretly signed by trembling hands in the flickering light of 40 years ago, but it has reverberated around the world. Those 18 brave souls who defied authority to try a new way of doing things were the pioneers of a revolution that has transformed the prospects for humankind. We salute them today.

It's definitely, absolutely, a measurement error - just, well, how large a one is it?

As Paul Krugman pointed out, productivity isn't everything but in the long run it's pretty much everything. That productivity of labour is the largest, by far, determinant of future living standards. Thus the recent slow down in the labour productivity numbers is something to worry about. Most people getting this wrong, including Martin Wolf:

One possible explanation is mismeasurement. It is, and always has been, difficult to measure the impact of new technologies, particularly now when many services are free and many are provided, invisibly, from outside the US. Yet it is hard to accept that measurement suddenly became more difficult in 2005, when the US productivity slowdown began.

He mentions that only to dismiss it as not being the true reason. Yet it is the true one, Hal Varian is right, GDP doesn't deal well with free.

The various possibilities are that we're not having a technological revolution, we're just about to have one, the rich are taking all the gains, or we're measuring it wrong.

So, the example we've oft used. WhatsApp provides telecoms services to some 1 billion people. It takes the labour of some 200 people to do so. There is no price associated with this service. No advertising, no fee, therefore where it appears in GDP is a little odd. For the only thing we do see are the wages of those who provide it. We just don't see any consumption nor production value, only those costs.

The effect of this is that WhatsApp appears in our global economic statistics as a reduction in labour productivity. We've got labour costs, no associated production nor consumption, that's a decrease in productivity.

So, we've a system whereby 1 billion people getting free telecoms off the labour of 200 people is recorded as making us poorer, lowering labour productivity? That's madness, isn't it. It's also an obvious measurement error. Thus the answer to our productivity problem is measurement error, isn't it?

The only thing left to argue about is whether measurement is some, most or all of the problem. We'd say more than all of it ourselves but we're willing to listen to counterarguments.

Reality in the NHS

Last week I went to an 80th birthday party with a difference. The birthday boy failed to show on account of having died two weeks earlier. The family decided to continue with the arrangements, balloons and all, as rather a jolly wake. The family all agreed was that he would have been there if he hadn’t agreed to yet another round of chemo. It was very disagreeable for him and it killed him.

No one is blaming the doctors and nurses. They are wonderful and have the best of intentions. He made the wrong choice or maybe the system made the wrong choice. A man with a hammer goes around looking for nails to knock in. As Atul Gawande showed in his splendid book, “Being Mortal: Illness, Medicine and What Matters in the End” (2014), specialist medical practitioners look to use their skills. It is what they do. The consequence is an excessive number of over-worked specialists and a shortage of geriatric specialists who can take a holistic view.

That is symptomatic of so many areas in the NHS where savings are not only possible but would benefit the patients. One reality is that the NHS will need more money. If the Prime Minister does provide it then she is acting irresponsibly–because she is doing so without also ensuring real reform. For a start, productivity will decrease.

Lord Warner was a Health Minister during the Blair government and witnessed exactly that. His book, “A Suitable Case for Treatment - The NHS and Reform” (2011), documents what happened when the NHS was given large sums of new money but little improved because it is an unchallenged monopoly: “This monopolistic power shows in the attitude of many NHS staff and their resistance to external providers and reform. While I was a Minister, the health team regularly had meetings with groups of NHS staff, with everyone from porters to consultants, but with no senior managers present. When asked what they would most like me as a Minister to do, they invariably asked me to stop change.”  

Listing the areas of NHS waste would take more space than this Blog allows. Some are massive: such as procurement and the external bureaucracy now committed to it. NHS constraints on surgeons and consultants lowers their productivity relative to their private work. Spending £180m a year on back injections and surgeries the medical community decry as useless. Prescribing over-the-counter medicines which the NHS forbids every few years. Refusing to recycle medical devices, such as crutches, or unopened packets of medicine.

Some are less serious: such as throwing away metal scissors and tweezers after one use. They used to be sterilized in boiling water but scientists have shown that “prions” (Mad Cow disease) are not destroyed by boiling. The grand total of UK cases of Mad Cow disease is two in the last eight years, both likely due to long ago blood transfusions from an asymptomatic patient who'd eaten infected beef–with no known instance of the disease being caused by surgical instruments.

The second reality is that the Department for Health and Social Care and NHS have more reasons to conceal waste than to come clean. Transparency would undermine their case for more money and it would increase the pressure for reform. Ministers can be fobbed off with promises of savings (procurement being a good example) without those savings actually being tracked and delivered. Worst of all, as Lord Warner discovered, transparency would mean change.

The NHS, like all those reaching three score years and ten, embarrassingly pretend everything is and will be as it once was. The reality is that the NHS should adapt. That does not mean accepting the whims of a few politicians as led to the unfortunate 2012 Act. We need creative thinking by well-informed experts. There has only ever been one Royal Commission strategically to review the NHS and that was 40 years ago. Be it a Commission or a more informal Convention, let us have a non-partisan strategic review now. Once the consequential reform has been put in place, then of course the necessary funding can flow.

We're very taken with George Monbiot's latest idea

Our general view of George Monbiot is that he spends far too much time thrashing around in ignorance to be a reliable guide to anything very much about the world. Yet there are indeed those times when the frantic search produces the odd nugget of interest. As with this demand of his:

He gets almost everything wrong. But last weekend Donald Trumpgot something right. To the horror of the other leaders of the rich world, he defended democracy against its detractors. Perhaps predictably, he has been universally condemned for it.

His crime was to insist that the North American Free Trade Agreement (Nafta) should have a sunset clause. In other words, it should not remain valid indefinitely, but expire after five years, allowing its members either to renegotiate it or to walk away.

George insists that all trade treaties should have such sunset clauses.

Note what a sunset clause is. It isn't an assumption that matters will continue as long as there's no vote against it. It's also an insistence that one decision once isn't the end of matters. It's an insistence that without a positive vote in favour of some treaty then it falls. No one does get to say that's just part of the settled system, it has to be positively approved every 5 years.

Which would make for an interesting world, wouldn't it? That Single Market of the European Union is a trade treaty. It would need a positive vote in favour of it every 5 years, would it? The Customs Union seems to be similar. And if this applies to trade treaties then why not to other ones? Membership of the UN, the Paris Climate Agreement, Montreal Protocol, why shouldn't these all be subject to that approval requirement? They all failing without it?

Well, of course, we know why not. Agreements approved of by George won't and shouldn't be so subject, those disapproved of should be. But it would be an interesting world if all such agreements were subject to that positive democracy, wouldn't it?  

Chaotic but interesting.

But, but, we're already doing all of this without any plans

The latest bright idea about how the world should be run is that we all have a basic income and that, also, we leave half the planet for that nature to gawp at. We're fine with that to be honest, the question occurring to us being why do we need a plan? We're already doing this.

To usher in a new way of living, the core dynamic of ever-greater production and consumption of goods and resources must be broken, coupled with a societal focus on environmental repair. Two increasingly discussed ideas do just this.

We've not quite managed an entirely dematerialised economy but that online internet stuff seems pretty close to it, consumption without much use of scarce resources. It's also true that as we get richer we take more of that increased wealth as leisure. The population explosion is already over, as they do note correctly. We're an increasingly urban species, thereby leaving ever more room for other species and that gawping at them.

We even, by industrialising our agriculture, are abandoning swathes of land back to that nature - we've mentioned before how New England used to be small farms and is now that regrown forest. There's even reasonable evidence that large parts at least of the Amazon are regrowth, not primaeval.

UBI would give people the right to choose when it comes to fulfilling their own basic needs, and rewilding Earth does the same of other species’ needs. This would be a legacy of a new chapter in Earth’s history that we could be proud of.

We agree that a UBI would be an improvement upon the current welfare systems but it's only a different manner of providing the same basic thing, not a revolution or anything. Every society rich enough to do so does make sure all achieve at least subsistence.

Our point being that we're fine with the basic ideas, aims even. It's just that we on't see why there needs to be a call to action, nor a plan. For what we're called to do seems to be pretty much what we're all doing anyway.

So, why do we need a plan if we're already, unguided and unforced, doing it? 

The latest logical error in the tax avoidance story

We have more evidence concerning offshore tax avoidance by those horrible large corporates. Evidence which will undoubtedly be used the wrong way, to do something which isn't actually implied, let alone proven,  by the research.

Multinational companies shift about 40% of the profits they earn outside their home countries into tax havens, eluding tax-collection efforts, according to an analysis that points to persistent gaps in government revenue collection.

That research is here by Gabriel Zucman and whoever he's got to do the sums this time. There are two basic logical errors here. The first is that they study how profits are shifted around - fair enough. But they then assume that profits which are shifted aren't taxed. This is not so. Sure, Apple might send some large sum of profits off to Bermuda for a rum punch and a tan. That means that EU countries don't get much tax revenue as it passes from them, to Ireland, to Bermuda.

But that doesn't mean that those profits are never taxed. When and if Apple takes it onshore into the US it becomes subject to the tax system there. In fact, Apple just made the largest tax payment by any taxpayer anywhere, ever, on exactly that basis.

It's the second which is the much worse error though. They claim to see little to no evidence that, as standard economic theory predicts, higher taxes reduce investment. "Real investment" as they call it seems to be near entirely uninfluenced by tax rates, it's just the legal form and location of profits which changes.

We can see where this is going to go, can't we? If real investment is unaffected by tax rates then we can tax those profits much more highly, reverse the decline in corporate tax rates, and still gain the same investments! Huzzah!

Except, except, they also show that a very large portion of such taxes are avoided through those offshore arrangements. So, what would we expect the influence of tax rates no one is paying to be upon investment decisions? That is, we can either show that lots of corporate taxation is avoided, or we can show that corporate taxation levels don't make any difference to investment decisions, but we cannot show both that tax rates make no difference and also that they're all avoided. Taxes that aren't paid aren't going to influence all that much, are they?

What this paper doesn't show is that investments, real investments that is, are unaffected by tax rates. But that's undoubtedly the way the paper will be used.