Perhaps you'd like to write a little letter to the House of Commons?

Or more precisely, a little letter to the Culture, Media and Sport Committee? For it looks very like it will be possible to influence our culture by having a little sport with the media.

The background here is all this fake news being sprayed around the place. The committee is going to investigate it:

MPs are launching a parliamentary inquiry into the "growing phenomenon of fake news".

The Culture, Media and Sport Committee said it would investigate concerns about the public being swayed by propaganda and untruths.

The inquiry will examine the sources of fake news, how it is spread and its impact on democracy.

The inquiry starts here. And your opportunity to inform them here. Their first question being:

What is 'fake news'? Where does biased but legitimate commentary shade into propaganda and lies?

Which is an absolutely fascinating question, isn't it? For example, do we have to ban Polly Toynbee, scrub the web of her presence? She has been declaring to all and sundry for more than a decade that property is hardly taxed in Britain. When, in fact, we get a greater portion of our tax revenues from property taxation than any other OECD country. 11% of revenue as opposed to the average 3% in fact. Or there is that remarkable feat of making five errors of fact in one sentence.

Or to be more general about this, people who claim that rising minimum wages do not create unemployment. This is wrong, even the Low Pay Commission says it's wrong, so should we pulp any editions of The Guardian that claim it? 

Or to be more specific again, if Nick Clegg states that Brexit means, under WTO rules, that Britain must charge tariffs to imports, what should we do? Spank him, ban the story, pin a Pinnochio nose on him?

Does fakery get a special carve out if it's politics? And if it doesn't then that really is going to change our media landscape, isn't it? 

So, we think that several, a number of, people should write in asking these sorts of questions. what actually is this fake news that must be rejected. And, as a bonus question perhaps, how is this going to constrain the future public statements of members of the Culture, Sport and Media committee of the House of Commons - to say nothing of making most newspapers in breach of whatever rules there are likely to be?

Conservatives and neo-liberals must not get into bed with fascism

It should go without saying that most of Donald Trump’s campaign promises and the executive orders of his first week in office are illiberal, unconstitutional, and repugnant. Restricting entry for immigrants, refugees, and US residents based on nationality is probably illegal as well as clearly immoral, not to mention pointless and arbitrary. The Wall™ is, of course, a phenomenal waste of money and resources that may be impossible. It is also pointless. Even mooting the idea of bringing back ‘enhanced interrogation techniques’ should be beyond the pale.

Nevertheless, for conservatives and free marketeers in the US and globally, there seem to be some silver linings to the Trump administration. School choice will be a major part of education policy. There’s generic Republican red meat in the form of tax cuts and deregulation. The next Supreme Court pick will likely be an originalist. Expensive, quixotic, and counter-productive foreign interventions may be as dead as the rest of Hillary Clinton’s career. And, from a British perspective, Trump may represent an opportunity for a post-Brexit trade deal.

As such, Congressional Republicans and market friendly governments should look to work with the Trump Whitehouse, and we should be cautiously optimistic for the libertarian-lite elements of the new administration.

To put it mildly, this response to President Trump is myopic, naïve, cowardly, a betrayal of principle and an abdication of responsibility. Being able to repeal Obamacare is not a fair price for a commander in chief that installs white nationalists in the National Security Council. The possibility of a (probably unfavourable and mercantilist-tinged) trade deal is not a good reason to tacitly accept the erosion of the international liberal order.

Trump’s economic agenda is, overwhelmingly, defined by economic nationalism and populism, not economic liberalism and fiscal conservatism. Any proposed tax cuts are unfunded and combined with a possible spending splurge will increase the deficit by $10 trillion. From both a neo-classical and a Keynesian perspective, this is madness. Mooted deregulation focuses on the wrong areas (targeting environmental regulations rather than, say, occupational licensing and zoning laws). Central bank independence is under threat. Self-destructive trade wars are on the cards, and the leader of the Chinese Communist Party has to explain the benefits of free trade to the purported leader of the free world.

The likely results of Trumponomics will be institutionalised rent-seeking and a capricious cronyist policy of picking winners based on the President’s whims. Multi-national companies are investing in preparations for the fall-out from possible Twitter attacks by Trump. Uncompetitive companies and sectors will be protected, subsidised, and given preferential treatment in a hare-brained attempt to reduce the current account deficit and achieve ‘national self-sufficiency’, which is neither possible nor desirable.

There is an existing term for economically illiterate, authoritarian, and ethno-nationalist governments that trample over the rule of law and value instinct and strength over rationality and co-operation. The opportunity to extend Charter Schools should not blind us to this reality.

It's amazing what people can convince themselves to believe

Our example here today is the evergreen Will Hutton. Of course, he believes that Brexit is a bad idea, thus there must be examples of why Brexit is a bad idea:

Yet misguided rightwing ideology now governs our affairs. For the British Eurosceptics, Europe has become so toxic nobody can think straight. Thus a footnote to the five-paragraph Brexit bill declares that Britain is to leave Euratom, the organisation set up in parallel with the EU to ensure safety standards in the European nuclear industry. It has the power to cut deals with countries outside the EU and is one of the linchpins of the global nuclear safety order. But none of that now matters. Britain is to compromise its nuclear safety standards, lose the world-leading research facilities in Culham and imperil an industry in which it is comparatively strong – for what? Nothing, except to appease the rightwing press, Ukip and Tory Eurosceptics.

Culham is a decent enough research institution and it's largely domestically funded. Why we would stop that is uncertain. There is indeed a Euratom/EU programme there, working on fusion.

Which might indeed stop when the current 2018 contract comes to an end. But we're really deeply unsure that the EU will raze the walls and plow the land with salt as they leave.

But there's more to it than that. Fusion research is being done by government because it's a public good. Once we know how to do it generally then everyone will know how to do it generally. It doesn't matter who finds out, once someone has then we all get power too cheap to meter. We can't even dream about the profits to be made from having found out - the entire point about the knowledge being a public good being that there are no profits to encourage the private sector to do the work that's why taxpayers are.

So, why is it that Hutton is straining as one sans Exlax to find something bad to say? Simply because Hutton knows that Brexit is bad therefore something must be found to show that it is. And standard economics be danged, who cares about that when there are political points to be made? 

Modern tomatoes have no taste - there's a curve for that

It is one of those sad truisms of modern life that tomatoes just don't taste like they used to. And this is not just the effect of ageing palates. Fortunately, there's a curve which deals with this and other such problems:

An international team of scientists claims finally to have cracked one of the most common consumer conundrums: why don’t tomatoes taste like they used to?

After conducting exhaustive taste tests of 100 tomato varieties and sequencing the genomes of nearly 400 varieties, researchers have found the 13 volatile compounds that give a tomato its inherent flavour.

By comparing traditional tomatoes with their modern descendants, the teams uncovered the properties that have been lost in the quest for improved size, yields and resistance.

The original problem was being able to grow lots and lots of tomatoes reliably, which would then keep for the requisite amount of time to get to people. OK, so we solved that and now we've got the information we need to breed back in flavour as well.

This is, when we think about it, just that Kuznets Curve kicking in again. Societies become more unequal then less as thy develop. Societies become dirtier then cleaner as they develop.

No, not because there is anything inevitable about this, but because richer people change their desires and spending habits to make it so. When we're all scrabbling for he next meal then the coal smoke which will kills us 30 years after our death can go hang. When we're well enough fed that we're likely to reach 60 then we'll try to make sure we don't cough our lungs up before then.

And when society's scarce resources are best used to make sure all children can have ketchup so they are, when we've achieved that then the work can start again on the sauce actually tasting of something.

This mass outbreak of fake news - something must be done

We do entirely agree that fake news is a bad thing. Even that Something Must Be Done. Which is why we highlight today just such a piece of fake news:

Girls as young as six years old believe that brilliance is a male trait, according research into gender stereotypes.

The US-based study also found that, unlike boys, girls do not believe that achieving good grades in school is related to innate abilities.

Andrei Cimpian, a co-author of the research from New York University, said that the work highlights how even young children can absorb and be influenced by gender stereotypes – such as the idea that brilliance or giftedness is more common in men.

“Because these ideas are present at such an early age, they have so much time to affect the educational trajectories of boys and girls,” he said. 

The fake news is not, of course, that the researchers found this result. Rather, it's the assumption that the girls are wrong to hold this view. In fact, they seem pretty switched on for it is true that brilliance is more common in men.

The variance of intelligence in men is higher than it is in women. As the House of Commons shows all too often drooling moronity is more common in men as is, as the HoC never shows, great intelligence or brilliance.

This is absolutely nothing at all to do with feminism or any other -ism - not even conservatism nor patriarchism. It's just one of the features of our species, that men are more variable than women along many axes. We are not supposed to say this of course, doing so is what cost Larry Summers his job as President of Harvard University.

But it is true all the same and the denial of it is the fake news.

All of which we think is rather fun actually. Because it is the left insistent that we must root out such fake news. And aren't a lot of shibboleths common on the left going to get hoist on that particular petard?

The economics of abortion

The week following the women’s marches has been busy. On Monday Trump signed a ban on federal money going to international groups that perform or provide information on abortions, and on Tuesday the US House of Representatives voted to prevent terminations being covered by medical insurance funded by the taxpayer.

The first is the reinstatement of the Mexico City Policy, or Global Gag Rule, which will stop NGOs outside of the US who offer or even advise on abortions from receiving any money at all from the US government. NGOs will no longer even be able to tell a woman that abortion is legal in her country without losing all US federal aid.

The second is the No Taxpayer Funding for Abortion and Abortion Insurance Full Disclosure Act, which will prevent women from paying for abortions with their insurance if it’s state funded through Medicaid, or state subsidized through Obamacare. This will affect lower income women the most, as these are the cheapest forms of health insurance.

Abortion is a divisive topic to say the least, and many people already have strong, set opinions on it (though not Trump, who has changed his mind quite a bit). But whatever your moral position, it’s worth looking at the effects of women being able to access abortions on a country’s economy.

One of the biggest effects of legalizing abortion is that fertility levels go down. Since legalization, the overall birth rate fell by 5% in the US directly because of legislation, and within certain demographics (teenagers, African Americans) the rate fell by even more – up to 12%. Although lots of abortions still go on whether or not they’re legal, there are many women who would have a legal abortion but wouldn’t risk a backstreet abortion or pay for going abroad. It’s worth noting that the population of the US is still growing at roughly the same pace as before Roe v. Wade – by a couple of million every year – as immigration has counterbalanced the decline in fertility.

Abortion legalization also changes the kind of children who are born: fewer children are raised in single-parent families, fewer children grow up on benefits, and fewer children grow up in poverty. The Roe V. Wade generation was more likely to graduate from college, make their own living without needing welfare and raise their children alongside a partner. Crime rates fell dramatically around 20 years after abortion was legalized, with many hypothesizing that higher levels of abortion led to lower levels of criminality.

So we know that abortions lower the domestic birth rate and raise average life prospects for the children who are born. But they also lift a burden off the taxpayer. After the Hyde Amendment in the US – a law that restricted federal funds going towards abortions except in the cases of incest, rape or when the woman’s life is in danger - researchers found that the “discounted future public cost… to be almost 100 times the cost of an abortion”. In fact, “for every public dollar spent to pay for abortions for poor women, more than four dollars is saved in medical and social welfare costs over the next two years.”

Although these are US statistics, the general idea is clear: If taxpayers resent paying for abortions, they should be aware that further down the line, they’ll end up paying far more to fund schools, welfare and more. All other things staying constant, making abortions harder to access and more expensive will only make the world a poorer, more crime-ridden and welfare-dependent place.

The Global Gag Rule will be responsible for 6.5 million unintended pregnancies, 2.2 million abortions, 2.1 million unsafe abortions and 21,700 maternal deaths, by 2020, if the loss of aid is not met by other sources. Maybe this is what Trump’s after - he’s said that women seeking abortions should face “some form of punishment” – but you might have hoped he would have prioritized the economy over vindictiveness and politics.

So let's waste even more resources to save resources

As we have pointed out more than once there's a certain use to the price system. It tots up for us, free and gratis, whether we are using more resources to produce something than it is worth or fewer. And, of course, using more resources to produce something of less value than those resources is also known as making us poorer.

As with recycling takeaway coffee cups:

A scheme to boost disposable coffee cup recycling has been launched in the City of London in an attempt to prevent 5m cups a year from the Square Mile ending up in landfill.

The City of London Corporation, in conjunction with Network Rail, coffee chains and some employers, are introducing dedicated coffee cup recycling facilities in offices, shops and streets.

Hmm, perhaps we don't want coffee cups in landfill. Perhaps we do. Perhaps they should be recycled, perhaps they shouldn't. This is, of course, an economic question.

Our aim, as always, is to produce the maximum value from the scarce resources available to us. Recycling can certainly aid with this - the vast majority of gold ever mined has been recycled many times over because it is profitable, it adds value, to do so. Sticking the cow shit on the fields also adds value which is why we have done that for millennia as well, we recycle it. What we want to know is, well, does recycling coffee cups add value?

Which is where our price system comes in. If we get more revenue coming out of coffee cup recycling than we have to put into the system then it adds value - that's what profit is, the value added in a process. If we have to stick more money in that we get out then the process is subtracting value. At which point:

The first 30 businesses with more than 500 employees to sign up to the Square Mile challenge will receive a year’s free membership to collection services provided by Simply Cups, while all other businesses involved can access discounted rates for collections. The coffee cups collected can be remade into a range of items, from pencils to park benches, which will be donated to local community projects and schools. Insurance broker Lloyd’s has signed up.

The programme does not make a profit. Those who offer up coffee cups for recycling must pay extra to do so. This is on top of the normal waste disposal fees and yes, even on top of the normal landfill tax already charged. The programme is unprofitable and thus makes us all poorer.

And note what the meaning of that is. We are spending more of our scarce resources by recycling than we would by not recycling. We are wasting resources to save them.

Another way to describe this is flat out idiocy but then that's the modern world for you with the mantra about recycling. It's the latest mass delusion to have taken hold of society.

We should recycle what is profitable to recycle, this makes us richer. We can even argue that we should recycle some things because externalities. But once we have already included the externalities in the price system we should not recycle those things where we make a loss doing so.

Ending the debt bias

Critics of the new Trump admin are scared the 'king of debt' is about to push the US into a debt-fuelled binge. But truth be told, the country is already far too fond of the stuff. Thankfully, it looks like Republicans are already wise to the problem.

Trump is currently negotiating with House GOP leader Paul Ryan over the shape that corporation tax reform will take. But, one area where both their plans are on the same page, is the debt-equity bias.

Under the status quo (in both the UK and US), debt is treated much more favourably by the tax system than equity. If you choose to finance a new project through borrowing then you can deduct interest repayments as cost to lower your tax bill. But if you instead wanted to fund a project through equity, that is through selling a stake in your company, then you can't deduct your dividend payouts as a cost. As a result, it's much cheaper to finance a new project through debt than equity.

This encourages projects to get funded through debt when they would otherwise be funded through equity.

This is not merely a cosmetic difference. As Chari and Kehoe point out, summarised well here by John Cochrane, equity has an automatic resolution procedure built in: owners’ shares go to zero. You don’t hear calls for governments to step in when share prices fall.

By contrast debt, which has fixed payments, not ones which vary depending on economic outcomes, tends to attract bailouts: ‘well-meaning governments lack commitment’ and step in to help pay them off when they become unpayable. They introduce a distortion by being unwilling to see creditors lose out or debtors go bankrupt. This is one reason why people worry about high debt funding in a way they don’t worry about high equity funding.

Then there's the Mortgage Interest Rate deduction. That allows US taxpayers to lower their tax bill by deducting the amount they spend on mortgage interest. As a result, there's a big over investment in owner-occupied housing.

The system is biased in favour of debt. But both GOP plans on the table will go some way to fixing that. Both plans allow for immediate expensing of capital investment, although Trump's still allows for some interest deductibility while the House plan gets rid of it entirely.

According to the non-partisan Tax Policy Centre (think of it as the US equivalent of the IFS) both plans bring the corporate tax treatment of debt and equity back into line.

Trump's:

And the House's:

They even tax debt slightly more, perhaps going some of the way to deal with Cochrane's point about the implicit bailout subsidy. I'm not sure the extra ~1% would be enough for Cochrane's purposes but it's start.

Both plans also do a little (but too little) to deal with mortgage interest deduction too. Trump's plan caps all deductions at $100k, which wouldn't affect most Americans, but very rich Americans taking out mortgages on absurdly expensive properties will take a hit. The House GOP plan instead raises the standard deduction substantially, that's the amount that taxpayers can claim if they don't make itemised deductions like the Mortgage Interest deduction.

However, if you are able to claim more on mortgage interest than you would from the simple standard deduction – i.e. if you pay more than $12,000 a year in mortgage interest – you should still deduct that. So the deduction remains solely as a handout to the very well-off. Thankfully, Britain's own mortgage interest tax relief was phased out in the early 2000s.

Some, particularly on the left, are concerned that Treasury Secretary Steven Mnuchin's call to 'strip back parts of Dodd-Frank that prevent banks from lending' will lead to the sort reckless lending that lead to the financial crisis.

I'm less worried, in part because I'm persuaded by Jeffrey Friedman's argument that misguided regulations in part caused some of the worst practices to happen.

But I'm also less worried because I think there is a strong prospect that other Republican reforms may make the US financial system substantially more stable.

Both Trump's and the House GOP's plans will lessen the tax system's bias towards debt. Britain needs to do the same. There are straightforward measures in both plans that Britain could implement. They would boost GDP and make future bailouts much less likely. 

This apparently new post truth politics

The Guardian treats us to three different Very Serious People telling us that Trump signifies some new and daring departure from the norms and standards of politics. We are into 1984 territory here, George Orwell all over again, post truth politics.

This is, you will not be astonished to find, a regular meme across much of the press. The same newspaper, The G, also has Simon Jenkins telling it like it is:

Of all golden-age fallacies, none is dafter than that there was a time when politicians purveyed unvarnished truth. As Private Eye’s Ian Hislop said in his recent Orwell lecture, suppressing truth and suggesting falsehood have been leitmotifs of politics since time began. Leaders of all sorts have used censorship to grind some personal axe, to deny George Orwell’s core principle of free speech, “the right to tell people what they do not want to hear”.

Falsity, whether about the past or the future, is the raw material from which politicians seek to fashion their personal narratives.

As examples, think of the constant wailing about increasing poverty in the UK - we do not have any poverty in the UK, we beat that in the 1930s. We have inequality of income, we most certainly do, but no poverty. Similarly, think of the claims of increasing global inequality - a flat untruth, global inequality is falling, not growing.

Or the claims that wealth or income distributions are returning to Victorian levels - nonsense, this is without counting what we do to reduce income and wealth inequality.

More specifically Hillary said that she would add not one penny to the national debt. Given that she was not going to (she said she wouldn't) close the $500 billion a year budget deficit this was a flat out lie.

Or at the grander end of the scale, those who state that the IPCC and climate change show we must radically change the entire structure of society. When actually, the IPCC itself says that all we need is a non-fossil fuel powered society (all!) and we'll be fine.

Or perhaps one close to our hearts here, the claim that a financial transactions tax will raise billions, hundreds of billions, with which we can.... when as has been conclusively proven an FTT would lose revenue overall, not increase it. Another close to us here, that tax avoidance costs the Treasury some huge amount and if only we could....but tax avoidance costs the Treasury nothing as that is tax which is not due.

We seem therefore to have described most of the Guardian's comment pages of recent years as being post truth. Or, as we might also put it, lies.

As Jenkins points out there is nothing new about this whatsoever, the difference is who and what not the process.

And let's be honest about this which would you prefer? Someone misspeaking about how many people watched him put his hand on a Holy Book or someone outright lying about the necessity of abolishing industrial capitalism so that we all have to return to medieval penury?

Wasn't there something in that Holy Book about motes and beams?

What should she say?

After seven weeks down under, I return to find the Brexit scene decisively altered. This is not so much by the Supreme Court’s judgement, always expected, less hurtful than it might have been and readily overcome given the parliamentary climate. The pivotal development is May’s trip to Washington this Friday, as the first overseas Head of Government to meet President Trump. This establishes that the stumbles immediately after his election have been overcome and attests to the mutual interest of both sides in constructive dealings. 

So what should May say to him? Is she simply trying to cement a personal relationship, or should she get into specifics? This has only to be asked to be answered: any relationship is built upon specifics. In this instance, both sides will also want a concluding press-conference which puts flesh on the bones. 

So let’s ask ourselves, what do the two sides want? At this early point, Trump is demonstrating credibility by signing executive orders which do what he promised (parenthetically, not the least by complying with the news values of his antagonists). He’s still keen on differentiating himself from Obama, but the fact of May’s visit achieves that. Friendship with Britain also plays well with many of his core voters - constitutionally well-disposed to this country - but May will do well not to rely on sentiment alone. In the medium-term, the success of Trump’s presidency will turn on his central economic promise: jobs for American workers. As to foreign policy, he will be less interested in giving signals of reliability to fractious allies than in pressing his foreign policy agenda: bilateralism in trade negotiations, burden-sharing in defence, and the defeat of Islamism. 

In principle, this poses few challenges for May, bearing in mind her fundamental objectives with the new man: a clear commitment to NATO and trading alternatives to the EU. The former should be fine, though we may have to goose up our expenditure on the military and suchlike (eg, GCHQ) to show willing. Trade is more problematic. May’s dilemma is that Trump is raising the stakes with his proposals for border taxes and the American way with trade talks is not encouraging: their negotiators take a notoriously tough line, animated by private sector cues. This means that May needs to prevail upon Trump to break the mould in some way, but without challenging his commitment to American jobs. To turn to one or two specifics: 

• The two countries don’t export much by way of consumer goods or food to each other, so this ought to be upside all round. Of course we’re bonkers about GM crops and the Americans might not welcome cheap cars from Nissan, but would these be deal-breakers?
• As to capital goods, both sides are already well ensconced with their customers. The civil business of our biggest exporter, B.Ae, is entangled in the Airbus joint venture and its European military business similarly in EADS. Rejigging any of this this would threaten jobs at Boeing and elsewhere, unless B.Ae also brought along new customers. This would be extremely disruptive, as the joint ventures are central to European - in particular French - industrial policy and underpinned by Government to Government agreements.
• As to services, the two countries are more or less on the same page about IPRs. The Americans have much larger private sectors in healthcare, tertiary education and broadcasting but it is hard to imagine more politically sensitive topics here. May is fortunate that Trump is in a position to ignore any clamour for access as unrelated to US jobs. 
• Finance poses few problems. Each country is already the largest FDI and portfolio investor in the other. The commitment of US investment banks to London is up in the air: May could ask Trump to lean on them to stay their plans to lighten their City footprint. He has shown that he’s willing to bully the private sector so you never know.
• Finally, when negotiating TTIP and TATP, the US raised hackles by pressing for the private sector to be able to sue for access. If still the thing, the topic lends itself to compromise, as to transition periods, adjudicatory body and so on.

More generally, Trump could press May to sign up to his bilateral agenda. At this point, we’ve got nothing to lose, so there may be text to that effect. Net, net, May has something to offer, Trump has no reason to mess her up, so we should expect a positive closing communiqué. Will there, however, be a timetable (other than the well-signalled State Visit)? May will be bearing in mind that Trump’s piston could have a short shelf-life. After all those executive orders, he’s going to need support from Congress and the government machine. I’d be looking for serious blow-back from those whose interests are hurt or who are determined to be offended by him personally. It’s always possible that his opponents will be cowed as his policies begin to speak for themselves, but Trump could equally become another lame-duck á la Obama in short order. So May had best push things along.