Can we please get this business rates thing right?

Two little stories that caught our eyes:

Nearly three-quarters of small companies in London say business rates are the most important issue they face, piling further pressure on the government over the controversial tax.

The Federation of Small Businesses (FSB) warned that London was in “serious danger of losing its vital support system of micro and small businesses”. The average micro business, which employs fewer than 10 people, will have to pay £17,000 to cover business rates from April, it added.

And:

The house price gap between London and the rest of the country has risen almost ten-fold over the last 20 years to reach nearly £300,000, a report has found.

An average home in London was valued at £105,266 in 1996 - around £33,834 more than one in England and Wales as a whole, according to research by Lloyds Bank.

But by 2016 the price gap had increased to £299,631, with a typical home in London priced at £578,381 and an average property in England and Wales costing £278,750.

Domestic property is not the same thing as commercial true, but that's likely to reflect similar changes in the second over the years.

At which point, business rates are a tax upon the rent that a landlord receives. Values have gone up strongly, rents have too, so why shouldn't the amount paid in tax upon those rents go up? 

We've got to get the money from somewhere and land's the one thing no one makes any more so taxing that is the least distortionary manner we've got of getting some tax into the coffers.

Shrug, what's all the fuss about?

They can huff and they can puff but....

Apparently Brexit will mean Britain doesn't get the fishing grounds back:

The hopes of British fishermen that the UK can win its “waters back” after Brexit are expected to be dashed by the European parliament, despite the campaign promises of Boris Johnson and Nigel Farage, a leaked EU document reveals.

MEPs have drafted seven provisions to be included in Britain’s “exit agreement”, including the stipulation that there will be “no increase to the UK’s share of fishing opportunities for jointly fished stocks [maintaining the existing quota distribution in UK and EU waters]”.

At which point we need to think a little about what is being said here:

But the leaked report from the European parliament’s committee on fisheries insists that the “granting of access to the EU domestic market to the UK” post-Brexit should be conditional on Britain continuing to respect the rights and obligations in the CFP.

At which point all becomes clear. This is a negotiating stance. If you want to be able to sell into our lovely market here then we've got to keep your fish. Perfectly reasonable and respectable argument to make and there's a perfectly reasonable and respectable answer too - as well as some more intemperate.

Not that it really matters because this "access" they are talking about is the same one that is being linked to freedom of movement. And since the government has already decided that that isn't going to happen then that form of access isn't something that we'll be trying to preserve.

They're huffing and puffing here about how harsh they'll be in negotiations but it's all rather wind signifying nothing instead of being about to blow the house down. We've already, for better or worse, rejected that Single Market membership or access that is conditional upon their keeping the fish.

Brexit won't lead to a flood of English champagne across the Continent, no, really, it won't

Our soon to be no longer Lords and Masters in Brussels appear to be getting their gussets in a twist over something that will not happen:

The European Union is concerned that British companies could violate protections given to the names of thousands of European products – such as parma ham and champagne – while the protected status of foodstuffs such as West Country Farmhouse Cheddar Cheese is retained after Brexit.

The European commission has given “geographical indication” (GI) status to 1,150 products, meaning companies can only use the name of a locality in their marketing if the product is from that area.

When the UK leaves the EU, it will no longer need to abide by the directives and could, for example, rename some English sparking wine as English champagne, or ham as English parma ham.

English champagne is that thing which will not happen. Because of the Treaty of Versailles from the end of World War 1 in fact:

ARTICLE 275

Germany undertakes on condition that reciprocity is accorded in these matters to respect any law, or any administrative or judicial decision given in conformity with such law, in force in any Allied or Associated State and duly communicated to her by the proper authorities, defining or regulating the right to any regional appellation in respect of wine or spirits produced in the State to which the region belongs, or the conditions under which the use of any such appellation may be permitted; and the importation, exportation, manufacture, distribution, sale or offering for sale of products or articles bearing regional appellations inconsistent with such law or order shall be prohibited by the German Government and repressed by the measures prescribed in the preceding Article.

That is generally taken to mean that Champagne comes from Champagne, Cognac from Cognac and so on and on. The reason the Americans don't limit themselves in the same manner is because they never did ratify the Treaty of Versailles.

Not that this protected designation of origin is important in any manner. It only started in 1992 for all the other foods and we're really very sure that the world still turned upon its axis before that date.

Still, lucky we're leaving eh, if our Lords and Masters obsess with trivialities and even then manage to get them wrong?

Those people have too much money, tax them more!

That seems to be the general thrust of this piece in The Guardian. Pensioners now, at least some of them, have higher disposable incomes than those still in work. This is appalling apparently and must be stopped. By imposing higher taxes upon pensioners:

That might be considered a good thing if it were not for the fact that the cost is unaffordable, is damaging the ability of British business to invest in the future, and fuelling inequality between generations and among the nation’s 12 million over-65s.

Those things could all be true but pensions are simply delayed earnings. Those people have worked for that money:

Perhaps the answer lies in an extension of national insurance beyond retirement , a care tax, or more transparently a separate tax regime for those who become eligible for the state pension. In short, pensioner income tax bands.

Pensioner tax bands would have lower thresholds for the higher rate of tax and the 45p rate, clawing back some of the inflated incomes many of the first wave of baby boomers enjoy from their guaranteed final salary pensions.

They received lower amounts in their weekly paypackets in order to pay for those pensions. Whether or not the pension payers saved enough to pay it is an irrelevance at this level. There was an employment contract which said some money now, some deferred into your pension. To change the rules now is not just akin to it actually is stealing their wages.

Pensioners on incomes above £20,000 a year will usually have paid off their mortgage and have few fixed costs apart from council tax and utility bills sapping their monthly bank balance. Some, we know, will be subsidising children and grandchildren on the bottom rungs of the pay ladder. Many have told the Guardian of their caring responsibilities. But the UK needs to avoid the situation in Greece, where pensions are untouchable because they have become the financial bedrock of extended family life. 

The Greek problem is entirely different. There it's the state pension (s) which are too high. This proposal here is that people who, entirely in the private sector, deferred some of their income to later in life should now be rapaciously taxed because inequality.

And this is all in The Guardian, usually in favour of the workers being able to enjoy their wages.

It's also very much missing the larger picture. We've been working for well over a century now at sorting this problem of old people starving to death in their freezing homes as unable to work they have no income. Funding pensions was the solution. And now that the solution is working we've got to rip up a century's work?

The usual ignorance of incentives is also on display. We'd rather like the younger generations today to do a bit of saving too for their own old ages. And if we go out to nick all the cash off the people who did save then what's that going to do to those we'd like to save? 

We regard this as an appalling set of suggestions and it seems to be driven solely by the idea that if anyone does end up with a bit of money then we musty, obviously, tax them more just because.

We fear the BMA has the wrong end of the stick here

The BMA, the British Medical Association, tells us that the NHS, that National Health Service, needs another £9.5 billion stat. That is, the trade union for Britain's doctors says that the employer of near all Britain's doctors should have lots more money.

Well, yes, OK, that's what unions are for but we do fear that they've rather got the wrong end of the stick:

Dr Mark Porter, the BMA’s chief, said: “These figures are especially concerning given that everyone can see a huge crisis unfolding within our NHS, with record numbers of trusts and GP practices raising the alarm to say they already can’t cope.

“The NHS is at breaking point and the STP process could have offered a chance to deal with some of the problems that the NHS is facing, like unnecessary competition, expensive fragmentation and buildings and equipment often unfit for purpose. But there is clearly nowhere near the funding required to carry out these plans.”

It's the unnecessary competition and expensive fragmentation that betrays the error here. For as Adam Smith pointed out those 241 years ago, long enough for people to grasp the point, we become richer through the division and specialisation of labour. Yes, that damn pin factory.

This does indeed apply in medicine - the literature is chock full of research showing that hospitals which do a lot of one type of operation have very much better results than those which occasionally dabble. That doctors themselves study certain specialties is again proof that the specialisation of labour applies here.

One of us here at the ASI spent a decade as the only person in the world doing a specific job. One part of the lighting industry uses rare earths to alter the colour emitted. That unique job was making sure of a supply of just one of those rare earths to that industry. No, not mining it, not processing it, not turning it into light bulbs, just ensuring that there was a supply of the right purity, in the right size, in the right place at the right time. That's the sort of granularity which private industry gets to these days. Just the one person in the world doing a specific task - OK, that level of granularity is still pretty odd but still, that's the possible end point of the process.

Fragmentation is not thus expensive, it's the process by which we become more productive and thus richer. And competition is just the method we use to decide who we are going to divide and specialise with.

Thus we really do conclude that the BMA have the wrong end of the stick here. The very things they are complaining of are the very things which, in every other walk of life at least, make us more efficient. And if it works everywhere else there is no reason at all why it won't work in medicine.

On the subject of Merrie England

The Observer draws our attention to a little book called Merrie England:

When Merrie England (quoted above) was published in 1893, it became a literary sensation almost overnight. Written in vivid, plain English by the Manchester-based socialist campaigner and journalist Robert Blatchford, the book was presented as “a series of letters on the Labour problem, addressed to John Smith, of Oldham, a hard-headed workman, fond of facts”.

To this fictional resident of one of Lancashire’s grimmest mill towns, Merrie England advocated a socialist transformation of the most advanced capitalist economy in the world. Using his Latin pen-name, Nunquam, Blatchford deployed satire and polemic to call for communal collaboration to replace competition and chasing profit as the driving force in human lives.

“Take the case of a tram guard working, say, 16 hours a day for £1 a week,” begins one of Nunquam’s rhetorical salvos. “That man is being robbed of all the pleasure of his life. Now there ought to be two guards working eight hours at £2 a week. If the tram company makes big dividends the cost should come out of those dividends.”

The implication there is that the dividends are enough to cover the wage bill going from £1 a week to £4 a week. And if we're honest about it we too would probably say that if dividends are four times the entire wage bill then there's a bit of room for a pay rise. We're not, however, entirely sure that the example is factual.

The paper uses this as a lead in to a discussion over the Labour Party's woes:

It has been estimated that 149 of Labour’s 232 constituencies voted Leave, in defiance of the party’s wishes and at odds with the overwhelming majority of Labour’s mainly professional membership. 

Well, yes, seems about right. However, the part that really interests us is this small detail:

Blatchford’s coruscating critique of free market economics and the culture of individualism became part of the warp and weft of the nascent Labour party.

Those were heady times for a British working class growing in confidence and taking its first political steps. Over a century later, the modern Labour party could use a Merrie England.

Possibly so. It's just that looking at the frontispiece of the original we note something that amuses. The publication was (in part) funded by advertising quack medicines to those stout working classes.

How's that for sticking it to the capitalists and critiquing the free markets?

This looks eminently sensible - not very new though

Apparently there's some great new breakthrough in being able to make cancer drugs cheaper for patients and the NHS. This sounds like an excellent idea to us, wouldn't we all like more people to be cured more cheaply?

The high price of new cancer drugs is indefensible and unsustainable, say two of the world’s leading cancer research institutions, who propose a different way to develop them that could sideline big pharma.

“There is a clear and urgent necessity to lower cancer drug prices to keep lifesaving drugs available and affordable to patients,” say leading scientists from the Institute of Cancer Research in the UK and the University of Texas MD Anderson Cancer Center, where many important new cancer drugs have been invented, in a paper in the journal Cell.

How absolutely super, eh? So, what's the magic ingredient in this?

Pharmaceutical companies used to justify their prices by pointing to the high cost of clinical trials involving many thousands of patients. But that is no longer always necessary, the scientists say in their paper. The new targeted drugs require a test for a genetic biomarker to see whether patients will respond or not. That means the drug can be trialled on far fewer people. The drug crizotinib, used for advanced lung cancer, was approved following a trial involving only 347 patients, they point out.

We're not convinced that is actually new though. The standard analysis of drug costs has been that it can cost $800 million to $ 2 billion (dependent upon who you want to believe and how you assign opportunity costs and the expenses of failures) to get a new drug through clinical trials and to FDA or equivalent approval. Further, the standard solution to these costs has been to reduce the costs by reducing the level of proof required - with the FDA specifically to argue only on proof of safety and leave effectiveness to the market (generally you must prove that the new drug is better than those already available in order to gain a licence).

Thus this proposal is not exactly new. Lower the costs of a drug gaining approval and drugs will be cheaper, yes, seems obvious enough and what some have been shouting about for some decades now.

The only remaining oddity therefore is this wibbling about "Big Pharma." Why shouldn't the big firms take part in exactly the same process? If said new process makes drugs cheaper than why not allow all to do so?

Why isn't this just blindingly obvious to everyone?

Apparently it's the naughty young people, with their mobile phones and their social media accounts, who waste all the food. We do have to wonder why anyone bothered to try to find this out - surely it must be obvious to everyone?

A generation gap in attitudes towards cooking and eating is helping to fuel the UK’s food waste mountain, research reveals, driven by time-poor millennials who do not understand the value of the food on their plate. 

In contrast to savvy older consumers familiar with post-war rationing, the study suggests, those aged 18 to 34 are preoccupied by the visual presentation of food to photograph and share on social media while failing to plan meals, buying too much and then throwing it away.

The UK churns out 15m tonnes of food waste a year – of which 7m tonnes come from households. The estimated retail value of this is a staggering £7.5bn, and the government’s waste advisory body, Wrap, calculates that a typical family wastes £700 of food a year.

A national supermarket study of the food waste patterns of 5,050 UK consumers, published on Friday, reveals nearly two-fifths of those aged over 65 say they never waste food, compared with just 17% of those under 35.

Using American figures, just because we have them at our fingertips, a poor family in 1963 spent 33% of income on a basic but nutritious diet. Today that is more like 11%. And here in the UK food spending is, on average, some 10% of household income today.

None of us should really be surprised that something which has become markedly cheaper in real terms is subject to a little less conservation now, should we?

More than that, these millennials are not "wasting" food because they don't know the value of it. Rather, they are wasting it because they know the value of it. That value being very much less than it was and thus less effort need be expended in avoiding waste.

It has always struck us as extremely odd this concentration upon food waste. It's easy enough to get someone to understand the value of time. Who these days would stoop down to pick a penny up out of the gutter and who wouldn't have done so 100 years ago? The relative value of a penny and the time taken to collect it having changed markedly over this time to the extent that your correspondent has seen beggars throwing away coppers collected as just not worth the effort.

But when it comes to food this obvious point seems to escape people. Food is now cheap, it is logical and righteous that people expend less effort to conserve it. And yet when it is cheap, needing less attention paid to it is when we are all taxed to have bureaucracies like WRAP shouting at us for doing what is logical and righteous - not caring about it very much.

The best we can come up with as an explanation is that those who rule us were brought up by rather strict nannies of that earlier generation and thus are infested with the idea that food is rare and expensive. Time to wake up and smell the broccoli ladies and gentlemen. Recent decades have solved one of humanity's perennial problems, the availability of cheap food. We just don't need to conserve it as we used to.

What a delightfully delicious dilemma

The usual hipsters and food faddists are soon going to face the most delightfully delicious dilemma. Quinoa has the merits of being a forgotten grain from a little regarded civilisation. The "rediscovery" of it thus brought tears to the eyes of all who would mark their social prowess through their bowels. And so it became tres trendy, certifiably chic.

The same group of cheerleaders are of course largely the people who insist that no GM will ever sully those bowels. No, we're not sure either but they at least insist they have some reason why.

At which point:

It has become a byword for metropolitan, health-conscious dining, but new research suggests quinoa could be destined for a far more important future.

Scientists believe the “supercrop” could solve the problem of feeding the world’s growing population.

The resilient seed, which was once the "mother grain" of the ancient Andean civilisation, thrives in harsh environments and provides a more balanced source of nutrients than cereal.

Well, isn't that lovely? And now for the dilemma:

Experts have now discovered a way of manipulating the quinoa plant changing the way it matures and produces food to make the bitter seeds sweeter.

Researchers from the King Abdullah University of Science and Technology sequenced the Chenopodium quinoa genome, creating the world's highest quality quinoa sequence which has already yielded insights into the plant's traits.

The reason you sequence the genetic code is so that you can manipulate it. Thus, coming soon enough, GM quinoa.

Which of the two fads will win? More of a cheap and nutritious grain with which to feed us all, in that most healthy manner as is currently claimed? Or the method of making it cheaper and more nutritious blacklisting it from all GoodThink diets?

Our suspicion is that GM making it cheaper will be the thing which makes it unfashionable. For how can you go around making a moral statement by consuming something that's cheap enough for everyone?

There's a reason we use prices to ration things you know

The intricacies of how supply, demand and prices interact seem to be a mystery to all too many people. Unfortunately, those who are so flummoxed appear to include large numbers of those who have the statutory right to reach into our wallets:

Introduction of 30 hours free childcare could mean shortage of places

Well, yes, thanks to The Guardian for that headline. We'd go so far as to insist that when something formerly paid for becomes "free", free at the point of use at least, then demand is really very likely to outstrip supply.

Because, you know, that balancing act performed by prices.

From September, three- and four-year-olds in England will be entitled to 30 free hours of care per week in term time - up from the current 15 hours.

But a poll of local authorities by the Family and Childcare Trust found uncertainty about impact of the policy.

The government says quality, affordable childcare is central to its agenda.

The survey was sent to all 152 local authorities in England, and 112 of them responded.

Of the 112, over half (54%) said they did not know if they would have enough childcare available for pre-schoolers using the 30 hours.

A third (33%) said that there would be sufficient places, while a further 13% said there would not be enough.

This is of course not free nor any reasonable simulacrum of it. Someone, somewhere, is going to have to pay for those places and that care. And doing so through the taxation system rather than the price one is the wrong way to go about it.

What we would actually like to happen is that those who can earn more by going to work rather than caring for their own children - and wish to, of course - do so. And those who earn less than the cost of child care don't. Hiding that decision from the price system is therefore the wrong thing to be doing.

It's actually making us poorer which isn't the point of government nor policy at all.