We note that Colin Hines is pushing his progressive protectionism again

One of us got rather shouted at a few years back for describing Colin Hines' idea of "Progressive Protectionism" as fascist economics. Note, well please, that we did not go further and describe his ideas in toto as fascist, nor he himself. Just that there's a great deal of similarity between the one of the economic ideas he is currently advancing and those of various fascist movements across history.

This is the idea that this international trade thing is a very bad idea indeed and we should all be content with what we can make at home. Hines rather doubles down on this in a letter to The Guardian:

Your editorial on the French elections (11 April), with its encouraging mention of the rise of the higher tax and spend candidate Jean-Luc Mélenchon, failed to mention possibly his biggest electoral draw: the fact that he is a leftwing protectionist. Prior to the 2012 election, polls showed that over 80% of French across the political spectrum thought that free trade had a negative impact on employment. So it’s not just immigration that is fuelling ever-broadening support for Marine Le Pen, it is also the fact that she too is an overt protectionist.

These trends have obviously not been lost on the unholy trinity of free trade pushers the IMF, WTO, and the World Bank (Report, 11 April). Having forced nations across the world to accept their open-borders, export-led growth mantra they are now busy crying crocodile tears for the “left behind”, the inevitable result of their policies. They still rail against protectionism, despite the fact that if it has a progressive end goal, it could enhance the economic and social conditions of the globally disadvantaged.

In terms of the relevance of all this to the UK, and at the risk of intruding on public grief, what are the Labour party’s views on these under-publicised protectionist trends? The likes of Trump and Le Pen have been able to turn it into a politically potent and successful issue, so why are so many progressives over here absent from this pivotal debate?

Ourselves we would hope that even progressives can note that this neoliberal globalisation has had really rather a large effect upon the globally disadvantaged. That collapse in the absolute poverty rate out there should be a clue - this last generation has seen the greatest reduction in poverty caused human misery in the history of our species. We think that's a pretty good recommendation for an economic policy really.

But a little point we would make to Hines. If your economic policy recommendations could have come from the manifestos of Le Pen, Melenchon, Mussolini, Moseley or the BNP then we would recommend a reconsideration of those economic policies you're pushing.

Money and mental health don't appear to be moving in the right direction

We are continually told that it is poverty - which of course these days means inequality - which contributes so much to mental health problems. Anything, dependent upon the person advancing the argument, from the green eyed God of jealously through to the unfairness of the distribution of resources leads to more mental health issues as the society becomes more unequal. This is rather what the Spirit Level was trying to tell us for example.

Except the actual empirical evidence seems not to be supporting that idea:

A quarter of young women in the UK have suffered from anxiety and depression, according to a new survey released by the Office for National Statistics (ONS).

...

The study also reveals that in the four years from 2009-10 to 2013-14, the number of young people saying their mental health had “deteriorated” rose from 18% to 21%.

This is all rather odd:

Other figures from the study show that the number of young people who believe they are financially comfortable has increased since 2009-10. Seven years ago, 15% said they were struggling to get by, while by 2014-15 the number reporting financial hardship was 7% – and a significantly higher percentage (45%) said they were satisfied with their household income, up from about 30% in 2009-10.

Economic conditions improve and mental health deteriorates? That's not exactly supporting the idea that it is deteriorating economic conditions which worsen mental health, is it? 

Ourselves we'd run with the idea that the two vary, except at the extremes of course, independently. For we're not in fact Marxists who believe that economics determines everything, just classical liberals who are pretty sure that economics aids in determining what happens to the economy but there's a lot more to life than merely that.

Doctors must find reality to be just so damned annoying

We would not say that everything is perfect in the National Health Service, in fact far from it. Nor would we insist that the current arrangements for general practice are quite what they could or ought to be. But we would still insist that reality has to have a look in here.

GPs are fed up with responding to political whim; they want to provide care to patients which is based on evidence, not political expediency.

That's from the following gentleman who has just surveyed all GPs in the South West:

John Campbell is professor of general practice and primary care, University of Exeter Medical School

As we say, we really do insist upon that intrusion of reality.

The entirety of the National Health Service is paid for from tax revenue. That means that GPs in the NHS are paid for with tax revenue - your wages come from our pockets but through the filter of politics and politicians. Therefore, and this is inevitable, there is no way to avoid this, how those tax revenues are spent, what the NHS and GPs are told to do, will be determined by politics and politicians.

The only way out of this is for the NHS not to be tax funded and thus not under the control of the politicians. For that's actually what we elect politicians to do - oversee the spending of our tax money.

You may not like this but it simply is never going to happen that an organisation gets £120 billion a year of tax money without politicians directing how it is spent because that's what politics is for. 

The Adam Smith Institute’s Young Person’s Outreach Programme

Among the most successful and popular of the ASI’s events is the series which caters for young people.

The Next Generation

The Next Generation, TNG for short, began in 1990, and brings together people from 18-30, usually on the first Tuesday of the month. It was named after the sci-fi TV series, “Star Trek – the Next Generation,” which had recently started. The aim was to bring together young people from five groups: those in fulltime education, those staring out in City jobs, young professionals in fields such as law and medicine, young people working in the media, and those involved in public policy, including research staff for MPs and people in think tanks.

The format is that of a wine reception starting at 6.00 pm. At each meeting there is a speaker of public prominence for 10 minutes in the middle (timed with an alarm clock!)  The young guests enjoy each other’s company as the invited speaker circulates among them answering their questions. Some of those who originally attended as guests are now themselves MPs and media personalities.

The highlight of the TNG year is the annual Boat Trip, when 240 of them sail up and down the Thames on a champagne cruise on a summer evening. It is always heavily over-subscribed.

ISOS

The Independent Seminar on the Open Society is aimed at school sixth formers. The London one, held in Westminster, attracts about 150 students, many of them sent by their teachers, with some teachers even accompanying them. The format is of a one-day conference with a series of speakers on topics relevant to the work and outlook of the ASI.  Each speaker has a half-hour slot to cover their speech and questions, so many can be fitted in. There is usually a debate on some topical or contentious issue.

The ASI has recently extended the programme to include ISOS conferences in Manchester, Birmingham and Sheffield, attracting about 120 students to each, and is looking to include other towns in the future.

Forum

The ASI’s Forum, held on a Saturday in early December, is a one-day successor to the Liberty League Freedom Forum conferences, and like them, attracts over 300 guests, mostly students or people in their early 20s.  It is very high powered, covering both esoteric and specialist topics as well, with speaks who are prominent, knowledgeable, and highly entertaining. It gives students a chance to network with each other and with the speakers.

Freedom Week

Freedom Week is held in a Cambridge college in early July. It is a Monday to Saturday conference jointly organized and funded by the Adam Smith Institute and the Institute for Economic Affairs. It selects 36 top quality students from about 250 applicants, and provides them with accommodation and meals during a week of intensive lectures in aspects of political economy and neoliberal ideas.

Social events make it even more attractive, and include an outdoor cava reception, a barbecue and a session of punting on the river Cam.  By the end of the week the students have formed a close-knit and effective group.

School visits

ASI President, Dr Madsen Pirie, speaks to about one school each month, going to the school to address their sixth formers on topics of economic and public policy that might not feature prominently in the school syllabus. The schools often invite nearby schools to participate, giving an even larger audience. These visits often spur the students into attending other ASI functions and becoming part of its network.

Gap Years

Each year the ASI employs two gap year people as paid full time employees. Often it is a boy and a girl taking a year out after school. They participate in the full work of the ASI, writing for the blog, organizing meetings and school trips, helping to plan lectures and events and editing and proofing our papers. It is very much a learning experience that makes it easier for them to handle the demands they will encounter first at university, then in employment.

Work experience

The ASI accepts a few interns each year for short periods of work experience, usually a week or two. They play a full part in the ASI’s work, and are usually assigned a special project to complete during their stay.

Overall

The ASI expends much time and many resources on its youth outreach programme, fully aware of the importance of the next generation of leaders in academe, public policy, the media and business. This attention has paid off handsomely in the past, does so today, and will do even more so in the future.

The BBC's horrible figures on social care staff turnover

The BBC has some horrible figures about the numbers of social care workers who quit each year:

More than 900 adult social care workers a day quit their job in England last year, figures reveal, as homecare providers warn the adult social care system has begun to collapse.

Analysis by the BBC of data released by a charity, Skills for Care, shows that in 2015-16 about 338,520 adult social care workers left their roles, equal to 928 people leaving their job every day. There were more than 1.3 million people employed in the adult social care sector in England in the period.

Such bald numbers don't mean very much, what we want to know is the rate:

The Skills for Care figures show that the industry has a staff turnover rate of 27%, which is nearly twice the average for other professions in the UK, according to the BBC report.

Profession? This is not being a social worker, this is the essential tasks of aid with bathing, bottom wiping and so on. Essential, entirely so, but not exactly a profession.

Still, what we want to know is how this compares with other occupations. What, for example, is the variance between different ones across the economy? Fortunately, that is already information collected.

And as it happens that turnover in social are is, at 27%, fractionally higher than that in leisure and hospitality at 25.9%. Two low paid jobs which require little in the way of qualifications or training - other than the basic human attributes of a bit of empathy and so on - have rather similar turnover rates.

This is a surprise to whom and why?

Deregulate childcare to make it affordable

Britain has the highest childcare costs in the developed world. A two-earner family will spend over a third of their after-tax income on nurseries and childminders. It's three times as high as in Germany, even though our Government actually spends more on early years education. In fact, the UK government spends a bigger share of GDP on childcare than the EU average.

We've argued before that the solution here isn't to focus on the demand side with ever-greater subsidies, but to look at the supply-side factors that make childcare so darn expensive in the first place. Britain has some of the most restrictive childcare regulations in the world. Currently in the UK one adult is required for every three babies, four toddlers, or eight children over the age of three. Our staff-to-child ratios are some of the strictest in Europe, as the table below shows.

Source: Institute of Economic Affairs (2017)

A 2015 study by Dianne Thomas and Devon Gorry for the Mercatus Center at George Mason University reveals the harm of mandating high staff-to-child ratios. Here are the four big takeaways from their study:

1. Relaxing the staff-to-child by just just one infant reduces the cost of child care by between 9 and 20 per cent across all US states. Applying those findings to the UK suggest that simply by relaxing child-staff ratios to Norwegian levels we could cut childcare costs in half.
    
2. Mandating quantity doesn't lead to better quality. When researchers control for confounding variables (e.g. mother's education levels, socio-economic status and income) staff to child ratios only have modest effects on the quality of childcare received. 
    
3. High staff to child ratios aren't just ineffective and expensive, they're actively harmful to quality once you consider their knock-on effects. High staff to child ratios incentivise daycare centres to hire less-qualified staff in order to keep staff costs at manageable levels. If caregivers can provide care to twice as many people at a time then it makes sense to pay a bit extra for a more qualified staff member. Indeed, the evidence suggests that the biggest determinant of care quality is the level of training of the care giver.

We should follow Denmark, Spain, and Sweden's lead and scrap child-staff ratio mandates altogether. It would leave more money in the pocket of parents without undermining quality of care.

Why must the spice flow?

In recent days, the media has been discussing a ‘zombie plague’ in our cities. Users of the synthetic cannabinoid drug known as Spice can become paralytically intoxicated and may be a danger to themselves and others through erratic and sometimes violent behaviour. It has also been said to have the physically and psychologically addictive properties of heroin and crack. It is developing into a crisis for our emergency services. Yet, paradoxically, this new outbreak can be directly linked to further restrictions on the harmful drug.

Spice is a drug so unpleasant that there is no real commercial market for it. A market in prisons only arose after mandatory urine testing was introduced for herbal cannabis in 2005. Spice, while it affects the same receptors in the brain, does not show up in usual THC drug tests, and is mostly odourless, even when smoked. Prisoners became addicted and it soon spread to homeless communities, popular for its low price and potent strength. As a result, our friends at Volteface found that in the first four months of 2016, around 22% of homeless people in Westminster were using spice, up from roughly zero two years earlier. The numbers are unlikely to have improved since then.

The drug’s status as a ‘legal high’ ended in 2009, but similar substances continued to be sold online and over the counter in head shops until the Psychoactive Substances Act was introduced in 2016. This has had the effect of pushing the supply further underground; outlawing the head shops that had previously attempted to ensure a degree of quality control and reliability to their customers, while also increasing the likelihood of violence and abuse used by dealers against vulnerable users.

This myopic belief by some in the media and government that the police are capable of stopping people using drugs, despite many decades worth of evidence to the contrary, has always and will continue to lead to more harm. The very existence of spice is the result of the prohibition of cannabis, just as hooch and moonshine were the result of alcohol prohibition in 1920s America.

It is clear that the UK should legalise cannabis and create a regulated market; to take away the revenue streams that fund the criminal gangs who supply it and to reduce the harm to users from cannabis produced by unscrupulous growers.

United against the world

If you use Twitter as much as us, you are bound to have seen the surreal video of a 69-year old doctor being violently ‘re-accommodated’ from his seat on a United Airlines plane and dragged down the aisle despectacled and bloodied while surrounding passengers cry in shock. The incident was the result of the airline overbooking the flight and needing a seat for a member of staff. After an entertaining carousel of passing the buck, United airlines is now investigating the  incident, but insists in internal emails, that their “employees followed established procedures for dealing with situations like this”.

Fortunately few suggestions have been made advocating the prohibition of overbooking or further regulation of the airline industry. However, there is a fundamental problem with the market for domestic flights in the USA; it is a literal oligopoly. Four firms shared 68.8% of the whole market in 2016.

This is exacerbated by ‘Fortress Hubs’ where a single airline controls a large majority of all flights out of an airport - turned off by United’s abysmal customer service? Tough luck if you have to fly out of George Bush Intercontinental Airport, 78% of all seats are on United planes. In 2015, the Department of Justice had to block a United acquisition that would have given them 75% share of flight slots at Newark airport.

Expanding anti-trust regulations designed by lawyers will not be not the answer to this problem. Prior to the 1978 Airline Deregulation Act, travel by air was a luxury and limited to the wealthy, but the act liberalised standards, encouraged additional routes and more airlines; by 1990, fares had fallen by 30% in real terms.

But one particularly egregious bulwark to competition remains - the protectionist cabotage rules that prohibit foreign and international airlines operating within the US. It may be that the air industry has a minimum efficient scale—firms need to be a certain size to compete. If only US firms can compete within America, then there can only ever be a small number of firms controlling the market. But even if this minimum efficient scale exists, the world market as a whole will be able to support dozens of effective firms.

Repealing these would reinvigorate competition and choice in the domestic market, push down prices, boost quality and undermine the complacent corporate culture that has led to what will inevitably be a go-to business studies guide on how not to do PR and customer care.

As we've been saying for several centuries now

Not we as in we you understand, but us classical and neo-liberals over these past few centuries. Human beings, that's the people we're trying to organise the economy and society to please and satisfy, do indeed have a finely developed sense of fairness. This is also what drives a very strong desire for equality. But what sort of equality is it that drives people?

There is immense concern about economic inequality, both among the scholarly community and in the general public, and many insist that equality is an important social goal. However, when people are asked about the ideal distribution of wealth in their country, they actually prefer unequal societies. We suggest that these two phenomena can be reconciled by noticing that, despite appearances to the contrary, there is no evidence that people are bothered by economic inequality itself. Rather, they are bothered by something that is often confounded with inequality: economic unfairness. Drawing upon laboratory studies, cross-cultural research, and experiments with babies and young children, we argue that humans naturally favour fair distributions, not equal ones, and that when fairness and equality clash, people prefer fair inequality over unfair equality. Both psychological research and decisions by policymakers would benefit from more clearly distinguishing inequality from unfairness.

Equality of opportunity therefore, not equality of outcome. Which is really the classical and or neoliberal case on the point, as we've all been saying these centuries.

It's useful to have this sorted out of course. For this is published in a subset of the Nature journal universe, meaning that this is settled science. As we're continually told about everything else that appears in such journals, we can't argue about it because this is indeed that science.

Good, excellent, equality of opportunity it is and don't listen to anyone who says different, they're being unscientific.

Regulators should make the punishments fit the crimes

Since 2010 Ofgem has fined energy companies £191M and imposed redress payments of £255M.  Redress payments are “made by companies either directly to consumers or to programmes and funds which would benefit them.” Fines are a form of taxation, i.e. paid to HM Treasury. Ofcom fined BT £32M and the Environment Agency’s prosecution for sewage pollution cost Thames Water £20M;

Biggest by far was the multi-billion fines on the big UK banks, by the UK, US, Hong Kong and Swiss authorities, for Libor rigging, money laundering, assisting tax evasion, sanctions busting, failing to keep proper accounts and mis-selling.  The directors of said banks, their auditors and the Bank of England were, we are told, unaware of the malpractice under their noses.  Amazing.

HBOS director Peter Cummings was fined £500,000 in 2012 and banned for life but he is an exception. Generally speaking, bank directors, auditors and the Bank of England emerge Scot free.  Companies, being legal persons, pay the penalties but this is fantasy. Companies do nothing wrong.  It is their directors, employees and auditors who do what they should not do, and cover them up.

Compounding the absurdity, those responsible who do lose their jobs receive pay-offs (cash bonuses, shares and, usually, pensions benefits) as if they were innocent parties being made redundant.  Their contractual terms, we are told, over-ride any culpability.  Sacking the seven seniors at HBOS, including Mr Cummings, cost the company, namely the taxpayers, nearly £1M. The Finance Director, Mike Ellis, arguably the most culpable, became Chairman of the Skipton Building Society Act two years later albeit at half his former salary.  Nine years later the financial regulators have woken up and are making threatening noises but it is too late to fine anyone.

Tesco is a classic case: the company inflated its profits by £326M in the year to August 2014.  The CEO, Phil Clarke, was sacked on contractual redundancy terms (18 months’ salary +) in July 2014 for declining profit forecasts.  He knew nothing about the false accounting and, as CEO, how could he?  The Serious Fraud Office fined Tesco £129M and are bringing criminal prosecutions against three other former directors, Chris Bush, Karl Rogberg and John Scouler, but not the Nelsonian Mr Clarke.  Note that the company is being fined, not the perpetrators who may well, given the SFO’s track record, get off. 

Regulators sometimes acknowledge the unfairness of the clearly innocent shareholders and customers ultimately bearing the cost of these fines.  But if they do not pick up the final tab and nor do the the directors and employees, who does?

Fining companies is a useful form of income for HM Treasury but it is really grandstanding.  Perhaps it damages reputation but it is debatable how much harm it does to companies like Thames Water and BT whose reputations are hardly lily-white anyway.  And fines which do not hurt those culpable are no deterrent. Sending my speeding fines to some distant person is not going to stop me speeding.

Regulators should stop fining companies and start penalising those individuals responsible for the malpractice and those who should have published the malpractice but failed to do so – typically the auditors and sometimes the regulators themselves, notably the late and unlamented Financial Standards Authority whose ability not to see the facts drawn to its attention is legendary.  Punishment should fit the crime. The courts have already established that directors can be personally liable and not hide behind the corporate veil – see.  However the law in this area is a bit of a mess.  It would be sensible for government, perhaps with a Statutory Instrument if Parliament is not bothered, to require regulators and the courts to fine individuals and to ensure they are not compensated by their employers or insurance.  Claiming not to know what they should have known should be no defence just as ignorance of the law is no defence.  Personal liability should mean personal liability just as it does for speeding fines.  And financial malpractice that goes unpublished for two years or more should result in personal fines levied on the senior auditors and even the regulators themselves.  Obviously regulators will not fine themselves bu the courts can and should.

As a starting point, I suggest that the fines are borne 50/50 by Chairman and CEO unless they can publish who the real culprits are.  This is akin to ministerial responsibility: Lord Carrington stepped down as Foreign Secretary even though he had no idea his diplomats were inciting Argentina to invade the Falklands.  High rewards should be justified by high risks.

Regulations are only going to work if everyone knows any punishment will fit the crime.