This argument about Catalonia is true but incomplete

Catalonia, as we've seen, has a number of people in it who would like to be independent of Spain. Whether this is a good idea or not is not for us to decide. But, as this Spanish writer puts it, it is possible to construct an argument about it:

I live in Pozuelo, a municipality in the outskirts of Madrid, where I commute daily. Pozuelo is the richest city in Spain, with an average household income of €73,000. Pozuelo is full of good private schools. Many of my neighbors use neither the public school system nor the public health system.

Let’s imagine one of my neighbors starts a movement for Pozuelo’s “right to decide”. His proposal to the neighbors is simple: we will remain in the EU, but we will be independent from Spain.

He would explain that the over €35,000 in taxes that each of our households currently pay (including over €20,000 in income taxes) finance services that we don’t consume. He would tell them that Carabanchel is stealing from us, just like the Andalusians and the people from Extremadura steal from us. He will promise a fiscal dividend of €20,000 per family.

OK, yes, that could be true. Further:

I hope, dear reader, that the argument is clear. The right to self-determination is not compatible with a welfare state and high-quality public services, especially in a single and integrated market. The rich will always have an incentive to benefit (single market, freedom of movement) without paying for redistribution to the poor.

That’s why Europe cannot, must not, allow these self-interested demands to succeed. Tuscany or Bavaria would reap great benefits if they could split, without cost, from their states to the detriment of their fellow citizens in Southern Italy or East Germany.

That would also be true. As the arguments about Scottish economic independence show us, there are indeed cross subsidies within the nation states. 

But that's not the end of the chain of logic at all. We all do agree that we've different redistributional responsibilities to different groups. No one at all thinks it odd that we redistribute more to the children in our households, less to those in other households in our same nation and very much less to those in other nations. If this were not so then there wouldn't be all that fuss about whether Germany should be paying Greek government expenses or not. Or within nation redistribution would be that 0.7% of GDP that we distribute as overseas aid.

We all do indeed agree, the occasional moral philosopher aside, that the volume of that cash flow is going to be different according to whether the recipient is perceived as in-group or ex-. Yes, we do still argue about how large the flow is but the basic idea of it being different is well founded. 

The argument about secession and redistribution then becomes, well, who is in-group and who is ex-? It is entirely true that if one of the richer parts of Spain leaves Spain then poorer parts will get less redistribution. But we cannot just say that it must not happen therefore - we've got to have a justification ofwhy the different parts are all to be considered in-group.

And if we're honest about it it's really not clear at all that current national borders do indeed usefully define who is in- and ex-. As Ireland leaving in 1921, Scotland arguing about it now, Yugoslavia breaking up, the implosion of the Soviet Union and all the rest show. 

Just because the lines on the map are as they are isn't a sufficient justification for the insistence upon redistribution across that total grouping. For that's just not how people work, is it?  

A little lesson for those who would nationalise everything

As we're being told many people - more so the young and inexperienced of course - are in favour of nationalising near everything. We've even seen one claim that the banking system is a natural monopoly and therefore should be nationalised.

We who are rich in maturity could, as we all are of course, carry on reminding people of how bad things were when nationalisation was rife. Sadly, none of those Marinas and Allegros have survived long enough to be usable as present day examples of the horrors that were.

So, instead, how things work out elsewhere:

Also, there are widespread objections among consumers against LPG cylinder price.

They said they have to pay different prices for a same product of a company in different areas.

A 12.5kg cylinder sells at Tk950 in Dhaka, while it is priced between Tk1,100 and Tk1,200 in Rajshahi, Khulna and Barisal.

On the other hand, a cylinder of state-run LP Gas Ltd sells at Tk800, though it is priced at Tk700. This type of cylinders, however, is not available in markets due to a supply shortage.

This is not an aberration. In Venezuela they insist that the government make food nice and cheap. There is no food in Venezuela. Housing was nice and cheap in the Soviet bloc - there was a serious shortage of housing for the 70 years of the Union's existence. Bangladesh has both government and privately supplied LPG. The government stuff isn't available.

Nationalisation and the political control of prices - along with that absence of the profit motive - will mean that everything is nice and cheap and you can't have any because of a supply shortage. As it did, so it will.

People aren't quite grasping how markets work

That Jezza and Labour are now promising everything to all - rent control being the latest nonsense - isn't all that much of a surprise. That's politics after all. But it is worrying that people just aren't grasping why so much of what is being promised is nonsense:

He did it because villainous letting agents encourage owners to do so, insisting on “market rents”, which they alone seem to set, and which are often much higher than levels of frozen local housing allowance, and devised without inspecting the property (my own rentier has never seen the flat and lives in another city, so it’s no surprise he relied on the agent’s viewpoint).

Market rents, like any other market price, are simply the balance of supply and demand. And something that most seem not to be aware of:

Main points

Private rental prices paid by tenants in Great Britain rose by 1.6% in the 12 months to August 2017; this is down from 1.8% in July 2017.

In England, private rental prices grew by 1.7%, Wales saw growth of 1.3% while Scotland saw rental prices increase by 0.3% in the 12 months to August 2017.

London private rental prices grew by 1.2% in the 12 months to August 2017, that is, 0.4 percentage points below the Great Britain 12-month growth rate.

Rents are rising by less than the general inflation rate, by less than wage growth. That balance of supply and demand seems to be working in favour of tenants then.

Further, it most certainly is not true that "market rents" are simply numbers being made up, not by anyone. It would, of course, be rent controls which are simply made up numbers.

Prices simply are not random numbers allocated as we wish. They're the vital information about who wants what so much, who is willing to supply what is wanted. As such we mess with them at our peril.

They say this about Ryanair as if it's a bad thing

Apparently selling people something they want at a price they wish to pay is a bad idea now:

But that show of transparency shouldn’t persuade anyone that this is an aberration rather than a symptom, a visible culmination of the logic of low-cost economics. Ryanair is a highly efficient business in an industry whose dominant vision is – in a phrase coined by the government’s airline commission – that “low-cost is king”. 

Unbundling has become part of our world, and not just when we fly. It shows up in a host of what are billed as consumer choices, and increasingly in what were once public services.

Effects like this aren’t unique to airlines. As consumers, we have been hooked by bargains that come at a cost.

Ryanair has nurtured the dream of flying to obscure cities for a tenner, because we can.

And Uber has encouraged a swath of city dwellers to take taxis when before they might have used public transport,

 Complaints are shrugged off by BA bosses: customers want low fares.

All of this is being said in those shocked tones of disapproval. As if it's just clear and obvious that supplying what people want is a bad idea. When, of course, nothing could be further from the truth. This is the entire point and aim of our having an economy in the first place, that people gain what they desire, that consumers get as much of what they want as can possibly be supplied to them. 

There is only one valid point in the diatribe:

Ultimately, the cheaper deal is making us all pay. Unbundling doesn’t eliminate costs, it just makes them external. And they still have to be met by someone, somewhere.

Absolutely, and bundling doesn't eliminate costs either, it just internalises them and thus forces everyone, whether they wish the extras or not, to pay for them. Which is why we like the unbundling of course - so that consumers may indeed select from that menu of options.

The very thing being complained about is the very thing which we actually desire.

Marvel at the effects of a truly unionised workforce

The Guardian tells us that academics in the US have taken to sleeping in their cars, even to indulging in sex work, in order to keep body and soul together. At which point we should marvel at the effects of a truly unionised workforce:

There is nothing she would rather do than teach. But after supplementing her career with tutoring and proofreading, the university lecturer decided to go to remarkable lengths to make her career financially viable.

She first opted for her side gig during a particularly rough patch, several years ago, when her course load was suddenly cut in half and her income plunged, putting her on the brink of eviction. “In my mind I was like, I’ve had one-night stands, how bad can it be?” she said. “And it wasn’t that bad.”

The wry but weary-sounding middle-aged woman, who lives in a large US city and asked to remain anonymous to protect her reputation, is an adjunct instructor, meaning she is not a full-time faculty member at any one institution and strings together a living by teaching individual courses, in her case at multiple colleges.

Adjuncts, of course, are not unionised. But their pay and conditions are caused by unionisation all the same. American academe, for those who gain tenure, is a very comfy gig indeed. Other than forcing oneself upon a student in the quad it's difficult to get fired and while the salary is middling for the professions the working hours and pensions are just great. And the best way to think about tenure is that it is acceptance into a very strong union indeed.

American colleges are not cheap, as we all know, and all the revenue is sucked up by those very well protected and comfy tenured academics and the administrators. Leaving near nothing left over for those adjuncts who carry an ever increasing part of the teaching load.

And why is it that the adjuncts are an ever increasing part? Because the employment of those permanent staff is so expensive given their unionisation. Further, this is what always does happen. Unions benefit those on the inside at the expense of those outside.

American colleges already cost as much as anyone will pay for them. The only solution to the adjuncts' problem is that those in the union get less so they can have more. And, of course, Good Luck with that.

We get it, you did a blog about vaping

I love teasing my friends who use e-cigarettes. There’s something intrinsically uncool about e-cigs – they’re gadgety, a bit silly-looking thanks to their chunkiness and the huge clouds of vapour they produce, and bring to mind the sort of middle aged geezer who hangs around CAMRA beer festivals with a beer checklist. I love to send my friend Dan photos of new vape shops that have silly names like “Vape Lords”, as if he loves vaping so much that he’ll be excited just to see that it exists. The “we get it, you vape” meme came about because vapers often will not shut up about it, which reminds some people of vegans or that guy who tells you he doesn’t even own a TV at every opportunity.

So I understand why people don’t care about vaping and public policy. If you’re not a smoker and haven’t experienced some of the costs of smoking in your own life – a relative dying young from lung cancer, say – it’s easy to just ignore it and laugh about the people who keep hammering on about it. 

I was among that group until a few years ago, and thought that the issue was a minor one compared with the weightiest issues in public policy – tax, housing, immigration, Brexit. But nowadays, the more I’ve learned, the more I think that e-cigarettes and related products might be one of the easiest ways to improve people’s lives we have. And if public policy can make them better, and make people more likely to use them instead of smoking cigarettes, then it should be a major priority for people interested in improving human welfare. 

Smoking is bad, but…

The first point to note is that smoking tobacco – that is, lighting it on fire and inhaling the smoke – is very harmful. On average, lifelong smokers seem to live for about ten years less than if they had not smoked, and they will be sick more often.

But it is also very enjoyable for many smokers, who judge the trade-offs to be worth it, perhaps because they like the taste or the nicotine. Though it’s important to make smokers aware of the harm that smoking does, most anti-smoking regulation is based on unproven assumptions about smokers’ rationality and ability to compare costs with benefits. I want smokers to be aware of the costs of smoking, and to make sure they bear the costs they impose on others. 

But most taxes and anti-smoking regulations are designed to increase the cost of smoking, which unless they are systematically irrational (unproved) is welfare-reducing even if they manage to persuade smokers to stop smoking. In short: only individuals can decide if the pleasure of a lifetime of smoking is worth living for ten years less. 

Many anti-smoking policies do not work very well even by their own standards. Taxes do, but indoor smoking bans, display bans, advertising bans and others all seem to do nothing to stop people taking up smoking (though they sometimes do lower smoking rates among current smokers). Plain packaging has been an abject failure in Australia, the only place that has had it long enough for us to measure. And, remember, most of them work by making smokers’ options worse and raising the costs of smoking, not by giving them a better alternative. 

E-cigarettes do the job

If some, most or all of the enjoyment of smoking could be delivered with less or none of the harms, humanity would be in luck. Instead of stopping people from smoking by raising the costs of doing so, as most smoking taxes and regulations do, and lowering human welfare, we would be able to lower the number of people smoking (and dying young) while also raising human welfare. 

This is the promise of e-cigarettes and other reduced risk tobacco products. E-cigs are much safer than cigarettes. The Public Health England review into them that concluded they were 95% safer was being highly cautious with that figure – the truth may be closer to 99% or 100% safer. 

Voluntary uptake of e-cigs since they first came to market has been very rapid and large. Since about 2011, three million people (about 5.6% of the adult population of Britain) have taken them up – one vaper for every three smokers (15.8%, 7.6 million people, smoke cigarettes). Two million of these say that they have used e-cigarettes to quit smoking, and another half a million say they are in the process of doing so, though this number may be somewhat exaggerated as self-response surveys sometimes are.

There are some interesting, though rough and uncontrolled, correlations in smoking and vaping rates that might suggest a relationship that we should be interested in. It was only from 2011 that the smoking rate began to fall quickly again after five years of barely falling at all; and from 2014 there is a sharp drop in under-25s smoking rates right at the same time that there is a sharp rise in e-cig use. That's quite an exciting trend!

The biggest anti-smoking public health groups have come out in favour of e-cigs, with ASH, Public Health England, Cancer Research UK and many others writing to the government to say that “e-cigarettes are the most popular quitting tool in the country with more than 10 times as many people using them than using local stop smoking services”. And fair play to them for that. On their side of the debate, there are people that oppose anything even resembling smoking without good reason for doing so, and giving in to them would have been easy.

Why this stuff matters

What now matters is regulation, where Britain faces some important questions that will determine how much more e-cigs can do. Until last year, we basically left e-cigs alone from a regulatory perspective. There is no legislation (yet) banning their use in public places or buildings, though obviously many places privately choose to ban them indoors (we do at the ASI, during office hours). Advertising as a consumer product is fine, but if you want to make claims about harm you need to get the device regulated as a medical product, which is prohibitively expensive and time-consuming. 

There are three questions on the regulatory front that we need to make decisions about. One, after Brexit whether we should continue the Tobacco Products Directive’s rules around things like vape liquid bottle sizes, which make vaping less convenient; two, whether we should change the advertising rules to make it easier for public health campaigners and e-cig companies to advertise the fact that they are much safer than cigarettes (and nearly as enjoyable!); and three, whether we should try to create a regulatory framework for other products that are like e-cigs so that it is easy to bring them to market. 

Of these, changing the rules around advertising is probably the most important. The Advertising Standards Agency is currently holding a consultation on this, at the request of public health groups. If they do change the rules the risk is that they only do so in a narrow way, so that e-cigs’ safety can be promoted as part of a stop-smoking campaign but not alongside claims about them being enjoyable, fashionable, or whatever. 

The gains are potentially enormous. Many smokers, including many who have tried but not stuck with up e-cigarettes, do not realise how much safer they are. 91% of dual smokers/vapers agreed in a survey that e-cigs were safer, but only 60% of smokers who had not tried an e-cig and 75% of smokers who had tried them but had given them up. 23% of smokers said they hadn't tried an e-cig because they were concerned about safety, and of people who had tried e-cigs but gave them up, 35% said that it was because e-cigs might not be safe enough. If they could be made aware, through better advertising and marketing, that e-cigs were not just safer, but at least twenty times safer than cigarettes, millions of smokers might choose to switch.

To me, one group in particular stands out here. In most age groups, men and women both smoke and vape at similar rates to each other. But in the under-25s group, only 2.6% of women vape compared to 8.9% of men. I do not think it is much of a stretch to assume that the uncool image e-cigs have is part of the reason for this. This age group is particularly important because people who do not become regular smokers while they’re this age are very unlikely to take up smoking in later life. If better and more convincing advertising could be brought to bear to make e-cigs less embarrassing for young women to use, and we merely brought their usage rates up to that of young men, 1.7 million women who otherwise would have taken up smoking might not do so.

1.4 million disability-adjusted life years are lost every year to smoking. Even small shifts from smoking to vaping would have a very large impact in terms of life-years saved. If marketing could make e-cigs less uncool, and make smokers better informed about the safety, the potential gains are huge. The method seems effective, it doesn’t cost us anything, and it’s voluntary, so we’re expanding choice and improving welfare, not just raising costs on a choice we don’t like. For anyone interested in human wellbeing, making public policy more e-cig-friendly seems like it should be a top priority. I even promise to tease my vaping friends less. 

If you're going to be at Conservative Party Conference in Manchester next week, you might want to come to our panel discussion on vaping, synthetic alcohol and other ways that innovation is beating the nanny state at its own game. Details here.

We've long been amused by The Guardian's Hardworking Britain column

Frances Ryan writes The Guardian's "Hardworking Britain" column and we've long been amused at the examples being offered to us. It is always, of course, that pay isn't high enough, that people are working fingers to bone and just not, still, having enough to get by upon. Our problem being that numbers just never quite seem to add up. 

One example that we explored with her was this:

Mike is frantic about finding money to pay for his multiple medications, but it’s buying presents for his daughters’ landmark birthdays – 13 and 18 this year – that’s playing on his mind.

We reminded her that the NHS charges a maximum fee for all prescriptions over a year. An entire £104 in fact. Her response was that Mike didn't have £104. We never did get a response to our pointing out that the NHS is absolutely delighted to finance this over 10 months.

It is, quite obviously, possible that someone doesn't have £10.40 a month. We think it's unlikely though if someone is far enough up Maslow's Pyramid to be worrying about birthday presents.

Which brings us to today's offering:

Julia has a system to survive. Every month, she maxes out her overdraft: £1,000 in the red to pay for utility bills, council tax, mortgage, and food for herself and her daughter. Then the 49-year-old’s salary puts her back in the black – and she does it all over again.

This is the definition of precarious living: a life where, in Julia’s words, “everyday needs pile up”. The overdraft isn’t enough to keep her head above water. In the past nine months, she’s fallen into £5,000 worth of credit card debt. As we talk, Julia writes it all out – listing basic family costs, item by item: replacing broken furniture (“It was falling apart,” she says); buying her daughter shoes and a uniform for secondary school, and a bike to get there; hiring a plumber to unblock the toilet.

She can’t remember the last time she went out with friends or bought something as a treat. “I have holes in my clothes,” she says.

This is of a teacher earning £34,000 a year. We agree that this is not a fortune. Well, actually, no, we don't. By global standards Julia is in the top 0.5%. Yes, this is adjusting for price differences across geography, we're using PPP here.

As we say, the numbers just never do quite add up. Precarious just isn't the right word, nor is poverty, to describe someone in that top 0.5%.

Seriously, whining about the living standards of one of the richest people to ever have existed on the planet just doesn't strike us as being valid poverty porn. Obviously, things are different at The Guardian.

Fighting (and writing) for consumers and innovation

Over the past week, I’ve been standing up for consumers against Transport for London’s absurd decision to revoke Uber’s private hire licence. At the ASI we will always oppose efforts to stifle innovation and protect incumbents from competition, that’s why I’ve been making the case in the media that Sadiq and TfL should reconsider their decision and restore Uber’s license.

In The Sun I debated Steve McNamara of the London Taxi Drivers’ Association, arguing that the Uber ban is bad news for consumers in London and will harm London’s reputation internationally.

“The reality is that if Uber can't operate in London, people will have to wait longer for cabs, pay much higher prices and some might even put their safety in jeopardy by choosing to walk home after a night out.”

In The Daily Telegraph I echoed Mises and argued that the market is the most responsive democracy of all.

“But, there is a better way to work out what voters really want: check their bank statements.  And if you check the monthly bank statement of the average Londoner, you’ll see with over a million trips each week that they’ve cast their sterling votes for Uber and not black cabs.

“And it’s easy to see why. Uber offers a substantially cheaper service, payment by card and shorter wait-times. TfL have censured Uber on the grounds of safety, in particular focusing on the reporting of sexual assaults. That’s a serious issue, but TfL should listen to the women who will always opt for an Uber late at night. Shorter waiting times mean that long walks in search of a main road to hail a cab are no longer necessary, and with every trip logged and tracked by GPS female passengers feel safer.”

And finally for The Times Red Box I argued that TfL’s Uber ban revealed who the real ‘Baptists’ and ‘Bootleggers’ were.

“The Licensed Taxi Drivers’ Association (LTDA) represents the modern-day equivalent of “Bootleggers”. Black cab drivers are opposed to Uber because it is a cheaper, more convenient competitor. Simply put, Uber means less work and lower earnings for black cab drivers. Visible and well-organised interest groups will always have sway over politicians, but any politician who supported banning Uber on the grounds that it would mean higher prices and reduced competition should be rightly pilloried.

“Instead, “Bootleggers” have to rely on “Baptists” to lower the political cost of giving in to naked self-interest. The LTDA are able to hide their financial self-interest behind a range of concerns from workers’ rights to public safety."

Check them out, though if you’re reading this blog I suspect you may already agree.

We entirely agree Dame Margaret, we entirely agree

Dame Margaret, Lady Hodge, tells us that government isn't very good at doing things, a position that we entirely agree with:

Furthermore, the public sector is notoriously bad at both writing and managing the contracts it enters into.

This is, of course, writ small the basic larger problem with calls for government intervention into matters. Most certainly, there are times when only government intervention will do - we're entirely happy with the British state's monopoly on the possession of nuclear weapons in these isles for example.

For the standard switch and bait is to insist that here, look, there's a problem that the market isn't solving. This is thus a market failure - although, a with climate change, it is often the absence of something from market prices, that is the absence of a market rather than a failure of one. Do note though that we agree, there are indeed such things as market failures.

The answer to such not being the usual knee jerk reaction, that government must now do this thing. For there is also something called government failure and we need to take that into account as well in designing whatever the solution might be. For example, as we've mentioned around here before about food banks, government just doesn't seem to be very good at the £10 here, £20 there problems. Private, communal if you prefer, charitable action appears to be very much more efficient at dealing with this specific problem.

That is, we've always got to remember that government isn't very good at doing things.

Ireland finally looks ready to abolish its anti-blasphemy law

This week, Irish Taoiseach Leo Varadkar announced plans to hold a series of referendums in the next two years. One of these referendums concerns Ireland’s outdated anti-blasphemy law, which mandates a maximum fine of up to €25,000 for the “publishing or uttering [of] matter that is grossly abusive or insulting in relation to matters sacred by any religion, thereby intentionally causing outrage among a substantial number of adherents of that religion”.

Whilst nobody has ever been prosecuted under the current legislation (passed in 2009), it nonetheless creates a chilling effect on free speech and makes an ass of the law. The only reason it still exists is to satisfy the requirements of the Constitution of Ireland, and indeed Irish lawmakers have admitted that the 2009 act was designed to render the law practically unenforceable. When actor Stephen Fry was investigated by gardaí earlier this year for alleged blasphemy, former minister Dermot Ahern told the Irish Independent:

We diluted it in a way that made it pretty ineffectual...We implemented the crime but made it in a way that it would be virtually impossible to prosecute.

Ireland’s religious community is equally blasé about the 2009 act. As Kevin Hargaden, Social Theology Officer of the Jesuit Centre for Faith and Justice, explained to the Irish Times earlier this year:

This law was passed as a component of the Defamation Act in 2009. It was not the product of a grassroots movement of Irish Christians or a broad coalition of religious leaders. The Irish Council of Churches did not greet it with applause. No photo opportunity followed with the leaders of Dublin’s mosques. Religious adherents in Ireland did not actively lobby for this law.

Despite the widespread (and accurate) impression that Ireland’s blasphemy law has no teeth, its continued existence has proven to be a useful rhetorical tool for opponents of free speech. Following the Charlie Hebdo massacre, Dr Ali Selim of the Islamic Cultural Centre of Ireland threatened to pursue legal action against members of the Irish media who published cartoons of the Prophet Mohammed: referencing Ireland’s blasphemy laws. And the problems created by the 2009 act aren’t limited to Ireland either:

...the Organisation of Islamic Co-operation - which has 57 member states - cites Ireland’s law as best practice and has even proposed the adoption of its precise wording to limit human rights on freedom of conscience.

Thankfully, with a recent poll showing a clear majority in favour of removing the offence of blasphemy from the Constitution, Ireland looks set to adopt a modern, secular approach to free speech.