What does anyone think we've been doing these past 250 years?

If and when the robots come to take all our jobs then just what is it that we're going to do? George Monbiot has an idea:

But while there is little chance of finding jobs that match students’ hopes and personalities and engage their capabilities, there is every chance of connecting them with good opportunities to volunteer. Perhaps it is time we saw volunteering as central to our identities and work as peripheral: something we have to do, but which no longer defines us. I would love to hear people reply, when asked what they do: “I volunteer at the food bank and run marathons. In my time off, I work for money.”

It's true that George has this rather weird thing about market economies. That people might receive actual money for what they do rather than just kudos or social status. He's rather more Polanyi than Smith, not quite getting the function of money here. It's a method of keeping score of those mutual obligations, no more. And the benefit is that it allows impersonal methods of keeping score with strangers.

Leave that aside though, his thought and desire is that people should, when the robots take our jobs, do more for other people, things enjoyed as well. Instead of keeping nose to the grindstone just to survive we should flower as human beings.

Well, yes, that's rather the point of the automation and that market economy. The automation takes care of the grindstone bit and the market expands the number we can specialise and divide the remaining labour with. Both make us significantly wealthier, a goodly portion of that greater wealth being taken in more leisure. Even more of it being taken not in pure leisure but just in doing "work" which we prefer to do rather than must. 

All of which does make the worrying about robots, capitalism and markets more than just a little bit odd. For they're exactly the things which will create the conditions allowing the desired society. As, you know, Karl Marx himself pointed out. We'll have enough time free from keeping body together to attend more to those enjoyments of the soul.

Really, what does anyone think we've been doing these past 250 years since we started to automate?

Billionaire boys club and their toys

The successful launch of Elon Musk’s Falcon Heavy, whimsically sending aloft a Tesla Roadster driven by a space-suited mannequin highlights a new group of players on the economic scene, driving technology forward. They are the billionaire boys who use money made elsewhere to pursue interests on the cutting edge of exciting technologies.

Paul Allen, who co-founded Microsoft with Bill Gates, put up $25m of his own money to fund Burt Rutan's company, Scaled Composities, and helped it win the X-Prize of $10m for the first private manned spaceflight of SpaceShipOne in 2004. Allen's backed it not for a return, but to speed up access to space by private citizens. As a sideline Allen also funds the Allen Institute for Brain Science, and the Allen Institute for Artificial Intelligence. He put $30m into the Allen telescope array to aid the Search for Extra-Terrestrial Intelligence (SETI).

Elon Musk made his first millions with Zip2, an internet city guide, receiving $22m when Compaq bought it. He co-founded Paypal and received $165m when it was snapped up by eBay. Like Allen he has helped to fund private enterprise spaceflight, founding SpaceX with $100m. SpaceX developed the Falcon rocket that sends Dragon capsules to the International Space Station (ISS), and which has pioneered re-usable launch vehicles.

Musk also founded Tesla Motors to advance electric car technology. Tesla has pioneered battery innovations that solved the short range problems that held back the spread of electric vehicles. One of Tesla's backers is Larry Page, who co-founded Google with Sergey Brin and has also backed alternative energy sources. He has donated $20m to the Voice Health Research Institute after developing vocal cord issues of his own.

His Google partner, Sergey Brin, is worth billions, but draws an annual salary of just $1, as Page and Musk do, as Steve Jobs did. He backed the genetic research company, 23andMe, founded by his then wife, Anne Wojcicki, and has also put money into alternative energy, including wind-powered electricity from high performance kites, and has even funded the development of lab-grown meat.

I met Sergey Brin and Larry Page (and Paul Allen) at Soyuz launches from Kazakhstan, there to watch other billionaires ride to the ISS as "mission specialists" – formally called "space tourists." What struck me very forcibly was how boyish they all are, bubbling with enthusiasm over new gadgets and ventures. These are boys who can afford to play with very expensive toys, and their enthusiasm is bringing forward the day when their toys become available to the rest of us at affordable prices.

Other players in this billionaire's game include Jeff Bezos, who founded Amazon. His toy is the New Shepard vehicle of his aerospace company, Blue Origin. A manned capsule is being developed to take astronauts into orbit at the top of the flight path, with the New Shepard setting itself down on Earth to be readied for another flight.

The common theme is of billionaires who put their spare wealth into bringing forward the technology they dreamed about as boys, and never quite grew out of. They push technology forward because they want to see the toys - the private space-planes, the augmented reality experiences, the high performance electric cars, and the driverless cars that will one day whisk commuters to and from work.

The billionaire boys want to see tomorrow, and are putting resources into making it come sooner. And the rate of technological progress is accelerating because of their activities.

Wall of Tyrants

An important anniversary happened this week. The Berlin Wall which had divided East and West Germany has now been down longer than the 10,316 days it was up.

Construction of the wall began in August 1961 by the German Democratic Republic, a state that was neither German nor Democratic; nor, indeed, a Republic. It was erected to stop the flood of East Germans fleeing to the free and prosperous West. The GDR and the Soviets called it “the anti-fascist wall,” equating Western countries with fascism, and saying it was to keep their peoples out. In reality it was a prison wall designed to keep East Germans entrapped under a brutal communist tyranny.

Many did manage to escape over the years that the wall stood, and up to 200 people were killed in the attempt. The wall had watch-towers, barbed wire and mines to thwart anyone trying to cross, and East German guards were ordered to shoot to kill anyone seen trying to escape.

The wall was the setting for many famous historic incidents, including John F. Kennedy’s “Ich bin ein Berliner” and Ronald Reagan’s “Tear down this wall.” I went through it myself via Checkpoint Charlie, and found it was like entering a drab and shabby prison. Where West Berlin was alive with evening and night life, East Berlin was a police state that discouraged revelry.

The wall was a potent symbol of a communist world on one side that needed to keep its people imprisoned, and a free world on the other side. It divided a rich West from an impoverished East. It was finally brought down when there was a mass exodus of East Germans to the West via Czechoslovakia and Hungary, which refused to close their borders. East Germans did the unthinkable and demonstrated in the streets. The GDR government wanted Soviet troops to suppress them, but Gorbachev refused and the authorities caved in. On a jubilant November night East and West Germans scaled the wall and mingled, and began taking it down.

This week’s anniversary serves to remind us how brutal and repressive were the socialist regimes that dominated Eastern Europe. It is a timely reminder of what should never be repeated, of a road that the world should not travel again.

Apparently variations in policy make it difficult to understand what works

This is quite possibly the most stupid thing we have seen today. Admittedly, it's early in the day as yet but:

Public policy needs high quality evidence of what works

No, that's not the bit which is odd:

Chief social worker Isabelle Trowler spoke at an event on 29 January, organised by the Cabinet Office, to celebrate the achievements of the 10 What Works centres across the UK. Trowler pointed out that without hard evidence about what works in the often-fraught relationship between social workers and families, this area could be at a real disadvantage when the spending cake gets cut. Trowler explained that there appears to be a different approach to youth social work, for instance, in each of England’s 152 county and unitary councils, making it almost impossible to know which is the most effective approach.

We have a rich data set and that makes it more difficult to work out what works? That's not, to put it mildly, how these things work. The more variations we've got then the easier it is to tease out of the data what is effective. Assuming that anything is, obviously.

What worries is that Ms. Trowler is one of those who actually runs the country and if this is the level of knowledge about data and information then matters are worse than we thought they were.

Just by contrast, 152 different sets of policy over a few decades would produce a better data set than we've got for the entirety of macroeconomics in rich nations. Ouch.

Great man, great achievements

On this day in 1911 Ronald Reagan was born to a poor family in small town Illinois. At 26 he moved to Hollywood as an actor, appearing in several big screen movies. He had few illusions about his status, however, regarding acting as a job he performed competently. He was a Democrat until the real world hit him at the age of 51, when he became a Conservative Republican. His 1964 speech supporting Barry Goldwater attracted the national spotlight, and from 1966 he served two terms as Governor of California.

In 1980 he was elected the 40th President of the United States, the oldest yet elected, and served two terms in which he transformed America and the world. At home he implemented supply side reforms, cutting taxes and regulations, and curbing government spending. Average annual GDP growth was 3.4%, and inflation dropped from 12.5% to 4.4%. Abroad he stood up against what he dubbed the “evil empire” of communism, and in a speech in Berlin urged Mikhail Gorbachev to “tear down this wall.”

Significantly he backed the Strategic Defence Initiative (dubbed “Star Wars”) to implement a defence against ballistic missiles. Although critics derided it as fantasy, it was the top item that Gorbachev wanted stopped at the Icelandic summit, and it was Reagan’s refusal to do so that led to the breakdown of the talks. In fact it was instrumental in the collapse and defeat of the Soviet Union who realized they could not compete on economic, military and technological terms with the newly assertive and self-confident USA.

There was real warmth in his friendship with Margaret Thatcher, who implemented similar domestic and foreign policy initiatives in the UK, and the two formed an effective alliance. Reagan left behind him a prosperous and vibrant America, and within a year, he witnessed the fall of the Berlin Wall and the release of the subjugated Soviet satellite countries into economic and political freedom.

The world is a better place because Ronald Reagan lived in it and walked upon its stage, and we should all fondly remember and appreciate his legacy.

100 years since winning the vote: a tribute to Violet Ann Bland

“They twisted my neck, jerked my head back, closing my throat, held all the time as in a vice. I gasped for breath, and suffered tortures mentally lest the food which they were trying to pour down my throat should go into my lungs... They expect, and try, to perform the whole operation in two minutes. There were always six or seven to one, so that there was really no possibility of the victim doing much in the way of protesting…therefore no excuse for the brutality shown on several occasions.”

The Votes for Women campaigners did not have it easy, as these words by my great aunt, Violet Ann (“Annie”) Bland demonstrate. She was arrested during the demonstrations of 1912, when Suffragettes rampaged through London, smashing shop and office windows—in her case, those of the Commercial Cable Company in Northumberland Avenue, causing £10 worth of damage. In court, she refused to be bound over to keep the peace, objecting that she had “paid rates and taxes to the tune of nearly £1 a week for 20 years,” but still had no vote. She was sentenced to four months’ imprisonment.

Many Suffragettes who were jailed earlier went on hunger strike, and given their seeming determination to starve themselves to death, had been released. But by 1912, the authorities met the women’s threats by force-feeding them. The prisoner would be held securely in a chair, her head held back, and lukewarm soup poured down her throat by means of a funnel. This was Bland’s fate too. In a second experience:

“They pinched and clutched my nose unmercifully and at the end of the assault, when I did not rise quickly from the chair because of my helpless and breathless condition, they snatched the chair from under me, and flung me on to the floor... There is no doubt whatever about the attacks being made with the object of breaking us down.”

She was then nearly 50. And it was not her first brush with the law. The 1910 ‘Black Friday’ demonstration on Parliament was broken up—very violently—by mounted police. Annie was among 119 people arrested. But the Home Secretary, Winston Churchill, saw only embarrassment from prosecuting them, and she was discharged.

Born in 1863, the oldest of nine children, Annie began life as a lowly kitchen maid at Dudmaston Hall in Shropshire. But she had drive: within ten years she was running an eight-bedroom boutique hotel “with good cooking” in Cirencester, and bought three new houses, renting out two. She then moved to Bristol to create a 15-bedroom country house hotel, and it was here she became active in the Suffragettes. Most of the movement’s leaders were her guests there
at some point.

She moved to London, establishing another upmarket guesthouse at 22 Old Burlington Street, Piccadilly. Though the Suffragettes suspended their demonstrations during the First World War, she continued to promote women’s right in other ways, holding discussions over tea with sympathisers such as Arthur Conan Doyle, the Sherlock Holmes author. And she was active in a fund to provide aid for Serbian soldiers and prisoners. Though now in her mid-fifties, and with war raging, Annie took in five of her late sister’s orphaned children, including my father Richard. In 1918, her name appears on the electoral register for Old Burlington Street. Suffragette leader Emmeline Pankhurst honoured her for her fortitude in prison. And I too am proud of her. Indeed, without her, I probably would not be here.

As we've been saying about the gender pay gap for some time now

We've been saying that there isn't a gender pay gap. Instead, there are life choices which lead to different incomes. Who makes what choices seemingly influenced by gender, or something closely associated with it, leading to those different incomes on average.

Which is something that even the New York Times now seems to be admitting:

The main reason for this pay gap seems to be the same in both places: Children hurt mothers’ careers. This is, in large part, because women spend more time on child rearing than men do, whether by choice or not.

The latest research paper to make this point is here:

The arrival of children creates a gender gap in earnings of around 20% in the long run, driven in roughly equal proportions by labor force participation, hours of work, and wage rates. Underlying these “child penalties”, we find clear dynamic impacts on occupation, promotion to manager, sector, and the family friendliness of the firm for women relative to men. Based on a dynamic decomposition framework, we show that the fraction of gender inequality caused by child penalties has increased dramatically over time, from about 40% in 1980 to about 80% in 2013.

We've also the report from the IFS:

The stark difference in pay according to gender comes as a consequence of the poorer levels of pay progression open to part-time workers – with women making up the vast majority of people taking temporary jobs, as they look to find more flexible working arrangements after having children. As a result, they miss out on earnings growth associated with staying in a permanent job.

That full report is here.

There are lots of reasons for the scale and persistence of this gap, but new work, funded by the Joseph Rowntree Foundation shows that one important factor is that mothers spend less time in paid work, and more time working part-time, than do fathers. As a result, they miss out on earnings growth associated with more experience.

People who make different choices about work make different amounts of money. People who go to university tend to make more than those who don't. People who have less experience tend to make less than those with more. We cannot say that we are worried by these differences.

But this does lead to a rather large question. As we can see, the difference in average income between men and women seems to be driven by different average choices being made. So, what should we, or even what can be, done about this? Anyone want to live in a society where choices don't lead to differences?  

Empty homes are no argument for Nimbyism

Why should we allow more development when existing homes sit empty? That’s the view of St Helens Conservatives leader Allan Jones. The St Helens Star reports:

Rainford councillor Allan Jones backed calls to focus on vacant properties, questioning the need to use the green belt.

Cllr Jones said: "With that amount of unoccupied houses and the fact that the council now have a brownfield register it may be possible to specify the projected total of houses required in the borough without using green belt land."

…

"With that in mind we will maintain our position which is to oppose mass house building on green belt land in Rainford and throughout the borough."

It’s an argument used by uber-Nimby Simon Jenkins too:

“As long as politicians refuse to put a stop to empty London, I will laugh in the face of those who claim that we must have ever more towers “to meet London’s housing needs”. I will do the same to those who demand an end to city conservation areas and green belts. There are thousands of houses and flats lying vacant in London and hundreds of acres awaiting renewal. And all our rulers can do about it is build more empty towers.”

The problem is their argument is simply false.

First, that some homes sit empty shouldn’t be a cause for concern. Well-functioning labour markets should still have a degree of frictional unemployment as people move from job to job. Just as opposing immigration because we have unemployment is bad economics, so is opposing new housing. As people move from location to location, we should expect a similar degree of friction within the housing market.

Second, there’s no reason to assume that restricting new development will increase the number of empty homes in use. But, the opposite is true according to a new paper from Cheshire, Hilber, and Koster. They find that restrictive planning policies increase vacancy rates. In fact, for every standard deviation increase in planning restrictiveness they find that vacancy rates rise by 0.9pp (23%).

In theory, the effect could go either way. As planning restrictions raise prices they also raise the opportunity cost of keeping a property empty. Indeed, there is a negative correlation between prices and vacancy rates.

But there’s another factor at play. Planning restrictions not only mean that more people are chasing fewer homes, but they also restrict the type of home on offer. For instance, there might be a rise in the number of single adults looking to move, but they’ll struggle to find the right property if the housing stock is mostly family homes and supply has been blocked from meeting new demand. As a result, people spend longer looking for houses and are more likely to stay in less restrictive areas.

The researchers found that it was this latter factor that trumped the former. They also found that planning restrictions increased commuting time as workers are forced to live further and further away from the high demand areas where new development is restricted.

It is time to reject the empty homes argument. Blocking new development doesn’t lead to fewer vacant properties – the opposite is true. Of course, this in itself isn’t the knockdown argument for planning reform. Just as a functioning labour market should have a degree of unemployment, so should a functioning housing market have empty homes. But, the fact that planning restrictions raise vacancy rates suggest that many people are stuck in homes that are too small or too far out. That’s a big problem, and the only solution is to ignore the Nimby’s and let the market build more homes.

Money taken out of the economy

Bernie Sanders described the US tax bill as “A disaster for the American people.” He said it was “a barely disguised reward for billionaire donors” (of the Republicans). For many left-wingers and some Keynesians it represents what they call “money taken out of the economy.” US Democrats predicted the tax cuts would benefit only shareholders because corporations would pass the money on to them in the form of increased dividends. Presumably if it had, they thought the recipients would have burned it, because to invest it or even spend it would have put it back into the economy. It might be that critics of the bill mean money taken out of the public economy, not counting private investment or family budgets as part of the economy.

What has happened so far, only weeks since the tax bill passed, is that over 300 companies have announced bonuses for over 3 million workers, with an average bonus of about $1,000. That represents $3bn into the private budgets of US workers. US corporations have also announced $110 billion in new investment in plant and equipment. Apple alone is going to incur a one-off $38 billion tax charge as they repatriate hundreds of billions to the U.S., with initial investment plans of $30 billion.

Sanders also said that “trickle-down economics has never worked.” He may be right about this, since I have never encountered any economist who believed that it did, or any who thought it had ever been tried. Trickle-down economics is a Straw Man fallacy of the Left, who seem to suppose that neoliberals believe that when rich people spend more money, they boost jobs for people working in restaurants or building luxury yachts.

In fact neoliberals hold that it is investment, not spending, that creates jobs. Extra money in the hands of those comfortably off might be more likely to increase investment rather than spending. Even money put into bank accounts will most likely go into investment. Still in its early stages, it looks very much as though the US tax bill will boost economic growth as intended. When that does happen, the critics will no doubt find other explanations for it.

The world's just not being serious about climate change

Please leave aside all of the arguments about whether there's anything going on, whether we're responsible and so on. Start at the point where it is, we are and something should be done.

Excellent, so, what should be done? At which point we've a report from some sciencey types talking about negative emission technologies. 

Ways of sucking carbon dioxide from the air will not work on the vast scales needed to beat climate change, Europe’s science academies warned on Thursday.

From simply planting trees to filtering CO2 out of the air, the technologies that some hope could be a “silver bullet” in halting global warming either risk huge damage to the environment themselves or are likely to be very costly.

One possible reaction to this is "bit of a pity but there we are." Another is to do that horrible trick of actually going to read the report. In which we find this:

The oceans currently provide one of the largest natural sinks for CO2, via the so-called ‘solubility pump‘ (since CO2 is slightly soluble in seawater), and the ’biological pump‘ (since microscopic plants take up CO2 to make organic matter constituting the base of the ocean food web). Both of these sinks could potentially be enhanced. The possibility of encouraging uptake through dissolution and mineralisation was included in Annex 4; this annex considers enhancing the sink as a result of biological activity. The rate of phytoplankton production is limited in many parts of the oceans by nutrient availability, and enhancing this has long been seen as a potential route for increasing the rate of CO2 uptake.

This is iron fertilisation of the oceans. The important things to know about this being that we know it works. Yes, really, we know, absolutely, that this works in a technical sense. We also know that it won't be a complete solution. What we don't know is how much it will cost - whether it will be an economic solution to a part of our problem.

One of us here has taken an unhealthy interest in this technology over the years and has also applied specialist knowledge to the point. The raw material necessary has, as the usual calculations don't include, a negative cost. It's a waste which people will pay you to take away.

But, still, we don't know quite how technically effective it will be nor quite how economic. As this report says therefore:

 These issues require considerable further research and field trials to be clarified, before OIF could be regarded as a potential contributor to achieving negative emissions.

Yes, we agree entirely. So, where are those field trials? As one of us has pointed out half a decade ago, they'd be illegal. Dumping that waste product into the oceans, that waste that people will pay you to take and which will, as far as we know at least, be a partial solution to boiling those same oceans, is illegal. Even just a few thousand tonnes into empty water, something which might suck down a billion tonnes of CO2, two Britain's worth.

The last field trials were in 2007. Positive results, it all looks like it will work, at low cost, and be that partial solution. But nothing is being done. No more research is being carried out.

The world simply isn't serious about climate change, is it? And we'll not believe it is until those field trials on this technology take place either.