How can they charge these prices? Because people will pay them

Some questions in newspaper advice columns are easy enough to answer. "No, ee's not worf it" being a useful one that applies to many. This is equally simple:

How can Viagogo get away with charging such big fees?

Because they can - some people will pay them. Enough people will pay them to make the tactic viable that is.

At which point a slightly deeper dive into the explanation. People will charge absolutely as much as they can for anything. We can ascribe this to capitalism if we desire - that lust for profit - but it's more a feature of being human. We'd all like to get more coming to us for what we've got to send the other way. So, therefore, people do charge as much as they possibly can.

The solution to this is market competition. It is true that there's some limited number of anything. Most especially tickets to an event. Price is not the only but it's the most efficient manner of sorting through who really, really, wants a ticket and who would prefer to be doing something else given what they'll have to give up to gain one.

OK. But how is that margin, mark up, that the intermediary able to charge limited? By the fact that they don't have a monopoly. Sure, they've an effective monopoly over that specific pair of tickers but not over all those to that event. Thus the competition of others also willing to sell their tickets brings down the margin that can be charged for any specific pair.

Or as we've been known to put it, it's market competition that reduces the gouging that human nature makes us all prey to. Which is why we have market competition of course.

Voluntary exchange is the very definition of what it is to be human

Adam Smith was here a little earlier with his comments upon the innate tendency to truck and barter of course. But we seem to be gaining proof that it's more than just humans like or tend to do so, it's the very definition of what makes us human in the first place:

Researchers reviewed ancient fossils and landscapes and found that what separates us from other forms of early man was our ability to flourish in even the most extreme environments, from searingly hot deserts and tropical jungles, to icy mountains and wastelands.

Scientists at the Max Planck Institute in Germany, claim that ability was far more important than art, language or technology, at setting us apart from other hominids, such as Neanderthals or Homo erectus, who also had rich cultures, yet still died out.

Not only did Homo sapiens survive in harsh landscapes but they thrived there, learning to become ‘generalist specialists’ who could out-compete those around them no matter what the environment.

There must be something that led to that ability to outcompete of course. That being:

Dr Brian Stewart, study co-author said:"Non-kin food sharing, long-distance exchange, and ritual relationships would have allowed populations to 'reflexively' adapt to local climatic and environmental fluctuations, and outcompete and replace other hominin species.”

The first two of those both being trade, that propensity to truck and barter.

Observation of modern humans tells us that this is something that we do, the best we know of proto-humans tells us that those who succeeded did it too. Voluntary exchange seems to be at the heart of our very identity - a fact which makes it very odd that so many people wish to protect us from trade.

One of these numbers is entirely unlike the other

There might be some impersonation at British elections. This is, of course, just as much a matter of the security of our democracy as all that shouting about who shows what adverts on Facebook. And as that episode shows, the security of our democracy is something all agree must be not just preserved but enhanced.

Thus trying to find out how much impersonation there is seems sensible to us:

More than 20 charities and civil society groups have urged the government to halt plans to expand compulsory voter ID, arguing that a trial at local elections in May did nothing to dispel fears it would put off vulnerable and disadvantaged groups.

The organisations, including the Salvation Army, Age UK, Liberty and Centrepoint, have written a joint letter warning that the idea was an excessive response to an almost negligible problem of voter impersonation at polling booths.

Well, we don't know that it's negligible, that's what we're trying to find out. By, you know, running trials and tests?

 The joint letter, sent to the Cabinet Office minister Chloe Smith, said that during the trial 350 people were turned away for not having the correct ID and did not return to vote – and there were just 28 allegations of voter impersonation throughout 2017.

The thing is, one of those numbers is entirely unlike the other. The lower one, 28, is the number which a system of no checks appears to think worth pursuing. The 350 is the number the new system of checks seems to think is worth pursuing.

Sure, we don't know why those 350 didn't return. They were legal but didn't have the docs, they weren't legal to vote, they couldn't be bothered to prove matters either way, who knows? 

Note also that the 28 concerns the whole country, the 350 only five local authorities. Of which there are some 400. Meaning that if we scaled up our trial results we'd be talking about 28,000 people nationwide.

Well, yes, that does seem to be worth further investigation, doesn't it? Certainly, those sorts of results concerning Facebook would be bringing calls for regulation. Why not here?

A truly appalling demand from Damian Collins

The furore about Facebook and political campaigning has always struck us as being much more about the wrong people winning than anything else. When the Obama campaigns used this bright new world to connect with the young there was nothing but praise for the tactics. About the only accusation this time around that we think can actually be made to stick is that Leave were marginally better at using the new tools than Remain.

Yes, we know of the overspend claims and so on and regard them as marginal matters - for they are indeed matters at the margin - even if we're still awaiting more information about the other campaign.

However, that's not what actually worries us at all. Rather, what rules might be put in place as a result of all this? Which brings us to the truly appalling suggestion by Damian Collins:

Damian Collins, the Tory MP who chairs the DCMS committee, said that to breach an agreement to stop campaigning in Cox’s honour would be “totally unacceptable, and those responsible should explain why they did it”. Collins also called for a new “fit and proper” test to be introduced for those who run referendum campaigns in future.

“This happens with company directors and football clubs. There is a strong case for a similar rule for those running our elections,” he said.

The claim is that only the right sort of people should be allowed to run campaigns. It doesn't take long for the right sort definition to morph into "those who agree with me." We have actually seen this in history as well. John Wilkes had certain problems in being accepted as a duly elected member of Parliament for example. It's also not true that one had to be a communist to stand for election in the Soviet bloc. Several countries had multiple political parties - but candidates did all have to be the right sort, signing up to the basic primacy of communism and or socialism etc.

Rather the point of this democracy kick is that, if we feel like it, we get to throw the bastards out without the requirement of a bloody revolution. The limitation of entry into such bastardy to only the right sort militates against this essential function, no?

We're a great deal less worried about whatever use was made of Facebook et al than we are about the proposals that are slithering out of the woodwork to cure the claimed problem. It all smacks much to much of the wrong people won so let's make sure that can never happen again.

Venezuela Campaign: Corruption & Catastrophe

Running a country in crisis is challenging for even the most capable politicians. When thinking of those that have successfully led a country out of crisis, you might think of a leader with the vision of Roosevelt and the personality of Churchill. What then of a country where politicians are not only incompetent, but extraordinarily self-interested?

Venezuela is such a country.

Ranked 169th in the world by Transparency International in its Corruption Perceptions Index, with the seventh lowest score, Venezuela is one of the most corrupt places on the planet. Elections are widely regarded as shams, political accountability is non-existent, and former President Hugo Chavez’s daughter is worth billions.

Venezuela’s ongoing economic crisis may be a direct result of falling oil prices, but corruption and political cronyism have exacerbated the situation. After a failed strike in 2003, Chavez fired 18,000 employees of Venezuela’s state oil company, PDVSA.  The skilled and experienced workers who left were replaced by Chavez’s political supporters, regardless of their qualifications. This started a catastrophic decline in oil production, as valuable technical knowledge was lost.

Faced with declining oil production and falling oil prices, Venezuela’s political elite were faced with a tough decision. One option was to remodel the economy, diversifying away from oil and encouraging foreign investment to help stave off future crises. The other was to print money to allay its short-term cash flow issues.

President Nicholas Maduro chose the latter. Ignoring the well-known fact that printing money is like playing economic Russian roulette with only one empty chamber, Maduro ploughed on ahead. Maduro believed that printing money and hoping the price of oil would recover and replenish his foreign currency reserves before hyperinflation began.

Fast forward several years and the economically illiterate Maduro has driven inflation rates up so far that the IMF predicts that inflation will reach 1,000,000% by the end of 2018. Farcically, Venezuela now owes money to the foreign firms that print its currency. Oil production may drop to 1 million barrels per day in 2018, down from almost 2.5 million as recently as 2016.

Catastrophe in Venezuela is political: it comes from the top, from the corrupt and incompetent politicians that are driving the country to ruin. Only when Venezuela’s leaders are held to account can the recovery efforts begin.

More information on the Venezuela Campaign can be found on their website

Iresa going bust probably is evidence of a competitive market

We mentioned a couple of months back that in order to determine whether a market is competitive or not it's not really possible to look at pricing alone. For manipulated markets and free ones can look remarkably similar through that one lens. We can though look for other events which will guide as to whether we've that desired competitive market. 

One of which is people attempting to be the low cost provider going bust:

We can though think about what should be true if it is a competitive market, look for that occurring and thus come to a determination. One of those things being, well, if the market is competitive on price then we'd expect to see those attempting to be the lowest cost provider experiencing significant difficulties in keeping going. For trying to be the lowest cost provider - without any particular low cost production method - is a precarious place to be in a competitive market.

Everyone is already charging just the minimum necessary to keep afloat and you're coming in lower? You're going to have a little problem there or two, aren't you?

Our example of someone apparently suffering such competitive problems was Iresa. And Lo!

Almost 100,000 energy customers have been left in limbo after Britain’s cheapest energy supplier went under after months of poor service and more than 2,000 complaints to the Ombudsman this year alone.

Iresa Energy, which is also the country’s most complained about energy supplier, collapsed on Friday after a lengthy, public battle with the regulator over its poor customer service and billing.

The company is the latest casualty of fast-rising energy costs that have forced standard energy tariffs across the market higher in the last few months.

A competitive market should see some people going bust as a result of that price competition. We are seeing people going bust because of that price competition. A useful conclusion would thus be that we've a competitive market here. 


It's the same old Grand Delusion all over again

Should we replace some part of doctoring and nursing with artificial intelligence and robots? At one level this is the same question as should we replace markets with government planning? The thing we desire to know is not are there, or even what are they, problems with AI, robots or markets. We want to know what is the balance of problems between those and doctors, nurses and government planning. It's the net position that matters, not the identification of a problem or two either side.

As we might put it, there's no value in shrieking market failure without also pointing out planning and government fail at times too.

 As we start to see these possibilities as fantastic rather than fantastical, we must also be aware of unintended consequences. What impact would doctors increasingly coming to rely on algorithms have on the body of medical knowledge? And how do we mitigate the risk that algorithms may not be sufficiently sensitive to everything going on in a patient’s life? For example, a patient with a high level of anxiety and stress may suffer an impact that no machine is able to capture. Algorithms will also have to be assessed to ensure they are not biased against certain groups, especially as they make decisions which may have very long-lasting consequences on individuals.

In detail that's to fail to ask whether humans might be biased against certain groups - not our historical experience really, is it? - or that all NHS employees are exquisitely sensitive, even that each doctor is aware of all of medical knowledge.

This is the same grand delusion as insisting that because markets aren't perfect therefore government must be. To insist upon the existence of market failure but refuse to note government failure..

Ivana Bartoletti is a privacy and data protection professional, and chairs the Fabian Women’s Network

Ah, yes, that explains the belief in that delusion, doesn't it? 

Book Review: Give People Money by Annie Lowrey

Universal Basic Income (UBI), is a programme that has raised questions across the political spectrum: who will fund it? Won’t it create even greater declines in productivity and cause mass unemployment?

In her new book Give People Money, The Atlantic’s Annie Lowrey tackles these queries by taking us through a number of case studies - from Kenya to Alaska - to explain how our current welfare systems aren’t working.

With the automation of vehicles and the rise of artificial intelligence both looking to be game-changers, Lowrey kicks off by cheerfully forecasting mass structural unemployment. She believes that self-driving vehicles alone could wipe out between 2.2 to 3.1 million jobs in the US. She argues that current redistribution policies employed by the state would not be able to stand up against the longer spells of technological unemployment many look set to face as their jobs become obsolete. UBI would give them cushion needed to obtain new skills and enter new industries.

Predictions about the state of the future labour market aside, a UBI would remedy current inequalities between different races, classes and genders. And Lowrey contends it would also create a sense of inclusion: a chance for each and every poor, disabled and marginalised individual to play an active role in the economy. Caregivers usually receive little to no pay, and on the flip side, many find it impossible to afford childcare - both issues that a UBI would address. Lowrey mentions Sandy J. Bishop, a disabled woman in Maine who reported that she often lost food stamps because of the cloud of paperwork required, to emphasise how the level of bureaucracy in the current system makes it hard for most in need of help to reach it, even when it is available.

Lowrey also highlights the increased bargaining power for workers that a basic income would create. She uses the example of the Ortizes, a family dealing with poverty in downtown Houston by juggling as many as eight jobs at once - even the children are forced to forgo school over low-paying fast food jobs. For families like these, UBI would not only give them something to fall back on, but also allow them to demand better working conditions and wages.  

Lowrey assuages worries over a UBI in developing countries while exposing the pitfalls of current aid programmes. In the Kenyan village she visits, there is a massive surplus of Toms slippers from their ‘One for One’ campaign. Rather than wasting money on the transportation of unneeded supplies like slippers and water jugs, we should draw back such a paternalistic approach and instead give those in extreme poverty the funds they need to survive. That’s not to say there aren’t issues with direct cash transfers too: in India where they have replaced old welfare programmes citizens have been plagued with technical issues and there’s been general confusion over the new system. For UBI to work effectively the public must be well educated on the policy and the payments must be easily accessible for all.

A solid case is made for the reasoning behind the UBI, but the book only gets into the nitty-gritty of funding such a scheme (in the USA) in its final chapter. It suggests several tax hikes, including a potential robot tax, as well as the scrapping of all other welfare as it takes its place. The most sustainable route to basic income for the masses would be a Negative Income Tax (NIT), which Lowrey does touch upon, though only briefly.

Lowrey suggests that the NIT would drive people to hide their earnings in order to get more from the tax. She is right in saying that this wouldn’t be an issue with UBI, but with many current welfare programmes and levies like the income tax there are sharp cut-offs, creating a very strong incentive to misreport income or simply work less.

Fraud in any policy is a possibility; what’s important is the level we’re willing to tolerate. The ease with which NIT is implemented makes it a strong candidate over the UBI and it wouldn’t make sense to dismiss it over minor concerns like fraud risk and allow inferior programmes to stand. The NIT reduces the amount of bureaucracy within welfare, providing security to those, who like Sandy J. Bishop, are currently falling through the existing safety net the US government has in place. The system may not sound as flashy as the UBI, where one can envision politicians throwing reams of $100 bills from a helicopter, but it is easier to navigate, and there may be less resentment over withdrawals taking place before the payment rather than after it.

From the mention of a basic income in More’s Utopia to Milton Friedman’s support of the NIT, the notion of providing a baseline for all has attracted the attention of luminaries across the political spectrum and through the centuries. Lowrey has presented a strong case for a basic income in Give People Money. The next step is advocating a feasible policy, like the NIT, that can be executed in the near future.

Emma Weber is a research intern at the Adam Smith Institute.  

If only Owen Jones Actually understood his history

Owen Jones is attempting one of the standard tu quoques. Sure, communism was a rapacious and murderous ideology that exterminated tens of millions at least. But, look, capitalism! This is, obviously enough, rather to miss the difference between sins of omission and commission. That famines happened under early capitalism, just as they did before capitalism, is in a different moral class from shooting people in dank basements.

But it's not just - as the good little propagandist that Jones is - this false comparison, there's a significant lack of understanding of basic fact:

That is, of course, not to excuse the horrors of Stalinism: the totalitarian model pioneered and exported by Stalin’s regime deprived millions of their liberty and, in so many cases, their lives; similarly, the millions of lives lost to murder and famine in Maoist China can never be forgotten. Yet the charge sheet against communism does not aid the champions of capitalism quite as much as they would like. According to The Black Book of Communism, a disreputable key reference point for the right, almost a hundred million humans perished at the hands of self-described “communist” regimes, mostly victims of Mao Zedong’s regime in China. The Nobel prize-winning economist Amartya Sen notes that between 23 and 30 million people did indeed die as a consequence of Mao’s catastrophic Great Leap Forward policies in the late 1950s and early 1960s.

But he also noted in a 2006 paper that in the middle of the 20th century, China and India had the same life expectancy – around 40 years. After the Chinese revolution, a massive divergence took place. By 1979, Maoist China had a life expectancy of 68 years, more than 14 years longer than that of capitalist India.

The error there - and one that Sen would laugh at - is to think that post-independence India was in any manner a capitalist economy. Quite famously it wasn't, in fact it was the one place that the fantasies of Fabian Socialism were enacted for any substantial number of decades.

For yes, Nehru's India was planned socialism. Not, note, communism, but that intermediary stage oh so close to the sort of policies that Jones recommends we follow today.

Which really is something Jones should know about the history he points to, isn't it? That his preferred policies are even less successful at raising lifespans than full on communism?

India and the tragedy of socialism

Today started with complete incredulity at an Owen Jones piece in the Guardian. I’ll admit, that’s quite regular, but this one really took the biscuit.

It wasn’t the way that OJ blithely glided over the 23 to 30 million killed in Mao’s Great Leap Forward policies (a low-end estimate by the way – most believe nearly 45 million died in those four years). But then, what is fifteen million extra dead but mere statistics to communists? The lives lost, the dreams dashed and futures foregone. Communists care not a jot, they’re to be swept under the carpet and minimised, not commemorated or mourned. 

No. What really stunned me was the way he decided to compare the increase in life expectancies of ‘communist China’ with ‘capitalist India’ between the end of the Second World War and 1979 as evidence that communism was being unfairly maligned in the British press. ‘Capitalist India,’ he charged, failed to increase life expectancy. Capitalism killed millions he surmised. 

If this jars, it is because it is meant to. And if it strikes you as complete bunkum, it is because it is. 

That ‘capitalist India’ that Owen Jones speaks of is one of pure fantasy. Owen’s ignorant analysis shows just how little he cares about history and just how little he cares about the impact of the policies that he now actively supports.

Let me spell it out for him: after independence, India was a socialist state. 

Jawaharlal Nehru, first leader of independent India, was an avowed socialist. He made no secret of the fact. 

Nehru acclaimed to the Lahore Congress in December 1929 that he was a ‘a socialist and republican’. In 1927, at the Brussels Congress he was made an honorary president of the openly marxist-leninist League Against Imperialism, and later that year visited Moscow for a four day visit to explore the practical application of socialism and communism. 

He said of his time in among the socialists and communists of Europe that: “My outlook was wider… without social freedom and a socialistic structure of society and the state neither the country nor the individual could develop much.”

His commitment to the creed, over the prosperity of his people, would lead to decades of growth delayed. It would lead to poverty for tens of millions. As Owen Jones says: it has meant death for hundreds of millions of Indians earlier than their counterparts in China.  

Just how socialist was Nehru and the rest of Congress? 

Well, in the 1950s they followed socialist creed and the state seized control of steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries. The Indian government had seized the commanding heights of the economy.

But they had not finished. The Banks came next. 

In 1950 there were 430 commercial banks in India. In 1955 the Imperial Bank in India was nationalised and renamed the State Bank of India. In 1969 all commercial banks holding over Rs.50 crores (just over £200m in modern money) were nationalised. The 14 largest transferred 70 per cent of deposits into Indira Gandhi’s hands. In 1980 all remaining banks were nationalised. 

As ever the aim was to ensure more people had bank accounts, ‘fairer’ credit access, restriction of monopolies, a reduction in inequality and to ensure lending was prioritised according to political directives. Owen Jones might recognise this and even the terms used to push it internally within Congress. It was called ‘Social Control’ and Prime Minister Desai said it would mean India’s politicians could “regulate our social and economic life so as to attain the optimum growth rate for our economy and to prevent at the same time monopolistic trend, concentration of economic power and misdirection of resources."

The outcome was predictable: thinly spread and poor banking facilities, deposits never properly matching liabilities, efficiencies and profits so low and with huge mandated expenditures which dragged the public banks into deficits. 

And of course, political interference meant a huge spike in non-performing assets. Oddly, when something isn’t commercially viable enough to succeed as a private venture, it’s rarely commercially viable to succeed as a public one. 

Sadly it didn't end with Nehru. Unlike China, which developed a taste for neoliberal policies under Deng Xiaoping in the 1980s, India would reaffirm its commitment to socialism by enshrining it in its constitution in 1976 and pushing ahead with further nationalisations in the 1980s. 


But there was hope for India. In 1991, Congress took the collapsing Soviet Union as the warning sign it was. Communism and Socialism should be abandoned. Capital and coverage ratios were reduced, government intervention in commercial decisions was reduced, branch licensing was abolished, interest rates were to be determined not by politicians but by market forces. 

As privatisation of state owned companies began, and reductions on foreign capital and foreign direct investment took effect, growth took off – reaching 7% a year between 1997 and 2011. 

But India still has controls that are markedly socialist and which hamper development. The World Bank in 2017 ranked India a dismal 130th out of 190 countries by ease of doing business. 

Corruption, cronyism, nepotism, investment and divestment based on patronage and not profit. These are what have kept India down. They are the hallmark of socialist states everywhere that rely on perceptions of fairness and commitment to the cause, rather than the output that is achieved. It is evidenced, as Professor Ramesh Thakur puts is, by the fact that it is “easier for a person of Indian origin to reach high public office in Canada, Ireland, the United Kingdom and the U.S” than in India. If you’re of Indian descent in the UK you are far more likely to succeed in exams, far more likely to go to university, and far more highly paid, than the rest of the population. 

The development of an entrepreneurial Indian state was possible, it didn’t need to be left to those that found new lives in the capitalist countries of the West and capitalist city states of the East. Nehru was half right when he said “without social freedom and a socialistic structure of society and the state neither the country nor the individual could develop much.”

Half right because you need social freedom – that’s the beauty of our liberal democracies and the social revolution we’ve undergone. But you need economic freedom too, not socialist structures and plans. If India wants to develop to its full potential it has to open up to the world, bring down the remaining capital controls and socialist structures. It needs to free its citizens from the dead hand of the state. 

If Owen Jones wants to claim that India’s lack of development was a tragedy, then I’ll welcome him with open arms. It was a tragedy. It was a socialist tragedy.