Let the car take the strain

Autonomous, truly driverless, cars are obviously going to change the transport network. It's a fun parlour game to try to work out which parts it's going to kill. Actually, not so much a game given that we've the usual suspects insisting that we must spend tens of billions - if we add up all the schemes perhaps hundreds -  on the rail network. For it's the non-commuting passenger part of that network which is going to be murdered in its bed by that new technology:

Volvo has unveiled a futuristic concept car that it hopes will replace short-haul air travel and introduce new safety standards that could put driverless vehicles on the roads sooner.

The Swedish company’s 360c autonomous vehicle does away with the steering wheel and uses the extra space created by electric drive systems to create different cabin layouts.

These can be configured into modes such as commuting, mobile office, entertainment and sleeping.

With a flat-bed installed, Volvo believes its cars can replace short-haul air travel, targeting flights of up to 400km - about the distance from London to Newcastle.

Short haul air travel might well suffer. But it's going to be the train taking the strain. 

Those commuter lines in and out of London, say. No, we're not going to start moving a million and more people a day on the roads, rail has its place there. Long distance travel is still going to be by air whatever the promoters of things like the TGV insist. But that part of the transport network where rail is in competition? Travel - for business and pleasure and of people not freight - in the tens of miles to the hundreds?

Assume, for a moment, that the advertised technology works. What are people going to prefer, that public option of the feeder line to the terminus, change, the fast train to wherever, that switch to local transport again?  Or what is, effectively, one's own private train carriage able to transport you point to point anywhere on Britain's road network? 

Well, quite, and the reason we're spending tens of billions (before the inevitable cost overruns) on HS2 and the like is what? Investing in a soon to be entirely redundant technology?

The argument in favour of government investment is that it will invest in things the private sector won't. It's also the argument against it as well.

Those spiralling costs of new drugs

It's not uncommon to hear people telling us that new drugs cost a lot per treatment. Therefore that drug development system is broken. The truth being that it's all rather more complex than that. Or even simpler. The drugs we're developing treat ever fewer numbers of people as we move down the list of problems to be solved. Thus the costs of the development need to be carried by ever fewer treatments. The cost per treatment is thus, whatever our financing system, going to be higher.

There is no way out of this, no way at all

The treatment called CAR-T therapy - has been hailed by scientists as one of the most significant breakthoughs in cancer for decades.

It works by taking a patient’s own white blood cells, and re-engineering them to fight cancer, , before re-injecting them into the body, where they multiply.

Some studies have found that up to nine in ten patients with little hope of survival went into remission after being given such therapy.

The deal struck between Novartis and the NHS is one of the fastest funding approvals in the history of the NHS, and comes 10 days since the drug was licensed for use in Europe.

The treatment would cost a patient around £280,000 privately....

£280k is a fair chunk of change in anyone's money. But why so much?

Around 30 children a year are expected to be given the CAR-T treatment

It's possible to argue - whether we include the opportunity costs of capital for example - but the development of a new drug through to approval costs some $800 million to $2 billion. The current funding system means that the developer has some 10 years after approval of patent protection to try and get that back. The fewer people the drug is given to the more each treatment will cost to try to recoup.

But note that this problem doesn't go away if we change the funding system. It still costs that $2 billion to develop a drug. The cost per treatment is therefore higher, to recoup that investment, however and whoever pays for the development. Even if it's all just tax funded the taxpayer is still spending $2 billion to treat 30 people a year (yes, obviously, the development is one once globally but still the logic stands).

The expense of new drugs is about the expense of developing new drugs. Changing who or how pays doesn't change that in the slightest.

Does the NHS expand to absorb the funding available?

The cost of the NHS has risen faster than inflation for good reasons and not so good. Innovation has brought shorter hospital stays, local in place of total anaesthesia, less intrusive  surgery and more effective medication.  Shouldn’t the total cost be going down rather than up?

Part of the increase has been at the expense of adult social care, whose funding via local authorities has been cut in real terms. Even so, The King’s Fund reported that: “the number of general and acute beds has fallen by 43 percent since 1987/8, the bulk of this fall due to closures of beds for the long-term care of older people.”  It is amazing the local authorities have been able to cope thus far. 

The Adult Social Care Green Paper will be delivered over a year late, coming out finally this Autumn. Of course, no explanation has yet been given. Cure and care need to be considered together but there is no sign they will be.

This blog has been prompted in particular by a letter from the Rev. Roy Allison who won the 1995 Adam Smith Institute competition the “Economy in Government.” It attempted to quantify the savings available from unblocking NHS beds. Eamonn Butler (the ASI’s Director and Co-Founder) is quoted as having said: “I have no doubt that the Rev. Allison’s proposal will be adopted.” Turns out, fat chance.

The Office of Health Economics celebrated the NHS’ 60th birthday by debunking a couple of myths:

Firstly, it shows that the UK is not a low spender on public health. Of the top 21 OECD countries only France and Germany spend more as a percentage of their GDP.

Secondly, up to 35% of the cost of the NHS does not go into primary (GPs) or secondary (hospitals) at all: “In 2006/07, the latest data available, Hospital services gross expenditure accounted for 43% of NHS cost, while the Family Health Services (FHS) accounted for 22%. This compares to 52% and 36% respectively in 1949/50, equating to a 5-fold rise in hospital expenditure per capita and 4-fold rise (in real terms) in NHS expenditure per capita over the same period.” (p.22).

The figures change from decade to decade but a large proportion of NHS England’s funding does go to the free individual health treatment for which it was set up. Supervisory boards and consultants alone cost £139m. The NHS should be streamlined to deal only with treatment and cure, leaving care, and better funding, in the hands of the specialists. At the same time, the variety of adult care services, mainly the elderly, mentally ill and those with learning difficulties, need some sort of framework to promote best practice and efficiencies. This is why we need a Royal Commission, which would be only the second in 70 years, or equivalent. For both cure and adult care.

This blog has thus far omitted the third big spender: public health. This too has a complex web of goals and management. Some lie within hospitals, others in County Councils, NHS Regions and Public Health England which answers directly to the DHSC. Norfolk’s approach, and other local authorities are similar, in that they ludicrously dabbling in every aspect of life: healthy food, drinking, smoking, driving, diseases, sex, home and school visiting, and “integration, prevention and reduced inequalities and priorities of mental health, dementia, early years and obesity.”

Government should indeed make us at least aware of the consequences of taking detrimental life choices. And government needs to prepare for, and deal with, epidemics. But that needs one small department, not armies of bureaucrats supposedly “working with” each other. For a start, public health responsibility should be withdrawn from the NHS.

In addition, with the declining number of beds to attend, one would expect the number of nurses have declined pro rata. In the past thirty years, bed numbers shrank by 43 percent while the number of nurses, visitors and midwives has grown by 14 percent (280k to 319k) – and that is ignoring the 30k primary care and district nurses where numbers have been stable. At the same time, some hospitals have failed to take proper care of patients due to a shortage of nurses and/or their supervision and training. The Commission needs to take a hard look at this anomaly along with other areas where efficiencies have been promised but not delivered.

The most fundamental instinct of any organisation is to grow. The NHS is no exception. With 1.7m employees in the UK (1.2m in England alone) unbounded growth will prove too much for the economy to sustain. On the one hand, justified demand for treatment and cure must be met. The NHS has a fine record on that. On the other hand, we cannot expect it to make the savings that would undermine its claims for more funding.  Only an external review can do both.

A start can be made by shedding non-core NHS responsibilities: namely adult care, public health and top-heavy supervision. A streamlined NHS focused only on treatment and cure would be in a stronger position to cross-fertilise best practice and improve productivity.  And continue to deliver what it was created to do.

Malthus was both right and wrong but we've solved that problem anyway

As we might have noted before the Rev Malthus was absolutely right about all of history until he sat down to write and absolutely wrong about near all that has followed. Population growth can indeed - and often will - outstrip food production growth yet this is a problem that capitalism and industrialisation solve. Rich people have fewer children:

South Korea’s fertility rate is expected to fall to an all-time low this year, setting the country up for a host of problems including underfunded pensions, expanding debt and economic decline.

The average number of babies born per woman of reproductive age is due to be as low as 0.96 this year, falling below one for the first time in history, according to a study commissioned by the Chosun Ilbo newspaper.

That sort of fertility rate pretty much solves the overpopulation concern. And while that rate is alarmingly low by anyone's standards it's also true that every rich country, absent immigration, is below the 2.1 which is replacement level. The world is expected to be below it when he world is as rich then as we are now, around 2100 or so.

It's not even access to contraception which drives this - although obviously those who wish to use it should be able to buy it if they so wish. It's desired fertility which falls like a stone.

We know how to solve overpopulation, that's one through economic growth. You know, that thing caused by capitalism and free markets? Or as we might put it, economic freedom is the most effective contraceptive we know of yet. 

The terror of people being employed where they are productive

The Telegraph has uncovered quite the horror of our age:

Britain faces an artificial intelligence “brain drain” as Silicon Valley raids its top universities for talent, data compiled by The Telegraph shows.

Around a third of leading machine learning and AI specialists who have left the UK’s top institutions are currently working at Silicon Valley tech firms.

More than a tenth have moved to North American universities and nearly a tenth are currently working for other smaller US companies. Meanwhile just one in seven have joined British start-ups.

People are being employed where they are the most productive. Given the global nature of the tech business the where where this is doesn't matter in the slightest. Thus the brightest minds being allied to the deepest capital pockets are off being productive - exactly the result we desire.

There is another point here too. The argument in favour of the universities - government funded of course - doing all the research is that it's all so long term, so much of a public good, that the private sector, private actors, just won't do it. Takes far too long, it's all far too risky, to do that research in a private company. 

Now we've the complaint that everyone capable of doing this research is in a private company - wherefore our universities now? Well, clearly, the argument that only universities, only the government, can do that research has something of a dent in it, doesn't it? 

And we do seem to have entirely demolished the idea that the universities must have more money in order to attract those brains to do the research that the private companies are already handling rather well.

In more formal terms the argument is that the private sector won't produce public goods therefore the public sector must. That doesn't then mean that the public sector must be funded to compete with private - it means that if the private sector is producing the public goods then we don't need the public option at all.

Help To Buy - why politics, again, isn't the way to run things

It was never a very sensible scheme to start with:

The government's Help to Buy scheme is facing the axe amid concerns it is helping wealthier households and pushing up house prices.

The Telegraph understands that ministers are planning a “fundamental review” of the policy that could see it replaced with a scheme that is "more targeted on those it is meant to be helping."

Subsidising the purchase of something you've already decided is too expensive is not the way to do it. For you're just adding more money to the flow chasing that already too expensive thing.

And yet it was done - why? Because political pressure to do something and logic to do the right thing aren't - as we can note - the same thing. House prices were/are such that people find it very difficult to get on the ladder. Reducing the price to be paid would help but that might mean confronting one or other shibboleth. Like allowing people to build houses people want to live in where they'd like to live instead of where the planners damn well tell them to.

Thus we get policy which not just doesn't quite address the justificatory problem given but is entirely counter-productive.

The point being that politics isn't a good way to be managing things. For what bubbles to the top of that political do something list, what politics suggests, or allows to, be done,  tends not to be what either needs or should be done. Better instead to use politics to decide that absolute minimum of things which can only be dealt with in that manner and leave the rest of life to us the people to deal with in a very much less inefficient manner.

Venezuela Campaign: a country in a death spiral

When people abandon a country in droves, it is rarely a sign of a healthy economy.  2.3 million Venezuelans (7% of the population) have fled poverty and economic despair, and another 2 million are predicted to leave over the next year and a half. For scale, imagine if half of London’s population left the UK, and the other half were about to leave. And we may be underestimating the crisis, since the situation is rapidly becoming nightmarish.

Hyperinflation has risen above 61,000% and is predicted by the IMF to reach 1,000,000% by the end of the year. When inflation runs this high, the lag between tax assessments and payments means that inflation wipes out the real value of taxes. This forces the government to print yet more money in a hyperinflationary death spiral. The recent botched operation to remove five zeros from banknotes has only caused further panic and confusion among the population.

Escaping Venezuela is increasingly difficult. Public transport has ceased to operate, and private cars lack petrol or can’t be repaired due to an absence of affordable spare parts.  Walking to the border is almost the only option, difficult for the old and sick or those with small children. Moreover, neighbouring countries have started to insist that Venezuelans should present passports. However, this is no longer possible because Venezuela’s passport bureau has run out of materials to produce them.

One could say “could the last person to leave please switch out the lights,” but that won’t be necessary as the electricity network is falling apart with blackouts becoming ever more frequent. As public services grind to a halt, so does the country. In Caracas, there is rarely running water available, which Bloomberg’s correspondent has described as “a man-made drought that is arguably the most equalising disaster the government has ever managed to engineer.

Some Venezuelans suggest that the government would prefer most citizens to leave, as this will help it stay in power.  Fewer people means fewer protests, and if political opponents are no longer in the country, they cannot campaign against the regime. The regime’s food distribution network, or CLAP, assures the loyalty of many poor Venezuelans. Meanwhile, the regime’s leaders allegedly siphon off money for themselves from state oil operations, regardless of its effect on the country.

What should the world do when a country’s leadership steers it off a cliff? Must we wait until the country crashes at the bottom? Venezuela is certainly already in free fall.  The British Government must be proactive both in addressing the humanitarian crisis and in working with Latin American countries to try and help the Venezuelan people find a new leadership dedicated to the welfare of the people.

The art installation that is the Soviet Union

A vastly ambitious and potentially interesting art installation. One which we'll guarantee manages to get one hugely important thing wrong

In an art project that has been compared to The Truman Show, Big Brother and the Charlie Kaufman film Synecdoche, New York, a Russian artist has paid 400 people to live for three years in a fictional but functioning Stalin-era research institute.

In an experiment long anticipated in the film and art worlds but confirmed by the Guardian on Friday, Ilya Khrzhanovsky created an institute of theoretical physics in eastern Ukraine modelled on the shadowy facilities which existed in the Soviet Union from the 1930s to the 1950s.

Inside it were more than 400 real people, who relived 30 years of the Soviet experience in three years between 2008-11, eating the same food, wearing the same clothes, and obeying the same rules as Soviet citizens would have.

That's not going to be true. One of us has extensive experience of this, having lived and worked in the rubble of actually existing socialism for a decade or so. Yes, including time when it was still the Soviet Union. Including an episode when the mathematicians of a research institute in Siberia (in Academgorodok) travelled hundreds of kilometres following a rumour that some pigs were to be slaughtered. That being the only way to get any pork, possibly.

The food, clothing, even housing, will be what the plan, the system, said would be available. Rather than what was actually available. It may well have been that carrots were a kopek a kilo in the ration shops. But a film assuming that there would be carrots - at whatever price - in the ration shops is making a serious error.

There is a reason why Soviet factories paid so much attention to providing the workers with a dacha. Not because those who work by hand should have a country cottage for the cottage didn't exist. It was so there was a piece of land upon which the worker could grow a few vitamins, those the State could not and did not provide whatever the plan said.

We too think that allotments for those who want them are a pretty neat idea in Britain. But we'd think that absolute reliance upon them by the population for anything close to a balanced diet is an indictment of the food system.

The point about a film, an art installation, concerning the Soviet Union is that it should not be about what it was claimed it supplied but should show that actually existing socialism. You know, that one that, whatever the ration, didn't actually provide that housing, clothing nor food in any great quantity.

The difference between Stella Creasy and ourselves

Other than the obvious differences that is, she's an MP, we're not and so on. This tale of Wonga falling into administration being a useful example of that major underlying difference. We'd like to solve problems, Ms Creasy to appear to do so.

Wonga collapsed into administration yesterday as Britain’s biggest payday lender lost its battle to stay afloat after a wave of customer complaints.

It was indeed Stella Creasy who led the charge against the company and payday lending in general. The thing being, the problem isn't solved, not at all. As a part of the Federal Reserve has noted:

Except for the ten to twelve million people who use them every year, just about everybody hates payday loans.

Yes, that's an American number but the UK incidence will be about the same in proportion. As they go on to say:

Even though payday loan fees seem competitive, many reformers have advocated price caps. The Center for Responsible Lending (CRL), a nonprofit created by a credit union and a staunch foe of payday lending, has recommended capping annual rates at 36 percent “to spring the (debt) trap.” The CRL is technically correct, but only because a 36 percent cap eliminates payday loans altogether. If payday lenders earn normal profits when they charge $15 per $100 per two weeks, as the evidence suggests, they must surely lose money at $1.38 per $100 (equivalent to a 36 percent APR.) In fact, Pew Charitable Trusts (p. 20) notes that storefront payday lenders “are not found” in states with a 36 percent cap, and researcherstreat a 36 percent cap as an outright ban. In view of this, “36 percenters” may want to reconsider their position, unless of course their goal is to eliminate payday loans altogether. 

Again, specific numbers will be different but the general underlying point is the same. A price cap will, dependent upon its level, simply abolish the activity altogether. Or at least legal versions of it, Big Tom and his kneebreakers will revive themselves.

The difference? Ms. Creasy and her campaign have exited Wonga from the market. But there has been no replacement for those borrowing desires of all those customers, the problem has not been solved that is. How to provide the desired credit at a price thought reasonable? 

Our preferred solution? Those who think that the price was unreasonable set themselves up to provide short term credit in small amounts and do so at that price they consider moral. This would both drive Wonga and others out of business and also solve the problem, that unavailability of reasonably priced credit. 

It's possible that this won't work. That this form of credit is simply very expensive to provide. We're aware of a US attempt by the largest Thrift Store organisation and they found themselves charging 230% or so APR just to cover costs, no profit involved nor even return to capital.

Even so we disagree with what has been done. For the problem isn't solved - the provision of reasonably priced credit. All that has been banned is those voluntary transactions of credit at a price suppliers and consumers are willing to agree upon. We don't regard this as a victory - but Ms. Creasy and the like will. Which is something of a difference, isn't it?