The OECD seems to be arguing for more indoctrination

Or at least people are using the OECD report on early years childcare to argue for more indoctrination.

“Give me a child for his first seven years and I will give you the man,” said the Jesuits, though recent developmental work suggests that they would have done better to have got their hooks into him before he was five. Our children are not only most adorable when they are tiny, they are also at their most malleable. They are most sensitive learning about emotional control at one, language and social skills at two, numbers at three. That’s why policymakers, like the Jesuits, long to get at people when they are tiny. That is when governments have their best chance of shaping the country’s future.

And the correct name for that is indeed indoctrination. Get at the little ones and mold them into what the State desires the citizenry be. All very much smacking of New Soviet Man to our ears, where given that state socialism doesn't work with human beings let's try to change the people into something which allows state socialism to work.

It's thus a basic approach which we reject. The aim of the State, whoever runs it and how, is to us to aid and allow us to be ourselves. It is not we who should change to fit the plans, the plans should be devised for us as we are.

That we provide plasticine for 3 year olds to play with while Mummy is at work is just fine. But indoctrination while they do so isn't.

London's Mayor gets something partially right

You may or may not recall this but Ken Livingstone, when Mayor of London (well, sort of, wasn't he?), brought in a policy that we here at the ASI had long championed, the Congestion Charge. And now we see another London Mayor thinking about bringing in a further policy which we have equally championed, pay per mile driving

London is to consider pay-per-mile road pricing and banning car parking in new developments under plans to cut 3m car journeys a day in the capital. 

A transport strategy to be published on Wednesday by the London mayor, Sadiq Khan, will set targets to ensure 80% of journeys are made by public transport, walking or cycling.

Khan said: “As London’s population is set to increase beyond 10 million, our future health and prosperity is more and more dependent on us reducing our reliance on cars.

“We have to be ambitious in changing how our city works. While there will be 5m additional journeys being made across our transport network by 2041, at the same time we’re setting ourselves a bold target of reducing car journeys by 3m every day.

Of course, much of this is barking inanity. Having a target for the number of journeys is simply nonsense. Set the basic rules and then leave people be to sort it out themselves by responding to the incentives.

But the basic idea of the charging per mile driven is entirely correct. We've a scarce resource, road space. We need to design some method of allocation of that scarce resource. And resource allocation is almost always best done by price. Thus, charge people for use of the scarce resource.

Space on the Embankment at 4 am is not scarce so there need to be charge. Space in the same place at 4 pm is scarce and thus a charge should be made. Technology has moved on since the original Congestion Charge so we are indeed able to bring in a more fine grained solution.

We're not, as we've noted, enamoured with the ideas of targets and so on. But the basic underlying concept is indeed correct. Charge people the correct price for a scarce resource and the correct amount of said resource will be used.

We're really not sure about this you know, really not sure

We're as fond of the white hot heat of the technological revolution as the next person but we're really not sure about this:

Avocados with laser-printed barcodes are going on sale at M&S as part of a drive to reduce paper waste.

The labels, which are etched onto fruit's skin with lasers instead of stickers, will save 10 tonnes of paper and five tonnes of glue every year according to M&S.

If that's what a business wants to do then let them get on with it of course. But there's at least the possibility that this isn't such a good idea. Paper seems to be about $1,000 a tonne, glue perhaps $2,000. So we're talking about a saving of $20,000, which is what, £15,000 a year?"

Sustainability is at the heart of our business and the laser labelling is a brilliant way for us to reduce packaging and energy use."

Hmmm.

"We have the potential to reduce packaging exponentially which is very exciting."

There is just a hint of a soupcon of a suspicion here that we're not being entirely rational. Using fewer resources to achieve the same task is obviously delightful, it's the process also known as "making us all richer" because we can then do another thing as well with those resources so saved. But that soupcon, there's a possibility that we've reified packaging and the use of less of it. It's seen as something indubitably good, when in fact it should be a rational calculation each time. 

It isn't true that "less packaging" is a good thing, it depends, but that's just not how the public belief seems to be going, is it?

New ASI paper: How the UK can be a world leader in medical innovation

The ASI has a new paper out today by Mark Lutter: Instrumental Variables: How the UK can become a world leader in medical innovation.

Lutter argues that the UK must reduce the restrictions on developing new drugs and medical treatments by building a culture and regulatory structure designed around "permissionless innovation"—innovate first, regulate later. People do not just suffer and die from faulty drugs, but also from good drugs being permitted too late. He suggests "reciprocity"—allowing devices and procedures in the UK if they are already permitted in some other highly developed country with similar regulatory standards—as a first step.

Here's the pdf of the whole paper. Here's the PR for the paper.

Here's Marks' twitter, his essays on private governance at Cato Unbound, his page on FEE, his Medium page, and his page at NeWAY Capital, where he's currently employed.

Governing to win

As Madsen wrote last week, the election was a close run thing. We've been spared a Corbyn premiership, for now. But my fear is that this ends up being a repeat of 1992–97, where five years of paralysis lead to a landslide defeat. Only, this time, it's not Tony Blair but Jeremy Corbyn who gets the massive majority.

No thanks. In today's City AM I outline an agenda for whoever replaces Theresa May to avoid that. It's crucial that her successor uses this time in government to do things that voters will reward them for when the next election comes around, and offers them a manifesto worth showing up for:

As for the next manifesto, focus on policies that have worked elsewhere.

Let local government issue municipal bonds for investment, as in Australia and the US; create a legal framework for long-term leases as in Germany; bring in Japanese-style track-and-train integration of the railways; copy Scandinavian models of childcare, which are much more affordable and less prescriptive than our own.

And show some compassion. Make Britain the most open market on earth for exporters from poor countries; give us the most humane animal welfare standards for food and farming in the world; immediately and unilaterally guarantee EU citizens’ rights; ditch the parochial and misguided migration cap.

Read the whole thing here.

The Daily Mail celebrates their campaign to make us all poorer

The Daily Mail proudly announces that their campaign to get more disposable coffee cups recycled has borne fruit. A new and lovely scheme to recycle more of them has been created. 

Or, as we might more accurately describe it, the Daily Mail's campaign to make us all poorer has succeeded.

Millions of throw away coffee cups will be recycled rather than sent to landfill sites or incinerators under a new service.

Employers will be encouraged to install dedicated bins in workplaces so that cups can be sent to specialist centres.

The Daily Mail’s Curb The Cups campaign highlighted last year how most disposable cups cannot be recycled because they have a plastic coating inside.


As we've noted many a time before, we've nothing against recycling per se, one of us made a living for some years organising profitable such activities. We do, however, object to recycling which makes us poorer. And this does, as we've also pointed out, apply to these coffee cups, recycling them instead of throwing them in a hole in the ground makes us poorer:

The programme does not make a profit. Those who offer up coffee cups for recycling must pay extra to do so. This is on top of the normal waste disposal fees and yes, even on top of the normal landfill tax already charged. The programme is unprofitable and thus makes us all poorer.

And note what the meaning of that is. We are spending more of our scarce resources by recycling than we would by not recycling. We are wasting resources to save them.

Another way to describe this is flat out idiocy but then that's the modern world for you with the mantra about recycling. It's the latest mass delusion to have taken hold of society.

As we'v also pointed out we've a very useful little system to calculate all of this for us:

But the logic also works the other way around. If we can work out the tax we’d have to impose to stop people doing something, and compare that to the actual costs being imposed by their doing it, we can work out whether the benefit is higher than the cost. And we can indeed do that. We know that the tax must be more than £625 million a year to stop this plague of using disposable coffee cups.

I’m told that one medium cup a day for a year amounts to some 5 kg of waste. As the report tells us there are 7 million cups used each day, so that is 35,000 tonnes of waste a year. And we know what the cost of a tonne of landfill waste is. We’ve got a Pigou Tax on it: it’s £83 per tonne these days. The annual cost of chucking those paper cups into landfill is therefore just under £3 million. And there’s not a chance Government is under-taxing us on this, is there?

The environmental cost to society of disposable coffee cups is thus £3 million a year. The benefits to the population are north of £625 million a year.

It is not necessary that we like the answer which the price system delivers to us but it is indeed vital that we understand it. Even when we add up all of the environmental costs of not doing so the recycling of coffee cups makes us poorer. Given that becoming poorer is not a known aim of socio-economic policy therefore we shouldn't recycle coffee cups.

But, you know, the Daily Mail gets its teeth into a misunderstanding of the issue and we all become poorer. 

Political engagement is fantastic but think what you really voted for

I congratulate the young for turning up in great numbers to cast their vote in the general election.  The main contribution by Mr. Corbyn’s Labour Party and Momentum was to mobilize political engagement among the young. Our politics and careerist politicians need shaking up — but promising the moon and hiding the true ideological nature of Mr. Corbyn’s Labour Party and Momentum was one of the most seductive and cynical plays that I have ever witnessed in British politics.

You voted for a change for the better, but be under no illusion, you cast your vote for a hard-core leftist party.  The Labour Party under Mr. Corbyn is guided by an ideological zeal that is based on both Trotskyist and Marxist-Leninist principles of proletarian dictatorship.  Over the weekend we saw demonstrators waving Hammer and Sickle flags and posters to defy Tory rule by striking, marching, and occupying outside Downing Street. Didn’t the demonstrators realise or care how offensive it was for us who have some understanding and personal memories of the 20th century history.  I grew up in Finland in the 1970s next to the Soviet beast.  I always remember lining up as a very young teenager waiting for a bookstore to open so that I could buy a book by Alexander Solzhenitsyn. It was announced in the news the night before that Dr. Solzhenitsyn’s book would be taken out of circulation as Finland couldn't be seen to be selling anti-Soviet material. Hammer and Sickle flags do not symbolise equality, freedom, and democracy. They are a symbol of an era of totalitarianism, oppression, gulags, KGB, refuseniks, and summary executions.  I call for Mr. Corbyn and the Labour Party of today to condemn such idealization of a regime that is a polar opposite to our parliamentary democracy.

Soviet Union failed, Venezuela and Cuba are economic basket cases.  Capitalism is far from perfect, especially capitalism that is based on cronyism, but the alternatives are far worse.  Mr. Corbyn’s Labour Party believes that human behaviour and economic decisions can be planned centrally.  Any economist worth her or his salt will tell you that this isn’t possible without political coercion.  Any political system that forces people to consume what is decreed by a central command, rather than for allowing markets to use the price mechanism to allocate scarce resources to meet what people wish to consume has failed and will fail.  Moreover, Mr. Corbyn’s Labour Party have shown their economic incompetence by stating that they will be using ‘bonds’ to renationalise industries as if ‘bonds’ were not real money.  I listened to a number of callers on LBC radio over the weekend who had swallowed this lie, hook line and sinker. Many of them stated that the government can use ‘bonds’ to fund the renationalisation programme.  Bonds are a form of government debt that accrue interest — real money that needs to be paid back with interest. 

You cast your vote to a Labour Party that will ruin this country politically, socially, and economically.  Any future government led by Corbynist ideology will leave you worse off and create an economic disaster for the future generations to pay off.  Finally, would you like to live in a society where you will be imprisoned for flying protest flags outside Downing Street.

 

We're being told things that ain't necessarily true

As we know there's much a' whinin' an' a' wailin' going on about the inequality extant today. After all, now that we've beaten absolute poverty in the rich would countries they the left must find something to occupy their energies, right, something to complain about?

It's just that some of the things they do say aren't in fact entirely true. As in, you know, factually not so?

Take this for example:Despite the perception that wealth inequality has been rising for decades, the research found that the inequality of net financial and property wealth fell steadily between 1995 and 2005, with the Gini coefficient falling from 0.71 to 0.64.

...

The shift in property ownership further towards the richest has contributed to the widening of wealth inequality. Including private pensions, the Gini coefficient rose from 0.67 to 0.69 from 2006-08 to 2012-14.

...

Total wealth across Britain, which includes private pensions, property, financial and physical wealth, rose in the wake of the financial crisis from £9.9tn in 2006-08 to £11.1tn in 2012-14. This has been fuelled by rising pension wealth.

That's all entirely true. Inequality of wealth feel modestly, it's risen modestly recently and pensions are a large part of the story. And given that it's pensions it's not all that much of a worry either. Because lifetime effects are going to account for much to most of that inequality. 20 year olds don't have pension entitlements, 65 year olds mostly do. Pension wealth is therefore always, but always, going to be unequally distributed just because that's the nature of the beast. 

But this next is untrue:

Private pensions account for 40% of the wealth total – the largest share at £4.5tn. The report forms part of the Resolution Foundation’s intergenerational commission. Conor D’Arcy, policy analyst at the foundation, said: “The accumulation of wealth over the course of our lives is arguably the most important driver of lifetime living standards, and yet it has been largely ignored in the public debate. Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance.

The reasons this is untrue are twofold. Firstly, we don't count unfunded (ie, most of them) government or civil service pensions as wealth. No, agreed, it's arbitrary to the point of lunacy that we don't. A public sector teacher getting a £30,000 a year pension is defined as having no pensions wealth, while a private sector teacher getting a £30,000 a year pension from a funded plan is defined as having pension wealth. And given that the pensions are the inequality causing bit it would be a good idea to get that little confusion sorted out, wouldn't it?

The second reason is rather larger though. The basic estimations of wealth here are entirely rubbish. Because they exclude the one great source of wealth and insurance for all of us, the welfare state. When we measure income inequality we do it after the effects of tax and benefits, obviously we do. When we measure wealth we're doing it before their influence. Meaning that our estimations have absolutely nothing to do with reality.

Which leads to the point we would make to the Resolution Foundation and others. Once you all start measuring wealth correctly then perhaps we'll have a discussion about its distribution.

 

 

Why we need to raise interest rates - the Ogden Rate

That interest rates were lowered to avoid economic collapse is just fine. We're really rather glad we didn't get a replay of the Great Depression, one which Ben Bernanke follows Milton Friedman in blaming upon the tight money policies of that era. However, there does come a time when we've got to unravel that, the Ogden Rate being an example of the sort of trouble we're going to get into if we don't:

Britain’s car insurers suffered combined losses of £3.5bn last year due to controversial new compensation rules for serious injuries, according to a report which predicts further sharp rises in insurance premiums, especially for young drivers.

Consultancy EY said the new Ogden formula led to significant underwriting losses for the motor insurance market in 2016. The unexpectedly deep cut in the Ogden rate, from 2.5% to -0.75%, prompted a furious backlash from insurers who claim that it will “overcompensate” victims of car crashes or medical errors in hospitals.

Although the change to the discount rate was announced in February, most insurers reflected the impact on outstanding claims in their 2016 figures.

No, we're not weeping for the insurers and their profits. This is an example of a much larger problem. Low interest rates mean that, obviously, risk free investment produces a smaller return. Insurance company profits are made up of both the investment returns upon the float and the performance of the underwriting. This is the mirror image of the size of payouts, in order top produce an income in the future a higher capital sum must be paid out now.

The important part of the economy this affects though is pensions. You'll have noted that near all funded pensions schemes have vast deficits - that's because more capital is needed now to produce a future income with low interest rates.

It gets worse than this too. Friedman again, the permanent income hypothesis, the idea being that we'll smooth our lifetime income over our lifetimes. If, after starting work, we're likely to live another 50 years but only work for 40 of them then we'll try at least to save enough in the 40 years to have an income in the last 10. Those savings are boosted by the investment returns from them over the years. If those returns are lower then we must save more now in order to so smooth incomes. 

This does in fact happen too. Generally, deposit rates in Chinese banks have been negative after inflation. That's why the gross savings rate is up at 40 and 50% of GDP. If you're losing money on your savings every year you've got to have a lot of savings to finance old age. We have also seen this in certain reports from the eurozone recently.

Yes, it's perverse, we would think that lower returns to savings will produce fewer savings. But that's not necessarily how it works, lower returns on savings can, by removing the investment gain on them, mean people saving more for their retirement. And at some point in this process low interest rates stop being expansionary, they become contractionary, entirely opposed to the reason we've got the low rates in the first place. 

Odd but true, the reason we need to raise interest rates is to stop people saving too much.

Why the British NGOs are so bad at fighting absolute poverty

That there's still near 10% of the human species out there languishing in absolute poverty is true. That we'd like to get that number to 0% and sharpish is also true. There are organisations here in Britain which ask you to send them money so that they can aid in this process. An idea and intention which we fully and entirely support of course, who wouldn't want to see the destitution of peasant poverty disappear?

It's just that at least some of them appear woefully misinformed about the subject under discussion. This is from some fool at Health Poverty Action:

Here’s the (heretical?) rub: it is understandable if people are losing faith in aid agencies and even in the idea of “development” itself. Because, broadly speaking, it hasn’t worked. We clearly haven’t solved the problem of poverty. Yet we’ve misled the public for years that poverty will end, if only they’ll give us £2 a month.

The main reason poverty thrives is that we haven’t addressed the interconnected, structural issues that create and maintain it: unjust trade deals, climate change, tax havens, the failed “war on drugs” and the lack of public services. Without tackling these issues (and those responsible for them) it is nigh on impossible to achieve social and economic justice.

Note the claim that poverty is created. It is repeated:

Stories about multinationals, tax havens, and the privatisation of public services would demonstrate that people around the world are victims of the same process of poverty creation and systemic injustice as we are here.

The idea that poverty is created is one of such drivelling inanity that it's remarkable that one who is literate can hold it. For we in fact know one thing about such absolute, extreme, poverty. As Angus Maddison pointed out, this has been the norm for almost all humans throughout all of recorded history. GDP per capita in the $500 to $800 range, annually, translates through into that $1.90 a day of absolute poverty (annoyingly we're using $ from different years as measurements there but the basic point stands, this is after inflation etc, changes in prices across geography). That's just what history was until the Industrial Revolution. Generation after generation, millennia after millennia, of what we now regard as the utmost destitution.

The thing which is created is the wealth which abolishes poverty. Only if we are to grasp this simple truth can we possibly craft plans, policies, to reduce said poverty.

This will sound dismissive, possibly even rude, but then it's meant to be both. You'll do better to reduce absolute poverty by randomly mailing your £2 a month to anyone on the planet. At least there you've a 10% chance of it aiding a poor person, a rather better opportunity than cycling it though an organisation as hopelessly misguided, ignorant even, as Health Poverty Action.

Of course, there's also the truly effective method, buy stuff made by poor people in poor countries. That is the method of this past generation, the one which brought absolute poverty down from 40% of all people to that just under 10%. You know, the one that works, the one that drove the biggest reduction in poverty in the history of our species, that neoliberal globalisation.