Space disco, Kate Bush, and more: the ASI's best of 2014
Ben:
Song: #####.1 by #####Album: It's Album Time by Todd Terje
Musician: The Pizza Underground
Movie: Grand Budapest Hotel, but I'm ashamed to say I only saw five
Book: Pale Fire by Vladimir Nabokov
Restaurant: Rex and Mariano, Soho (runner up The Manor, Clapham)
Favourite article: I Can Tolerate Anything Except the Outgroup, by Scott Alexander
Favourite moment: #Gamergate
Favourite person: Scottish highlander on BBC Question Time
Kate:
Song: Wild Child by Kenny Chesney, with Grace Potter
Album: 1989 by Taylor Swift
Musician: Jason Aldean (for continuing his tradition of writing songs about trucks)
Movie: Magic in the Moonlight
Book: Goodbye, Mr Chips by James Hilton (1939)
Article: Bring Back the Girls - Quietly by Peggy Noonan (WSJ)
Political moment: #Bridgegate
Person: Senator-elect Cory Gardner, CO (I have now forgiven Colorado for their nightmare decision in 2012. Ohio, on the other hand, I am still not speaking to)
Charlotte:
Song: minipops 67 [120.2][source field mix] by Aphex Twin (because it only took 13 years to come out proper)
Album: Rivers of the Red Planet by Max Graef (jazz/hip-hop/house, good background music)
Musician: Kate Bush (the year I got round to listening to her albums)
Movie: Under the Skin (amazingly shot)
Book: Perfume: The Story of a Murderer by Patrick Suskind (one of the few I actually read)
Restaurant: Bone Daddies, Soho (who can't love a huge bowl of pig fat & garlic)
Article: The Socialist Origins of Big Data - The New Yorker (on Chile's project Cybersyn)
Political Moment: The world thinking Kim Jung Il's public absence was because he broke both his ankles because he ate so much Emmenthal (because obviously)
Person: Shia LaBeouf (for everything he's given us)
Sophie:
Single: Shake It Off by Taylor Swift (I do not enjoy this song but LOVE watching Charity, one of my best friends and Swift’s greatest fan, singing it)
Album: Artpop by Lady Gaga (the pop genius’s works are not only the epitome of freedom of expression and individualism but Gaga demonstrates the natural force with which the world sucks up anything walking into a gaping hole in the market)
Musician: Kate Bush (my eyes opened to her brilliance and creations this year by Sam, her sounds and voice open creative avenues in my mind)
Movie: La Grand Bellezza (released 2013 but watched this year, you MUST see this, it’s an indulgent party for the senses to devour)
Book: The Rational Optimist by Matt Ridley (only read this year though it was released in 2010)
Restaurant: Le Relais de Venise, Mansion House (holds fond memories of both an amazing steak and my first time dining with the ASI team)
Political moment: remaining a United Kingdom (were endless obscure and hilarious ones in 2014, though building up to the referendum for two years and the elation experienced at the result makes this undoubtably number 1)
Person: Malala Yousafzai (the 17-year-old global role model is courageous, ambitious and hard-working, existing to fight for others’ education—I was reduced to tears of inspiration when she spoke at my university)
Nick:
Song: Fancy by Iggy Azalea and Charli XCX (albeit for entirely non-I-G-G-Y related reasons)
Album: Kenny Dennis III by Serengeti (see No Beginner, Off/On)
Musician: Jonwayne (partly for being the neckbeardiest rapper/producer going - see Andrew, Be Honest)
Movie: Locke (of the four or so I watched)
Book: Time's Arrow by Martin Amis (1991) or The Rise of the Meritocracy (1958) by Matthew Young (honourable mentions to We by Yevgeny Zamyatin (1921) and Girl, 20 by Kingsley Amis (1971))
Restaurant: Jam Jar, Jesmond, Newcastle, if only for their Cow vs. Pig burger
Article: ‘Tories should turn their backs on Clacton’ and ‘Voters, not the politicians, are out of touch’ by Matthew Parris, King of trolls (Times)
Political moment: The UKIP defections and the resulting betting, which netted me a sum of no less than £10
Person: For me, 2014 was the year of the unimullet (s/o r/YoutubeHaiku)
Sam:
Song: Attachment by Hannah Diamond (My top 50 singles of the year are here, Youtube playlist link here)
Album: It's Album Time by Todd Terje (Thanks Ben for introducing me. I also enjoyed FKA Twigs's album LP1 and got into Susanne Sundfor in a big way this year)
Musician: AG Cook / the PC Music grouping in general
Movie: Interstellar (but I only saw about 5 films all year)
Book: Vanished Kingdoms by Norman Davies (Worth it for the chapter on the Kingdom of Dumbarton Rock alone. Matt Ridley's The Red Queen, on the evolutionary biology of sex, was a close runner-up)
Restaurant: Santana Grill (a burrito stand on Strutton Ground near the office—just delicious; I also ate at KFC at lot)
Article: An open letter to open-minded progressives, by Mencius Moldbug (I disagree with much of Moldbug's work, but I can't think of a more interesting contemporary political thinker)
Podcast: Serial
Political moment: Shinzo Abe storming to victory in Japan (also for his amazingly awkward handshake with Xi Jinping)
Person: Richard Dawkins (boring as an atheist, brilliant as Social Justice Warrior-bait)
Philip:
Song: Turn Down for What by DJ Snake and Lil Jon
Album: Syro by Aphex Twin
Musician: Matador
Movie: Guardians of the Galaxy
Book: Intuition Pumps and Other Tools for Thinking by Daniel Dennett
Restaurant: Gymkhana, Mayfair
Article / blogpost: How Farming Almost Destroyed Ancient Human Civilization by Annalee Newitz
Political moment: The landing of the Rosetta spacecraft's Philae probe on Comet 67P
Person: David Sinclair (for his work on lifespan extension)
They're spouting rubbish about rubbish again
We're really got to get ourselves a new group of people running our public services you know. The current lot seem to have missed the point of the whole exercise. For, at root, the entire exercise of politics and state power is really a method of deciding who empties the bins. There are certain things that simply need to be done. There's also a group of things that can be done individually, one of those that can be done by simple voluntary cooperation and another group of things that can only be done by some fairly strong compulsion. And those that are properly the province of that state, this government idea, as those that must both be done and can only be done with that compulsion. And taking out the rubbish is one of those things that is both. Yes, a free market would indeed deal with most of it but the public health benefits of not having those remaining piles of stinking ordure mean that there's always going to be some state compulsion necessary.
At which point we get:
A town has been left overflowing with rubbish bags after binmen have refused to pick them up - because the sacks are the wrong colour.
Mountains of household waste is lining streets in Weymouth, Dorset, after residents were given blue bin bags as part of a new waste collection scheme rolled out in the town.
But some claim they did not receive the new blue sacks, and have continued to use the standard black ones - only for them to be left by the side of the road by binmen under strict orders not to take away the 'unauthorised bags'.
Piles of rubbish bags have been mounting up in streets around the town for the past two weeks, to the anger of residents.
What?
The council-run Dorset Waste Partnership said it is 'applying its policy' to limit residents to one household rubbish bag a week in the hope they will recycle more.
The loons have taken over the asylum. We need to fire these people and get a new set.
Please note this is not about party politics and it's also not about the "shortage of landfill". We don't have such a shortage. The country produces about the same amount of waste each year as the number of holes we dig each year for other reasons. The only shortage is in the licences to be allowed to put the rubbish into the holes we already have available.
What this is about is that we've simply got the wrong group of people ruling us and that needs to change. On the basis that government really is about deciding who take out the rubbish and if they can't even manage that then....well, why don't we try finding some people who can manage that minimal task?
Local government cuts needn't be the end of the world
Local governments are having their spending power cut by 1.8% in real terms next year. Local councils pay for things like social care, some education, public transport and roads, and some of the arts. So this cut is not so popular in some quarters.
I hate relying on ‘waste cutting’ as a way of making spending cuts, but local councils really do seem to waste a lot of money. Since 2010 they’ve made £10bn in efficiency savings, and a third of councils say they can make bigger savings. I’m sure at least some of the other two-thirds are just being shy. The Local Government Association estimates that local governments can continue making efficiency savings at between 1 and 2 percent per year. So that’s something.
The big spending items are social care and waste spending. Both of these can be reformed so that people who can afford to have to pay for themselves. Waste collection is often contracted out, and there is academic evidence that doing so results in significant cost reductions. (There’s an easy way for councils who do not already do this to save some cash.) But more significantly there’s no real reason that more of the actual payments for this should not be moved to private residents as well, at least those who can afford it.
Social care is much trickier and, as the population gets older and lives for longer, paying for it is becoming a bigger and bigger problem. Those people who can afford to pay for their end-of-life care should do so, but there is the problem that this disincentivises saving. Nevertheless it is hard to see a case for people who live in social housing and earn low amounts of money paying for the end-of-life care of people who own the big houses that they live in. Reforming this wouldn’t solve problems in the short run, but it might help stave off a bigger funding problem in the medium run.
Normally everyone focuses in on arts funding. In my view, there is no role for government in arts funding at all. I won’t convince you of this here, but Pete Spence might. And there are all the weird little things that local governments spend their money on that could be cut to save even a tiny bit of money. Where I live, in Lambeth, half the adverts I see seem to be thinly-veiled political campaign posters (paid for by me and my neighbours).
And, funnily enough, there’s one way councils could raise quite a lot of money and solve another problem in the process. The country needs a lot more houses, and planning permission is the main thing standing in the way. In some parts of the country, a piece of agricultural land that gets planning permission rises in value by one hundred times. Councils should be allowed and encouraged to auction off development rights for new houses. That would raise money for them and help tackle the housing shortage.
The problem here is that housing demand is not equal across the country, and it’s the richer places like London and the south east that would benefit the most from this. So there’s probably a case for some minority fraction of the money raised being redistributed to poorer authorities. In general I like the principle of council funding redistribution from rich to poor parts of the country, but that does reduces the incentive for councils to improve the economic prospects of their own areas. Though perhaps they lack the powers to do this anyway.
We have a government deficit that most people want reduced, some very large areas of central government spending that most people want increased (pensions, healthcare), and a general consensus that economic growth is a good thing (so tax rises are out). Something’s gotta give and there is almost nothing that can be cut painlessly. But given some willingness to reform alongside cutting, local government cuts could be the right way to go.
Competing monetary rules: modern free banking possibilities
With the emergence of new digital currencies and, in particular, crypto-currencies (the most prominent of which, being Bitcoin), one can wonder how different Free Banking might look in the modern economy. In the past, monetary rules had been based on metallic content. Now, they are often focused on inflation-targeting, nominal-GDP targeting and so on. Though Free Banking would be desirable, Ben Southwood and Sam Bowman have previously argued for nominal GDP targeting in its stead, as the pragmatic, preferred alternative for monetary policymakers. Saying that, George Selgin argues that most free banking systems lead to effectively 0% NGDP targets.
Of course, the one thing that all these monetary rules have in common is their aim to foster expectations-stability. However, stabilising expectations with respect to one variable often still leaves unstable expectations with respect to another variable; modifications of the Taylor rule may stipulate that we should raise or lower interest rates according to the output gap, inflation rate etc. but this still does not mean that people will be able to forecast when or by how much the interest rates will rise in advance since one’s expectations with respect to other important variables are hardly stable.
Bitcoins have a monetary rule with respect to the rate of increase of the money supply that is determined by an algorithm that periodically halves the speed at which Bitcoins are rewarded to the successful miner (mining being the process by which they are created) and, furthermore, the number of bitcoins in existence can never exceed 21 million. However, Bitcoins still suffer from exchange-price volatility. Other crypto-currencies also have different monetary rules. So it’s quite clear that developments in the state of technology enable different types of monetary rules to be implemented.
In a modern free banking system, then, there would be competing monetary rules between the various different currencies (whether they are issued by banks or obtained through other mechanisms made possible by the state of technology). Since each monetary rule implemented hitherto attempts to stabilise expectations with respect to a certain variable, picking a currency would essentially involve each agent choosing between differing monetary rules and, therefore, independently and rationally stabilising their expectations according to their priorities.
Even Keynes wrote on the importance of understanding
The dependence of the marginal efficiency of a given stock of capital on changes in expectation, because it is chiefly this dependence which renders the marginal efficiency of capital subject to the somewhat violent fluctuations which are the explanation of the Trade Cycle ... this means, unfortunately, not only that slumps and depressions are exaggerated in degree, but that economic prosperity is congenial to the average business man.
So even in a Keynesian framework, modern free banking, through more diverse, competing monetary rules, could help ease the excessive malaises of business ‘cycles’!
Left - Right / Open - Closed
James Kirkup over at the Telegraph has an article on how the Left-Right divide no longer seems to apply to the UK’s political parties. We should expect Left-wingers to be hostile to free markets and big business, he argues, and Right-wingers to embrace them. However, reality is far less clear-cut. UKIP is increasingly honing an anti-corporate edge, criticizing both the European Commission and the Labour party for being in bed with large, multinational firms with little regard for 'the national interest'. UKIP are simultaneously daubed ‘more Thatcherite than Thatcher ’ – and indeed, plays up to this when useful – yet considered left of the Conservatives by voters.
Kirkup also notes that whilst Labour, UKIP and parts of the Conservative leadership are busy immigrant-bashing, a ‘curious band of political actors’ are fighting the immigrant’s corner, including ‘nasty party’ London Mayor BoJo, the ‘old lefty’ Vince Cable, and (apparently, shock horror!) the ASI.
Libertarians have long claimed that the Left/Right distinction is largely redundant, arguing that the Nolan chart – which plots support for economic & political freedom across two axis – yields far clearer understanding of political ideology. Today, variations of such political quizzes and graphs abound, including the somewhat absurdist 5-axis offering.
Kirkup's analysis is simpler; that politics is no longer about Left or Right, but whether we should be an open or closed nation.
This certainly makes some sense in the current political climate. UKIP isn’t really left or right, but ‘closed’ – looking inwards for a sense of ‘Britishness’ and for British values we may or may not have ever possesed. The distinction can be broken down further, with individual policies analyzed the same way. Conservatives are, for example, typically open to business, but closed to immigration. You could widen the definition of ‘open’ and ‘closed’ out, too – for example, the Lib Dems are open to the issue of prison and drug law reform, whereas the Tories are far more closed. They're open to things like NHS and schools reform, though – whilst Labour tend to be closed to such possibilities.
It might then be a useful strategy not to consider whether a party is Left or Right wing, but whether individual policies are broadly open or closed. Disregarding the left/right stigma could help individuals focus upon what it is they actually care about. Clearly, this dichotomy doesn’t work for everything – monetary policy, for example, or attitudes towards the EU – although you could argue that openness generally correlates with a preference for smaller government.
Certainly, openness is a defining characteristic of the ASI. We favour openness in terms of international trade, the movement of people, competition, experimentation in the public sector, and social attitudes.
In this context, open policies reflect the freedom of individuals to make their own choices without unnecessary restriction. They encourage new ideas and welcome change. In contrast, closed policies seek to restrict potentially disruptive activity and unwanted influence, in an attempt to maintain some status quo or protect particular interests. This tendency cuts right across the political spectrum, but, as a think tank, is one that we endeavour to avoid.
Professor Dennis O'Keeffe
We are sad to announce that Prof Dennis O'Keeffe has died. He was a very distinguished educationist who did original and influential research on subjects that included truancy and teacher training. He was Professor of Social Science at the University of Buckingham. He attracted national attention with his report on "School Attendance and Truancy (1995)," taking the view that truancy was an almost inevitable result of poor courses that failed to entice the attention of students. With the Adam Smith Institute he published "The Wayward Elite" in 1990, a major critique of British teacher-education, and sat on the ASI's Scholars' Board. He was a keen supporter of several of the Free Market think tanks in addition to the ASI, including the IEA, the CPS, and Civitas, and participated in many of their activities. His attendance was always appreciated at our lectures and lunches, as much for his goodwill and charm as well as for his considerable intellect.
People respond to incentives
That people respond to incentives is an obvious point but I feel like every reiteration is worth it. One of the clearest examples of where people respond strongly to incentives is retirement. If you raise the retirement age, many people who'd otherwise be eligible continue to work. Since retirement probably increases life satisfaction/happiness and perhaps even health we obviously want it to happen at some point, but since it's also very costly in terms of benefits paid and productive activity not done, we want to be mindful of both costs and benefits.
A new paper in The Review of Economics and Statistics by Kadir Atalay and Garry F. Barrett at the University of Sydney adds to a large literature:
Governments around the world are reforming their social security systems in light of the challenges posed by population aging. We study the 1993 Australian Age Pension reform, which progressively increased the eligibility age for women from 60 to 65 years. We find economically significant responses to the reform. An increase in the eligibility age of one year induced a decline in the probability of retirement by 12 to 19 percentage points. In addition, the reform induced significant program substitution, with increases in enrollment in other social insurance programs, particularly the disability support pension, which effectively functioned as an alternative source of retirement income.
Raising the retirement age for women led to lots more of them working, but also more of them claiming other benefits.
Every single paper I've ever seen on the topic has found a similar result. For example in the UK raising the pension age from 60 to 61 led to 7.3pp more women in employment at age 60 (separate paper with more evidence). In Spain, people with worse health were more responsive to financial incentives. Less generous pension payouts in France (normal retirement rather than disability insurance retirement) meant 14% higher total work hours, on average, between the ages of 55 and 64. Another paper found that pensioners respond to incentives in a different way: if they stand to gain more by waiting before they claim then they are more likely to wait.
The point of all this is not to say that we should pack the elderly off to the workhouse until they're 90, but more to note that incentives matter, against the common claims that the homo economicus model is rarely or never a good approximation for real humans.
D'ye see why we get puzzled about food banks?
We've the news today that it's just appalling that a supermarket that runs a collection scheme for food banks should actually indicate, in its stores, which foods might be suitable for purchase to a food bank.
The Co-op has faced criticism on social media after a customer tweeted a picture of an own-brand grocery display touted as 'ideal for the food bank'.Dan Paris, a Scottish National Party activist, shared his picture of the promotion and remarked: 'It's easy to get used to these things but a shop advertising tinned food as "ideal for the food bank" has floored me.'
It led to a furious response from Twitter users who accused Co-op's charitable appeal as a scheme for 'pushing stuff customers won't buy just to make a profit,' as one put it.
Umm, what?
In response, Mr Paris explained he is himself a supporter of food banks.
He tweeted: 'I'm sure this was done this with good intentions but I found it genuinely upsetting that food poverty has been normalised to this extent.
'Nobody should be asked to buy food for the poor when they're doing their weekly shop. That's what the welfare state is for.'
We wouldn't normally say this, that people should look to La Toynbee for actual information on anything but she did, on the same day, point out this:
As the Church of England report revealed, the most common reason for using food banks is benefit delay and “sanctions”.
The reason that we don't want food banks to be a part of the welfare state is because they're a reaction to the incompetence and or malevolence of the welfare state. It's also worth reminding ourselves that the Trussell Trust says about itself that it started to take an interest in the issue back in 2000. when it was horrified to find out that there were people with no actual food in the house because of incompetence in the paying of benefits. This isn't a new problem. and it's not even entirely a problem with the simply incompetence of the State organs. Any system that tries to deal with tens of millions of tax and or benefit accounts simultaneously will screw up from time to time. And the sheer numbers just mean that at any one time some tens of thousands of people at least will be getting screwed. Which is rather why it seems like a very good idea to be using an entirely different system, operating in an entirely different manner, to be dealing with that problem.
All of which is entirely beside the basic moral point at issue here. What the heck's wrong with private charity? Why does the solution only become sanctified when it is washed through the Holy Church of the taxing offices?
One reason why we get bad policies
If the What Works Centre for Local Economic Growth didn’t exist someone would have to invent it. It analyses policies to see which are the most effective in supporting and increasing local economic growth. Although its focus is local, most of its findings have national implications. So far, the centre has looked at a number of policy areas. A theme cutting across all of its findings is that to a large extent we don’t really know what works. Too often, the evidence is inconclusive or lacking.
- We found very few studies that look at the impact of schemes on both access to finance (direct effect of the scheme) and on the subsequent performance of firms (indirect effects of the scheme).
- While most programmes appear to improve access to finance, there is much weaker evidence that this leads to improved firm performance. This makes it much harder to assess whether access to finance interventions really improve the wider economic outcomes (e.g. productivity, employment) that policymakers care about.
- As with other reviews, we found very few studies that gathered (or had access to) information on scheme costs. As a result, we have very little evidence on the value for money of different interventions.
On business advice:
- There is insufficient evidence to establish the effectiveness of sector specific programmes compared to more general programmes.
- We found no high quality impact evaluations that explicitly look at the outcomes for female-headed or BME businesses.
- We found two high-quality evaluations of programmes aimed at incubating start-ups. Both programmes were targeted at unemployed people and show mixed results overall. However, there is a lack of impact evaluation for Dragons’ Den-type accelerator programmes that aim to launch high-growth businesses and involve competitive entry.
- We have found little evidence which provides robust, consistent insight into the relative value for money of different approaches. Most assessments of ‘cost per outcome’ fail to provide a control group for comparison.
- We found no evidence that would suggest local delivery is more or less effective than national delivery.
As the above suggests, on key areas of government policy we lack evidence of what works, particularly when it comes to determining value for money. Given the billions spent on various schemes this simply isn't good enough.
The way to move forward from this is to work backwards, ensuring that a robust framework of analysis is build into each and every government programme so that we can know how successful (or otherwise) each intervention is. Crucially this should be done in a way that lets it be compared by the same metrics also being measured in other schemes trying to achieve similar outcomes.
Residing in the economic departments of our universities are the brains to do exactly this – to date though, policymakers have lacked the gumption to systematically experiment, measure and evaluate what works. Until they do we will just keep getting ad hoc policies with enough Rumsfeldian known unknowns to make an economist cry.
Philip Salter is director of The Entrepreneurs Network.
The income inequality obsession
There is undoubtedly a persisting obsession with income inequality, whether this comes from the likes of Thomas Piketty or Russell Brand (whom Kate Andrews very recently wrote an article on), this obsession is unhealthy and, actually, upon closer scrutiny, counter-productive. The focus on income inequality places emphasis on income being the most important component of inequality. Income, however, is only useful as a means to an end, rather than as an end in itself. It is a way of measuring and attaining a form of freedom in modern society. It derives its value from affording the individual who possesses it with capabilities. Ludwig von Mises wrote in a Theory of Money and Credit that money is money by virtue of the fact that it is a medium of exchange (rather than it being legal tender or a store of value, for example).
The obsession with relative income rather than focusing on advancing one’s own, absolute capabilities (and/or others’, for that matter) helps perpetuate the frictions of class differences (the income component of them, at least). Income, whether absolute or relative, is not an end-in-itself for the vast majority of people.
Delving more deeply into the real value of money, we find that freedom and the inequality of freedoms enjoyed by people is at the real heart of the problem. Those who obsess over income inequality shy away from addressing the legally imposed inequality of freedom; the right to use one’s labouring capacity as one sees fit, to spend one’s time as and when they want and for the price they will, the right to interact with our fellows to our mutual advantage without third-party interference, the right to speak freely, think freely and live freely – don’t these legal iniquities require more urgent addressing?
The focus on income inequality is the smoke and mirrors of well-intentioned rhetoric. The focus on wealth redistribution rather than the opportunity to engage freely in wealth creation, on compulsory, ever-more rigid education instead of free thought, on dividing society according to income instead of encouraging social cohesion… this focus provides supposed justification for the legal privileging and normative elevation of income pursuit and, therefore, enables subtle homogenisation and, ultimately, degradation of peoples’ capacity for free thought. Addressing income inequality through redistributive policies is, as is all too often the case with such proposals, conservatism in the guise of social liberalism.