Apparently variations in policy make it difficult to understand what works

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

Public policy needs high quality evidence of what works

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

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

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

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

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

Great man, great achievements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The latest research paper to make this point is here:

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

We've also the report from the IFS:

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

That full report is here.

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

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

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

Empty homes are no argument for Nimbyism

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

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

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

…

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

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

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

The problem is their argument is simply false.

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

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

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

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

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

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

Money taken out of the economy

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

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

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

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

The world's just not being serious about climate change

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

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

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

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

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

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

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

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

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

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

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

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

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

66% of rail passengers shouldn't be on a train

It is a standard assumption that people don't buy things they don't think are worth it. It's not a bad nor even unusual assumption either - the very definition of people thinking that something is worth it is that they're willing to buy it. Without a gun to their heads of course - we mean voluntarily buy it, not taxation.

Thus some two thirds of the passengers on British trains shouldn't be there: 

Only one in three commuters believes their rail fare is value for money, according to the passenger watchdog’s national survey.

Transport Focus, whose national rail passenger survey asked 27,000 passengers to rate aspects of their journeys in the autumn, said that the value for money scores reflected “patchy reliability” of train services.

While 47% of passengers overall felt they had paid a fair price for their ticket, only 33% of those commuting to work were satisfied with its value.

OK, we can argue about whether it's two thirds of commuters or only half of all passengers. But they don't think it's value for money - yet by the definition of the group being asked they must all be paying for it. Thus they do value it at what is being charged, or more, by definition.

What is happening here is the difference between expressed preferences and revealed such. That people do pay current prices shows that their economic calculation shows those fares are worth it. When someone comes along and asks whether we'd like the same thing cheaper of course we say yes.

Shrug, we think that 12 year old malt is terribly expensive and we'd much prefer it to be cheaper. But that we've a bottle of it on the shelf - some part of that bottle in a glass often enough - shows we think it worth the price all the same. 

The problem with the Dream Hoarders thesis

One of the books, ideas, which ruffled feathers last year in the US was "Dream Hoarders." The essential thesis being that what ails the place isn't that 1%, it's the 20% described as the upper middle class. That's where the Great Fracture in society is according to the analysis.

There is some good observation in the book. It's true that exclusionary zoning is a pernicious failure of the society. In English we'd say planning permission perhaps but it is often applied to much wider areas making it near impossible for the bottom 80% to live in some cities at all - even counties.

However, the main strand doesn't stand up. The claim is that access to the sort of higher education which puts you into that upper middle class in one's own career is hoarded by this generation's such class for their children. This is done by the arms race of ever better public education (or private) in those zoned and exclusive areas. Those reliant on the more normal public education just don't get a look in.

Which is where the problem comes in. Even if we assume that this is all true what should we be doing about it? It's not exactly a great secret that much of the inner city education system is a monstrous disaster after all. It's been described as the closest thing to an Act of War short of revving up the tanks upon the population subject to it in fact. It's also not a secret that a goodly part of this problem is the manner in which the bureaucracy and the teachers' unions run and control such systems.

So, if we were to be arguing that the playing field needs to be levelled a bit we'd be shouting about vouchers, charter schools, killing the unions, or at least their power over the school systems. We're not and the book isn't. Why not?

Because the author is a Democrat, the teachers' unions are a major hotbed of support for that political party. Shouting at your own supporters isn't regarded as good policy wonkery. Even if it is the solution to the problem identified. 

That is, the entire argument fails for not mentioning the elephant in the room - something which isn't the Republican party despite the usual imagery. 

Ayn Rand, Pro and Con (and Pro)

Ayn Rand, the ‘radical for capitalism’ best known for her novels Atlas Shrugged and The Fountainhead, was born on this day in St Petersbury (Russia), 1905.

Her novels, with their emphasis on self-actualisation, character and principle, bring millions of (mostly young) people into to the free-society, free-economy movement. As people say, “It usually begins with Ayn Rand.”

Her ideas in morality and politics are hugely innovative, radically challenging the traditional doctrine of altruism and instead defending egoism. When we correctly understand the world and how it woks, she argues, we can understand and know what actions—moral and political—are right, and what actions are wrong. What was consonant with the world, she concluded, were life, rights and freedom. The only moral social system was laissez-faire capitalism, because it was the only one not based on force and the only one to support these values.

Her view on how we can actually get to know the world and its working was a common sense one. There is a real, objective world; we are aware of it; and the things in that reality each have a specific nature or identity. By using our minds, we can work out what that is, and how to behave in ways that are at one with it.

Many people, however, see Rand’s philosophy not as common sense but as crude—not understanding the skepticism of David Hume or F A Hayek. She caricatures them as denying existence, and building a world on a whim. But skeptics do not deny existence: they say only that we have no direct access to it, and can only guess how it works. We still act in a principled way, but on the basis of our theories, not with irrefutable knowledge. And tomorrow, the universe might throw up some new fact that makes our theories no longer tenable.

Critics also question whether Rand can legitimately move from what is to what ought to be. Her criterion is that we should do what promotes life. But whose life? Rand focuses on the individual, but humans are social creatures, and the survival of larger groups (indeed the whole species) is important too. That is why we have altruism built into us: don’t knock it.

Also, say critics, most moral choices are not about life or death. We cannot know how our decision to hand in a lost wallet without taking any of the money out of it will affect anyone’s survival. We cannot reason it out. But then, as Hayek says, the spontaneous orders of society often have more wisdom than our limited minds could ever possess. 

In politics too, critics can use Rand’s standard of survival to deny her radical defence of individual freedom and capitalism. Should we not intervene to save people from the harm they do themselves through smoking, alcohol, drugs, guns or even fizzy drinks? And, on that same standard, should we not stop the sale of these products?

Despite such criticisms, Rand still inspires millions, and makes people think. She rightly observes that many of the problems in human affairs today is down to a lack of philosophy—a lazy unwillingness to engage the brain and think things through. That is why people do not understand that the state must be limited and rights protected, and why we need moral, political  and economic freedom. And businesspeople lack this understanding just as much as politicians and the general public—which is the origin of the crony capitalism (or as I prefer to call it, crony statism) that grips too much of the world today.

With focus and self-esteem, you can change the world, Rand tells us. But that requires thought, moral qualities and character. It means not craving security over freedom, and not trading your freedom or your dignity; defending your achievements and your right to what you create; not demanding favours or sacrifices; and respecting others who do the same. It is a very attractive prescription; and even a small dose of it would indeed go a long way toward making the world better.