The planning delusion again - this time it's electric cars

In the grand and larger sense we've Hayek's injunction, that we do not and cannot have enough knowledge to plan the economy in any detail. In a narrower sense we've the same point made by Lord Stern in his review of climate change. Given the externality of emissions then crowbar the costs into the price system and, as Hayek insists, use the only calculating engine we've got, the economy itself. Stern is really very certain, adamant even, that we should not be trying to deal with matters through plans, regulations and in detail.

At which point we get this:

Cars unable to travel 50 miles on battery power would be banned from sale from 2040 under plans being considered by the Government to improve Britain’s air quality.

The move is one of the proposals in an internal government review aimed at making transport in the UK more environmentally friendly bydriving motorists into electric vehicles.

However, the idea has been met with fury by the car industry, which called it “unrealistic” and based “on neither fact nor substance”.

If enacted, virtually all cars currently on sale would be outlawed – including hybrids such as the bestselling Toyota Prius which has a combined petrol engine and battery drive train.

No, no, and thrice no. Our third coming from the fact that we simply do not know the emissions of the various possible solutions here. What are the lifetime emissions of a battery powered car? How often does that battery need to be replaced, remanufactured? What are the production emissions of any car? Are we sure that lower emissions in use - if such is true - cover the emissions in manufacture? 

Even, are we certain that moving emissions from the tailpipe to the electricity plant aids in any manner? If we're burning wood in Drax it probably doesn't for example.

As ever when we're discussing climate change here leave aside any thoughts that it's not happening and all that. Engage with the discussion on their terms - and we still find out that they're doing the wrong thing.

We just don't know enough about the various possible technologies to know what will be the solution. Hybrids? Fuel cells? Batteries? Flywheels? Probably not that last but who knows? We also only have the one manner of finding out what that answer is. We can include the externality into market prices and see what happens. For the solution is something emergent from market processes, not something that can be known or calculated in advance.

Hayek tells us this, Stern tells us this, basic common sense about technology tells us this and yet they still try to plan.

Why?

Voter ID may or may not be a good idea - but what's the evidence we have a problem?

Whether or not voter ID should be demanded isn't our point here. Rather, we want to point to the illogic being used. Here's a Labour MP:

The introduction of voter ID is intended to help reduce electoral fraud. However, In 2017 there was only one convicted case of electoral fraud based on impersonation. Furthermore, the UK’s official statistics watchdog, the ‘UK statistics authority’ condemned the Government’s argument that voter fraud has more than doubled in two years as misleading.

That there was only one conviction for impersonation doesn't tell us much about the prevalence of it. You know, given that there are near no checks upon it in the first place. Which is why the tests of course:

More than one in FIVE polling stations turned away voters for not having ID during a hated Tory trial, a volunteer group says.

The astonishing claim would suggest more people were turned away in five areas than ALL last year's in-person voter fraud cases in the entire country put together.

When we do start checking we then find many more problems. Whatever else we might say we cannot then insist that before we started checking the absence of cases means that there's no problem, can we? Precisely because checking reveals problems that we might want to deal with.

Obviously enough there are different potential explanations for the problems. We Brits - thankfully and rightly - don't carry nor have an ID card so we've often not got a manner of proving who we are. It's also possible - possible note - that impersonation is very much more common than our previous system of not checking led us to think. The point being here that we are getting a different result by checking. That's new information that we've got to consider, not a time for us to be insisting that we've historically not prosecuted many.

The very fact that checking produces more cases means that what we believed before may well be wrong, doesn't it? 

Unhealthy Statistics in the Darzi Report

The Darzi Interim Report, published last week by the Institute for Public Policy Research, sets out to provide a reliable forecast of the financial gap between the health and care services the country will need by 2030 and what current financial policies will provide. In the most generous scenario it is estimated an additional £60 billion of funding must be allocated to health and social care by 2029/30.

But just how healthy is the statistical analysis that generates the £60bn? 

Unfortunately it seems to be flawed in two main respects: 

1. No account is taken of managing demand; 
2. Acute hospitals, the most expensive sector of the NHS, are the basis for the projections – this despite the report itself saying provision will shift from acute to chronic conditions.

In 1948, the NHS was created with three core principles, to which was added, in 2011, a constitution of seven more principles and a set of values. With exceptions for teeth, specs and prescriptions, healthcare is unpaid for at the point of use for all who do not wish to, or cannot, pay for private treatment. 

Strangely, there is no mention of what the NHS should actually provide. One cannot buy health or longevity so it cannot be either of those. The unstated offer seems to be that the state would pay for the time, facilities, technology and dedication of UK health care professionals. Does that include cosmetic surgery? Aromatherapists? Osteopathy? Treating gender dysphoria through psychiatry and/or surgical reassignment? No boundary has ever been set for what the NHS should provide, apart from medicines and devices quangos deem poor value for money. Instead we’re governed by convention. This has made restraining demand more than difficult.

This is not a big surprise.  If ice cream had to be supplied at ever increasing levels of quality but free to all, ice cream factories would have long waiting times and reluctant financial backers.  The reason other countries have more efficient and better suited health systems is their use of copayment to manage demand– as indeed we have done for teeth, specs and prescriptions and they do through insurance and low level charges.  

Sadly the Darzi Report makes no mention of managing demand and it sets the definition of health very wide: “Health is much more than the absence of illness or disease. The World Health Organisation defines it is “a state of complete physical, mental and social wellbeing” (p.10).

The report claims, based solely on Grossman 1972: “Better health is an investment in ourselves and each other: this means an individual’s capabilities and assets, which in turn determine their economic potential” (p.9).  One wonders if the Report’s authors actually read the article they cite.  It was a purely theoretical model with no empirical validation.  

And it leads to an opposite conclusion, one which the report contradictorily comes to as well inciting Licchetta and Stelmach: “Each generation expects more from their health and care system than their predecessors. Indeed, there is significant evidence that rising expectations has been one of the biggest drivers of health and care costs in the last century” (p.46). These two positions can’t be held together. We need to address demand as well as supply. 

If we are to address demand, we need to understand the impact of the scale of demand is likely to be coming our way. Yet the report worryingly fails to do so. Beyond simply asserting that “social care which, if anything, is facing an even larger funding gap” and that “as a bare minimum the system will require an extra £10bn.; and that is just to maintain the existing level of provision” there is nothing to suggest the report’s authors have understood the problem they’re facing in the real world.   

The projections grow demand pro rata to life expectancy, i.e. every year of life is assumed to have the same cost. But this is not true.  As the report itself noted, the last years of life are far more expensive, for the NHS, than the previous ones. The last year is usually the most expensive of all.  

Lord Darzi should be aware that each of us has only one last year of life no matter how long we live. Longer healthy life expectancy actually reduces NHS costs solely by deferring the expensive final years.

The Report subscribes to the current wisdom that bad habits, such as smoking and obesity, contribute massively to NHS costs even though the reverse is probably true for smoking and excessive drinking which feature high taxation followed by reduced calls on the pensions pot. Snowden and Tover calculated the smokers’ net contribution, after the additional health costs, to the public purse of £14.7bn a year. Mark Tovey showed that obesity accounts for less than 2% of the NHS budget for similar life-shortening reasons.

Treatment is increasingly shifting away from acute hospitals towards the more cost-effective care now possible in the community. The report itself says that medical care will switch to treating chronic rather than acute conditions: “This transformation – part of the shift from acute to chronic illness” (p.10) and “This shift [to chronic] will require us to get better at preventing these chronic conditions, shifting their onset as late as possible into life. Once people have them we will need to make sure care is community based and led by the patient rather than clinician led in the acute setting. It will also mean valuing care – not just formal social care but also the huge army of informal carers – more highly” (p.45).

Thus the central plank of the projected needs does not support the arithmetic. Instead the report relies emotively on the word “care” as can be seen in its concluding paragraph: “And, most important of all, it must build on the progress we have seen over the last decade in terms of the quality of care in health and care. This is after all, what people care about most.” (p.50). It is a political polemic designed to lobby for more NHS funding as distinct from reliable research into how the NHS books can best be balanced.  “The model” we are told “has been peer-reviewed by experts” (p.46) which makes one wonder who these “experts” might be.
 

We never believe any number in The Guardian ourselves

We've noted before that when Frances Ryan tells us about some appalling abuse of poverty her numbers never quite add up. There's always a hole where some important digits aren't explained. So it is with this about the expense of schools:

What price can you put on a child’s education? It depends on who that child is. New figures show the average fee for attending a top private school has now risen above £17,000 a year for the first time. In contrast, a child attending a state school in England can expect to have £4,000 to £6,000 spent on them, depending on location and additional allowances. This would be worrying in any circumstances but when we have crumbling and cramped state schools, it feels almost grotesque. While some children enjoy drama halls and swimming pools, others are trying to learn surrounded by leaks, mould and vermin.

Her source is another piece in The Guardian:

Data collected from the 1,300 members of the Independent Schools Council (ISC) – an umbrella body that ranges from famous public schools such as Eton and Harrow to hundreds of smaller prep schools – showed that a child attending a private secondary school as a day pupil would cost around £15,000 a year, while a boarder would pay £33,000.

The figures showed an increase of 3.3% compared with 2017, which the ISC said was the slowest annual rate of increase since 1994. However, independent school fees have outstripped the rate of inflation over that period.

The average annual fee for a day pupil was around £13,000 three years ago but 10 years ago the same education cost £9,600 a year. Boarding fees have risen by 50% in the last 10 years, having cost on average £22,000 in 2008.

In comparison, state schools in England receive around £4,000 to £6,000 per pupil depending on location and additional allowances for language and disadvantage, as well as access to funds for buildings and maintenance.

That last clause is really rather important, don't you think? Especially as Ryan's complaint above is about the physical estate of the state sector.

The private school number includes both the operating costs of that school and also the capital - and maintenance - costs of the school estate. The numbers for the state school are instead only the operating costs, not including those maintenance nor capital costs.

From memory we'd also suggest that the private school numbers include the substantial pensions costs of the teaching staff, the state ones not. But that is from memory, we're not stating it as a fact.

When one Guardian article doesn't even manage to pick up the correct numbers from another Guardian article - that's why we don't actually believe any numbers in The Guardian, ever.

How the sharing economy makes us all richer

The Mirror tells us that we Brits have £48 billions' worth of unused stuff cluttering up our households. This is exactly why the sharing economy makes us all richer.

Brits are so unwilling to bin unused items that they have £48billion of stuff stashed away.

Researchers found a typical ­home has a hoard worth £1,784.

Consider what that sharing economy is. It is renting out those things which already exist, isn't it? Putting them to use instead of leaving them to rot in the attic. Or in the case of some AirBnbs, it's is the attic being rented out.

Of course, this all already happened. We did borrow the lawnmower or the electric drill from the neighbour. But this took place in Polanyi's web of mutual obligations. What this new economy of apps and websites is doing is lifting it all up a stage into more Smithian impersonal commerce. The advantage of which is that it all takes place on a larger scale, we are dividing and specialising on a larger, thus more efficient, scale.

The net effect of this is that it does indeed make us all richer. There's something called the Solow Residual, that being a crucial source of economic growth. It's the bit of economic growth which comes from doing things better, rather than by feeding more resources into the system.

So, we've some stack of things lying around doing nothing. This is capital - it's all been bought and paid for and it is indeed capital of society. We now put this to work by sharing it around those who actually need it to do more than clutter up the basement. We're getting more output from that same capital base we've already got as a society. That's an increase in that Solow Residual, we're richer by having become more efficient in our use of extant resources and capital.

Sure, he very phrase "sharing economy" is more of the usual hippy dippy nonsense but it's still true that it does indeed make us richer.

There isn't a binary choice for trade with the US or EU

We've another reappearance of that mistake that we must swing one way or another - exclusively that is - on matters trade post-Brexit. Sadly, it's the people who actually govern us making the mistake:

The UK is facing a binary choice between a deep trading relationship with the EU or the US, according to a report from MPs on the International Trade Committee (ITC).

Efforts to drop regulations in a bid to land a quick Free Trade Agreement (FTA) with the US could result in the erection of fresh trade barriers between the UK and the EU, the report claimed.

An in-depth 50 page examination of UK-US trade relations has highlighted the likely trade offs for the UK in securing an US FTA. Trying to build a closer relationship with the UK’s largest single-country trade partner could increase the size of the UK economy by 0.35pc of GDP but like all deal it would require "trade offs", the report warned. 

UK exports to the US were worth £100bn in 2016, compared with £234bn to the EU in 2016, making any such trade off a difficult economic balancing act.

The full report is here.

The trade off simply doesn't exist. We can confirm this by pointing out that we already trade with both the EU and the US.

The mistake being made is to assume that in order to export to the US - or Monaco, the EU or Mars - then our internal regulation must conform to that of the US, Monaco, the EU or Mars. This is simply not so. Our internal regulation of whatever we want can be whatever it is that we want.

Those making things to export - again, to the US, Monaco, the EU or Mars - must make sure that their production accords with regulation in those intended destinations.

There just isn't a binary choice here. Our evidence, our proof of this contention, is that this is what we all do anyway. Car regulations are significantly different in the US than they are inside the EU. Jaguar Land Rover uses plants in the UK to supply both markets. They are therefore not making a binary choice, are they? They're manufacturing to both sets of standards, both sets of regulations.

We might add a third set of such regs as a newly sovereign economy, we might not. But it's still not true that all must manufacture to either US or EU standards, is it? 

Bribery and corruption in the planning system - so, make the planning system simpler, dolts

The Guardian has discovered a revolving door between those who process planning permissions and the firms which advise on how to gain planning permission. Further, that some local councillors who vote on such matters have connections with, or are themselves, property developers.

The accusation of T Dan Smith style corruption isn't made - as of course it shouldn't be - but the implication that there's something not quite right with this is certainly in the air. There is of course an answer to this which is to make the planning system simpler, you dolts. As Our Sam points out in The Times in fact. 

There's an important concept about bureaucracies, regulatory capture. This is normally meant to work one way, that a bureaucracy regulates in favour of the established players in the industry it's supposed to be regulating. But it also works the other way - the people in the bureaucracy switch sides. Tax inspectors join consultancies devising tax avoidance schemes - they're the only people who understand the horribly complex system well enough to do so. So too with a planning bureaucracy, the public sector has paid for their decades of understanding how it works why not cash in? 

The answer to this of course being to have simple systems which anyone can understand and which doesn't need the intervention of that trained caste.

Which is where we find ourselves making the Protestant contention. Catholicism certainly used to insist that eternal life was far too complex for the rubes to get to grips with, better by far to have all the heavy thinking done by the priestly caste. The Protestant response being that the Word of God was there, written down in the Bible for any man to see for himself. What need of priests now, eh? 

There are libraries full of books insisting that it was - in part at least - this simplicity of the finding of the path to salvation which helped to drive the social and cultural structure which led to the Industrial Revolution. It's a concept we should revisit.

Once planning - or tax - law is simple enough that any man can read and understand it then we'll not need the intervention of the priestly castes, shall we? At that point which side the clerics are trying to get paid by doesn't matter, does it? 

Are the Cuban health statistics actually true?

Something that we've pondered here over the years. Those health care statistics which come out of Cuba - are they actually true? An important point we think, for there are any number of people who insist that the Cuban Revolution - with all its slaughter and inducement of poverty - is justified by the fact that it has free health care. That rather requiring, if we accept the basic contention at all, that free healthcare can be pretty good.

As is being pointed out in The New Republic, it's not easy to be certain that it is:

The problem with using statistics to sing the praises of autocracy is that collecting verifiable data inside closed societies is nearly impossible. From Ethiopia to Kazakhstan, the data that “proves” that an authoritarian regime is doing good is often produced by that very same regime.

...

UNESCO representatives say that in the case of Cuba, they use the regime’s education numbers in compiling their reports. There is no on-the-ground verification for these often-encouraging figures.

One of us did track down where the Cuban health statistics came from. They're compiled by the Cuban health ministry and then passed on to the WHO. Certainly it is possible that they're subject to this special style of authoritarian reporting.

This isn't our area of expertise so we pass this idea along to anyone who wants to run with it. Are the Cuban numbers actually even internally consistent? If we know birth rates, average lifespan and immigration/emigration numbers plus the starting population then we should be able to calculate the population alive at any one point. A question we'd love to know the answer to. Do the reported numbers given by the Cuban health ministry match up with the reported population of the country?

That would seem to be the easiest manner of checking the internal consistency of what is being reported and we'd love to know the answer....

If the TSB screws up then why does the bureaucracy get a chunk of money?

That there's been a monumental Mongolian clusterhuddle at the TSB over their computer systems does not surprise us all that much. For we know - as rather too few do - that the British banking system is built upon layer after layer of ancient computer systems. Some to many of which don't speak to each other. There's a good argument for doing what the TSB has tried to do, which is move over to one single system, one possibly using modern languages, modern architecture and even modern computing boxes.

Although, obviously enough, the argument is stronger if they'd managed to get the transition seamlessly right.

There is however one part of this story that confuses us immensely. Yes, we can see the clusterhuddle. But why does the bureaucracy get a chunk of cash as a result? 

 Both the Financial Conduct Authority (FCA) and the ICO said they were monitoring the situation. The watchdogs have the power to investigate and potentially fine TSB for a system failure or data breach respectively.

We can see the logic about the data breach. Not wholly sure we agree with it but we can understand that logic at least. But a fine for system failure?

 TSB’s botched IT “upgrade” has snowballed into a full-scale crisis, with up to 1.9 million customers locked out of their accounts for a sixth day, MPs demanding action and the bank facing a potential multimillion-pound compensation bill and regulatory fines.

Having botched it we're really rather certain that the TSB will lose a certain amount of custom. Somewhat amusing really, as once the transition is completed they'll be one of the few banks without a system held together by sealing wax and spit but there we go. Still, the punishment for a producer getting things wrong is right there in the marketplace already. So, why the fines?

Seriously, why should government - or more accurately, the regulatory bureaucracy - get cash because someone screwed up? What is the justification for fining someone for ruining their own business?

And what does this do to incentives? If the bureaucracy gets more money as people err then aren't they going to be hoping that people err? Even aiding them into error? 

The TSB is now worth some sum less than it was two weeks ago. Why do they have to pay government for that achievement?

As we've been saying, we need more markets in the NHS

Following the Darzi report we've one of those typical Guardian pieces just insisting that we not only shouldn't, but must not, change the essential structure of the NHS. An insistence which rather fails:

But dig a bit deeper and the arguments of the naysayers begin to crumble. They point to insurance-based systems – like those operated in the US and some European countries – as a solution. But the evidence is clear that these alternatives end up costing more money. The reality is that all advanced countries are facing similar pressures on health and care systems, and ours appears to be managing these as well – if not better – than many others.

These same sceptics say that our system is selling us short by failing to deliver the best possible care. But Lord Darzi finds that over the last decade – despite being the most austere period in its history – the quality of care delivered by our health and social care system has improved. Cancer survival rates are up. A stroke or heart attack is less likely to be fatal. People are more satisfied with the social care they receive.

This past decade is also when we've been inserting more market mechanisms into the workings of the NHS, isn't it? Sure, correlation isn't causation but we've certainly no evidence that more markets means worse, do we? 

Further, we've the experience of the three different NHS structures, those for England, Wales and Scotland. That which has had more markets inserted, as with a colonoscope into a fundament, the English has got better faster than the other two.

That is, the very argument being used to insist that we shouldn't have more markets in the NHS is entirely consistent - at least and we'd argue causation not just correlation ourselves - with more markets in the NHS improving things. And if that's the best argument they've got against those markets then we'd better get on with doing a little more inserting, eh?