An interesting view of how government works

Apparently we're all right to be sceptical of how that 0.7% of everything everyone does is spent. That official development aid budget is indeed wasteful, even corrupt. This is something admitted by the bloke in charge of spending the cash extracted from us.

Well, that's nice, so, what are we going to do about it? Reduce the amount? Do it better? Stop wasting it? Ah, no, that's not how government works, is it?

Public criticism of foreign aid spending as "corrupt" and wasteful is "valid", the civil servant in charge of the International Development department has admitted.

Matthew Rycroft, Dfid’s Permanent Secretary, also suggested that politicians are out of touch with ordinary people by not being more sceptical about the aid budget.

Dfid is so concerned that it is trialling a new programme which involves British aid workers telling their own stories in local papers about the value of their aid work.

Not wasting money isn't what government is for. Instead, we should up the propaganda so that money can continue to be wasted upon corruption.

Which is an interesting thing to know about government, isn't it? 

Systems have to be good enough, not perfect

One of our bedrock beliefs around here is that humans are fallible, so therefore will be any system for anything built, run and maintained by humans. It's one of the reasons we're so in favour of market solutions, markets containing the feedback mechanisms to kill off the truly dreadful mistakes in a manner that planning - with its fondness for reinforcing failure - just doesn't.

We're thus entirely fine with systems which are just good enough, not perfect. Sure, we struggle more, search for ever less tolerance of failure the greater the stakes at issue but still, we've got to accept that we should only struggle so far.

Tens of thousands of EU migrants could lose their right to be in the UK after Brexit - and the authorities will not know who they are, a new report warns.

EU citizens must register using an online system to secure "settled status" when the UK leaves next March.

The government has said it expects about 3.5m applications.

But the Migration Observatory said ministers had no precise figures for how many EU citizens were living in the UK and how many plan to stay.

The think tank, which is based at Oxford University, has previously warned that thousands of EU citizens could inadvertently become illegal residents in the UK after Brexit despite meeting the required criteria to stay.

The claim is that we must now go and find who these tens of thousands are and, well, do something. Our reaction is rather different. Objectively, asking people to use an app, upload a photo and pay a reasonable processing fee seems reasonable. And an error rate of tens of thousands among 3.5 million sounds remarkably close to perfection for government work. We'd suggest that this is about as good as it gets, better left well alone in fact.

That idea that the perfect is the enemy of the good applies here. For how intrusive would the State have to become to approach solving the last 0.8% or so of the problem? We don't even manage that for investigating murders, do we?

At least some of what we needed to do about house prices has already been done

That British house prices are too high is one of those generally accepted parts of the political conversation. It's even one where we agree that something must be done. The part where we might disagree with the consensus is over what must be done. For - OK, part of at least - what must be done has been done.

House prices are too high, something must be done to lower them. Great:

The value of Britain's housing market has fallen by £26.9bn, or 0.33pc, since the start of the year, as growth in the North East and Wales has failed to counteract falling prices in many other regions across the country.

The nation’s homes decreased in value by an average of £927 each between Jan 1 and June 30 this year, and are now worth a collective £8.2 trillion, according to figures from property site Zoopla.

Something has been done therefore. Whether enough has is still open to question, certainly, although it's worth noting that those are nominal prices, we can add another percentage point or two to the decline for general inflation. So too to affordability, given that while real wages aren't rising strongly they're not falling much either.

Housing is becoming more affordable.

This rather means that we don't need to nationalise the entire housing stock (something we've seen suggested in The Guardian), nor use taxpayers' funds to build 300,000 council houses a year, as seems to be the official policy of more than one political party. In fact, it means that something which needed to be done has been done.

As our own analysis of this problem, repeated ad nauseam, has been, the problem is not the price nor cost of houses, it's the value of the planning chitty to allow a house to be built. We're not short of land, we're short of land which can be built upon. The solution is therefore to issue more such permits.

Policy in recent years has been to issue more permits. Not in the manner we would prefer, the destruction of the structure of the planning system itself, but more have been issued and in areas people might actually want to live in too. As we can see, prices are becoming more affordable.

As we say, something needed to be done and something was done. Remarkably for government action the right something was done too. As ever with government action the right thing being for government to do less. Stop banning people from building where people desire to live and house prices will come down. We did, they have, why not do more of what works?

This isn't really quite what free speech means, nor a free press

Ofcom has decided that we all need to be protected from ourselves:

Most people reading news on unregulated platforms such as Google and Facebookcannot tell the difference between it and other content, Ofcom has warned.

The regulator said the reason was because social media, often accessed on smartphones, ‘blurs the boundaries’.

This has a ‘detrimental’ impact on how users question the world around them and ‘important implications for our democracy’.

The answer being, of course, that an organisation - say, Ofcom - should take responsibility for managing what is fake news and what is not-fake. How surprising, a bureaucracy arguing that it should be paid to extend its tentacles.

The underlying problem here though is rather more serious than just that burst of realism about tentacleness. It is, well, which news is fake? And who gets to decide? 

Imagine that we did have some arbiter of what was true, what was not. Then the definition of truth will be whatever the consensus is, wouldn't it? Something which might well benefit those who agree with that status quo in beliefs but does rather militate against the basic ideas of either free speech or a free press.

Yes, of course, actual free speech and press is messy, chaotic and not as many would like. But that's rather the point, so is liberty those three things. Trying to limit that press and speech will be a constraint upon that liberty too.

Venezuela Campaign: Forgotten Refugees

South America has a new refugee crisis. Nearly a million Venezuelans have left their home country in the last 2 years, some claiming that the number may be as high as 4 million. On the 12th of March 2018, the United Nations High Commissioner for Refugees stated that a very significant proportion of those who had left were in need of international protection.

Venezuela’s refugee crisis is driven by the implosion of its economy and the collapse of law and order in the country. Since August 2017, 250,000 Venezuelans have surged into Colombia. In recent months, more than 70,000 have entered Brazil, triggering a state of emergency in Roraima state.

There are warnings that the Venezuelan refugee crisis could surpass Syria’s in scale and speed. The number of Venezuelans leaving their own country could exceed the 1.5 million who left Cuba during Castro’s rule, and has already exceeded the half million who fled El Salvador’s war during the 1980s.

Venezuelans have scattered as far as Colombia, Panama, Peru and Brazil. In January 2018, the Venezuelan government blocked all traffic to and from the islands of Aruba, Bonaire and Curacao in response to the numbers of fleeing Venezuelans. Polls have shown that over half of young Venezuelans remaining in the country want to flee abroad permanently.

These migrants are subjected to difficult conditions at home and little better awaits them abroad. 3,000 troops were deployed to northern Brazil after two buildings housing Venezuelan migrants were burned down. Refugees now represent 10 percent of the population of Roraima’s capital, Boa Vista, putting immense pressure on public services. In Colombia, authorities are conducting operations to severely limit the numbers crossing the border. Guyana has already imposed border controls in response to civilians and military units crossing over in search of food and supplies. Panama deported 308 Venezuelans in January 2018, more than they had deported in the previous 6 years.

Venezuelans fleeing the disintegration of Venezuela face many of the challenges they faced in Venezuela: human rights abuse, poverty, and disease. Only a massive and coordinated response to this crisis will prevent this refugee crisis from spiralling out of control.

More information on the Venezuela Campaign can be found on their website. 

To rather miss the point, we can, and have, shift the Phillips Curve

It's entirely true that unemployment has to be very much lower today than it was in the 70s and 80s for real wages to start to rise. This is an odd thing to complain about though, this has been the point of the labour market reforms we've carried out these recent decades. But still, Thomas Frank wants to complain:

According to Josh Bivens, of Washington’s Economic Policy Institute, you can trace the slow decline of US workers’ bargaining power in the historical statistics. As the years go by, it requires ever lower levels of unemployment to ignite the wage growth that was once the hallmark of good times. “The decades-long campaign by employers to kick away any sources of economic leverage enjoyed by typical workers seems to have worked,” he tells me. “These workers now get real wage increases only during white-hot labour markets.”

This is the central story of the last four decades, the vast social engineering project to which all our recent presidents and both parties have contributed. Next to this stupendous transformation, all the culture wars and flag-fights and stupid tweets fade into insignificance.

Vast social engineering might be overdoing it but yes, a bipartisan attempt to reform this part of the economy.

The why being that it is better for us all if this is so. Think about the business cycle for a moment. We have a boom, growth occurs, then inflation rears its head and we've got to slam on the brakes with an interest rate rise - what we might call an engineered recession. The faster the wages rises occur in said boom the faster we've got to slam on the brakes. So, change the manner in which those wage rises occur and we can let the boom run for longer.

Another way to put this is that Phillips Curve. The point being that we don't have to run along it, or only do so. We can also shift it by changing the underlying microeconomics of the labour market. So, we did.

The reason we did was because people noted that we had a ratchet effect going on. The unemployment level at which we had to raise interest rates kept rising every boom. The unemployment in each recession was higher again - and higher again every recession. We were ending up with an ever more significant portion of the population entirely locked out of the world of work - and the independence, self worth and income that goes with it.  

Thus, change the labour market so as to stop that portion being entirely locked out. The flip side of this is that wages rise only at ever lower levels of unemployment. Actually, the very thing we've been trying to engineer.

Frank is right in that this was planned of course. It's the basis of much of the work of Richard Layard for example. Dean Baker, Paul Krugman and Brad Delong have all been arguing that the Federal Reserve should delay raising interest rates precisely because this change has occurred, we're still not at that non-accelerating inflation rate of unemployment. But to complain about it does seem most odd. The aim has all along been to make sure that we don't have swathes of the population rotting away in permanent unemployment. Something we've achieved and now he's complaining? 

Apparently the NHS is the world's largest buyer of fax machines

This might not be too much of a surprise, the National Health Service is, apparently, the world's largest remaining buyer of fax machines:

The NHS is buying more fax machines than any other organisation in the world due to a “stubborn” resistance to new technology, medical leaders have said.

A report by the Royal College of Surgeons (RCS) has revealed “farcical” reliance of the outdated equipment, with one hospital trust alone using more than 600 fax machines.

In total there at least 9,000 machines in service across the NHS through which doctors are forced to send crucial patient information.

One argument could be that the NHS is one of the world's largest organisations so it being a large buyer of any specific piece of equipment isn't that odd. But there's more to it here:

Currently, medics are officially required to contact each other by pager or fax.

There's that lack of productivity improvement, that failure to embrace new technologies, emblematic of centralised and planned systems. It has, for example, been near a decade now since it was possible to gain, for free, encrypted email and or messaging apps. 

You know, the apps which the actual doctors are already using, but they've just not got official permission for as yet?

Can artificial intelligence in education improve social mobility?

Brendan Bracken must qualify as one of the most successful parvenus of his century. Born Irish and raised as a Catholic, he absconded from schools and was sent to Australia for 3 years of peripatetic existence and self-education. He returned and settled in Liverpool, pretending to be 4 years older to gain a teaching post. When he'd saved just enough to finance a singe term at public school, he pretended to be 15 instead of 19, and was admitted to Sedbergh. There he made establishment friends, some of whom moved in Winston Churchill's circles.

Befriending Churchill, he used his successful career in financial journalism to back Churchill's campaigns, and to help secure the latter's finances. Elected as an MP himself, he became Churchill's right-hand man, and entered the wartime government. He was a talented spin doctor decades before the term was invented. He was eventually admitted to the cabinet, and given a peerage. Lord Bracken had done quite well for an Irish nobody. 

His upwardly mobile career is an example of social mobility, though it took deceit on a grand scale to make it happen. One cannot imagine it happening in the days of social media; his fantasies would be tracked down and exposed. But he was perceptive enough to realize that the ticket was a public school education, one which he tricked his way into, albeit at a minimal level. A term at Sedbergh was enough to give him access to the prizes, and the contacts to pursue them.

Although some praise what they see as the increased social mobility of the modern UK, the Sutton Trust has revealed that those with a public school education, only 7% of the population, make up 74% of top judges, 71% of top military officers, over half of leading print journalists, and dominate most of the top jobs in influential sectors, as well as the well-paid ones. Recent disclosures have revealed that they even dominate the leading careers in acting. Not surprisingly, many parents consider the fees of a private education to be a solid investment in their child's future.

Although there are calls for diversity quotas, with posts set aside for those with state education, the obvious solution is to make state education of a sufficient quality that its students can succeed on merit, without needing special consideration and lower standards. Even then, though, critics point to the way in which a private education has the children of successful parents mixing with each other and forming the friendships that will see them in good stead for seizing life's opportunities. Elitism would be hard to eradicate, if it were a goal to achieve that.

Grammar schools are in the news again because they give chances to people from humbler backgrounds. The top judges who are not ex-public school are ex-grammar school. They were largely abolished by Labour governments because they were felt to give unfair opportunities to too small a proportion. Left-wingers claimed they took talent out of the working class and made it middle class. Labour similarly abolished the Assisted Places Scheme, which enabled large numbers of children from modest backgrounds to attend private schools, and which gave those schools a broader social mix.

Clearly, the creation of new grammar schools and the restoration of the Assisted Places Scheme would go some way to increasing social mobility, and access to the top posts and prizes to people from lower down social strata.  But more is needed if the UK is to become more meritocratic. It seems wasteful that people with talent and ability cannot develop these and express them to the benefit of their fellow men and women. This is not to back the unattainable goal of equality of opportunity, but it is to endorse more opportunity and to seek ways of achieving this. And it starts with education.

Technology might point the way forward, and it could be artificial intelligence that sets the pace.  Among the advantages that public schools offer is a staff to student ratio that allows each child to receive individual attention. It seems clear that intelligent programs now under development will allow each child to be educated individually, and at a pace suited to its own capability and progress. Not held back by a teacher having to attend to slower learners, or dispirited by its inability to keep up with the others, each child can be taken forward at a pace it can accommodate. It can be educated to the degree that its abilities will permit. If this becomes the norm in education, it achieves the educational ideal of "a log with a teacher at one end and a student at the other," or a staff to student ratio of one to one.

If technology can be applied to educate each child to the maximum of its ability, the question arises as to whether it can be used to address some of the other factors that stand in the way of social mobility. For example, one of the advantages of a public school education is perceived to be the self-confidence it develops in its students.  This is hugely advantageous in university and employment interviews, where the ability to articulate clearly and confidently conveys massive benefits to the candidate.  Many students from state schools do not have self-confidence developed to such a degree, and are therefore at a disadvantage.

With artificial intelligence being applied to boosting the quality of education, can it similarly be used to equip students with more confidence so they can perform better in interviews?  The odds are that it can, and that future programs will use psychological insights to develop a greater degree of self-confidence.  To some extent, the greater educational skills will themselves boost a child's confidence in its abilities, but additional programs can coach it through interview techniques and take it through mock interviews to give it the resources to make them less daunting to the candidate.  Other programs will probably be developed that can raise a child's self-esteem through role-playing virtual reality situations.

Of course, the teenage years are, and perhaps should be, a time of questioning as children work out their identities and form a view of their place in the world. They find out who they are, what are their ambitions, and how they will relate to their peer group and those outside it. Self-confidence can be overdone and can indeed be counter-productive, so a balance needs to be sought to impart enough of it without overdoing it.

The individual attention that artificial intelligence can give to each child will mark the end of the notion that mass state provision should strive to produce identical or broadly similar outcomes for the children who go through it. It will produce greater variety, and a greater range of choices for children. Just as factories now no longer mass produce identical products, but allow customer preferences to be incorporated, so state services will be able to apply artificial intelligence to produce a different outcome for each recipient, an outcome more appropriate than the "one size fits all" result sought hitherto.

The role of government will not be to force all schools to apply the same model, but to facilitate and encourage them to apply the new technology in different ways, learning from the example of the more successful ones.  The outcome will be that far more children will have access to opportunities that their social background previously made it difficult for them to seize.

There have been three landmark Parliamentary Education Acts in the UK, the Foster Act of 1870, the Butler Act of 1944, and the Baker Act of 1988.  All of them transformed education in UK schools.  Now artificial intelligence is about to achieve a transformation no less profound.  It will achieve more for social mobility than any laws passed by governments could hope to do.

It would be nice if they did is not sufficient justification to force other people to pay your expenses

We're told that it's simply an iniquity that buses outside London are not subsidised in the same manner as those inside it. This is rather dressed up with complaints about privatisation, their not being planned and run by the local bureaucrats, but it's this lack of subsidy which is the real complaint here:

It’s not only Londoners who rely on buses and trains

Lynsey Hanley

Buses in the capital are fairly priced and frequent – and well used. Why has the rest of the country been left behind?

There's actually no evidence at all that buses anywhere are being fairly priced - nor unfairly. What we can see is that different people have to pay for them. For that's what "subsidy" does, moves the person bearing the cost away from the person doing the using.

Since deregulation, bus usage outside London has declined by more than a third, and fares in many rural areas are rising far above the annual rate of inflation. In the capital, however, usage has risen by 98% since 1986 – though it has fallen slightly in the last year – and passengers enjoy a stable flat fare of £1.50. (I pay £2.40 for a bus trip in Liverpool, where I live, a city with median earnings of £23,000 per worker, compared with London’s £35,000.)

What’s the difference? London’s buses are regulated, subsidised...

There it is. Other people manage to snag some portion of other peoples' money, why can't I? All of which is entirely understandable of course. It is nice if other people pick up part of your daily expenses. But there does need to be some reasonable justification for forcing them to do so through the tax system. Other Londoners - the taxpayer nationally in fact as well - pay that subsidy to London's buses. We're open to arguments that they shouldn't, equally to that they should. As ever, the answer is "it depends."

The argument in London being that 10 million people just aren't going to be able to move at all without some more general taxation paying for moving 10 million people around. Maybe it's a valid argument, maybe not, but that is the one here.

The justification for someone in Saffron Walden being taxed to subsidise buses in Liverpool is what? Other than it would just be nice?

Do we really have to be subjected to these sorts of misunderstandings?

We agree that the European Union is an important trading partner for the UK. We agree that services are important to the UK economy, that services exports are too, even those to the EU. However, we really are also pretty sure that we'd all be better served by the commentariat - today's example being Polly Toynbee - being a little more informed on these subjects:

But take the other mammoth in the room: to escape the free movement rule, the plan omits services from any trade deal – and that casts 80% of our economy to the winds, a hard Brexit by any account.

Services are 80% of the total economy. International trade is not 80% of the economy. In fact, services exports (the only part to be affected by Brexit, we can do whatever we like about imports of them once out of course) are perhaps 8% of the economy. That's gross services exports too. Of which about half goes to the EU.

Yes, certainly, 4% or so of GDP is an interesting number. But it ain't 80%, is it? 

The 26 million people working in British services create a massive £28bn-a-year trade surplus with the EU,

Again, eyeballing the percentages, but 2% of GDP is an interesting number, not an economy defining one. And of course the 26 million are not working in service exports, they're working in services, the vast majority of which are - in common with every other large economy - domestic in both production and consumption.

They know the EU will never allow a single market deal on goods without services. How often must they repeat that the EU’s four freedoms of goods, capital, services and labour are indivisible?

Well, yes, except that that single market in services is, to put it as politely as possible, as yet an unfinished work in progress, not something that entirely and wholly exists today.

Please do note that the above is not an expression of our opinion. Now is it to insist that Brexit should happen, nor the manner in which it should. It's rather an insistence that those who would pronounce on it really have a duty to know more about it. As with the economy more generally - ignorance isn't a good starting point for a chain of evidence nor logic. 

As to opinions, we have 'em. Polly tells us of this:

Patrick Minford CBE, former Thatcher adviser and leader of Economists for Brexit, is willing to spell out to me what Brexit politicians dare not. Their goal is no tariffs, no barriers, no regulations, open free trade with the world. That, he claims, cuts 20% off food prices in tariffs and roughly the same again in removing all regulatory barriers. What of food quality? As long as it’s labelled, let the consumer decide. What of farmers bankrupted by cheap imports? Big farmers will do more efficient biotech farming (GM, etc); small inefficient farmers will go to the wall or be paid to protect the environment.

What of manufacturing, facing a tidal wave of cheap, imported, unregulated goods? That’s an insignificant 10% of our economy, so let cheaper countries do the “metal bashing”, as we import cheaper cars: we will do high-value intellectual work. And what of all those “metal-bashing” jobs? Here he uses a favourite phrase: the “reallocation of labour”, just like all those “reallocations” of the 1980s on which he advised Thatcher, when unproductive mines, steel works and shipyards closed. Look, he says, over those years most of the 35% employed in manufacturing have been “reallocated”, with a growth in city financiers, consultants and all other services. But what of the people and the places destroyed in the process?

Yes, he admits, the 1980s was a “big shock”, but it rid us of “hopelessly uncompetitive” industries. That’s what unilateral open free trade would do again, clearing out overprotection from global competition with, he claims, a huge economic boost. Short-term pain means long-term gain: a second coming of Thatcher’s 1980s.

That’s the vision that dare not speak its name among Brexiteer MPs – for good reason.

As an aside, we'd note that the clearing out is what moved people into those services which export so much that even Ms. Toynbee is impressed.

But as to not speaking its name - we agree thoroughly with Minford here. It's all rather the point of Brexit itself in fact, that we can go and do all of those things which will make the economy so much larger, make our children so much richer. That is, the point of leaving the European Union is so that we can stop doing all the things they insist upon, all the things which progressively impoverish those who will come after us, and make the lives of the little ones so much better. Yes, absolutely, Brexit is for the children.