Doing things by bureaucracy never does lead to sensible solutions

Voluntary cooperation - the basis of markets but not exclusive to a market system - leads to a certain give and take. Hmm, yes, that seems a sensible solution to the problem at hand. That sense being determined by the people on the ground, at the place and time, observing said situation and coming up with a solution.

The we’ve the bureaucratic solution, the one where there must be a written rule for everything:

Litter pickers were told they couldn't recycle rubbish at council centre because it didn't count as "household waste".

“Litter picking” being where you go out and, well, pick up litter. Clean up a place that is. That litter then needs to go somewhere. The local council tip sounding like a good place for it to go.

But after filling six bags full of litter, Mr Mitchell turned up a the Richborough Household Waste Recycling Centre in Sandwich, Kent, last weekend (Aug 31) to dispose of them, but was turned away, being told it was just for 'household rubbish'.

Rules, d’ye see?

A spokesman for Kent County Council said: "The Richborough Household Waste Recycling Centre is for the use of members of the public to dispose of items which originate from their own property.

"If you are planning a litter pick, we would encourage people to contact their district or borough council in advance to arrange the collection of the waste.

"KCC has worked with district and borough councils across the county to make it easier and clearer to arrange disposal of waste from litter picks."

Politics, government, is at heart the system whereby we work out who deals with the rubbish. It has been said that the great genius of the British is to somehow muddle through. Few plans, little bureaucracy, rules only where there absolutely need to be such. Perhaps we should go back to that system rather than the current one where the anal retentives are in charge?

Georgi Markov, murdered by a Bulgarian Secret service assassin

On September 7th, 1978, Georgi Markov, a Bulgarian defector working for the BBC World Service was walking across Waterloo Bridge when he felt a sharp pain in his leg. The man behind him who was carrying an umbrella fled in a taxi. Four days later Markov died in hospital, and a post-mortem found he had been injected with a pellet containing the deadly poison ricin, probably injected from a weapon disguised as an umbrella.

 He was murdered on the orders of Todor Zhivkov, the Communist dictator of Bulgaria for 35 years. His rule tolerated no dissent, and writers had to toe the party line and parrot its praises. Those who were reluctant were persecuted and denied publication and recognition. Markov defected in Italy and settled in London, where he learned English and found work with the BBC. He was sentenced in absentia to six-and-a-half years for his defection.  

Todor Zhivkov was a thug, one whose extremist approach led to the largest ethnic cleansing of the Cold Ear period. He ordered a forcible assimilation of Bulgaria’s Turkish minority, forcing them all to adopt Bulgarian names. Resistance to his led to riots, so he expelled 360,000 of them over the Turkish border. This brutality appalled even his Soviet and Warsaw Pace colleagues, and he was forced to resign in 1989. Within a month Communist rule in Bulgaria ended, as it did across central and Eastern Europe.

No-one was ever charged with the murder of Georgi Markov, carried out in broad daylight on a London Street, but KGB defectors Oleg Kalugin and Oleg Gordievsky later confirmed that the KGB arranged the murder at the request of the Bulgarian Secret Service, whose agent, Francesco Gullino, was given the weapon. The documents concerning the case were later destroyed to remove hard evidence.

After his death, Markov’s works were withdrawn from circulation in Bulgaria, and his name was not mentioned by their media until after the fall of Communism in 1989.

Communist dictators routinely ordered the murders of defectors living in the West, and several were victims, or had unsuccessful attempts made against them. The same pattern can be seen today, with ex-KGB Putin ordering similar attacks against dissidents and defectors. Alexander Litvinenko was murdered in London in 2006 with radioactive polonium-210, on Putin’s orders. Sergei Skripal and his daughter Yulia were poisoned with the nerve agent Novichok sprayed onto their door handle by Russian agents who have since been named and identified by Western media investigators.

It illustrates the utter contempt the Communists and their like-minded successors have shown for international law and due process. They kill people who oppose their tyranny. It reminds us of the need for vigilance. Thankfully the UK has not thus far fallen under the rule of such a sociopathic ideology.

An interesting corollary to public choice economics

Public choice economics is simply the observation that humans respond to economic incentives. Those who rule us, politicians and bureaucrats, are not immune to this - despite appearances and other behavioural attributes we are all members of the same species.

Another way to put the same idea is that everyone always talks their own book. This research testing that in the economic predictions made about Brexit by bank research departments:

Doom-laden warnings of economic catastrophe before the Brexit referendum were driven in part by commercial worries by economists at the banks that stood to lose the most from a ‘leave’ vote, economists have found.

The paper is here:

This paper introduces macroeconomic forecasters as political agents and suggests that they use their forecasts to influence voting outcomes. We develop a probabilistic voting model in which voters do not have complete information about the future states of the economy and have to rely on macroeconomic forecasters. The model predicts that it is optimal for forecasters with economic interest (stakes) and influence to publish biased forecasts prior to a referendum. We test our theory using high-frequency data at the forecaster level surrounding the Brexit referendum. The results show that forecasters with stakes and in uence released much more pessimistic estimates for GDP growth in the following year than other forecasters. Actual GDP growth rate in 2017 shows that forecasters with stakes and in uence were also more incorrect than other institutions and the propaganda bias explains up to 50 percent of their forecast error.

People do indeed talk their own book. And now the test for public choice economics. Or perhaps for opponents of the idea. If the economists in banks will skew their predictions to their own interests then why won’t the economists in government? The Treasury?

That is, if we’re seeing a human universal here what makes our rulers immune to it?

We can even test this empirically. Are we currently in the depths of that recession the Treasury insisted would be upon us the moment we had the temerity to vote for Brexit?

Nudges: they shouldn't cost an arm and a leg

Spain has the highest level of organ donation in the world. Many attribute Spain’s success to its opt-out system of organ donation, yet it is clear to see that this is only one of the factors at play. 

Both Dr José Ramón Núñez, head of the WHO’s Donation and Transplant programme, and Juan Pedro Baños Jiménez, president of the Spanish Association of Transplants, agree that there are factors that influence organ donation rates other than simply giving the state de-facto ownership of your organs. Many Spanish doctors explain that in order to affect the level of organ donations a nation must change public opinion - not just legislate to prevent choice. 

Dr Núñez claims that Spaniards’ faith in their well organised system makes them more willing to donate. Juan Pedro Baños Jiménez cites Spanish methods of communication with its citizens and press coverage of recipients expressing the virtues of donation. (A great example of this is the song Gracias por Ser Donante). In the UK, there is no popular culture equivalent. 

In addition, Spain accepts organs from people that many nations would deem too old. While most countries have an upper age limit of 65, Spain does not. The oldest age of a successful organ donor in Spain was 91. Donations from over 65s account for only 7 percent of total donations in the United States but in Spain, one in every 10 donors is 80 or older. Naturally, as the rate of mortality falls, so does the availability of organs. By accepting organs from older donors, Spain combats this problem, an example of the country’s ingenuity in maximising the availability of organs. 

Organ transplants are more routine in Spain thanks to doctors who are ready and able to perform transplants. By contrast, specialist transplant doctors in the NHS in England already report being swamped. Naturally, the Spanish system inspires trust as people have confidence that their donated organs will be used well. In all systems, those in favour of organ donation will donate and those opposed will not, as long as they can do so legally. With an opt-out system a government is trying to nudge those who are indifferent into becoming donors. Looking at Spain, it is equally likely that faith in the system will sway these people, doing so in a far less intrusive manner and still achieving the goal of higher organ donation.  

And yet many still praise Spain’s opt-out system. Surely that is a fool proof way of increasing organ donation? Wrong. Wales has had an opt-out system since December 2015, yet the number of organ donations fell from 64 in 2015-2016 to 61 in 2016-2017. This shows that the number of people who adopt the default position (i.e. not positively making a decision) is not as significant as one may expect and that an opt-out system may not increase numbers as expected. The opt-out system did not increase the number of people on the registry as it is still possible for individuals to opt out. Moreover, families of the deceased can override the donor’s choice to donate, which in turn shows the importance of Spain’s organ donation campaign, and that a nudge alone is not enough.

According to an article in the Independent, ‘in recent years around half of British organ donors’ status on the register wasn’t known at the time of death’. It is apparent, in Britain, the system is already ineffective. If we are unable to record the number of people who have opted in, how can we expect to record the number of people who will opt out. Clearly, there are deeper problems with our organ donation system than simply the concept of choice.

All of this relates to Nudge theory. The aim of libertarian paternalism is to make it easier for people to make the ‘right’ decision by helping them overcome the cost of actively considering and making the decision. Nudge theory is, however, pernicious. It recommends the government nudge us towards ‘better’ choices. Why should the government be able to pass value judgements - or, worse, assume ownership of an individual’s body? By granting the government this power to pass moral judgement, the system invites itself to be abused. Not only is the opt-out system paternalism, it is particularly bad paternalism. In Spain the logistics behind organ transplants is done by the National Transplant Organisation (Organización Nacional de Trasplantes) and it is after the introduction of this organisation that organ donation numbers started to rise. Thus, the paternalism of the nudge (the opt-out system) is not as effective as the ‘paternalism’ of the National Transplant Organisation. 

The takeaway point of Spain’s success is that they have a successful system that people trust. In a time in which the NHS comes under constant fire, these conditions are ones that England and Scotland can replicate but not simply by introducing an opt-out system.

St Petersburg recovered its great name

St Petersburg recovered its name after a 1991 referendum had voted heavily to change it back from Leningrad; (it had briefly been Petrograd). On September 6th, 1991, the Russian Parliament approved the name change, turning its back on its communist past, and harking back to its glory days as an imperial city and Russia’s capital.

Peter the Great had founded the city in 1703, wanting a more convenient port than Archangel, further to the North on the White Sea. The reforming Tsar wanted closer links with Europe, both trade and cultural. He moved the capital from Moscow to St Petersburg, and it remained so, barring a brief 4-year reversion, until the communists took power in 1917 and switched it back to Moscow.

The city is a monument to fine architecture, with much of its public buildings in a style called Petrine Baroque, developed by Trezzini and others. Many Russians dub it “the window to Europe” because it represents the westward-looking face of Russia. It is also called “the Venice of the North” on account of its many waterways. It was originally built on swampland and water.

Because of its far North location, there is a period in the summer when the nights do not grow completely dark for about a month. This is the city’s famous “White Nights,” a major tourist attraction. Large numbers choose that period to visit the city’s combination of its Russian heritage with European-inspired architecture and culture.

Not all visitors have been benign, however. Following the Nazi invasion of 1941, the city (then called Leningrad) was besieged by German forces for nearly two-and-a-half years. The siege cut off most food supplies and was one of the most destructive in history, with over one million civilians killed, most from starvation. It was also one of the most cruel, and was not lifted until January, 1944.

The city recovered, and when Soviet system was overthrown, its citizens voted to restore the name that spoke of its history, its culture, and its greatness. It discarded the name associated with brutality and murder, even though it had resisted Nazi conquest under that name.

The old man had been interviewed on television in the street while Soviet Russia was still communist. The interviewer asked, “Where were you born?” and the man replied, “St Petersburg.” “And where did you do your courting?” he was asked. “Petrograd,” he replied. “Where did you live your life?” the questioner went on. “Leningrad” was the answer. “And where would you most like to live?” was the final question. The old man replied with a sigh, “St Petersburg.”

I hope he was still alive to receive his wish.

But Polly, why should spending be at 2010 levels?

Polly Toynbee tells us that whatever the Chancellor announces he’s going to be spending it’s not enough Because there’s £60 billion at least that needs to be spent to get back to the service levels of 2010.

All in all, the IFS says it would take £60bn to get back to 2010.

But why should spending get back to 2010 levels? One good reason why not coming in her very next sentence:

Pay is still not back to 2008 levels.

If we the people who pay the taxes are poorer then it seems reasonable and fair that less is collected in taxes to fund those services really. If total resources are less then so will the righteous level of spending on any particular sector.

We can lay this out more formally too. Wagner’s Law tells us that as a country becomes richer more will be spent upon state services. The argument being that such state services are luxury goods. No, not luxuries, but things we spend more of our income upon as our income rises.

We have our doubts about that. We think it’s more to do with politicians and bureaucracies learning how to pluck the population better over time. But accept that statist contention for a moment instead. We’re poorer therefore Wagner’s Law goes into reverse, doesn’t it?

We might also think this through in a different manner:

Things less visible include Natural England losing half its budget and 1,000 staff;

What is there to tell us that Natural England’s budget in 2010 was correct? Rather more importantly we’ve had three elections since then - and are likely to get a fourth - and what is an election if it isn’t for us, the taxpayers, to change how we’re taxed and what that’s spent upon?

That is, if elections don’t change how much Natural England gets then what is the point of this democracy in the first place? Tony Juniper does, after all, work for us and aren’t we actually supposed to have a say in how much of our money he gets to spend?

And all that heedless, needless cutting was for nothing: breaking the fiscal rules proves this was about pure ideology, not economics.

Just for the sake of the argument we’ll agree. And what are elections and changes of government supposed to be about if not ideology? There are, after all, some out here who think that ever more government isn’t the solution. Sometimes we even vote that way too. That it all happens the way we vote is the point of the system, not a problem with it.

Taxes on beards and other unusual items

On September 5th, 1698, Tsar Peter 1st of Russia imposed a tax on beards. He wanted to Westernize his country, and thought the clean-shaven look favoured by the European nations was a symbol of modernity. He exempted the clergy and the peasantry, though. Men with beards had to carry a beard token to prove they had paid the tax, or they would be shaved on the spot by officials. This was an unusual tax, not only for what it was levied on, but because it was specifically designed to change behaviour. All taxes change behaviour, even though most are levied to raise revenues. Peter’s beard tax was designed to make growing a beard a more costly activity, in order to discourage it.

The UK’s 1795 wig powder tax was imposed for revenues, taxing the aromatic perfumed powders that people put on the wigs that were then fashionable. The extra cost that added led to a steep decline in the popularity of powdered wigs, and their eventual disappearance.

The famous window tax of 1696 led people to brick up windows in the UK in order to reduce the tax band their home fell into.  The 1660 fireplace tax similarly led people to brick up fireplaces. The brick tax, introduced in 1784 to help pay for the American wars, was initially charged at 2s..6d per thousand bricks, but canny builders began using larger bricks to use fewer of them. The authorities responded by slapping a larger tax on bigger bricks.

Britain’s soap tax was very unpopular, largely because it added two-thirds to the price of the coarse soap used by the poor, but a trivial mount to the refined and scented soaps of the rich. After a campaign against it, it was repealed in 1833.

France’s salt tax, known as La Gabelle, was even more unpopular, and opposition to it is reckoned to have been a contributing factor to the French Revolution. It was levied on the salt the French used for preserving food, making cheese, and raising livestock, and hit the poor hardest. The post-Revolution National Assembly abolished it in 1798, but Napoleon restored it in 1806, and it was not finally abolished until 1945, after World War II.

Taxes do tend to hang around. In 1902 Kaiser Wilhelm II introduced a champagne tax to fund an imperial navy and widen the Kiel Canal for it to sail along. The Grand Fleet is long gone, decaying relics on the ocean floor, but the champagne tax fizzes on.

Exotic UK taxes have included its 1784 hat tax and its 1789 candle tax, but Denmark probably wins the prize for the most exotic with its cow flatulence tax. Since cow-produced methane is reckoned to be a significant contributor to greenhouse gases, Danish farmers are subjected to a levy of $110 per cow. Needless to say, it created outrage among Danish farmers when it was introduced.

Taxes always change behaviour, and sometimes in unanticipated and unwanted ways. Increases in tobacco duty, for example, lead to increases in smuggled and fake brand cigarettes that are easier for underage smokers to access.

It is quite likely that the widespread adoption of taxes on income and purchases has created ways for governments to finance their activities without resorting to exotic taxes on strange items. But even here, it should be noted that taxes change behaviour, and higher top rates of income tax drive people into tax avoidance. Similarly, high rates on purchased goods lead to smuggling across borders and sometimes to cash purchases that are off the books.

The moral, if there is one, is that governments should use dynamic modelling that anticipates, where possible, the behaviour modifications that tax changes might lead to. It could make governments more cautious about levying new taxes or raising existing ones.

It's not just our government having problems

It appears that New Zealand suffers too:

The New Zealand government has scrapped its target to build 100,000 homes in 10 years, saying it was “overly ambitious”.

Do tell.

In June, Ardern replaced her housing minister and appointed a team of senior officials to fix New Zealand’s housing problems after KiwiBuild, the government’s flagship project for building 100,000 affordable homes in ten years, missed every several deadline.

As of 4 September, the number of homes built was 258, according to KiwiBuild’s website – thousands less than the target.

Certainly market failures exist - although the definition, accurately, is the absence of a properly functioning market, not failure of the market system. That doesn’t then justify whatever plans the government might have, for government failure is also something that exists.

Woods did not set any new target for KiwiBuild, saying the government would focus on building as many homes as it could, and targets had led to KiwiBuild homes being constructed in towns such as Wanaka that had no market for first-home buyers, and where they now languished empty for months.

Ah, it’s worse, those that were built are where no one wants any.

From which a useful guide to our own housing problems. The stated desire is that we have 300,000 new houses a year in the UK. The last time the private sector managed this was in the 1930s - before the Town and Country Planning Act 1947. Current government efforts are getting nowhere near close to that target. The solution would therefore seem to be to bypass government failure, blow up the Town and Country Planning Act 1947, and return to having a properly functioning market.

After all, we do have the evidence that it solves the problem being discussed.

Maybe Guido Fawkes was right: prorogation is not enough

The Trade Bill is important to securing trade agreements post Brexit.  No strategic matters are involved, just a bit of tidying up: “Make provision about the implementation of international trade agreements; to make provision establishing the Trade Remedies Authority and conferring functions on it; and to make provision about the collection and disclosure of information relating to trade.”

The 2016 Referendum made it clear that this administrative clean up was necessary and urgent so our Lords and MPs, so essential to our democracy, set to work. Three years on and after thirty odd sittings (see below), they have achieved precisely nothing, perhaps as a remainer plot. The Trade Bill is now likely, as a result of prorogation to go into the bin. Maybe that is irrelevant as the current version of the bill is in the “Ping Pong” stage which refers to the two chambers batting the bill to and fro with only slight changes in the wording. This can go on for ever. No date is arranged for the Commons to consider it again.

The Secretary of State, Liz Truss MP, has now declined the International Trade Select Committee’s invitation to discuss the matter. Presumably she sees little point in sitting in front of prevaricating MPs and being lambasted for something which is Parliament’s fault and not the government’s.

Stage Date
1st reading: House of Commons 07/11/2017
2nd reading: House of Commons 09/01/2018
Money resolution: House of Commons 09/01/2018
Programme motion: House of Commons 09/01/2018
Committee Debate: 1st sitting 23/01/2018
Committee Debate: 2nd sitting 23/01/2018
Committee Debate: 3rd sitting 25/01/2018
Committee Debate: 4th sitting 25/01/2018
Committee Debate: 5th sitting 30/01/2018
Committee Debate: 6th sitting 30/01/2018
Committee Debate: 7th sitting 30/01/2018
Committee Debate: 8th sitting 01/02/2018
Report stage: House of Commons 17/07/2018
3rd reading: House of Commons 17/07/2018
1st reading (Hansard): House of Lords 18/07/2018
2nd reading (Hansard): House of Lords 11/09/2018
Committee: 1st sitting (Hansarad): House of Lords 21/01/2019
Committee: 2nd sitting (Hansard): House of Lords 23/01/2019
Committee: 3rd sitting (Hansard): House of Lords 30/01/2019
Committee: 4th sitting (Hansard): House of Lords 04/02/2019
Report: 1st sitting: House of Lords 06/03/2019
Report: 2nd sitting (Hansard): House of Lords 13/03/2019
3rd reading (Hansard): House of Lords 20/03/2019
Ping pong TBC

How Google changed the world

Google was incorporated 21 years ago, on September 4th 1998. It had begun life in 1996 when two Stanford PhD students, Larry Page and Sergey Brin, thought up a better way of making searches. Instead of counting the search term’s appearances on the page, they wanted a system that analyzed the relationships among websites. They called it PageRank, and it determined a website's relevance by the number of pages, and the importance of those pages that linked back to the original site.

The name was later changed to Google, which is how they mistakenly thought a googol was spelt. A googol is the number 1 followed by a hundred zeros. They chose the name to indicate that the search engine was intended to provide an enormous amount of information. It was initially funded by four ‘angels,’ one of whom was Jeff Bezos of Amazon. They moved to Palo Alto six months after incorporation, and they never looked back.

I met both Larry Page and Sergey Brin at a Soyuz launch in Kazakhstan 10 years after they founded Google, and was struck by how boyish they were. I’ve observed this in several go-getting entrepreneurs; they seem to retain a boyish sense of enthusiasm and fun throughout life. Both were already fabulously rich, and destined to become more so. In 2012 the company passed the $50bn mark in annual revenue. Two years later it was reckoned that if it were a country, it would rank 70th in the world in terms of riches, richer than 123 members of the United Nations.

Its name has passed into language, with the verb “to google” defined in dictionaries as "to use the Google search engine to obtain information on the Internet." People use Google Analytics to track their site’s popularity. They use YouTube, owned by Google since 2006, for video viewing and sharing. They use Gmail for e-mails, Google Maps to find locations, Google Drive for cloud storage, Google Chrome as their web browser, and many use the Android mobile operating system Google developed. And, of course, there’s hardware in the shape of a smartwatch, TV, and soon a driverless car.

Their story has not been without issues. Google Glass raised privacy issues from people not wanting to be under surveillance and filmed by strangers without their consent. Their obedience to China’s Great Firewall of internet censorship blocks access by Chinese people to much information about the world outside.

The European Commission imposed a €1.49 billion fine on them for “acting unfairly” against rivals for online advertising, though many think this is just the EU attempting yet again to have funds paid direct to it instead of via national governments, just like their proposed Financial Transfer Tax. Perhaps more seriously, the United States Department of Justice announced in June that it would investigate Google for antitrust violations.

Google's corporate philosophy, however, is benign. They have mottos such as "you can make money without doing evil," "you can be serious without a suit," and "work should be challenging and the challenge should be fun." The company cultivates a laidback air that softens the edges of a very competitive organization.

It has made me very much more productive, and more knowledgeable. Previously when writing books I had to research my way through piles of books, whereas now I look up on line what I need to quote or to refer to. When I encounter something I don’t know, I look it up. Yet hardly any of this shows in GDP. It is a similar case with other online sites. They enhance life without showing in the economic figures. If someone had the same real-terms income they had twenty years ago they would be very much better off than they were then because of all of the developments that have added value to life. It rather suggests that GDP is at best a somewhat crude measure of economic performance.