Of course The Guardian would put it this way

Boris Johnson’s pledge to raise the threshold for the top rate of income tax from £50,000 to £80,000 would cost £8bn a year and boost the incomes of the highest-earning 8% of the adult population, according to the Institute for Fiscal Studies.

The policy would take 2.5 million people out of paying higher-rate tax, more than reversing the increase over the past three decades, the tax and spending watchdog said. About three-quarters of the tax benefit would go to the highest-income 10% of households.

It’s the word “cost” in there which is misapplied. Not taxing someone, or some group, is not a cost. It might well be a reduction in the public revenues but even that is not a cost. It is, of course, a benefit. The price of government weighs more lightly upon the shoulders of the population.

It’s true that there are costs and benefits to everything, this is one of the central lessons of economics. But in order to make sense of the world around us we do have to identify which is which, which is a cost, which a benefit.

It is a benefit that the money remain fructifying in the pockets of the people. It is, therefore, not a cost.

The Model T Ford and the Liberty ships

September 27th was an important date in the development of mass production on two occasions. In 1908 it marked the beginning of production of Henry Ford’s Model T car in Detroit Michigan. The idea of using interchangeable parts that could be slotted together had been pioneered and popularized by Eli Whitney when he had won a contract to supply muskets to the new US army in 1798, but Henry Ford took it further. Using a moving production line, instead of individually crafting each car, as carriages had been made at one time, his workers put pre-assembled pieces together to make a car that became an icon. It could be made so cheaply that motoring ceased to be a plaything of the rich, but became accessible to the common man.

Suddenly America became mobile, and people could travel from their remote farms and dwellings into nearby towns and cities. It changed not only people’s mobility and lifestyle; it changed the American economy. Detroit became the motor city (Motown), and the US became a consumer society in which the automobile industry was to play a central role for decades to come.

By coincidence, it was also on September 27th, some 33 years later in 1941, that the SS Patrick Henry, the first Liberty ship was launched. The US was not yet in World War II, but it saw that ships would be needed in vast numbers. If it were to be the arsenal of democracy, it would need to ferry food, supplies and munitions across the Atlantic to the beleaguered island of Britain. Conventional ships might take two years to build, but the Liberty ships, so-called because they could bring liberty to Europe, were made like the Model T Ford of interchangeable parts that could be fitted together.

Henry Kaiser was to develop new methods of ship-building, enabling him to out-produce other yards and build 1,490 ships, 27 percent of the total Maritime Commission construction. Kaiser's ships were completed in two-thirds the time and a quarter the cost of what it took other shipyards. Liberty ships were typically assembled in a little over two weeks, and one was put together in less than five days. Altogether 2,700 of them were to be built, enabling the Allies to keep well ahead of U-boat sinkings, and to ferry across the Atlantic the supplies, troops and equipment that would win the war.

The mass production of identical items made items affordable, but at the expense of variety. Henry Ford offered “any colour you like as long as it’s black.” But technology has advanced to the point at which individual preferences can be incorporated into the manufacturing process. The Tesla customer specifies the accessories, the trim, the colour and the materials before the car is made, so that no two cars coming off Elon Musk’s production line are identical. Each one is unique, made for an individual owner to meet their tastes and preferences.

Technology has moved us beyond the age of standardized mass production of identical items to the stage where individual choices and preferences can be satisfied. The Model T Fords and the Liberty ships were valuable in their day, but the world has moved on to become one. not of collective mass production to standards determined by producers, but to one determined by the individual choices of consumers. So, two cheers for identical mass production, and three cheers for the personal choices that technology now makes possible.

About that 7 degrees temperature rise by 2100

Ambrose Evans Pritchard tells us of new climate change research:

We have a choice. Either we fight runaway climate change with liberal market policies and capitalist creativity, or we cede the field to Malthusians and the Green Taliban.

Retreating into denialism - or more corrosive these days, into shoulder-shrugging nihilism - will not cut it. Last week the France’s National Centre for Scientific Research (CNRS) warned that global warming could reach seven degrees by the end of the century under current policies.

As we’ve been saying for a long time now - and as people shout at us for saying - something is going to be done about climate change. The political head of steam exists and the idiots are going to enact something or other. The task therefore is to push that enacting over to something that would actually solve the problem if it exists while also doing the least damage by doing so. You know, the carbon tax rather than the destruction of civilisation.

We can also be critical in our comments on the claims. This one, of 7 degrees or example. It comes from here:

In the most pessimistic scenario (SSP5 8.5 – rapid economic growth driven by fossil fuels), the rise in mean global temperature is likely to reach 6 to 7 °C by 2100, which is 1 °C higher than in previous estimates.

The thing being that we know, absolutely, that RCP 8.5 simply isn’t going to happen. Look here at the assumptions behind it. It simply isn’t true that we’re going to be using 5 or 10 times as much coal as we do now. It’s equally not true that we’re going to be using more coal as a portion of energy output than we do now. We’ve already done the things that mean wee’re not going to be using coal in those volumes.

Sure, solar - just to take an example - may or may not be all that economic presently in high latitudes and so on but it’s also still reducing in costs at 20% per annum, as it has been for decades now.

The wilder estimates of the future simply are not true. For they’re entirely ignoring the changes we’ve already made. Evans Pritchard is right, we need to be taking the fight to the Taliban on what to do. The first step being to remind people of their own estimates, their own models.

It is not logically possible both that renewables are currently economic and also that we’re going to be using coal as the major power source for civilisation in 80 years’ time. We should at least demand they tell us which of the two they think is true.

Rave on for Liberty!

It was 1994, and the Home Secretary Michael Howard had had enough. Slamming his clenched fist down hard on the mahogany table of a Pall Mall club he very likely said “damn these hippies to hell, every last one of them”, and most right and proper Tory members of parliament very likely agreed with him.

Two years previously, and a couple of hundred miles away, the Somerset and Avon police force were trying – and failing – to stop the Avon Free Festival from taking place. The Avon Free Festival was a meeting of ‘free spirited types’, featuring new age hippies and many young and old people simply out for a boogie.

The attempts of the police to shut down this festival proved an abject failure however, as the diverted and dispersed crowds merely reassembled on a spot a few miles away at Castlemorton Common in neighbouring Worcestershire. There, on a sunny May Bank Holiday, over 20,000 people boogied away, chilled out and took part in other such festival-like past-times. Groovy.

This grand old shindig marked the zenith of what was a period of the ‘free party’ in the UK. A movement in which people would gather on common land and take festivities into their own hands, embracing delightful anarchy and all its wonderful appendages.

The metropolitan chattering classes were of course quite nauseated. The tabloid papers were likewise thoroughly outraged. They interpreted this festival as a signal of not just steep moral decline in our youth, but also of the utter uselessness of our namby-pamby police force, who had on this occasion arrested only a handful of people (all later acquitted) and impounded only a couple of loudspeakers. The media furore was phenomenal, and John Major’s government, with dwindling performances in the national polls, had to be seen to do something.

The occasion was debated at length in Parliament, and thus the 1994 Criminal Justice and Public Order Act was passed, section 63 of which stated that an event may be stopped by the police if there exists ‘a gathering on land in the open air of 20 or more persons at which amplified music is played’.

So that people couldn't escape prosecution by arguing the sounds coming from their stereos was not technically music, Section 63 of the bill included a sub-clause defining what the government meant by ‘music’, which was, in this case; ‘sounds wholly or predominantly characterised by the emission of a succession of repetitive beats’.

Reading this sub-clause in this new piece of legislation, two cheeky Mancunian chaps grinned. Rob Brown and Sean Booth, who comprised the techno duo ‘Autechture’ duly got to work on a radical new track.

In September 1994, their EP Anti was released. Within this EP there were three tracks; Lost, Djarum, and Flutter. The final track of the EP, Flutter, was constructed from a sequence of 65 unique drum beats put one after another, so to subvert the definition of music given in the clause of section 63 of the new bill. This means that whilst the track might sound repetitive, strictly speaking, it is not. As music critic Louis Pattison so eloquently puts it, Flutter “moves fluidly, nimbly, never moving into abstraction, never missing a beat, delivering a political coup de grace”.

The cover of the EP bore a black sticker reading the following:

Flutter has been programmed in such a way that no bars contain identical beats and can therefore be played under the proposed new law. However, we advise DJs to have a lawyer and a musicologist present at all times to confirm the non-repetitive nature of the music in the event of police harassment.

The black sticker sealing the track warned buyers that upon opening "you accept full responsibility for any consequential action resulting from this product's use". Rob and Sean weren’t just mucking around either. Every penny raised by sales of the EP would be given to the human rights advocacy group Liberty. The note, on what must have been a rather large label, sealing the record ended by saying: "Autechre is politically non-aligned. This is about personal freedom." 

This, I believe, is political protest at its finest. Subversive, intelligent and highly artistic, it makes a mockery of a piece of government legislation that was ill conceived and mostly reactionary. It brings to light the fatuity of government making such highly discretionary legislation and the ingenuity of individuals in being able to so deftly mock it.

Off the rails - why incentives matter

Transport Secretary, Grant Shapps, was asked on Sky News whether giving franchises incentives to be punctual meant that they could lose their contracts for poor performance, or if bonuses were a possibility for on-time working.

He answered: ‘If you don’t run trains on time, don’t pay them. If you do, then do pay them. So it’s a pretty straightforward thing. What’s happening at the moment ... is they’re paid even when they don’t run trains on time and that is one of the reasons why we’ve ended up with a very dysfunctional system. It’s too fragmented.’

Sounds pretty straightforward - but there’s been some level of backlash. Last week, I debated the comments in City A.M, with my opponent (Richard Hyde of the Social Market Foundation) calling the proposal to give firms who run on time bonuses ‘Python-esque in its absurdity.’ 

There’s an important distinction to make here: that Shapps isn’t just offering incentives for operators to deliver an agreed service, but repercussions if they fail. If big rail monopolies commit to a service, fail to deliver it, passengers will think it’s right to expect ramifications except in the most extreme circumstances. 

Although privatisation has more than doubled the number of rail journeys and massively increased capacity — consumers still feel the system isn’t quite working for them. The issue is a lack of competition. Just as air routes have competition on them, so should our railways. Where this already happens prices are lower, and passengers are happier with the service. 

The Adam Smith Institute has called previously for Open Access on our railways - allowing different operators to compete on the same routes for passengers. According to our research, fares on Open Access lines are up to 55% cheaper than monopolised routes - and Open Access operators have the highest level of passenger satisfaction. Open Access operator Grand Central has had the largest increase of passengers of any train company, up 12% over 2017-18, discluding Transport for London services.

As annoyance with our rail services grows amongst commuters, we hope Shapps and the Department for Transport legislate to encourage more competition in our railways. In the meantime, though, introducing incentives to operators to improve their service rather than allowing monopolies to ride roughshod over consumers with no fear for their bottom line is a good step forward. 

How to succeed in communism

Nicu Ceaușescu died on September 26th, 1996. He was the youngest child of Romania’s Communist dictator Nicolae Ceaușescu, and was a close associate of his father's political regime. He was being groomed to succeed his father eventually. While studying Physics at university, he became First Secretary of the Communist Youth Movement, and then Minister for Youth Issues when elected to the party’s Central Committee.

His career seemed to be going well, despite his reputation as a heavy drinker and his involvement in rape incidents and car accidents. But it was permanently derailed when his parents were executed on Christmas Day, 1989, as the Communist government was overthrown. He was accused of holding children hostage, and of misuse of government funds, and was sentenced in 1990 to 20 years in jail. He was released in November 1992 because of cirrhosis, a disease he died of four years later, aged 45.

He illustrates what is the central problem to every dictatorship, including Communist ones. It is the succession, the transition to another leader when the current one dies or retires. Somewhat surprisingly, one solution is inheritance, the same practice as the kings and emperors of old employed. Ceaușescu had planned to have young Nicu succeed him. Fidel Castro was succeeded by his brother, Raúl. More common is to have a ruling council choose a successor, as happened with the Central Committee of the Soviet Communist Party.

The transition from one dictator to another is always an edgy time, especially when the changeover is contested, or when the designated successor is not thought up to the qualities of their predecessor. It is common for violence to accompany the attempted changeover to the new regime, as often happened in ancient Rome.

The most successful formula used by some Roman emperors was for the ruling emperor to adopt as his son someone who could be trained to become the natural choice as successor. A string of stoic emperors gave Rome over 180 years of peaceful transition, as Nerva adopted Trajan, who adopted Hadrian, who adopted Antoninus Pius, who adopted Marcus Aurelius. Alas for history, the much-praised Marcus Aurelius nominated his own son, the depraved Commodus, to succeed him. The peaceful transitions and the absence of civil wars led Edward Gibbon to write in his “Decline and Fall of the Roman Empire,”

“If a man were called upon to fix the period in the history of the world during which the condition of the human race was most happy and prosperous, he would, without hesitation, name that which elapsed from the death of Domitian to the accession of Commodus.”

The other successful technique for transitioning peacefully from one ruler to the next has been democracy. Allowing the population to decide periodically who shall rule them enables a changeover to be made, and a replacement installed. It has the other great advantage that the knowledge that they might be replaced acts as a restraint on democratic leaders that is not there in dictatorships. To paraphrase Popper, it’s not the ability to choose leaders that is democracy’s great strength. It is the ability to replace them. It stops them doing too much damage.

The problem with Orkambi

Orkambi is a very expensive drug to treat a relatively rare condition, cystic fibrosis. Jeremy Corbyn is suggesting that a Labour government would break the patent and manufacture a generic version. There’s a problem with this idea:

Labour has pledged to create a publicly-owned company to make cheap versions of medicines the NHS needs but cannot afford, such as Orkambi, which is denied to thousands of children and young people with life-shortening cystic fibrosis.

The problem being exactly the argument that is being used in support of the plan:

Orkambi campaigners welcomed Corbyn’s speech. Christina Walker, Luis’s mother, said: “My child’s future is being put in jeopardy by the behaviour of one pharmaceutical company: Vertex.

“But it’s not the first or the last time that excessive profits have been put above patients’ health, and with 7,000 rare diseases currently without an effective treatment or cure, our situation could be replicated many times over in the future if the government doesn’t intervene now.

It costs up to $2 billion to gain approval for a new drug. That money has to come from somewhere, the current system is to give patent protection for a limited period so that the investment can be made back. Not, far from it, to insist that people have a right to a profit. But so that people are incentivised to invest in the next new drug to cure one of those 7,000 diseases.

So, we change the system so that the patent protection doesn’t work, money isn’t made back, what then happens to capital going into developing the next set of new drugs? That capital vanishes.

Ah, but, of course! Government can make the investment! But as ever Mariana Mazzucato is on the wrong end of this discussion:

Prof Mariana Mazzucato, director of the University College London Institute for Innovation and Public Purpose, said: “It is welcome that the Labour party is addressing key failures of the pharmaceutical sector.

“When the government funds the development of new medicines, it must do so in a systematic way to make sure that the benefits reach the patients who need them.

“Instead, we currently have a system where the risks of innovation are socialised, while the benefits are privatised through dysfunctional uses of intellectual property rights, a financialised business model and a pricing system that does not recognise taxpayer investment.”

Government doesn’t fund the expensive part of drug development, the clinical trials.

But let’s leave that aside and think of what an actual government run drug development system would be. Including the one vital number we’ve already got. The NHS, using the NICE guidelines, will only pay £30,000 per qualy - quality adjusted life year. Orkambi doesn’t have any known as yet effects upon life span. In fact, the benefits in general are regarded as marginal. There are some 5,000 sufferers from cystic fibrosis who may or may not gain those marginal benefits (the drug doesn’t work for all cases).

That’s, at very best, a marginal case for investing to create this drug, isn’t it? $2 billion spent to gain, at absolute maximum, £150 million a year of those qualys. Without taking into account any of the costs of failures and so on.

Now let’s do the same thing again for truly rare diseases. Where there are some few hundred who suffer. We’ve still got our budgetary boundary there imposed by the efficient use of public monies.

The problem with a government run drug development system is exactly the same as that with a public drug payment system. The costs of developing drugs for small groups of patients don’t pass the public spending efficiency test. This being nothing at all to do with profit, capitalism, socialism, business or government. Drug development is expensive therefore drugs for small numbers of patients are expensive per patient.

Or, as we should put it, a government drug development process will - righteously - never develop drugs for any one of those 7,000 rare diseases. Which really isn’t the nirvana we’re being promised by cutting the capitalists out of the deal, is it?

Tackling the ozone hole

It was 45 years ago, on September 25th, 1974, that scientists alerted the world to the environmental damage being caused by chlorofluorocarbons (CFCs). The 'miracle compound,' freon, representing several different CFCs, had been invented in 1928 for use in refrigeration and spray cans. It was regarded as safe because it was non-toxic, non-inflammable, and largely non-reactive, unlike dangerous alternatives such as ammonia.

The study revealed, however, that CFCs made their way to the upper atmosphere, where ultraviolet radiation broke them down and released their chlorine to attack the ozone layer. The Earth's high ozone later shields the surface from much of the ultraviolet radiation that might otherwise increase cases of skin cancer in humans and genetic damage to many organisms. Research showed this breakdown was indeed happening, with a hole in the ozone layer over Antarctica that was increasing in size.

The international community sprang into action in what is regarded as a successful response to an environmental threat. The Montreal Protocol in 1987 banned the production of CFCs, halons and other ozone-depleting chemicals, and took effect from 1989. Industry responded by developing ozone-friendly alternatives to CFCs, starting with hydrochlorofluorocarbons (HCFCs), one of which is now used in motor car air conditioners. Hydrocarbon refrigerants began to supersede CFCs in domestic and commercial refrigeration. The manufacture of new CFCs virtually ceased in 1994, though some are still used in aircraft halon fire suppression systems until a safe and effective substitute can be developed, and very small quantities are still permitted for some "essential" uses such as asthma inhalers.

The ban began to achieve the desired result. Ozone levels in the upper atmosphere had stabilized by the mid-1990s, and began to recover by the early years of the current century. The ozone hole was observed to be shrinking, and recovery is expected to continue over the course of the century.

What made the action effective is that it used technology rather than trying to impose behavior changes. People still used air conditioners, but now with safe alternatives to the freon they had previously used. People still used spray cans, but now many of them used hand pump action in place of gas pressure, and the ones that still used pressure relied on different and more environmentally-friendly gases. Industry and people readily turned to the new alternatives because they required no lifestyle changes.

This is something many environmental campaigners today fail to appreciate. Calls for us all to "live more simply" are likely to fall on deaf ears, whereas calls for new and more environmentally-friendly technologies to be adopted are more likely to succeed. The move to replace fossil fuel vehicles with electric ones is gathering pace, as is the switch from producing electricity from coal and oil to generating it from the much cleaner gas, or from cleaner still solar and wind produced energy. People are unlikely to stop driving or flying in response to hysterical cries of impending doom, but they are likely to drive and fly by very much more planet-friendly methods. As with the reduction in CFCs, nations are already responding with alternative technologies that cut the carbon footprint.

The lesson of the drive to replace freon with non-damaging alternatives is that technological innovation succeeded where exhortations to change behaviour would almost certainly have failed. The solution is not to live more simply; it is to live more cleverly.

We're quite taken with this idea of making ecocide a crime

Michael Mansfield has an idea for us all:

That late-night kebab might be considered a guilty pleasure, but could it one day be seen as a crime against the planet? Will the time come when the only means of procuring a slab of Aberdeen Angus is from a dodgy dealer with a cool box? The barrister Michael Mansfield has suggested that we should have new laws against ecocide – practices that destroy the planet – and that under them, meat could be targeted. “I think when we look at the damage eating meat is doing to the planet, it is not preposterous to think that one day it will become illegal,” he said.

The thought is that people who destroy the environment - that’s the ecocide - should be prosecuted and jailed, along the same lines as those who commit genocide.

We do see the merits to this. The environmental movement, en masse, backed the idea of first generation biofuels a couple of decades back. Even brought the practice to fruition. Leading to higher CO2 emissions, the ploughing up of the land to grow said crops, even to significant food price rises at the same time. So, we get to jail Friends of the Earth and Greenpeace then. Sounds good to us.

We’ve currently any number of people telling us that economic growth must stop in order to beat climate change. Yet our actual science on the subject has more economic growth in the emissions pathway where we beat climate change than there is when we don’t. So we get to jail everyone arguing for the cessation of economic growth then.

We could be a little more controversial and suggest that nuclear power is part of that climate solution therefore people who protest against nukes should be jugged.

The particular delight here is that if ecocide is to be an actual crime then of course any case will have to be judged, on the facts, in a court of law. Rather than through headlines in the court of public opinion. Thus the actual facts of each case will out and we will indeed be able to confine the guilty.

The thing is, given the idiocies that varied environmentalists urge upon us we’re unconvinced that they should be wanting this legal change. For it is those idiot ideas that would be prosecuted, no?

Even so, we do think the idea has merit. For example, the abolition of meat eating would lead to a significant decline in the planetary ability to practice organic farming - the manure is a vital input. Some would say this is good for the environment leading to more of the efficiency of factory farming. Others would say that this would be bad, they object to that efficiency itself more than anything else.

Oh well, the only way to resolve such a matter would be to have a court case about it. Is the abolition of meat eating a case of ecocide? Which would mean, presumably, prosecuting Michael Mansfield for the crime to be able to hear the evidence and find out.

And who doesn’t relish the idea of putting Michael Mansfield in the dock?

Cornering gold

The date September 24th, 1869, is known as Black Friday because of the panic caused in New York by two unscrupulous speculators, James Fisk and Jay Gould. They tried to corner the gold market on the New York Gold Exchange, and would have succeeded but for the personal intervention of President Ulysses S. Grant. Grant's post-Civil War policy was to pay down the national debt and stabilize the dollar by selling Treasury gold at weekly intervals.

The schemers behind the so-called Gold Ring established personal contact with Grant, and used it to persuade the President that selling gold was bad for farmers. As a result, the sales (which kept down the price of gold) were suspended. Fisk and Gould began buying gold at Gould’s New York Gold Room. The price rose rapidly, making huge paper profits for the Gold Ring, it accelerated as others bought in to gain from the seemingly irresistible price rises. Fisk and Gould were on the point of cornering the market in gold when President Grant realized what was happening and ordered the release of $4 million in gold on Friday 24th. The move drove down the price and stopped the Gold Ring’s attempt to corner the market.

There was panic on Wall Street as hundreds were ruined, unable to meet the obligations they had speculatively entered into. Share prices dropped 20% within a week, and the US went through months of economic turmoil. It bankrupted dozens of trading firms and hit farmers, who were 50% of the workforce, hardest of all. Wheat prices dropped by half, corn prices by a third, with steep falls for other cereals. Export goods could not be shipped amid the financial chaos. There were runs on banks, and economic decline in whole sectors, though the President’s action is reckoned to have averted what could have triggered a nationwide depression.

Fisk and Gould bought expensive lawyers and narrowly escaped prosecution. They had in fact engaged in bribery of the Assistant Secretary to the Treasury, and the attempted bribery of the President himself. Fisk’s career was documented in W A Swanberg’s biography, “Jim Fisk: The Career of an Improbable Rascal,” and in the 1937 movie The Toast of New York. The man himself was shot dead by a love rival in full public view in a hotel lobby.

Sone critics of free market capitalism claim that this is what capitalism is all about: swindling and speculation at the expense of honest labour. But the truth is that Fisk and Gould were an aberration. They abused a system, using loopholes in the rules to do so. Free market capitalism is not the same as laissez-faire, in that it requires intervention to ensure fair play. When parties try to acquire monopoly powers, or to use other methods to gain greater rewards than they would obtain in a fair and honest market, the behaviour is referred to as “rent-seeking.” It is perhaps an unfortunate term, because it has nothing to do with the price you pay to rent a car or a home. Instead it is a technical usage, and far from being part of free market capitalism, it is used to describe behaviour that seeks to thwart free markets via monopolistic or regulatory seizure.

When this happens, governments usually step in with new laws and regulations to close the loopholes that were used. Although they are normally one move behind, each abuse makes the system stronger in one sense because it exposes the flaw in the system and allows government to remove it. The behaviour of Fisk and Gould would not even get started under the current rules that regulate behaviour in financial and commodity markets. Free market capitalism adapts and changes. True, there are some who try to abuse it, but fortunately there are financial journalists and investigative bodies on the watch for such abuse, and who can urge the adoption of practices to curtail it.