A call for the return of peasant agriculture

We think The Guardian has made a mistake here. This is from Fridays for Future, the Greta Thunberg thing, calling for changes in the Common Agricultural Policy:

“[We] demand a pathway to climate neutrality for the EU’s agricultural and food sector,” the activists wrote in an open letter published ahead of the virtual meeting. “We need to transform direct payments into payments for public goods. Public money needs to flow into the transition to sustainable, climate-friendly and peasant [sic] agriculture. We need a new evidence-based and just CAP.”

The error being The Guardian’s addition of the “sic” there. For the demand really is that we move back to peasant agriculture, not to pleasant or some other word that has been misspelt.

The entire point of industrial agriculture - we can call it chemical, non-organic, other names exist - is to reduce the amount of human labour required to perform it. The removal of all of those substitutes for human labour will require adding that backbreaking work back in.

The problems with this idea being at least twofold. Firstly, the backbreaking labour. Very few of us indeed wish to do this as evidenced by the difficulty in recruiting people to go pick the fruit and veg crops. You might have seen something in the newspapers just recently about this. Secondly, to go back to us all standing around in muddy fields is to kill off the very idea of civilisation itself.

For if we are all to be growing food there’s no one left to staff the NHS, run the libraries, dance the ballets, put up the phone masts and serve the pints. Don’t forget, back when we did have machine free and organic agriculture some 80% of the population had to be doing that fields thing. Currently we have perhaps 2% - that’s 78% of the population that’ll have to move from doing all those non-farming, non-food things we so enjoy consuming back to providing that winter diet of turnips.

We’ve just spent the last 8,000 years since the invention of agriculture itself trying to haul ourselves up out of the workload that non-industrialised farming imposes. To kill off the results of that effort and return to peasant farming is, quite literally, insane. And if only the call were a typo….

Wednesday's Organ Seizure Act

On Wednesday the Organ Donation Act came into force: "force" (the government's words, not ours). This means that, based on a consultation of 17,000 individuals, the government has chosen to nationalise the organs of its citizens rather than gain their explicit consent.

The nationalisation is clear. On death, the person, after consulting with family, will be presumed to have consented to have their organs harvested: 

Firstly, the body should not become state or communal property on death. There are strong bodies of common law guidance, along with the cultural practice, in relation to the disposal of the body. The government stepping in and assuming the body is their's for the taking because the individual concerned did not check a box is a frightening reach of government power.

Secondly, the consultation of the family does not mean that the family may do with the body as they please. Tacit consent is cited here for funeral arrangements, and often there is a great deal of preparation beforehand including with wills and powers of attorney, but this should not happen with the harvesting of organs. Again, the government cannot simply step in here and take what is not theirs.

Thirdly, the sick do not have the right to the organs of the dead. There is no obligation to transfer ownership of organs from one individual to the other just because they are not in usage anymore. This may sound heartless, but there are two parties to this, and a Burkean conception of presence post-mortem is still important. Why else is there the veneration of the dead in British Culture?

Fourthly, the naming of the Act is wrong. This is not organ donation but organ seizure. A donation requires active consent, this quite simply is not. One must be confronted with the choice rather than have it decided in absentia. The use of this spin and misuse of wording is all the more sinister.

A lot of this revolves around Nudge Theory (Thaler and Sunstein) and resolving policy problems through the manipulation of choice architecture. However, this is not the manipulation of choice architecture but the manipulation of the legal status of one's self-ownership. Yes, there are not enough organs being harvested to fulfil demand, but there are different ways of presenting opportunities to donate organs that do not involve nationalising the bodies of citizens. They can present organ donation cards in more places and more frequently, such as on top of tax or GP-feedback forms. This would gain active consent rather than tacit.

This act will not even be guaranteed to increase the rate of organ transfers. Presumed consent, as it is officially known, has not been statistically demonstrated to increase transfer rates (Hitchen, 2008). This has been demonstrated in Wales, Sweden, Singapore, Chile, and Brazil (Arshad et al, 2019). In order for even critics to be satisfied, they have argued that the government must first approach the public to inform them of the change in the law (Bramhall, 2011). This has not happened, bar a single tweet from the Department for Health and Social Services. 

For presumed consent, the ends do not justify the means as it completely deforms the rights of the living. The government exists to uphold property rights, not to deprive us of them for the purposes of viewing us a 'waste' if we are put into the ground without giving up organs. No sane individual would baulk at seeing less people on waiting lists and more people living happy, fruitful lives. Yet, the method of getting here must be ethically sound. Hence, the government should not cut corners and fully consult the Behavioural Insights Team on how to fulfil their policies without infringing on the consent of those they govern.

We hope the government reforms this law to remove this legal, social, and philosophical problem before it creates a lasting change with our relations of the state for the worse.

Max Marlow is a past ASI intern and current President of the LSE Hayek Society

There will be someone along in a moment to get this wrong

The only limitation on the coming flood of articles shouting that the government should borrow more is how fast people can type. Perhaps allied with the willingness of editors to publish them. For if the government can borrow at negative rates then the government should borrow more, right?

The new government bonds, known as gilts, were issued with an effective negative interest rate of 0.003 per cent and found ready takers, with investors prepared to lend £8.1 billion on those terms, according to the Debt Management Office.

The government can borrow at a profit and create such wonders! Of course, this presupposes that government allocating resources within the economy is an efficient manner of resource allocation, an idea we reject after the certain basic minimum of things that government must do. But let us remain agnostic, for our purposes here, on the desirability or not of more borrowing.

The argument will be put forward that market prices are indicating that such borrowing is profitable - thus the market is demanding more such. The problem here being that the Bank of England already owns just shy of £700 billion of such gilts, or soon will do. That is, that yield, that market price, is not actually a free market price, it’s a highly manipulated one.

In itself this is fine for the point of quantitative easing is to distort the free market price. That’s actually the aim. But this then conflicts with the general injunction that prices are information within the economy. A distorted price is distorted information, it tells us things which aren’t quite true.

We should therefore reject that coming flood of pieces. For if we are to use the argument that market prices tell us what to do we do have to then insist that it is free market prices, not deliberately distorted ones, that do.

Think on it for a moment. The Venezuelan government distorted the price of toilet paper with the well known effect of there being none available. A distorted price was not, thus, a good guide to the supply and demand of toilet paper, was it? The same is true of the QE distortion of the price of money, we should not argue from that incorrect price.

Entirely true, but do we want to?

As with every other interest group looking to make use of a crisis the vegans and vegetarians are telling us that we should stop eating all that meat:

Instead of killing animals, exploiting workers, and despoiling the environment, we can feed ourselves sustainably and help heal the earth through community-oriented plant-based agriculture. Farmland that is currently growing monocrops with petrochemicals for animal feed can switch to producing legumes, grains, fruits, vegetables, pulses, nuts, seeds and other crops directly for human consumption. Suburban lawns can be turned into gardens, and in urban settings, food is already being grown on empty lots, in school and church yards, on rooftops, in food forests, in containers and planting boxes, and even in abandoned buildings re-configured into vertical farms.

Using expensive urban land, rather than cheap rural, to grow food is a recipe for impoverishment. The vast labour requirements of small scale farming as opposed to industrial will also make us poorer. And organic agriculture is going to be very difficult indeed in the absence of the dung from those animals no longer being reared. But yes, it’s all possible, at a price.

To put it bluntly: it’s time to get used to eating less, or no, meat.

Ah, but that’s to miss the important question - do we want to?

The aim and point of our having an economy in the first place is so that we humans get more of what we desire. This is the purpose of trying to get richer. What it is that we desire is an individual decision - utility is always personal. It is entirely true that many things are possible the question is instead which of the possible things meets our desires best?

Given that the vast majority of us happily chow down on the products of industrial farming, that the progress of civilisation itself can be marked by the manner in which food becomes cheaper - requires less labour, so that there are more people available to build civilisation - it would appear that for that vast majority of us the current system works. Works in the sense of sating, as best can be done given scarce resources, our desires.

Given that this is the very reason to have an economy it would be more than a little odd to discard the system, no?

Price gouging and price controls in Italy

Meddling with prices is an irresistible temptation for governments, particularly in times of crisis. So, to avoid price gouging, the Italian government capped the price of surgical face masks on April 26. I’ve written on the issue for the Wall Street Journal, here.

A couple of things stand out in this story. First, the price was fixed at a level clearly below any sensible appraisal of the market price. The government itself was buying at 38 cents a mask, wholesale, and pre-tended retailers sell at 50 cents a mask. Why? If the price was fixed at, say, one euro a mask, perhaps it would have produced little damage, and the government could still claim it put an end to “speculation”.

So, why did they do something different? Well, I suppose the simplest answer is, alas, the closest to the truth: 50 cents sounded better than one euro. One euro is the price of an espresso. What a wonderful government, the one that allows you to buy two pieces of a life-saving device with the same money it will take you to buy a coffee!

Now, here comes an interesting development. The Italian Commissioner for the Coronavirus emergency made sure to clarify that he was regulating the price at which face masks ought to be sold, not the price at which face masks ought to be bought by retailers. Since retailers already bought masks at a higher price, this was meant to be a green light: go ahead, sell under costs, the government will step in and refund you. Pharmacists I talked with, however, did not do so: they were quite hesitant in taking the Italian government’s word for granted. So far, the subsidy has not yet been agreed.

Many comments on the WSJ website are humorous and funny. One claims that Italians now have received free face masks in the mail, by the government. Indeed, some Italians did receive one or a couple of masks for free, by their regional governments. Still, it is worth remembering that a surgical one is supposed to be a single used, disposable device.

Mr. Mingardi is director general of Istituto Bruno Leoni, Italy’s free-market think tank, an adjunct scholar with the Cato Institute, and a presidential scholar in political theory at Chapman University.

Patent pools, vaccines and coronavirus cures

Given age, general grumpiness and our correct if rare worldview we rarely see newspaper articles - those not written by ourselves that is - that we entirely agree with. An exception is Matthew Lynn on patent pools for vaccines and treatments for the coronavirus:

One iron law of politics and economics is always this: there is no crisis quite so bad that the European Union cannot find a way to make it a little bit worse. This week, the EU is leading efforts to create a so-called “voluntary patent pool” that would suspend intellectual property rules so that a vaccine or drug to fight Covid-19 can be rolled out quickly around the world.

At the same time, charities such as Oxfam are leading a campaign for a “People’s Vaccine” and Left-leaning economists are arguing that companies shouldn’t be allowed to stop treatments being made available to everyone.

People, runs the argument, need to be put before profits.

But hold on. That’s crazy. In truth, we should increase the incentives to find vaccines and drugs to combat the virus – not reduce them.

Quite so.

We face a large and expensive problem. We’d like to mobilise the collective resources of the species to solve it. Our only question is what is the best manner of doing this?

One potential answer is that we ask governments to do it. The problem being that governments do not currently employ the people able to do this and there’s insufficient time to go through a civil service hiring process. This before we even consider the likely outcome of asking PHE to do anything other than berate the population on their girth. Another touted possibility is that we ask the private sector - who do employ the right people already - to do it and then tell them they’ll get nothing more than a pat on the back for doing so. This does work in certain circumstances - it is what medals and titles are for, incentives to action - but rather better with individuals than collectives. This is a collective, not individual, endeavour.

We are thus rather left with the thing that already does operate as the incentive for private sector economic activity - money. It’s a vaccine, most rich world doses will be bought by governments, so it’s going to be taxpayer cash spent here. However it’s done poor world doses are going to be supplied at something like cost plus a tiny bit as near all vaccines are today.

Our two options now being that governments can offer a prize for the treatment or vaccine or governments can offer a prize for a treatment or vaccine. The first could be a large lump sum payment for whoever gets there first with something that works. The second would be the award of a patent - therefore the ability to profit from the use of - for whatever works. Which is the best system?

It is unlikely that governments will agree to pay the sorts of sums that would provide the correct incentive. This is an expensive problem, it is immediate, a week makes a difference to the true cost - we should be talking billions as that prize. Politics will not pay that sum, it is not conceivable that it would, not as one lump sum to the winner of the race.

It is also true that we don’t in fact want the one treatment or vaccine. We want as many as actually manage to do something. Governments are most certainly not going to pay out billions each time for multiple solutions, partial solutions or complete. We don’t and cannot know now which of any of the multiplicity of possible solutions will prove most valuable. We don’t know now that is, it’s something we’re going to have to try and see.

So, our only useful and viable solution is that each of those - partial or complete - solutions get out there, be used, then people get paid some sum dependent upon how effective they are. That effectiveness being estimated by how often they’re used. This being exactly what the patent system does do.

That is, we already have the system in place to deal with this immediate and expensive problem. Pay people a small fee for each use of their developed solution - patents.

Why is anyone arguing about this?

The draft trade treaty that should be presented to the European Union

The government is to prepare and publish the draft of a trade treaty to govern interactions between the UK and the remnant European Union.

British negotiators fear Michel Barnier has been unable to get EU leaders to focus on Brexit trade and security talks as a result of the coronavirus pandemic, as Downing Street prepares to publish a draft treaty this week in an effort to reboot the process.

Sadly, it will not be the correct one. For, as we’ve said before and will no doubt have to again, the correct treaty is short, simple and goes full blown unilateral free trade on them:

1.There will be no tariff or non-tariff barriers on imports into the UK.

2.Imports will be regulated in exactly the same manner as domestic production.

3.You can do what you like.

4.Err, that’s it.

Nothing else is required. Well, except for all to understand the most basic point about trade. The purpose of which, the very reason we interact with those foreigners beyond our silver girt islands, is in order to gain access to those things they do better than we do. There are, after all, some such things. As Adam Smith noted, it is possible to grow grapes and make wine in Scotland but for the effort required it’s better to buy it in from Bourdeaux. What would middle class life be without prosecco? That swapping of port for cloth is the very basis of comparative advantage. And while Savile Row tailoring is all very well Hugo Boss was known for some pretty spiffy outfits in his time.

The rules on what we may export to others are of mild interest. What we may buy from others and how much we charge ourselves for doing so are vital. Imports, that is, are the point of trade, exports just being the work we do to get them.

Thus the only correct attitude toward trade is free trade. Unilateral free trade that is, as we did in 1846 with the Corn Laws. Which is what our draft treaty should be.

Of course, the world is more complex now, there are such things as patents and intellectual property rights to consider too. But that’s OK, we’ll not bother with asserting our copyright on the above treaty.

The Importance Of Collaboration, Open Trade, And Innovation In Tackling COVID-19

Today, the Geneva Network is launching its declaration on the importance of open trade and innovation in tackling COVID-19, with the ASI as a signatory. The 31 signatories all recognise the importance of a global response to this global issue.

Protectionism will prolong the crisis and lead to shortages of medical supplies. Abolishing tariffs on medical supplies and medicines will, on the other hand, allow countries to import them with ease and ensure the supply of goods to countries in need. 

Most states are not self reliant. Nor would we want them to be. Specialisation means we can focus on what we’re good at, and trade allows us to have access to all manner of goods. We’re all the richer for it. 

Individuals should not be victims of national pride — they should not prevent free trade and the efficient supply of necessities. Similarly, countries must reject export bans on medical supplies. 

Global markets for medical supplies are essential for a global pandemic. Our concerns do not stop at borders and nor should our supplies. We benefit from the ability to procure components from across the world to construct a final product. Put up in haste by populist politicians looking to be seen to do ‘something’, we must commit to remove export bans. In doing so, countries will be allowing their manufacturers to do their bit and contribute to medical equipment across the globe.  

The declaration calls for Governments to commit to permanent tariff reductions on medical supplies, devices, medicines and vaccines via legally binding WTO commitment: this would be a tool not only in dealing with the present situation but also in future crises too. We should never tax our citizens for the audacity of buying essential goods from abroad. 

In today’s world it is neither possible nor desirable for entire countries to isolate themselves from others. In Britain, entrepreneurial spirit has helped to combat shortages of hand sanitiser. Spirit producing companies, such as BrewDog, have been able to shift production to meet the sudden change in demand while Burberry has flipped production to ‘designer’ personal protective equipment. This entrepreneurial spirit should be rewarded and allowed to help areas where supply is not so responsive through free trade. Market solutions should be allowed to help fill global demand, not just domestic.

As the Geneva Network points out “five Latin American countries (Ecuador, Bolivia, Venezuela, Brazil, and Argentina) have the highest tariffs on protective facemasks, ranging from 17% to 55%”. These tariffs will hurt these countries’ citizens in the name of local business. It is the free market that will mean these necessities are available to all. By removing these extortionately high tariffs, the governments would be introducing greater competition in the provision of medical supplies which in turn forces lower prices and ensures not only adequate supply but also affordability.

The Geneva Network’s declaration advocates the free flow of essential epidemiological and clinical data across borders, a process which will facilitate a solution to this crisis. Having access to international sets of information allows scientists to work together to provide a vaccine. Just as sharing knowledge is important so is maintaining transparency in collecting and sharing epidemiological data. Skewing data to be more flattering to a country does not benefit the scientific cause since the need to assess the data is critical. Accepting decisions made by major drug regulatory authorities such as the US Food and Drug Administration and the European Medicines Agency will facilitate this process further — what’s good and safe for humans in one developed country is the same in another, we can cut time on approvals and save lives. Drug manufacturers can produce a speedy treatment and even a vaccine to face this silent killer and future threats without having to compromise on safety.

Innovation has shown itself vital to solving this crisis and will continue to do so. A key factor in encouraging innovation is intellectual property rights. These rights incentivise the private sector and spur on competition. Scientists need the security that their rights will be protected and not done away with by any state. If this is achieved, it will produce the greatest degree of innovation, the greatest degree of productivity when medicines are developed and greatest efficiency in distributing medicine.  

Now more than ever is the time for all countries to be following Pakistan, Brazil, Colombia and Norway’s examples of exempting COVID-19 related medicines, vaccines and medical supplies from import duties and taxes. These countries recognise the role of free trade in truly protecting their people.

We’re proud to join the call. We hope governments around the world will listen. 

It's what you believe that ain't so that's dangerous

William Keegan tells us something - asserts as a foundational truth - something that just ain’t so. Which, as Mark Twain observed, is what really gets us into trouble:

What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so.

The assertion is that geography is the determinant of trade volumes:

At present we do 43% of our trade with what I can still call the rest of the EU, and 15% with the US. All serious authorities on this subject, including the great Paul Krugman – who won his Nobel prize for research on trade – insist that geographical proximity to markets is the most important factor.

This is the gravity model of trade. The amount of trade between two economies is, observably, connected to how large the two of them are plus the distance between them. Larger, closer, economies trade more with each other than smaller more distant and so on through the variations of small, large, close, distant. The advantage of the model being that it’s empirically sound, we can see it every time we go and look at trade figures.

The error here - and while you might have to push Paul Krugman a bit to get him to assent to the correction he would once the question is correctly posed - is to think that it is geographic distance which is being talked about. It isn’t, it’s economic distance.

Trade between Newcastle and London used to be very much greater than between Newcastle and Carlisle. Ships down the coast meaning less economic distance between the first two than the absence of roads between the second pair.

Trade barriers - and we’ve been lowering them among European countries even as we’ve been raising them across the Atlantic - have changed the economic distance between the various economies even as the geographic distance has changed only by those inches a year of continental drift. Trade patterns have been following those changes in economic distance - tariffs and quotas - not geographic.

The geography model of trade is indeed true but only if it is understood what it is actually saying. Which isn’t that trade depends upon geographic distance, but upon economic distance. Failure to get this right will lead us into trouble for we could end up asserting for sure that which just ain’t so.

Privatisation can teach us a lot about preparedness

In 1989, England’s government-run water utility was split into regional companies and privatised.

The timing was unfortunate. A year later, England was gripped by a two-year drought, the worst in 100 years. The new water companies were reduced to rationing water, banning all but essential uses, putting standpipes in the streets and running water tankers to the most affected towns and villages. Complaints abounded, and naturally, privatisation was blamed.

Shortly after, I met the Chief Executive of one of the new companies. As is the way of these things, running a water utility is a specialist job, and like many of his colleagues, he had worked in the old government-run service. I asked him about the crisis.

He looked rather wistful. “When we were in state ownership,” he said, “we were geared up to survive a one-in-five-year drought without imposing emergency measures. Now we are in private ownership, we realise that surviving a one-in-a-hundred-year drought isn’t good enough.”

Today, Covid-19 is the biggest killer since Spanish Flu in 1918. Like droughts, pandemics happen periodically, and we need to be prepared for when they do. Were our health and social care managers—public employees just as the old water board managers were—prepared for this one? Plainly not. After this is all over, the management—and the manageability—of our healthcare system needs urgent reform.