Brexit has reduced trade costs
We agree, this isn’t what we normally hear but according to the Financial Times it is true. Brexit has reduced trade costs by reducing the problems of inspections, paperwork and bureaucracy at the border:
Goods entering the UK from outside the EU, which previously underwent rigorous physical or documentary inspections, are now entering with weaker checks or none at all, three agents told the Financial Times.
Of course, it’s possible to have different views about this. But that idea that Brexit would cripple trade by increasing border inspections and thus the costs of trade. This appears to be not wholly so.
A rough guide - rough, you understand - is that 50% of our trade is with the EU, 50% isn’t (that’s of the small minority of all trade that actually crosses the borders of the Kingdom of course). So, if non-EU imports are now being more lightly inspected then that makes - from the effects of trade barriers and costs - non-EU goods cheaper to us. Which is good.
Yes, yes, it’s possible to think that increasing the barriers on the other 50% of our trade is a bad idea. But then we’ve always backed unilateral free trade. Let’s lower the barriers on all.
But, Brexit means higher barriers on 50% of our trade, lower barriers on the other 50%. Are we thus evens? It’s possible to veer to the idea that we’re hugely better off. For the lower costs, the freer trade, is now with 7.5 billion of our fellow humans, the increased costs are with the 430 million left in that rump-European Union. We are, thus, about 15 times better off in our ability to trade with more people.
Which is good, you know?
Tim Worstall
We are so, so, looking forward to this
The Labour-led Welsh government has committed to introduce “globally pioneering” legislation that would in effect make lying in politics there illegal.
Our general view is that governments rarely know what they’re doing - Hayek was right about information flows to the centre after all. But our specific view here is that they’ve no clue. It is, however, going to be hugely amusing proving this point.
So much so that if they actually carry this through then it will be worth moving to Wales in order to have standing to contest matters. Private prosecutions are allowed, of course they are, upon criminal matters. So, if political lying is a criminal matter private prosecutions may be brought.
Of course, “lie” has several definitions. Saying something that is untrue, saying something untrue that you should have known is untrue, saying something untrue that you know is untrue as one order of meanings.
But just think of the joy to be had here.
“Inequality is increasing” - no, the usual measure, the Gini, is lower than it was in 2008.
“Renewables are cheap” - have you even looked at the varied prices being paid under CfD and so on?
“Building more houses won’t make them cheaper” - What?
And so on. It's possible to be as cynical as we are and just assume that lips moving means lies being told. It’s also possible to be less realistic and assume that at least some of what is said could, perhaps, be true. But this new law will give us all the ability to take those making the statements to court, to get them to prove their claims.
Which will be most fun - for we don’t think that many such claims will survive the process. In fact, we’re really very certain that absolute truth telling will mean the death of politics.
Tim Worstall
So, why does anyone believe the United Nations?
We’re told, by one of the United Nations bods:
Economic growth will bring prosperity to all. This is the mantra that guides the decision-making of the vast majority of politicians, economists and even human rights bodies.
Yet the reality – as detailed in a report to the United Nations Human Rights Council this month – shows that while poverty eradication has historically been promised through the “trickling down” or “redistribution” of wealth, economic growth largely “gushes up” to a privileged few.
In the past four years alone the world’s five richest men have more than doubled their fortunes, while nearly 5 billion people have been made poorer.
This seems somewhat at odds with a more evidence based approach:
Global economic growth seems to do just fine at reducing poverty. So, is this just some bureaucrat worried that folk might get rich without the tender ministrations of a bureaucrat?
Olivier De Schutter is UN Special Rapporteur on extreme poverty and human rights
Ah, no, this is the UN expert on that extreme poverty that economic growth is so good at killing off.
He’s taking short term numbers - including the effects of a global pandemic, lockdown and the associated inflation - and using them to argue that the one true cure for absolute poverty we’ve ever discovered, that economic growth, doesn’t work in curing absolute poverty.
He then ends up arguing that we should instead, plump for being poorer than we can be so that we can be more socialist.
So, remind us. Why does anyone listen to the United Nations?
So, nationalisation - industrial policy with strong conditionalities - causes shortages, does it?
This would seem to be a problem:
Labour’s plan for a net-zero economy powered by wind turbines and electric vehicles (EVs) risks being thwarted by a huge drop in factory apprenticeships, British manufacturers have warned.
But clearly, this is a problem that could be solved by the government really taking a grip on apprenticeships. Instituting some industrial policy with strong conditionalities, say?
The number of new apprenticeships has fallen by up to two fifths since the introduction of the government’s “broken” levy system, new research shows.
There has been a 41 per cent decline in the number of apprenticeship starts for those under the age of 19 since the scheme came into force, according to analysis by the Chartered Institute of Personnel and Development (CIPD). For those aged between 19 and 24, participation has fallen by 36 per cent.
The levy, introduced in 2017, requires employers with an annual wage bill of more than £3 million to pay 0.5 per cent of payroll costs into a fund for training. It has come under fire from businesses such as AO World, Timpson, Tesco and the Co-op, which have argued that inflexibility, unsuitable courses and programme lengths are the biggest barriers.
As a result £4.4 billion raised by the levy had been kept by, or returned to, the Treasury over the past five years, rather than being spent on apprenticeships. It has also led to a decline in training opportunities and to the emergence of lower-quality schemes.
Ah. yes, the shortage of apprentices has been caused by the government getting a strong grip on the sector - the problem itself is industrial policy with strong conditionalities.
Such a pity we didn’t have any warning, some sort of heads up. After all, it’s not as if the Soviets nationalised farming and then everyone starved, is it?
Nationalisation causes shortages. Why didn’t we know?
Tim Worstall
Dale Vince is wrong here, for of course he is
In a debate with Dominic Lawson about what we should be doing over Net Zero Dale Vince says:
We need to declare that wind farms, solar farms and pylons are vitally important national infrastructure and put them into a completely different planning regime where there’s a presumption in favour of them happening.
This is of course wrong. Usually it’s possible to tell that something is wrong because Dale Vince says it but this here is a proof of that contention. That is, we can use it as a proof of Vince being wrong, not just assume that it must be wrong - as is more usual - just because Vince has said it.
The initial contention, that planning laws are so restrictive that nothing can be done, is true. But the idea that some things are so special - speshul - that the laws should be changed is incorrect. If planning laws are so restrictive that nothing can be done then the planning laws need to be changed for everything. For we’re not just short of onshore wind - we’re short of housing, tunnels, factories, data centres and a great deal else. All hamstrung by the idiocies of the current planning laws. So, for the benefit of all those things the planning laws have to be changed for all those things - for everything in fact.
A presumption in favour of things happening is a good start even if not sufficient. We’d go further and suggest that everything be approved except where there’s a damn good reason why not. “Damn good” being defined along the lines of maybe not an airport in Fulham level of damn good. But well above the level that would be against a power station on the Thames in the middle of London. After all, the next century might rather like a monumental building to amend into flats in Battersea.
If the current planning system is too restrictive to allow important things to be done then the current planning system is too restrictive. We need to free all things of that clammy embrace, not just things that Dale makes money out of.
Tim Worstall
Our word, if only there were a possible solution to this difficult problem
This seems just terrible:
A critical three-year period between the ages of 11 and 14 has been identified as the point at which talented children from low-income backgrounds fall behind their wealthier peers at school, according to new research.
The study tracked high-ability children from the age of five, from the lowest and highest income groups, and found that they progressed at similar rates until the first years of secondary school.
But by the time the two groups sat GCSEs or equivalent exams at 16 years old, those in the wealthier group were much more likely to gain top grades than those in the low-income group, and were more likely to take A-levels.
It’s terrible for the individuals, they don’t get to reach their full potential. It’s terrible for society as a whole - these individuals don’t get to reach their full potential.
We should do something about it. The question then becomes, well, what could be a solution to this terribly difficult problem?
What if, say, we identified these talented but poorer scholars? Offered them a more academic education better suited to their innate talents? Tested them - at, say, age 11 where the problem seems to arise - and then offered them that more academic education in a slightly different school setting?
That would appear to solve the problem, no? Call the exam the elevensies, or the eleventh, perhaps the 11 +. Hark back to the ancient times when the entire rigorous syllabus was named this, call the schools grammars perhaps. Seems to solve the problems being identified at least.
It’s a wonder no one ever thought of this before to be honest.
Tim Worstall
That Chevron decision looks right to us
No, no, this is nothing to do with fossil fuels. Rather, this:
The Supreme Court on Friday overturned a landmark 40-year-old decision that gave federal agencies broad regulatory power, upending their authority to issue regulations unless Congress has spoken clearly.
The old decision, overturned, was known as “Chevron”.
Not being lawyers we’d not comment on the legal reasoning. However, the basic idea seems to us to be entirely correct.
It won’t be a surprise to most adults that there are some out there who insist that there must be rules about everything. Nothing can be done without there being such a rule. As a basic idea we’ll accept that this is true about some things and not about the majority of life. But that’s not our point here.
Rather, if there are to be rules then who is going to make them? We would suggest that it shouldn’t be the bureaucracy. Which is what, essentially, the Supreme Court over in the still-rebellious territories has just decided.
For, by the very nature of the occupation, those who insist that there must be those detailed rules about everything are going to migrate into the occupation that writes and administers the rules - the bureaucracy. Further, when it is the bureaucracy writing them then the only consideration is going to be how precise the rules can be. There will be no consideration of, attention paid to the impact of, those rules on the more general state of the country and the economy.
As an example, say we had a bureaucracy concerned with rip offs in the financial markets. How people might be able to use the banking system nefariously and so on. The rules then written would end up being onerous, tight and very expensive. So much so that new financial organisations would find it between exceedingly difficult and impossible to get started - the necessary overhead of meeting those detailed rules is only supportable at large scale. Growth to being able to support it isn’t possible.
It’s even possible that right now we have such a bureaucracy with exactly such an outcome.
For there’s been no one with the overview, with oversight, involved in the creation of those rules. We’ve devolved the rule making to monomaniacs with a clipboard and no one at all is thinking about the effects upon competition, new firm creation and so on.
We could make similar noises about Natural England banning the building of 150,000 houses or whatever it was over nutrient rules. Or whichever idiots were allowed to change planning so that first floor and above window sills must be 1.2 metres from the floor. In isolation, to the monomaniacal clipboard wielders these might look sensible. To anyone interested in the overall system they’re madness.
The problem with the devolution of such rule making is that the inevitable trade offs - for all of life is a series of trade offs - get ignored for no one is responsible for the overall, only for their specific detail.
The rules should be made by politicians. In Parliament. We don’t say they’ll necessarily be better - we’ve seen some of the horrors in primary legislation - but it would mean that someone is actually responsible. So, we would know where to go to get idiocies changed and who to sack for having approved them.
Tim Worstall
As we’ve been saying for a couple of decades about childcare
This is true:
The Nobel prize-winning economist Claudia Goldin has shown that women are paid less not because they are discriminated against but because of the roles they often end up in: jobs with greater flexibility but lower wages.
People make different choices in life and they get paid different amounts of money. What is currently called the “gender pay gap” is in fact about the choice - or not - to be the primary child carer.
We can indeed go on to say that the feminisation of the economy is going to - should even - happen. This does not mean abandoning that masculine insistence upon logic and sums.
The trend since the pandemic towards more flexible working for men and women — for white-collar workers, at least — gives fathers more scope to share the caring burden with mothers and will help to narrow the gender pay gap.
But it won’t be enough alone to deliver a better economy for women, especially women in low-paid jobs in social care, hospitality and retail, who can’t work from home when it suits them.
If people change their behaviour then that’s great. After all, the very point of a liberal polity is that folk can do - absent third party harms - as they wish with their lives and the society we end up with is the aggregation of those individual choices. Pay gap or no pay gap - the point is construction from below but the choices from below.
The case for better childcare and social care has been known and understood for years. So why hasn’t any government delivered them? A handy rule of British life is that policies don’t happen if the Treasury opposes them, generally because it thinks they are too expensive.
But the argument being made is not better childcare and social care. It’s more paid childcare and social care. Further, there’s handwavey over how this will grow the economy. The thing being that the Treasury is right about the expense.
As we all know - as is the complaint in fact - for women (or, if we prefer, “primary child carers”) in the lower half of the earnings spectrum going to work, collecting the money, then paying for the childcare that allows them to work doesn’t, in fact, work. The costs of the childcare - or the social care - are higher than the income from the work.
Changing who pays these costs doesn’t change that expense. Sticking those care costs on the tax bill most certainly doesn’t change those costs - nor, importantly, that the costs are higher than the value of the work done. Increasing costs while increasing revenues by less than those increased costs is one of those not good economic ideas.
It is simply true that for some significant part of the workforce the most valuable labour they can perform is taking care of their own families - kids or social care. Which we can see by the fact that it costs more to provide the child or social care than they earn working doing something else.
If what everyone wants is increased feminisation of the economy then good luck to everyone - that is the liberal point. But there’s no reason to abandon logic and sums at the same time.
Tim Worstall
It’s time to update St Maggie about other peoples’ money
Margaret Thatcher, famously, said “The problem with socialism is that you eventually run out of other peoples’ money”. The actual quote is “Socialist governments traditionally do make a financial mess. They always run out of other people's money.” That’s how quotes work, often enough, after the initial statement a certain amount of reorganisation happens in the societal memory to heighten the pithiness.
We should update that. For here’s a demand:
A global wealth tax on billionaires would raise as much as $250bn (£200bn) annually, according to a report by a Left-wing French economist for the G20.
Around 3,000 people would be liable to pay an annual charge amounting to 2pc of their worldwide assets, said Gabriel Zucman, a French economics professor.
We should violate everything we know about deadweight costs and taxation in order to achieve what?
Global GDP is around the $100 trillion level. So, this would bring in revenue of 0.25% (yes, that’s a quarter of one percent) of GDP. A pittance.
The tax-to-GDP ratio varied significantly between EU countries in 2022, with the highest shares of taxes and social contributions as a percentage of GDP being recorded in France (48.0 %)
It wouldn’t even touch the sides, would it?
So, why? Well, yes, there is that obvious point that Zil-lanes don’t just pay for themselves you know. But if a system is already eating just under half of everything then another quarter of one percent isn’t going to aid in any significant manner.
Except - the problem with social democracy is that you eventually run out of other peoples’ money. Until and unless we start saying “That’s enough there, no more” then the demands for ever more to micturate up the wall simply will keep coming.
So, we should say “That’s enough there, no more”. And if not now then perhaps 50 years ago? 100?
Tim Worstall
A significant mistake by Willy Hague
Apparently science and technology is where it’s all going to be at. Which is something we’ll partially agree with. It is indeed advancing technology - the flip side of advancing productivity - which will determine future living standards.
Being a leader in technology has always been woven into the modern British story. We led the Industrial Revolution, and we survived the Second World War largely because we had such things as radar, Bletchley Park and Spitfire engines. But the next decade is likely to contain as much scientific advance as those last two centuries put together.
OK. So, how did we do all that technology and science stuff in the past? Well, Jethro Tull got to keep the benefits of the seed drill, Crompton’s Mule fees went to Mr. Crompton and so on down the generations. We had small government which meant that the returns to having invented, to having done science and technology, went to those who’d done the doin’.
Incentives do matter after all. And it’s possible to mutter that takin’ the rewards of success off those successful to then pay out to those not so rather blunts said incentives.
But this is a far greater error:
And while the great ideas will come from the private sector and academia, governments will be decisive in many ways: using procurement to favour innovative companies, speeding up regulators to clear new products for use,
The innovation cycle - the invention one if you prefer - doesn’t work on what regulators will clear for use. It works on the happy happenstance of someone finding a way of doing something that people want to do. And we don’t, in fact, know what people want to do until they’re able to do it. Which means before any regulator gets to stick their nose in and demand evidence that people do want the thing done.
The correct way to foster technological advance is to shoot - in the metaphorical sense, of course - those who delay it, the regulators insisting on the power to grant permission or not for something to enter the market. Razing that system to the ground and ploughing the land with salt afterwards is to be taken literally, of course.
Tim Worstall