Is it too much to ask that people read, even understand, their own evidence?

Britain's economy is broken apparently. Everyone is simply intellectually bankrupt other than those brave people at the IPPR who are going to do all that heavy thinking for us and put the world to rights. You know, with a properly radical and progressive list of the things we must all be forced to do.

One minor point we would make:

In the early 19th century, the process of mechanisation created mass destitution and misery. The Luddites were right that new technologies were taking their jobs, even if they were wrong to think they could face this threat down by breaking the machinery. How will we manage the 21st-century disruption better than we did last time? How can we imagine new jobs that make the best use of uniquely human talents? Should we explore a universal basic income or not? Is it time to reopen questions of common ownership in a machine age in which capital is likely to dominate?

There is something called the Engels Pause. The Industrial Revolution was revoluting, GDP and output climbing sharply, yet pay didn't seem to be rising. One part of this is simply that at this distance we're not measuring living standards properly. To be trite about it the replacement of woollen underwear by the newly cheap cotton we think a decent advance in living standards. Try wearing woollie undies for a week between washes to get the point. Not being trite the vast reduction in female household labour brought about by the Spinning Jenny was not a minor matter. Near every woman we meet in literature all the way back to Homer, rich women and all, spends inordinate amounts of time hand spinning. By Jane Austen it's not even mentioned.

That Pause ends in the 1840s in terms of wages paid. Which is also the time that Britain adopts free trade with the repeal of the Corn Laws. This is not a coincidence. The greater competition from that trade means that the rentier and capitalist profits are competed away to the benefit of the workers. Thus one part of the solution is clear today, unilateral free trade, as last time.

And now a more major point:

Britain has an enormous trade deficit, since we buy more from the rest of the world than we sell to it. The result is that the British economy is dangerously dependent on what the governor of the Bank of England has described as the “kindness of strangers” – borrowing from foreigners to keep us afloat. Our economy has not achieved sustained trade surpluses since the late 1970s and early 1980s.

We do not borrow in order to fund a trade deficit. We most certainly have, must have, a surplus on the capital account. But that surplus is made up of portfolio and direct investment by foreigners, only some of which is borrowing. And the idea that "we," the country, borrow from foreigners is because the government is borrowing, nothing at all to do with a trade deficit.

Wrong in micro, wrong in macro therefore. But it gets worse, with the major point:

 In Britain in 2017, the gap in wealth (rather than income) between top and bottom is almost the same as in Russia.

We are directed to this page. Where we are told:

The UK's wealth distribution is roughly average compared to the other OECD countries. The UK has a wealth GINI coefficient of 73.2% compared to an OECD average of 72.8%.

That is, wealth inequality in the UK is lower than it is in Denmark, Sweden, Finland and Norway. Lower than all of the Nordic social democracies. It would appear therefore that social democracy does not reduce wealth inequality, no?

But this is what makes it all so appallingly bad. The IPPR is not just wrong in micro and macro they're not even reading their own evidence.

And these are the people who should plan what we should all be forced to do?

This isn't an error it's an intention

One letter pointing out the dangers of the Corbynista agenda:

Theresa May’s economic plans are underwhelming and do little to boost the UK, a panel of more than a dozen leading economists has told The Sunday Telegraph.

But the Conservative manifesto is still far superior to Labour’s, the economists said, fearing that a win for Jeremy Corbyn on Thursday would leave the country with excessive taxes, soaring debts and an interventionist industrial policy which risks taking the country back to the 1970s.

We agree that there aren't that many joys in the Tory promises. But to say that Corbyn and allies risk going back to the 70s is an error, for that's the intention. Another letter in another paper:

In contrast, Labour’s manifesto proposals are much better designed to strengthen and develop the economy and ensure that its benefits are more fairly shared and sustainable, as well as being fiscally responsible and based on sound estimations.

We point to the proposed increases in investment in the future of the UK and its people, labour market policies geared to decrease inequality and to protect the lower paid and those in insecure work and fair and progressive changes in taxation.

That second signed by all the usual suspects, Danny Dorling, Andrew Simms, Ha Joon Chang and what looks like the entire faculty of SOAS - those educated enough to sign at least.

What we need to remember is that to some significant portion of the minor level intelligentsia the 1970s were admirable. The country has indeed never been more equal, it is the time of the lowest Gini in our history. The capital share of the economy was the lowest it ever has been, the labour share the highest. There are innumerable papers and articles making these points spread around - even Polly has been known to talk about 1976, when we were most equal, approvingly.

That the capital share didn't even cover depreciation does not matter - business wasn't sticking it to the workers! That the equality came at the price of recession, inflation and near national bankruptcy does not matter - equality!

A standard reminder in the City is that the next crisis is going to occur, in the same place and in the same manner, just after the people who recall the last one retire. There's no one in that list of academics signing that second letter who was both adult and policy making last time around which is why they're not recalling the flip side of their stated desires. A monomania in favour of equality is enough for them, without bothering to think about the evidence of what happened last time we tried it.

It really is true, a return to the 70s is not, for all too many, a warning of an error, it's a stated goal, an intention.

Monty Don thinks supermarkets reduce choice

This is not a contention which survives any interaction with reality:

Supermarket plant sales are reducing customers' choice, says Gardeners' World presenter Monty Don.

Nurseries increasingly focus on plants that can be mass produced so the big stores can sell them cheaply, he says.

"You have these vast wholesale nurseries now supplying supermarkets - and that's a diminution of choice," he told Radio 4's You and Yours.

Some of us are old enough to have lived in that world before the general rise of supermarkets. One or two of us have lived in Soviet-style places without those supermarkets. And we've really got to tell Don and others that the supermarket expands choice hugely.

The average UK supermarket has 10,000 skus, stock-keeping units. An Aldi or Lidl might have 1,000 to 1,500. That lower number is still vastly more than the entire High Street would offer those years before the pile it high and sell it cheap years.

Seriously, go talk to Granny about when olive oil was sold in pharmacies only as an earache treatment - or read Elizabeth David. Supermarkets reduce choice? Pah!

Further, mass production and lower prices reduce choice? You mean that if my plants cost me less I have fewer choices in my life? 

Err, yes, but then Monty Don is associated with the Soil Association which is full of this sort of nonsense, isn't it?

Ha Joon Chang asks an interesting question

Surprisingly, the answer isn't quite what he assumes:

The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.

But would you call the money that you pay for your takeaway curry or Netflix subscription a burden? You wouldn’t, because you recognise that you are getting your curry and TV shows in return. Likewise, you shouldn’t call your taxes a burden because in return you get an array of public services, from education, health and old-age care, through to flood defence and roads to the police and military.

Yes, of course they're a burden. Come along now, an economist should be familiar with the idea of costs and benefits, even cost benefit analysis. That we get Netflix is the benefit of the burden of our subscription, that we gain a scrumptious curry is the benefit of the burden of our having to pay for it. So it is with public services, the tax is the burden of the benefits which shower down upon us from Whitehall.

Further, economists are really quite certain about two other things. Firstly, that gaining maximum benefit while bearing minimum burden is what makes us all richer. Economic efficiency really is a thing. Secondly, that this is the way that human beings work. we really do try to maximise individual utility, also known as maximising bang for buck and even, whisper it gently, attempting to maximise benefit while minimising burden.

Studying how people do that is actually a fairly important part of both economics and every economics class we've ever heard of.

Tax is indeed the burden and the question is always whether it's one that's worth it for the benefits. Given the economic efficiency of the British State the answer, at the margin at least, is no.

Super, so how do we decide Mr Jackson?

Tim Jackson presents us with a new vision of the economy. One entirely at odds with our current method of organisation:

Let’s be clear. Technical innovation can deliver us a better quality of life, freedom from drudgery, the ability to be more productive. But there are also places where it makes no sense. Certain kinds of tasks rely inherently on people. The care and concern of one human being for another is a case in point. Its quality rests primarily on the attention paid by one person to another. And yet compassion fatigue is a rising scourge in a health sector hounded by meaningless productivity targets.

Craft is another example. It is the accuracy and detail inherent in crafted goods that endows them with lasting value. It is the attention paid by the carpenter, the tailor and the designer that makes this detail possible. Likewise it is the time spent practising, rehearsing and performing that gives creative art its enduring appeal. What – aside from meaningless noise – is to be gained by asking the London Philharmonic to reduce their rehearsal time and play Beethoven’s 9th Symphony faster and faster each year?

An economy that works must have something to do with investing in work itself. Care, craft, culture, creativity: these sectors offer a new vision of enterprise: not as a speculative, profit-maximising, resource-intensive division of labour, but as a form of social organisation embedded in the community, working in harmony with nature to deliver the capabilities that allow us to prosper.

That accuracy and detail producing the value we'd take to be dangerously close to the labour theory of value but other than that little blip there's nothing to argue against here is there?

Yes, sometimes the productive efficiency of the mill or factory is either necessary or desirable, at other times the more intimate human interaction is. Shrug, who has ever said any different? Even Ayn Rand pointed out that Hank and Dagny had their intimate moments.  

What we need though is a system to decide when each - or any one of the myriad possibilities - is the appropriate method for this task at this time and place. Take a desk - a flat surface upon which to place writing and drawing things. Perhaps the architect's one should be some monstrous white thing out of Nordic Central, the economic writer's some marvel in oak or chestnut to engrain that value of skilled human labour into the mind, the ones for the children in school should be mass produced, cheap and sturdy, above all, sturdy. Who is going to decide here when that productivity of the Satanic Mill is the correct solution and when the master craftsman?

We have actually tried out various methods of doing this. The Commissars have at times told everyone what to make and what they're going to get. The 20th century showed that didn't work, Venezuela is just the elegant little reminder for our own times. The only system we've tried that actually works is that the consumers get to decide among rival producers over what they want, how it is produced.

Manifestos will come and go but one startling realisation persists. The failed experiment of free-market, neoliberal economics that has haunted modern politics, undermined the fabric of society, disempowered government and left millions behind, may just be coming to an end. Building an economy that works for everyone has become a precise, definable and meaningful task.

That is, we're right back at free market, neoliberal, economics, aren't we Professor Jackson?

For we're right with you in this idea that there are appropriate technologies, appropriate products and methods of producing them, appropriate to time and place. The market is the only useful method we've ever employed to decide among them.

Why everybody is wrong about the Land Value Tax (except me)

The Conservatives have laid into Labour’s manifesto pledge to consider replacing council tax and business rates with a land value tax (LVT). They’ve dubbed this a ‘garden tax’ and claimed that it ‘could’ triple property tax bills to £4,000 per household.

It’s a bit silly to call this a ‘garden tax’, since council tax valuations already include gardens. Unless the Tories are proposing to exempt gardens when we calculate how much a property is worth, they too favour a ‘garden tax’. If they think there should be special tax breaks for garden ownership, they should come out and say so. 

The main difference between a Land Value Tax and the current council tax and business rates tax system we have right now is that the current system is appraised on the value of the entire property, instead of just the land it sits on. 

That makes existing property taxes a partial tax on productive investment, which gets us less investment in buildings and improvements than we’d get without that tax. If you invest in the quality of your property by building an extra floor or by renovating the retail space, your tax bill will be higher. To really appreciate how bad this is, consider the fact that heavy machinery is included in business property valuations, so you will be taxed heavily for setting up a new electric car factory on a previously derelict bit of brownfield. 

Council tax is less harmful in this regard. It’s more like a tax on consuming housing, akin to VAT, but the lack of revaluations makes it uneven across the country and it still distorts people’s consumption.

A LVT is better overall and especially better than rates because, as Tim Worstall points out, because the supply of land is so inelastic that is it basically fixed. That means that taxing it doesn’t reduce the amount of it we get, unlike most other taxes. And we don’t penalise people for developing their own land as we do now. 

It would also be nice not to tax business property so much more than we tax residential property. Rates are nearly 50% of rental values, where council tax can be extremely low – my bill is equivalent to one sixteenth of the annual rental value of my flat. That gives landowners an incentive to prefer more residential property than normal supply and demand factors would warrant. 

Overall, then, ceasing to tax property improvements and machinery would be a good simplification. But the policy is less attractive than many of its advocates think.

One false claim made in favour of the LVT is that it would force the land to be used ‘more productively’. But there is already a sort of ‘tax’ on owning land and not using it as productively as possible: opportunity cost. If you choose to use your land as a garden instead of a block of flats to rent out, you are ‘paying’ the cost of doing so in the rent you’re forgoing. Adding an additional tax to that would make things less efficient even if it raised GDP numbers – a bit like taxing leisure time, it would increase cash output at the cost of actual wellbeing.

Here’s another. LVT supporters talk about the economic rents that accrue from land ownership, and suggest that these rents need correcting with an LVT. But I’m not convinced. The price of a given piece of land, sold today, will reflect whatever future profit its buyer and seller expect it to make. And last time that piece of land was sold it will have reflected all the future profits its buyer and seller expected it to make then. And so on. 

Of course these expectations will often turn out to be wrong, but are they any more likely to underestimate than overestimate things? Why would they be? I’ll grant that anyone who themselves or whose families acquired the land, whether by homesteading it or by violently stealing it, has enjoyed an undeserved windfall, but once it’s sold, land is surely going to be priced like any other asset – reflecting the expectation of future gains and losses.

People in the Heathrow flight path probably don’t deserve compensation for the new runway because they bought their houses at a discount to reflect the chance of a new runway being built – but if a runway doesn’t go ahead they don’t need to be taxed to capture the benefit to them. The price they paid reflects the odds in both directions, and their gamble either pays off or it doesn’t. 

The biggest problem comes when you try to replace other taxes that don’t relate to property by raising the LVT rate. The reason is that future taxes will capitalise into the value of the the land today (as we’ve shown many times before, in the UK land and property taxes are almost entirely borne by the land owners, not the renters). 

If buyers know that they’ll have to pay £10,000 in tax on a piece of land they valued at £100,000, they’ll only be willing to pay £90,000 for that land. The tax lowers the returns from land ownership which is reflected in the value of the land. The current owners of land are the ones who bear the full cost of future tax bills. (Similarly, when a new school is announced somewhere, house prices rise to incorporate the future value of living near that school. Even local government debt capitalises into property values!)

That might be economically efficient, but it would be quite unfair. Land is just one of many assets you might want to invest in, and there’s no particular reason that it should be taxed more than others. In the UK, we tend to keep the rules of the game constant, rather than doing specific cash-grabs from particular asset owners, even when it’s economically efficient. The supply of red-heads is extremely inelastic too, but it would feel extremely unjust to slap a fat levy on them nonetheless.

All in all, then, a LVT would be a sensible improvement on the current system of property taxation in Britain. But as a replacement for other taxes or a revenue-raiser in general, not so much.

No, Corbyn is not 'just a normal social democrat'

One of the most annoying features of the UK’s 2017 General Election campaign season is the increasingly large and loud chorus of left-wing commentators insisting that Jeremy Corbyn is not actually all that left-wing. Apparently, Corbyn and his policies merely represent ordinary social democratic principles and it is only because the UK’s Overton Window has been dragged deep into right-wing territory that anyone thinks otherwise.

This is such a lazy and unserious argument that it’s unfortunate that it needs addressing at all.  The perspectives and tradition Corbyn comes from have never determined the mainstream of centre-left thought and policy in the UK or elsewhere. Corbyn has always been on the left of the Labour Party even during the 1970s and 1980s, and did not merely become an iconoclastic rebel during the Blair-Brown years.

Throughout his pre-leadership parliamentary career Corbyn was a member of the Socialist Campaign Group, a hard-left group of MPs that split with the soft-left Tribune Group in 1982. It is important to note the context. Labour’s ‘right’ had already left and formed the centrist Social Democratic Party in response to the election of the left-wing Michael Foot as Labour’s leader. Corbyn and his associates actually rebelled against Foot’s leadership from the left, most notably when Tony Benn challenged Dennis Healey for the Deputy Leadership.

On a variety of issues Corbyn was well to the left of the leadership and has always held Bennite-socialist, not social democratic, views. In addition to campaigning to leave the EEC in 1975, Corbyn opposed the expulsion of the Trotskyite Militant Tendency from Labour and supported the Miner’s Strike of 1984-5. From 1982, he contributed to the Morning Star, which has consistently had an editorial in line with the programme of the Communist Party of Great Britain. As recently as 2015, Corbyn referred to the paper as “the most precious and only voice we have in the daily media”.

This radicalism is not merely a product of a shifting political spectrum and Labour’s move to the right. The SDP, not to mention the Labour Party under Neil Kinnock, were to the left of New Labour. In fact, the SDP were the flag-bearers for a European style social-market economy, which, in spite of revisionism by elements of the contemporary left, was always seen as more liberal than the UK’s clumsy dirigiste Post-War Consensus. Furthermore, Corbyn’s main influences, Benn and the Marxist academic Ralph Miliband, had long been critical of the Post-War Consensus and, indeed, much of Labour’s history in government and Parliament, for being insufficiently socialist.

Still, Labour’s recent manifesto is significantly less radical and ridiculous than Labour’s notorious 1983 effort. Nevertheless, there is every reason to believe that this is a tactical rather than a principled development. Corbyn’s main allies unambiguously and unashamedly carry far-left baggage. Diane Abbott, the Shadow Home Secretary, is of the opinion that Chairman Mao was, on balance, a force for good. Seumas Milne, Corbyn’s Director of Strategy and Communications, is a long-time Stalin apologist. John McDonnell, the Shadow Chancellor, enjoys flip-flopping on the extent to which he is a practising Marxist.  Corbyn himself regards Fidel Castro as a “champion of social justice”, for all his “flaws”.

The Manifesto itself, whilst it appears more populist than socialist, is more radical than its marketing. Whilst the headline tax increases are being touted as modest, the overall impact would be to raise the UK’s tax burden to its highest level since 1950, taking it above the OECD average. National Investment Banks have a long, sad history of failure. Rent control may be widespread but economists across the political spectrum near-unanimously regard it as harmful. Imposing a pay ratio on firms with government contracts and an ‘excessive wage levy’, the relics of Corbyn’s ugly flirtation with a ‘maximum wage’, are bizarre invitations for companies to do business elsewhere that are closer to communism than social democracy.

Of course, if you regard Venezuela as a solid economic model, then Corbynism should make sense. But if you’re more inclined towards a German social-market economy, or a Nordic social democracy, you’re actually much closer to the ‘far-right neo-liberalism’ of the likes of Emmanuel Macron. And you should probably vote Liberal Democrat (for all their flaws).

Are food banks a new technology or not?

There is a certain controversy over the rise of food banks and their usage in Britain today. Some say that it's a symptom of the austerity, the cuts (insert evil Tories to taste here). But as we've mentioned before there is an alternative explanation possible, which is that food banks are a new technology. That is, it's not that we have more food poverty that needs alleviating, but that we've found a new method of alleviating food poverty.

We find ourselves very definitely leaning toward that second explanation:

There are at least 2,000 food banks operating in the UK, giving out emergency food parcels on a weekly basis to people in hardship, according to research that shines fresh light on the rapid growth of charity food provision in austerity Britain.

The research complements established information on UK food bank use compiled by the Trussell Trust, Britain’s biggest food bank network, which collects extensive data from its members and recently reported that it gave out a record 1.2m food parcels to families and individuals in need in 2016-17, the ninth successive year in which demand had risen.

Emerging results from the mapping project undertaken by the Independent Food Aid Network (Ifan), confirm that the Trussell figures represent only a partial picture of the scale of organised food bank provision, and suggest that the level of food bank use is far greater than headline figures indicate.

That is, we don't think this is a reflection of demand rising, rather a result of ability to supply increasing. That Ifan report is here:

Ultimately we would like to see national monitoring of household food insecurity as part of an effort to stop the normalisation of emergency food aid provision within the UK.

That strikes us as a very odd goal indeed. We would, obviously, like people with no food to be provided with food. So why would we want to stop the normalisation of foodless people being provided with food?

Food banks have been around for a while in the US (and Portugal, to the certain knowledge of one of us) and have really only started expanding in the UK in the last 10 to 15 years. And we also know absolutely, from personal experience again, that the State has always been capricious and inefficient in providing benefits and subsidies to those who need them. Our reading of this is therefore that what we're seeing is the spread of a new supply technology.

There are indeed many more food banks serving many more people today. Something which we think is rather glorious, as those little platoons roll out the voluntary solution to the caprice and inefficiency of the State.

Why would we be against community alleviating poverty and want?

 

What went wrong with the Conservative manifesto?

It is clear that the Conservative manifesto has done serious damage to the Party’s electoral prospects. 

There is a sharp and deep inflection point in the Conservatives’ lead from the publication of the manifesto. Never before has a party leader changed a manifesto policy mid-campaign, as Mrs May was forced to do last week over social care, which made a mockery of her endless billing of herself as ‘strong and stable’ until then.

Obviously the social care policy was badly misjudged, politically, and alienated the Tory base of home-owning middle class old folk. Strangely this was the policy that was pre-released to the media on the morning of the manifesto launch. Did they think it would be popular? 

The ‘Theresa Miliband’ policies – the energy price caps, the meddling in corporate governance, the workers on boards and the requirements that firms publish gender pay ratios – were mostly watered-down, but are still very alienating to liberal Conservatives. The line “Some people say that it is not for government to regulate when it comes to technology and the internet. We disagree.” isn’t just horrifying to most younger internet users, it contradicts DCMS’s long-held opposition to moves globally to make it easier for states to regulate the internet.

The manifesto was not costed, unlike Labour’s and the Lib Dems’, which led to the audience laughing in the Prime Minister’s face during Monday’s televised Q&A event when she said that Labour’s sums didn’t add up. It included a pledge to hold a free vote on legalising fox hunting, which 84% of people oppose.

Conservative PPCs blame the manifesto for turning the campaign on its head, and the Party's twenty-point lead has at least been cut in half. So what went wrong? 

I wonder if May’s lack of an ideological constituency of support might be an important reason that things went so badly so rapidly. The two complaints that people have about the manifesto are that it was done without consulting people who expect to be consulted, and that it doesn’t have any policies that actually appeal to voters. But why has this happened? 

Neither of these would normally be issues. Most party leaders have had a circle of supporters and ideological allies around them. Their role is to provide ideas and act as outriders and surrogates to test and defend policies before they have to be made ‘official’ in the manifesto or as government policy.

Under David Cameron, the Conservatives had a mixture of Policy Exchange and the Centre for Social Justice to do this, and eager support from the media. Blair and Brown had groups like the IPPR and Demos; Miliband (I guess) had the likes of Compass. Thatcher had the IEA, the CPS and us; Major had a grab-bag of organisations like the Social Market Foundation and the ASI.

These groups, along with like-minded journalists, can safely raise ideas in the public debate and see the sort of traction they get with everyone else without contaminating the party leadership. The ideas that normal people hate get sloughed away. The ones you’re left with are both reasonably popular and liked by a decent enough core of supporters that they’ll go to bat for you in general.

But there isn’t a ‘Mayite’ think tank. Her policy guru Nick Timothy, his time running the New Schools Network aside, doesn’t have an ideological group behind him and cites Joseph Chamberlain, a 19th Century protectionist of all people, as his political inspiration. This kind of backing may have been very useful as she went without her cabinet, just as it was to Thatcher when she went against hers.

Since May has no ideological or intellectual base either of supporters or of thinkers, she’s come up with a bunch of policies that nobody is really willing to defend. And because nobody has thought much about them or properly tested them in the public debate before now, they've proved to be a lot less popular than they might have sounded when they were drafting the manifesto. May's team probably thought they could get away without much fan service to their base, and rely on her appeal to voters alone. That seems to have been a mistake.

In short: you need a base to test, think through and defend potential policies before you make them official. Every Prime Minister since Thatcher has had that; Mrs May does not. Maybe that explains why her first real policy test was such a failure – one that may haunt her for the rest of her career.

Capitalism just makes things so damn cheap, doesn't it?

You don't have to go far - say to the Labour Party Manifesto, or this time around the Tory one in fact - to find people complaining that capitalism is some form of a rip off. In their lust for profits the plutocrats grind the faces of the workers into the dust, short change the consumers.

And yet we also face the obvious truth of the world around us. Those people living in a place which has been roughly capitalist and roughly free market for any reasonable period of time are as rich as any group of human beings ever have been. They have more than those who came before. And thus it must be true that capitalism makes things cheaper, something not consistent with everyone being ripped off.

And a specific example

Ryanair, Europe’s largest airline by passenger numbers, has helped drive down short-haul ticket prices in Europe by increasing its capacity by 33% in the past two years.

Its cost base, widely acknowledged as the lowest of Europe’s major carriers thanks to low plane purchase, maintenance and staff costs, has allowed it to undercut rivals while still making a profit.

The Irish airline made a profit after tax of €1.3bn (£1.1bn) in the year to the end of March, even though it slashed ticket prices to fill almost 14m seats added during the period.

Chief executive Michael O’Leary said fares had fallen 13% but profitability had doubled over three years. He added: “Frankly I see no reason why that trend won’t continue.”

The capitalist plutocrats can and do cash in by reducing the prices to consumers, making them better off. Which is, of course, why the system works as a whole.