If only Owen Jones were capable of observation

According to Owen Jones the desecration of the environment is all about profit and the pursuit of it:

This is not a bug of capitalism: it is a central feature. The remorseless search for profit – and an economic system that enables the capture of our political systems by multinational companies with bottomless pockets – represents a fatal threat to our health, to our lives, and to our planet. Without a determined effort to drive back the political power of these corporate titans – which means questioning the very fundamentals of our economic system – our planet will continue to perish. Time is not on our side.

It’s necessary to be remarkably unobservant to end up in this position. A consideration of economic systems where profit did not, or does not, exist gives us places which are vastly more polluted than those where profit is sought. Looking east from the Berlin Wall in 1989 did not reveal a green and verdant environment after all.

It’s possible to be a little more detailed as well. Richer people in richer places have more income to devote to environmental preservation. That blend of capitalism and markets produces richer people better than any other economic system. Therefore the capitalist environments are cleaner - that environmental Kuznets curve. Again with the detail, that we consumers prefer cleaner environments means that those trying to profit from our choices are edged toward being cleaner.

But back to basics here. How can anyone observe such stinking messes as the Aral Sea and claim that it’s the pursuit of profit that damages the environment? From which we must conclude that Owen doesn’t observe.

But then we knew that.

Not taxing something is not a subsidy

There are claims that not taxing something, or even not raising the tax on something, is a subsidy:

UK slashes grants for electric car buyers while retaining petrol vehicle support

What petrol vehicle support?

The cut is likely to be controversial, only a fortnight after the chancellor, Rishi Sunak, extended a generous implicit subsidy for drivers of petrol and diesels by freezing fuel duty.

Not raising tax is neither an implicit nor, obviously, explicit, subsidy. Not increasing income tax is not a subsidy to people working for a living, not increasing VAT is not a subsidy to consumers.

It is possible to argue about externalities of course. Emissions have effects, those are costs that an activity might not be paying, that could be, with a squint, a subsidy. As we’ve pointed out a number of times over the years this is not true of petrol or diesel in the UK.

As we know the Stern Review told us that those social costs of carbon are $80 per tonne Co2-e. This is 11 pence per litre of diesel. That would then, to cover those externalities, be the righteous and just tax to adjust market prices. Since the fuel duty escalator was introduced by Ken Clarke - to “meet our Rio commitments” - the escalator has added 25 pence per litre. At least that’s what it was last time we went and counted.

That is, far from being subsidised by under-taxation to corral those externalities petrol and diesel are over-taxed. Do note that this is not some strange neoliberal construction, this is simply a straight reading of that insistence contained within the basic climate change report itself.

We can approach the calculation another way too. Total UK emissions are of the half a billion tonnes order. At $80 a tonne that’s around the £30 billion mark for the correct tax to adjust for those externalities. Fuel duty alone costs consumers about that amount. If anything - again, not some weird construction but the plain and open reading of the Stern case itself - petrol and diesel are over-taxed on climate change grounds and all other emissions in the economy under-taxed.

Freezing fuel duty is not a subsidy, implicit or of any other kind. Don’t let anyone tell you different.

Why William Nordhaus was right about climate change policy

As every economist knows if climate change is a problem that requires a solution then that solution is a carbon tax. Within that, however, is an argument which can be described as Stern v Nordhaus. No, this is not about discount rates, rather, about the capital cycle.

Stern said we should have the $80 tax and have it now. This is to internalise those externalities upon everything. But this means that we suddenly make uneconomic things which still have considerable useful life in them.

Nordhaus, on the other hand, points out that climate change is a long term problem. We can - and should - thus reduce the cost of dealing with it by using up that installed base and only replacing it with emissions free technology when we come to replace it anyway. Thus the carbon tax should start small - $10 say - and ramp up over time to something that forces new tech when we are replacing anyway - say $240.

Nordhaus was and is right:

However, this won’t be enough for the sector go green. Chris McDonald, chief executive of the Metals Processing Institute, estimates it would cost between £6bn and £7bn to decarbonise the UK’s steel plants, assuming they were replaced by new facilities. Eurofer says the entire EU and UK steel industry going green by 2050 would push up production costs by between 35pc and 100pc per tonne.

“It will be a huge challenge to fundamentally transform how steel is produced,” says Gareth Stace, director of UK Steel, warning his energy-hungry industry already faces higher costs than rivals in Europe.

Whether or not the UK should be producing virgin steel is an interesting question. There are those that say we must be able to do so on security grounds and the like. But we don’t mine iron ore here and we’re not going to start - again - either. So having a capacity to manufacture from raw materials doesn’t provide that security anyway.

But assume that we must have that capacity. We can use, as we currently do, blast furnaces and coking coal and that has high emissions. We can also use the much newer technology of direct reduction. This requires hydrogen and we’ve not a green supply of that yet but perhaps we will have. This has very low to no emissions.

The Stern to Nordhaus question is when should we replace those blast with direct? Given the long term nature of the problem when we’re about to tear down the old ones anyway, whenever that happens to be. Build the new plant with the new technology, yes, but why blow up a few £ billions worth of perfectly functional plant before we have to?

That means that we don’t in fact have a £6 to £7 billion bill to decarbonise. Now the cost of direct reduction systems is their cost minus the money we’re not going to spend on rebuilding or creating anew blast furnaces. A bill that, when properly calculated, is probably negative.

Of course, we could instead drop the idea of making iron and steel from virgin material altogether and just reprocess scrap in electric arc furnaces but then where’s the fun in that? It’s obvious, economic and requires no government - following that path would allow no strutting upon the national stage, would it, nor dipping into the pockets of the populace?

Latest from the MoD: It’s only money

Whitehall 

London SW1

“Humphrey.” 

“Yes, Minister?” 

“The Public Accounts Committee is grumbling that our plans are unaffordable and have been in every year since 2013. The MoD is only planning to spend £181 billion over the next 10 years on equipment for our armed forces. I take it we need every penny?” 

“The National Audit Office did indeed say previous years were unaffordable. Consistency is important, Minister.  We have a black hole accounting system: now you see it, now you do not. When you welcomed the PM’s promise of an extra £16.5 billion, you may not have realised that we had already spent it, so it would not be extra at all.” 

“No, Humphrey, I did not.  Well at least if we’ve been spending all that money, we must now be match-fit: our troops, tanks and other equipment must be world class.” 

“Well the truth is that we haven’t been able to recruit enough troops and we have not actually been able to introduce much new equipment.  At 135,444 trained troops, we were 8.4% below strength last April. Mark you, we did also have 61,500 military personnel either under training or working in the MoD, helping us disburse our funding.” 

“Difficult work spending money, Humphrey? My wife doesn’t have any trouble with it.” 

“The nation demands it, Minister. As of October 2020, our MoD civilian personnel strength was 58,850. But you should add about 40,000 military personnel, which is the 61,500, less those under training.” 

“So for every four trained troops we have three dedicated money spenders?” 

“You could put it that way, but we do at least have the tanks we think we should have.  That is because there is not much call for them these days.” 

“We had 27,528 tanks and self-propelled guns in WWII, Humphrey.  How many can we muster now?” [1] 

“About 220 and they are so out of date that one third of them will have to be scrapped. The other 150 will be upgraded at a cost of £1.2 billion.”  

“That’s £8 million a tank just for refurbishing it?” 

“Excellent value, Minister.” 

“Humphrey, I know you think I got this job only because I know nothing about military matters but one of the chaps I play golf with is an American general.  He tells me they make about 500 M1 Abrams tanks a year and each costs less than £8M, brand spanking new.  So why do we mess about refurbishing ours, which no doubt will take years, when we could get a couple of hundred M1 Abrams right away?”  

“Well, that would not be the British way, Minister, and they probably have left hand drive.” 

“British way?  We haven’t made any tanks since 2017, so far as I know, and have no plans to make any in future because tanks are yesterday’s weaponry.” 

“Not at all, Minister, we plan to re-tank by using German guns on Swedish chassis.” 

“The cavalry will like that: the Swedish chassis goes backwards faster than forwards.”  

“That is rather an elderly bon mot, Minister.” 

“So are you really telling me, Humphrey, that we’ve spent over £130 billion on military equipment over the last 10 years and ended up with a pile of outmoded junk.  What state of the art gear did we actually receive?” 

“Well, to be less than my circumlocutional self, Minister, I would have to say ‘not a lot’.  The variations to specification and cancellations are very expensive.  My civil servant colleagues do a wonderful job but we do have trouble with the transitioning military.  They come in from playing war games on the Salisbury Plain, knowing nothing but thinking they do.  They are horrified by what is on order and change the specifications which delays everything by another few years, and puts the prices up. We have to pay new design fees, cancellations and advances.  Then the next lot come in and do the same again.” 

“So we are paying billions not to have military equipment?” 

“Indeed Minister.  Critics believe we are constantly running around in ever-diminishing circles but they do not comprehend the rigorous processes we have to observe.” 

“Sounds like the Oozlum bird to me. The imperative that one has to have bespoke weaponry is fostered by the staff officers worrying about their next employment.  Humphrey, have you any idea what a Saville Row suit costs these days?” 

“No Minister.  I find the Army and Navy Stores to be quite satisfactory.” 

“Well that’s my point, Humphrey.  You get your suits off the peg and we should buy our tanks, rifles, scout cars and such like off the world market – even from the Americans.  At least they would then be compatible.” 

“We have to protect the British defence industry,” 

“Nuclear warheads are another example of waste.  We may have invented them but how many have we ever dropped in anger?” 

“None, Minister, as you know.  Are you trying to make a point?” 

“I am.  We don’t intend to drop any in the future either and we signed up to reducing their number.” 

“So?” 

“Why are we actually increasing their number by 30% at a cost of God knows what?” 

“As we make our own nuclear warheads, we regard the expenditure, not as a cost, but as a contribution to our economy. Of course, we’ll never use them but they signal that we are a Global Power. And the Treaty on the Non-Proliferation of Nuclear Weapons is so woolly we can do what we like.  It is really just a game of tennis between Russia and the US with the rest of us spectators.” 

“I thought you were going to give me a lecture on deterrence. The funny thing Humphrey is that half of our submarines built to carry the new ICBMs actually patrol empty because MI6 says the deterrent effect is the same. So we don’t have to make all these new warheads at all.  We can just pretend we have and put the money into our black hole. And we can build smaller submarines too,” 

“Minister, the White Paper will be released on 22nd March and that will surely resolve all your concerns.” 

“Jolly good show.  You must get me a copy.” 

[1] Evans, Charles; McWilliams, Alec; Whitworth, Sam; Birch, David (2004). The Rolls Royce Meteor. Rolls-Royce Heritage Trust. ISBN 1-872922-24-4.

If only Jonathan Porritt knew what a technology is

Jonathan Porritt wants us all to understand that it will be renewables, not nuclear or hydrogen, that will power our future world. Well, maybe, possibly that is the way that it will pan out. We don’t particularly mind either, our concern is that civilisation does get powered and at the least overall cost. Which may or may not coincide with the exclusive use of renewables.

However, buried within the argument is a horrible piece of ignorance:

Rather than being the solution we have been waiting for, this nuclear/hydrogen development would actually be a disastrous techno-fix.

There’s nothing wrong with a techno-fix, indeed there’s everything right with one. For a technology is simply a way of doing something. Capitalism is a technology, it’s a way of doing the ownership and financing of productive assets. Socialism is a technology, a useful way of making sure there are too few productive assets to be owned and or financed. Nuclear is a technology, hydrogen is a technology, windmills, solar cells, dams, they’re all technologies, as is doing without anything other than animal and human muscle power a technology.

That is, every approach to doing anything is a techno-fix. All that Porritt is offering is a different techno-fix and one that we should evaluate on that basis alone. Does this technology fix the problem better than that other one?

We strongly suspect not which is why the scary words he’s offering about the alternatives but the base point still remains. Methods of fixing problems are, by definition, technologies, thus everything is indeed a techno-fix.

It's not that we just randomly oppose everything Harriet Harman suggests

There is often enough thought and reason put into the opposition:

Harman proposed the creation of a British Music Export office

This would be a government office, of course it would - it is a politician recommending it after all.

Most European countries have a designated music export office. That the UK doesn’t is down to “a failure” to recognise that it is a necessity, said Harman.

“DCMS [department for culture, media and sport] needs to be flexing its muscles and recognising the power of these sectors and the importance of public policy in them,” she said.

It is true that French disco had its moment, Belgian punk a hit. We believe that there is such a thing as Austrian rap and in the possibility of Polish rock and roll. Cross-fertilisation abounds, the best Glimmer Twins production is a Russo-Finnish collaboration with an able assist from Nicky Tesco.

And yet:

Consider these facts. Sweden is the largest exporter of pop music per capita in the world. In fact, regardless of population, Sweden is currently the third largest exporter of music in the world, just behind the US and the UK.

Neither the US nor UK have such an office. As for Sweden:

Running the Swedish Music Export office with a significantly smaller financial support from the government than other comparable countries

And:

Export Music Sweden is a non-profit organization founded by the music industry associations SAMI (artists and musicians) and IFPI/SOM (record companies) and STIM (composers and publishers).

We seem to have one of those examples where less government works better. Not that this greatly surprises as a theoretical result to be honest. The specific industry redoubling that we feel. After all, the major purpose of most popular beat combos is pour epater les bourgeois. Putting the paperclip sniffers of government in charge does seem to be missing the point rather.

There usually is a reason why Harriet Harman is wrong, the intrinsic assumption just being a matter of saving time.

What, exactly, is the problem here?

Something, something, mumble, mumble:

A giant American healthcare group will employ its own doctors when it opens its first hospital in Britain in a move that experts have warned could result in a rush of medics permanently moving to the private sector.

....

Experts warned that the recruitment could add to NHS workforce pressures that reached breaking point during the pandemic. If the model is a success it could mean an exodus of NHS-trained doctors moving permanently to the private sector, they say.

The government takes upon itself the job of planning for, then training, those required to deliver health care in the UK. Whether they then work for the NHS or the Cleveland Clinic wouldn’t seem to matter. They are delivering health care in the UK off the back of the training, no?

Any why would we worry about a non-profit, one that runs the finest cardiology department in the US, in fact one of the finest hospitals in that country, organising some of the health care in London? The very complaint is that it will be British people doing health care for British people in Britain. Which does seem to be a very odd thing to be worrying about.

Reasons for optimism - Ageing

While we can be optimistic that advances in medicine and healthcare could enable us to live longer, healthier lives, we eventually come up against the lifespan barrier that limits the number of years before the body’s deterioration with age finally ends its life. The indications are that many more people will live to pass the 100-year milestone, and some suggest that perhaps 120 years might supplant the traditional biblical “three score years and ten.” But some researchers are looking into ways that might delay, or even reverse, the ageing process to the extent that people might live for hundreds of years, not aged and relatively helpless years, but vigorous, youthful years.

There are several approaches that show promise, including ones that have lengthened the lifespan and apparent youthfulness of test mice in laboratory experiments. These include measures to prevent the shortening, or even lengthen, the telomeres, the same short repeated DNA sequences at the end of chromosomes. They have been compared to the plastic tips on shoelaces that prevent them fraying. Shorter telomeres correlate with ageing, and longer ones with longevity. They become shorter as the body ages and telomerase, the enzyme that repairs the telomeres, becomes depleted and degraded. But there are procedures that can delay or prevent this, and these include taking control of weight, exercise, stress, and diet, and perhaps taking supplements. Studies have shown that, on average, subjects who do this have longer telomeres than those who do not.

A further class of research is looking at senolytics, a class of small molecules that can target senescent cells, the damaged and ineffective cells that increasingly proliferate as the body ages, causing inflammation, and turning healthy cells senescent and leading to tissue damage. When senolytics are used to remove these cells in mice, the animals treated have achieved longer, healthier lifespans, and the research now has turned to repeating these successes in human subjects. Some of the scientists involved in this research have volunteered themselves as guinea pigs to monitor the effectiveness of the process.

The people working along such lines of approach are breaking new ground by attempting to deal with ageing itself, instead of attempting to treat, one by one, the diseases and conditions that come with it. Their outlook is that it is ageing, with its cell and tissue damage as the body loses the ability to repair itself, that leads to the cancers and heart diseases that degrade or terminate lives. By treating ageing itself, their hope is that the body can be kept or restored to an indefinitely youthful state. In short, instead of concentrating on treating the diseases and infirmities that come with age, they are seeking to have the body retain its ability to do that itself.

This raises the prospect of extending the human lifespan to perhaps hundreds of years, which could bring social problems in its wake. If youthful and vigorous older people remain active and in place, this could close off opportunities for advancement and promotion by younger people. And it might retard progress as people loyal to their old ideas do not leave the stage and make way for those prepared to embrace new ones. No doubt solutions to such problems will manifest themselves as people learn and adapt to new circumstances, but it helps to anticipate that developments such as these will bring about a radically different world. The prospect of lives not debilitated or depleted by age is an attractive, optimistic one, the more so if humanity prepares in advance for the changed world it will engender.

We're deeply unconvinced there are too many rich people

Matthew Syed gets a little confused about positional goods:

Turchin argues that resentment among elites is having serious political consequences. He points out that the trappings of social prestige are, by their nature, limited. After all, if everyone had membership of Annabel’s, it wouldn’t be worth having. Status goods derive their cachet from how they exclude others. But this means that as the pool of super-rich swells rapidly, expectations outpace the constraints. This can lead to corruption and, in time, a breakdown of moral order.

That’s to get positional goods the wrong way around. There is always going to be that competition for them. A generally poorer society would have just as many people desiring to bop next to an over-champagned Duchess. A richer one would have just as many with the same lack of ambition and taste.

It is precisely because they are positional goods that the general level of wealth or income makes no difference. For it exactly having that little bit of whatever is defined as unavailable to all which is the point of the exercise in the first place.

Syed uses his misunderstanding to justify this:

There are too many super rich people now, and that spells trouble

When elites grow swollen and opportunities for their children dry up, unrest is inevitable

That could be true of non-positional goods, things that are not, by their very nature, in limited supply. But then if things are not, by their very nature, limited in supply, why would we worry about an increasing number of people who can afford them?

A little linguistic note on market failure

It is entirely true that markets, markets alone and all the time markets, do not solve every problem that either we or society are prey to. The trick is to work out when they are so they can be left alone and when they are not so that some other mechanism needs to be used.

Which brings us to the phrase “market failure”. For example, the Stern Review calls climate change the world’s biggest market failure ever. This is then taken to mean that as markets have failed in this instance then we must, clearly and obviously, move to non-market methods of solving the problem.

This is not actually what “market failure” means. We can take it, if we wish, to mean that this particular construction of markets has failed, so far, to deal with this problem. But a much better translation into colloquial is that “market failure” means “we have failed to have a market in this” rather than “markets have failed with this”.

With this clarification it then becomes obvious what we should be doing - having a market in this. Which is why the Stern Review does go on to insist that the solution to the market failure of climate change is to create a market via a carbon tax. Or, if we prefer, to shoehorn the issue into our currently extant markets.

Given that this is the solution insisted upon it must therefore be true that the meaning of market failure is as we describe. The failure is not of markets, but the failure to have the relevant market.

This also applies more generally. The provision of public goods can be seen as a market failure - given that the logical definition of public goods is something that markets don’t deal well with the provision of this seems reasonable. Often enough, although not always, the answer is the creation of a market though patents, copyrights and trademarks.

So too with externalities. These are things that are external to market processes. Between sometimes and often the solution is to make them into internalities so that markets do deal with them.

We’re entirely willing to agree that markets don’t solve every problem. But we will insist that market failure does, often enough, mean a failure to have a market rather than that markets have failed.