Good to see someone getting the point of Brexit

It's not that we approve, heaven forfend, of this particular policy idea but we do insist that this is the point behind Brexit

All of which is significant. Corbyn and McDonnell are smart enough to understand the risks of Brexit, but they also see it as an opportunity to push through their own economic agenda. Which is why they are exploring the freedom Brexit would provide for public ownership, lower rates of VAT to help those on the lowest incomes, state aid to support sunrise industries, and fair trade agreements with developing countries.

Remainers on the left would argue that there is no need to leave the EU for this to happen, but they are wrong about that for two reasons. The first is that a radical socialist programme that included a different approach to state aid, state ownership, public procurement and managed trade would be deemed illegal under European law. The second is that without Brexit, the impetus for change would quickly dissipate.

No, we really don't think that a more socialist economy is the way Britain should be moving - but you knew that, right? The underlying idea is entirely correct though. Membership of the European Union cuts us off from the possibility of a number of useful and interesting economic policies. 

We would like to see, for example, unilateral free trade. That's not something which EU membership allows. Not with that great big wide world out there that is. This is a policy different in kind from that socialism above of course - it has actually been tried and it worked, unlike socialism anywhen anywhere. We ourselves did it in 1846, that free trade thing, and we prospered mightily as a result.

Brexit allows us policy freedom which EU membership doesn't. Yes, that includes damn fool things like socialism but we are indeed all adults aren't we, capable of making up our own minds rather than having to rely upon Brussels to do it for us?

We fear Sir Michael Marmot is confused here but it's a good plan anyway

Sir Michael Marmot is famed as the academic who told us all that health inequality is caused by economic inequality. we don't doubt that this is partially true although we'd really like to insist that health inequality will produce economic as well. Becoming bedridden and incapable to work at age 40 will lead to income inequality at age 60.

His latest work tells us that life expectancy is rising more slowly in the aftermath of the recession. This could of course be true. We might even agree with Owen Jones here:

An ideologically driven programme of cuts is almost certainly robbing us of life. Consistently rising life expectancy should be something we all take for granted. The UK, after all, is one of the wealthiest societies that has ever existed in human history. There are continuing dramatic improvements in medicine and technology. And yet new research by an ex-government adviser, Sir Michael Marmot, suggests that the rise in life expectancy – a constant trend for a hundred years – has stalled since 2010. What happened that year, exactly? Was that not when David Cameron, George Osborne and their Lib Dem stooges began slashing public services with a false economic pretext?

And thus the call for revolution:

Is there any clearer evidence of how utterly bankrupt our social order is? Human and social progress is grinding to a halt in Britain. Life is getting more insecure and poorer for millions – soon, it may even be getting shorter. That’s why we don’t just need a change in government in Britain, we need a change in how we organise our society. A peaceful, democratic revolution is long overdue in Britain, for the sake of our living standards, our health – and for the sake of our very lives.

Well, OK. So, what exactly should the revolution consist of? As Marmot points to:

There is no reason why the UK could not emulate Hong Kong, where life expectancy for men is 81.1 years for men and 87.3 for women – the highest in the world – Marmot added. Hong Kong has overtaken Japan in terms of how long citizens can expect to live.

So, let's increase economic inequality up to Hong Kong levels then, cut social spending down to Hong Kong levels and slash government overall to Hong Kong levels. We're just fine with that but we do think that Professor Marmot, given his usual proclivities, is confused here. And no one at all is surprised that Young Owen is confused at all, are they?

Fake news in The Guardian

Oh dear, how embarrassing. The Guardian’s George Monbiot appears to have fallen hook, line and sinker for Nancy Maclean’s poorly (dishonestly?) researched book Democracy in Chains.

Democracy in Chains smears Nobel Laureate James Buchanan (amongst others) with deliberate misquotes and pernicious accusations of racism. It asserts that Buchanan sat at the centre of an elaborate academic conspiracy to undermine democracy and replace it with ‘a totalitarian capitalism’.

Of course, this isn’t the first time Monbiot’s been taken in by a BS Vendor who happens to share his political biases – he frequently cites Naomi Klein’s sloppy Shock Doctrine which proposed a similar right-wing academic conspiracy with Milton Friedman at the centre (thoroughly debunked by Johan Norberg at Cato).

Unlike Maclean herself, it’s not clear if Monbiot actually understands what public choice theory (the field where Buchanan made his name) is.

He writes:

James Buchanan brought these influences together to create what he called public choice theory. He argued that a society could not be considered free unless every citizen has the right to veto its decisions. What he meant by this was that no one should be taxed against their will. But the rich were being exploited by people who use their votes to demand money that others have earned, through involuntary taxes to support public spending and welfare. Allowing workers to form trade unions and imposing graduated income taxes were forms of “differential or discriminatory legislation” against the owners of capital.

Not quite.

Public choice theory isn't a set of political conclusions, it's a method of study pioneered by centre-left academics Kenneth Arrow and Anthony Downs who applied the tools of economics (e.g. rational choice theory) to the problem of political science. Buchanan describes it as “politics without the romance”. Essentially, it is a theory that predicts politics will be closer to Yes Minister than The West Wing. Indeed, Anthony Jay created Yes Minister to popularise the ideas of public choice theory.

Supporters of free and open markets tend to be drawn to Buchanan’s work in particular as it helps to answer questions like:

· Why do industrial strategies always end up subsidising losers rather than backing winners?

· Why is one bureaucrat at the Department of Agriculture for every three farms in the USA?

· Why do NIMBYs have so much power?

There are legitimate criticisms of Buchanan’s approach to public choice theory. It isn’t (or at least shouldn’t be) a theory of everything. As Ben Southwood points out, voters don’t vote solely out of self interest, they vote for the policies that they think will be best for society as a whole.

But Nancy Maclean doesn’t make those criticisms. She resorts to sloppy misquotes to paint James Buchanan as a supporter of racial segregation. An accusation repeated by Monbiot here:

He explained how attempts to desegregate schooling in the American south could be frustrated by setting up a network of state-sponsored private schools.

An explosive claim, but untrue. David Bernstein in the Washington Post writes

Meanwhile, in Chapter 3, MacLean claims that contemporary libertarians “eschewing overt racial appeals, but not at all concerned with the impact on black citizens, framed the South’s fight as resistance to federal coercion in a noble quest to preserve states’ right and economic liberty. Nothing energized this backwater movement like Brown.” MacLean identifies only two such libertarians, Frank Chodorov and Robert LeFevre. I can’t check her citation to LeFevre, because it’s from private correspondence that I don’t have access to. But her citation to Chodorov fails to support her assertion.

The article she cites by Chodorov can be found here. In it, Chodorov praises Brown: “The ultimate validation of the Court decision, which undoubtedly ranks among the most important in American history, lies in the fact that it is in line with what is deepest and strongest and most generous in our historical tradition.” Chodorov goes on to point out that merely prohibiting segregated schools won’t lead to integration because of residential segregation, and concludes that hostility to integration may lead some southern states to open up publicly-funded education to competitive private schools, which would mean “what began as an attempt to evade an unavoidable change in an obsolete system of racial segregation might turn into an interesting educational experiment.

This wasn’t Maclean’s only ‘mistake’. David Henderson at EconLib highlighted a particularly egregious misquote.

Maclean writes

'People who failed to foresee and save money for their future needs', Buchanan wrote in 2005, ‘are to be treated as subordinate members of the species, akin to . . . animals who are dependent.’

Contrast that with what Buchanan actually wrote

The classical liberal is necessarily vulnerable to the charge that he lacks compassion in behavior toward fellow human beings - a quality that may describe the conservative position, along with others that involve paternalism on any grounds. George W. Bush's "compassionate conservatism" can be articulated and defended as a meaningful normative stance. The comparable term "compassionate classical liberalism" would approach oxymoronic classification. There is no halfway house here; other persons are to be treated as natural equals, deserving of equal respect and individually responsible for their actions, or they are to be treated as subordinate members of the species, akin to that accorded animals who are dependent.

Maclean doesn’t just get this quotation wrong—she edits it so that it says exactly the opposite of what Buchanan actually wrote.

This isn’t an aberration. It’s not a sloppy mistake in an otherwise well-researched book. This is Maclean’s modus operandi.

Russ Roberts highlights a passage from Maclean smearing the economist Tyler Cowen.

The weakening of the checks and balances” in the American system, Cowen suggested, would increase the chance of a very good outcome.” Alas, given the pervasive reverence for the US Constitution, a direct bid to manipulate the system could prove ‘disastrous’.

Maclean describes Cowen as “creating…a handbook for how to conduct a fifth-column assault on democracy.” A claim that will seem absurd to anyone familar with Cowen's work.

Compare that to Cowen’s original passage

While the weakening of checks and balances would increase the chance of a very good outcome, it would also increase the chance of a very bad outcome. Furthermore, the widely perceived legitimacy of the US Constitution suggests that such a change would involve disastrous transition costs.

As Roberts writes

MacLean left out the word “While” that begins Cowen’s sentence. Then she left off the key qualifier that completes the sentence — the point that the downside risk of weakening checks and balances is substantial. There is nothing here suggesting Cowen is in favor of weakening democracy or the Constitution. By quoting only a piece of Cowen’s sentence, MacLean reverses his meaning.

It would be easy to list a dozen more errors but Michael Munger, Christopher Fleming, Phil Magness and Greg Wiener have already done it for me.

Regrettably, The Guardian’s George Monbiot has been taken in by Maclean’s selective quoting and sloppy research.

I am sure it was not Monbiot’s intention to mislead his readership and I expect he will retract his article, clarify his mistake and apologise to the scholars who have been a victim of Maclean’s academic malpractice.

Clarification: Viktor Matheson points out that I misread PJ O'Rourke's reference to the US Department of Agriculture. There's one bureaucrat for every three farms not the other way round. Still too high, but not quite as extreme. I apologise if anyone was misinformed by this. 

Mrs Clegg tells us about Brexit - and gets it entirely wrong

One of the mystifications of the Brexit process is how many very clever people can end up believing things which are just simply not so. For example, Mrs. Clegg takes to The Guardian to tell us about negotiations over trade following our blessed exit:

It is easy to see why this government would be mesmerised by Legatum. It is keen on unilaterally removing tariffs and quotas on agriculture products (farmers, take note) in exchange for services agreements all over the world.

A lawyer should know the meaning of the word unilaterally. It means without being in exchange for something. We've no particular relationship with Legatum ourselves, although we obviously know them. And we too think that unilateral free trade is the way to go. As we did in 1846 with the Corn Laws. For imports are the purpose of trade, they're the very things that we conduct trade in order to gain access to. Taxing ourselves for the temerity to like Argentinian beef is simply ludicrous from the word go. Thus we shouldn't do it.

But it is worse than that:

The effect of this on food security and food prices was highlighted this week in a report published by the University of Sussex.

That's the report by Tim Lang et al which insists (no, not just assumes, insists) that we will have to impose "WTO tariffs" on food imports as we leave. This is to miss that there are no such things as WTO tariffs. What there are are maximum tariff levels that a WTO member may impose upon imports from another WTO member. Further, every WTO member is entirely at liberty to charge themselves anything they like less than these maximums. We did actually check this at source, Britain can indeed decide not to tax itself for access to French cheese. 

Lang's report insists that reversion to WTO terms means we must impose import tariffs, Lang is wrong. Given that it is this error which leads to his prediction of higher food prices Ms. Gonzalez Durantes is also wrong. Not that this is unusual in her circles as Mr. Clegg also suffers under the same delusion.

Brexit will not increase food prices, it will reduce them as we will be able to buy the best and cheapest food from the world, not have to cower behind the EU's protective barriers to trade.

What worries here of course is that these people, both Cleggs, Tim Lang and pals, various others, they insist that they are the Great and the Good who really know this stuff and we should just shut up and do as they say. The problem being that they're simply wrong, they believe things which ain't so.

 I have negotiated myself for the EU on many occasions on trade,

No wonder that EU trade system is such a crock, eh? 

The Sorry State of Sex Trafficking Research

Last month, Northern Ireland saw its first prosecution for paying for sexual services (alongside violent crimes) brought before the courts. Having adopted the ‘Nordic Model’ of criminalizing the purchase of sex in June 2015, Northern Ireland seems to have inspired SNP politicians to advocate for a similar approach in Scotland. The debate about sex work legislation also rages on in the rest of the United Kingdom, where marginal progress is being made in some areas.

Research into the impact of different forms of sex work legislation and sex trafficking is a fascinating but highly-fraught area. The prevalence of sex trafficking and its relationship to different legal regimes pertaining to sex work is one of the chief battlegrounds for those who seek reform, and reliable evidence on this emotive issue is hard to come by.

A new paper published online last week by sociologist Ronald Weitzer—who wrote this excellent article on sex work policy and sex trafficking in 2011—gives new insight into the sorry state of the academic literature on these topics. First on his list of grievances is the unreliability of the data that is often used:

Using information on 161 countries from the United Nations Office on Drugs and Crime (UNODC), Cho et al. (2013) and Jakobsson and Kotsadam (2013) attempted to determine whether national prostitution laws were related to the prevalence of human trafficking. Yet UNODC had warned against using its figures either for one nation or cross-nationally, because “the report does not provide information regarding actual numbers of victims” (UNODC 2006, pp. 37, 44–45). UNODC’s caution was based on the unstandardized definitions of trafficking across countries (with some conflating trafficking, smuggling, and irregular migration); the widespread lack of transparency in data collection and reporting; and the reliance on different sources across the 161 countries (the media, research institutes, government agencies, NGOs, IOs). For some countries, only one of these sources was available. The authors concede that “the underlying data may be of bad quality” and are “limited and unsatisfactory in many ways” (Jakobsson and Kotsadam 2013, p. 93) and that it is “difficult, perhaps impossible, to find hard evidence” of a relationship between trafficking and any other phenomenon (Cho et al. 2013, p. 70). Yet they nevertheless treat the UNODC report as a data source and draw profound conclusions about the relationship between trafficking and national prostitution laws, concluding that human trafficking is more prevalent in countries with legal prostitution than countries where prostitution is criminalized.

Flawed data is just the tip of the iceberg. In the case of the two studies cited above, the authors’ approach to study design also leaves a lot to be desired:

A cross-sectional design (at a single time point) is used to measure something that should be examined longitudinally: the amount of trafficking before and after legalization. The latter approach would require reliable baseline figures to compare to reliable recent figures—neither of which exist.

The authors use aggregate national trafficking estimates (which combine labor, sex, and other kinds of trafficking) in their attempt to assess whether legal prostitution makes a difference. This means that there is a gross mismatch between the trafficking figures and prostitution law: In assessing whether prostitution law is related to the incidence of trafficking, figures on sex trafficking alone should be used, not the totals for all types if trafficking.

It is quite possible that nations where some type of prostitution is legal may have superior mechanisms for detecting sex trafficking, a variable missing in both studies.

A subsequent study by Cho (2016) using a different data source contains another howler. It “uses information on countries’ level of protection for [overall] human trafficking victims, which is then correlated with whether prostitution is allowed in a country.” The justification for this sleight of hand?

Without citing any source, Cho claims that “prostitution is closely linked to human trafficking because sex trafficking for the purpose of prostitution is the most common form of human trafficking and constitutes the largest fraction of trafficking victims” (Cho 2016, pp. 325–326). This claim is contradicted by the International Labour Organization (ILO) and the U.S. State Department. According to the ILO, “Forced commercial sexual exploitation represents 11% of all cases” of forced labor worldwide (ILO 2005, p. 12), and the State Department declares that “the majority of human trafficking in the world takes the form of forced labor” (USDS 2010, pp. 8–9).

All of these problems are endemic to the field of sex trafficking research. Weitzer’s paper would be an interesting academic exercise in the perils of low-quality data and poor research methodology, except for the fact that policies being enacted on the basis of the former two studies are hurting marginalized women:

...these two studies were embraced by politicians and policy makers in several countries, and used to justify new criminalization laws.

Weitzer also offers some thoughts on how the current state of research and the public debate based upon it can persist without significant challenge:

It is easy to make blanket and cavalier assertions regarding both trafficking and prostitution when (1) solid data are lacking, (2) the media simply recapitulate “official” claims without questioning or fact-checking them, (3) experts who challenge official assertions are ignored or denounced, and (4) the participants in sexual commerce are highly stigmatized and marginalized. This unfortunate pattern can be seen in both prohibitionist nations (e.g., Sweden) and in nations facing resistance to their current [comparatively] liberal policies (e.g., Germany, the Netherlands).

I’m sure readers of this blog approach every sensationalist media headline with a critical eye. However, when it comes to scaremongering stories about sex trafficking epidemics and accompanying calls for the ‘Nordic Model’, extra caution should be exercised.

[Photo Credit: Ira Gelb]

We're entirely amazed at the persistence of truly terrible ideas

We shouted at Dave when he suggested national service for 16 years olds. On the very simple grounds that demanding people go off and work as you insist they do, without a choice, is slavery. Looking back further we've long been appalled that this country had peacetime military conscription post WWII and we're really not sure about the validity of the legal insistence even in times of war.

Yet as has been noted by others really bad ideas do keep being revived

Now, conscription is a scary idea; associated with the great threats that come with war, so it is sure to antagonise. But I believe we need to start treating the multiple environmental crises as the serious threat they are. We need to consider them in the same league as the threat presented by an army massed on our borders. This is not (just) a green manifesto. Eco stems from the Ancient Greek “oikos” and means home. Ecology, the study of the home; economy, its management. Eco-conscription is about working together for our collective home.

The benefits to society just in terms of physical and psychological wellbeing will undoubtedly be worth the investment

The benefits to our “home” of having people working on the land, reconsecrating the sacrilege of our industry, are immense. Reweaving the connections, rebuilding the Linescape will forge links for wildlife and for people.

We suppose it's not Maoism as this is supposed to be for the kids before they become students rather than a method of getting the students out of society's hair. Given that there's no mention of starving them while they are there it's not Pol Pot either. But it is still slavery, society stealing a year of the life of each and every youngster to do as they are damn well told rather than as they would wish.

We would also note that there's no shortage of those rural jobs out there, tens of thousands are available each and every picking season and near none of the youngsters want to touch them with a bargepole. At which point, you know, it is their life.

It's a common mental disorder that one or other of us knows what everyone else should be forced to do. Our own liberalism is based in the fact that we've not a scoobie about what will maximise the happiness of others, good grief, the existence of Simon Cowell proves that. Thus our basic prescription that people should be stopped from doing what damages the rights of others and after that left alone to do as they please.

You know, without being whipped into the fields just because they're 18 years old? 

Making Sense of the NHS

Much of the last election, and many elections before, centred on the claimed inadequacy of the NHS. The same arguments have circled for decades creating heat rather than light and, importantly, social disaffection without progress. Adversarial political mudslinging and ill-advised interference have damaged NHS cost effectiveness and capacity, and will continue to do so until politicians leave it to the professionals.  The cross-party convention proposed by Norman Lamb, or the Royal Commission proposed by Lord Saatchi, could help bring that about.

Making sense of the NHS boils, ultimately, down to two issues.  The relatively easy one is how much HM Treasury should provide, be that from a hypothecated tax or the general pot.  That political decision should be based on the state of the UK economy, the plentiful international comparatives, the coherence of the NHS corporate plan and competing demands.  The allocation of those resources, and the rest of NHS management, should be taken out of politics. 

The convention/Commission should review the governance and scope of NHS England and the extent to which pricing should be used to cool demand:

  • NHS England is too big and overloaded with policy makers rather than policy doers – doctors, nurses and technicians. If NHS Scotland and Wales are roughly right-sized, as their separation implies, then NHS England should become six autonomous NHS Regions, i.e. public corporations like the Bank of England or BBC. The public corporation may be only the least bad governance structure but imagine how much worse the BBC would be as part of a Whitehall department.  Since adult social care is already devolved to local authorities, regionalising the NHS would allow the DH and NHS England to be downsized to just a few staff dealing with the overall allocation of resources. 
  • The NHS should be streamlined to be more manageable. The boundary of its responsibility should be narrowed to curing what can be cured and providing medical treatment.  It should not attempt to care for the incurable. Caring and curing need to be closely linked, and cooperate better, but integration would be unmanageable.  The NHS should provide individual treatment and not tackle public health as a whole.
  • Pricing, prescriptions for example, is already used by the NHS to restrain demand. Co-pricing, i.e. patients picking up some of the cost where they can afford to do so, is used elsewhere in Europe and New Zealand, and would be no more counter to the NHS original constitution than charging for dentistry.  What does not strictly need to be cured, or medically treated, could be subject to co-charging, if resources are available, for optional matters such as IVF. One way or another, demand needs to be cooled.

    The number of GPs and geriatricians needs to be increased. An aging population grows the need for geriatricians but supply has been reducing.  GPs do their best but few of them are trained in geriatrics and their interaction with geriatricians has reduced.  It is not the most attractive branch of medicine and the pay and prospects are poor. People aged 65+ now absorb about half of the total cost of the NHS. The number of general physicians is, per 1,000 potential patients, eight times greater than the number of geriatricians: the very people who need doctors most are the least well served. The British Geriatrics Society is outgunned by competing medical professional bodies.

    Mental disorders have also dramatically increased. Drawing the boundary of NHS responsibility between treatment and cure (NHS) and care (other services) for treating geriatric issues is difficult and the boundary for mental health is more difficult still.  Today, surveys indicate that about 12% of the UK population have mental health disorders and more than double that proportion of doctors – mostly due to stress. Clearly some sort of tiered approach is required to focus professional help on those with the greatest need. 

    The potential benefits from these proposals fall into four groups:
  • Improved morale, recruitment and retention of nurses, doctors and technical staff.  The continuous political fault finding, interference and reorganisation of the NHS damages staff motivation and patient satisfaction. The professionals need empowerment and clearer lines of authority. Local and national lobby groups press their vested interests to the detriment of the whole. The contribution of politics to the NHS is, in sum, counter-productive. Unfortunately, even if politicians back off, the NHS will continue to be subject to sniping by the media. Smaller organisational units would bring staff and patients closer to top management.
  • Better management of the demand for NHS services which will always, and increasingly, outstrip supply capability, not least because they are free. Ways have to be found to cut unnecessary calls on A&E and GPs. Falls by the elderly are now treated by ambulance paramedics in the patients’ homes rather than carting them into A&E.  Better for everyone. 
  • Balancing the books by continuing to streamline working methods and bureaucracy to release more patient time for doctors and nurses, simplify the allocation of resources and better interface with, and learn from, the private sector. The NHS could make much better use of IT.  GPs in England use at least four IT systems, for example, which do not communicate adequately with each other or with hospitals. Acute hospitals should move more patients (sooner) into the less expensive cottage hospitals and convalescence homes.
  •  Focusing the NHS on curing the sick, surgery, mending limbs, medical treatment and maternity. At present, only 80.5% of the NHS England funding is devoted to its core role: primary and secondary healthcare.  That streamlining would not reduce the quantity or quality of patient care and enable the adult social care budget to be doubled at no cost to the Exchequer. 

The full paper, to which this is the introduction, will be released in September this year.

A 1988 paper on the NHS published by the Adam Smith Institute, Too Big to Manage can be found here

Learning from elimination

This piece was originally delivered as a lecture by Dr. Madsen Pirie to students at the beginning of Freedom Week 2017.

Scientific discovery

David Hume had a problem with induction.  Put starkly it is that it rests upon the shaky ground of an assumption that what happened yesterday will happen again tomorrow.  Hume could not find a causal thread that linked previous events to future ones, and thought it ultimately depended on an act of faith, unsupported by evidence or reason, that linked future events to historic ones.

In the Twentieth Century Sir Karl Popper solved Hume’s problem of induction.  Popper proposed that instead of using induction to develop theories, we use creative imagination to suggest them, and then test them to see which ones work in practice.  Her called the process “conjecture and refutation,” claiming that instead of ‘inducing’ theories from past events, instead we conjecture what might be the case, and then test the conjectures to see if they can be refuted from practical observation.

Thus Hooke’s Law, for example, suggests that the extension of a spring is proportional to the force applied to it.  That is the conjecture.  We then apply weights to springs and measure the extension to see if it does indeed vary in proportion to the attached weight.  If it does not, we discard the theory.  The theories we retain are the ones that are supported by experiment; the ones we discard are those that do not.

Science proceeds by what I call a "selective death rate."  When I used this term on a Radio 4 programme series about "Learning from Life and Death," the producer found the term "macabre," as he put it.  Perhaps it is, but it simply means that we reject the theories that don't cut it.  They die.  The ones that pass experiments live on.

The upshot is that what we call our scientific knowledge is the collection of theories that have been tested, and have not so far been discarded.  Note that they are tested in practice.  It is their performance in observed tests that decides which ones live and which ones die.

Note also that the successful theories only live on until a better one comes along, one that can enable us to predict what we shall observe better than previous ones were able to do.  Like ourselves, theories are mortal, and they live only for a time.

The market economy

There is a striking parallel between this account of scientific methodology and the operations of a free market economy.  In a market economy people are free to introduce new products and processes.  They are tested in the market to see if they appeal to consumers more than do existing products and processes.  The ones that do so survive, while the ones that do not are counted out.

A market economy, like scientific method, operates through a selective death rate.  Unsuccessful products and processes are eliminated, while the more successful ones survive.  We look at the list of leading companies, and we find that most were not there twenty-five years ago.  The names that seemed so dominant then are now distant memories, their places taken by names such as Apple, Google, Amazon and Facebook.  Many of the products that were ubiquitous and dominant a quarter of a century ago are now regarded as anachronisms, to be regarded with amused wonderment when dug out of forgotten cupboards to be surveyed by today's children,

There are other important parallels between scientific method and market economies.  Scientific discovery works faster in a society where people are free to investigate, to explore and to innovate.  It depends upon freedom of information to spread new ideas and to report on the experiments that have tested them.

A market economy similarly makes faster progress if people are free to innovate and to introduce new products and processes without state or other interference or impediments. It, too, requires freedom of information so that knowledge of success can spread.

They have something else in common, too.  Both are areas in which progress can be made. In both of them there is a goal or goals, so that attempts to reach towards these can be tested against each other to see which ones approach closer to it.

In science the aim is to extend our ability to predict what we shall observe, and theories are tested in experiments to see which ones do it better than their rivals.  I part company with Popper at this point, because he thought that by proving things false we could approach closer to objective knowledge about the universe.  I do not think we can do that, because we can no more prove something to be false than we can prove something to be true.  We discard theories not because we know them to be false, but because they serve our purposes less well than the ones we retain.  The aim is to predict what we shall observe, and we retain the theories that enable us to do that better than the ones we discard.

In a market economy, our aims include being able to better our lot, to make best use of scarce resources, to be able to satisfy more of our desires, and so on.  We can test products and processes against each other to see which ones best enable us to achieve these things. 

Thus progress is possible in both science and market economies.  In science we can become able to predict more, and in a market economy we can become wealthier and satisfy more of our desires.


There is, of course, another area characterized by a selective death rate, and that is evolution.  New mutations are tested by their ability to survive and reproduce in their environment.  Those that do so live to breed and become the dominant new strain.  The ones that do not are counted out.

I would draw your attention to two significant facts.  One is that scientific discovery and a market economy both have the inspired minds of creative human beings behind them.  People think up the new theories and the new products that have to be tested. 

In evolution the mutations are random.  This means that the changes in evolution are slower than those in science or economic activity.  Innovation in biological evolution is blind, whereas in the other two it is inspired and directed.

The other significant fact is that we cannot speak of progress in evolution because there is no goal to work towards.  There is only an environment that changes in ways that allow some mutations to prosper at different times if they are better equipped to meet the new conditions.


In summing up, I myself take the view that we humans try to improve our lot, or our performance, or our understanding, and that we do so by a method of inspired trial and error.  We do it by introducing innovations and testing them in the real world.  We retain the ones that achieve our aims better, and we discard the ones that do not.  This is how we progress toward our goals.

I add in conclusion something about myself.  I am optimistic about human creativity and ingenuity.  By this method of inspired trial and error I think we can meet any challenge and solve any problem. 

We do think this is unlikely to work

Some ideas from the civil service about what to do over the train services:

Civil servants at the Department for Transport have put forward proposals to take much greater control of the running of the train operating companies, raising the spectre of the recreation of the defunct strategic rail authority.

A high level briefing document seen by The Times states: “The franchise model . . . faces real challenge — chiefly ensuring it remains commercial and politically sustainable.”

This would, as the paper goes on to point out, mean building out capabilities in that department. Or, as C. Northcote Parkinson would have pointed out, the aim and intent of every bureaucracy is to expand the budget of that bureaucracy.

However, over and above the usual self serving nature of the proposals we're really quite sure that this isn't going to work:

It continues:

“Reforms may be required to better manage uncertainty, eg HMG [the government] retaining more or all revenue risk.

Which of the various lines is it that has the general public near to revolution? Why, that would be Southern, wouldn't it? 

What is the general arrangement for the management of the Southern line? Govia runs the system on a day to day basis, under a contract from government. That is, this is not in fact a franchise, this is a management contract. One in which all revenue risk is carried by said government. Fares go to the centre, the agreed fee is paid for running the network.

In order to mitigate the outrage about the train system the civil services suggests expanding the management system applied to that part of the network which produces the most outrage.

Really, we're quite sure that this is unlikely to work.

What joy when telling the truth is politically unacceptable

An entirely reasonable contention is that if we're to try and work out what it is that we should do we must start from some mutually agreed set of facts. It would also be useful if those agreed facts were the truth of the matter. Not starting from this point is going to be piling error upon misunderstanding.

At which point what joy that telling the truth is now considered politically unacceptable:

Philip Hammond has declared that public-sector workers are “overpaid”, as a bitter cabinet war erupted over austerity.

At a heated cabinet meeting on Tuesday, the chancellor refused to lift the 1% cap on wages for public-sector workers on the grounds that they earn more than those in the private sector, along with generous taxpayer-funded pensions.

But Hammond left his colleagues thunderstruck at the language he used. “Public-sector workers are overpaid when you take into account pensions,” he declared. The chancellor then described train drivers as “ludicrously overpaid”.

The comments will fuel public anger that the Tories are out of touch with the public mood and will plunge Tory MPs into despair at the chancellor’s political tin ear. 

The point being that this is actually true. As one of us has described elsewhere recently, since 2002/3 public sector pay (not including pensions and other perks) has gone from roughly comparable to private sector, risen faster in Brown's boom years and fallen less since the recession. Yes, of course, this is after controlling for age, qualifications and so on.

It's also entirely true that public sector wages have fallen in real terms since the recession - but then so have private, the private by more. These are the facts of the matter. Only once we all agree them can we then start to have a reasoned conversation over what we should do next.

But what chance of that when uttering such truths is regarded as politically unacceptable?