Greetings everyone!

Since I started my A-Levels I knew I would go on a gap year, but I didn’t want to do it for the sake of doing it. I wanted to do something that would be enriching for me as a person and my future career. Now, I have been a neoliberal from the day of my first social science class (in Denmark social science is a combination of politics, economics, international studies and sociology) and I therefore knew that I wanted to do something that would help change the world, even if it was a small dent, to a freer and more prosperous place.
As a Local Coordinator for European Students for Liberty I got to do exactly this, but it wasn’t enough for me since this was only in my spare time. Later on I searched on the internet for organisations looking to hire gap year students and the Adam Smith Institute popped up. I thought the position was perfect for me: being taught on important issues from some of the brightest heads in the UK in addition to actually working full time to promote freedom and a freer market. However, I didn’t think I would actually be able to get such an attractive position. But fortunately, I did.

In a place like Denmark opportunities like this doesn’t occur often, especially not to a neoliberal, and on top of that find a place whose beliefs you share is extremely seldom.
I’m very passionate about educating the public on neoliberalism and the ideas behind and, hopefully, change people's minds in the process. I also think that it’s important to educate the youth on these matters since they play a huge part in shaping the future. Therefore, I was happy to see the launch of ASI’s ‘Secrets of the Magna Carta’ and excited to become a part of ‘The Next Generation’.

Some other areas I’m passionate about include economics, consequences of the welfare state and Danish politics. Hopefully, I will get the opportunity to write about some of these subjects in the future.

I’m looking forward to my time here at the ASI and I can already after little less than a week tell it's going to be a great one.

It's just amazing how far politics and reality can diverge

Our image is taken from this Guardian piece. That famed one with the claim that there are up to 100,000 Vietnamese women smuggled into the country to work in nail bars - nail bars where they are forced into prostitution, a particularly vile form of modern slavery. That same Guardian piece which was debunked in its own comments section as being an entire phantasm.

A couple of years later there was a series of directed raids upon such nail bars. No one's surprised there were immigration offences found but of that modern slavery - and of that prostitution - not a scrap, jot nor tittle was.

At which point we get this in The Times, about the Anti-Slavery Commissioner:

Slowly, almost disbelievingly, Britain is being forced to confront the disturbing reality of modern slavery on our high streets, in homes and in criminal sectors of the economy.

We would not say that there is no slavery out there. There have indeed been prosecutions for it which have succeeded. Any slavery is too much of course. However:

That car wash in the old petrol station is good, quick and cheap, the deal in the nail bar is just too tempting and the Turkish barber offers exceptional value.

...

In the black economy, the cannabis factories hidden in houses and premises all over the country routinely employ exploited labour — often young Vietnamese men living in poor conditions. Young women and girls who came to Britain from all over the world after being promised a better life find themselves in brothels and forced to have sex with many men every day.

...

Kevin Hyland, the anti-slavery commissioner, says there is much more to be done. He wants campaigns, like those that raised awareness of domestic violence as a crime, and regulation of sectors such as nail bars. And he wants arrests. “I want to see the police doing what they are there for, pursuing the criminals behind modern slavery and putting them behind bars,” he said.

We've actually investigated those nail bars and found that while there are indeed immigration offences there's not much else there. Equally, we've investigated those sex slavery allegations and that's led to the most glorious Guardian piece ever.

The following correction was printed in the Guardian's Corrections and clarifications column, Saturday 14 November 2009

In the report below about sex trafficking we referred to the United Kingdom Human Trafficking Centre as "the police Human Trafficking Centre". The UKHTC describes itself as "a multi-agency centre" and says that it is "police led". Its partners include two non-governmental organisations, HM Revenue & Customs, the Crown Prosecution Service, the Serious Organised Crime Agency and the UK Border Agency. We referred to Grahame Maxwell as the head of the UKHTC; his title is programme director.

The UK's biggest ever investigation of sex trafficking failed to find a single person who had forced anybody into prostitution in spite of hundreds of raids on sex workers in a six-month campaign by government departments, specialist agencies and every police force in the country.

As far as being things that we can actually track and identify are concerned nail bar slavery, trafficking into sex slavery, are not things which occur in modern Britain. And we really have tried too, all 55 police forces rousted their entire patches in that Operation Pentameter. 500 odd arrests were made, most of which didn't lead to charges let alone trial and absolutely none of the arrests, charges or trials under Pentameter were for the actual crime of trafficking into sex slavery.

At which point we should note again that Kevin Hyland is the Anti-Slavery Commissioner. About the likes of whom Upton Sinclair had something to say:

It is difficult to get a man to understand something, when his salary depends on his not understanding it.

Isn't it just amazing how far politics and reality can diverge? And on our money too.

So if everyone's obeying the law in every jot and tittle we'll just have to change the law then

Here's an interesting idea from some of our friends on the Continent. Everyone is actually obeying the law, the tax system is operating exactly as it was and is intended to do. Corporate taxes are indeed taxed where economic value is being added, yea even among the tech giants. Thus and therefore the law must be changed

 Paris and Berlin are mounting a joint offensive to tax internet giants such as Google and Amazon based on revenues generated in EU countries, a change that would wreak havoc with many technology groups’ business models in Europe.

The first and most obvious thing to point out is that revenue based taxes don't work that well. Sure, we've VAT but that's a consumption tax, not a turnover one. Among those tech giants for example Amazon makes very little profit over time. Apple a great deal. It's difficult to see how a tax on turnover applied at the same rate to both can be considered fair to anyone at all. And a variable rate for different companies does seem to violate that equality before the law thing.

A French government official said that a turnover tax, even levied at a low percentage, had the potential to deliver a tax take that was “orders of magnitude” higher than what European governments had managed to collect so far. It is envisaged that the tax could be set at somewhere between 2 and 5 per cent of turnover, the official said.

5% would wipe out the entire profits of many a company  - both Amazon and Walmart included.

At which two more points. Firstly, the current tax system does in fact tax profits where they are "earned." It's entirely obvious that the value of the Apple brand, all that design work and so on, is created in Cupertino, thus any profits from that work should be taxed under whatever system applies there. Which is exactly what does happen at the moment.

Secondly, our Ministers gasping for tax revenue seem to have missed the very point upon which France just lost the Google case. Those ad sales do not take place in France, they take place in Ireland, that was the whole deciding fact of the case. What is this local revenue to which they refer?  

Who carries the can for adult social care?

According to its website, “the Department of Health (DH) helps people to live better for longer. We lead, shape and fund health and [adult social] care in England, making sure people have the support, care and treatment they need, with the compassion, respect and dignity they deserve.” One of the three Parliamentary Under-Secretaries leads on “care for the most vulnerable, mental health, adult social care, community care, injustices and vulnerable groups, women and children’s health, health and work [and] blood and transplants”.

That may seem a little confusing given that the DH's overall responsibilities can be divided more simply into three: medical treatment, adult social care and public health.  “Community care”, i.e. care in the community, is a subset of “adult social care” which also covers care homes – some of which are small enough to see themselves as being in the community. “Under the 1990 National Health Service and Community Care Act any adult aged 18 or over who is eligible for and requires services from the Local Authority has the right to a full assessment of their needs and the services provided should be individually tailored to meet those assessed needs." Adult vs. community care is not a useful distinction.

None of the 27 DH quangos is devoted wholly to adult social care although some, such as the Care Quality Commission which critiques both care and medical treatment institutions, have some involvement with it.  Of the 32 DH advisory bodies, only one, the Health and Social Care Advisory Panel, has some limited involvement in adult social care (“open data strategy”).

In summary so far, Whitehall’s responsibility for adult social care lies with the DH but it appears to have little capacity for exercising that responsibility.  The current fashion is to call for the integration of the NHS and adult social care.  Better linkage can indeed improve their cooperation at local level, like has happened in Manchester, but the NHS is already too big to manage and total merger makes about as much sense as merging the Titanic with an iceberg.

Much of the NHS' troubles flow from internal squabbles over how the money is spent.  At least it all comes from the DH.  In the case of adult social care however, Whitehall’s share of the funding comes from the Department for Communities and Local Government.  How crazy is that?  Suppose, for example, the DH decided to remove hospital bed blocking by transferring the savings to adult social care.  It would not happen because no self-respecting Whitehall department hands its money over to another department. The DH has responsibility for adult social care but not the finance or authority to meet that responsibility.  

Local authority expenditure in 2016/17 is budgeted at £94.1bn of which adult social care costs £14.4bn. and education costs £34.2bn.  The DCLG contribution is budgeted at 53% or £50.1bn. In other words if the total funding of adult social care and education was transferred to the DH and DoE respectively, with local authorities simply acting as agents, policy and resources would be aligned at no cost to the taxpayer.  The DCLG’s financial responsibility would be reduced to £2.4bn, and ultimately nil, which they would hate but who cares about them?

Adult social care is widely seen as an important and growing problem.  The Care Quality Commission reported “While so far the sector has been more resilient than some anticipated, we are concerned about the fragility of adult social care and the sustainability of quality.” The under-funding of adult social care is contributing to the difficulties of the NHS. At the national level, who carries the can for it?  In reality - almost nobody.  Yet this circle, as shown above, is not hard to square. If the Prime Minister could spare five minutes from Brexit, she could do so.

Don’t be scared by the elephant chart: it shows that most of us are getting richer

Despite many qualities, the Archbishop of Canterbury speaks as though he is shamefully illinformed and lazy-minded about the global economy, making hasty, ill thought out assertions about how society is so horribly unjust, and that the poor are getting the roughest deal of an economy that needs to be distributed less unevenly.

Here is the actual reality of what's been happening, illustrated in Branco Milanovic's elephant shape graph of the years 1988 to 2008. The horizontal axis shows global income percentile in terms of the world's poorest and richest people, and the vertical axis shows the real-terms percentage change in incomes.

image1.jpg

The summary of why it's an elephant shape can be explained in roughly this way.

  1. The world's very poorest (the very small proportion of people to the far left on the horizontal axis) have not gained significantly. They are the minority that have not yet been able to benefit from globalisation, mostly due to being excluded from entering the global market (for reasons like dictatorships, civil war and lacking basic human rights, but for another significant reason I'll mention in a moment).
  2. The entirety of the elephant's body, ending at the top of its head, shows the gains in prosperity of all the rest of the world's poorest people in emerging countries - it's the biggest explosion of progression for the most number of people the world has ever seen.
  3. The dip just after that, at the formation of the elephant's trunk, is the people in the world's most well off two dozen countries whose incomes haven't risen to the same extent - but that's primarily because: a) they are already in the top 75-90% of the world's wealthiest people who have ever lived, and have consumption and prosperity levels that even their grandparents would marvel at; and b) because much poorer people have been gaining by entering the market and being more competitive (which, if you're paying attention, is actually of benefit not just to the people in number 2, but also the people in number 3 as they benefit in terms of more affordable consumption of those goods and services).
  4. The people that make up the rest of the elephant's trunk comprise the world's richest people. And as expected, they have made significant gains too, because the world's top entrepreneurs are the main people creating the jobs and opportunities for all the people in groups 2 and 3 - so of course they are going to see gains. They become better off by making large proportions of the global population better off too. And don't mistakenly think that the world's richest people are only the yacht-owning multi-millionaires - you only need to earn just over £24,000 per year to be in the world's top 1% of earners.

Milanovic's graph isn't perfect: some of the stats that comprise the low point at the elephant's trunk are also countries in significant transition periods that hit a low; and faster population growth in the economies of groups 1 and 2 means that the people at the low point at the elephant's trunk are not always precisely the same people in both 1988 and 2008.

But the general trend holds: although some workers in the 75th percentile have seen their wages fail to rise because of low-wage competition in growing economies, the vast majority of the world's population are being made better off by globalised trade, not just in terms of rising incomes, but lest we forget, in terms of consumption too (better technology, more goods and services, more affordable products, enhanced communication, fewer working hours, etc).

Finally, I said earlier that there is a minority of people in the world that have not yet been able to benefit from globalisation by being excluded from the global market due to malevolent influences in their own countries. But we cannot ignore the part that politicians in the most prosperous countries play in the continuation of their plight. The sad reality is, there are still too many barriers to free trade, as many of the people in group 1 are kept in group 1 by regulations constructed by governments of people in groups 3 and 4 to favour groups 3 and 4 over groups 1 and 2.

For all those reasons, and more, I think now would be a nice point in human history to let reality and a sense of perspective rule over half-witted, half-thought-out attacks on the free market.

Policy in Practice and interesting assumptions about welfare reform

Policy in Practice has done a "report" for the LGA about the effects of welfare changes. The result being that millions will be left wandering the streets apparently:

Over two million poor families will be more than £50 a week worse off by the end of the decade, according to an alarming analysis of welfare cuts, crippling rent rises and looming inflation.

In a bleak assessment of the plight of the poorest families in Britain, the study commissioned by the Local Government Association found that more than 84% of those set to lose £50 a week or more are households with children, either lone parents or couples. Almost two-thirds of them are working households, despite claims from ministers that they wish to create a welfare system that encourages work.

The major factor here is rising private rents while LHA numbers don't rise:

More than 2 million low-paid private renters face an average real-terms loss of £38.49 a week by 2020.

This clearly depends upon some estimation of what future rent rises are going to be. The assumption made in the report is that they will be large. On page 16, from a little under 5% a year to over 6% a year. Cumulative, of course.

ONS has private rental costs rising by less than 2% over the past 12 months.

Yes, probably best that we file this report in that round filing cabinet under the desk then. Certainly, forecasting is necessary for these sorts of things but starting from the current baseline is useful practice.

Nicolas Maduro and the dumbest economic idea in the world

A headline in The Times:

President Maduro of Venezuela caps prices to curb black market

As PJ O'Rourke remarked in Eat the Rich:

 It's no use trying to fix prices.  To do so, you must have a product that can't be replaced, and you must have complete agreement among all the people who control that product.  They're greedy or they wouldn't have gotten into the agreement, and they're greedy so they sneak out of it.  This is what was wrong with Paul Samuelson's idea about crop restrictions in Chapter 1, and this is why the members of OPEC are still wandering around in their bathrobes, pestering camels.

     Any good drug dealer can tell you that to ensure a monopoly, you need force.  To ensure a large monopoly, you need the kind of force only a government usually has.  And it still doesn't work. ...

     The government of Cuba, with force aplenty at its disposal, decided that beef cost too much. The price of beef was fixed at a very low level, and all the beef disappeared from the government ration stores.  The people of Cuba had to hassle tourists to get dollars to buy beef on the black market, where the price of beef turned out to be what beef costs.

     When the price of something is fixed below market level, that something disappears from the legal market.  And when the price of something is fixed above market level, the opposite occurs.  Say the customers at suburban Wheat Depot won't pay enough for wheat.  The U.S. government may decide to buy that wheat at higher prices.  Suddenly there's wheat everywhere.  It turns out that people have bushels of it in the attic.  The government is up to its dull, gaping mouth in wheat.  The wheat has to be given away.  The recipients of free wheat in the Inner City Wheatfare Program hawk the wheat at traffic lights, and what they get for it is exactly what people are willing to give.

There is indeed a tragedy in the fact that the President of Venezuela knows less economics than the humour correspondent for Rolling Stone.

The underlying point being that supply, demand and prices are not an optional part of our universe, they are how we humans interact with it. The only choice we have is whether we make such interactions safe, legal and commonplace or dangerous, backstreet and rare.

As ever with Polly it pays to study the details

The latest bright idea from Polly Toynbee is that we shouldn't sue the NHS when they irretrievably screw up a life through negligence because....well, that bit is rather left unsaid. We're in that penumbra of It's The Wonder Of The World and we should dance in the Olympic Stadium in praise rather than critique in any manner.

As the NAO points out, the costs of such negligence have risen substantially in recent years. Those costs are not quite as Polly, who presumably has read the report, manages to mangle

But one reason for official defensiveness is the soaring cost of insurance against claims, and insurance companies telling them to admit nothing. If fear of massive payouts from threadbare budgets were lifted, complaints could be handled faster and better.

As far as we're aware at least there are no insurance companies here. Matters are dealt with by NHS Resolution, itself funded by a levy on the Trusts. This is a useful and sensible manner for an organisation of this size to insure by the way. The risk pool is large enough that there's little point in trying to spread it further.

This is also wrong:

There used to be a concept of crown immunity that spelled out the special social contract between citizen and service. Is it time to return to something like it? Citizens need to ask themselves if they want ever larger sums of money drained from services to go to a few claimants who can prove their case, while a great many lawyers make more than the value of the original claims: the public realm belongs to us all, equally.

Crown Immunity for civil claims was lifted on Jan 1 1948, some 6 months or so before the formation of the NHS. As Frank Dobson pointed out in the Commons:

Crown immunity was first substantially undermined —if that is the right word—by the Crown Proceedings Act introduced by the Labour Government in 1947. It was felt necessary to move with the times and at least give individuals the opportunity and right to sue the Crown for damages. However, the Crown Proceedings Act does not permit criminal proceedings against the Crown or any of the agencies presently covered by Crown immunity. As a result, many laws do not apply to Crown property or to Crown institutions.

We find ourselves in the strange position that a health authority can be sued by an injured individual in the civil courts, possibly over being poisoned as a result of something going wrong in a kitchen, but the health authority cannot be prosecuted under the criminal aspects of the food hygiene regulations that the authority was breaking.

What Polly is thinking about is the lifting of Crown Immunity in respect of the regulatory apparatus, not civil damages for negligence, that happening in 1990.

We think it's a little fun to point out that the right to sue for civil injury was granted by a Labour government, the part putting the NHS under the more normal regulatory system of the land a Tory one. Polly complaining about that Labour action of course. 

This still leaves us, of course, with the desire to reduce the number of claims of negligence - we're not in favour of lives being irretrievably screwed up after all.

At which point we really should be, as is already in fact being tried, importing an aspect of the US medical system. Yes, we know, we'll all be bankrupted in our beds by being charged for our health care. Or, rather, perhaps not killed in them:

Today, aviation is arguably the safest form of transportation. Last year the accident rate had dropped to a low of only four fatal crashes from a total of 37.6 million flights.

Independent investigation is at the heart of this process. Professionals are given every reason to cooperate, because they know that investigations are not about finding scapegoats, but learning lessons.

Indeed, professionals are given a legal safe space so they speak up honestly, and can be penalised only where negligence or malevolence is proven.

Independent investigation and safe space protection are equally vital in healthcare.

Staff must be assured that when mistakes are caused by defective processes, they can speak up without being scapegoated.

Only by combating the "blame culture" in the NHS can transparency and meaningful change take place.

Hospitals that have developed a culture of open reporting have produced outstanding results.

The number of malpractice claims against the University of Illinois Medical Center, for example, fell by half in two years.

Virginia Mason, a hospital in Seattle, has seen a fall in insurance liability premiums of a staggering 74%.

As Gary Kaplan, its chief executive, put it: "We have a system that learns the lessons so that we can turn weaknesses into strengths".

There is indeed a solution to the problem Polly describes. It's just, as ever, not the solution that Polly proposes. Open investigation of systems and events then coming down like a tonne of bricks upon those negligent - yea even unto the actual punishment of individuals - is the way to do it. Rather than just not suing the NHS because it's a Wonder.

Socialism's the cure for famine apparently

What we might call one of those interesting claims from US academia:

In the 19th century, all of Ireland was part of the United Kingdom. Wealthy Protestant families with ties to England owned most of the land, renting small tracts to Catholic subsistence farmers. While landlords dedicated acres upon acres to raising cattle and grains for export to Britain, renters were left with scarcely enough land to sustain their families.

The plots were so tiny that tenant farmers came to rely on a single, durable, calorie-rich crop — the potato. In the early 1840s, a fungus afflicting potatoes arrived from the continent, and it devastated small farms, leading to widespread famine. One million Irish people died. Another million immigrated to Britain, Australia and North America. The population of Ireland has never recovered. Even now, fewer people live on the island now than did before the blight.

“Basically, what you had is a society controlled by what we would today call neoliberal capitalism, in which the rich viewed poor people as totally superfluous,” said Kerby Miller, professor emeritus of history at the University of Missouri. 

Those of us a little closer to events tend to think of Ireland pre-famine as being rather more akin to a feudal society than a neoliberal one. We're also pretty sure that Peel's rolling out of neoliberalism, the abolition of the Corn Laws and thus lower import prices for wheat, were a pretty good idea. Not sufficient as subsequent events showed but still a good idea.

However, it's this which produces the gasp:

“I certainly do think that the effects of climate change under neoliberal capitalism, under the governing ideology, is just going to be an unbelievable disaster,” Miller said. “Barring a socialist revolution — which completely changes the nation’s value system so that sharing, rather than competition and exploitation, become the primary values — I’m afraid I really don’t hold out a whole lot of hope.”

We would take the great lesson of the 20th century to be that the one thing socialism doesn't produce is bounteous food for the people.

But, you know, maybe things are different in American academe? 

Yeah, actually we will take fries with that...

Today the BBC led with a story from busybodies at the Royal Society for Public Health (and Slimming World – go figure…) attacking retailers that like to sell their wares to a completely suspecting public.

The public were so aware, the RSPH told us, that nearly 8 out of 10 of us have noticed that we’re being upsold to every single week.

This, the RSPH bemoaned, is a disgrace. But is it really? What’s so bad about a food retailer offering you the chance to buy a lot more food for a little bit more money? Are the Royal Society for Public Health really saying you should be banned for getting value for money?

Think about the last time you were upsold to: a snack and drink with your sandwich at Tesco, those fries and a drink with your Big Mac, the rest of the wine bottle if you buy three glasses at the pub. You'll have known exactly what you’re buying, you'll have known exactly what you were paying and you'd have had the chance to say no at any point of the transaction.

Which makes the wording of the report a little bit bizarre to say the least:

“One in three buy a larger coffee than intended, upgrade to a large meal in a fast food restaurant and buy chocolate at the till in a petrol station in the course of a typical week.”

But by buying the larger size, at a fraction more, you are indicating precisely the amount you intended to buy at an amount you are willing to spend. Upselling is at the heart of a whole swathe of retail industries. It is indeed a tool to get you to purchase more but more than that it exposes you to possibilities you might not have not known were available and more accurately reflects your preferences – as Neil Patel noted the most successful upsells are those that get a consumer to realise their true need and makes them willing to purchase further.

“People who take an upsell will generally spend around 17% more money but receive 55% more calories.”

You get a bit more product that you actually want and the company gets a bit more money. Oh look, just like trade generally, it’s a win-win.

One other finding was illuminating – that this practice is actually most likely to benefit the group that has the fastest metabolisms and the slimmest wallets - the young. In fact, Slimming World and he RSPH found that:

“Young people aged 18-24 are the most likely to experience upselling, consuming an additional 750 calories per week as a result and potentially gaining 11lbs in a year.”

We all have the chance to buy some more at a price you can choose to take, completely understanding the transaction. Has capitalism ever been so delicious?