This is an absurdly stupid complaint about in work poverty here

This particular complaint should be met with an angry shout of "What the hell did you think was going to happen anyway?" quite possibly with a few cuffs around the ears to encourage thought:

A record 60% of British people in poverty live in a household where someone is in work, according to researchers, with the risk of falling into financial hardship especially high for families in private rented housing.

No, that's not it, this is:

Low pay is a trigger for in-work poverty but the primary determinant is the number of workers in a household, with single-earner families at a very significantly elevated risk of hardship, the study says.

So what the hell else did anyone think was going to happen?


We measure poverty as being below 60% of median household income (and then in various forms, before and after housing costs, disposable income, before and after tax and benefits and so on). We adjust for the size of the household, the number of adults - but not for the number of earners. The median UK household has two earners in it. Thus single earner households are much more likely to be in poverty simply because of the way we measure it, comparing single earner household incomes to that median of dual.

The result is built into our measurement system. We could not reach any other result given that measurement system.

Imagine, just as an example, that the second adult went out to work and the household then spent upon paid child care. As many have actually noted the extra earnings from that second job only just about cover those child care costs. The household isn't any better off. But by our poverty measure that household isn't going to be in poverty any more as a result of two earnings not one.

We must always, but always, remember that we do not actually have any poverty in the UK. That, the absolute poverty, was beaten back in the 1930s. What we have and what we measure today is inequality, the thing we call relative poverty. And if we don't remember this then we're going to be making mistakes similar to the one above.

Single earner households have lower earnings that dual earning ones. Blimey, that's a bit of a surprise, innit?

Economics has moved on, but the law hasn't

In Britain, manufacturers and suppliers can recommend prices to retailers, but they can't enforce those prices through a contract. Retail price maintenance (RPM) has been banned outright since 1964's Resale Prices Act on the grounds that it's anti-competive and hurts consumers. The problem is economics has moved on, but the law hasn't.

That's not the case in the US where the Supreme Court overturned a near hundred year precedent in 2007 to rule that suppliers that set minimum prices weren't necessarily undermining a competitive marketplace. In the US the practice was banned through the courts based on the best available economic theory and evidence. But when new theory and more importantly new data overturned the economic consensus the courts (eventually) took note.

The Competitions and Markets Authority (the regulator tasked with enforcing the law) states that "RPM agreements are usually unlawful because they prevent you (the retailer) from offering lower prices". It's a bit more complicated in reality: suppliers have little incentive to increase their retailer's markup at the expense of their consumers, especially in the face of competition from other brands. It wouldn't be wise for Coca Cola to set a minimum price that boosts Asda and Tesco's bottom lines when they face competition from Pepsi.

Most economists accept that RPM agreements can potentially undermine competition for two main reasons – exclusion and collusion. They make it easier to police collusive agreements at both the manufacturer's and the retailer's level. It might also enable a dominant but inefficient retailer prevent other more efficient retailers from undercutting them with smaller mark-ups.

If that was the only reason to employ an RPM agreement, then banning them would make sense. In fact since the practice was outlawed economists have discovered additional explanations for why a firm might employ an RPM agreement and why it is in the consumer's interest to let them.

To begin with, a range of products from high-end fashion to digital cameras and phones typically require retailers to invest substantial effort in hiring staff to explain and promote their features to customers. This doesn't come cheap. It means hiring more staff, training them and paying them more. That squeezes margins and pushes up prices in store. But a consumer is under no obligation to buy from the retailer who's put the effort in. No-frills retailers can free-ride off the effort of other retailers in promoting the product and sell it at a discount. The threat of free-riding discourages firms from investing in promoting the product and leads to a worse customer experience with less well-informed customers.

Think of a car dealer offering test drives with well-trained staff offering detailed explanations of the vehicle; the incentive to provide those services falls if the buyer has the option of going to a discount retailer afterwards.

If manufacturers agreed a minimum price with their retailers they could prevent no-frills discount stores from undercutting and free riding off of the ones that invested in promoting the product.

But it's not simply blocking free-riders. It also helps resolve a conflict between the incentives of retailers and manufacturers. Retailers have much less to gain than the supplier from promotional services. Retailers tend to make a greater investment attracting customers to their store over other shops, for instance by extending opening hours. If I ran an electronics shop, I might reward repeat customers to attract more customers from other shops. However, I'd have less of an incentive to invest in promoting Apple Macs by displaying them prominently, offering free installation and bundling in products as a special offer, because while I'll sell more Apple Macs I might sell fewer PCs.

It's true that manufacturers could simply pay retailers for floorspace. As UCLA's Benjamin Klein points out Gucci could simply pay a department for their product to be placed in a prominent place, but that would inefficient for a number of reasons. First, the value of floorspace varies from shop to shop. It'd be inefficient for Gucci to go to a great length at determining the value of floorspace in each different shop to them. Second, retailers tend to know better than manufacturers how to market products. Gucci might struggle to specify the exact promotional services that they want the department store to carry out. It is better for Gucci to solve that knowledge problem by creating a financial incentive for shop to push for further sales. Instead of this inefficient duplication of efforts they can just make sure that retailers have a financial incentive to market their products through a bigger markup.

Whether or not America or Britain's approach to RPM is right depends on how often RPM is used to boost competition and how often it's used to suppress competion. If it's the case that RPM is mostly used to police cartels and for dominant dealers to throw their weight around then the UK's approach is right.

But multiple meta-analyses of prosecuted cases of RPM find few cases of it being used to police cartels. Ippolito (1991) reviewed 203 litigated cases of RPM and found that just 13% of case alleged (not proved) horizontal price-fixing, while many more offered evidence suggesting the agreements led to better customer service. Ippolito's review backed up previous research by Overstreet (1983) which found that RPM agreements tended to appear in markets with little scope for either retailer or manufacturer collusion.

A more recent meta-analysis by LaFontaine and Slade (2005) which reviewed 23 papers came to a similar conclusion. They stated:

"...when manufacturers choose to impose such restraints, not only do they make themselves better off, but they also typically allow consumers to benefit from higher quality products and better service provision.


The evidence thus supports the conclusion that in these markets, manufacturer and consumer interests are apt to be aligned, while interference in the market is accomplished at the expense of consumers."

The evidence against banning RPM is overwhelming and on the strength of that evidence the US Supreme Court overturned the outright ban on RPM in 2007 moving to a rule of reason approach which requires firms to prove that RPM was being used for the purposes of undermining competition.

Promoting and preserving competition benefits consumers, but too often regulation rules out innovative solutions to potential market failures. Let's fix that and deregulate RPM.

Adam Smith - the most feminist man ever

Yes, you're right, of course that headline is a deliberately provocative piece of hyperbole. And yet it is indeed true that Smith described at least the most feminist of all socio-economic systems, that of roughly free market roughly capitalism. For that is the only system of organisation which has ever lifted mankind out of Malthusian growth. 

At which point this new book looks like a waste of valuable space and time:

Does capitalism help or hurt women is an enduring question. And one that a fascinating book, Capitalism, For and Against: a Feminist Debate (Cambridge University Press), seeks to answer that question.

There is the ritual mention of the fall in child mortality made but not enough is made of the full horror of that past. At which point Don Boudreaux mentions Queen Anne:

 A high-born English royal in the early modern era – a woman who was for twelve years Queen of what was by then one of the wealthiest nations on earth – died as a widow in 1714 at the age of 49 without a single surviving child despite giving birth ten times.  (Each of her other seven pregnancies ended in a miscarriage.)  Anne’s longest-surviving child was Prince William, Duke of Gloucester, who in 1700 died at the age of 11.

Anne’s sad fate was unusually bad even for her era, and especially for her class. 

Yes, at the bad end of the spectrum. Yet when we examine all the Stuart and Hanoverian Kings/Queens of England we find that absolutely none of them had all children surviving into adulthood. For many not even a majority of pregnancies led to a child even, rather than a baby and then nothing.

The aim and point of any form of life is of course that the life itself replicates down the generations. And for human beings, until very recently, that meant that in order to have a good chance of grandchildren a woman would be pregnant or nursing from marriage until menopause. If she survived that grueling duty of course, or if her fertility did. And that is the greatest achievement of the surplus that this capitalist free marketry has brought.

Today an odds on chance of grandchildren, a stable population, is achieved with 2.1 completed pregnancies per woman. Rather than the 10 and 20 needed by the British royal family of only two and three centuries ago. And if that ain't a feminist advance then what is?

Smith may only have described the system which achieved this but there's no doubt at all in our minds that this capitalist free marketry is the most feminist socio-economic system devised as yet.

Poor Greece, the fat lady ain't singing yet

As with the opera not being over until the Fat Lady has sung about her youth, beauty and slenderness the Greek debt saga is not going to end until the one important decision is taken - how much debt should Greece repay? We've been making this point for a number of years now in a number of venues. There is just this one question that must be answered:

Policymakers were still in disagreement this weekend over assumptions about Greece’s long-term growth trajectory, and the ability of the country to maintain a sizeable primary surplus over the medium term.

Countries such as Germany believe stronger growth in Greece will remove the need for debt relief, with the country’s expansion alone enough to reduce its debt burden to sustainable levels.

However, the International Monetary Fund has called for more conservative estimates of growth and primary surpluses, insisting that it will not join Greece’s €86bn (£74bn)  third bail-out package unless there was meaningful debt relief.

A simple truth about our universe is that debts which cannot be repaid will not be repaid. Thus putting rather a large weight upon the definition of "cannot." Which is where the disagreement is here.

The IMF thinks that Greece can run a primary budget surplus (the primary meaning before interest and debt repayment, the implication being this is the amount that can be used to pay down debt) of 1.5% of GDP for some decades. Run that forward and that means Greece can repay some portion but not all of the current debt. 

Everyone else is a politician and a politician quite aware of the fact that they've lent their voters' funds to Greece. And they'd just hate for said electorate to find out that they've lost that money by so lending it. So they've cut the interest rate to near nothing (a few basis points over the ECB's current QE influenced very low rates on much of it) and extended repayment out towards the end of the century. Losing money through opportunity cost, inflation and interest not paid is less politically painful than cutting the capital sum. Even the dimmest voter on the Chemnitz Omnibus would cotton on to the loss if there was a reduction in the outstanding sum.

But this still leaves them coming up short - unless Greece runs a primary surplus of 3.5% of GDP. So, that's the demand. Not what can Greece achieve, but what must Greece achieve to save political positions? 

Which is where the problem is. No democratic system can run a primary surplus of that size over time. It can be done for a year or two but sending that much of the economy off to foreigners just isn't going to happen over the long term. The only person we know of who did manage it was Ceausescu in Romania and they machine gunned him and his wife in the end.

The IMF is correct here but then this is Europe, political desires do so often seem to win out over economic reality. But that's why the whole thing is still rumbling on after all of these years. And it will continue to do so too. Until that basic truth is recognised by all, debts that cannot be repaid will not.

But what's actually wrong with Facebook and data?

There's obviously something we've missed in this argument about Facebook and the other internet giants and their collection and manipulation of our data. The specific fine handed out this past week we're just fine with. Facebook was more than a little economical with the actualite to the regulators over its capabilities and intentions. Whether there should be such regulators we think doubtful but if there are going to be then they should indeed be told the truth. It's like the courts and perjury and contempt - these are very serious crimes on the grounds that if we're going to have courts then people must take them seriously and also tell them the truth.

So with regulators, this is a rule of law matter. However, he larger issue here is something we've missed:

Equipping competition law for the formidable task of properly tackling data-rich behemoths is a fertile area of research and policy, but still awaits enforcement. Challenges include market definition, accurately valuing data assets and dealing with the particular modes of virtual competition.

If the value of data were more appropriately considered, the commission might not have waved through the Facebook/WhatsApp merger so easily.

We're not even understanding the concern here. The data, to the individual, isn't worth a great deal. That's why they're willing to hand it over in order to share cat pictures. The individual pieces of data are worth nothing. It's only the information, in aggregate, and when processed, that has any value. And that's what Facebook really is, an aggregator and processor of such information. That's the function of the beast, so why people are worrying about something doing what it says on the tin we're really just not sure.

We assume this is just the usual about people doing something new and damn it, they're Americans, so we had better stop them. 

If we are really to change the dynamics of the modern data economy, it is going to take more than just targeted arrows and small-fry fines.

Again, we're missing this. Was there a meeting at some point, one we weren't invited to, which decided that the dynamic must be changed? If so, what was the justification? That they're Americans or something useful?

Although we think we do understand this bit:

For the future to offer anything more than resignation to the power of Facebook and its ilk requires dedicated finance for sustainable, civic-oriented technology, strategies to incentivise growth and for people to vote with their feet. How many lies will it take until we hit that point with Facebook?

Yes, we get this bit:

Dr Julia Powles researches technology law and policy at Cornell Tech and at the University of Cambridge

Give my department a big grant please.

Other than that, what actually is the problem that is being complained about?

Questions to which the answer is no

Unemployment is of course a problem, there's those vague whispers of technological unemployment coming down the pike, so, what should we be doing about it?

Should the Government Guarantee Everyone a Job?

No. That's one of those questions where it's entirely and quite clear that the answer is no.

As to why it's no it's because it's a solution that's at least a century, if not near a millennia, out of date as an answer to the problem.

One way of detailing the problem is OK, so government guarantees a job for everyone. Which job?

Back when work was, to a large extent, the application of human muscle power to either farm work or some form of building (roads, canals, buildings, sea defences, whatever) then labour was homogeneous. Someone who could guide a plough might not be quite capable of surveying a dyke, for example, but they'd be perfectly, reasonably at least, efficient at doing the spade work to build one. Thus the various make work schemes in times of dearth familiar to the varied Chinese and Indian administrations of the past were sensible reactions to dearth.

The 1930s experience in the US, well, still, building a dam did need tens of thousands equipped with little more than a shovel and wheelbarrow.

But today we just don't have homgeneous labour. It's hugely, highly, heterogeneous. This is, of course, just the side effect of that much greater division and specialisation of labour which makes the modern world so rich. But it does mean that there isn't anything that we do which either requires or benefits from the mobilisation of large amounts of untrained, in this task, labour.

Well, perhaps government could work out what needs to be done, then train people to do it and that's how we'll provide everyone with a job? But that runs straight into Hayek, pointing out that the market is the only method we've actually got of processing through the information to work out what needs to be done and in what manner. We know very well that government trying to decide that is going to be less efficient than just leaving well alone.

And as a final kick in the fork for the argument that we can just move labour from one task to another at will. If we could do that then there would be no such thing as technological unemployment, for labour could be moved from one task to another at will.


Cats in a sack comes to mind, like cats in a sack

Or if you prefer your analogies more Northern-style, too may ferrets in that trouser leg:

The EU’s chief Brexit negotiator, Michel Barnier, fears the refusal of member states to soften their demands over the size of Britain’s “divorce bill” could lead to a collapse in talks and the UK crashing out of the EU without a deal, minutes of a meeting of the European commission reveal.

Barnier has told the commission president, Jean-Claude Juncker, and other senior officials that the stakes are so high because Berlin and Paris are refusing to pay more to cover the UK’s departure, while those governments who receive the most from EU funds are opposed to any cuts in spending.

And thus those demands for €60 billion, €100 billion, that are being bandied about. Not because there is any legal right to have such sums, nor even a nod to the lads agreement that they would be paid, but because that's the amount that wouldn't inconvenience the others as we leave.

Which isn't, if we're honest about it, that great a justification for our having to open up the chequebook. And it's not as if the EU doesn't have form here, they're prone to backcasting.

The very centre of the Greek debt problem is that the IMF insists that Greece can only manage a primary surplus of 1.5% of GDP, thus can only pay back less debt than is owed. The Eurogroup has been working the other way around, in order to pay back the total that surplus should be 3.5% over decades. Therefore Greece must be plunged into the sort of austerity that no democratic polity has ever managed over the long term just because that's what makes the EU sums add up.

It's the same here. We desire this much money, that's the demand. Not anything to do with how much is owed, due, or can or will be paid.

And we would note one more interesting little point. If it's €100 billion to leave then what would have been the even greater costs of staying? For this demand really does only take us up to 2020......

The demands become ever more extreme, of course they do

No organisation ever goes quietly into that long dark night and most certainly no bureaucracy. So, even if the original problem is solved we end up with ever more demands. For little reason other than the prolongation of the life of the organisation making them.

So it is with food waste:

Less than 1% of edible surplus food produced by UK manufacturers and farms is being sent to charities to help feed the hungry, according to new figures.

Vegetables that are perfectly edible are being left to rot in the fields, and other foods not sold to retailers are put into anaerobic digestion or sent straight to landfill, the UK’s largest redistribution charity FareShare has warned.

While retailers and supermarkets have doubled the amount of surplus food sent to feed the needy in the last three years, a high volume of food that never makes it into the shops is being needlessly wasted elsewhere in the supply chain, it said.

We're entirely in favour of the change that has happened over the last decade or more. The growth of food banks fills us with nothing but joy. The little platoons have discovered a technology, for that's what such a system is, a technology, with which they and we can fill in one of the gaps of the State's incompetence. Why wouldn't we be happy about this? 

Similarly, people getting realistic about best by dates and the rest is just fine with us. But it's possible to take this much too far, as is being done here:

According to the government’s waste advisory body Wrap, food waste at a supermarket level – any edible food that remains unsold – stands at just 2%, whereas 17% of edible food surplus found in manufacturers and on farms is lost.

When dealing with something perishable like food we'd take 2% to be perfection. Even before considering things like the marginal cost of clearing up the last little bit as opposed to the marginal value of doing so. But now to the extreme:

Vegetables that are perfectly edible are being left to rot in the fields,

So why is this happening? Because they are not worth the cost of collecting them, that's why. Let alone the cost of then transporting them and distributing them. If they were worth it then people would be doing so, profit is a pretty good incentive.

So what is now being demanded is that someone must make a loss in collecting those vegetables from the fields and transporting them. And you know what? We think that insisting that someone else makes a loss is extreme, we really do.

Come and do your gap year at the ASI—and get paid!

Backpacking around South-East Asia is great, but do you know what's more fun? 

That's right, spending 6-9 months in the ASI office with all of your favourite neoliberals!

It's that time of year again: the ASI is looking for two new employees, to start in September 2017.

As last year, the crucial requirements are that you:

  • Are on a gap year; you must be 18-20
  • Are open-minded, inquisitive, friendly, intellectually curious, eager to learn and interested in policy
  • Know and have an opinion on the ASI's perspective and what it does
  • Have a broadly liberal perspective on the world

Does that sound like you? If it does, you've passed the first hurdle. Congratulations! You're one step closer to potentially becoming the latest ASI intern. 

Your duties will include:

  • Organising lunches and dinners, keeping the database up-to-date & doing secretarial work for the directors
  • Managing the blog
  • Reviewing and editing ASI publications
  • Selling ASI merchandise
  • Logging RSVPs for events
  • Meeting a wide range of interesting & important people
  • Learning about social & political science
  • Socialising with the staff
  • Carrying out self-directed research
  • Writing blog posts
  • Setting up and cleaning up after events
  • Mailing out publications to subscribers
  • And, of course, having fun! 

Previous interns have gone on to work with the Adam Smith Institute, including the ASI’s current Executive Director, Sam Bowman, and Head of Digital Policy, Charlotte Bowyer, who was a Gap Year intern in 2009-10.

The role pays the National Minimum Wage. All applicants will interview with President Madsen Pirie and Deputy Director Sam Bowman at the Adam Smith Institute offices in Westminster during the summer.

Please send a CV and cover letter of around 500 words to by Sat 1st July 2017.

Excess diesel NOX emissions cause 0.07% of deaths globally

So we're told in this latest paper at least, the NOx emissions from diesel engines, over and above what emissions standards say they should be spewing out, cause 0.07% of deaths globally:

Diesel driven cars, lorries and buses churn out far more air pollution than standard testing procedures suggest, leading to many thousands of unreported deaths, scientists claim.

The excess emissions of harmful nitrogen oxide (NOx) exhaust gases can be linked to 38,000 premature deaths worldwide, according to the new research.

Mr. Google, our friend, tells us that there are some 54 million deaths a year globally. Thus that 0.07%.

At which point we've got to ask the obvious economic question - compared to what?

The heart of the problem here is that we have three things we'd like to have. Low diesel consumption for cost and CO2 reasons, low NOx creation for those health reasons and low cost engines just on the general basis that cheap is better than expensive. And as with the engineering wish list, faster, better, cheaper, we can only have two of the three.

As we crank up the combustion temperature in order to gain fuel and CO2 efficiency we end up creating more NOx. We can only avoid this by having expensive, not cheap, diesel engines - or adding the expensive urea systems to such vehicles. This is not an optional aspect of our universe. We cannot have all three, we can only have two of the three in pretty much any combination we desire. Low NOx is possible cheaply at the cost of general fuel efficiency, we can have low NOx and efficiency at high cost and so on.

So our 38,000 deaths are compared to what? To the extra cost of having no cheap diesel engines, only expensive ones.

No, we don't know the answer here either. But we do insist that this is the correct question to be asking. We've limited, scarce, economic resources. So, what is it that we'll have to give up to gain this purported reduction in deaths from NOx? For without that answer we cannot possibly hope to answer the question of whether we should do it or not.