So just how badly is the economy doing? Pretty well actually

So just how badly is the economy doing? Pretty well actually

We're generally told that the entire economy is slipping down that slope to hell in that proverbial handbasket. and yet when we go and look at what people are saying, away from the politically oriented opinion pages, in those very same newspapers we find rather a different story. Things seem to be getting better, perhaps not as fast as we would like, but better they are indeed getting. From the Guardian

How Houston densified beautifully through markets

I recently came upon a 2011 document (pdf) from a local architect working in a suburb of Houston that I have become somewhat obsessed with. Basically, it's a pictorial account of how Houston—which has practically no land-use regulations at all—has developed as a city.

First, it sprawled outwards, but as the sprawl and population growth created more economic activity, and agglomeration benefits, the demand for housing near the centre rose and rose. Since there was no restriction on simply adding a few floors to buildings, and filling in gaps between them, to maximise the value of plots, and how many people they could accommodate, developers simply did this. And they did it beautifully and harmoniously, rippling outwards to make Houston denser and better.

Houses like these...

Houses like these...

...quickly become houses like these

...quickly become houses like these

The document, by architect Barbara Tennant, mainly tells its picture through stories, so you should check out the whole thing, as they say. But it has a few key lessons, repeated throughout: restrictions were minimal, with no height limits, freedom of style and design, and only a few rules on setbacks (how far properties must be from the street).

The results are impressive. Houston is cheap, diverse, rich, and growing, and this policy experiment should make us more sanguine about the results to London's skyline if we drastically reduced land-use regulations. The results of private development seem to be very attractive; by contrast planning restrictions seem to make things uglier and less popular.



...and dense beauty

...and dense beauty

Happy 117th birthday, Hayek

F A Hayek, the Anglo-Austrian Nobel economist and liberal thinker, was born yesterday in 1899.
Hayek’s economic works in the 1930s, researched with his mentor Ludwig von Mises, showed how boom and bust cycles arose from the inept government manipulation of credit; and he became the leading critic of collectivism, central planning and the expansionist interventionism of John Maynard Keynes (1883–1946), arguing that the latter would lead to inflation and economic dislocation. 

The Second World War turned his attention to political science, and his bestselling The Road to Serfdom (1944) traced the roots of totalitarianism, arguing that central planning, being counterproductive, requires increasing compulsion to maintain. 

In The Constitution of Liberty (1960), he set out ideas for a free social and economic order. He updated the classical liberal idea of self-regulating, spontaneous social orders, showing how they emerge from the regular behaviour (or ‘rules’) followed by individuals. He argued that these orders, though unplanned, could process a huge amount of knowledge – held by individuals but dispersed, partial, personal and often ephemeral – more knowledge that any planning agency could process, even if it could access it. 

In The Fatal Conceit (1988), he argues that it is a delusion to imagine that we could shape such complex orders using the tools of the physical sciences, and that conscious attempts to redesign them would destabilise them and lead to social and economic disaster. 

Hayek also founded of the Mont Pelerin Society, which has become a powerful international forum for classical liberal thinking.

Eamonn Butler is author of Friedrich Hayek – His Ideas and Influence.

The Panama Papers manifesto

The leaker who hacked Mossack Fonseca and thus led to the massive leak of sensitive information (for example, did you know that the British Prime Minister pays all the taxes he owes? In full and on time?) has released his manifesto. Or at least his justification for his actions. It does appear that he is rather remarkably mal-informed about matters:

Income inequality is one of the defining issues of our time. It affects all of us, the world over. The debate over its sudden acceleration has raged for years, with politicians, academics and activists alike helpless to stop its steady growth despite countless speeches, statistical analyses, a few meagre protests, and the occasional documentary. Still, questions remain: why? And why now?

The Panama Papers provide a compelling answer to these questions: massive, pervasive corruption.

That's his opening and it's just plain flat out wrong.

We agree that within country inequality has risen in recent decades just as global inequality has fallen. But this has absolutely nothing whatsoever to do with any secrecy nor use of offshore. For the quite simple reason that the inequality we're measuring does not include any effects of secrecy or offshore. Because, you see, things that are secret are not included in public information and calculations, and things that are offshore are not included in estimations of in country inequality.

That is, the information revealed has absolutely nothing whatsoever to do with the thing being complained about, that already measured inequality.

This is, by the whistleblower, logic worth of Richard Murphy. Sadly, the manifesto is, logic and facts aside, too well composed for it to have come from that source so we're still left wondering who it is.


How a poverty meme gets created

We're privileged to be at the birth of a new poverty meme. We can actually watch how it is done. First, you create your own definition of some form of poverty. As the Joseph Rowntree Foundation have done here. They define destitution as being the following:

The number of destitute people in the UK isn’t measured officially, despite growing concerns about rising use of food banks, homelessness and other indicators of severe poverty in recent years. In fact, when we started this research we found there wasn’t even a widely accepted definition of destitution which we could apply to everyone in the UK. The research team at Heriot-Watt University worked with experts to develop a robust definition, which was then tested with the general public.  Using this, we define destitution as being when someone lacks two or more basic essentials in one month, and so has experienced two or more of the following; slept rough, had one or no meals a day for two or more days, been unable to heat or to light their home for five or more days, gone without weather-appropriate clothes or gone without basic toiletries.

We agree, those are not things which should be happening to people in a rich country. We would also note that the major cause of all and any of these things is the incompetence of the anti-poverty bureaucracy run by the government. But do note that there is an important point about the numbers here:

This week we have published the first comprehensive study into destitution in the UK, which shows that 1.25 million people, including over 300,000 children, were destitute over the course of 2015. 

I any one month the number being failed by that State is some 100,000 people. 100,000 too many, of course, but it is 100,000 who experience perhaps a couple of days of that "destitution" in any one month.

And then, only a week later, see how this meme has subtly altered in the popular press (to the extent that The Guardian is popular of course):

This is what destitution looks like. More than 1 million people in the UK are so poor they can’t afford to eat properly, keep clean or stay warm and dry, according to new research by the Joseph Rowntree Foundation (JRF). What’s emerging in austerity Britain is a new level of class inequality: not simply between the wealthy and the poor, but between people who have enough money to buy toilet rolls and cook a hot meal and people who don’t.

They're referring to the very same report. And yet that meaning has hugely changed, hasn't it? From this destitution being a brief period for that 1 million over the course of a year to something that is happening to that 1 million all year.

And thus are memes created. Invent your own definition, however reasonable, attach a caveat, a qualification, and watch everyone run with the uncaveated, unqualified, extreme version. This has been done for decades now with the definition of poverty itself: the modern definition means "not as much as others" rather than the older meaning of poverty of "not much". 

We don't hold with it ourselves, think this is tantamount to lying to us all. But just look around, it's a very common tactic.

Naomi Klein just doesn't understand the real world

Naomi Klein just doesn't understand the real world

We've had our differences with Ms. Klein before. We recall a central tale in her most recent offering: she complained that the WTO's insistence on lifting local content rules on Canadian solar power reduced in some manner the fight against climate change. When, of course, allowing people to install cheaper Chinese made solar panels rather than more expensive Canadian made ones will, presumably, increase the number of such panels installed.

Whitehall should manage the what, not the how

BIS may not have noticed the British steel industry going to the wall but they at least deserve sustained applause for getting something right. For twenty years and more they have been assessing their International Trade Advisers on how they spent their time, not what they have achieved.  Critics have been suggesting that, as ITAs were supposed to be turning SMEs into exporters, maybe they should be assessed by the number of new exporters, or the value of exports they produced.  Now, UK Trade and Industry, under the leadership of the excellent Dr Catherine Raines, has done exactly that.
We taxpayers give Whitehall our money for things we could not otherwise achieve for ourselves. Is it not blindingly obvious that value for money should be assessed by what that money achieves, not by some contrived analysis of  how public servants spend their time?
Yet department after department has not got the message.  The Department of Health thinks it knows how to be a doctor better than doctors do.  Education likewise thinks it knows how to run schools better than teachers do.  The most disgraceful, perhaps, example is safeguarding children, or perhaps failing to do so.  The Department’s response to each child abuse scandal is to commission another enquiry.  This then further complicates the way child workers are supposed to spend their time which in turn leads to more safeguarding failures and so it goes.  Rotherham at 1,400 abused children and counting may prove an all time high but child workers are so busy with redundant admin that you can bet the abuse continues willy nilly. 
One such enquiry was headed by Lord Laming who, in 2003, said:
 “17.65 There was no doubt that the work of each of the key agencies supporting children and families should be rigorously monitored. In the past, the tendency has been to concentrate on the measurement of inputs; for example, the size of the budget, the number of staff, or the range of equipment used. This approach is of limited value and does not address the more important question of what is actually being achieved, and whether the lives of children and families are being improved by the investment.”
13 years later that attitude has not changed. This summer we are expecting another “Single Inspection Framework” from Ofsted setting out how social services should spend their time to please Ofsted, not how outcomes should be measured, still less how they should be used to assess child workers’ achievements.
When the Minister’s attention was drawn, again, to the need to monitor outcomes, the response (19th April 2016) was, if the status quo was inadequate, to consider “alternative models of delivery”, i.e. having child workers spend their time differently and, no doubt, confusing them further thereby.  Please, Minister, just establish the required outcomes and let child workers get on with it.