National literacy day

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To put into context the worthlessness of marking the UN mandated National Literacy Day, the same institution puts Cuba top of the tree in its ranking of world literacy at 98.8%. Having lived in Havana for a number of months, I can categorically deny the validity of this, based upon the simple fact that a worryingly large number of the people I met were unable even to write their own name. Given that this was the major city, I hold little hope for real rates of literacy in the countryside.

Interestingly though, many of the poorest in Havana were able to speak a plethora of different languages, learnt not in the classroom but on the streets: essential in selling all manner of black market product and disreputable service to tourist so they can get hold of those precious greenbacks. The moral of the story? If you really want your children to learn foreign languages, dump them on the streets of Havana. Perhaps not. But it does go to show that human ingenuity adapts even in a heavily distorted market.

Rather than to simply celebrate literacy and condemn illiteracy, the key point to consider is how it is achieved. It certainly helps if economic development is at a point where literacy is itself as essential to being able to function as having German, French and English as second, third and fourth languages is on the streets of Havana. However, we also need a good and competitive education system, especially for the poorest in our country. The former we have, but the latter we don’t; and this accounts for the embarrassingly high levels of illiteracy among UK adults, because of – not in spite of – government interference.

For a proper understanding of literacy and all matters related to education, you could do no better than to peruse the excellent work coming out of the E.G. West Centre based at the University of Newcastle. They also have blog that can be accessed here.

Would a department by any other name...

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Trying to discover the government’s procedures for forecasting the impact of new regulation, I recently googled “regulatory risk assessment."

The number one result is this. Entitled “The framework for regulatory risk assessment in the Department of Trade and Industry", it’s found on the website of the Department for Business, Enterprise and Regulatory Reform, and topped by the logo of the Department for Business Innovation and Skills.

The DTI was abolished in 2007, and BERR in June this year. Brown’s endless bureaucratic rejigging has clearly proved too much for the governmental webmasters…

It's not the amount of money you spend, it's the way that you spend it

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I've not normally got a lot of time for Professor Julian Le Grand but this point about NHS reforms leapt out at me:

During the same period that we examined waiting times in England in our study, Scotland and Wales, which both explicitly rejected market-driven reforms, have spent more per patient but have seen much smaller decreases in waiting times.

People like me don't run around screaming that we've got to use market mechanisms because that's what Nanny beat into us nor because we are paid agents for international capital: no, we do so because most of the time (and I certainly am willing to acknowledge that this isn't always true) the use of market mechanisms is more efficient. We get more of whatever it is that we want from the resources available by using markets than through any other method we've yet managed to come up with.

That the English system of more markets reduces waiting times (and also, as the Professor notes, increases equitable access at the same time) produces better results than the not market but more expensive Scots or Welsh systems should come as no surprise to those who remember water privatisation. England got for profit private companies, Wales a not for profit mutual, Scotland a government run company and Northern Ireland direct government supply. In terms of cheapness of supply, higher purity of that supply and lower environmental damage from that supply a decade later the best to worst in order was England, Wales, Scotland, Northern Ireland.

This will of course be the most delicious part of both devolution and of the even more fashionable localism that is being promoted. Precisely because different places will try different structures we'll see which of those structures works best in each and every different field. Forgive me if I crow and point out that yes, even in such basics as water and health care, markets seem to work better than not-markets.

Time for forward-looking policies

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As the signals intensify that the recession may be coming to an end, we have a chance to take stock of the damage done to the economy. At first glance the figures look pretty unpleasant, but before we despair, it’s worth stepping back and taking a broader view over the last sixty-five years:

 
The graph shows the total output of the UK economy in each quarter between 1955 and today, adjusted for the seasons and changing prices. Even the current recession, the steepest and deepest of the period, seems relatively insignificant in this context – the economy is still bigger than at any time before 2005.

Of course, the recent contraction has not been evenly spread across regions or industries, and the hardship for many has been terrible, but the bigger picture is clear: the recent crisis has been little more than a hiccup in decades of sustained growth.

We should maintain this sense of perspective not only in assessing the harm wrought by this recession, but in developing policy for the future. The living standards of the next generation will not be chiefly determined by the severity of cyclical fluctuations, but by the long-term rate of growth in the intervening years.

In responding to the current crisis, and to the wider ills of society, a brave and forward-thinking government will bear this in mind, and pursue goals that do not simply address the problems of today, but recognise that economic growth offers the best solutions to the problems of tomorrow. It will accept that short-term sacrifices are necessary for long-term gains. It will encourage competition and innovation; it will reduce taxation and spending, and eliminate subsidy. It will ensure a productive workforce by educating and training the workers of the future, liberalising the labour market, and demolishing the benefits trap. And it will stimulate investment through price stability and fiscal prudence.

Or perhaps, as ever, it will succumb to the temptations of short-term, politically-motivated policy.  

Taxing fast food will lose us money, not make it

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As Spencer pointed out, there are reasons why taxing fast food to prevent obesity might not work. There's a larger point to make as well though. If taxing fast food did reduce obesity it would not save us money on health care costs: quite the contrary, it would increase the amount that we have to pay out of tax revenues.

I've looked at the American numbers in more detail elsewhere but the basic outline is quite simple. Assume that we are living in something very much like any of the European welfare states. Health care and pensions are paid out of tax revenue (that is the case pretty much anywhere in Europe). Then let us agree with those who say that obese people (that is, with a BMI of over 30, not just those like yuo and I merely well padded) cost more each year of their life in medical costs.

It isn't exactly a wild leap of faith to assume that those who consume more in health care are likely to die younger: one of (not the only of course) functions of health care is to prevent early death so not to see a connection there would be odd. And it is indeed true: the obese on average die younger than the non-obese. Those years of life not enjoyed stuffing fast food into oneself as a result of stuffing fast food into oneself tend, as is the nature of these things, to come at the end of one's lifespan. When one is retired and in recepit of, even in the US, both government paid health care and a government paid pension. People who die after pensionable age but before the average age of death save us money on that health care and pension.

A brutal thought, yes, but one that is still worth thinking. What we want to know now is whether the extra health care costs paid over the years are lower than, higher or the same as, the savings in health care costs made by not having thin pensioners. As a rough guide it seems that the savings from those years of not providing health care are a little less than the extra costs during life: add in the pensions and obesity is a net gain for the public purse. Just like smoking in fact which also provides a net gain to The Treasury.

There are of course other reasons to think about obesity as a bad thing: those lost years of life for a start. But in a purely monetary calculation, obesity does not cost us money, it saves us money. Thus while there may be other arguments to be used in favour of corralling us all into "eating healthily" the saving of money simply isn't one of them.

 

Obamaganda

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It has emerged that the USA’s National Endowment of the Arts (a government agency) has been encouraging the arts community to create more ‘obamaganda’- although this time regarding contentious policy under legislative consideration. During a conference call, the NEA encouraged America’s creative elite “to help lay a new foundation for growth, focusing on core areas of the recovery agenda – health care, energy and environment, safety and security, education, community renewal."

This basically boils down to the fact that a government agency is asking artists to create work that gives a positive atmosphere towards proposed government policy- and in particular areas which are embroiled in fierce debate, such as health care reform and cap-and-trade legislation.

Given the fact that the NEA is the largest funder of the arts in America, its clout could be far-reaching. It is disturbing that the NEA is adapting its role of “supporting excellence in the arts" to “supporting government supporters in the arts", using artist’s work to mask genuine dislike for policy and actions with manufactured support, and quite simply, propaganda.

More worring still to consider what could happen should Gordon decide that a nice bit of artwork could revive his flagging popularity.

Defensive medicine

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Support for ObamaCare is crumbling rapidly as people are getting more aware of its weaknesses. Yet one area in which the president Obama could curb costs is tort reform, which for many years has been a major driver of increasing health care expenditures. The fact is that American doctors have in recent decades increasingly resorted to defensive medicine (a recent study put the number at 87% of doctors) . These doctors are reckless in employing all available diagnostic procedures simply to escape claims of malpractice by their patients.

The price tag for this type of defensive medicine in the US amounts to somewhere between $100 and $200 billion per year. This considerable sum forms the livelihood of a group of well-heeled and specialized lawyers, who happen to be among the biggest sources of funding for the Democratic party. So for purely political reasons this is a no-go-zone for the Obama administration. In addition the rapidly increasing rates for malpractice insurance are invisible to patients:

- Nearly $2,000 a year in extra health expenses for an average family, according to the rate of defensive medicine found in a study by Daniel Kessler and Mark McClellan.

- Stuart Weinstein…has calculated that if a doctor delivers 100 babies a year and pays $200,000 for insurance (the rate in Florida), "$2,000 of the delivery cost for each baby goes to pay the cost of the medical liability premium."

If this money could be transferred into a patients health savings account about half of the yearly health budget for a middle income family of four would be provided for.

Mad and madder

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Japan's new First Lady believes that she was once abducted by aliens. "I think my soul rode on a triangular-shaped UFO and went to Venus" Miyuki Hatoyama wrote in a book last year. She also claimed to know Tom Cruise in a former incarnation when he was Japanese.

Mind you, her husband, the Prime Minister-elect Yukio Hatoyama, believes that raising the minimum wage, banning temporary employment, subsidising famers, and a $76 billion social spending plan is going to save the Japanese economy.

Junksmith is not sure which is crazier...