Anti-English comments by Football Association of Wales are just not cricket

Last week the Chief Executive of the Football Association of Wales, Johnathan Ford, went public with comments on who would not become the next Manager of the Welsh national football team. He didn’t rule out an individual though, instead he decided to rule out everyone from England. Not just anyone from outside of Wales, he only ruled out the English, saying the “next Wales manager could be "foreign", but "definitely not English".

The reason this smarts is not just the blatant anti-English bigotry but also because it flies in the face of their policy on players. The most recent squad of 25 for the friendlies last month had 12 players born in England (James Chester - Warrington, Andrew Crofts - Chatham, Ashley Williams - Wolverhampton, Ethan Ampadu - Exeter, Dave Edwards - Shrewsbury, Lloyd Isgrove - Yeovil, Andy King - Devon, Tom Bradshaw - Shrewsbury, David Brooks - Warrington, Sam Vokes - Lymington, Marley Watkins - London, Ben Woodburn - Chester), the Captain was English born and every single one of that squad currently plays in England & for clubs in English towns & cities.

With so many English born and English trained players, taking Wales up to the 10th best team in the world in 2015, and given they're currently sat at a not-too-shabby 19th, you might think that the FAW would understand and appreciate the benefits that immigrant talent from Wales’ nearest neighbour has brought to their sport (this is not a uniquely Welsh phenomenon either, as this exploration of how World Cup teams would look without immigrants shows).

The CEO of the Football Association Wales can’t possibly think that Wales’ performance is poor because of their use of migrant labour, nor can he really think it’s the location of the manager’s birth (after all, the last two managers were Welsh born). So this is a matter of pure taste-based discrimination in which he has come out and said that he won’t accept applications from a group of people because where they were born. That it is English managers he wanted to ban is no more acceptable than if it were anywhere else, but it grates even more with the 20% of Welsh people who were born in England and the even greater number with familial links with the country next door.

In England we’ve had this conversation before, in a whole host of industries immigrants are a scapegoat. This is as true in football as it is anywhere else, migrants are seen as a useful mechanism to blame the failures of investing in training at home. There is a reason why non-national teams, private companies in a competitive environment, go after and source talent from across the world – and pay large salaries in the process – rather than relying solely on the locales where they are based. National teams piggyback off of this, and benefit when they do. The world cup in 2014 saw English Premier League players score 20% of the goals, with 80% of goals scored by players that are based at clubs outside of their homeland.

This upsets economic nationalists but true fans of clubs realize it is the winning that counts, not the birthplace of the people who help them secure the silverware.

News hit yesterday that the FAW has whittled the candidates to the top job to three Welsh men. Good for them (I have no opinions on their qualification for the job), but can we honestly say this process has been good for the team, and good for the game?

Drugs are very expensive things to create

As we've pointed out more than once around here drugs are very expensive things to create. As we've also pointed out patents might not be the perfect solution to the public goods problem here but they're a useful one. Finally, we've also routinely pointed out that the cost of creation is largely based upon the regulations about gaining approval to sell something created:

The cost of developing a cutting-edge medicine has jumped 70pc in just seven years to £1.2bn, a Deloitte study has found.

Yet a survey of the world’s top 12 drug firms by R&D spend found that despite spending more on each treatment, the companies were struggling to increase profits.

Deloitte’s analysis – which included data from FTSE 100 giants GSK and AstraZeneca – found projected returns on R&D investment dropped to 3.2pc this year, down from 10.1pc in 2010.

Over the same period the average cost to bring a drug to market jumped to just under $2bn (£1.2bn), up from $1.2bn (£708m).

We would like to have more drugs available to us. For we'd like to be able to treat at least, if not sure, those things which we currently cannot. But if the cost of new drug creation continues to spiral upwards then we'll be getting fewer of those things which save our lives than we would like.

The answer, therefore, is to change that regulatory system. If we reduce the bureaucracy in between bright ideas in the lab and the sick rising from their beds then more of the latter will do so. As is so often true, the solution to our ailments is for government to be doing rather less than it currently does. 

Why not use the John Lewis Christmas ad as an economic example?

Around here we bang on, interminably at times, about the importance of distinguishing between capitalism and markets. The first is a description of who owns, the second about competition, pricing and the distribution of what is made. These are entirely different things, different axes along which to consider the structure of an economy.

We're absolutely fine with voluntary socialism - if the workers, the customers, the producers, want to own the means of production then why not be fine with that? We would and do insist that they must create or buy them of course, but other than that again why not? Why shouldn't there be that competition in structures and forms of organisation? 

That all then have to compete in a market is the part that is important - to the point that while we may indeed be neoliberals in this modern world we're not particularly capitalists but marketists. Capitalism has its advantages at scale but it's not the basic idea which must be protected and savoured, markets are.

This becomes important when running the other way. For all too much of what the "socialists" state they want is actually anti-marketism, that very thing we consider so dangerous. 

Which brings us to the John Lewis Christmas ad. They were the first to really gear up for a large campaign at Christmas, incorporating a story, using a song which would then gain significant airplay and so on. This is an excellent piece of market participation, even as others have caught up in recent years.

But do note that John Lewis is a socialist organisation, it is owned by the workers within it.

As we say, we're just fine with that voluntary socialism, it's the markets part, the market axis, which we consider the truly important part of the economy.

We have cars because they have net benefits, not ban them because they have costs

Abi Wilkinson - admittedly, not unusually for someone in The Guardian - entirely forgets the most basic economics. She's missed opportunity costs:

If petrol and diesel vehicles were invented today, what possible justification would there be for allowing unchecked ownership? Knowing all we do about the damage wrought by burning fossil fuels – both to our immediate health and to the long-term viability of our habitat – it would seem an act of obscene, destructive decadence. The idea of driving a monstrous, tank-like 4x4 a distance you could easily walk or cycle, and then sitting outside a school (a school!) with the engine still running, guzzling petrol and burping out poison into the surrounding air, would be seen as actively malevolent.

 If such vehicles were allowed at all, they would surely be strictly regulated. Disabled people might be able to claim special dispensation because of the unique mobility difficulties they face. And perhaps people who live in very rural areas might also be permitted to own vehicles, on the basis that regular public transport isn’t viable. Certainly, things wouldn’t be like they are now.

We would add that the important people - whether we call them the peoples' commissars, politicians or gauleiters - would obviously have a car in this Brave New World.

But the basic error here is much deeper than that. Sure, we're entirely willing to agree that cars have costs, pollution among them - we are the people who touted the congestion charge for decades after all. But we would also insist that they have benefits.

We'd all be far poorer if we didn't have the transport made available by the internal combustion engine. Poorer in cash terms and much more importantly in our life choices. Do note that poorer people tend to die earlier so it's not even obvious that the absence of cars would reduce the death rate nor increase lifespans on balance. 

To miss that, to miss opportunity costs, is a signal of being ignorant of the very basics of economics. Further, to argue that we have a solution is an error too. For the outcome of economic study is that, by and large, we don't actually have solutions to anything. We only have trade offs. Are the costs worth the benefits?

Given that absolutely every society ever which has had access to a private and personal form of transport has taken full advantage of that availability we'd have to assume that the people think the costs are worth those benefits. Whatever the peoples' commissars, politicians and or gauleiters believe upon the subject. 


Regulating social media threatens free speech and competition

The PM’s ethics watchdog is preparing to call for a major change in the way social media is regulated. It's thought Lord Bew, who chairs the Committee on Standards in Public Life, will recommend that social media firms like Facebook and Twitter should be liable for the content posted on their platforms. In other words, he wants to reclassify social media platforms as publishers, holding them to the same standards as newspapers.

If you care about free speech and innovation, this should worry you. Currently, if someone posts a defamatory comment or shares extremist material on Twitter, they alone (and not Twitter) will be liable for legal damages or criminal prosecution. Twitter may of course choose to ban extremist accounts for violating its Terms of Services, but that decision lies with Twitter alone. If the law changes, then Twitter could be held liable if it fails to rapidly take down the offending content.

This may seem like a small change, but it would have massive implications for the internet ecosystem.

David Post, a professor specialising in internet law, makes the case that an obscure provision of the 1996 Telecommunications Reform act has been essential to the growth of platforms like Facebook, Twitter, YouTube and Tumblr.

The provision “immunizes all online “content intermediaries” from a vast range of legal liability that could have been imposed upon them, under pre-1996 law, for unlawful or tortious content provided by their users — liability for libel, defamation, infliction of emotional distress, commercial disparagement, distribution of sexually explicit material, threats or any other causes of action that impose liability on those who, though not the source themselves of the offending content, act to “publish” or “distribute” it.”

He argues that treating web firms as platforms and not publishers “created a trillion or so dollars of value”. Imagine if Facebook, Tumblr, Twitter and YouTube were liable to be sued or fined, whenever a user posted extremist, racist, or defamatory material. “The potential liability that would arise from allowing users to freely exchange information with one another, at this scale, would have been astronomical”. It’s easy to imagine venture capitalists passing up an opportunity to invest in Facebook, Twitter and YouTube at an early stage with those risks.

Eric Goldman, another online law professor, argues that treating online platforms as publishers will reduce competition and entrench major players. Under the current law, “new entrants can challenge the marketplace leaders without having to match the incumbents’ editorial investments or incurring fatal liability risks.”

Beyond the effect on new entrants, there’s a real risk that the free flow of ideas will be restricted by platforms over-enforcing restrictions on extremist and defamatory content. We have already seen multiple cases of platforms overreacting and banning users for seemingly mild violations. For instance, the comedian Marcia Belsky was banned from Facebook for 30 days for saying “men are scum” in response to death and rape threats. Unlike pornographic content, which can be identified algorithmically, identifying hate speech, threats and defamation relies on context. If the potential liability is high and policing abuse is labour intensive, then firms may be incentivised to shoot first and ask questions later. That could have a chilling effect on free speech.

Lord Bew may be frustrated by what he believes is inaction by social media companies (despite the fact that over 100,000 people worldwide are employed in content moderation). But, he shouldn’t risk throwing the baby out with the bath water. The result of treating online firms as publishers would be to reduce competition, deter innovation, and threaten the free flow of ideas online.

A foolish complaint about capitalism

This is one of those mistakes about the world, the economics of the world, that causes us physical pain. It's like fingernails down the blackboard, something that causes a wince at the least. The idea that money paid out of a company somehow disappears:  

Gary Cohn, Trump’s chief economic adviser, told CNBC on Friday that tax cuts will usher in a long period of wage growth. The White House Council of Economic Advisers has said the proposed corporate rate cut to 20 percent from 35 percent, combined with full expensing for capital investments, would increase average household incomes by at least $4,000 a year after a decade.

Try telling that to the C suite. Many executives view repaying investors as a higher priority than increasing wages or hiring. Honeywell, Coca-Cola, Amgen and others have said they will use any tax windfall in part to boost dividends, share buybacks and debt repayment. Hilton’s chief executive echoed those comments on Thursday.

Well, yes, OK, but what happens next? 

There are only two things that can be done with money, it can be spent or it can be invested. No one does stick it in vault. So, what will happen with this money sent to shareholders is that it will be spent or invested. For nothing else can or will be done with it.

The error here, and it is both a common one and one that makes us cringe, is to believe that money which is paid in tax, or which remains within extant companies, is productive while that held by individuals is not. For that is what is being said here.

If the money stays inside the company, is not paid to shareholders, or it is paid to the government in tax, then it will be either spent or invested in a manner which grows the economy. But if it is in the hands of individuals, in their guise as shareholders having sold stock into a buyback, or received dividends, then somehow, magically, it becomes unproductive. This is nonsense.

Those individuals can only either spend or invest this money. Even if they just buy some other extant asset then the person who sold that has the same and only the same choice, spend or invest. And let's be frank about this, the money to invest in companies not yet extant does indeed have to come from somewhere, doesn't it? Extant companies not being greatly known for investing in those who would disrupt them to our but not their benefit.

The money-go-round doesn't stop, whoever has it can only spend or invest it, there are no other choices. Thus complaining that a tax cut might lead to shareholders gaining more is ludicrous, for the money isn't destroyed nor does it leave the economy. It can only be, and it only will be, either spent or invested. If it's spent then there's an increase in demand, if it's invested then there's an increase in investment. Which is rather the point, this is what we want. Less to be going into the maw of government and more in demand or investment.

Oh, and by taxing the results of investment less we're increasing the incentives for investment which is why we're cutting taxes on the results of investment in the first place.

That shareholders get sent money if we tax investment returns less isn't therefore a problem, however common the wailing about it is, it's the damn point. 

The Star Wars universe doesn't make sense

Star Wars makes perfect sense at one level of course. We humans like to see the hero being oppressed then winning, it's one of the basic mythologies of our species. However, it also has to be said that the Star Wars universe doesn't make any economic sense:

Yet the existence of slavery in the Star Wars universe is itself something of a mystery. Yes, economic historians have come around to the view that Southern slavery in the U.S. very likely was profitable, whether or not it was sustainable. But in a technologically advanced galaxy, exactly why human slave labor should be more profitable than droid labor is not entirely clear. One would think that robot miners, for instance, would work more efficiently than humans, and with considerably less attrition. But in the Star Wars universe, mining is done by human slaves.

As Adam Smith himself was pointing out paid labour is more productive than slave at anything above the most basic human grunt work. Something that just doesn't have to be done by human or animal muscle power in a society with any form of technological advancement at all. Even today's protested versions of slavery aren't that straight chattel form and even then, again, they're restricted to the most basic of tasks.

The thing being that for all its vileness slavery just isn't economic given any modicum of technology.

But the fictional universe still doesn't make sense even after that. In the same way that Red Mars from Kim Stanley Robinson doesn't. They both have people poorer than today's - agreed, rich world - society in a more technologically advanced scenario. This isn't one of the possible outcomes.

Assume that the machines are doing very much more - that's what technological advancement means. There will be more for all to consume therefore - no one can be poorer.

Or perhaps we then posit that only some gain the production of the machines. Analagous to the current complaints that the capitalists will get all the output of the robots and the rest of us will be wandering bereft and jobless. Thus the rich get richer and the poor get poorer. This isn't, as we say, a possible outcome.

For think what happens. The machines do much but we out here don't get any of that. So, what will we be doing? We'll be doing exactly what we are now of course. Producing things that other humans consume, consuming what other humans produce. Sure, those consuming the production of the machines will be very much better off than we are but we cannot be poorer than we are today. Simply because we can produce and consume what we do now without that next generation of machines and therefore we will.

There is no manner in which a more technologically advanced civilisation can leave some portion of us worse off than we are now. Yes, OK, it doesn't matter as a background to a myth in which the hero triumphs but it does when we consider what we need to do about our own futures. Even at the worst the robots cannot make us worse off.

A health care system diagnosis that doesn't really work

We are told that some patients in hospitals in poor countries are held hostage after their treatment. They are held until their medical bills are paid. Distressing no doubt, even something that something must be done about. But the diagnosis of the underlying point is in error:

“This is a systemic problem, and the number of rights abuses is quite profound: people are being detained without trial, they’re being locked up with security guards, and women are giving birth to babies who are entering the world, in effect, as prisoners,” said Robert Yates, project director at the Centre on Global Health Security, who co-authored the paper.

“Healthcare user fees are at the root of the problem, and this just shows how bad a privately financed health system can get. We need to do more research on this and the global health community needs to start taking this seriously.”

There is a doubling down on this same point:

“Healthcare really needs to be free of charge to the patient, because this is the consequence of making patients pay, and it is the worst situation in a whole range of very difficult situations: they may get the medical care they need but then they, or their belongings or their ID papers, are kept hostage,” said Dr Mit Philips, health policy advisor at Médecins sans Frontières.

“Unfortunately, because many of these health facilities don’t receive sufficient funding to provide adequate care even when patients can afford to pay, this is the kind of economic logic that results. If we’re serious about universal health coverage, then abolishing user fees would be a good place to start.”

As we say, this diagnosis is wrong. For it is our own National Health Service which is the outlier here, one of the very few systems that has no user fees, indeed appears to have no system nor ability to make sure that those who really should be paying them do so. Most, somewhere between the majority and near all, rich world health care systems do have some requirement for such users fees. Yet said rich world systems do not keep patients locked in hospital until those bills are paid.

It is therefore not the system of user fees which leads to the practice, is it? 

What is the reason is one of those things we can discuss. Possibly the absence of a legal and efficient debt collection system. Could be the general poverty in these places meaning that routine health care is hugely costly as compared to average incomes. Might be the manner in which all too much of a nation's government spending gets creamed off by the WaBenzi. We can indeed think of a number of reasons why this is happening.

But given that the majority of rich world systems have some form of user fee, that said majority doesn't keep patients hostage until bills are paid, then it's not user fees being the underlying cause of the problem, is it? 

Therefore the abolition of them isn't the solution.

We do find this productivity story amusing

Apparently it is just terrible that market competition is going to lead to some Asda workers losing or changing their jobs:

More than 800 senior Asda shopfloor workers are facing a pay cut or redundancy in the new year after the supermarket chain embarked on another cost-cutting exercise.

Store staff have been briefed this week on a proposal that could mean 842 section leaders being removed from its store management teams. Thousands of other workers will also be affected by a wider move to cut the number of hours spent on stacking and tidying shelves at 600 supermarkets.

In a document given to staff, and seen by the Guardian, the retailer said it needed to cut costs so it could “close the price gap” with rivals Aldi and Lidl.

It said: “We need to continuously review our operating model. … being the cheapest of the big four is no longer a viable business model. We need to be able to look at ways to reduce our operating costs in order to close the price gap.”

No, that's not the amusing part.,What is amusing is to compare this with the very loud complaints currently being made about British productivity.

For this is exactly the sort of thing which increases productivity, that very thing which all are shouting must be improved. To use less labour to perform a task is the very definition of increased labour productivity. So, why isn't this being hailed as a - partial to be sure - solution to what ails our economy? 

Note also how this comes about. Aldi and Lidl have shown that the Great British Public appears to be just fine with hauling their comestibles out of their packing boxes, not actually requiring teams to shelf stock for them. The competition from that lower labour using - and thus more productive - method of retailing being exactly what is pushing Asda into similarly trying to be more productive in its use of labour. Market competition leads to productivity rises.

Except, of course, when people insist that there's something wrong with anyone increasing the productivity of their use of labour.

Too many zombie companies - support for the Austrian view again

An accurate and useful description of economic models and theories is that there's a nugget at least of truth in each one of them. Yea even unto some of the corners of Marxism, a monopsonist employer of labour is indeed a bad idea. The trick is in deciding which model should be applied to the analysis of which problem and when.

Which brings us to the Austrian view of recessions and their aftermath:

There are as many as 100,000 “zombie companies” holding back the economy by soaking up credit that could be used to finance the businesses of the future, a study has claimed.

The Organisation of Economic Co-operation and Development has assessed the impact on productivity of zombie firms kept on life support by their banks and has found that Britain would be growing more quickly if it encouraged a clearout.

Zombie companies have been cited as one of the reasons for Britain’s weak productivity growth, as they soak up capital that successful businesses could use. The OECD defined zombie firms as being more than ten years old and having “persistent problems meeting their interest payments”.

It added: “Zombie firms represent a drag on productivity growth as they congest markets and divert credit, investment and skills from flowing to more productive and successful firms and contribute to slowing down the diffusion of best practices and new technologies across our economies.”

A crude - very crude indeed - sketch of that Austrian view is that mistakes are made in economies. That's fine, that's what the market is, an error detection machine. But the crucial next part is that those errors must be killed off. Bankruptcy the mechanism by which this happens.

We can and should add in that comment of Warren Buffett's - it's when the tide goes out that you see who has been swimming in the nuddy. When times are generally good, in the upswing of a boom, mistakes can be and are covered up by that general enthusiasm. Recessions are, in this Austrian view, the necessary countervailing force, revealing and wiping out those accumulated errors. All of which is rather what the OECD is saying here. 

The policy implications of this view are harsh - when recession strikes just let it happen. Clear out that dead wood so that asset and production factors can be and are reallocated to more productive uses. Short sharp recessions are the way to deal with it, not ameliorative action which prevents economic pain for that simply extends the time span of said economic pain. 

Agreed, many don't like this view - but as the OECD is pointing out there's more than a nugget of truth to it all the same.