Decarbonization and protectionism

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Adam Buckley, Ben Caldecott and Gavin Dick from The Conservative Environment Network (CEN) have written a short piece on ConservativeHome on the benefits of decarbonization.

CEN’s argument is entirely objectionable:

CEN believes that we should consider climate change a significant risk and decarbonise accordingly. But even without the very real and obvious risks associated with climate change, decarbonisation has other profound benefits. In a world without climate change it would still make sense, if done in a cost-effective way, for Britain to save energy, use less foreign fossil fuels, and develop indigenous sources of low carbon energy.

Ignoring the well-trodden territory of their position on climate change, much of the argument from CEN is based upon the failed economics of protectionist policies and state dirrection and control of industries.

In arguing that we should use less energy, CEN suggest that we need to tackle “market failures that prevent people and organisations from improving their energy efficiency". These failures are they believe down to access to capital and the “hassle" factor. However, in the real world individuals and organisations do not improve energy efficiency when it will not save them money and given the failure of the climate change predictions to come to fruition, people see no practical and moral reason to waste their money. How is that a market failure?

If – and it is a very big ‘if’ – CEN are right about the bleak future for hydrocarbon fuels, then the market mechanism will ensure that alternative energy production will be put into effect. And with an unmolested market, some entrepreneurs will take risks at the right moment and cash in on this shift. For the government to do so now is bad economic policy.

The last and most surprising argument that CEN put forward in favour of decarbonization is as follows:

Additionally, we can send less money abroad.  The issue of balance of trade has become unfashionable, but is another important reason why decarbonisation should be desirable regardless of the risks associated with climate change.

CEN tie this in with arguments to invest (read tax and spend) and protect UK energy production. As an antidote to all this nonsense, I suggest the authors start by reading this from Milton and Rose D. Friedman:

"Protection" really means exploiting the consumer. A "favorable balance of trade" really means exporting more than we import, sending abroad goods of greater total value than the goods we get from abroad. In your private household, you would surely prefer to pay less for more rather than the other way around, yet that would be termed an "unfavorable balance of payments" in foreign trade.

Privatized policing

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Residents in a leafy suburb of Southampton have clubbed together to purchase security from a private firm. The 'local' police force have failed to protect the community and left people feeling unsafe. Thus, with an opening in the market place a private company is now giving the residents peace of mind by protecting them from crime. Atraks offers a 'first response' to crime and is independent of the police and local councils, and is cheap at just £3.15 per week.

This country has reached the point where the police force has become a centralized, uniformed arm of the state, directed by government not for the people's benefit but for their own. They are no longer protecting us as a visible deterrent on the streets, they are little more than a criminal investigation bureau. The modern police force offers little value for money, the cost per capita is the highest among OECD countries and yet despite this crime and the 'fear' of crime remains stubbornly high. If the approach of financially saturating the oversized police forces isn't working perhaps a different approach is needed.

This private service is the reproach that government needs, as they may realize that their current meddling in how the police operate has achieved little. What people demand is that the police patrol the streets, protect property and handle any crime that does occur swiftly, backed fully by a strong judicial system. The shift to private police forces will undoubtedly grow as the state continually identifies only national strategies towards policing. The people require local approaches as this is the only way they can ensure that their demands are sufficiently met. If the police forces of Britain had any sense they would be calling for themselves to be privatized, if only to cut down on the demandingly wasteful paperwork they have to complete.

Free speech and press

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The freedom of speech and the freedom of the press have not been granted to the people in order that they may say things which please, and which are based upon accepted thought, but the right to say the things which displease, the right to say the things which convey the new and yet unexpected thoughts, the right to say things, even though they do a wrong.

Samuel Gompers, Seventy Years of Life and Labor, 1925

Should taxpayers fund the arts?

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With the news that opera will receive £2.4m in recession support from Arts Council England as part of their first round of Sustain funding, is it not time that the state stopped funding a form of entertainment that appeals only to a small section of the population?

In the press release, Arts Council England state that “The number of applications to the fund illustrates how this recession is challenging the capacity of our arts organisations to continue to deliver the bold, ground breaking and excellent art that audiences demand." Not exactly. The applications illustrate a natural response to free cash upon application. And if it is the case, as the press release also states, that “the creative economy is the fastest growing part of our national economy", why on earth does it need taxpayers’ money?

Personally I benefit hugely from arts funding. I enjoy opera, theatre and classical music, which are all heavily subsidised. Living in London it is easy to visit the opera a handful of times each year and the theatre and classical concerts more regularly still. My entertainment is subsidised by other taxpayers who are either not interested, live too far away or cannot afford to attend. These events are mostly attended by a section of the population who are already wealthy beyond the average. At least the Romans had the good grace to appeal to a wider section of the public in their policy of bread and circuses.

Art is such a personal and ephemeral thing that it really does not warrant our taxes. Its appreciation (if not beauty) is very much in the eye (or ear) of the beholder, with difference and conflict being the order of the day. As its creation and admiration is hardwired into humanity, the money ploughed into arts is as valuable as subsidising conversation. And as in the most creative times public opinion and the direction of what is considered good can turn on a sixpence, the government and quangos will inevitably back losers.

Lord Adonis: Three reasons why he is wrong

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Transport minister Lord Adonis tells us that the government’s intends to replace domestic and short-haul flights with a new high-speed rail network. There are three good reasons to think that this is a terrible idea.

First is the government’s record with large-scale infrastructure projects. The last major project on the railways was the upgrade to the West Coast Main Line, which was initially planned to be finished by 2005, estimated to cost £2bn, and designed to allow trains to travel up to 140mph. It was eventually completed in 2008, at a cost of at least £9bn, and permitting speeds up to 125mph. The government’s estimates for a single 250mph line linking London to the North stand at £20bn, and a decade’s work. Believe them if you wish.

Second is that the railways are not economically viable. Despite the government bearing a large part of the maintenance and capital costs of the rail network, most operators only survive with massive subsidies: Virgin West Coast franchise received £312m last year. Many airlines, despite brutal levels of taxation, still make a profit. It’s nonsense to spend a fortune replacing a mode of transport that is profitable, that generates wealth, with one that destroys it.

Third is that the government’s environmental arguments are ridiculous. Even if we accept their assertion that the construction of new rail networks will make substantial difference to carbon emissions (which many contest), it’s a horrendously expensive way of doing so. Even if the railways replaced every one of the nine billion kilometers flown by domestic passengers last year, the trains omitted no carbon dioxide whatsoever, and the project came in at the lowest possible cost of £20bn, and assuming that airlines currently use the most polluting planes available (165gCO2/km), the cost would be £13,468 per tonne of yearly CO2 emissions avoided. For comparison, CO2 reduction at coal-fired power stations costs in the region of £20 per tonne.

If it ever gets built, this railway will be little more than a monument to ministerial ego, financial insanity and environmental hysteria.

The oil price – Whither next?

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As a basic commodity, oil price movements are curious. After all, just over a year ago, the oil price peaked on the spot market at $147 per barrel. Yet, by the end of last year, the oil price had fallen below $40 per barrel, thereby - in theory at least – making a lot of world production uneconomic.

Clearly, the onset of the recession depressed oil prices as industrial demand plummeted worldwide. More recently, though, the oil price has rallied as the recession appears to have stabilized. 

Whilst leading oil producers operate on the basis of long-term contracts – with more stable prices than the volatile spot prices - there are ongoing concerns about the sustainability of the oil price.

For the international majors, such as ExxonMobil, BP and Shell, the recent plunge in the oil price has had a massive impact on their profitability. When oil prices were peaking, these companies were generating vast sums of cash: their latest results were far less buoyant.

Fluctuating oil prices also create real uncertainty for investment decisions. The Athabasca Tar Sands projects in Canada, in which Shell is a heavy investor, are a case in point; it is estimated that a price of at least $80 per barrel is needed to make these operations profitable.

Of course, OPEC (Organization of the Petroleum Exporting Countries) is key to future oil prices. This cartel currently embraces around 40% of world production, with its leading member, Saudi Arabia, being central to any decision to cut back output. Significantly, too, OPEC members account for c70% of total world reserves.

Looking forward, oil prices may settle within the range of $60-$80 per barrel – a level that is widely seen as being appropriate for both producers and consumers. Currently, the price per barrel – at c$70 – is at the centre of this range.

You can take our heels...

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Smoking, drinking.... what next? This?

Lessons in morality

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A leader in the Daily Telegraph yesterday exposed one of the deep seated flaws of our parliamentary system. It called for MPs to be allowed to decide laws on moral issues, in this instance whether people should be allowed to aid those ending their life. This is in light of the Law Lords asking the Director of Public Prosecutions to clarify the existing legislation on assisted suicide and the Telegraph fearing that the drawn up guidelines would in fact create new law.

The Telegraph recognises the fact that Parliament has spoken on this issue, with the rejection three years ago of Lord Joffe's Euthanasia Bill and just recently Lord Falconer's amendment to the Coroners and Justice Bill. Calls for an adjournment debate following the summer recess, despite Parliament's continual ignoring of the public, are naive. The public's feelings towards assisted suicide/euthanasia have remained constantly in favour of it over the past few years.  With over 65% of people in a variety of  surveys wanting to see non-prosecution of those that assist others; as well as being legally able to undertake medicinal euthanasia should they so choose. Demanding MPs act and decide what the law should be exposes the democratic deficit in relation to morality: namely that MPs would mostly likely vote based on their own morality/values. Thus negating their constituents views and exhibiting a truly Platonic approach to governing, as can be seen by Nadine Dorries upcoming campaign, ensuring that a mature approach to euthanasia isn't taken.

An MP is not instantly elevated to the Heavens and instilled with divine wisdom upon election. And they are unlikely to pack the chamber out during the debate (at most you would probably see around 75-100 discussing this issue). MPs are human like the rest of us, and while they should discuss this issue the outcome should represent the will of the people. It should not be the view of the narrow out-of-touch minority that sit on the green benches in the Commons. Asking MPs to make value based morality judgements is akin to asking a professional car thief to valet park your car.

Where next for the BBC?

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An article in Monday's Guardian and a subsequent column by Geoffrey Wheatcroft on Tuesday revealed that the BBC " has been using a distant sun-kissed villa as a base for entertaining.....at a cost to date of £90,530". Now to be fair, apparently it has been used to entertain television executives to persuade them to invest in future projects, reducing the net cost to us license-payers of programmes: reportedly £80m a year in investment is secured through such activities.

Whatever the truth behind this specific example though, and regardless of whether the entertaining was justified and represented good value for money, it raises further questions about the role and strategy of the BBC in an increasingly segmented and non-linear media marketplace. The problem is that if it makes popular (and generally populist!) programmes, it is quite rightly argued that these are produced effectively by the commercial sector. If it focuses more on traditional public service broadcasting, with an emphasis on factual, cultural and news programming, then it loses audience share and is attacked for failing to provide the service that most license-fee payers want.

Over the weekend, Ed Vaizey suggested that BBC's youth orientated Radio 1 should be sold off, claiming that it was failing to reach its target 15-24 demographic. This channel's output arguably encapsulates the modern BBC: the daytime programming is fairly mainstream, and is very similar to the output of a multitude of national and local commercial stations, whilst the nighttime shows promote new music and more diverse genres, something generally not offered by most other stations.

What I suggest then is that the mainstream populist output of the BBC (with which I have no problem and often enjoy) should be spun out into a commercial entity, funded by adverts. In the absence of the BBC, I believe that factual, cultural and niche programming would continue to exist on commercial channels, and in fact increase to fill the gap left. Already, broadcasters including ITV and Channel Four provide some excellent factual content. In the unlikely event that there was strong demand for a type of programming that the mainstream media (including an independent commercial BBC) was not providing, then people who wished to have such content would be served by niche channels, made possible by the increasing channel capacity of home TV services and the proliferation of web-based media. The fact is that the dramatic development of technology in the decades since the formation of the Beeb have rendered it an outmoded institution with an uncertain role, bloated by the regressive license fee.

Why there is no “Right to work”

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Monday’s repossession order, handed down by the Newport County Court in the Isle of Wight should signal the end of a two week sit-in by redundant workers at the Vestas wind turbine factory.

However, the socialist politician and (therefore presumably part-time) union leader Bob Crow has said that his RMT union “will continue with our campaign and the right to work on green energy jobs." There is an obvious mistake in this sentence (other than the structure) that is nonetheless all too common. It is the assumption, and then misunderstanding, of a “Right to work".

At the core is a more fundamental problem with the concepts of “rights" and “freedoms": what might also be called “positive rights" and “negative rights", though the latter terms can be taken to imply a value judgement and so will be generally avoided from here on in.

If by a “right to work on green energy jobs" Mr. Crow is suggesting that individuals (such as the redundant Vestas workers) should be free to work in companies that trade on their environmental benefits, he is of course correct. Indeed, whether it is the “right to work" in any particular sector, or the “right to work" in general (a more traditional cry of Union collectivists), in the sense that nobody should be able to prevent a person from pursuing employment (in that sector) it is something for which we should all strive. Indeed, the right to work is enshrined in the Universal Declaration of Human Rights

However, Mr. Crow and like-minded people are rarely talking about freedom when they are talking about rights. Rather, they are talking about entitlements. The “Right to work" is, in their view, the right to have the job of their choice, presumably in perpetuity.

This type of “right" differs fundamentally from a freedom. Freedom is individual; it requires only that others do not prevent the worker from working. Entitlements are inherently communal; if one person is entitled, another must be obliged. Mr. Crow is suggesting that some person or persons should be obliged to offer people jobs - in the case of the redundant Vestas workers, in industries that claim environmental benefits.

A very easy case can be made for leaving people alone to find their own employment without hindrance. In passing, it is worth noting that the greatest hindrances to employees finding (better) jobs are labour unions themselves – which operate on the basis of restrictive practices, without which they would have no power – and the laws for which they agitate. It is far harder to justify compelling a person to offer another a job. As compulsion is only necessary when a person does not want to do something, and as the only reason that a person would decline to offer another a job is that the would-be employer believes that they will lose out because of it, compelling them to offer a job reduces their welfare.

The likes of Mr. Crow are not, therefore, upholding a universal right. Instead, they are forcing one group of people, with whom they do not sympathise, to provide for another group, with whom they do. This could be viewed as transferring wealth from one group to another; it could be viewed as making one group the slaves of another (though the latter risks sounding like hyperbole and so should be used with caution).

It makes no difference, in this respect, whether it is the owners of Vestas specifically, or taxpayers more generally, who are subjected to this obligation. It remains an unjustifiable attack on their freedom, saddling them with an intolerable moral and financial burden that – in the long run and across the whole of society – will also impoverish all of us.