How Britain should fix its fisheries

Over at Brexit Central, Madsen has written about his plan to restore Britain's fisheries using property rights and market mechanisms – the Icelandic model, essentially:

Having seen its fish stocks depleted by over-fishing, Iceland instituted a quota system to restore and sustain them.  Each year its scientists estimate the biomass within Iceland’s waters.  They measure the amount and size of a variety of different species and calculate the quantity of each that can be fished sustainably.  Quotas of different types of fish are assigned to every boat, quotas which belong to the owners and which, crucially, can be traded.
Every catch is recorded, and no dumping is allowed.  All catches must be landed, and if a boat exceeds its quota for a type of fish, its owners must buy quotas from others to stay within the law. All catches and quota trades have to be made public, and are put online so that any vessel can inspect the current state of the market, and decide what and where to catch based on public information.

Read his post here, and his recent paper on these proposals here.

The Marijuana Transmogrification

'It was all Mrs. Bumble. She would do it,'

'That is no excuse,' replied Mr. Brownlow. 'You were present on the occasion of the destruction of these trinkets, and indeed are the more guilty of the two, in the eye of the law; for the law supposes that your wife acts under your direction.'

'If the law supposes that,' said Mr. Bumble, squeezing his hat emphatically in both hands, 'the law is an ass—an idiot. If that's the eye of the law, the law is a bachelor; and the worst I wish the law is, that his eye may be opened by experience—by experience.'

Oliver Twist, Charles Dickens

In Dickens’ story, Mr. Bumble, Oliver’s corrupt guardian, tosses the boy’s identifying heirlooms into a river. When questioned about the act, he blames it on his wife, only to be informed that the law views his wife as his agentless servant, rendering him guilty. While Mr. Bumble may be a villain, his ruin results not from the smooth functioning a justice seeking law, but the exploitation of its absurdity by Oliver’s friend. Oliver is glad of the man’s fate, but unlikely to gain much respect for the law from the episode.

Mr. Bumble’s claim holds weight not because he is innocent, but because in convicting him, the law reveals itself to be operating on an incorrect set of assumptions about the world. While Bumble hopes that the law’s eye will be opened by experience, the early 19th century provided the law with many examples of female agency. In the face of this reality, the law blinked, continuing to indulge a fiction, and depriving itself of a basis for respect. The ongoing prohibition of marijuana blinks similarly in the face of reality and experience, placing needless strain on the rule of law.

The law is not merely the specific statue in question, but the rule of law, an institution respected, in principle, as a set of constraints necessary for the enjoyment of ordered liberty. We are not expected to pick which laws we ought to obey, but to follow them all because they are equally law. This works only when the law is applied impartially, and corresponds to a set of broadly accepted moral norms. Each statue gains the binding power of law, but, with great power, comes great responsibility; each regulation’s individual legitimacy reflects back upon the law as a whole. A small number of bad laws can do great damage to the rule of law; only a donkey’s head is necessary to make a man Bottom.

Marijuana use, while not healthy, simply does not have the deleterious effects long promised by prohibitionists. Marijuana users are not generally regarded as particularly deviant, or antisocial. Prohibition affects poorer urban users more than others, both because of racial discrimination, and the relative ease with which densely populated spaces can be searched. As a result, the ongoing to prohibition of marijuana begs us to understand the law as scientifically ignorant, discriminatory, and a least an amoral restraint.

When marijuana use is both normalized and illegal, breaking the law becomes a normal act. Would-be law abiding marijuana users regularly interact with criminals, or delve into the dark web. We shrug when passing marijuana smokers in the park, seeing something illegal, but certainly not worth arresting anyone over. Police are distrusted as enforcers of an erroneous order, or begin selectively enforcing the law. A century of prohibition has made an ass of our law with little to show for it, the sooner we can open its eyes, and begin to reverse this spell, the better.   

On the subject of Google's search results

A complaint that searching Google for "Did the holocaust happen?" leads to, as its first result, something from Stormfront. Deluded idiots that they are they deny that it did. This is, apparently, an outrage. That we live in a society which has freedom of speech to the extent that people are allowed to say things which are wrong.

And, according to Google, it’s the most authoritative source on the internet on the “question” of whether or not the Holocaust actually happened. Sceptical, educated people will of course look for other evidence. These are the searches that Google lists at the bottom of the page as suggestions for what to search next: “Holocaust never happened theory” “proof the Holocaust happened” “Holocaust fake proof” “Holocaust never happened movie” “Holocaust didn’t happen conspiracy” “did the Holocaust happen during ww2.”

On our search, to replicate this outrage, we found that the second entry was the BBC explaining why the holocaust did happen, the third Wikipedia's entry on holocaust denial, the fourth and fifth from the United States Holocaust Memorial Museum (not known to  be a hot bed of deniers) and so on.

We're not overjoyed about Stormfront's placing either but that line from the play about Voltaire comes to mind, we disagree with what they say but we're damn certain that they should be allowed to say it - we are though ambivalent about whether we would put our lives on the line for that particular grouping even though it is traditional that we should claim we would.

A search for Fidel Castro produces the BBC on Cuba's revolutionary leader, The Guardian on how he corrected Gabriel Garcia Marquez's manuscripts, the NYT on some called him a hero, some a despot. A search for Mao Tse Tung gives us the History channel which notes that people died under his rule but is remarkably coy about apportioning any blame.

And no doubt further investigation will find more such "errors" in such search results. All of which is, we would maintain, the price of that liberty and freedom we have. That people are not only allowed to say, subject only to the laws of libel and incitement to violence, what they believe to be true, but even if it is wrong. And to prevent the presentation of this, these views, by the law is indeed censorship.

And that, of course, is where this is going:

This is hate speech. It’s lies. It’s racist propaganda. And Google is disseminating it. It is what the data scientist Cathy O’Neil calls a “co-conspirator”. And so are we. Because what happens next is entirely down to us. This is our internet. And we need to make a decision: do we believe it’s acceptable to spread hate speech, to promulgate lies as the world becomes a darker, murkier place?

Because Google is only beyond the reach of the law if it we allow it to be.

The case is very simple indeed. Do you believe in freedom of speech or not? If you do then Stormfront gets to have a website detailing whatever it is that it misunderstands about the world. As does every other vile and hateful group from left and right. There is no shortage of sites insisting that Stalin had nothing to do with the Holodomor, that it was disease not starvation, that the starvation was just bad weather, that there was no campaign against Ukrainians and anyway, it never happened did it?  

There is amusement here as well though:

Our problem too: because do we let these multinational corporations own us and all aspects of our lives? Is that the plan? The Google Transparency Project has documented how the company has become one of the biggest spenders on government lobbyists in the US.

Traditionally the Silicon Valley firms spent little to nothing on lobbying. They just got on with life and business. Then politicians noted that there was lots of money out there. So, they started to regulate the sector - a Danegeld, pay the political process or we'll regulate some more. Which is why they all now have lobbying operations because people are trying to use the political system to gain what they cannot through the normal market processes, control of those Silicon Valley giants.

And it is amusing that the very people arguing for political control use the evidence of resistance to said political control as the reason why control must be imposed.

Let's face it here, wouldn't you send someone to Washington DC to explain to politicians why Carole Cadwalladr should not gain political control over the free speech of billions? Yet that you have done so is evidence to Ms. Cadwalladr that she must have that power. And if you can't laugh about that then why not cry instead?


As we might have mentioned, idiocy is still idiocy even if it's political

Correct, a lot of you disagree with our solution to climate change - stick on a carbon tax and we're done. But given the head of steam that the idea has, rightly or wrongly, something is going to be done. Thus let's try to make sure that it's the right thing which is done, not the wrong.

For example:

Jeremy Corbyn’s Labour Party is considering radical plans to ban the sale of new petrol cars in the UK, The Independent can reveal.

The bold proposal would mean only zero- or low-carbon vehicles being sold after a set cut-off date, dramatically reducing air pollution and potentially saving thousands of lives.

Or, of course, kill tens of thousands as people cannot afford the transport that enables them to live and work. Then there are the people who get it right:

The Canadian government has agreed a deal with eight of the country’s 10 provinces to introduce its first national carbon price, Justin Trudeau has told reporters.


Under his plan, carbon pollution would cost C$10 (£6, US$7.60) a tonne in 2018, rising by C$10 a year until it reaches C$50 in 2022. The provinces can either implement a carbon tax or a cap-and-trade market.

That's a bit steep as a ramp up, something a little more gentle would be a better idea.

But the basic understanding is correct. And again, please, let's not say that it's all a scam. That doesn't matter - these people are going to do something so let's insist they do the right thing. Which is, of course, that some things are just too important to not use markets. If we really do have an externality about emissions then that one crowbar into market prices, that Pigou Tax, is the correct solution. Rather than politicians deciding that they're going to ban the greatest contribution to social freedom yet invented, the internal combustion engine powered car.

But there are those who argue differently:

One party source said: “It’s got nothing to do with whether the technology is there now. It is there, and this is already happening elsewhere in the world. It is only the political will that is lacking in this country.”

The European record of the Triumph of Political Will is just so inspiring, isn't it? But then Fascism always was a movement of the left....


To put Thomas Piketty's worries to rest

You might recall that Thomas Piketty told us all that capitalism was on its last legs, again, and that we needed to have that glorious revolution, again.

The particular worry this time was that capital was growing in relationship to GDP. Instead of said societal capital being 200%, or 300%, of GDP it was rising to ever higher multiples, perhaps 400% and so on. This could only mean that inherited capital was going to become ever more important as a determinant of positions in life, as was true in the 18th and 19th centuries, so tax the capitalists now and tax 'em good.

It's possible that we missed a little of the nuance there but that's a reasonable outline of his worries and his policy solutions. At which point we've this information from the OECD:

The 2016 OECD Pensions Outlook analyses how the pensions landscape is changing in the face of challenges that include ageing populations, the fallout from the financial and economic crisis, and the current environment of low economic growth and low returns.


The report shows that there were 13 OECD countries in which assets in funded pensions represented more than 50% of GDP in 2015, up from 10 in the early 2000s. Over the same period, the number of OECD countries where assets in funded private pension arrangements represent more than 100% of GDP increased from 4 to 7 countries.

We're living longer lives these days, we're working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises - not to produce inheritances, but to produces incomes in retirement. And rises by potentially at least more than 100% of GDP.

We can't see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.

So much for the most recent French call for revolution then, eh? 

Will our Corporate Tax Cuts get Trumped?

Theresa May's decision to pledge that Britain will have the lowest Corporate Tax Rate in the G20 is undoubtedly good news. If we're to make a success of Brexit (another thing Theresa May has pledged), then preserving and building upon Britain's competitive tax code is essential. But, I suspect Theresa May hasn't quite grasped just how significant Trump's tax cuts will be.

Most of the media has focused on the headline tax cut from the absurdly high 35% to 15% in the tax plan on Trump's campaign website, but this is misleading. First, very few US corporations actually pay that 35% rate. There's a labyrinthine set of exemptions and deductions that mean the average US corporation pays a much lower effective rate of 12.6%. Trump's plan funds his headline tax cut through eliminating almost all (except the R & D tax credit) of these distortionary exemptions from the current system. This means in effect US corps won't be paying substantially lower taxes, even if they'll benefit from less distortionary and more efficient tax code.

Second, and more significantly Trump's tax plan isn't necessarily the tax plan that'll be put forward in the House of Representatives (where Speaker Paul Ryan and Ways and Means Chairman Kevin Brady hold the cards). The Ryan-Brady plan dubbed "A Better Way" differs from Trump's framework in a few key ways (for even more detail read Cameron Arterton and Lisa Zarlenga's excellent overview).

First, they cut the headline rate by much less. Under the Ryan-Brady plan, the headline tax rate only falls to 20%.

Second, they border adjust it. That means that imports are taxed, but exports aren't. To readers of this blog, that might sound worryingly mercantilist - but as AEI's Alan Viard points out it won't have this effect. Such a reform does however resolve some of the transfer pricing problems that plague modern corporate taxes.

Third, and this is the big one, the Ryan-Brady plan proposes unlimited immediate expensing of all wages and new capital investments (tangible and intangible). This turns the Corporate Income Tax into what economists call a business cash-flow tax. This isn't just tinkering with rates, this is fundamentally changing the structure of business taxation in the US. It removes entirely the tax burden on capital and shifts it to consumption. Economists generally believe that taxes on capital are excessively harmful because capital is incredibly mobile and even low capital tax rates translate to incredibly high taxes on future consumption. As my colleague Ben Southwood points out, even though it's meant to raise taxes from wealthy investors, it ends up leading to much lower wages for ordinary workers.

In essence, the Ryan-Brady plan turns one of the most inefficient taxes into one of the most efficient. Typically, Republicans (and libertarians) oppose such moves because they think making taxes more efficient will encourage the Government to spend more and only a painful, inefficient tax code will put the brakes on out of control spending. As Will Wilkinson points out, that's bunk. The Ryan-Brady plan breaks with that dogma.

What does that mean for Britain? Well, cutting corporation tax just ain't good enough. Theresa May and Phillip Hammond need to be more radical if they don't want to be Trumped by the Donald. Let's abolish corporation tax and replace it with a simpler, more efficient business cash-flow tax.

Trial and Error

Trial and Error

Karl Popper is rightly esteemed by those of a liberal persuasion for his many contributions to the cause.  In The Open Society and its Enemies – volume 1 he took issue with Plato.  He showed that although Plato claimed to be seeking just and virtuous rulers, his Republic resembled the totalitarian warrior state of Sparta with detailed control over every aspect of its citizens' lives.  The point, said Popper, was not to choose the best rulers, but to prevent bad or incompetent rulers from doing too much damage.

In volume 2 of The Open Society he took issue first with Hegel, then with Marx, showing that their ideas must lead to coercion and that they contain the roots of totalitarianism, a theme he developed in The Poverty of Historicism, where he countered the socialists' claim that history is moving in their direction toward an inevitable goal.  

That employment law comes from the EU doesn't mean that employment law must come from the EU

It is entirely true that much employment law currently comes to us via the tender ministrations of the European Union. This is not, however, the same as the statement that only the European Union can deliver employment law. Which is the logical mistake that is being made here:

One could be forgiven for wondering what the Independent Workers’ Union of Great Britain (IWGB) – a small trade union that represents mainly low-paid migrants and workers in the “gig economy” and relies on crowdfunding to help finance its initiatives – is doing intervening in the UK’s most important court case in recent history.

The starting point for understanding why the IWGB has an interest in the Brexit case is this: the UK leaving the EU represents potentially the biggest assault on workers’ rights and migrants’ rights in a generation. Indeed it is difficult to overstate the degree to which working people depend on employment law that originates in Brussels.

To name just a few examples: your right to paid holiday; your right not to be discriminated against because of your age or sexual orientation; your right not to be sacked or have your wages reduced when a company buys out your employer; your right to be consulted when your employer wants to make you and your co-workers redundant; protection against unfavourable treatment towards you if you work part-time; and equal pay for men and women.

It is entirely so that many, even all, of these things come to us as a result of the beneficence of the Parliament in Brussels. But that's rather because said Parliament and system has been insisting these recent decades that it should be they which have the right to legislate upon said subjects.

That is, said laws come from there because we are members of the EU, not because only the EU can deliver such laws. We are really rather sure that Canada, Australia, New Zealand, Norway, Switzerland, all have very similar laws and all of them are entirely unblessed by being members of the EU.

Indeed, we're old enough to have long memories and not old enough to have no memories at all. The UK has had equal pay for men and women since the Equal Pay Act 1970. Which is not just before Britain joined the system but before the EU itself even came into existence. Holiday pay as a legal requirement for all has existed since the Holiday Pay Act of 1938 - not just before EU membership but even before Rossi and Spinelli started scribbling their manifesto on Ventotente.

It's entirely true that much law in the UK today is derived from the EU. But that's because EU membership has meant that the EU is the body which defines much law in the UK. There's absolutely nothing at all to stop us retaining, altering, amending, adding to or abolishing any of these laws and or rights as we wish post-Brexit.

The EU, that is, is only the mechanism by which these things exist currently, not the only, nor possibly even the best, way that we can make them exist.

We're against the Magnitsky Amendment, a horrible piece of law

What was done to Sergei Magnitsky was appalling - that is not an excuse for a terrible piece of law. But that's what is being proposed as the Magnitsky Amendment. As Margaret Hodge (and it would be she pushing such a nonsense, wouldn't it?) explains:

Our amendment places a duty on ministers to ask the High Court to place a designation order on people who were involved in, or profited from, the worst human rights abuses. Once an individual is subject to a designation order, the enforcement authorities will have a duty to freeze their British assets.

Seems fair enough, freeze the assets of the evil ones. Except:

More than £100 billion is laundered through Britain each year but only £100 million — a fraction of the amount — is frozen. The Magnitsky amendment will close gaps in the law. Individuals and NGOs can also take matters into their own hands and apply for designation orders, sending a clear signal that inaction by the government and enforcement authorities is not acceptable.

The specific point being made is that anyone breaching the Section 1 of the Human Rights Act 1998 rights can be subjected to such an order.

Such as the right to family life, the right to freedom of religion, free elections, even religious education. Thus, for example, those who would abolish religious schools in the UK could have their assets frozen. Officials from countries which regard a Muslim embracing another faith as the crime of apostasy could have their assets frozen. All Cuban government officials could have their assets frozen as a result of the absence of free elections for 55 years which we admit would be fun to see.

And any Tom Dick or Harry can apply for such an order to be made. 

No, this is not good law. If it does pass there would be a terrible temptation for us to start organising cases against those who do breach some of those rights. Cuba first perhaps. Closely followed by HMRC attempting to insist upon payment of disputed tax bills before a court has ruled upon the issue. But however much fun we might have with it it would still be bad law. Thus it really should not be passed into said law.

For this rather comes under the general rubric about power and the law. You never, ever, want to put into the law something that you don't want your enemy or rival using against you and yours. And we really would have fun using this.

What did anyone think would happen to social care with the national living wage?

This is very bad apparently, really, terribly bad:

The cost of social care rocketed over the last year, even as the proportion of services ranked good or outstanding fell, according to a new analysis.

Social care services directory found that the price of a week in a care home jumped by almost a quarter over the last year, from an average of £557.86 a week to £686.32, while the cost of a nursing home rose more than a third from £692.17 per week to £924.82. The price per hour of care visits also rose, from £15.01 to £17.02.

The analysis was based on data from providers registered on TrustedCare, as well as calls made by its researchers to more than 100 services in each English county over the last four months.

Social care in the UK is provided through a mixture of individuals and government payments. However, concerns are growing over the system’s ability to cope with an ageing population and pressures on local government and NHS budgets.

TrustedCare’s researchers also looked at data from the Care Quality Commission (CQC), which regulates and monitors social care, and found a 9% drop in the proportion of services ranked as either good or outstanding from 88.9% in 2015 to 79.8% over the past year.

Social care is one of those things where a very large portion of the costs is the minimum wage - and also where a very large portion of the people doing it make minimum wage.

Therefore a rise in the minimum wage is going to bite here and bite hard. And when a minimum wage level does bite there are only four options. Profits, prices, productivity and people.

We raise the costs of performing some activity - something has to give to pay for that. In the public sector there are no profits, thus they cannot take the strain. No one has offered these services more money so public sector prices cannot change. Productivity of course cannot be changed because after years of austerity and decades of pressure on the public sector it all works as productively as possible. There simply is no room for improvement as every Labour party member and every union official tells us.

Thus what we do get - a rise in that portion of the costs carried by the private sector and a decline in either the number of people providing the service or the time in which they have the ability to provide it.

The thing is this is obviously what will happen when a wage rise in this sector is mandated. So why the Hell is everyone surprised when it does?