Blood, Sweat and Development


altThe latest high-profile BBC show, ‘Blood, Sweat and Takeaways’, is a series of documentaries looking at how consumerism in the west is leading to poverty and exploitation within the Asian food industries, the first episode focussed on the Indonesian tuna industry. As can be expected with the BBC this show only presents half the debate.
It puts across a very tainted view of the situation; it implies that we are demanding cheaper and cheaper food in greater quantities than before. In order for this food to be produced, workers in foreign countries need to be exploited. It hints at a neo-colonialist world where Asian producers are at the beck and call of our demands at whatever human cost.
The evidence in the show is worrying, but the arguments are not conclusive. Clearly, hundreds of workers working and sleeping in cramp and hot factory conditions with few breaks is a distressing scene that none of us would envy – and yes, we probably have disassociated the food we eat with its production, but this is not the full story.
We need to consider the flip-side to these realities. Supermarkets already only make around 3p profit per tin of tuna they sell. If they were forced to pass any more of this profit onto the producers, the incentive for selling tuna would be severely limited (especially when the opportunity cost of stocking these goods is the sale of much higher-profit foods).  This would result in a decline in the tuna industry and the consequential unemployment of the factory workers.
I’m sure after watching the show many would call for a growth in Fair Trade products. As the ASI report ‘Unfair Trade’ has shown this would not be beneficial to the individual producers. Even if in the short run the benefits filtered down to individual workers, the higher prices would encourage more firms to enter the market, artificially forcing prices down further in the long-run.
It is easy to blame consumers for these problems, and although our casual spending may have fuelled the rapid development and industrialisation of many foreign industries these jobs would not exist at all were it not for our consumption.

How much should MPs get paid?


In an ideal world we would not need to be represented by MPs, but as things stand the question of their remuneration will not go away and needs to be addressed. The general line MPs and the media are taking on the expenses dibacle is that MP fraud grew out of the politically charged problem of MPs not want ing to be seen to award themselves more wages. Frankly this is just an excuse to justify their behaviour and should be wholly ignored. Give or take the odd thousand either way – as of today – £64,000 is ample reward for the job of an MP.

Politics is a career these days. Young men and women decide at an early age to charm and smarm their way into political office. The profession of the politician is much the same as any other and should be treated as such. Of course they deserve a decent wage, but they already have one, especially given the bonus culture.

By bonus culture I don’t mean MPs dishonest and fraudulent expenditure claims, I mean the lucrative advantages of getting to the top of their profession: speaker fees, non-executive directorships, TV series and autobiographies. Like other professions, getting to the top certainly pays, as 'Tony Blair Inc.' explicitly testifies.

So if it is agreed that MPs should be earning as much as they are legitimately being paid now, how should this figure change over time? I would not tie it with any measure of inflation (who knows what that could lead to?) but instead link it to ebbs and flows in equivalent executive pay; excluding public sector pay for obvious reasons.

Blog Review 967


One theory: house prices are high because it's in the interests of MPs with two of them that prices continue to rise.

This independent regulator of Parliament. How is this going to work and how embarrassing is it anyway?

Should that independent regulator be us?

And how Brownite is all this? The solution is a new quango?

Has Gordon Brown just pointed out that he must stand down as an MP?

No, it's really not a good idea at all.

And finally, the ultimate political insult.

Speaker out


Traditionally when a Speaker of the Commons is elected, he or she is supposed to feign reluctance because of the past perils of the job. This is symbolized by having the Speaker dragged to the chair by MPs. This is the first time one has been dragged from his chair. All of the reasons given are no doubt true: Mr Martin had lost authority; he miscalled the whole expenses row; he underestimated the public outrage. It is also true that he was seen from the outset as a weak candidate, lacking the gravitas which the post calls for. He was also seen falling short of the objectivity the job requires.

Something else might well be true. It is quite possible that MPs are looking for an event to draw a line under the whole row about expenses, hoping that in the public mind it will now be regarded as over and done with. The fall of the Speaker, they might hope, will settle the matter. They could well be wrong about that, themselves underestimating how badly let down the public feels. Those who abused the system the most may yet find that selection committees and constituency voters refuse to be fobbed off by seeing a fall guy go down, and insist on punishing the real culprits. We could be in for a most interesting election.

Who will regulate the politicians?


The Speaker is not the first nor will he be the last victim of the tsunami of receipts currently washing over the Houses of Parliament. This exposure of the true financial wheelings and dealings of our MPs has resulted in public anger and many calls for a change to the system. A persistent, and consistent, call from all shades of the political spectrum has been one for transparency and that is something all MPs should now be subject to. But as we have seen, a system devised by MPs, for MPs, will no doubt suffer from further MP abuse as they seek to line their own pockets. We need an alternative.

It is time that we put ourselves back in charge. There is an election on the horizon and we, the people, have an opportunity to start afresh: we could simply elect only those who have never sat before. All the parties have in place the necessary machinery that can help the virginal politicians take their first faltering steps toward governing us properly without recourse to having their hands in the proverbial till, or snouts in the trough!

There is an opportunity to hold a bloodless coup and observe whether the system itself is corrupt or if the trade merely attracts those who are of a weaker moral outlook. The current suspicions held by the majority probably straddle both camps, which is why the forthcoming European and General Elections will both suffer from even lower turnouts than usual. But rather than be helpless observers to reformers reforming their own system we can impose the ultimate punishment upon these corrupt transgressors: removal from their seats, and distance placed between them and their access to our wallets.

NB: In an ideal world there would be very few politicians required, perhaps this could be the first step to removing the majority by decapitating their power substantially.

Power Lunch with Peter Hill

Old and New Media met across sushi and sandwiches at the Adam Smith Institute today. Our principal guest was Peter Hill, Editor of the Daily Express, but with bloggers there like Guido Fawkes, Tim Worstall and Mike Smithson of, there was a predictably lively discussion on his theme that the internet was killing newspapers – and not replacing some of the public service they deliver us.

Newspapers are giving away their content for nothing online, said Hill, but this can hardly be a good business model. Local papers are suffering particularly – much of their traditional classified advertising has moved to online providers, and advertising generally is down. But local papers play an important role in holding local councils, police and officials to account, so when they go, it's a loss to democracy. Then there is the BBC, which has a vast, free website completely funded by the taxpayer. Who can compete with that? But its effect must be to take business away from commercial newspapers.

The bloggers were united in their disapproval of the BBC's taxpayer-subsidized webworks, but weren't likely to shed a tear for the print media. But perhaps there is something different about newspapers. Would the MPs' expenses scandal have made so much impact if the details had simply come out online? As Smeargate showed, bloggers can bring down politicos. But perhaps newspapers can bring down governments...

Blog Review 966


It's true, this is one of the things that is desperately needed in British politics. That the left will actually start looking at the evidence of what works rather than what they desire might work.

For example, regulation almost always simply benefits the largest incumbents.

And yes, high tax rates really do make some people flee the jurisdiction.

This might not be the most surprising number ever.

Why do politicians prefer cap and trade over a carbon tax? Because cap and trade offers greater opportunities for politicians to meddle.

More dystopian writing from The Guardian.

And finally, the first line here shows why economists are different.

BAA: Over two decades of indecision


altToday’s announcement by BAA that it is appealing to the Competition Appeal Tribunal (CAT) over the Competition Commission’s (CC)  report prolongs the ongoing indecision on UK airports policy.

Ignoring the natural justice element of the appeal – as to whether one of the CC’s members had a conflict of interest - by far the more important ground is whether it is unreasonable to expect BAA to sell three of its airports within two years in current depressed markets.

Since its privatisation in 1986, BAA had been adamant that one dominant airports owner was best for UK plc, despite the fact that much of its investment went into new retail outlets.

This mantra endured for almost 20 years until BAA was taken over by a highly geared private equity consortium led by the Spanish-based Ferrovial. Arguably, this risky financial deal should have been blocked. 

In fact, the worm began to turn before the recession kicked in, when various shambolic incidents at Heathrow - for which British Airways shares some blame – drove the competition agenda. 
Following the recent CC report, a rapid U turn was executed. Although BAA was to retain Heathrow, Gatwick had to be sold off; despite today’s appeal to the CAT, this disposal seems set to continue. Further sales of Stansted and either Glasgow or Edinburgh are also required by the CC.

With bids for Gatwick coming in at c15% below the near £1.6 billion Regulatory Asset Value of Gatwick, the Ferrovial consortium will be sitting on a heavy loss. Neither will this valuation help other regulated businesses. 

Such massive policy shifts over a short period are not the best way to run an industry dependent on long-term investment, a factor that is crucial to Stansted’s future - whether based on BAA’s projected investment costs or those promoted by the far more parsimonious Ryanair.