Blogroll: Adam Smith Institute
I read blogs, as well as write one. The 'blogroll' on this site reproduces some posts from some of the people I enjoy reading. There are currently 135 posts from the blog 'Adam Smith Institute.'
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Outrage as our beloved National Health Service - that national religion - is charged for the use of a parking space. The problem here being that yes, of course the NHS should be charged for the use of a scarce resource like a parking space:
A council has faced a backlash for charging a mobile NHS breast cancer screening unit £1,500 for parking, with patients saying the fees are "disgusting".
Cornwall Council issued the bill after a lorry used to offer routine mammograms to women aged 50-71 stayed in a car park in Liskeard for six months last year.
After the figure emerged, the local authority said it no longer charges the NHS vehicle for parking following a "recent review".
One patient described the parking fees as "disgusting", adding: "The NHS is facing a funding crisis, the hospital is on black alert and health workers are struggling.
As everyone who has ever used one knows space in a parking lot is a scarce resource. Scarce resources should be charged for. The reason being that only when they are do we get the optimal use of them.
Sure, the NHS is “government funded” as is the local council so it can seem a bit odd that one arm of government charges the other. But even - perhaps especially - here the pricing structure tells us the optimal distribution of those resources.
We do this in other areas too. The Ministry of Defence needs spectrum so that it can run radio systems. That spectrum has other uses - say, mobile phones or mobile internet. So, we charge the MoD for the spectrum they use. Of course, the grant to the MoD now includes the costs of that spectrum, it’s all a bit round and round in circles. But it does still concentrate minds at the MoD as to which spectrum it really needs, how much of it.
The Americans do not so charge the Department of Defence for its spectrum allocation and it looks like the US is going to end up on a different - and worse - 5G standard from the rest of the world as a result. Without the relative values of DoD and 5G uses being expressed as plain $ numbers it’s not made obvious that cost of DoD’s squatting.
Prices actually matter, they’re information, everyone should be charged them. Even if we then subsidise people to pay them, we still need the information about resource allocation that the price system brings us.
Gold was discovered in the Klondike region on August 16th, 1896. It precipitated a mass migration as people from the US and elsewhere surged into the area hoping to get rich. Most went via Alaskan ports, and then trekked with a ton of equipment down to the Yukon in Northwest Canada. To avoid mass starvations, the Mounties only let in those who had a year's supply of food with them. Boom towns such as Dawson sprang up to service the incomers. Dawson's population went from 500 in 1886 to 30,000 by the middle 1898. Infrastructure failed to keep pace with the influx, and Dawson's wooden houses were prone to fires, while epidemics broke out in its insanitary conditions.
About 100,000 headed there, hoping to strike it lucky, but given the arduous trek from Alaska, only about 40,000 made it. The ones who became rich were mostly the ones supplying clothes and equipment, rather than actually finding gold, although about $300m of gold was mined. This was nothing like the California gold rush of 1848-1855 that yielded $2bn - $3bn (at today's values), though again, it was mostly the suppliers who made the money. The Klondike gold rush lasted 3 years, and faded when gold was discovered at the beaches near Nome in Alaska in 1899, sending most of the prospectors up North.
Gold has always excited the imagination and the avarice, from King Midas to Auric Goldfinger. Keynes called the gold standard "a barbarous relic," echoing the words of John Austin Stevens in the New York Times of 1873 who said, “gold is a relic of barbarism to be tabooed by all civilized nations.” Its value has been attributed to its permanence, in that it does not fade or tarnish, and reacts with only a few things. Its lustre gives it value as ornament, and its scarcity enhances that value. All the gold humans have mined in history would fill about one-third of the Washington Monument. The largest nugget of it ever found came from Ruby, Alaska, in 1998, and weighed 24.5 pounds, giving it a value of over half a million dollars.
When President Nixon in 1971 cancelled the convertibility of the US dollar into gold, he effectively ended the gold standard, and by 1973 the Bretton Woods system was replaced in practice by a regime based on freely floating fiat currencies. There remain those known as "gold bugs" who advocate returning to a gold standard to inhibit the ability of governments to inflate currencies at will, but most bankers and economists suppose this would be akin to time travel into the past, and think that independent central bankers represent a reasonable way of restraining irresponsible governments. Critics suggest, however, that the government can appoint central bank directors inclined to do their bidding.
Both the forty-niners of California and the Klondikers were lured in their thousands to endure some hardship and sacrifice in the hope of striking it rich, but very few of them made any significant amount. It was not the gold itself, but the dollars it would buy that they sought. Nonetheless, few people are as thrilled by a bundle of dollar bills as they are by the bars of that gleaming metal in the vaults of banks. People still buy gold today as a hedge against inflation and market volatility, and I played a small role in allowing Americans to do so. I was working with the Republican Study Committee on Capitol Hill in 1974 when we tacked an amendment allowing private US citizens to own gold onto an Eximbank annual appropriation bill. It was carried, and gold ownership remains legal in the US to this very day.
The Farmers for a Peoples’ Vote campaign is starting out and in the process they tell us this:
Many industries will suffer but the industry that would suffer the most serious economic shock will be agriculture. It is impossible to project the exact number of farmers who will go out of business. What we do know is that over 40% of them will have no net income if the basic payment is removed. If at the same time the Government removes all tariffs and so depresses prices, these two factors combined will render over 50% of farms in this country unviable.
There are, apparently, some 126,000 farms in the UK employing the thick end of half a million people. Ceasing the subsidy to those farms will mean half of them go bust.
Well, obviously enough, that means that the labour of a quarter of a million people - to be simplistic about manning levels - and the land of 63,000 farms is being used entirely unproductively. We should stop doing that therefore and use the land for something else.
For that is actually what the statement is. 40% of farms will have no net income if the acreage payment stops. That is, 40% of farms produce no added value whatsoever. The inputs, in alternative uses, are worth as much or more as the outputs we gain from their current uses. The other 10% of farms that will fail are only propped up by the manner that the consumer is rooked by the high prices foisted, by law, upon them through those tariffs.
That is, between the two payments we’re all forced to pay for half the agriculture industry to achieve nothing. We should stop doing so. Organisations that consume resources and produce no value from doing so should go bust.
And yes, we’ve done this before. Coal mining used to employ 1.2 million people, it was 2,000 in 2015. Unproductive activities, unproductive producers, should go bust. We’re near entirely bereft of buggy whip makers too. And?
Napoleon Bonaparte was born 250 years ago, on August 15th, 1769. Serving as an army artillery officer in 1798 when the French Revolution took place, he rapidly rose through the ranks, becoming a general by age 24, and achieving national recognition when he conquered the Italian peninsula. He became First Consul in a 1799 coup, and Emperor of the French in 1804.
His career thereafter was marked by wars of conquest in Europe and Egypt, most of which he won. Although hailed as one of history’s greatest generals, he was more of a strategic general than a tactical battlefield one. He could take his troops rapidly, fed and supplied, to take enemies by surprise before they had time to form up against him.
Although revered as a hero in France, he made many disastrous mistakes. His appointment of his brother Joseph as King of Spain provoked a guerilla uprising aided by the British, and ended in his defeat in the Peninsular War. Although he inherited a huge conscripted army he turned into the Grande Armée, he led it into a disastrous invasion of Russia in 1812, and lost most of it.
He was a dictator, and like most dictators, exploited his power for what Corelli Barrett called “his personal megalomania goals.” He is praised for the Code Napoleon, doing what emperors do, codifying the law as Hammurabi and Justinian did, to extend tighter control over their whole territory. His code told people what they were allowed to do, and forbade everything else, unlike English law which tells you what is forbidden.
Like the Nazis who followed, Napoleon plundered conquered territories, filling French galleries and museums with artworks looted from across Europe. Fortunately for history, he came up against Wellington, who never lost a battle, and who finally ended his dictatorship. First at Leipzig in late 1813, then at Waterloo in 1815, Napoleon was finally beaten.
France is proud today of his achievements, but as historian Victor Davis Hanson puts it, ""After all, the military record is unquestioned - 17 years of wars, perhaps six million Europeans dead, France bankrupt, her overseas colonies lost." Yes, quite an achievement. Looking back, 250 years since he was born, we can set the record straight. He was just another military despot bent on power and conquest. He ruined millions of lives, as they all do.
The NHS has a problem feeding those who cannot feed themselves:
A shortage of intravenous feed supplies affecting hundreds of patients has been declared a national emergency incident by the NHS.
The situation has affected patients who are unable to digest food normally and are instead dependent on an intravenous feed, which bypasses the gastrointestinal tract, known as parenteral nutrition (PN). The NHS has been forced to try to source supplies from overseas to address the domestic shortage.
It has been caused by a reduction in output by PN producer Calea as a result of it being directed by the medical regulator to take immediate action to change its manufacturing process.
Something went wrong with the domestic supplier, we must source from overseas.
Those hunting for a bubbling dish of cauliflower cheese in a restaurant will be in for disappointment after the crop was killed off by the freak July weather, causing a shortage.
Britain is usually self-sufficient for cauliflower, which has become fashionable in recent years, roasted whole as a plant-based Sunday dinner and whizzed up as an alternative to rice.
As the country baked in temperatures, which hit a record 38.7 degrees, brassica plants were killed off. This means wholesale prices have been hiked from 60p-£3 in some cases, and restaurants have taken cauliflower off their menus entirely.
Something went wrong with domestic supply, we must source from overseas.
All of which illustrates the inanity of the fashionable mantra that we must be self sufficient in our supplies. The argument often enough being, well, what if something happens out there and so we can’t get any? This ignoring the bitter experience of the ages which is what happens if something goes wrong here and we can’t get any?
To illustrate, famine is a product of there not being food locally, not an absence of food globally.
Resilience of supply is a function of having multiple suppliers. Where supply is dependent upon weather, to use just the one example, then we’d like those many suppliers to be spread across many different weather systems.
That is, the perfect food delivery system would be exactly the opposite of what current fashion generally proposes. That proposal being that we should grow everything we can ourselves, only going overseas for what cannot be produced here at all. Which is, we insist, absolutely the wrong decision.
Rather, even if we can produce sufficient here we don’t want to. It is better that the - just an example - 20 areas which can grow the same crop do so and each trade 19/20ths of it with the others. If we wish to maximise the security of our supply that is. After all, we do generally recognise that monopolies are bad things and the failure of a monopoly supplier is a catastrophe. Therefore we shouldn’t have monopoly supplies even unto not having a monopoly of our food supply from one geographic area. Even if that monopoly is local food for local people.
The Marine Broadcasting Offences Act, (known as the "Marine Offences Act"), became law in the United Kingdom at midnight on Monday 14 August 1967. It was introduced by Harold Wilson's Labour government in an attempt to preserve the BBC's monopoly of radio broadcasting.
The radio monopoly was that of the Post Office, which licensed the BBC exclusively to broadcast radio programmes. The BBC was in thrall to the Musicians' Union, which severely limited what it called "needle time" in order to protect jobs for live musicians. The result was that pop music was limited to a couple of programmes a week, notably "Two Way Family Favourites" at lunchtime on Sunday, the BBC's most popular programme of pop requests for members of UK forces serving overseas.
Teenagers who wanted to listen to pop music had to tune in to Radio Luxembourg, outside UK jurisdiction, broadcasting on 208 metres with somewhat patchy reception in parts of the UK. That all changed in 1964 when Irish entrepreneur, Ronan O'Rahilly, spotted an opportunity to bypass the BBC monopoly by broadcasting from outside UK territorial waters. A ship with a giant antenna set sail, and in March 1964, Radio Caroline began broadcasting non-stop pop music to an enthusiastic audience that soon swelled to millions. The station paid for itself and turned a profit by running adverts, something the BBC frowned upon as against the spirit of public service broadcasting, and had never itself done.
Radio Caroline was joined by others, and soon over a dozen broadcasting ships were dotted around the UK coastline, just beyond the 3-mile limit. They were dubbed "pirate radio" stations, and featured Radio London, Radio Scotland, Radio 270 and others. They were hugely popular, drawing audiences that far exceeded those listening to the BBC's output of programmes such as "Music While You Work" featuring live studio musicians.
The government’s heavy-handed response was the Marine Offences Act, which made it illegal to visit, supply or take adverts on ships broadcasting from international waters. On August 14th, 1967, the pirate stations went off the air one by one before midnight came. The exception was Radio Caroline, which continued to broadcast, supplying itself from the Continent, even though this was now against the law. In St Andrews as a student, I had to rig up an aerial that stretched round my room in order to tune in to it. We campaigned for free radio and published pamphlets about it, ones that gained some national prominence.
The epilogue was that we convinced the Conservatives of the case for free radio, and the party promised to introduce commercial radio when it next gained office. It won the 1970 election and legalized commercial radio broadcasting during its term in office. The BBC huffed and it puffed, but it was too late to blow the house down.
Polly Toynbee gives us chapter and verse on how difficult it is going to be for one business to export into the European Union after Brexit. The little bit that Polly’s not grasping being that the point and purpose of trade is access to the imports, not the ability to make the exports. For sending stuff abroad for foreigners to consume is the work that we do. The benefit we gain from that work being the stuff that foreigners send us that we can consume.
Keep that in mind for a moment:
Searching for what forms to fill, HMRC’s list of codes has been impossible for his complex products, where the quantity and original source of each ingredient needs a separate coding. “The paperwork is crazy,” he says. Each form has three pages, one needed for each of his 50 products with certificates of origin relating to ingredients from all over the world. “That’s what the single market did away with in 1994,” he says.
Baker’s post-Brexit transaction costs include paying a carrier £100 a time to fill out the right forms, and a customs clearance agent to check and process duty paper work: qualified agents are in short supply. The company and each of his staff need security vetting to get exports through ports with less checking, requiring him to hire a security vetting consultant too.
The claim is that this is what it takes to export into - or import into of course - the European Union. OK, this is what it takes to export into the European Union then. Meaning what?
Meaning that the 6.5 billion people out there who are not part of the European Union currently have to face this faradiddle of pointless bureaucracy to send us the lovely things that they make and we might wish to consume. That is, every complaint about how difficult exporting to the EU will be after October 31 is a listing of the current costs to us of being in the European Union before October 31.
At which point recall that little point to be kept in mind. The point of trade is the imports, it is our consumption that makes us richer. We may well face greater difficulty in exporting to 450 million people but there’s a decent enough chance that we’ll face less in importing from 6.5 billion. Given the way trade works that’s a net benefit to us.
It’s not too much to ask that Polly Toynbee actually think is it?
Nazi Germany wanted to invade and occupy Britain to complete its conquest of Europe, so Hitler could complete his plan to move East. Operation Sea Lion was the codename of the invasion plan, and the barges and landing craft were assembled in readiness. But first the Roya Air Force had to be destroyed to stop it attacking the invasion fleet or providing air cover for British naval vessels that might intercept it at sea.
The planned attack on the RAF was codenamed Adlertag, or Eagle Day. It was postponed several times because of poor weather over the Channel and Southern England, but it finally took place on August 13th, 1940. Hundreds of German Luftwaffe planes attacked radar stations and fighter airfields in Southern England. They were met by fierce RAF resistance and faced a sophisticated air defence system that used radar, supplemented by the Royal Observer Corps, to pinpoint the numbers and direction of incoming enemy aircraft and send fighters up to intercept, Hurricanes to attack the bombers, and Spitfires to take on their Me109 escorts.
The German attack was marred by poor intelligence. They never really appreciated the significance of the radar stations, or understood how Britain's outnumbered fighters could be directed by ground control to attack specific flights without needing to mount costly defensive patrols. The WRAF personnel who manned the huge tables moved counters across the maps as information came in, enabling Dowding and Fighter Command to order planes to scramble to meet the attackers. The attackers had to use fuel flying to their targets, and only had minutes of effective flying left when they reached them before turning back. The RAF, on the other hand, were nearby, enabling their planes to stay longer in combat. Downed RAF pilots who survived could be rescued and sent rapidly back into service, whereas their German counterparts were taken prisoner.
Although damage was done on Adlertag, it did not make the major impact on the RAF's defensive capability that had been its aim. Poor intelligence sent some German planes to bomb the wrong targets, and crucially failed to pinpoint the factories where RAF fighters were made. German estimates had told Goering that Britain could produce roughly 250 fighters a month, whereas the actual figure was twice that.
Both sides overestimated enemy losses throughout the Battle of Britain, and on Adlertag the RAF claimed 78 Luftwaffe planes destroyed, whereas the actual number was 47 or 48 destroyed, and 39 severely damaged. The Germans claimed to have downed 70 British fighters in the air, with more fighters and bombers destroyed on the ground, whereas the actual British losses were less than one-third of those claims. The high Luftwaffe losses did not deter them from continuing their attacks throughout August and into September, until the Luftwaffe switched to night strategic bombing.
The failure of Adlertag and the ensuing Battle of Britain meant that Britain stayed in the war. It provided a base from which a future attack could be launched once the US had entered the war. It meant that Germany had two fronts to deal with when it attacked Soviet Russia. It is debatable if Russia could have defeated Germany had Britain been under Nazi occupation. Without the vital supplies taken by the Arctic convoys that helped Russia to sustain the war, and without Germany having to divert huge military resources to its second front in the West, it is conceivable, maybe even likely, that Hitler's armies would have subjugated the entire continent. And even if Russia had finally won a costly war of attrition, there would have been no allied troops in Western Europe to temper its colonial ambitions.
Thus the failure of Adlertag and the succeeding air attacks were instrumental in securing the preservation of freedom in Western Europe, and in ultimately defeating the evil scourge that sought to extinguish it. Among the brave airmen who fought in that battle was Antony Fisher, later Sir Antony, who afterwards went on to found the Institute of Economic Affairs, which itself played a major role (and still does) in preserving and extending freedom.
Another little entry in the well they would say that stakes:
Short sellers 'should be applauded' over Burford attack
Perhaps in the sense that people putting their money where their mouth is can be seen as admirable.
A secretive investment firm has leapt to the defence of short sellers after litigation funder Burford Capital suffered one of the most devastating “short attacks” ever seen in the UK.
Gotham City Research, known for its assault on outsourcer Quindell in 2014, has released a note adding to the criticism against Burford and arguing that short sellers “should be applauded for their work”.
The report comes days after US short-seller Muddy Waters issued a blistering dossier on Burford, one of the biggest names in the rapidly growing litigation funding industry, in which it took aim at its accounting practices and “laughter-inducing” governance.
That Gotham is also a short seller might lead us to the Mandy Rice Davies line. But there is a more important point here.
As the standard joke goes - laughs are hard to come by in economics - Eugene Fama got the Nobel for showing that the efficient markets hypothesis is true, Lars Peter Hansen for doing the mathematics, Robert Shiller for showing it isn’t true. All on the same day, Tee Hee.
As with many jokes this isn’t quite true - Shiller instead showing what was necessary for the EMH to be true. Which is that all have the opportunity to express their view by trading upon it in that market. Only then are all views, thus all information, incorporated into market prices - the base contention of the EMH, that information is already in market prices and efficiently so.
That is - and Shiller has been most vocal on this point - people must be able to make money from falling prices as well as rising. Only then is the view that prices can or will fall incorporated into those very prices that we wish to be correct.
Applauding short sellers isn’t therefore quite the point. We must allow them so that markets do in fact work. To the point, as Shiller says - as in the housing markets - that we should deliberately construct futures and options markets so that people can be short the market where this is, in the absence of such constructed markets, difficult to impossible. Thus his agitation for derivatives markets in housing.
Short selling is important. No, not moral nor ripe for our approbation for both economics and markets are entirely amoral. Just important, which is why we must allow it.
An interesting little philosophic question here. Who is it that we should trust more on an issue?
Boris Johnson’s controversial enforcer, Dominic Cummings, an architect of Brexit and a fierce critic of Brussels, is co-owner of a farm that has received €250,000 (£235,000) in EU farming subsidies, the Observer can reveal.
The revelation is a potential embarrassment for the mastermind behind Johnson’s push to leave the EU by 31 October. Since being appointed as Johnson’s chief adviser, Cummings has presented the battle to leave the EU as one between the people and the politicians. He positions himself as an outsider who wants to demolish elites, end the “absurd subsidies” paid out by the EU and liberate the UK from its arcane rules and regulations.
Lord Astor rather comes to mind here.
Imagine that some official of the National Farmers’ Union insists that we must remain in the European Union because of those handouts. In the context of farming incomes they’re substantial - by some estimates they’re all of net farming incomes - and so we could and perhaps respond with “Well, he would, wouldn’t he?”
Now imagine that someone is in receipt of such payments but still, for what he at least believes is the greater good, thinks that the system which so enriches him should be abolished. Whose word should we be putting greater weight upon?
The other phrasing that comes to mind is, well, who is merely talking their own book?
The grander issue here being that we’ve reached a place where doing so, loudly demanding that one continue dipping into the communal pot, is seen as righteous and serious, while arguing the contrary is a potential embarrassment. When did we reach the point that “No, don’t give me other peoples’ money” is a political position to be criticised?
Charles Darwin, one of history's most influential scientists, was born on August 12th, 1809. Newton had dispelled the notion that there were two domains, the heavens and the Earth, by showing that the same laws that governed motion on Earth also governed the motions of heavenly bodies. Now Darwin was to achieve a similar result for nature, showing that there were not two domains, humans and the animal kingdom, but that humans were part of the animal kingdom and subject to the processes that governed its development. Both Newton and Darwin therefore edged humanity away from a human-centred view of the universe, and into a position that saw human beings as a part of the universe and a product of it.
His 5-year voyage on HMS Beagle had given him scientific recognition as a geologist, one whose observations and samples supported Charles Lyell's notion of gradual geological change over long periods of time. But it was his observation of the different species scattered across different islands that aroused his interest. He had read "An Essay on the Principle of Population," published by Robert Malthus in 1798, which suggested that human population would always grow at a faster rate than the food supply, causing periodic catastrophes of starvation. If many were doomed to die, Darwin wondered which ones would survive, and the question led him to develop the theory of natural selection. He wrote:
"In October 1838, that is, fifteen months after I had begun my systematic enquiry, I happened to read for amusement Malthus on Population, and being well prepared to appreciate the struggle for existence which everywhere goes on from long-continued observation of the habits of animals and plants, it at once struck me that under these circumstances favourable variations would tend to be preserved, and unfavourable ones to be destroyed. The result of this would be the formation of new species. Here, then, I had at last got a theory by which to work..."
Darwin published his theory of evolution with a weight of supporting evidence in his 1859 book "On the Origin of Species," and the world was never the same. One of the interesting features of his account was that it included a process of change, a process by which one thing gradually became another. Unlike accounts of change such as Hegel's, for example, that thought change occurred abruptly, Darwin's was one of slow incremental change, evolution rather than revolution.
Radicals such as Marx have supposed that changes to society must come in abrupt leaps achieved by revolution, and have proposed what those changes should be. Some have inspired others to seize power in order to impose those sudden changes. The more evolutionary approach takes it that free societies change gradually over time as people develop new ways of doing things and new ways of looking at things. Values change over time, as do practices and habits. Under this framework, changes come about by gradual adoption. The innovators are the early adopters, but others observe the results, and copy the new behaviour if they seem favourable.
In "The Poverty of Historicism" (1957), Karl Popper contrasts what he calls "Utopian social engineering" with "piecemeal social engineering," describing the former as "a method which, if really tried, may easily lead to an intolerable increase in human suffering." The latter, by contrast, he describes as "a reasonable method of improving the lot of man." The lessons of the French and Russian revolutions bear out the view that sudden, imposed, revolutionary change can easily bring disaster. The Industrial Revolution and the gradual spread of capitalism as a global wealth-creating process have brought about by gradual change the biggest advances in human welfare since hunter-gatherers became farmers.
The process Darwin saw in nature of gradual, incremental change has proved to be one that people can apply to the improvement of society and to the quality of life, as well as to expanding the choices and opportunities that are available to people. Evolution brings improvement, where revolution often brings only disaster.
Andrew Carnegie died exactly a century ago, on August 11th, 1919. His was a "local boy makes good" story, in that he went from a one-room house in Dunfermline to become one of the richest men in history, and one of the most generous. His father was a casualty of the new textile technology as machines replaced the skilled handloom weavers. The machines gave the world cheap fabrics, but they drove the weavers into destitution. Carnegie's father moved with his family to seek a better life in the United States.
His first job, at age 13 in 1848, was as a bobbin boy in a cotton mill. It paid $1.20 a week for 12 hours a day for 6 days. In modern values that would be about $35 a week. His second paid more, $2 a week, but it was harder and involved firing up a boiler in the factory basement and running a small steam engine to power the machines.
Still a teenager, he became a railroad telegrapher with the Pennsylvania Railroad Company, in his spare time avidly devouring the library that one of the bosses gave the young employees free access to. He resolved then to offer poor boys the same opportunities if he ever became wealthy himself. He did indeed, by acquiring a series of shares in growing companies. Still in his 20s he had acquired investments in railroads, Pullman sleeping carriages, bridges and oil derricks. America was growing into its industrial revolution, and Carnegie was building up wealth in its new technologies.
He later built up the Carnegie Steel Company of Pittsburgh, eventually selling it to J P Morgan for over $350m, a fabulous sum even in those days, equivalent to about $5.15bn at today's values. His subsequent reputation, however, rests not on the wealth he accumulated during his life, but on the wealth he distributed to charities and worthwhile causes, especially educational ones. Before he died he had given away some 90% of his fortune. He funded 3,000 public libraries in the US, the UK, Canada, Australia, New Zealand and South Africa. He paid for the establishment of libraries in nearly every town in Scotland, and also paid for organs in many of their churches. He donated money to help set up the University of Birmingham.
Before his death from pneumonia on this day in 1919, Carnegie had donated over $350m to deserving causes, which today would be worth about $5.15bn. His "Andrew Carnegie Dictum" was:
* To spend the first third of one's life getting all the education one can.
* To spend the next third making all the money one can.
* To spend the last third giving it all away for worthwhile causes.
His name lives on in New York's Carnegie Hall, the Carnegie Endowment for International Peace, the Carnegie Institution for Science, the Carnegie Trust for the Universities of Scotland, Carnegie Mellon University, and the Carnegie Museums of Pittsburgh and other cities. He even had a dinosaur named after him when he sponsored the expedition that discovered it. He was so proud of "Dippi" that he had casts made of the bones and plaster replicas of the whole skeleton donated to several museums in Europe and South America.
Andrew Carnegie has been an inspiration to successors such as Bill Gates and Warren Buffett. The message is that it's fine to make a huge sum of money, but that is by no means life's purpose. To dispose of it wisely and generously is a better way of feeling that one's life has been worthwhile.
In order to be able to do science it is necessary for us to have an hypothesis. An idea that, if this happens, then that. Such an hypothesis is always open to disproof by reality. That one ugly fact that can explode a beautiful theory.
At which point, to ruminate upon the power outages yesterday across Britain:
The enormous impact of this power failure is likely to lead to questions about the strength and robustness of the system.
The BBC understands that two power supply plants - one a traditional gas and steam-fired power station in Cambridgeshire, the other a huge wind-turbine farm in the North Sea - failed at about 16:00 BST.
National Grid described it as an "unexpected, and unusual event".
An additional factor may have been capacity problems at Britain's largest single power station in Yorkshire.
The sudden drop in available power caused protective measures to kick in that immediately cut electricity supply to a section of the National Grid network.
Our hypothesis is that running the National Grid on intermittent power sources is more difficult - without power outages - than running it on reliable power sources. Indeed, we have had numerous predictions that trying to run the country on wind and solar could cause problems. Like, say, wind speed at a producing wind farm going over safe limits, the entire operation thereby shutting down, that then cascading across the Grid. That standby gas cycle plant perhaps powering up in time, perhaps not. This leading to shutting off power to some parts of said gird in order to save other parts of it.
We have our hypothesis. We have our fact. And we can’t as yet say that our fact disproves our theory. Which is going to make that inevitable report into events most interesting to read, isn’t it?
If we’re allowed to read it of course.
August 10th has been declared "International Biodiesel Day because on that date in 1893, Rudolph Diesel ran one of his early engines in Augsburg, Germany, on nothing but peanut oil. It was, however, only in 1977 that Expedito Parente, a Brazilian scientist, invented and patented the first industrial process for the production of biodiesel.
It's not quite clear why biodiesel deserves a day. In fact, if anything, it deserves to be forgotten. It is one of the silliest things ever one in the name of 'renewables.' Determined to be seen to be cutting back on the dreaded fossil fuels, people went for fuels derived from vegetables (and in some cases animal fats) , and therefore renewable. Farmers, especially in the EU and the US, were rewarded for growing crops that could be converted into diesel fuel to be used in transport and heating. 3.8 million tons were produced worldwide in 2005, with approximately 85% of biodiesel production from the European Union.
Biodiesel is made by the transesterification of vegetable oil or animal fat feedstock, with rapeseed and soybean oils most commonly used. Soybean oil accounts for about half of U.S. production. Biodiesel can be used by itself, or mixed with petrodiesel in different proportions, and blends of it can also be used as heating oil. Some concerns have been expressed about the effect that biodiesel has on engines. Mercedes Benz revokes its warranty if fuels containing more than 5% biodiesel are used.
The more pressing concerns are about world food prices, especially in poor countries, and the environmental impact biodiesel has. Moving fully to biofuels could require huge tracts of land if traditional food crops were used. Environmental groups including Greenpeace and Rainforest Rescue have criticized the use of oil palms, soybeans and sugar cane for biofuels, pointing to the loss of rainforest cleared for their plantations. They claim that oil palm plantations in Indonesia and Malaysia have caused tropical deforestation there.
Two factors are behind the food problems. If food stocks are used for fuels, there is less available for consumption, leading to price increases. The rising price of vegetable oils and basic feedstocks means that poor people cannot afford food if they are outbid by those wanting it for fuel. There have been attempts to make fuels from inedible crops, but these have made only a marginal contribution. Researchers in Nevada, for example, have developed a process for making biodiesel from used coffee grounds. However, even if it could be done on a commercial scale, the entire world supply of coffee grounds would not contribute even 1% of the diesel used annually in the US alone.
Critics also point out that if farmers switch from growing food crops to growing fuel crops, it means that less food will be produced, and the price of it will rise. It seems a strange world in which mothers in rich countries can feel virtuous by driving their children to school in giant 4x4 'Chelsea tractors' running on biofuels, at the expense of mothers in poor countries unable in consequence to afford enough food for their children.
Biodiesel seems to represent one of the worst cases of environmental tokenism, doing something that looks good without taking account of its real impact. Taking an environmental protester across the Atlantic on a millionaire's high-speed yacht "to save the environmental impact of flying her" is virtue signaling of the highest order. The environmental impact of that voyage far outweighs many times over that of putting her in a plane seat that would otherwise be flown across empty.
It is highly probably that petrol and diesel engines will be banned from our cities in the near future, and then gradually phased out elsewhere, replaced by electric vehicles than can be powered by relatively low impact electricity generation. Even before that happens it is to be hoped that governments will recognize the folly of using food crops to make fuel. Promoting it and subsidizing it was one of the more wicked things the European Union has done. On International Biodiesel Day, we would do well to realize that.
The Conservative MP for East Surrey tells us that the falling pound is a very bad thing.
As our currency plummeted last week, politicians were remarkably quiet. In normal times, a catastrophic slide in the pound would send a shockwave through Westminster. An emergency cabinet meeting might have been called. The chancellor might have made an announcement, calming markets and reassuring the public.
That is to rather miss an important point. When we agree to fix the price of the pound then the pound’s price not being fixed is a problem. So, whether it’s called Bretton Woods, the EMS, the Snake, whatever, a fixed currency rate regime will be most uncomfortable with changes in the rate. The solution to which is to do as we now do, allow the price to move in a free market. At which point there is no problem for without the price fixing the balance of payments will, by definition, balance.
Markets solve so many things.
But sadly it becomes worse:
The sheer drop in sterling since 2016 is only a taste of what’s to come if we continue down the destructive route of a no-deal Brexit. Instead of continuing the ideological race to the cliff edge, we have a duty to consider the interests of ordinary people. Leaving people worse off financially is a Brexit outcome nobody supports, whether they voted leave or remain.
That is why it is time to think again. A fresh democratic mandate is key to this big decision, now that the circumstances have changed so much. This is why we must hand the choice back to the British people in a referendum.
This is to be remarkably ignorant of the efficient markets hypothesis. The EMH not saying that markets are the efficient method of organising everything, nor that we cannot improve market efficiency. Rather, that markets are efficient at processing the information of what prices should be in a market.
The insight coming in three forms, weak, semi-strong and strong. We haver between the last two definitions ourselves, all publicly known information is already in prices to all even privately known is. But the weak version, all generally known information is, is so obvious that even critics of it can only dismiss it as a tautology, an obviousness.
It is generally known that Britain voted to leave the EU, that Article 50 has been invoked, that October 31 is the currently listed departure date. It is all this that has dropped the pound that 15%.
That is, markets are forward looking and have already incorporated much to possibly even all of the likely fall in sterling from our leaving the European Union. Which is really a pretty big thing for a Tory MP to miss when discussing markets, isn’t it?
We live in a world where people who are overweight or obese are considered part of a ‘national health crisis’, which needs addressing through nanny-state measures such as the sugar tax - or, alternately, simply left to die an early death to benefit the rest of us, according to BBC presenter Michael Buerk. The logic behind these policies is that, especially in a nation with state-run healthcare, it is for the public good to have citizens who are healthier, and thus less of a drain on NHS resources due to preventable diseases or lifestyle choices, justifying an increased level of control over the lives of individuals.
However, this is misleading for two reasons. Firstly, direct links between being overweight and catastrophic health problems are arguably overstated. In fact, “the available scientific data neither support alarmist claims about obesity nor justify diverting scarce resources away from far more pressing public health issues”, and instead place the focus on the real health dangers which lie in lifestyle and diet choices and where the most significant benefits can be gained. While obesity is not ideal health, there is a substantial difference between being overweight, and being unhealthy, and it is very possible to be one without the other. In fact, between one-third and three-quarters of ‘obese’ people are metabolically healthy. This is a fact it seems our healthcare system has not yet recognised. Because of this failure to separate weight and health, significantly lower effort is being put towards educating people about the dangers of other factors such as being underweight, even though studies have found that “obesity and [being] underweight, but not [being] overweight, was associated with higher all-cause mortality”. If the purpose is to create a healthier society, more focus should be put on educating people about healthy lifestyles and diet choices, and a distinct division between health and weight ought to be created, something which must be perpetuated through change in social norms at large, not just in the doctor’s office.
Secondly, the costs of obesity on the NHS have been largely miscalculated, promoting an ineffective and heavy-handed response. Several government and independent estimates of costs to the NHS because of overweight and obesity range from £5.1 billion to £6.1 billion; however, these estimates are not balanced cost-benefit analyses. The costs saved on pensions, healthcare, and other benefits from the 7.1% of early deaths attributable to overly high BMIs are calculated at £3.6 billion per year, which brings the net costs on the state of overweight and obesity down to £2.47 billion — 2.3% of the 2016/17 budget of the NHS. In conclusion, though, callous, “obesity prevention may be an important and cost-effective way of improving public health, but it is not a cure for increasing health expenditures.''
However, even if one believes that part of the state's role is to promote healthy lifestyles because of increased productivity and the overall wellbeing of its citizens, enforcement, ineffective promotion, and shaming are some of the least beneficial ways to do so. The current culture of fat-shaming and the acceptance of discrimination based on weight (in the legal definition) is actually counterproductive, as perceived weight discrimination is directly linked to increased levels of the stress hormone cortisol, which “may play a role in generating a vicious circle of weight gain and discrimination and contribute to obesity‐associated health conditions”. Instead of ineffective sugar taxes, the state should focus on education, especially about the importance of a healthy diet and exercise, while disconnecting it directly from weight. A review of 44 studies of school-based activity and health programmes found that while such programmes did not result in weight loss for children, they were correlated with improved athletic ability, a tripling in daily exercise, and a reduction of TV consumption of up to an hour. A much more effective approach would be a focus on education and ‘nudge policies’, metaphorical carrots which encourage - but don’t penalise or enforce - healthful behaviour. These policies include redesigning roads to make safe cycling lanes (cyclists now constitute up to 70% of traffic on some London roads during peak hours), providing free and/or easily accessible exercise classes, and healthier school meals. These policies actually do encourage healthier lifestyles, without an unsubstantiated focus on overweight or obesity. This is not a national health crisis burdening our healthcare system with billions more in preventable costs, and it is not easily solved by measures which infringe on individual freedom and are largely ineffective.
Melissa Owens is a research intern at the Adam Smith Institute.
It is often invigorating to read of high achievers who managed without the formal qualifications and training usually required. Such a man was Thomas Telford, born on August 9th, 1757. He built bridges - some 40 in Shropshire alone - yet at aged 14 it was to a stonemason he was apprenticed. He then worked in Portsmouth dockyard, and although untrained, was soon working on some of the major projects involving their design and management.
By the time he was 30 he was appointed Surveyor of Public Works in Shropshire. There is a telling anecdote that, when consulted by St Chad’s Church in Shrewsbury about their leaking roof, he warned them it could easily collapse. When it did so 3 days later, his reputation was enhanced.
Telford was just getting into his stride. He inspected Abraham Darby’s famous bridge at Ironbridge and thought he could do better. His own bridge, even though 30 foot wider in span, weighed only half as much. His most famous work is probably the Menai suspension bridge connecting Anglesey to the mainland. It was then the longest suspension bridge ever built, spanning 580 feet, and is regarded as a work of art, now listed as ‘Heritage.’
He constructed canals as well, notably the Ellesmere Canal and the Shrewsbury Canal. He did roads, too, including sections of the main Northern route from London to Holyhead. His friend, the Poet Laureate of the day, Robert Southey, dubbed him “The Colossus of Roads.” And he constructed the St Katharine Docks near Tower Bridge in London. He was elected the first President of the Institution of Civil Engineers, not bad for an unqualified lad from Scotland.
Such were the heady and exciting days of the early Industrial Revolution, that people could achieve great things if they had talent, ambition and determination. The Britain of the day fostered and rewarded such people, and had the courage to back them undertaking impressive things never done before. It was not conservative in the small “c” sense, but hungry for change that brought improvement.
It is very much a spirit that could be recaptured today. The planning laws that strangle development would have to be changed, as would the appeal procedures that allow a few obstinate opponents of change to tie things up for years in the courts. The tax system would need to be overhauled to allow people to gather the rewards of risk. Perhaps most of all, it would require a change in attitudes, one that would see people respect and admire giants like Telford, treating them as role models to inspire emulation, rather than trying to bring them down. It could all be done, and as the UK moves away from the bureaucracy that is Brussels, it might be done. All it would take is a country determined to make it happen.
We’re told that female entrepreneurs have it differently from male. The solution is, apparently, that more should be invested in the businesses of female entrepreneurs. However, there is a certain relationship being missed here:
Female entrepreneurs are more likely than men to take a salary cut when getting their own business off the ground, a survey has revealed.
The study found that women are more likely than their male counterparts to sacrifice their own income for the sake of getting a new business on a healthy footing.
It suggests that women are still struggling to attract investment into their firms and feel under more pressure to reinvest as much spare income as they have into the business.
The survey, by the small business investor Iwoca, also appears to show that women are less likely than men to sacrifice their family time when starting a company, suggesting they try harder than me to juggle their time in order to share it equally between work and their partner and children.
One possible - and reasonable, there is useful evidence on the point - explanation for this might be that more women start businesses in order to gain that greater family time. But let us leave such empiricism aside.
Concentrate upon the theory here. Starting a business isn’t easy and it requires significant investments of time. Those willing to invest less time in doing so gain access to less capital to do so. This is a surprise in what universe? Further, which reality requires a solution to it?
The philosopher Francis Hutcheson is widely regarded as one of the early father figures of the Scottish Enlightenment, the blaze of talent and intellect that swept Scotland in the 18th and early 19th Centuries. He was born on August 8th, 1694, and died on the same day 50 years later. Although hugely influential in Scotland, where he made much of his career, he was in fact an Ulsterman, and was born there and died in Ireland.
Hutcheson was hugely influential on Adam Smith and David Hume, and other Enlightenment figures, many of whom attended his philosophy lectures in Glasgow, where he was the first professor to lecture in English instead of Latin.
He was not a systems-builder, like both Smith and Hume, but his influence can clearly be seen in their subsequent thought. Hutcheson himself was influenced by Locke, from whom he took much of his empirical approach. He thought that there were no ‘innate’ ideas, but that the five physical senses were the sources of the information that we processed.
However, he also listed six non-physical ‘senses,’ referring to things we felt, including consciousness itself and a sense of beauty. His third one he called a “public sense,” which is "a determination to be pleased with the happiness of others and to be uneasy at their misery." This immediately stands out as what Smith called “sympathy” (and we would call “empathy”), and which lies at the core of Smith’s “Theory of Moral Sentiments” (1759). This was the magisterial work of philosophy that made Smith famous many years before his “Wealth of Nations” was published in 1776.
The sixth of Hutcheson’s ‘senses’ was what he called “a sense of honour,” and it is that by which we seek to earn approval and to avoid blame. He said it is that "which makes the approbation or gratitude of others the necessary occasion of pleasure, and their dislike, condemnation or resentment of injuries done by us the occasion of that uneasy sensation called shame." Again, there is a clear thread running from that thought to Smith’s “impartial observer” that we construct in our minds to tell us how our behaviour will look to others.
Although Hutcheson published his essays anonymously, his authorship was widely known, and there were rumblings against him in the Church of Scotland. In 1738 the Glasgow presbytery challenged his belief that people can have a knowledge of good and evil without, and prior to, a knowledge of God. Hutcheson probably would not have faced the death penalty, since the last person to be so punished had been a 20-year-old student, Thomas Aikenhead, executed for heresy 43 years earlier, but he could have been sacked from his academic role had not influential friends supported him.
The Scottish Enlightenment was a remarkable phenomenon, which might have had its seeds in the 1707 Treaty of Union that gave Scots access to the British Empire and its economic possibilities. It might have been the defeat of the ‘15 and ’45 Jacobite rebellions that confirmed to Scots that they were not going back to a mediaeval world of kinship and kingship, but could embrace the new individualism that was sweeping the intelligentsia of Europe.
Wherever the roots of it might lie, Francis Hutcheson was one of the thinkers who laid its foundations and contributed to an intellectual heritage that is respected worldwide, and has greatly impacted upon modern thinking. Ironically, this tradition is one barely acknowledged, if it is at all, by Scotland’s current intellectual and political leaders.
According to George Monbiot it’s the flood of dirty, fossil fuel, money into politics and the public debate which means that nothing is being done about climate change. We’re even accused of being responsible ourselves. That must be why, when asked, we point out that the solution to the assumption that climate change is a problem is that carbon tax that Bill Nordhaus, Nick Stern and every other economist having a look at the problem suggests. You know, insisting upon the correct solution as devised by the settled science is so unhelpful, isn’t it?
A recent paper in Nature shows that we have little hope of preventing more than 1.5C of global heating unless we retire existing fossil fuel infrastructure. Even if no new gas or coal power plants, roads and airports are built, the carbon emissions from current installations are likely to push us past this threshold. Only by retiring some of this infrastructure before the end of its natural life could we secure a 50% chance of remaining within the temperature limit agreed in Paris in 2015. Yet, far from decommissioning this Earth-killing machine, almost everywhere governments and industry stoke its fires.
That recent paper is this one:
We estimate that, if operated as historically, existing infrastructure will cumulatively emit about 658 gigatonnes of CO2 (with a range of 226 to 1,479 gigatonnes CO2, depending on the lifetimes and utilization rates assumed). More than half of these emissions are predicted to come from the electricity sector; infrastructure in China, the USA and the 28 member states of the European Union represents approximately 41 per cent, 9 per cent and 7 per cent of the total, respectively.
We’re arrogant enough to think that we’ve some influence upon the political debate here in Britain. We’re not stupid enough to think that we influence the Chinese Communist Party.
Which is where we’d suggest that people check their own references. Because to work out a solution to a problem we’ve got to identify what the cause of it is. If it’s not fossil fuel money influencing public debate causing the problem then restrictions on that rather important freedom and liberty of speech aren’t going to solve it either, are they?