Blogroll: Adam Smith Institute

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Updated: 28 min 33 sec ago

Grammar schools make no difference - great, let's have more grammar schools

7 hours 32 min ago

The standard argument against grammar schools is that they confer privilege. Presumably the complaint is that if the academic are given an academic education then this is somehow unfair. At which point we've the news that grammars do not in fact confer such privilege. Great, so, let's have more grammars then:

Grammar schools do not help children achieve academic success, a UCL study has claimed.

Researchers also said attending a grammar school had no positive impact on a teenager's self-esteem or their aspirations for the future.

The study, by the UCL Institute of Education, comes weeks after the Government announced plans to pump £50 million into creating more places at grammar schools.

"Against the conventional wisdom, we find little evidence that gaining entry into a grammar school has a positive impact upon most aspects of young people’s lives," the study concludes. 

"This leads us to an important conclusion: gaining entry into a grammar school may actually not be as important as many assume."

Professor John Jerrim, lead author of the study, said: "Our findings suggest that the money the Government is planning to spend on grammar school expansion is unlikely to bring benefits for young people.

"Even those children who are likely to fill these new places are unlikely to be happier, more engaged at school or have higher levels of academic achievement by the end of Year 9."

Co-author Sam Sims added: "Schools across the country are already hard-pressed financially. Our research suggests that the Government would be better off directing their money towards areas of existing need, rather than expanding grammar schools."

That is, of course, entirely the wrong conclusion to be reaching from the evidence presented.

The basic democratic deal is that we, the taxpayers and voters, get what we want. The restriction upon this is when what we so desire limits or impacts the rights of others among us. It's always, or at least should be, a negative restriction.

Spending money into order to inculcate privilege among the few would therefore be something that - potentially at least - shouldn't be one. But if that privilege isn't being created then the question becomes much simpler.

Do the people who pay the taxes, the voters, desire grammar schools? Yes, most certainly they, we, do. Given that there is no unfair privilege being created, as this research insists isn't, there's no reason to deny us all our wish, is there? 

 The finding that grammars do no harm means we should have more grammars.

 

Categories: Current Affairs

British property taxation is already very high by international standards

Wed, 23/05/2018 - 07:01

It's astonishing quite how long people can believe things which just aren't so. Polly Toynbee is, rightly enough, casting around for some method of paying for the social care which an increasingly elderly population requires. In doing so she alights upon property - there's a stash of economic value which can be taxed!

The thing is though she's wrong:

Property is undertaxed in Britain so there’s symmetry and fairness in reaching into home values to pay for care. 

Undertaxed compared to what? For as we've pointed out before Britain gains more of its tax revenue from property than any other OECD country. Vastly so in fact. The OECD average is under 2% of GDP, we're at over 4% of it. We gain 12.5% of our total revenue from it, the average is 5.7%.

Any comparison with that reality around us isn't going to leave the impression that we undertax property, is it? 

It's not actually the being wrong which bugs so much. We have in fact told Polly this, directly, a number of times over the past decade. And yet still she insists upon what just ain't so.

 

Categories: Current Affairs

A useful example of why we'd prefer a land value tax to business rates

Tue, 22/05/2018 - 07:01

The essence of a land value tax - this is without getting all Georgist about it, making it the single tax, or taxing away the entire rental value - is that it is the value added to the land by the activities of other people which is taxed. Mayfair land is worth more because 10 million other people have built London around it. Tax is going to come from somewhere, why not from that value created by the 10 million? 

Our current system of land taxation, rates, doesn't work this way at all. Rather, it tries to tax the value added by the owner of the land, entirely a different concept:

Supermarkets could be owed as much as £300m because of an ongoing legal wrangle about the business rates paid for cash machines, which threatens to heap additional financial pressure on the struggling industry.

The Valuation Office Agency (VOA), which is responsible for administering business rates, issues an initial bill which retailers then check against the size of their shops, often resulting in a refund.

But these claims have been put on hold while a case about whether ATMs are part of supermarkets or not is fought through the courts. The Court of Appeal will hear the latest stage of the case later this month.

The VOA is arguing that ATMs located both outside and within a shop should be assessed separately for additional business rates, and that retailers should pay the business rates taxes on them in addition to their normal store rates.

ATMs are generally of value to the people passing by. They're also value that the holders of the land add to the environment about them. Not things which the society around adds to hte value of that plot.

It's an entirely different concept of taxation therefore. We want people to improve their own land to the benefit of the rest of us - why tax it therefore?

Land value taxation is the much better concept.

Categories: Current Affairs

The capitalist who transformed a conservative United Kingdom into a more egalitarian society

Mon, 21/05/2018 - 10:35

Harry Selfridge’s founding of Selfridge’s in 1908, brought with it one of the
largest and most profound shifts in British culture seen since the inception of
our nation. Not only did it change consumer culture, not only did it innovate in
areas where previously people were restricted in shopping habits, it also
brought with it a groundbreaking wave of liberalization, which helped lead to the
emancipation of women and the breakdown of class barriers.

The department store, Selfridge’s, was one of the first spaces to contain
separate male and female toilets in the UK. We take it for granted today, but
prior to the 20th Century, women were not commonly seen outside the house.
The barriers to their emancipation were extreme. Imagine a society in which
there were no places to go to the bathroom; where the limiting factor for travel
was the distance from your own home. Selfridge’s, by utilizing gendered toilets
for the first time, by locating near public transport links, became a place in
which women felt safe to frequent alone, or with other women. It was a place
they could be individually empowered. And this was revolutionary to the
emancipation of women.

Selfridge himself was also a supporter of the Suffragettes, and the wider
campaign in favour of women’s rights in the UK. Whether this was a gesture
utilized to enhance profits, or whether there was a genuine streak of early
American freedom and liberalism behind this decision is moot, the support of
the Suffragettes meant that when militant feminism came to the streets of the
UK, one of the few shops which weren’t targeted and vandalized was
Selfridge’s. A smart business decision, but also a noble cause to support.

Selfridge was also unique in the way he advertised his new department store,
spending millions on mass advertisement prior to even finishing the
construction of his store. In his advertisement, he emphasized a simple fact; his
store was open to everyone, no matter which creed or class. Selfridge’s was
one of the first places in the UK where the doors were open to all regardless of
class, and the aristocracy, middle classes and working classes all shopped and
perused alongside one another. This egalitarianism was also helped by the
removal of what previously was common in stores.

Previously in shops, there would be staff members employed to ensure that
customers were served as speedily and efficiently as possible. The emphasis,
from the business point of view, was that the more time workers spent with
actual buying customers, the more profit that would be made, and ultimately
anyone seen to be loitering or spending unnecessary time would be moved on
by members of staff on the shop floor. Selfridge removed these staff. He
allowed people to spend time in his store, taking in every element of every
display stall. For those with little money, this opened the door to a vast space,
filled with artwork, flowers and grand architecture.

Selfridge’s prided itself on technological innovation, being one of the first stores
to demonstrate the television in action, it sold revolutionary wireless radios, and
even, as a publicity stunt, was host to the plane which first flew across the
English Channel. People from working class backgrounds could come into Selfridge’s as if it were a museum, a showcase of what was happening in the
world, and a taste of what could be achieved. Harry Selfridge was a self-made
man, he battled adversity and hardship to climb to where he perched. He grew
up in rural Wisconsin, to a single mother, worked up the ranks in Chicago
before noticing a break in the market for American style department stores in
the UK. This drive, and the fact he was a self-made man, underpinned his
classless emphasis within his store. He wanted people to be inspired by what
was within, so that they too could reach for the stars and become all that they
might be. Many members of the public saw technology previously seen only by
the upper middle classes and aristocracy inside his store. Selfridge installed
plentiful lift shafts, at a time when the thought of moving straight up was
unlikely, inspiring thousands. In the first week of opening, Selfridge’s bought in
1 million customers, when the population of London itself was only 4 million.

The staff members in previous stores were treated much like the servants in
aristocratic homes. Many of them would live on site in accommodation above
the stores, in rather squalor conditions, with minimal pay. Selfridge did not
follow this pattern. He wanted his staff to enjoy working, and to pass that
enjoyment on to his customers, emphasizing customer service over efficiency; a
model that turned out to be more profitable. He paid his staff a higher amount,
so they could afford to live outside of work and commute themselves,
liberalizing the workers, setting an example to other stores, and changing the
way that people, who otherwise would have had very few rights, could live.

Other department stores saw the success Selfridge’s achieved and emulated it.
They precipitated an environment which encouraged female emancipation and
liberalization, and broke down class barriers. As Harry Selfridge himself said,
“the customer is always right”, regardless of class or gender. His take on
capitalism, his fight to succeed and profit above other stores lead to a greater
delicacy in customer service, a greater emphasis on care, and better treatment
for workers.

Selfridge understood that capitalism is not a race to the bottom, because for
companies to succeed they need to please customers, and the greatest
weapon for change possessed by the masses is the power of the purse. We live
in a world today of immense wealth and technology that otherwise would have
been out of reach to the vast majority at the bottom of the ladder. Looking at
where society was in the past, and how far it has come to the present, should
lead to a great optimism about where it will go, and to its future state.
Capitalism and liberalism go hand in hand to bring about better living
conditions, higher pay, and opportunities and freedom for all. Every customer is
capable of creating profit, regardless of individual attributes, and can thus
command better treatment.

Categories: Current Affairs

The Keynesian problem that ails the UK commercial property market

Mon, 21/05/2018 - 07:01

As JM Keynes noted, we humans just hate having our nominal incomes reduced. We're a lot less worried about falling real incomes through inflation and the like a long as nominals don't fall. This is something of a problem in a recession for that's exactly when real incomes should fall and also when we've not got much inflation.

The answer is to do as we have done, create a flexible labour market. Thus, in recessionary times we get falling incomes, not massively rising unemployment. This is exactly what did just happen in fact and is a great victory for that idea of the flexible market. Sure there was recessionary pain. But it was generally shared, not just dumped on the 10 or 15% who lost their jobs an thus everything. The rise in unemployment we did have was very much lower than we would usually have expected from such a fall in GDP.

Places such as Greece have had to have very much higher unemployment, very much more economic pain, in order to get those reductions in real wages.

At which point

The fashion retailer Next is preparing to take a stand against landlords who grant rent cuts and store closures to rivals using a controversial insolvency process.

Company voluntary arrangements (CVAs), which allow struggling businesses to walk away from their liabilities, are sweeping through the retail industry as traditional operators reel from a downturn in consumer spending and the ongoing shift to online shopping.

Retail and restaurant chains including Byron, Jamie’s Italian, Prezzo, New Look and Carpetright have used CVAs to close hundreds of sites and cut rents on hundreds more since the start of the year. House of Fraser and Mothercare are among those ready to follow.

Like many healthy retailers, Next, run by Lord (Simon) Wolfson, believes that CVAs give an unfair advantage to competitors by allowing them to sever leases while better-run companies are forced to honour expensive commitments. New Look slashed rents by up to 55% on some of its stores.

Next has started demanding a “CVA clause” when it renegotiates leases. The clause says Next’s rent should fall by a similar degree if one of its neighbours in a shopping centre or retail parade achieves a rent reduction through a CVA. The move could have huge implications for the commercial property market if other healthy retailers start asking for similar clauses, leading to mass drops in rents.

One of the things which ails that UK commercial property market is that rent reviews within a lease are upwards only. Thus directly analagous to our nominal wages problem. There has to be considerable and sustained pressure for rents to fall. Meaning that the economy as a whole is less flexible than perhaps it should be.

Not something we need to do something about for as we can see something is already happening under simple market forces. But it is something we should be aware of.

Categories: Current Affairs

National insurance really is insurance, not just another tax

Sun, 20/05/2018 - 07:01

The zeigeit is gearing up for an increase in the taxation of the self-employed and it's worth noting the mistake at the heart of the basic claim. Which is that those who are employed through personal service companies pay less tax. This is both true and not true and the form of the truth makes a difference to what is being suggested:

More than 100,000 self-employed workers who are paid through companies could be hit by a new tax crackdown by the Government.

The Treasury has launched a consultation which aims to target people who are paid through a personal service company (PSC) instead of being on their employer’s payroll.

“This is unfair: two people doing the same job, in the same way, can end up paying very different levels of tax, depending on how they are engaged," its consultation document said.

The usual claim is that people only pay the corporation tax on the incomes they draw from such companies, not income tax which would generally be a greater amount. That is not actually how it works. Taxes on dividend incomes and those on employment ones are roughly the same, by design, once we piece all the bits of the system together. For high dividend incomes then pay more income tax again, over and above that corporation tax already paid. The total bite out of the income is, as we say, roughly the same.

Sure, maybe there's some bits to do at the margin but it's not a major difference.

Where there is a significant difference is with national insurance. Dividend income doesn't pay either - employers' or employees' - and that will be a saving. Given that there's a cap then a minimal rate above it of 2% on the employee's side, it's the employers' of 13.8% which is "dodged."

It's also true that when counting the revenue NI really is just another tax. The national insurance fund has been a fiction for generations now, the money just all goes into the general revenue pot. 

However, from the point of view of the individual it isn't just another tax. For, with the payment of NI comes certain forms of social insurance. If you don't pay it you don't get certain things. We also have different classes of NI, each of which give access to different parts of the social insurance system. You'll not get unemployment pay if you're paying a light stamp for example. 

Reform of the system might well be due - we've argued for many a year to simply abolish NI altogether and just have the one taxation system upon incomes. But it is still necessary to point out that much of this about personal service companies isn't really about tax dodging, it's about not purchasing state proffered services. Which does rather change the conversation, doesn't it? 

Categories: Current Affairs

We already use paid for plasma - why not pay ourselves for it?

Sat, 19/05/2018 - 07:01

As we've noted more than once around here the only country that doesn't have people dying while waiting for a kidney is the only country that pays live donors for a kidney - Iran. But, as we're also continually told, we should never sully matters concerning body parts with mere money.

Thus gamete donors are not compensated and we import sperm from Denmark, people do die waiting for a kidney or liver and blood, well, blood's interesting. For the system of voluntary donation does largely cover British needs. But plasma doesn't

The global demand for plasma is growing, and cannot be met through altruistic donations alone. Global plasma exports were worth $126bn in 2016—more than exports of aeroplanes.

…Only countries that pay for plasma are self-sufficient in it. 

The UK is one of those places which imports plasma. And we're importing it from paid donors in the US. The moral point has already, therefore, been trumped. We are paying donors for their plasma. But still there is the insistence that we must not ever pay for anybody part - even when we already do.

Our own view is that efficiency trumps the ethical concerns of some. After all, those who object to the financialisation of such medicine can always register their protest by dying without it.

Categories: Current Affairs

Fixed odds betting terminals - Mancur Olson was right

Fri, 18/05/2018 - 07:01

The government has announced that the stakes on fixed odds betting terminals will be reduced to £2. This is proof that governance does in fact work as Mancur Olson insisted it does. It's a fight among special interests for who gets to extract from us.

The news:

The maximum stake on addictive betting machines will be cut from £100 to £2, ministers announced today after reaching a compromise to limit damage to the public purse.

New rules on fixed-odds betting terminals (FOBTs) — described as the “crack cocaine” of gambling — will come with tax rises on bookmakers.

There's been a sustained campaign to get this to happen:

It’s nearly 20 years since I was put in charge of fixed-odds betting terminals (FOBTs) for one of the major bookmakers, rolling out some of the first ones, and it’s six years since I put the boot into them by turning whistleblower on Panorama.

Why did I turn whistleblower? To highlight the absurdity of £100 spins, in what was then a relatively lax regulatory environment around FOBTs. I wanted to expose the failure of the industry to recognise the impact of £100 stakes and the roulette game itself on the daily life of betting shops – customers and staff.

The point being not that the individual realised how damaging they were. But that other gambling interests were able to coopt those feelings:

Reducing the stake has always been a red herring. As opponents of FOBTs now admit, a £2 stake will make the machines 'unplayable'. The campaign isn't called Stop The FOBTs for nothing. And if FOBTs are removed from the high street, punters will move online, thousands of jobs will be lost and horse-racing will lose millions of pounds.

Gambling is going to continue, problem gamblers will still be problem gamblers. Who makes the money out of them will change, that's all.

As Mancur Olson did point out. Democratic governance does become the fight of the special interest groups over who is able to farm us. By altering the law in their favour and against their competitors.

Categories: Current Affairs

Polly's just found out that most of us don't care

Thu, 17/05/2018 - 07:01

Polly Toynbee is outraged by her latest discovery - the British people aren't up to having her guidance. We're just not good enough for her - no doubt the calls for another people will be along soon enough.

 The more precise complaints are about big business. Pay for CEOs is too high, according to Our Poll,  tax dodging too high and all that. Labour has excellent policies on these matters, so she says, the Tories don't. And yet, and yet, we don't vote for Labour and their policies? 

The answer being, as she says:

Good, say I! Class war! riposted the Mail. But when Trickett averred, “People have had enough of the elite pinching wealth from the pockets of working people,” the trouble is that they haven’t really, or not enough of them. 

Truly we are not worthy of such a visionary.

For what is happening here is that we are in fact a democracy. Not a system where what happens is determined by the enlightened in the elite. Instead, we hoi polloi have our say about what is important to us. And the basic point is that we just don't care about these things. Or don't care enough to live up to Polly's vision of the Good Society.

But then that is the point of our being a democracy, isn't it? That we don't have visions of the Good Society imposed upon us but get to choose for ourselves? 

No wonder she's disappointed in us.

 

Categories: Current Affairs

The proof that millennials should love the market

Wed, 16/05/2018 - 07:01

It's not obvious that millennials - the young and unwise of our society - like or even understand markets. Yet here we've a little story which shows that they should love them.

That story being a little listicle of things which have fallen out of fashion as the portion of purchasing power deployed by those millennials rises.

It’s not just frozen food that millennials have helped bring back. Millennials get a bad rap for killing things, but they’re also helping saving a number of industries. But are they reviving as many industries as they’re killing? I’ve conducted an investigative analysis to find out.

In are diamonds, golf, and vinyl records apparently, out go bar soap, chewing gum, focus groups, napkins, thongs and the Olympics.

Now let us think of an economic system which accommodates such changes.in desires. There's nothing particularly rational about some of them, they're just changes in taste. Rational in the sense of being calculable that is. Thus a planner could not possibly forsee them nor, well, plan for them. 

Who, after all, knows why the desired shape of knickers changes? 

We thus need some sort of system which indicates to producers that tastes are changing, preferably with a vicious feedback system to clear out those who don't take note. That being exactly what the market does provide for us. Those who fail to rise those changing tastes go bust an vanish from our economy.  And precisely because changes in taste aren't predictable they cannot be planned for at the system level - only by individual market actors who may or may not strike it lucky.

Millennials, whatever their thoughts about markets, really should love them. For they're precisely what caters to their tastes.

Categories: Current Affairs

MaxFac

Tue, 15/05/2018 - 12:24

What does MaxFac mean? What might it mean for Brexit? In this week's #MadsenMoment, Dr Pirie explores the option on the table to solve the Irish border question after we leave the EU. 

Categories: Current Affairs

A remarkable example of missing the point entirely

Tue, 15/05/2018 - 07:01

Even to seasoned readers of the newspaper like ourselves there are still gobsmackers to be found in the pages of The Guardian:

Back when local councils directly funded nurseries, there was at least some democratic accountability for how public money was being spent. But now that subsidies are channelled via individual parents, there is too little oversight for how £6bn of taxpayer money is being used to help give children the best possible start in life. Instead, the care of young children has increasingly become a commodity to be bought and sold.

The claim being made is that bureaucrats, overseen by politicians to some extent, care more about the quality of goods and services being delivered than private sector economic actors do.

Well, to be honest, that might even be true. It's the next stage which is so important though. The only way we will get decent supply from the bureaucrats is if they do care. Those private sector actors have to care for if they don't then they lose business, go bust, get fired.  

Which is why that move to commoditisation, the insistence that care for children is something to be bought and sold. The decision makers being the very people to whom the welfare of the children is most important, their parents. Because, as hard won experience has taught us, it's the pressure from buyers that makes suppliers deliver the goods.

That, after we surveyed the rubble heading east from the Brandenburg Gate in 1989, anyone can seriously argue otherwise really is a gobsmacker.

Categories: Current Affairs

In which we refute Piketty - thusly

Mon, 14/05/2018 - 07:01

All too few of us really understand the scientific method. Certainly, whenever it comes to the social sciences the truth of the technique rather goes by the wayside. So, to repeat, we come up with an idea, this becomes the hypothesis. We then look around for facts which will refute this idea. For as long as we find no facts that do disprove our idea then it stands as a possibly useful description of our world.

But note the truly important part. When we find a fact which cannot be true if the hypothesis also is then it is the hypothesis, that idea about how the world works, which is rejected, not the fact.

That's the bit the social sciences have such difficulty with, the rejection by fact-finding. Clearly, if this were not so then we'd not have as many as we do insisting that socialism and planning will make us richer given our evidence of 1989.

Thomas Piketty made waves with his insistence that inheritance of wealth is leading to a division in society., one where place in that society is solely determined by membership of the lucky sperm club. We also have certain facts about wealth and who has it and why:

The number of people who inherited their wealth has gone down, with 94 per cent of the rich list being comprised of self-made entrepreneurs. 

Yes, that's a strong enough fact to refute the hypothesis. The idea is wrong and we not just should but must discard it.

Those concentrations of wealth are not being inherited, they're being newly created. Which is great of course, we like new wealth being created, given that we know how much of - some 97% or so in fact - entreprenurial wealth flows to us, the consumers, only that fraction sticking with the entrepreneur.

Categories: Current Affairs

An elegant proof of why planned economies don't work, the efficient markets hypothesis

Sun, 13/05/2018 - 07:01

The efficient markets hypothesis tells us that it's not possible to regularly beat the market. For information about what prices should be is already incorporated into those prices. Sure, some beat it for some period of time because that's just the way statistical variability works. Some, like Warren Buffett, beat it for a long time but then his cost of funds is lower than the market's.

We also have all sorts of people out there who insist that the use or markets to allocate economic resources is the wrong way to be doing it. That the wise people in government should be doing this for us instead perhaps. 

At which point, an interesting comparison:

The message is clear: the beat-the-market efforts of professionals are impressively and overwhelmingly negative. In any asset class, the only consistently superior performer is the market itself. It is well to consider, briefly, the connection between the socialists and the active managers. I believe they are cut from the same cloth. What links them is a disbelief or skepticism about the efficacy of market prices in gathering and conveying information.

Odd to equate socialists and money managers, true. But the underlying point does stand. If we had evidence from our unfettered (no, don't titter at the back there) financial markets that they could consistently be beaten by good planners, then it's possible that good planners with adequate powers could improve upon a market economy.

We don't see that market outperformance - thus the planning part isn't going to work either, is it? For all the evidence we have is insisting that we cannot beat the market.

Categories: Current Affairs

Why shouldn't the people who benefit pay for infrastructure?

Sat, 12/05/2018 - 07:01

There's a certain amount of shock, horror, being expressed at the idea that property owners near Crossrail 2 stations might chip in some of their value gains to pay for Crossrail 2. It being a reasonably obvious observation that being close to a station running in and out of London increases property values.

Home owners living within a certain radius of Crossrail 2 stations could be forced to stump up millions to pay for the project.

Transport for London is considering introducing a levy to fund the £30 billion scheme, which will run from Broxbourne in Hertfordshire to Epsom in Surrey, through central London.

It would create three zones stretching a kilometre around each station. Each zone, mapped out in concentric circles, would have a scaled charge, known as the Transport Property Charge, descending with the distance from the station, according to Estates Gazette.

This is of course close to, a variant of perhaps, land value taxation. The society around you has increased the value of your land. Why not a tax to pay for the process of increasing your land value? 

We might also note that this is not uncommon in transport circles. Hong Kong's metro is largely paid for in this manner, the Jubilee Line to Canary Wharf, the more recent Northern Line to Battersea. Property owners benefit from this, why not property owners pay for it at least in part? 

There most certainly can be specifics wrong with such charges - come on, this is government, of course there will be errors. But the basic idea, that those who profit from infrastructure pay for it seems fair enough.

Categories: Current Affairs

Is Eurovision worth the cost?

Fri, 11/05/2018 - 16:16

This morning I jumped onto BBC Radio Wales to discuss the costs and benefits of the Eurovision song contest to the UK. 

Back in 2013 Dr Eamonn Butler wrote a great blog piece on the cost of the contest to the UK. In it he detailed the payments that the BBC makes to the European Broadcasting Union that hosts the contest: £279,805 in 2009, and £283,190 in 2010, £310,000 in 2012. What does this buy us? Well it buys the BBC the right to show the programme and it buys us a guaranteed place in the final. 

It doesn’t buy us the cost of the BBC’s production though. So I thought I’d update that a bit with some more figures, to give a better picture of what we spend and for you to decide if we’re getting bang for our buck. 

The benefits are obvious of course, so I’m going to focus on the costs. 

While the beeb isn’t keen to be open on how much it spends on Eurovision coverage, we can get an idea based on the spends the BBC is open about elsewhere. 

In their commissioned tariffs structure the BBC says the Premium Entertainment (including ‘one-off specials’ broadcast on flagship national TV networks like BBC 1) price per hour the BBC expects a show to cost is between £400,000-£750,000. 

Eurovision isn’t just a one-off on one day. As any die-hard fan will let you know it’s many months in the making and the actual contest is a week-long phenomenon, with two semi-finals broadcast live and then the Saturday final. The semis last around 2-3 hours and the final has been known to go beyond 4. In the UK we also have the BBC’s ‘You Decide’, run live on BBC 1 and BBC Radio 2. So we’re looking at a potential spend of between £4m and £7.5m on top of the payments made to the EBU (if any rogue BBC journalist wants to drop me the true figure, my DMs are open). 

And of course there’s the salary of our superstar presenters. One who earns £900,000 per annum direct from the BBC (not to mention his fees for his regular show on the beeb), another who earns £250,000-£300,000 and two that earn through producing companies for this one-off so don’t show up in the superstar earnings breakdowns. 

This year’s first semi final saw UK just half a million watching the first semi-final, just over that amount last night for the second semi. Tomorrow is the final and based on audience figures being up for the semis we might expect it to beat last year’s 6.73m who turned in (which was about 36.6% of the Saturday night audience). This year’s contestant picking show had fewer than 1m viewers. The final in particular is a pretty substantial number – comparable regular annual events are the Voice (5.7m) or the X Factor Final (4.4m) with the FA Cup getting over 9m. This is of course nothing compared to the audience share for the final in Sweden (70%) or Iceland (98%)

Eurovision costs are borne by Licence Fee payers and the EBU has been pretty vocal about its support for the system. We are, as you might expect, slightly less keen on a fee that makes up 10% of our criminal cases and which crowds out private competitors

The good thing is we’re not likely to win the contest any time soon. When Azerbaijan hosted the contest in 2012 they spent £48m on it and got just £7m back in tourism revenues, Copenhagen in 2014 spent £36m and got £13m back. It’s better if you do it on the cheap, Malmo spent £17m and got an estimated £16m back. Last year’s hosts Kiev ended up spending around £30m, it destroyed plans to reform the state broadcaster into a private one and took up nearly a quarter of its annual budget. 

I’m not going to say whether Eurovision is worth it (I have spent a lot of this week listening to the songs on repeat via my private subscription to Spotify, or watching videos supported by adverts on YouTube) but we should know how much our publicly funded broadcasters spend on events in our name and perhaps we should be more open to private broadcasters taking up the reins. 
 

Categories: Current Affairs

Not that we expect anyone to thank us but housing policy is working

Fri, 11/05/2018 - 07:01

We have, for a number of years now, been pointing out that what ails the British housing market is really very simple. We have a shortage of permits that allow one to build on specific pieces of land.

We do not have a shortage of land - housing is 3% of so of our land area. We don't have a shortage of land where people wish to live either - given the inevitability of positional goods like a mansion in Mayfair at least - nor even, over time, of the ability to build more housing.

We've just a legal structure and a bureaucracy dedicated to not allowing people to build housing without those permits in artificial shortage.

Recent policy has been, not as fast as we'd like, not as big a change as we'd like but in the right direction at least, to issue more of such permits. The result being, as even The Guardian notices

At last, a reason to celebrate: house prices are falling.

We're not the sort who would boast of having told you so, heaven forfend that we should be so self-regarding.

But, you know, we did tell you so.

These markets things, the interaction of supply and demand changing prices, they really do work, are a useful description of that reality out there.

Categories: Current Affairs

The history of property rights in Judeo-Christianity

Thu, 10/05/2018 - 16:47

Yesterday evening, we hosted the author and historian Benedikt Koehler who presented a whistle-stop tour through 2,500 years of thinking on property rights in Judeo-Christianity. John Locke’s contention that everyone has a right to own property now seems so obvious it is hard to imagine how it could ever have been contentious.

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However, the opposite notion - that land was beyond the reach of private ownership - had been axiomatic from the beginnings of Judeo-Christianity and throughout most of the Middle Ages.

You can view the slides from Benedikt's lecture by clicking here, and listen to our Facebook Live recording here.

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Categories: Current Affairs

Cat & Dog Economics

Thu, 10/05/2018 - 16:23

Books, poems, films and theatre productions have been written and produced over many decades celebrating the unconditional devotion and affection that exists between dogs, cats and their owners: A Streetcat named Bob; Clare Balding’s delightful book My Animals and Other Family about her maternal bulldog Candy; and the incredible story from Australia of Sophie Tucker the castaway dog, to name but a few.

However far less has been recorded of the parallels to Human Health from owning a companion animal, in what is an effectively largely overlooked adjunct to Social Welfare.

Dr Leigh Plummer, A Sydney Clinical Psychologist has drawn on his experience working with people suffering from mental health issues to demonstrate how owning a cat or a dog can improve owners’ sense of self, from walking the dog, communicating with other dog owners in the park which can help those suffering depression and sense of isolation. 

Owning a cat can provide companionship in the home and alleviate loneliness especially for the elderly or infirm and the daily routine provided by feeding, cuddles, and stroking can make for a more rewarding life for many who live alone.

Remember the touching story of Billy the stray cat who brought the autistic 4 year old Fraser Booth out of his shell? An air of peace, happiness and calm returned to the Booth family home.

A compelling British published pamphlet “Companion Animal Economics: The Economic Impact of Companion Animals in the UK” says that readily available data collection for companion pets is poor in the UK as, up until now, there has been little requirement for statistical collating of pet ownership by Government. In contrast, Germany and Australia have already published studies on this fascinating Human-Animal bond.

A common theme in animal companionship literature is the anxiety- reducing effect that cats & dogs have (Lang et al., 2010, Berger & Grepperud 2011, Dietz at al, 2012). 

In 2007, 2.28 million people in the UK were diagnosed with an anxiety disorder which costs the economy £8.9 billion. By 2026 it is projected that 2.56 million anxiety related diagnoses will be made which will further cost approximately £14.2 billion (McCrone et al 2008).

Just half the people living with an anxiety disorder do not receive treatment which is associated with lost employment costs. The ability of companion animals to prevent and remediate symptoms of anxiety, independent of medical services, is exciting and worthy of further controlled investigations.

The study goes onto say how Australian companion animal owners from various demographics, made fewer visits to their doctors for minor ailments than non-owners (Headey 1995), furthermore, the same owners were reportedly less likely to be taking medication for heart problems, high blood pressure, high cholesterol and sleeping difficulties. 

One of the pioneering studies in the estimation of economic savings associated with companion animal ownership, Headey & Anderson (1995) attempted a preliminary estimate of possible government expenditure savings using data obtained from 1994 Australian National People & Pets Survey. 

The study arrived at a saving of AUS $1,183 million, equivalent to 5% of the total Australian health expenditure.

In 2013, the United Kingdom’s healthcare expenditure totalled £124 billion which then equalled 8% of GDP. 

In the same year, 63.5 million people lived in the UK in 26.4 million households, with 46% owning a cat or a dog (Murray et al 2015). The implication is around that 12.14 million main companion animal owners or 19.1% of UK population could be in better health than those without pets (80.9% of the population).

In 2008, Dog & Cat owners made on average 5.04 visits to the GP each year which equals 61.19 million (17.5%) visits vs 288.13 million visits (82.5%) by non-owners. Total average visits to the GP in 2008 was 5.5 p.a. (Hippisley-Cox & Vinogradova 2009). The suggestion is then, that should companion animals not exist, total UK healthcare could have been significantly higher at £126.45 billion. Government healthcare savings due to the presence of companion animals was estimated to be £2.45 billion.

Giving the ageing national population, the significance on this effect may be of increasing importance to governments and healthcare providers. Perhaps it's an area of worthy study – our dogs and cats are leaving us healthier and the country wealthier.
 

Categories: Current Affairs

Madsen Moment – Innovation

Thu, 10/05/2018 - 15:04

Once a week Dr Pirie takes to the camera to explain a concept to our social media channels. This week it's innovation and Madsen is explaining why we at the ASI have put it at the heart of our policies for the year

Categories: Current Affairs

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