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 124 posts from the blog 'Adam Smith Institute.'
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On February 21st, 1952, Churchill's new Conservative government, which had campaigned under the slogan "Set the people free," abolished National Identity Cards as part of a campaign against regulations and controls.
The cards had been introduced in 1939 as a wartime measure, anticipating the dislocation of the population that would be caused by mobilization and mass evacuation. The postwar Labour government retained them, citing their need for National Service registration, rationing, the Health Service, family allowances, and post-war credits. Post Office clerks who were uncertain of a customer's identity, could demand to see them.
The police fell into the habit of demanding to see them, even for trivial matters such as overstaying one's time in a parking slot. There was a widespread feeling, expressed in Parliament, that this was un-British, and was more redolent of the practices of totalitarian countries. A famous test case aided those campaigning for repeal.
When Clarence Willcock, a dry cleaning manager, was stopped on suspicion of speeding, the police demanded to see his ID card. He refused on principle, and was convicted and fined at a magistrate's court. He took the case to the Court of Appeal, and although the judgement against him was upheld, Lord Chief Justice Lord Goddard commented that the Act was intended for emergency uses, now over, and should not be invoked on trivial matters. He further remarked that demanding production of the card for its own sake tended “to turn law-abiding subjects into lawbreakers, which is a most undesirable state of affairs." Although he upheld the decision of the lower court, he declined to award costs against Mr Willcock.
In 1952 the Conservative Health Minister, Harry Crookshank, announced their abolition, saying, “It is no longer necessary to require the public to possess and produce an identity card, or to notify change of address for National Registration purposes." Police, public officials and counter clerks were instructed accordingly, and told to use other means of identification such as passports, driving licences and season tickets.
I kept my own Identity Card for many decades, battered and worn though it was, as a souvenir of more restrictive times. A Labour government passed an Act in 2006 to reintroduce Identity Cards, pleading national security concerns. Their action engendered a furore of opposition from people determined to act in defence of civil liberties. The pressure group, NO2ID, formed to oppose it, ran a successful campaign, and in 2010 the Conservative-led coalition government repealed the Act, and destroyed the National Identity Register database that it had created.
We bring good news and tidings of joy. It is possible for Europe to feed itself. Even, it is possible for Europe to feed itself in an organic and environmentally friendly manner:
Europe would still be able to feed its growing population even if it switched entirely to environmentally friendly approaches such as organic farming, according to a scientific paper.
A week after research revealed a steep decline in global insect populations that has been linked to the use of pesticides, the study from European thinktank IDDRI claims such chemicals can be phased out and greenhouse gas emissions radically reduced in Europe through agroecological farming, while still producing enough nutritious food for an increasing population.
See, it can be done!
Not that anyone doubted it could be done of course. The question is, as it always has been, do we want it done?
The IDDRI study, entitled Ten Years for Agroecology, used modelling to examine the reduction in yields that would result from a transition to such an approach.
Reductions, the authors argue, could be mitigated by eliminating food-feed competition – reorienting diets towards plant-based proteins and pasture-fed livestock, and away from grain-fed white meat. More than half the EU’s cereals and oilseed crops are fed to animals. The study models a future in which European meat production has been cut by 40%, with the greatest reductions in grain-fed pork and poultry.
We can’t see any evidence that that’s what people do want. Sure, there’s a vocal minority shouting that that’s what should be desired but that’s a different matter. Humans like meat generally and dislike living on turnips. A solution that insists upon a diet of turnips is not achieving that basic human goal, of maximising utility.
There are many things that are possible just as there are a number of things which please people. The trick is to find the ones that are both - not, as here, to find something already rejected. After all, a diet of turnips was common enough around this time of year in Northern Europe for some centuries. We all gave it up as soon as we could. Which is evidence of a certain desire not to go back to it, isn’t it.
Benjamin Franklin was the first Postmaster General in the US. His operation became the United States Postal Service (USPS, often called the "Post Office") on February 20th 1792, when President George Washington signed the Postal Service Act. It has a monopoly of first class mail and of the use of boxes marked "US Mail," but it has experienced troubled times.
It makes losses into the billions of dollars. The latest year's current loss is put at $3.9bn, and it will not make a scheduled $6.9 billion in benefits prepayments. It still owes over $100bn to its retiree health benefits fund.
Part of the problem is that it has failed to adapt to changing times. It no longer makes big business mailing store catalogues, because people look up online what is on offer. First class mail has been replaced by e-mail in many cases. Most bills are now sent electronically, and such periodicals as survive tend to be often read online.
It has failed to adapt because it is big and cumbersome, and because it is run by government, directed to serve political needs to some extent. The same was true of both the German and UK postal services before they were privatized. It is always a critique of nationalized operations that the monopoly gives them captive customers who do not need to be lured by an attractive service, and the state's subsidy is a disincentive to cost-saving efficiencies.
Users of state-run monopoly services in effect pay twice. They pay once for the service itself as they use it, and again as taxpayers when they fund its subsidies and meet its losses. Funds needed for modernization and infrastructure improvement come not from investors, but from a reluctant government that always has more pressing claims on the resources it handles. That is why state-run services usually seem outmoded and old-fashioned. New technology means that people's habits change, and they change faster than the state service can keep up with.
There is a stronger critique of state monopolies, though. It is that their status magnifies the bargaining power of their employees, and enables them to gain benefits that no private firm could afford. Workers can strike, knowing that the government-backed operation will not go bankrupt as a private firm might, They can do so in the knowledge that government will come under pressure from customers anxious to regain their service, pressure that makes giving in to exorbitant demands an easy option. The USPS is struggling to meet the ongoing pension obligations that it conceded. State-run services tend to be subject to producer capture, meeting the needs of those who run them, rather than of those who use them.
The solution is privatization, as it was in Germany and the UK. President Trump is known to be considering this option in the US. When the company has to attract private investment, and to offer a service that customers will prefer to those offered by rivals, and when it has to cut costs where it can to improve its bottom line, only then does it have the incentives that will keep it on its toes.
From the Commons environment committee, telling us about the perils of fast fashion and clothes being cheap enough that even the factory girls can have a change of them:
“In the UK we buy more clothes per person than any other country in Europe. ‘Fast fashion’ means we overconsume and under use clothes. As a result, we get rid of over a million tonnes of clothes, with £140m worth going to landfill, every year.”
That’s from Mary Creagh and the correct response is “To whom?”
Those clothes being landfilled are worth £140 million to whom that is. They’re not worth £140 million to those who threw them away because they’ve just thrown them away - a fairly clear valuation of zero. They’re not worth £140 million to anyone else either as if they were then people would be collecting the clothes so as to gain that value. Outside government circles £140 million is still more than small change after all.
It’s the next bit that shows that not even Creagh thinks they’re worth that sum. For she calls on a tax to be spent in preventing such landfilling. Some reuse or something perhaps. But if we’ve got to use tax money to subsidise the reuse then the reuse isn’t worth the market price, is it? Even if that market price is nothing, entirely freebie.
All the information we’ve got tells us that these clothes going into landfill are worth nothing. So why should we be spending extra money to save that zero value? But sadly it appears that it’s Ms. Creagh who makes the law here, not you or I.
On February 19th in the year 1473, Nicolaus Copernicus was born in Royal Prussia in the Kingdom of Poland. Despite dropping out of two university degree courses, he went on to become proficient in astronomy, mathematics, medicine, and economics, and practiced for a time government and diplomacy.
He is celebrated for his book "De revolutionibus orbium coelestium" (On the Revolutions of the Celestial Spheres), a book that created a revolution in thought. For 1,300 years people had supposed from Ptolemy’s Almagest that the sun revolved around the Earth, the centre of the universe. This accorded with what appeared to be an everyday observation of the sun moving across the sky, and with the religious view that the Earth, the abode of humanity, was the centre of God's creation.
Copernicus had formulated his heliocentric view by 1510, but told only close friends, holding back publication of his ideas because of the controversy he expected they would cause. He finally allowed publication just before his death in 1543, the story being told of how a copy of the newly printed book was rushed round and placed into his hands so that he could see it before he died.
It aroused curiosity at first, and controversy later. The Catholic Church banned Copernicus’s book completely in 1616, regarding it as a threat to its authority, and in 1633 convicted Galileo of heresy "for following the position of Copernicus, which is contrary to the true sense and authority of Holy Scripture."
His significance is that Copernicus helped pioneer a scientific revolution that saw observation and intelligence as a pathway to knowledge, instead of using only the interpretation of scripture. Knowledge could be advanced, not by authority, but by competition between different ideas, provided that people were free to assess them, to evaluate them, and to choose between them. It parallels the way in which economic progress can be made by people freely choosing between competing products.
As an economist, Copernicus developed in 1517 a quantity theory of money, a very modern idea, and in 1519 put forward the idea that where there are alternative currencies, the more valuable will disappear as people hoard it and pay out with the inferior one. This is now called Gresham's Law. His truly was a revolutionary mind.
We are entirely happy that The G realises this, we’d just like to see them applying it to rather more of life:
The A380 proves that it’s profit that really makes an airliner fly
Even a great aeronautical achievement like a superjumbo can be brought low by the vagaries of economics
It’s not a vagary of economics it’s the point.
Sure, back two decades the idea of the superjumbo looked pretty good. No one knew it would work but the runes looked like it might. So, what we desire is a system in which people get to try out things that may or may not work. That being what a market based economic system does for us. People get to try stuff out.
We also need a method of deciding whether something has worked. This also being what is achieved by a market based economic system. If people don’t freely and voluntarily buy it then it’s not worked. Even, if enough don’t to mean no profit is made then it hasn’t.
We look forward to the application of this new found knowledge to such things as Sure Start, council housing and whatever else The G thinks our money should be spent upon. That markets work and one way they do is to tell us what we should stop doing.
Kublai Khan, who died on this day 725 years ago, is recognized as one who realized the enriching value of trade, and who implemented policies that massively extended and expanded it. The grandson of Genghis Khan, he completed the conquest of all of China and became the first ruler of the Yuan dynasty.
Formerly separate and isolated cultures were drawn into a continental system that had the re-established Silk Road as its primary transport route. This made for greater safety and security for traders and travellers, and reduced the frequency of tribute payments.
Caravans took Chinese silks, and from the Spice Islands conveyed pepper, cinnamon, nutmeg and ginger to the West. Along the way were picked up Indian fabrics and precious stones, and carpets from Persia. From Europe in the opposite direction went such wares as fine linens, horses and silver to both the near and far Easts. Each side encountered new goods, as did nations along the route, and new markets were developed. The increased volume of trade enriched those who participated in it, and saw the expansion of many of the cities involved.
Kublai Khan was, in effect, an early globalist. He established an extensive Maritime Silk Road, with Chinese vessels plying for trade across the Indian Ocean, and thence to the Persian Gulf and the Red Sea. They ventured to Eastern Africa, and there is even evidence that they may have reached South America.
Of course, along with the traded goods went ideas and people, mingling with and learning from each other. The Yuan paper money, made from the bark of mulberry trees, and backed initially by silver, copper and coin, was one example. It facilitated and reduced the costs of trade.
We remember Kublai Khan for many things, including his unsuccessful attempt to invade Japan, and perhaps for the stately pleasure dome that he decreed in Xanadu. But on this anniversary of his death we should remember the legacy of his commitment to trade, and his inspired efforts to make it safer and easier. China's new Silk Road today is a direct descendent of his own. He recognized what many leaders today do not seem to understand, that a wide and expansive trade generates prosperity in its wake, a prosperity that uplifts the lives of peoples.
Fracking for natural gas is indeed controversial. And there’s certainly a theoretic possibility that it could trigger an earthquake or two. So, sensibly, let’s have some rules about earthquake triggering from fracking. Being able to heat our houses, cook our dinner, in 2030 may or may not be worth Lancashire tumbling to the ground in its entirety.
But the question then becomes, which or what limits?
UK fracking industry pushes for review of earthquake limits
Firms say regulations forcing operations to stop if they trigger tremors greater than 0.5 magnitude threaten viability
0.5 is, as these things go, a triviality. This past month has seen 13 earthquakes in the UK of this or greater size. We’re unaware that Newdigate is - having suffered a quake near 100 times greater than this limit - now rubble.
We have a certain suspicion here. The limit is there to make sure in the unviability of the process:
Opponents said the lobbying drive showed companies were in trouble.
“We are seeing an industry that is desperate and knows it’s not viable. I think you’re really seeing an industry in its death throes,” said Jamie Peters, an anti-fracking campaigner at Friends of the Earth.
Those “safety” rules are set at a level designed to make sure that fracking cannot be done. That sounds like a really good reason to revisit them.
Venezuela’s collapse continues and its complex humanitarian emergency is worsening. The Catholic NGO Caritas has just reported that child malnutrition has exceeded critical emergency levels in two states, Vargas and Zulia. In Vargas state the level reached 22.7% and in Zulia, 17.6%. These are both well above the 15% emergency threshold set by international organisations. Children are close to starvation in Venezuela.
Venezuela’s food diversity score has worsened again, falling by 1% with families reporting that they consumed only five different types of food. Caritas stated that 90% of the households interviewed have insufficiently balanced diets. Less than 30% of the households surveyed consumed any foods of high nutritional value, such as meats, fish, dairy products, fruits and vegetables, showing that the bulk of the population is deficient in proteins, iron and vital vitamins.
In an indication of further deterioration of the health sector, patients from the Juan Pablo II" Dialysis Unit in Caracas staged a street demonstration last week to protest the absence of water in the unit, which prevents them from completing their daily dialysis. A patient interviewed stated: "we are not asking for crumbs, what we are asking for life, health, what we want is to continue living." Deaths of patients have increased, not only because of the absence of water, but because of a lack of medications such as intravenous iron that have not arrived for a long time.
Domingo Luciani is the last hospital in Caracas with a paediatric surgical unit that still functions; but of its 18 operating rooms only three are still in use. There are 500 children on the waiting list for urgent surgery. Electricity at the hospital is intermittent, and virtually no medicines are available. Doctors at the hospital rely on donations to feed their patients. "Most of the children come to us in a state of malnutrition," said one doctor. Doctors give lists of needed medical supplies to visiting NGOs.
Giselle, of the NGO Comparte Por Una Vida which helps 35 public hospitals, said delivering medicines and other aid in person was the only way to guarantee it gets into the hands of those who need it. "The government doesn't deliver it, it keeps it or sells it in the black market," she said. Hospitals are guarded by the police and pro-government militias, who are on the alert for western humanitarian aid. In reality they try and steal the few medicines that are available in order to sell them on the black market. In the last few days military police raided Fundacion Mavid in Carabobo State and stole milk and medicines that had been donated for children with aids.
Meanwhile, the illegitimate President Maduro has been selling off what remains of Venezuela’s assets, mainly gold, in order to keep financing his military supporters and regime cronies. He announced that his priority was to make "sufficient investment for Venezuela" to strengthen its anti-aircraft and anti-missile defence system, and equip the militia with "the most modern missiles in the world."
Maduro continues to deny that there is a humanitarian crisis, describing it as ‘a show.’ Rather admitting that 3 million refugees have fled, he claims that there are “more than 10 million immigrants coming every year to Venezuela.” It’s a level of falsehood that should make even his last supporters in the west wince.
With Maduro in brazen denial and blocking the arrival of humanitarian aid, what is the international community to do? When a complex humanitarian emergency exists, international protection frameworks can give legal authority to international humanitarian intervention. Urgent action may be needed sooner rather than later if more deaths are to be prevented.
More information on the Venezuela Campaign can be found on their website.
On the 17th of February in the year 1600, the Dominican Friar, Giordano Bruno, was burned, hanging naked and upside down, at a stake in a central Roman market square. His ashes were thrown into the Tiber, and all of his works were placed on the Index Librorum Prohibitorum shortly afterwards.
His ‘crime’ was heresy, that is, refusal to accept the authority of the Church as the one and only basis of knowledge. The Church taught that the stars were part of a celestial sphere, all at the same fixed distance from the immobile Earth at the center of the sphere. Its diurnal rotation had been gifted upon it by God. Bruno, by contrast, had publicly embraced the recent Copernican heliocentric model. Bruno suggested in addition that the stars were distant suns surrounded by their own planets that might foster life of their own. He also proposed an infinite universe that had no centre.
These and other heresies were at odds with the Church’s teaching that humankind and the Earth stood at the centre of God’s creation. After a long trial by the Inquisition, in the same room in which Galileo was later to be tried, Bruno was condemned to death. He is reported to have responded to his judges, "Perhaps you pronounce this sentence against me with greater fear than I receive it”. He was one of many thousand heretics executed by the Inquisition; some say 30,000, and others put it at 300,000.
The dispute was not about science or religion; it was about authority. The Church told people what to believe, and it was heresy to think otherwise, or to suppose that people could learn and discover things by themselves. The Church of his day was not the only body to think and act in this way. In more recent times totalitarian governments have punished dissident thinkers by imprisonment and execution. The Soviet and Chinese authorities killed many millions more than did the Inquisition.
At issue is the freedom to think differently, and to express those thoughts freely. The rule, summed up by John Stuart Mill, should be that people shall be free to express dissident or controversial views, however upsetting and disquieting they may be, provided they do not incite people to commit acts of physical violence. Some of today’s campus bodies hold that inquiring minds, such as that of Bruno, should be silenced. They have more in common with the Inquisition than they would like to suppose.
A new paper insisting that organic foods leave fewer pesticide residues in the human body than conventional diets.
What the pesticides in our urine tell us about organic food
A study helps answer a question many of us ask when deciding whether to buy organic food: does it really make a difference?
The full paper is here.
In the interests of reducing narrative tension the answer is no.
One detail in the paper is that they don’t in fact measure the levels of the residues. Instead they note movement across the level of detection. So, for example, malathion residues can be detected down to 0.02 ng/mL 87.5% of the urine samples on the conventional had above this level, only 43.04 % on the organic did. Moving one way or the other across the detectability boundary might not be thought to be all that important.
For, as Paracelsus pointed out, it is the dose that is the poison.
Which is where we get to the larger point abut this paper - dosage. So, what do we think is an amount of malathion exposure that is important? The EPA tells us “ 0.1 mg/L for lifetime exposure of adults “. That’s not an entirely useful number because that’s going into the body, not what’s present in urine coming out. But still a useful enough guide to orders of magnitude and so on.
We’ve then got that problem of comparing ng/mL to mg/L, most of us can’t track all those zeros in our head. Fortunately, there’s a converter out there. The level we’ve said we shouldn’t be exposed to - in itself a number of orders of magnitude reduction from what we know does harm - is thus 100 parts per billion. The level this paper is measuring to is 0.02 ng/mL, or 0.02 parts per billion.
We are this, umm, fingers and toes out, at least 4 orders of magnitude below the limit we think reasonable to impose. Nearly 5 in fact.
Does this make any difference? No, of course it doesn’t. This is a story about how much better analytical work in the lab has become, nothing else. Well, OK, a little bit else:
This work was funded by Friends of the Earth U.S, United States.
Which is why the paper hasn’t gone on to do the only comparison we are really interested in. Organic food costs more than conventionally pesticided stuff. It uses more land too. Cheaper food means, obviously enough, that we all have the ability to eat more and better of it. What is the addition to human health of that as compared to this movement across the detectability barrier of pesticide residues?
No, really, that is the only interesting question. What are the costs - and or benefits - of these residues as against the costs - and or benefits - of not having them?
Another white elephant has died. Competition between companies means that innovative products and processes are put before consumers. There are some spectacular successes, but there are casualties along the way. The market operates by what might in macabre terms be described as a selective death rate. The new offerings that customers take to thrive and prosper, but the ones that fail to attract a following are counted out. The process converges on increased consumer satisfaction.
Fifty years ago, Boeing bet the farm on a new type of aircraft, the 747 Jumbo-jet. It almost bankrupted the company, but they won the bet. A plane that could carry twice the passenger load did not have twice the running costs. It made possible lower fares for more passengers. Over 1500 of them were made.
Twelve years ago, its European rival entered service. The Airbus 580 was a bet that the future lay with even bigger aircraft, in this case a giant that could carry 550 passengers, and even in some configurations nearly 900. Airbus took on the 747, reckoning that its huge profits were enabling Boeing to cross-subsidize its smaller planes. The WTO, on the other hand, ruled that the EU had failed to comply with its order to end subsidies to Airbus.
Boeing took a different bet, anticipating that the future would lie in lighter, fuel-efficient, twin-engine planes that could avoid the big hubs and fly direct between secondary cities. Its 787 Dreamliner has high-tech innovations that give it the same range more efficiently.
Airbus lost its bet. It announced a target of 700 planes, and predicted it would make 1500. In fact, its total production might just pass 250. On Thursday, February 14th, it announced that production of the A380 will cease. It guessed wrong. The 747, whose success it hoped to rival, lives on. Some 536 of them are still in service, and the cargo version will still be in production after the last 380 has rolled out.
This is the market. It’s a tough place to inhabit, and you have to be on your toes all the time, in order to peer above the present and see what customers might like in the future. Airbus just guessed spectacularly wrong, and its white elephant has bit the dust.
Polly Toynbee is more than a little uncomfortable with the idea of Brexit and she makes that known often enough. She has also laid out usefully enough a decision that has to be taken. We do actually need to work out what it is that we’re going to do about tariffs and trade. While in the EU that’s something solely decided by Brussels. Outside we’ve got to make up our own minds.
We also do have to make up our minds for something must indeed be done. There is no do nothing option:
He talks of companies that long ago ordered shipments of sugar and other faraway goods, with no idea if tariffs will be sky-high or zero when they arrive after 29 March. If zero, much of British food, farming and agriculture will collapse under cheap imports; if on WTO rules, they face hefty tariffs on processed food, cereals and meat.
So, which should we choose? Should we tax ourselves lots and lots - have high tariffs - for the temerity of eating that foreign muck? And thereby save Farmer Giles. Or should we partake of the very best the world has to offer at the finest prices and leave no-longer-Farmer Giles to fend for himself?
The country has, roughly enough, 65 million people. The National Farmers’ Union has some 30,000 farming members. A simple and utilitarian calculation says ditch the tariffs and benefit the majority, doesn’t it?
So, that’s what we should do. Return to what we were for most of the century after the repeal of the Corn Laws, a unilaterally free trading nation. The one arrangement that benefits all of us as consumers.
We can thank Polly for laying out the problem for us so clearly even as she’s unlikely to enjoy the answer.
It was on this day, February 15th, 1906, that the 29 Members of Parliament just elected under the banner of the Labor Representation Committee (LRC), voted to adopt the name “The Labour Party” and chose Keir Hardie, a former lay preacher as their leader. The LRC had been formed from several workers’ associations and trade unions, who decided to seek their own representation in Parliament following the extension of the franchise, rather than continue to support the Liberals. The party had roots in non-conformism, prompting a later General Secretary to comment that "Socialism in Britain owed more to Methodism than Marx."
Despite distancing themselves from the now-declining Liberal Party, the brief Labour governments of 1924 and 1927-31 were with Labour minorities dependent on Liberal support. Their first majority brought to office the postwar government of Clement Atlee, which engaged in a radical socialist programme, including the nationalization of key industries, and the introduction of the National Health Service. It failed, however, to end the shortages and rationing that had characterized wartime Britain, or to revitalize industry and the postwar economy, and it lost office accordingly.
There has long been a mismatch between working class Labour support, principally expressed through the trade unions, and an urban intelligentsia in the thrall of Marxism and the ideology of class struggle. The New Labour period of 1997-2010 showed that Labour could win power if it eschewed socialism, but left-wing critics regarded this as “Tory Lite,” and saw little point in electing a Labour government if it embraced market capitalism.
The party today is under the control of an urban Marxist intelligentsia, personified by Jeremy Corby and John McDonnell, whose policy it is to introduce to the UK policies that have failed in practice not only in the UK, but everywhere they have been tried. Those 29 MPs who formed the Labour Party 113 years ago would distance themselves today if they were able to see the anti-Semitism, the support for terrorist and anti-British groups that the present leadership of their party embraces. They were basically decent and patriotic, despite their opposition to the established policies of their day. They would be appalled at the thuggery that characterizes today’s Labour militants, and by the way in which extremism has become mainstream-ism in the party they began with such lofty ideals and intentions.
One of us here has a sad about the cancellation of the Airbus A 380 having been in business life a supplier to Airbus. Even one to the experimental side of the organisation where they plan and plot their new products. Yet this is still just markets doing their stuff for us, that process of making us all ever richer:
Airbus has announced it will end production of its A380 superjumbo passenger jet after failing to secure orders – a move that puts UK jobs at risk.
The European aerospace group said it had made the “painful” decision to stop making the world’s largest superjumbo in 2021 after Emirates, the A380’s biggest customer, reduced an outstanding order for 53 planes to only 14.
Emirates will instead order 70 of the smaller A330 and A350 aircraft, underlining the trend towards smaller, more efficient aircraft that made the A380 unsustainable.
The particular thing here being, well, how do we want to fly? Vast numbers of us from one terminus to another? Perhaps with feeder flights into and out of those termini. What is often known as hub and spoke. Collect people from across northern Europe to, say, Frankfurt, then fly them all to Sydney, then disperse them on local flights. Or would we prefer to fly direct from Oslo to Melbourne, Cologne to Perth and so on?
If we prefer that second then we need what is known in the jargon as point to point flights.
Well, obviously, we’d prefer the p to p but at what price?
Boeing put their money on p to p, Airbus on hub and spoke. Which is where our market thing comes in. For before this all started we didn’t know. We didn’t know generally as a society, the people making the planes didn’t know, we passengers didn’t know. Various ideas and inclinations were there, obviously. And the two plane companies certainly tried very hard to find out which was going to be the right answer. That they came to different conclusions shows that there wasn’t any method of actually knowing ahead of time.
Which means doing that market thing. People try it out, suck and see, and then we all decide when we’re faced with real, actual, choices. That is, we’ve got to get to the point where revealed preferences are possible, not just expressed, before we can find out. The market thing being exactly that, people get to try stuff and we all give our verdict by doing or not as we desire.
Sure, the A 380’s a marvelous beast and it’ll be sad to see it go. But as it turned out that’s not what we all wanted, not enough to pay for it at least. That resources are no longer devoted to making what we don’t want means they’re available for something we do, making us richer.
On February 14th, 1889, the first trainload of oranges pulled out of Los Angeles heading for the East. The first transcontinental railroad had been completed 20 years earlier, when the Union Pacific and the Central Pacific railroads were ceremonially linked by the golden "last spike." The new opportunities it brought for freight transport were immense. In the year of its completion the population of Los Angeles was only about 1,600, but given rail transportation it could grow and prosper. Its climate, with irrigation, was ideal for valuable fruit such as oranges.
Even before the transcontinental railroad's completion, when the line had reached Abilene, ranchers drove cattle that sold for $4 in Texas along the Chisholm trail to Abilene and thence by rail to Kansas and the Midwest, where they could fetch $40. An estimated 5,000,000 head of cattle passed along that route. The availability of low-cost and rapid transport has had a huge impact on the wealth-creating properties of trade, both within countries and internationally.
In Britain the railways facilitated the transport of millions of tons of coal from the pits of the Northeast in places like Newcastle, to the factories of its Industrial Revolution, and enabled the manufactures of those factories to be transported both to their domestic markets and to the ports for export to their international markets.
Internationally, the invention in the late 1800s of the double- and triple-compression steam engines, combined with the screw propeller to replace paddle wheels, led to the development of fast, efficient freighters to convey the grains of the American Midwest to hungry mouths in Britain and Europe. The free trade enabled by Britain's 1845 repeal of the Corn Laws needed the technology of better transport to make its impact in lowering food prices.
More recently Malcolm Mclean revolutionized freight transport in 1956 with his invention of the shipping container. Given its ease of loading and unloading onto ships, and its ability to travel on trucks and rail freight carriages as well, it dramatically lowered the cost of transport, and greatly expanded international trade. It gave landlocked countries access to international trade by enabling them to transport containers by land to ports beyond their borders. The invention of the container played a major role in the globalization of trade in the second half of the 20th Century.
The lesson today is that even as we liberalize trade by lowering barriers and tariffs through free trade agreements, we should also be making it easier for new transport technologies to facilitate international and domestic freight transport and lower its costs. The imminent advent of driverless trucks and ships, and of cargo-carrying drones, portend the continuation of evolving transport technologies that will decrease transit times and lower costs. That first trainload of oranges 130 years ago was but a landmark on a continuing journey.
Ian Birrell talks at UnHerd about how Whitehall corrupts charities by showering them with cash. He’s right, that flood of money will stop mouths. But that’s not the true danger of the combination of the two. Rather, that comes when the charities in receipt of the cash lobby government back. For that becomes the bureaucracy itself using our money to pay to tell the bureaucracy what to do. Reasonableness, even value for money, is not going to get much of a look in in such a circular process.
As Chris Snowdon has been pointing out these years there’s little to explain the existence of of varied anti-smoking bodies other than the rivers of taxpayer cash sent in order to provide a merkin for bureaucratic justifications against smoking.
A baby step has been taken on this issue. Charities do have to curb their political campaigning but are still able to campaign upon specific issues. And cash sent to them by government isn’t restricted to not doing so.
The solution is that old one of sunlight being the best disinfectant. Perhaps we should revive an old idea of Chris Mounsey’s, the Fake Charities register. There, any organisation which received….well, the definition was:
If a charity receives 10 per cent or more of its income, or more than £1m a year, from the Government, and engages in lobbying or influencing policy, then it goes on the list.
That might be too restrictive a definition, might be too loose. We’re interested though in seeing a revival of the idea itself.
After all, as is the current mantra about Facebook and political advertising, if we don’t know who is paying for the propaganda then we don’t know how to weight it properly, do we? Quite how formal and funded such a listing should be, well, we leave that an open question. If the Fair Tax Mark can gain funding then why not the Fair Charity one?
A very interesting approach to homelessness in Finland has seen dramatic results. In the UK there were an estimated 7% more rough sleepers last year. Germany has seen an increase of 35% over the last 2 years, and in France over an 11-year period the numbers are up by 50%. In Finland over a 7-year period the number of long term homeless fell by 35%. There are almost no rough sleepers in Finland now, and their homelessness figures include people not sleeping rough, but staying long-term with friends or family because they have no home of their own.
The National Audit Office tells us that in Britain:
"There is a high prevalence of mental illness and alcohol and drug dependency among rough sleepers. Of the 70% of rough sleepers who had a support needs assessment recorded, 47% had mental health support needs, 44% had alcohol support needs and 35% had drug support needs."
This tells us that for most rough sleepers alcoholism, drug abuse and mental illness feature among the reasons for their situation.
Finland's policy, introduced in 2007, is called Housing First. Instead of requiring people to solve those problems before they are housed, as most countries do, it does the opposite, housing them so that they can better address those problems. The reasoning is that alcoholism, drug abuse and mental illness are all more difficult to solve for someone living on the streets.
Tenants are housed in apartments, entitled to housing benefits and pay rent. What they cannot meet out of income is met by local government. Crucially they receive support services to help with their difficulties. Trained personnel are available to help with financial problems, advice about housing and benefits, and to provide therapy for addiction and mental problems. Although the programme costs money, there are savings for government from lower use of emergency health services and from less involvement of the criminal justice system.
Finland has purpose built or converted premises into self-contained apartments, and has turned all of its homeless shelters into such accommodation. Some of these have communal areas where tenants can interact and form communities. An article in the Christian Science Monitor examined some of the costs. Between 2008 and 2015, 3,500 apartments were produced at a cost of £294m, or £84,000 each. Over that time the estimated saving to the medical and emergency services no longer required is put at £14,200 per previously homeless person per year. This suggests that the project's costs might be recouped over a 6-year period.
The results of the Finnish approach are remarkable, and they suggest that their alternative approach brings a viable solution to a growing and distressing problem. There is a very strong case for a detailed study of their methods and consideration given to trying a similar approach in the UK more broadly.
That a free market doesn’t produce what you want isn’t a market failure. It’s just you not liking the answer that the calculating engine of that market is providing. It’s no more a failure than a calculator showing that you’re, at your current levels of spending, going to run out of wages before you run out of month.
Or, as we might put it, statements of reality are not failures:
Cairncross said that job losses at local newspapers meant there was a crisis in the coverage of democracy. “The cost of investigative journalism is great and rarely seems to pay for itself … given the evidence of a market failure in the supply of public-interest news, public intervention may be the only remedy.”
The complaint is that such journalism costs more to produce than people are willing to pay for it. That’s just the same statement as it costs more than it’s worth in those purely monetary terms. Given that the market is the calculating engine of what things cost and what they’re worth this verdict is not a failure.
The actual complaint here is about reality. Dame Frances Cairncross, along with some number of other people, thinks that we out here should all value that local and investigative journalism more highly. Which is fine, of course it is, it’s views which make a market in the first place. Yet that reality is that we don’t.
OK, we don’t value such journalism at the rate which Dame Frances thinks we should. What is the solution here?
The correct solution being that as we don’t then we don’t have to pay for it. For to be forced into paying for something we don’t value sufficiently to pay for it voluntarily is to make us poorer. Those, like Dame Frances, who do value it more highly can maximise their own utility by paying that higher price. We are all thus made as well off as current circumstances allow us to be. That Dame Frances, and those who think similarly, have the opportunity to dip into our money through the taxation system changes nothing in this argument.
We aren’t willing to pay the costs of production of this type of journalism. Therefore we shouldn’t pay for it. And that we’ll not pay for what you want is not evidence of market failure, it’s instead you disagreeing with revealed reality. To which the answer is - just as with the existence of opera, pink Ferraris and pumpkin spice lattes - you want it, we apparently don’t, so you pay for your desires not charge us.
Dr Julian Simon was born on February 12th 1932. I befriended him through the Mont Pelerin Society and hugely enjoyed his company. To say he was an optimist would be to understate it because he took the view that human creativity and ingenuity could solve all of its problems, and that gloomy forecasts of impending doom failed to take account of this.
Simon was of the Chicago School of Economics, and a friend of Milton Friedman and F A Hayek. His book, "The Resourceful Earth," was in response to the best-selling books "The Population Bomb" (1968) and "The Limits to Growth" (1972) by Paul Erlich. Erlich was high priest of the view that the explosion of the world's population would lead to catastrophe because the planet could not support the predicted numbers. He took the equally pessimistic view that people were using up the Earth's limited supply of resources, leaving none for future generations. These limited resources, said Erlich, would mean that economic growth could not continue.
Simon took the opposite view, arguing that although resources might be physically limited, they were not limited economically because technological progress and increased wealth enable them to be recycled, and develop substitutes that decrease the need for them.
He challenged Erlich in a 1980 wager that became famous. He asked Erlich to pick 5 raw materials that he thought would rise in price over the next decade. Erlich accepted, and chose tin, nickel tungsten, chromium and copper. When the decade expired, they had all fallen in price, so Erlich paid up, sending a cheque to Simon.
Simon published "The Resourceful Earth" in 1984, co-edited with Herman Kahn, in response to the doom and gloom of the "Global 2000" report. He argued that the prices of raw materials, especially metals, tended to be stable or to decrease in the long term, and that population, far from being a problem, was a solution because people are creative and innovative. His anti-Malthusian position has been vindicated by events. The world's population rose by 145% between 1960 and 2016, yet average world income per capita rose by 183% over the same period. Many analysts now think the world's population, currently 7 billion, will peak at 10 billion and then fall as people become richer and raise fewer children.
Julian Simon was a remarkable man, way ahead of his time. He provided an effective counterweight to the scare stories. After his untimely death in 1998, his last book, published posthumously with Stephen Moore in 2002, was "It's Getting Better all the Time: 100 Greatest Trends of the Last 100 Years." It shows in statistics and charts how much life has improved worldwide for most of humanity, despite all the scaremongering that says it is becoming worse.