Wednesday, 30 January 2013

The Third Sector.

If you want evidence that the 'third sector', 'social enterprises' or whatever 'charities' are called this week are merely an arm of the state, check out their job advertisments like this one from Home Group Ltd

You will deliver outrageously brilliant customer experiences by developing great communities which are tailored to individual needs. Utilising customer insight, creating engagement opportunities and carrying out generic Housing Management activities you will work in partnership with our Customer Service Centre, local service providers, voluntary sector and statutory organisations to ensure our customers receive seamless Housing and Neighbourhood services
They are looking for what would be called a housing manager or rental agent in the private sector, where the wage would be £12,000 basic & £30,000 OTE (on target earnings). Basically in the private sector, you have to earn your pay. In the Third sector, you need to mouth public-sector bureaucratese and not rock the boat.



Monday, 28 January 2013

High Speed 2

There are plenty of reasons why High Speed 1 made sense: The Channel Tunnel should be linked to London by an equivalent high-speed line if the rail is to compete with City-Paris-Orly air route. I of course remain devastated that the trains from Paris no longer arrive at Waterloo station, which used to be a calculated and wonderful middle-finger to any Frenchman visiting London. However the new St Pancras international station is quite magnificent and streets ahead of le Gare du Nord, and it's an easy change for me, as my London trains get into Kings Cross. This puts Paris closer for me than Leeds, Manchester, Edinburgh or even Birmingham. This sounds like an argument for HS2. It isn't

The reason HS2 is going to be given the go-ahead are not the same reasons why it might be a good idea.

HS2 aims to link the North of England with high-speed rail links, putting Birmingham 2 hours, not 3 from London. The argument goes that this will save business time and money, and help the regeneration of Northern shitholes. This is utter bollocks. The evidence from Lyon and Osaka is that provincial cities have the life sucked out of them by fast rail links to the capital, as it reduces the importance of regional offices of national companies. It's easier to do business in Birmingham with a London base. And unfortunately for Birmingham, the greater rewards of London mean that as it's easier to do business in London, at the Margin, jobs and capital will be further sucked from the provinces to the capital as a result of high speed rail.

It will end up moving the commuter belt farther out along the rail corridor, to the detriment of the local job and economy. So HS2 will suck jobs and capital out of Birmingham leaving empty industrial parks and office blocks surrounded by sterile commuter "communities".

HS2 will wreak this devastation at a cost vastly greater than increasing the capacity or extending the regular trains. Of course ministers and mandarins know this. So why is it going ahead?

  1. Mandarins and Ministers are overconfident in their analysis (guesswork) and think they know better than experience of other countries.
  2. Mandarins and Ministers are the kind of people who benefit from a shiny new train to and from London, as are the 'business leaders' who are also said to be in favour. They benefit, the cities don't.
  3. Ministers need to do "something" about the economy and capital spending is seen as something. HS2 is therefore 'something', so it will get done.
  4. High speed rail is shiny and high-tech, and Ministers like to be photgraphed next to shiny modern and expensive bits of engineering.
These are not good reasons to spend billions of taxpayer's money, especially when it makes the poor bits of the country poorer and the rich richer. 



Tuesday, 22 January 2013

Growth is NOT going to end.

In "Perfect Storm" the head of Research at Tullett Prebon, Dr Tim Morgan predicts the end of Western Growth arguing that the last 250 years were an anomaly of the industrial revolution, which is now over.

To summarise the argument, Morgan identifies four trends which will mean Growth is going to be anaemic or non existent for the long-term, all coming together in the perfect storm. These trends are 1) The benefits of the move away from human muscle as a primary source of power have been largely spent, and there are no further equivalent gains to be had. 2)We are at the end of a credit super-cycle which has been inflating a bubble for the last 30 years. 3) Policy-makers have been blind-sided by rubbish data, and 4) the west is vulnerable to globalisation.

He's not even half right.

Let's look at his trends in detail: First he suggests that the debt bubble is equivalent to the south-sea bubble or the Tulip-mania. The UK and US are enormously endebted. There was not just a vast increase in public debt, but also private debt too over the past 30 years.

Gordon Brown, for example, proclaimed an end to “boom and bust” and gloried in Britain’s “growth” despite the way in which debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money. Between 2001-02 and 2009-10, Britain added £5.40 of private and public debt for each £1 of ‘growth’... Asset managers have a very simple term to describe what happened to Britain under Brown – it was a collapse in returns on capital employed. No other major economy got it quite as wrong as Britain under Brown, but much the same was happening across the Western world...
While he is, of course right our economies are more indebted than ever before, the damage to the economy (or at least growth) from this has already happened. There was almost no private sector growth during the Labour years. Almost all the growth was due to immigration and increased public spending. Brown's "boom" was merely a public spending spree, masking a recession which was already happening. Much is made of the collapse of investment returns over the period. It's almost as if that huge increase in public debt sucked investment out of the private sector!

That process reversing would explain the no growth, but rather solid employment numbers that we've seen recently. Meanwhile the private and corporate sectors have been busily using the low interest rates to deleverage faster than at any time in history. The good news is the UK and USA are not going to go the way of Japan, because instead of committing to ever more "stimulus" we're all agreed on Austerity. Japanese debt now stands at 250% of GDP and they've enjoyed little growth in the last 20 years as a result. The Anglo-Saxon economies, in contrast have instead purged the bad debt from bank's balance-sheets (incompletely, but better than Japan in the 90's), refinanced, and hit the monetary nuclear button (Quantitative Easing) after 6 months, not 6 years.

Yes there's a 30-year asset bubble to unwind. That's not what drives real wealth. There is capital for innovative technology, so this isn't going to stop the long-term driver of growth: productivity. Yes, we're at the top of a 30-year bond bull-market driven by falling interest rates and falling risk appetites, and yes, interest rates will rise over the next few years. But the overall debt burden (including public, private and corporate) has already started to fall. Let's not forget the South-Sea bubble and Tulip Mania didn't derail western growth because the shape of balance sheets don't ultimately drive long-term growth. Technology does. There's no reason to suppose the credit crunch will do so in the long-run.

Next up, Dr Morgan channels the Socialist Workers' Party by suggesting globalisation is a disaster for the west because it's sucked "production" out of our economies. This is pure "manufacturing is special" wibble. Globalisation has, of course been a boon for Chinese wages, and as a result the phenomenon of offshoring jobs has run its course. Western manufactures now cost about the same, when the extra transport and extended supply-chain of Chinese manufacture is taken into account. Meanwhile, the Chinese, vastly wealthier than they were a decade ago thanks to offshoring, are now clamoring for Jaguars. We've created a market for the high-value manufacturing and services which never existed before. We in the west aren't producing less - the UK is a net exporter of cars for example - we just employ fewer people to make more.
The big problem with globalisation was that Western countries reduced their production without making corresponding reductions in their consumption... 
Morgan makes the standard pessimist mistake. Making things we can drop on our feet with fewer people means those people not hammering metal in Birmingham car-plants can train to be lawyers, or web-designers instead. We get cars AND websites. We're richer. We don't need to cut our consumption, or at least not as much as Morgan thinks we do.

In the interface between these first two trends Morgan identifies, there is a glimmer of truth. Because much of the growth in the noughties was debt-financed and ephemeral, we simply weren't as rich as we thought we were in 2008. The recession is the process by which we cut our expenditure to meet our income. Great. The economy is healing itself, and has been doing so for the last four years.

Any economic historian could tell you that recoveries from balance-sheet recessions are always slow. The credit crunch was the mother of such, and so the slow growth subsequently is not exactly unexpected, however unwelcome. The enormous private and corporate deleveraging, combined with public sector Austerity should, if the Keyensians are right trigger a depression. The fact that growth is merely flat should be grounds for optimism.

Trend 3) is that the financial statistics used are a grand exercise in self-delusion.
The critical distortion here is clearly inflation, which feeds through into computations showing “growth” even when it is intuitively apparent (and evident on many other benchmarks) that, for a decade or more, the economy has, at best, stagnated, not just in the United States but across much of the Western world. Distorted inflation also tells wage-earners that they have become better off even though such statistics do not accord with their own perceptions. It is arguable, too, that real (inflation-free) interest rates were negative from as long ago as the mid-1990s, a trend which undoubtedly exacerbated an escalating tendency to live on debt.
I've long argued the current recession's seriousness is the direct result of Governments' efforts here in the UK and in the USA to use public debt to prevent a recession which should have happened in response to the .com crash in 2000. There has been little private sector growth in the UK from when Gordon Brown turned on the spending taps in 2000, to the crash of 2009. Furthermore, the use of CPI (which doesn't include house-price inflation in the inflation number) and failure to deal with the known problems with RPI, left were handy fictions in the public data. This probably massaged the true figures down, helpful to government, which stealthily cuts people's real incomes. There's more: open abuse of the disability benefits and education system was used to massage the unemployment numbers.

But you're not really surprised that I'm sympathetic to the idea Government and bureaucracy will indulge in self-serving self-delusion, are you? The good news is the Coalition has addressed some of these problems.

Because of this tendency for bureaucracy to indulge in self-serving lies, they pose the biggest risk to western growth. Increases in wealth are, as Morgan correctly observes, all about productivity growth. Where is productivity growth weakest? In the public sector which operates without competitive pressure. And which part of the economy has been growing the most for the last 15 years? That's right: the Public sector. It may take a decade of cuts and austerity for this trend to be reversed, but that's why I'm optimistic. Europe, the USA and UK have all made a start on trimming the burdens a much-derided but absolutely correct policy of Austerity. The EU is imposing Austerity on the nations with the biggest deficits, and the US fiscal headbangers of the Republican party are using the debt ceiling to impose a modicum of sanity on an unwilling president and the coalition is making cuts to services.

Shrinking public sector headcounts may be hurting GDP growth in the short term, but this is bringing the economy back from the debt-financed insanity. It may take a while, but unlike Japan, we seem to be willing to face the reality. Japan's experience shows clearly the party cannot be made indefinite.

It's the final trend: that the growth engine is winding down which is the weakest in the whole piece, yet forms the basis of the conclusion. Morgan suggests the growth which started with the industrial revolution is spent. He's wrong. The heat-engine: Steam and internal combustion power, hasn't even been fully deployed around the globe when a billion people are still using the ox-plough or digging stick. We've not deployed the technology of the 18th century to the world. There's still economic growth from crop-rotation, something which was cutting edge when Europe was recovering from the Black death.

Furthermore Morgan suggests there is no further equivalent growth to come. He's wrong. We're only just scratching the surface of what telephones for example can do for growth, let alone computers. Less than 10% of humanity has access to the internet, and that 10% hasn't yet worked out how to use pocket devices with access to all the world's knowledge available generate money.

The idea there's no growth to come is just laughable. The agricultural revolution and industrial revolution aren't even over. The telecoms revolution has barely started, and the information revolution is just a glint in the milkman's eye. There's two-centuries of growth for humanity right there. And that's before we start harnessing fusion power, driverless cars, abundant solar energy or whatever we come up with next.

Anyone who says "this time it's different" on the way up is wrong. The same is true on the way down.

The only unlimited resource is human ingenuity. That's why I'm an optimist, tempered by cynicism about Government's motives and competence. Simply by applying what we already know to those who don't, we can drag the billions currently in poverty out of it. Even better, when Governments facilitate rather than control the process, we can all get rich doing so. Globalisation isn't a zero-sum game. Innovation is happening. The credit super-cycle is being addressed (everywhere except Japan). The only thing I'll agree with  Morgan, is that the public data is rubbish and so too was Gordon Brown.



The Economics of Online Dating, Poker & Bingo.

One of the things that interests me about economics is how people make money out of new technology. The printing press was used at first for political pamphleteering  one sheet arguments, easily produced and distributed; and Bibles in the vernacular. This led directly to the reformation and the subsequent two centruries of war, as the people, rather than just monks, debated how many angels could, in fact, dance on the head of a pin.

This power to distribute ideas, previously the preserve of an ecclesiastical and political elite, was enormously disruptive. The same is true of all other information distributive technologies - Radio and TV were at first controlled tightly by the powers that be, then regulation relaxed. People started hearing what they wanted - rock and pop rather than what the authorities wanted them to hear. The same is true with TV. ITV started the rot, and we're complete with the broadcast of 'Celebrity wedding planners'.

Finally we come to the internet. And the triumph of the medium over the message. The money is made by the owners of the forums, not the people producing the content. Other than that it's a free-for-all with a distinct winner-takes-all flavour. Why did Amazon win the battle of the online retailers? Probably more luck than judgement  Why did Facebook beat MySpace? What happened to Friends re-united? Once dominance is established though, can we really predict how long it will last. Perhaps the cool kids are already migrating to Twitter. Perhaps the dominance of Facebook is already over. Who knows? The shares have certainly responded to Facebook's challenge to Google in search, so perhaps even Google's dominance there might be ephemeral.

I suspect the real losers of the internet will not be the established newspapers and retailers, whose online brands may well survive, and whose brand equity will be useful in maintaining market share in a 'goods unseen' environment. The real losers will be casinos, crippled by regulations which simply don't apply to online poker or bingo. Interesting the cost of doing business is probably the cost of acquiring players. You can tell this by the amount of advertising they do. Once scale is achieved, then payouts can improve, in a virtuous circle of scale vs. relatively fixed costs. Judging by the adverts for online Bingo in particular, I guess the barriers to entry are low.

The other joyous thing about the internet is that much of the stuff that makes money - online dating, gambling, networking, and advertising does so without much interference with regulations. They provides a beautiful resource for economists and sociologists to see what people actually do, rather than what the powers that be or enforced social norms want them to do. We can explore people's propensity to take risk - financial and otherwise - with huge volumes of anonymised data. We can see what people's mating preferences are as opposed to what they say they are. Possibly the greatest gift the internet will give is the data to better understand ourselves.



Tuesday, 15 January 2013

David Cameron and the Euro Head-Bangers.

The press are talking up the prospect of a Tory Euro-split. The likes of serial rebel Douglas Carswell are regularly talked about as if they are the same as the Maastricht rebels, and they will do for Cameron as John Redwood did for Major. Common Market or Quit is their rallying cry.

If we were to withdraw from the Eurosystem, but remain part of the Single Market, we would have to conform to all manner of rules and regulations made by the Eurosystem. It is not just that we would have no say in making such rules (not that we have much say now). Nor is it just that many so-called Single Market rules – such as the 48-hour week – are actually social and employment law masquerading as Single Market measures. The real problem with retaining a residual requirement to conform to Single Market rules, after withdrawing from all the rest, is that UK firms would still have to conform to Single Market rules even if they have no intention of exporting to the Single Market at all.
But are they going to bring down another Tory Government?

I'm not sure. Carswell knows Cameron's not going to get a Common-market relationship in negotiation. He also knows he will almost certainly get an in-out referendum some time after the next election (assuming a Conservative victory...). Miliband has ruled out such a referendum. Carswell also knows he will be free to campaign for 'out'. Hence the long-running complaint that the media seem determined to run with a 'Tory split' story, when actually the party's rather united on the issue, and probably more so than Labour. Even Carswell talks with irritation about the endless 'Tory splits' questions he gets, when quite often he's actually supporting the Prime Minister.

Tory splits on Europe are largely tactical. There are a few who would take a hard line, a small number who would vote 'out' come what may. There are almost no federalists of the Michael Hestletine type left. Everyone else is sceptical, but not wanting to pull out now. Almost all, including Cameron, want to repatriate powers.

Most people in the country (if they care, which few do) want to repatriate powers too, but don't want to pull out. So the Tory party is in broad agreement with the country. This, however encourages the Tories to talk about Europe, as it's something they have in common (they think) with 'the man in the street'. The 'man in the street' however is thinking "I wish they'd shut up about Europe and sort the fucking economy out". To understand this better, read this by YouGov head, Peter Kellner on "Valence voters".
Suppose you feel that strongly about the role of the private sector in the NHS, either for or against. That is a positional view. But suppose you don’t mind that much either way, and all you want is prompt, high-quality care when you need it. In that case, yours is a valence view. Most politicians, activists and commentators are full of positional views. But millions of swing voters aren’t: they take a valence view of politics. They judge parties and politicians not on their manifestos but on their character.
What banging on about Europe tells voters about the Tories' character, even voters who agree with them on the issue, is that The Tories aren't interested in concerns of ordinary voters. Labour's positional issues at least have the virtue of not being completely irrelevant to the man in the street, even if the voters largely disagree. It matters not a jot that the voters take the "right wing view" positional view on Europe, what's crucial is they don't hold this view very strongly and aren't that interested. Endlessly demanding a referendum may be delivering what the voters say they want in response to that question, but To which the average voter actually asks "to what immediate problem is a referendum on Europe a solution?". Almost no-one (3-5% at most) outside  the bubble of the politically engaged think a referendum on the EU is important enough to spontaneously offer it as a top-5 issue to pollsters.

The headbangers, by which I mean those who simply will not be appeased by anything other than an immediate referendum, now, in which Cameron backs 'out', have largely gone to UKIP. And good riddance. What's left is a small rump of people for whom Europe is a major issue but who can be persuaded to back a realistic strategy of renegotiation, if the referendum is credibly promised.

My problem is that any Euro debate has the potential to cost the Tories dear. The best thing Tories can do to prevent a Labour victory in 2015 is just simply shut up about Europe. Don't mention it. Keep schtumm. It is enough that the voters agree with us. We do not need pacts with UKIP to defend the right flank. We don't need to have a pre-election referendum. All the voters want right now is lower prices in the shops and a growing economy. Deliver that, get a landslide. Fail, get voted out. It is that simple. Europe appears to be a distraction, of interest only to the political class, reinforcing the view that the Tories in particular aren't interested in the concerns of ordinary people. Whatever your view, you must acknowledge that withdrawal from the EU would be a major issue for Government, which would distract them from other, more pressing questions.

Above all, the headbangers need to stop spouting self-serving myths, which aquire truthiness by constant repetition. What are you, Labour? Most of our law is not made in Europe. We are not swamped by eastern Europeans, who aren't "taking our jobs. The EU is not a plot by dastardly foreigners to circumvent our democracy, when all the important stuff affecting people day-to-day is dealt with by Westminster. Even if a measurable percentage of law is "made in Brussels", much of it is detailed trade regulation, necessary for a functioning common market, and of little interest to the man in the street. And in any case, in order to get to 50% of law "made in Brussels" you need to include every law which has any influence at all from EU law, even where the law is not changed because of 'Europe'. We are not "run by Europe" and to suggest we are is paranoid fantasy.

Contrary to both Federast and Head-banger myth, renegotiation of terms is possible, both Thatcher and Major showed this. The Eurozone is going to go off and do its own thing. Which leaves the 'outs', of whom Britain as the largest country, is the natural leader. Some of the outs are still publicly committed to joining the Euro, but in practice are probably having second thoughts. The UK does have influence - the EU would be much less free-trade oriented were it not for us.  It's true the 'Common Market' relationship is not on offer, but significant repatriation of powers over employment law and so forth could be.The EU is reforming, and a UK renegotiation will accelerate this process. The UK is a creditor nation, with a strong economy and goodwill, especially in the countries of the East for our open policy to immigration which contrasts sharply with the attitude of France and Germany. Remaining in, but on looser terms is true to 500 years of British/English foreign policy.
And let me be quite clear. Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the Community...
Margaret Thatcher, Bruges, 1988.

If your view is "Withdraw now, or by Thursday week at the latest, or you're a Federast" this post is not for you. This one is, and you should bugger off to UKIP, pronto. If, however you have a realistic view of what Europe is for, and does with us; and think the UK can influence its European future, then have a little faith in Cameron. He's got it right so far.

Cameron's strategy is right. It is consistent with British interests and conservative ideals. It is pragmatic, intelligent and opportunistic. It is sceptical, but not obsessed by the European question. Like Thatcher, who secured the rebate, and Major who secured the opt-outs from the social chapter and Euro, Conservative prime-ministers have performed well in European negotiations. Cameron will be no different. In contrast Blair gave up the rebate and got nothing in return, and Brown scuttled off to Europe to sign the Treaty of Lisbon while no-one was looking. Conservative Prime ministers succeed in Europe despite the head-bangers, not because of them.



Friday, 11 January 2013

On BMI, Smoking and Physical Fitness

Quite often amongst libertarians there's a 'drinkin' smokin' and ahm-a-gonna-continue-coz-you-ain't-gonna-stop-me attitude'. Because the BMA advises something, some libertarians willfully do the opposite.

I entirely understand the wish to blow the smoke of an unfiltered Senior Service into the face of any public-health busybodies I see. There's enormous glee for example in the reporting of the meta-study released recently which suggested the slightly overweight live longer than those in the "healthy" BMI range. This is something that I thought was long-known. The VERY underweight live the longest, as near-starvation prevents some damage caused by free-radicals in cells during metabolism. We all know what healthy people look like, but it's apparently just as healthy to carry a bit more weight as you age. The findings of the report are not surprising.

BMI was invented in the 19th century, when people were calorie constrained, cars hadn't been invented and everyone was skinny, worked in manual labour, and walked, rode, or cycled everywhere. "Normal" was different back then. However BMI's not a bad rule of thumb. Normal these days is a bit overweight, and certainly not doing the exercise or suffering the occasional bout of hunger for which nature designed us.

The key is muscle. If you're carrying muscle, and we carry a lot more of it than our great-grandparents, you're active, a bit of extra fat isn't a problem for your body to bear, but big muscles are heavy and so push you into "overweight" on the BMI.  If you're built like a jockey's whip, you're completely sedentary and have an unhealthy lifestyle, you can have quite a high fat percentage and a low BMI as fatty tissue is less dense than muscle. Catwalk models have bad skin from make-up and a diet of cocaine, bulimic vomiting and fizzy white wine yet fall at or below the healthy range. Most professional Rugby Players, on the other hand are "obese" thanks to their large muscle mass. There's no doubt which looks more healthy (without makeup).

Make-up can be used to disguise an unhealthy lifestyle and unhealthy BMI.

I've never been a heavy smoker, but I have recently got into the habit of enjoying a cigarette or two in the evenings when I get home from work. I have for one reason or another been without a bicycle for much of the last few months. I've been drinking nearly every day and eating too much. I've not been taking exercise. I've got a bit fat. My BMI is 25.6. Very slightly over the border into overweight. And that's probably about right. Fat, but not dangerously so. It certainly doesn't help anyone who isn't a professional athlete to see the BMI and think "Overweight is good", because it isn't.

Just a week of running and swimming each evening, and giving up the cancer-sticks entirely and cutting down the booze, I feel great. The first run was horrible. The second wasn't much better. But on the third, I felt I'd cleared out some crap from the lungs and I enjoyed it. From previous bouts of fitness fanaticism I find at first you hate it. Then you start to enjoy it. Then you start to need it.

What interests me in the epidemiology is to what extent is the huge health penalty with which smoking is correlated to do with the harms of smoking itself, and how much is to do with the fact that people who smoke are also less likely to make healthy choices with exercise and food? It's my belief that for day to day well-being, being sedentary is worse than light smoking. If you take regular exercise, I suspect you can get away with a fag with your pint afterwards. But I'm not a doctor, nor am I a public health epidemiologist. I don't know.

Just because some nannying doctor tells you something is good or bad for you, doesn't mean he's wrong. Feeling hungover, lethargic and listless is not as good as feeling bright, cheerful and healthy. Pretty girls prefer men with toned muscles. You're better in the sack with those pretty girls (or even your significant other) if you take some exercise. Fit people suffer less depression and have higher self-reported happiness. You'll live longer and so generate more personal utility from the taxes you pay as you burden the NHS with your longer senescence. You sleep better after exercise, and are so more productive when you get up. Live fast, die young? Sod that. Live fast, die old, that's my motto.

I've just started an exercise regime. I'm not just happy about it, I'm smug about it too. Hate me.



Wednesday, 9 January 2013

Child Abuse and Operation Yew Tree

I was asked by a friend to write about the Operation Yew Tree, which has seen people publicly branded as paedophiles, who will never see the inside of a court to clear their name. Jim Davidson may or may not have behaved inappropriately, in 1980, with 20-odd year-old women and so on.

Dredging up old allegations, which are never going to be proven, against famous people is probably a good way for a copper on the make to get his name in the papers. It does however take their minds off things like this. Anna Racoon has written the post, so I don't have to.



Tuesday, 8 January 2013

Protest & Political 'Freedom', in Practice.

Free societies are richer, but more unequal. Where people in the mainstream of debate in sensible countries differ is in the definition of "free" and the relative importance of "unequal" and "rich".

The left tend to regard inequality itself as a mitigation against freedom - the existence of conspicuous consumer goods that the poor could never afford compound the humiliation of a low station in life for example. If there is a culture of meritocracy, the poor are made to feel that they deserve in some way, their fate. Thus economic freedom for some constrains the freedom and happiness in others. This is the rationale behind the left's persistent support for high marginal tax rates, despite the acceptance by the more intelligent of them that such taxation is costly and inefficient and often reduces growth.

For the economic right, growth is everything. If you get high growth, while a few at the top may get filthy, stinking rich, the rest of society also gets dragged up too, but perhaps slower. It's growth that generated sufficient surplus to enable the nation to afford a welfare state, which would have crippled Victorian Britain. It's growth that sees almost anyone who wants one able to afford a car. It's growth that enables most people to enjoy two weeks in the sun every year. Consumer goods, like silk stockings, once the preserve of the Aristocracy are now available to all. Government did not do this. And this explains the right's attachment to low taxation and lower public spending: inequality matters less than Growth, because growth provides the surplus that can ultimately be spent on the poor, if necessary.

The left have a point. At some point, inequality is demotivating if you have a hereditary stratum of society who see, but cannot grasp the riches others take for granted. In the UK these people subsist on benefits, which keeps them quiescent. But, crucially, there are plenty of routes out of the welfare trap for those intelligent or resourceful enough to take it. Crucially there are (a few) examples of those who have done just that in the House of Lords and at the very top of public and business life in Britain. So while inequality does affect individuals, it's not in my view as much of a problem as many in the left make out. Better to focus on removing any remaining barriers to individuals' success than trying to legislate inequality away.

The economic left and right differ on the inefficiencies of various forms and extents of taxation, but accept there must be some. The other great axis of politics - the authoritarian/libertarian divide differ on what constitutes freedom. Freedom to own guns means in practice that some other people die as a result and so lose the freedom to walk down some streets. Freedom to drink does not mean freedom to drive afterwards. Freedom to take drugs (arguably) imposes costs on others and so on. Weighing up these competing freedoms - the freedom to inject heroin vs the freedom to not be mugged by a junkie, is what reasonable politics in a free society is all about. We all must accept constraints on our freedom in order to rub along in a crowded and high-pressure society and in order that the constraints are reasonable, we must argue about them.

As a libertarian, I make different judgments about where those lines should be to most people, but I do accept there are trade-offs. What I can't accept is the Hyperbole that comes from people on all sides of debate on almost all issues about slippery slopes, about to render us "unfree", that Leveson or the more hysterical of the pro-welfare left make about their chosen bugbear.

Ultimately, a working definition of 'unfree' is where a Government can decide arbitrarily to persecute someone or some group of people, and they have the power to thwart that individual or Group's life chances.  The Government of the UK simply does not have that power. Venezuela, for all it's fig-leaf of elections which may or may not be rigged is not free, because the Government does not obey the rule of law, and can persecute a blogger for 'terrorism'.

Of course, having got Mr. Medina Ravell sacked, and rendered him unemployable, he becomes an implacable opponent of the Venezuelan Government. In the UK someone who wrote elegantly pejorative articles about the Government of the day will find themselves with a job offer from the Guardian, not a 3am knock from the Police. Until this changes, Britain remains free. It pays even the critics of our society to work harder. Protest is futile, when you can increase your power more effectively by getting richer. Argument on blogs/twitter/newspaper is more effective than ranting slogans on the street.

This is why the ranty left and idiot right is so marginalised  No-one listens when they shout. A few-hundred placard wavers have less leverage over political discourse than a single well read and shared blog-post.Their tactics of marches and protests only work in societies where people are unfree to make their point in other ways. The march and protest is a ritual pastiche of protests past (few of which had the effect ascribed to them). Protests are a social event for like-minded people, a Lek for the politically obsessive. Whatever the inequality of power relationships between workers and employers, rich and poor, we all remain free. And the fact is Britons of all stations in life can see this, and so rightfully ignore the political extremes finding it more profitable to spend their energies elsewhere. The louder they shout, the more completely the political extremes are ignored.

Ultimately those on the political extremes have to contend with the fact that while the UK isn't perfect, it is one of a handful of stable countries whose people are richer than any who have ever lived. Whatever the UK's problems are, they're ones many people will hang onto the axles of lorries to endure. The vast majority of people see this, and don't want (much) to change. This is also why the mainstream is so small there's just not that much wrong with the UK in the grand scheme of things.

Think about Mazlow's hierarchy of needs. Many societies struggle to provide the physiological basics of food and clean water, shelter from the elements and so forth. Physical safety requires a reasonably strong and competent government. Friendship and family are simply not in the Government's gift, though too much Government power can get in the way. In all these areas, free-market capitalist democracy is superior to all other systems yet developed. Democracies don't have famines, the socialists did. What we're left arguing about in the west now the big problems are solved, are the top-of-the-pyramid issues of esteem, and self-actualisation. To these problems, we have yet to find public policy answers, if indeed there are any.

This is why I think freedom of speech is the only freedom that really matters. Most other freedoms are not absolute. Because it's the free market in ideas which has fueled the free market's success in delivering goods and services to the people, and free speech is the canary in the mine which will warn us long before the Government starts killing people. So long as people aren't going to gaol for criticising the Government, rational debate works better than placard-waving, by people who are usually fighting battles long lost and won. There's always hope you can persuade people you're right. Only the idiots are left shouting on street-corners.



Wednesday, 2 January 2013

Train Fares

The news this morning was once again all about train-fare rises. The 10th year, apparently of above-inflation rises. So I'm reposting, for the benefit of the BBC, what I wrote when they were announced in August.


I'll declare an interest: I use the rail network, but not to commute. There has been an astonishing amount of bollocks being spoken about train-fare rises. Especially commuters, whose season tickets are rising by hundreds of pounds. "The trains are crowded" they complain. Yes, they are, and cutting rail fares will help that, how exactly? "It's too expensive" Well move house, or change jobs. Or travel off-peak. This crowding is because more people try to use the network than is optimal at peak hours.
The effects are not just stress and misery on the journey. This underpriced peak-hour rail drives up house-prices along the rail corridors, and sucks life and employment out of the towns. It also makes people unhappy. People make bad decisions about what makes them happy. They overvalue big houses, and undervalue time not spent on an hour-long commute into town. They overvalue money, and undervalue social contact and family time. And they're aided and abetted in this happiness-destroying cultural artefact by heavily subsidised commuting.

 If the crippling over-dependence of the country on London is to be addressed, the market must be allowed to do its work on rail fairs. Shifting economic activity out of London is to be desired. Britain does not benefit from shifting millions into town and out again every day, when with a bit of thought, much of this economic activity could happen in Reading, or Northampton or Brighton or Hull. Making it easy to live in Cambride and work in London doesn't help Cambridge or its economy.

 You may FEEL you have no choice but to buy the season-ticket, and in the short-run you're probably right. But in the longer term, every person deciding the commute isn't worth it, and seeking a job locally helps the local economy. Every person moving nearer their place of work reduces stress at peak hours on the transport system. In the long run, people respond to economic incentives. It shouldn't be the government's role to insulate people from the reality of their choices.

So, you want to get into central London by 9am? Why not do what I did when I lived in London, and live in a grotty part of town instead, within cycling distance? OH! You want a big house out of London? So you want ME to subsidise your big house by keeping your rail-fare down? Is that fair? It's not like you're without choices: there are no solutions in economics, only trade-offs. Compromise on your house, or compromise on your job. Or accept the real cost of rail-fares. You want a seat, guaranteed? Buy a first-class ticket. Overcrowding in cattle-class in the carriages is merely evidence that the price is wrong.

If there was a free market, rather than fares being regulated, peak hour journeys would certainly be more expensive, and off-peak would probably be cheaper. Lower house-prices in the commuter-belt would offset this somewhat. So renegotiate your hours. Capacity-smoothing fares make sense. Ultimately the problem is one of mis-priced resources, especially space on the world's second busiest rail network. Like the Roads, the Rail Network is overused at peak times and underused off peak. Prices reflecting this are a step in the right direction.

Sorry, rail commuters, your fares are not going down any time soon. I don't mind paying for a rail ticket when I buy a ticket. I do mind paying for rail tickets I'm not using, subsidising people to drive up the price of a house I want where I live, when I fill in my tax-return. The fare rises are necessary, and will have positive economic effects, if you let them. It's not all bad news. 



Share it