Monday, 15 April 2019

Wiping Out 60% Of Animal Populations May Not Be A Bad Thing


I read a report that says humanity has wiped out 60% of animal populations since 1970, and that humankind has destroyed 83% of all mammals and half of plants since the dawn of civilisation. Now this immediately sounds like bad news, and it may well be bad news, but it may not be. The information in the article is insufficient to tell us one way or the other.

Perhaps the entirety of human progress and all that created value and happiness has been worth the price of eradicated life forms. I think it probably has been worth it, but perhaps not. One thing is sure though; if you want to defend a particular view, you ought to have a good argument about the pros and cons of human progression, and devise a proficient metric for establishing which has greater precedence. In other words, you mustn’t (as many people do) just read a headline like “humanity has wiped out 60% of animal populations since 1970” and assume it’s a bad thing, because it may not be.

It doesn’t help, of course, that the language they use is set up to make you feel like it’s a bad thing - where terms like ‘wiped out’ connote some kind of allusion to genocide or bacterial eradication. A much more sensible analysis might conclude something like “During the unprecedented explosion of human progression in the past few hundred years, compared with the hundreds of thousands of years of human plight and suffering that preceded it, many species have been unable to co-exist alongside that progression, sometimes due to human activity and sometimes not”. That’s a much better way to phrase it.

This is especially relevant given that palaeontologists estimate that 99% of every species that has ever lived has now become extinct, and that the vast majority of those extinctions occurred long before humanity came on the scene. Most species died out in the natural fight against nature’s oppressive forces - severe weather, biological competition for survival, natural disasters, and so forth - so the narrative that the animal kingdom was a safe, stable place before rotten humans came along to spoil everything is, at best, hugely exaggerated, and at worst, a very unfair reflection.

Here's a novel way you could think about it. You could note that endangering the existence of things for human benefit is a dominant part of our existence. Measles, mumps, rubella, smallpox and polio have been prominent in human history, and thanks to medical advances, their existence has been endangered for the benefit of humanity. We are glad these diseases have been eradicated because they bring about impediments to human progression.

It isn’t, therefore, a huge category leap to say that we could ascribe overall positive benefits to humanity’s progression, even though many species have been unable to co-exist alongside that progression. In other words, if we can be reasonably glad that diseases have been eradicated because their survival brings about impediments to human progression, it’s not self-evident that we shouldn’t be able to put up with other living things being eradicated because their survival brings about impediments to human progression, as long as the benefits outweigh the costs.

To do a proper cost-benefit analysis, you would have to assess how much humans value the gains against the losses of extinct species. An argument can be made that as part of the analysis we must include the cost of life to the species themselves, but that’s hard to measure, and it’s not obvious that the way we may attempt to assess it is in any way meaningful to human minds.

All we can do is have a stab at measuring the costs to humans of other species’ extinction, and even that is difficult. What price would it be worth to humans, for example, to preserve lions on the planet? If every human had to pay out 25% of their annual income as a one-off payment to guarantee the survival of lions, is that too much? It sounds like a lot too much. What about 25% of their annual income to save lions, tigers and elephants? It still sounds like too much. What about 0.01% of our annual income to save all mammals? That doesn't sound like too much at all. What about if the cost of saving lions fell to one individual, and he wasn’t allowed to receive any financial help? Would a one-off fee of £50,000 be worth it to save all lions? Maybe it would for Bill Gates, but wouldn‘t for a minimum wage worker.

The upshot is, there isn’t an easy way to measure whether the sum of human progression has been worth it for the cost of the extinctions of other life forms - but given how much humans value their own lives, it is at least reasonable to consider that it might have been a net benefit to the world to bring about such a huge sum of human happiness. When thousands of tiny creatures die in order for a single house to be built, almost nobody doubts that the value for the inhabitants outweighs the cost to all the living things in the soil. It’s possible that that truth could be equally well extended to the sum of human happiness.

And if you think it’s difficult to measure the value of a human life, you only need to look at how humans behave to see how much we do value it. According to Steven Landsburg’s research on this matter:

“A standard ballpark figure for the value of a life is about ten million dollars. What this means is that empirically, people are willing to pay about $1 to avoid a one-in-ten-million chance of death, about $2 to avoid a one-in-five-million chance of death, about $10 to avoid a one-in-one-million chance of death, and so on for various other small probabilities. (Theory tells us that willingness-to-pay to avoid a probability of death should be some constant times that probability, as long as the probabilities are small. Data tell us that the constant is somewhere around ten million dollars.”

If every life is worth 10 million dollars (by the way, it’s not self-evident under this metric that every life is worth the same in economic value, but let’s assume it is for the sake of argument), and there are 7.5 billion people in the world, then humanity being alive compromises an aggregated value of at least $75,000,000,000,000,000. That is 75 quadrillion dollars!

So while it isn't factually accurate to say that "humankind has destroyed 83% of all mammals and half of plants since the dawn of civilisation" - because it involves many false attributions of causality - perhaps an aggregated value of 75 quadrillion dollars has been worth the price of some species being unable to co-exist alongside us, or perhaps it hasn't: but it's the epitome of lazy thinking to just assume it hasn't and not bother to consider the situation with a proper cost-benefit analysis, as so many do.

Wednesday, 10 April 2019

Eugenics & The Dark History Of The Minimum Wage


Many people believe that the minimum wage is a state policy that helps poor people. Some even think it should be higher than it currently is. People who actually understand the real effects of the minimum wage – a club you’d hope would be larger than it is – know that this is economic foolishness: that the minimum wage actually makes the vast majority of poor people worse off (see my Minimum Wage / Living Wage side bar on this).

Some people know something else on top of that – that, actually, far from being a state policy that helps poor people, the minimum wage was actually sinisterly invented as a eugenics-type method of keeping so-called ‘undesirables' out of the job market (I wrote an article about this for the Adam Smith Institute – re-printed in full below).

When politicians support economically foolish policies, the relevant incompetent or dishonest? question looms large: Do they support foolish policies because they don’t understand they are foolish, or do they know the policies are foolish but support them anyway because they are popular vote-winners? Of course, added to the second option is the reality that in some cases they support a policy because to not support it would be damagingly unpopular.

One clue of the answer to that question might be this. We all know of instances in which politicians understand that artificially raising the cost of something will reduce its consumption, because that's what they try to do with taxes on goods like sugar and alcohol. They seem to understand the basic principle that their actions will reduce consumption of the thing they're taxing, so they probably could work out that artificially raising the cost of employment will reduce employment. To me it indicates that in many cases they probably know the policies are foolish but support them anyway because they are popular vote-winners.

Here is that article I was talking about, talking about the minimum wage's very dark history:

We read today that the national minimum wage will increase by 20p an hour to £6.70 from October, and that this will benefit more than 1.4 million workers. What we hardly ever hear from politicians is how many people will feel the costs of this increase, in addition to the people who are already being hurt by having a minimum wage law in the first place.

The problem with state-enforced minimum wage laws is pretty standard economic text book stuff: the minimum wage makes it harder for low-skilled workers to get a foot on the labour market ladder, it unfairly loads the burden on firms that employ low-wage earners (a burden that could be avoided by simply reducing the tax low-earners pay, or taking them out of tax altogether), and as a result it often causes inflation of prices and reduction in staff as firms try to recoup their losses.

With the announcement today, and with the Budget looming, I was very interested to stumble upon an article this week by Jeffrey Tucker about a Eugenics Plot Behind the Minimum Wage, in which we find out that in the early 20th century some eugenicists tried to introduce the minimum wage as a means of getting some of the lesser able people out of the employment market. Here are some relevant quotes that are bound to shock:

A careful look at its history shows that the minimum wage was originally conceived as part of a eugenics strategy — an attempt to engineer a master race through public policy designed to cleanse the citizenry of undesirables. To that end, the state would have to bring about the isolation, sterilization, and extermination of nonprivileged populations.

It was during this period and for this reason that we saw the first trial runs of the minimum wage in Massachusetts in 1912. The new law pertained only to women and children as a measure to disemploy them and other “social dependents” from the labor force. Even though the measure was small and not well enforced, it did indeed reduce employment among the targeted groups.

Leonard documents an alarming series of academic articles and books appearing between the 1890s and the 1920s that were remarkably explicit about a variety of legislative attempts to squeeze people out of the work force. These articles were not written by marginal figures or radicals but by the leaders of the profession, the authors of the great textbooks, and the opinion leaders who shaped public policy.

“Progressive economists, like their neoclassical critics,” Leonard explains, “believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”

So when we hear politicians make minimum wage commitments in the run-up to the election, bear in mind that those that preceded them were always fully aware that wage floors precluded people from the labour market, and that they were once deliberately implemented to expunge the demographic landscape of those they thought inferior citizens that were unworthy of earning a living. That they so readily endorse a policy that places a barrier to employment for so many people tells you just about all you need to know about the extent to which winning votes matters far more than aiding people’s job prospects.

I hope that, in my lifetime, politicians and social commentators begin to get the simple message that if you artificially remove the lower rungs on the labour ladder, you make it difficult (often impossible) for people to climb it, or in some cases, get on it at all.

Saturday, 6 April 2019

Writer's Update: It's The Easiest & The Hardest Time To Be A Writer


I'm still fairly quiet in Blogosphere, as I'm focusing my efforts on editing my books. Aside from my biggest problem, which is creating more new stuff than I ever finalise from the panolply of old stuff, I'm making quite good progress. I thought I'd take a break this morning, as the following thoughts about being a contemporary writer entered my head.

I don't know much about modern fiction (I'm a classics man), but when it comes to non-fiction, it looks to me like it has never been easier to be a writer, and it has never been harder either. Everyone knows why it has never been easier: the Internet has given us the best tools we've ever had for successful writing - increased knowledge, a wider platform, and more ways to become a widely read author. But those are the same tools that have also made it harder than ever before to be a successful non-fiction writer, because a combination of greater competition and more ubiquitous and intense scrutiny has greatly increased the required standard for academic writing that is sold as popular social science.

This generation more than any other is a generation in which the anachronisms of Thomas Carlyle's Great Man theory - that history is written by the impact of a minority of charismatic and powerful men - have been well and truly put to bed. Nowadays, pretty much everyone is a writer of some sort (even if it's just publically sharing a thought or making comments on social media) and everyone is a critic too. Widely read authors receive thousands of comments, as the readers seek to obtain parity with the author, and in many cases supersede them with their wit and intelligence.

Intellectual endeavours have been more widely collectivised and democratised, while at the same time specialised research has become so interconnected within international fields - it is harder than ever before to write anything truly remarkable that does not trespass on other people's toes. Given that almost every field is awash with expert analysis resulting from years or decades of rigorous research, it is hard for an individual writer to produce anything that covers a broad and complex domain of thought that is at the same time seminal and ground-breaking.

For writers looking to make a big impact, the challenge has never been greater!
 
 

Thursday, 21 March 2019

When The Fantasy Brexit Is Better Than The Real Brexit Options


To me, the Brexit negotiations are a bit like a group of vegetarians and a group of vegans arguing about how to make the best beef burger - they don't really believe in the cause for which they are fighting.

Let's play a pretend game: if we were to take out all the politics, the corruption, the self-serving manoeuvres of bureaucrats, and the perverse incentives to stop other countries also leaving the EU, and pretend that the outcome of Brexit could be solely based on sound economics for the benefit of as many people in the world as possible, then Britain would be better to have a bespoke arrangement to stay in the EU single market (because it’s best to preserve the free movement within the EU of goods, services, labour and capital), and leave the EU customs union while at the same time enjoying a bespoke deal that confers all the trade advantages of being in it, and at the same time all the advantages of not being entirely under its regulatory thrall with regard to the rest of the world.

And once you understand why that is true in this pretend game, you see that it points to a bigger argument in the real world about trade: wherever they are in the world, all countries should trade without tariffs, and as freely as possible without the deadweight losses incurred from excessive political interference.

The EU customs union is a trade bloc agreement to abolish tariffs and quotas between EU member nations, in order to encourage free movement of goods, services, labour and capital, while adopting a common external tarif on non-EU countries. The customs union is based on the problem of having a tariff free trade bloc and a different attitude to those outside it. If Britain had zero tariffs on Japanese cars, but Germany had a 10% tariff, then Japanese cars are better going to Germany via the UK, which adds layers of additional complexity to trade relationships, as does every other likewise situation.

If all tariffs are removed across the world, then there would be a huge gain for every domestic nation - free trade would eliminate billions of pounds of deadweight costs in global trade negotiations, all of which is picked up by taxpayers in countries across the world.

One of the reasons politicians have become so powerful in the global economy is because the project began with conditions under which many countries had different rules on quality control, product safety and environmental standards - meaning there was no common, all-encapsulating set of rules that could govern trade across the world.

If everyone understood that a) global free trade is the most desired economic goal, and b) that that would happen most optimally with a multilateral, fairly common set of standards for quality control, product safety and environmental standards, then every country would have done their best to achieve this much sooner than now. It would have started domestically, whereby effective regulations ensure that businesses meet the standards required for consumers, and would then be applied across the global marketplace, under the assurance that if a business operates within its own domestic laws and regulations, it operates within a globalised system of commerce too.

But alas, in the real world, thanks to the plethora of unnecessary political interferences, this doesn't happen particularly well at all. Coming up against this more economically-friendly model is the reality that countries are governed by self-serving politicians, eager to protect their careers, fatten their wallets, increase their power, and preserve their status at the expense of the people from whom they confiscate earnings.

A global trade environment that worked best for everyone would no longer work best for the bureaucrats that have their ever-wealthier fingers in the pie - it would mean less tax for the state, reduced control over competition, and less special-protection for their domestic businesses. Even though the citizens of their country would be immeasurably better off, the political establishment would not - they would no longer reap the rewards of their crony capitalist agreements with domestic firms who can’t compete with more efficient foreign competition, or personally benefit from the self-serving legislative measures designed to keep money flowing into their country, and from the spoils creamed off from customs taxes that pay for their lifestyle.

One of the near-insuperable laws of economics is that when people who are not creating any wealth are getting paid to impede the progress of those who are, there is something that badly needs addressing.

EDIT TO ADD: I mean, basically, the Establishment never thought for a moment that Remain wouldn't win - they thought that Leavers were just 5 or 6 million older people scattered around coastal towns, nostalgic for the days of 1960s Britain. When they heard the result, they pretty much said something like:

"Crikey, we are in big trouble now, and we can't let this Brexit scenario happen! Here's the plan to thwart it- during the lengthy 2-3 year negotiations, we'll construct countless subsidiary arguments about hard and soft Brexit, different types of hard and soft Brexit within those subsets, etc, and turn everything into a squabbling morass of indecision and ambiguity, until the majority of the population is a tiny bit satisfied with some of it, but mostly unsatisfied with the rest of it. And then we'll make out that it's such a mess that the only way to resolve it is to take it back to the people, by which time, a lot of those old xenophobes in Great Yarmouth and Lincoln will have died, and a lot more young neo-Marxist children will have come to voting age, so we'll be able to stay in the EU by then, and when we get excoriated by the centre-right, we'll be able to refer to the 'will of the British people' in both referendum 1 and referendum 2."

Whether they pull it off remains to be seen - but that was the Establishment's plan - and it was set in place from pretty much the day after the 23rd June 2016.

 
 
 

 

Wednesday, 20 March 2019

Knight’s Back Of The Envelope Philosophy: The Whole Of Epistemology In 400 Words


Make any statement about reality and it will be incomplete in some way. If it is a statement that you can prove with logic or mathematics then it falls short of describing anything conclusive about any reality outside of mathematics or logic; if it is a statement about physical reality then it falls short of anything that can be conclusively proven to apply in all cases (in the black swan sense); if it is a statement of fact then it cannot be established by logic or by reason prior to initial experience; if it is a logical proposition then its subject/predicate content must be verified outside of the proposition; if it is an allusion to an inner concept then it is not knowledge (justified true belief) of the perceivable world; if it is an allusion to an inner perception of outside reality then it escapes your certainty; and if it is a statement about a metaphysical interpretation then in its proprietary form it is entirely subjective.

Everything is derived from experience (this is the basis of Hume’s fork – everything is classified as either Relations of ideas and Matters of fact), but in distinct ways: a priori is knowable without having to consult experience, except initially to understand the terms (“all bachelors are male”); a posteriori is only knowable by consulting experience (“London has a higher population than Birmingham”); analytic statements (A is A) are true by virtue of the meaning of the terms, synthetic statements (A is B) are true by virtue of meanings in relation to facts; physical statements are in relation to the material world (“the chair has four legs”), metaphysical statements are subjective ideas formed as a result of relation to the objective world (“Love and grace triumphs justice and revenge”); and necessity and contingency are related to whether or not a statement is conditioned by how the world happens to be. 

Relations of ideas and Matters of fact describe everything, including all the notions like a priori and a posteriori, necessity and contingency, the physical and the metaphysical and the analytic and synthetic distinctions – they are part of our matters of fact derived through experience, and our relations of ideas that result from that experience.
 
Every possible distinct description of experience is covered above, because everything is either a fact (an impression) derived from experience, or a relation of ideas based on those impressions from experience.


 


Saturday, 9 March 2019

The Strange Thing About Good & Evil


Good and Evil both exist - in fact, they seem to me to exist in a more concrete way than anything that science measures. The reality of good and evil is so instantiated in truth that a universe in which one of the laws of physics suddenly became radically different would be far less strange to sentient minds than a universe in which good and evil no longer exist. In fact, it seems impossible to have sentience without value judgements - and it seems impossible to have value judgements without the up and running concepts of an extreme upper end (maxima) and an extreme lower end (minima), where one is an ideal we have no chance of attaining, and the other is a nadir from which we should stay as far away as humanly possible. 

But what's really interesting about those concepts, for me, is that the more broader and abstract they become, the more real they appear to be, and the more the propositions about them seem evidently true. When you speak of historical passages of evil, like Nazi Germany or ISIS in the Middle East, the evil attributed to them is an abstraction - it's as though the evil that pervades in those events is a much bigger thing than the narrower particularities of the events. They seem 'possessed' by evil, perhaps rather like how William Burroughs talked about 'genius' as being something we are possessed by, not something inside us implicit in the individual (although in a sense, it's possibly also that, because creativity is heritable).

The more you break those historical catastrophes down to their constituent parts, and the grainier those parts become, the more you diminish the overall intensity of 'evil', to the point that it's very hard to ascribe the notion of evil to any individual person - and even harder still once you drill down into the inner-humanity of that person, and the shared suffering and tragedy that's a central part of the human condition.
 
Even the people thought to be the poster boys of evil - Adolf Hitler, Jozef Stalin, Saddam Hussein, Ian Brady, Charles Manson - were all damaged by their surroundings, plagued by their insecurities, and corrupted by the seduction of having power over others. Peel off the layers, and you don't find anything as substantial as evil - you find really bad choices, failure, regret, circumscribing defects, psychological torment, and a wounded psyche that hates and fears its surroundings, and turns inwardly towards a parochial rejection of truth and goodness.
 
And here's the other thing: each and every one of the people that the sententious subsections of society deem as 'evil' and 'beyond the pale' can be redeemed - they can love by being loved; they can be liberated from their plight by sorrow and regret; and by being forgiven they can be restored, as though a big blanket of goodness has been thrown onto their fire of torment. Restoration is possible because Good and Evil are bigger things than individual properties of personhood.  

Good and Evil seem to me to be too metaphysically overwhelming to be reducible to mere individual traits or personality properties. Their nature in the reality we know constitutes a fundamental reality in the nature we know - it really is as profound as that. Because of that, we humans are so much more amazing than we realise, and so much worse than we realise - and that is the duality of the human condition, played out sublimely where individual identity is perceived as a weighted average of all our thoughts, feelings, decisions and actions.

Monday, 4 March 2019

How Economics Can Solve The Supernatural Problem


If there’s a problem that’s hard to solve, economics usually provides the best chance of solving it. How would economics help solve the problem of whether the supernatural exists? Here’s a good way to think of the problem. Imagine two alternative realities - a reality in which the supernatural does not exist (Reality 1), and a reality in which the supernatural exists (Reality 2). Think what it would be like to live in each of these two realities, and then think what it’s like to live in the reality of today (Reality Now) that we currently experience. Here are the three realities:

Reality 1 - The supernatural does not exist:

Reality 2 - The supernatural exists:

Reality Now - The reality of today we know:

What we know of today’s reality (Reality Now) is that a huge proportion of all the people who’ve ever lived believe the supernatural does exist. The world is full of claims of supernatural experiences: miracles, healings, communications with God, answers to prayer, ghosts, prognostications, and countless other testimonies of where people report a relationship with God as evidence that goes beyond natural explanation. Not all these claims are credible, but whichever way we cut the cloth, human history is absolutely replete with belief in the supernatural - and people 'really' believe this stuff in a way that radically changes their life like nothing else in creation.

Given the foregoing, how, then, do we try to determine whether Reality Now is consistent with Reality 1 or Reality 2? An economist method would be to imagine what a Reality 1 and a Reality 2 would be like if it did exist, and see which Reality seems most like Reality Now. First off, then, what would a Reality 1 look like if it did exist - a world in which the supernatural does not exist? I do not believe that it would look anything like the Reality Now in which we live. If there was no such thing as the supernatural, I feel fairly sure that we would not live in a world like this, where claims of supernatural experience and insight have been so prominent throughout history that they have this kind of overwhelming impact on our lives.

If Reality 1 is the real reality then it is not self-evident to me that the concept of the supernatural would have been invented at all. Here's why; I know of no other type of human invention that creates a metaphysical reality that isn’t true and then confuses that invention with actual reality. It’s true that humans are immensely creative with the truth when it comes to art and literature and poetry and film, but no one is confusing the reality embedded in those disciplines with an actual reality they think exists but doesn’t really.

It’s also true that people get confused a lot about empirical matters, especially in politics and economics - but we can’t count that as being anything like the same thing, because it merely creates a metaphysical reality that isn’t true and then confuses that invention with actual reality. These errors are actually cases of poor reasoning and being unapprised of facts, and are easily corrected with fewer emotional biases, better arguments and improved reasoning.

Next, what would a Reality 2 look like if it did exist - a world in which the supernatural does exist? I think it would look exactly like the world in which we currently live, where claims of supernatural experience and insight have been so prominent throughout history that they have this kind of overwhelming impact on our lives.

I think it is only by virtue of the supernatural existing that we would have such a world in which it is so prominent. We simply do not make up a new reality that prominent, that influential and that life-changing and confuse it with the truth. There is nothing else in human existence that's even on the same playing field as the significance of the supernatural in our lives.

And if the supernatural is true, you would expect it to consist of an indefinite number of human claims where a small fraction of them are based on the truth, and most of them are either flatly false, or misleading distortions of the truth*. Because that is what Reality Now is like. There are uncountable ways to be wrong, and far fewer ways to be right - but like everything else, the mass falsehoods and the ubiquitous delusions exist, not because everything is false, but because almost everything is false, and the most important things are true.

If Reality 1 was the real reality, there would be no supernatural claims - possibly ever (it may not have ever been invented, although it's possible it might have) - and certainly not anymore, as any claims from the ancients that bore no resemblance at all to the truth would have died out before we ever got to find out they existed. Even with my economist hat on, it is infinitely likely that the supernatural exists.

* Wide is the gate and broad is the road that leads to destruction, and many enter through it. But small is the gate and narrow the road that leads to life, and only a few find it.
Matthew 7:13-14

Monday, 4 February 2019

Progressive Tax Is Fine When It Applies To Others


A progressive tax system means the rate of an earner's taxation increases as the taxable base amount increases. So someone earning £100,000 per year will not just pay more in tax due to higher earning, they will pay a bigger proportion of their income too. The thing about progressive taxation is that just about everyone prefers it more when it applies to others than if it applied to themselves.

Suppose Jacqui takes up writing fiction in her spare time. She works on her debut novel "50 Shades of Jax", which turns out to be her masterpiece, and earns her a large one-off payment for her efforts. Jacqui spends 2 years on her book, working in her 9-5pm job in the daytime (and paying tax on those earnings too lest we forget) and dedicating her evenings to writing the novel.

If Jacqui's day time labour value is £15 per hour in her 9-5 job, and she spends 800 hours on "50 Shades of Jax" in the evenings, then the cost of her time writing the book is around £12,000 (this is an economic value based on a truism that the cost of an hour spent doing something is roughly proportionate to your earning power in that hour). Thankfully Jacqui gets the rewards for her hard work and skilful writing - she earns a one-off fee of £100,000 from a top publisher (we should actually deduct the £12,000, making it £88,000, as that was the cost of her writing the book - but let's forget that).

So, Jacqui has earned a straight £100,000, and she has big plans for the money. She can pay off some of the mortgage, pay her daughter's fees to send her to university, give some to charity, make a donation to keep open her local community centre, and arguably most importantly she can afford to give up work for a while in order to work on a follow-up book. Her success enables her to fulfil her lifetime ambition of being a paid writer.

The trouble is, she won't get to keep it all, because on current tax rates the government will want to take approximately £36,000 of her £100,000. Generally speaking, there are only two ways that anyone can get your money; either you give it away voluntarily (for example, in the form of a gift, a donation, or spending it on something you want), or it can be taken from you against your will (for example, in the form of an act of theft or extortion).

I've no doubt that Jacqui would rather pay zero tax on that £100,000 if she was let off by the government, so in being forced to pay the tax under the threat of imprisonment the government is engaging in extortion. Under any other circumstance - a big kid in school taking 36% of the little rich kid's pocket money, or being threatened by a couple of muggers for 36% of the money in your wallet - the extraction would be a crime. When a government does the same thing, it is called taxation.

Now most people aren't as averse to taxation as they are to being extorted or mugged, because they are able to live in a society in which they and their fellow citizens benefit from some of the taxation obtained. But my guess is that Jacqui will be pretty indignant at actually handing over a whopping £36,000 of her £100,000 after producing something she is very proud of, and working very hard to do so.

And why shouldn't she be indignant? It's true that some of her money will be spent on things of which she'd approve (basic health care in the NHS, education, roads and social services) but equally much of the money will be spent on things of which she probably wouldn't approve (foreign wars, PFIs, agricultural subsidies).

The upshot here is that many people are quite happy to endorse progressive taxation, but in most cases they are bound to be less enamoured with it when it applies to them. Given that we must therefore live in a society in which the majority of people would be indignant if they had to hand over £36,000 of their £100,000 earning (what's more, it's actually more like £60,000 when you account for all the ways they'd be taxed further on what they get to keep), but would be perfectly happy to see others pay that kind of tax, that ought to be a blatant indication that something is fundamentally wrong with the system, and needs changing.

Wednesday, 30 January 2019

A Rich Challenge For You


Envy of the rich is one of the most dastardly things lefties do. Chief Executives get lambasted for earning too much; millionaire innovators are the scourge of society, and the top few dozen richest people on the planet are thorns in the flesh of the dim-witted social justice warriors holding placards in central London bemoaning the 'injustice' of the wealth gap, and the 'greed' of the rich.

To see why the leftist antipathy is misjudged, you only need to consider the question of what you personally would need to do to be rich. Think for a few moments. If you don't have the skills and experience required to earn a big salary, you are going to need to come up with something that society wants on a large scale. Have a think ....


Did you manage to think of a way of making yourself rich yet? I suspected not. It is not very easy to produce a good or service that masses of people value more than it would cost you to produce, especially as your venture would involve large start up costs and initial risk and foresight.

The reality is, very few people possess the creative nous to become millionaires, let alone billionaires. That is why, when lefties whinge about rich people, I suspect the subtext is that they are really bemoaning their own lack of entrepreneurial talent - it's an underhanded lament at what others can do better than them.

I'm not rich, but I greatly value the contributions of the likes of Jeff Bezos, Bill Gates, Mark Zuckerberg and countless others. Lefties value them too; they just forget that they do. Because, you see, that is what is great about the market. Jeff Bezos has got rich from being an Amazon shareholder, but the combined riches of the Amazon customers have become even richer once you aggregate the lower prices and consumer surpluses they've enjoyed.

The more competition there is in the market, the more benefits go to the consumer. Rich people like Jeff Bezos and Bill Gates don't just make themselves wealthier; they increase the wealth of the average person in society too. Think how fortunate you are (as am I) to live in a society in which you are made so well off despite not having the entrepreneurial prowess to make large sums of money. I'm typing this on a laptop, sharing it on the Internet, surrounded by luxuries that my grandparents would have found astonishing - and for a lot of these luxuries, it is rich, creative, innovative risk-takers I have to thank. On top of that, we should all be thanking each other too - after all, no single person does anything, even make a pencil, without the help of everyone else.

Finally, some lefties think that typical workers are being exploited by the rich executives that run their companies. A basic understanding of economics would tell them that this is untrue: for as long as there is enough freedom in a marketplace to allow competition to operate, every worker is paid their marginal product - which is to say, they are paid what their labour is worth to the firm.

The upshot to all this is that the Corbynites have got their whole political mandate wrong. No country, or group of citizens, has ever risen to its material feet by bringing richer people down. Poorer people, whether that's someone on the dole in Newcastle, or someone at the subsistence level in Nigeria, only rise to increased prosperity by creating something they can trade - an invention, a service or their labour.

No injection of material prosperity or economic growth is created through redistributing wealth from top to bottom. Yes, of course, redistributive measures are fine as a safety net to help society's most vulnerable, and for public goods like defence and the rule of law - but those who see the transfer of capital through confiscation as an envy-driven vehicle for levelling society are both uninformed and misguided.

Thursday, 17 January 2019

Good Cop, Bad Cop Economics: Good Cop


In the last Blog post, entitled Good Cop, Bad Cop Economics: Bad Cop, I had a few choice words to say about the left's culpability in the social/political/economic problems that preoccupy so much of their attention. I ended by promising a follow-up in which I offer a solution to how all this can be put right with a pretty radical but effective overhaul of our current framework.

The way to reform the system is simple in explanation but more complex in execution (and very timely perhaps, given the current Brexit debacle over an exit strategy). It is this: enshrine in law any policy that proves to be demonstrably beneficial in net terms to the economic well-being of the country. Now obviously this must come with caution, because it is not always easy to empirically verify whether the economic well-being of the country improved as a direct result of a policy, or whether there were other important factors not related to a particular policy.

But thankfully most economic logic carries enough weight to show why a policy is either a good one or a bad one - and if such positive policies became legally binding they would be safe from party political interference and protected from the dangers of being reversed for political gain. Provided the people making the laws understand the indubitable economic benefits that the nation will enjoy from these acts of legislation, and are able to convey them in a way that laypeople can understand, there are plenty that could be instituted right away.

For example, it could be made law that the UK may not impose any import tariffs on foreigners - a policy that unquestionably harms both the nations involved in the trade exchange. Even if foreigners don't reciprocate and still wish to impose tariffs on us, we would still be better off not imposing tariffs on them.

Another example, it could be made law that no politician is allowed to interfere with the price system generated in a supply and demand market. From now on, the price of everything must be governed by market signals, not woefully inadequate politicians. No longer can politicians make it illegal to sell your labour below a set price, or tell you how much or how little you have to charge for a good or service. Leaving prices to the market signals of supply and demand will make the nation better off by eradicating the numerous deadweight costs associated with price fixing.

A third example, it could be made law that no domestic government can interfere in the competition process by subsidising new businesses or bailing out failing businesses. A fourth example, it could be made law that all income tax is flat, not progressive, and that top rates do not exceed a certain high-end threshold (probably somewhere in the region of 30%, but lower ideally). It can also be enshrined in law that governments won't tax corporations (which only ends up falling on employers and consumers anyway). Both of those would ensure politicians get the incentives the right way round - that they are incentivised to manage their public spending properly, not treat taxation as a money tree.

The public needs laws like these to protect them from their own economic misunderstandings. Once it started to be more widely known that these laws would make the nation better off - in terms of GDP, levels of outside investment, job creation, lower levels of unemployment, or any other assessment you care to make - the nation will be a lot easier to govern if the electorate better understands the link between market freedom and economic well-being. More or less every nation in the world that does well in terms of sustainably higher GDP also does well in terms of prosperity, freedom and well-being too.

With the introduction of such laws there will be less of a need for party political rivalry in playing fast and loose with the public's knowledge deficiencies and the extent to which they can be seduced by short-sighted policies. Laws like the above would also counteract the short-termism of political parties' interests whereby they rarely get to feel the long term effects of bad policies or get held accountable for their mistakes.

There is one obvious caveat to the above. Well, two if you allow for the fact that occasionally even sensible legislation may need to be temporarily reassessed on a case by case basis if it's in the public interests to do so (but we'll allow for the fact that this is hardly an insurmountable issue). No, the main caveat I have in mind is that such a radical change to the political framework would have to evolve over a (hopefully) short period of time - it would be too drastic to introduce as a fait accompli shake-up of the system right away. The reason being; there would need to be a transition period during which the public spending bill could come down while at the same time the private sector revenue goes up. Like children learning to walk, it would be foolish to demand that they run.

The upshot is, if done proficiently, these are the radical measures that are needed to properly transform our political landscape from the grass-seed of failure and incompetence to the fresh wheat of success and prosperity. Cutting the grass may keep it neat and tidy - but it'll never give you a field of wheat. If we want to get political wheat, we need to put away the shears and go down into the soil, where the economic foolishness of the present day political landscape can be ploughed up and re-sown.

Saturday, 5 January 2019

The 'Destroying Our Planet' Fallacy


One of the biggest fallacies out there is the complaint that we are 'destroying our planet'. We keep hearing rallying calls to care for the earth - but, alas, the people who think we are destroying it are confusing their terms.

The earth is not a sentient being that can be destroyed, and nor does utilising its resources constitute destruction of the planet. The resources we use are vital ingredients for making the world a better place, reducing suffering and misery, and increasing knowledge, well-being and the quality of life we have.

Take a forest as a good example. Cutting down trees for the paper and replanting more is not destroying the earth - it is utilising a vital resource that enriches humanity greatly. Yobs setting fire to a forest, on the other hand, is a case of being careless with the planet's resources because they are being supplanted for value-less ruination.

The large swathes of people who are constantly telling us that we are destroying our planet are seeing our use of resources as being like burning down a forest when they should be seeing it as being like making paper from trees. The earth is a giant rock that's over 4 billion years old: it was here long before we were, and it can survive long after we have gone. The notion of destroying it is a fallacious one. The only thing we can destroy is our capacity for utilising its resources, but given that it is the utilisation of its resources that they mistake for its destruction, the accusation is laughable.

For obvious reasons, saving the planet (by which it is meant ‘the earth’) must always be a secondary aim behind saving the planet (by which it is meant ‘life on the planet’). If preserving life and increasing well-being are the primary goals, then part of that goal (the most urgent goal, in fact) is to bring an end to global poverty and help the neediest people out of their plight of impoverishment.

This leaves those who think we are 'destroying the planet' with a big problem, because the only way to bring an end to global poverty and help the neediest people out of their plight is to help those people attain economic freedom, and the ability to trade, be self-sufficient, and productive in the broader market economy. And, of course, the only realistic way to achieve this is to generate the kind of industry and globalised expansion of the market that will come at the cost of using some of the earth's natural resources.

The upshot is, in the short-term future, to eradicate global poverty entirely, we're going to have to carrying on making the best use of the earth's raw materials. Like most things, there's a trade off, and all it takes for an intellectual malady to occur is the slightest reactionary ignorance to assert that 'We are destroying the planet' as though there's no need for consideration of the benefits vs. the costs of doing so.

It is thanks to the use of the earth's resources, particularly since the Industrial Revolution, that we've moved the human condition from a state of widespread poverty to a state of greatly reduced poverty and much more prosperity. Of course there's still a way to go, but as the developing world countries increase their infrastructure and market potential, they are going to be using the most ecologically efficient technology - so there is every reason to continue to develop and pioneer more environmentally efficient methods of industry.
 
Realistically, the things that are the biggest ingredients in achieving this - free trade, healthy imports/exports, high employment, sensible and equitable government spending, a good legal system, cultural plurality, immigration, global travel, welfare systems, human rights, property rights, family rights, and being freer citizens* – are going to have an environmental cost that is more than compensated for by the good it will do for the neediest people in the world.

Sadly, it's usually the lack of these things that is behind the killing of endangered species and the causing of extinctions, as well as people in developing countries not having a proper stake in their own country's resources - all of which are certainly things to be spoken out against.

Wednesday, 19 December 2018

Misunderstanding Inequality: Heroes & Villains


The world has seen unprecedented economic growth in recent times, alongside which the world has seen unprecedented increases in capital inequality. Many people feel joy about the first fact and despair about the second fact. So much so, in fact, that many of the nation's problems seem to get blamed on inequality - even the fact that some families are struggling to make ends meet.
 
A moment's thought should make it obvious that the problem with someone's economic hardship is their absolute state of well-being, not their relative well-being in relation to rich people. Alas, despite being obvious, it is doubted by many - primarily, one imagines, because of a) envy, and b) being tripped up by the fixed pie fallacy. The reality is, economic growth naturally engenders marked differences in people's incomes. In fact, much of the time one person's large wealth increase affords many others an opportunity to work, as anyone who has ever been in McDonald's Sainsbury's or Domino's would know.
 
It's also the case that economic growth actually dispenses disproportionately greater benefits to the poorest in society - because not only does it create jobs, which creates money to spend, which creates more jobs, and so on - it also improves their consumption. Once upon a time only the richest people televisions, cars and mobile phones. Now most people have these things, not to mention access to the entire world's knowledge at the touch of a button, and the uncountable other riches that our forebears would have thought impossible.
 
The upshot is, wealth inequality is a so-called problem that's hugely overblown. As long as everybody's absolute well-being and standard of living continues to increase, the income gap isn't much of a problem - quite the contrary, it's a natural non-linear feedback effect of a free market of voluntary exchanges.
 
In fact, monetary inequality with concentrations of capital in the top quintile is actually evidence that a lot of people are becoming better off by purchasing those goods and services through voluntary transactions. As the gap between richest and poorest is narrowing in pretty much every area apart from capital, it's easy to see how much more equal we are becoming, not more unequal.
 
Inequality through the lens of discrimination
Moreover, as I explained in this Blog post, most inequality is due to rational decisions made by people - called statistical discrimination - that play out in terms of society's revealed preferences. In terms of incentives, statistical discrimination is one of the most easy to understand in society, despite some people's distaste for it.
 
Consider when the European Court of Justice (ECJ) ruled that the long-established practice of setting insurance prices according to sex is illegal discrimination. Or consider that even though women statistically live longer than men, insurance companies are no longer allowed to offer different annuity values to men and women.
 
So men come off better on car insurance, effectively being subsidised by safer driving women, which is the same as saying that women come off worse by paying a penalty for less safe male drivers. Both those situations are reversed in the annuity situation.
 
When everyone in a particular group is homogenised, the statistical variances are cancelled out as individuals are assessed based on the characteristics of the group as a whole, not on their own merits and demerits. In many cases this is obviously foolish and wrong. It's much better if men and women are not treated the same in terms of insurance premiums, because women ought to be rewarded for being statistically safer drivers.
 
The inevitable consequences are that some very unsafe women drivers benefit on the back of the average safety of women drivers, and some very safe male drivers lose out because of the average safety of male drivers. Safe male drivers are discriminated against not proximally because of their sex, but more distally because they are pooled with characteristics that we commonly associate with less safe driving.
 
Another example of where discrimination occurs when people are pooled with a group that have an easily identifiable weighted average is that if women are more likely to leave work in their thirties to have children, then some employers are more likely to choose men, even if it means missing out on better talent. Some cry foul of unfair discrimination, but sometimes it is a rational thing to do, as employers look to increase the probability of stable utility and efficiency.
 
But that's not the end of it. Suppose 32 year old Jack and 32 year old Jill are going for a job as project manager in Bob's company. Everything else is equal, so Bob hires Jack purely on the following probabilistic grounds: that there is a chance that Jill may wish to have time off for motherhood and possibly revert to part time hours thereafter. But now suppose the above scenario again, apart from one difference - Jill is slightly better than Jack, but doesn't get hired because Jack is less of a risk in terms of future motherhood. Jill goes on to get a job as project manager in Margaret's company, has a child five years later and returns to work after six months.
 
Bob's preference for Jack over Jill when they were equal was probably a rational choice, but when Jill was better, Margaret gained by recruiting a better project manager, whereas Bob gained a decent project manager too. In other words, rational discrimination usually produces a levelling effect, and employers know that irrational discrimination is an imprudent recruitment policy that hits them in the pocket.
 
The underlying reality about statistical discrimination is twofold: a) it's almost impossible to detect in the first place because people's real motives are not in full view of the public; and b) in a society that values liberty and freedom of choice, people should be perfectly free to statistically discriminate any way they wish. Generally I favour the egalitarian, classical liberalism (of the Hume, Smith, Ricardo kind), meritocratic ethos, and the view that individual pursuits and a bit of luck play important parts in our journey, as does the 'reap what you sow' maxim.
 
Consequently, then, while I'd hope for equality of opportunity wherever it doesn't unfairly disadvantage others, I don't expect equality of outcomes, and I think many people trying to interfere in society to correct things that don't need correcting are, quite naturally, misjudged and making the situation worse. There are several, often connected and complementary (what should be more obvious) reasons why unequal outcomes occur, and why that is no bad thing:
 
1) The effort people put in to things is unequal, which should rightly yield unequal outcomes. Those who work hard and study hard have a better chance of being rewarded for their efforts - and that should be encouraged. A surgeon should be higher on the income ladder than a taxi driver or a tyre fitter, and I don't want society to be less unequal in this regard.
 
2) The risks and inconveniences people take are unequal, which should rightly yield unequal outcomes. People who do jobs with highly scalable outputs, risky jobs, dangerous jobs and jobs with unsocial shift patterns should be paid commensurate to these factors, and once again I don't want society to be less unequal in this regard either.
 
3) The "slings and arrows of outrageous fortune" inequality. This one is often overlooked or not given enough attention, but there are quite natural inequalities by the fact that nature is not very democratic at all. When it comes to health, looks, size, shape, talents, intelligence, sensory apparatus, opportunity and background, nature is far from democratic - there is a notable difference in all of these human qualities in each of us, as their attainment depends on undemocratic things like fortune and pursuit. A significant proportion of outcomes in society are down to luck, serendipity of circumstance and being in the right place at the right time, bringing about expected inequality of outcomes.
 
4) Rewards for innovation in a 'winner-takes-all' market. Most of the world's biggest gaps in income equality are because of innovators, entrepreneurs and job creators (usually one and the same) who have become wealthy by being good at providing things many people want. Market are democratic in that consumers vote with their purchasing habits, and therefore inequalities of this kind are not a problem that needs addressing - they are the result of freely made human choices in a competitive marketplace.
 
What so many get wrong in this area of discourse is in the misattribution of causes for outcomes. It's a base fallacy narrative that, unless corrected, will continue to misinform them about the so-called unfairness and injustices in society. Inequalities that have legitimate causes based on the above four explanations are often misrepresented as societal injustices and misattributed to the plight of human infirmities - something I've blogged about numerous times before.


 

 
 
 










 
 
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