Monday, 29 September 2014

The Latest Bright Idea About How We Choose To Eat


The ludicrously misinformed Tory MP (and former GP) Sarah Wollaston is at it again. I had a few choice words to say about her in a recent Blog post – but this time she’s gone overboard with her litany of misinformation and shoddy reasoning.

First the misinformation: you’d expect an ex-GP who is now chairwoman of the Commons Health Select Committee to be better informed than this, but Wollaston’s claim that binge-eating obese people cost the government a lot of money is false. A study showed that smokers and obese people actually save the health service money, because although they cost more than healthy people between the ages of 20 to 56, they also die sooner than the healthy group, meaning it costs less to treat them in aggregate terms. Plus, add in the State pension savings for those who die young and you’ll see the case against Sarah Wollaston’s claim is even more compounding.

Now the shoddy reasoning: Wollaston exclaims the need for regulation to force stores to offer discounts on fruit and vegetables. The only way to achieve this is price-fixing – that is, fixing the amount that supermarkets can charge for healthier foods like fruit and vegetables. But it is beyond foolish to even entertain the idea of price-fixing because price-fixing is guaranteed to get the situation wrong. If the price is fixed too low then demand will increase and willing suppliers will diminish, creating a shortage of supply. If the price is fixed too high then consumption will decrease, which in the case of fruit and vegetables will achieve the opposite of the desired effect. The only way to optimise the price is to leave it to market forces, which, of course, involves no price-fixing at all.

With people like Sarah Wollaston in The Conservatives, it’s little wonder that there are so many rumours about several Tory MPs wanting to follow Douglas Carswell and Mark Reckless and switch to UKIP.
 

* Photo courtesy of bbc.co.uk

 
 


Friday, 5 September 2014

Why We Don't Need An Energy Revolution



"Pessimism won’t do. We need an energy revolution."

No, no, we do not. The Guardian's Zoe Williams is worried about human-induced climate change, and insists we should invest in alternative green technology - except by 'invest' she means throw taxpayers' money at it. I have good news for her - she can relax, because the situation will resolve itself through market forces. Here's the rub of the situation. Humans are causing climate change, but they are also penalised for their carbon externalities through green taxes and numerous regulatory measures. That is to say, because prices have been changed to account for the increased emissions, the only investment that is needed is investment that is more economically viable that the current prices.

The imminent effect of those price changes will tell us the best course of action. If, for example, our ability to augment our solar capacity enables that venture to be price competitive against our current carbon industries then consumers will respond to it. If it doesn't, they won't (that point alone illustrates how State interference can only impede the process). The costs (present and future) of staying with our current carbon trends have already been factored into the increased prices of our externalities. We don't need to throw taxpayers' money at it at all - because people's preferences for economic viability will drive this, as already happens in virtually every other market process.
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