NHS Shocks & Stocks

This week we saw confirmation in the media of something that those of us with market-friendly sexual charisma have been envisioning for ages - that the NHS has been hugely criticised for the bad health of its finances (including, for local readers, our own N + N hospital which has been placed in financial special measures).

By now everyone knows that the future of the NHS is very precarious - thanks to a number of factors (which I blogged about here). But what I didn't know until reading some stats by one of the Adam Smith Institute think tank members is just how much clinical negligence there is, and how shockingly costly it is proving to be. Apparently just in the 2011-2012 financial year alone, the total cost for the NHS in clinical negligence claims exceeded £1 billion, with a further £50+ million in non-medical compensation claims. However much does this add up to if we factored in every year, even for just the past decade? Several billion pounds I'd suggest.

There is clearly a whole scope of work to be done in terms of accountability - whether it is incentivising the public to be in charge of finances that match actions to consequences, or improving the internal spending structure (like the case of Hitchingbrooke hospital where significant savings were made by spending more wisely on things like stationery in a competitive market).

The Unintended Consequences Of Trying To Help Tenants

New London mayor and arch-socialist Sadiq Khan is attempting to shore up his solutions to the London housing problem by re-loading his regulatory pistol. Part of his ammunition includes giving tenants in London properties a mandatory 6 months' notice law to protect them from expeditious landlords (it's currently 2 months, I believe), as well as bending the leader of the opposition's ear about favouring radical measures for rent controls, and even the possibility of legislating on who can buy property in London.

Regular readers will know my views on the latter two proposals, (if you're in even the slightest bit of doubt about them you can read my views in the 'Housing' tab to the right), but even the law that says landlords must give a six month notice period before evicting a tenant is not as obviously beneficial as it may first appear.

You may be under the impression that it sounds good because it protects tenants against unexpected short-term evictions. This is true, but on the other side it prohibits landlords from evicting problem tenants in quick time, so it's as broad as it is long.

But it's quite possible that the law makes both parties worse off. Suppose the law of six months' notice is equivalent to a £15 per month loss for landlords and a £7.50 per month cost for tenants (when prices have adjusted to reach their equilibrium). If a landlord has no preference as to whether he has to give six months' notice or pay a £15 per month surcharge on each apartment rented, the supply curve for flats shifts up by £15.

The extra guarantee is worth £7.50 to tenants, but a tenant generally has no preference for paying £450 per month for a flat without six months' security or £457.50 for one with additional guarantee. The demand curve will shift up by £7.50.

Consequently, then, changes in supply and demand curves mean the new price is higher than the old by more than £7.50 but less than £15. Given that this state-enforced guarantee increases landlords' costs more than it increases their rents, and since it increases the rent of the flat by more than it increases the value to the tenant, then both landlords and tenants are worse off.

It's true that there are additional varying factors in the landlord-tenant relationship that could be written about here, but the general point holds - that it is possible for a government interference implemented to protect one party to actually make both parties worse off.

In most cases a free contract between two mutually willing signatories is better than a state-enforced restriction that seeks to act on behalf of one party, because they often end up making both parties worse off. This is because, despite popular opinion, the real quintessence of business is to engender exchanges that maximise both parties' gains in the transaction.

It Doesn't Matter Who Said It, Neither Party Believes In It Or Cares About It

Theresa May, our new Prime Minister, has decided to accompany her opening few days in office with the Ed Miliband-esque slogan of a system that "works for everyone, not just the privileged few". Her doubters are already asserting that these are empty promises and that the leader of the opposition, Jeremy Corbyn, is the only one who really cares about fulfilling such a promise.

Those making such assertions are quite right that Theresa May is making empty promises, but they are wrong in their belief that Jeremy Corbyn cares about fulfilling such a promise. The reality is, Corbyn's policies are a lot further from offering something that "works for everyone, not just the privileged few" than those of Theresa May, it's just that you have to understand the process behind why this is the case. I'll explain.

I am a libertarian because I care about the poorest people in the world - and because I understand that trade and competition (either in a distal or in a proximal sense) are the main drivers of increased prosperity and well-being in the world. Everything else to which you might ascribe progress - government programs, welfare, aid, charity - are such because of the trade and competition going on (it's because of money earned from trade that government programs, welfare, aid and charity can be funded at all).

Conversely, Jeremy Corbyn and his supporters are socialists because they don’t understand that trade and competition are the main drivers of increased prosperity and well-being in the world. Socialists, whether knowingly or unknowingly, promote ideas that are inimical to the system that “works for everyone, not just the privileged few", because the policies of the socialists are policies that stifle trade and competition.

With their demands to protect domestic industries at the expense of foreign ones, to pay people above the marginal value of their labour, and to disincentivise entrepreneurial enterprises by uncompetitive levels of taxation, they favour a system that works for the privileged few (that is, a large proportion of the world privileged enough to be born in a rich place like the UK) and works against the poorest people in the world. Corbyn and his supporters proudly advocate systems of control that ensure those already winning in the global lottery of life win some more, while those already losing lose even more.

But it goes even deeper than that, because trade works for everyone who partakes in it, so not only would poor foreigners lose out thanks to Corbyn’s policies, a large proportion of fellow Brits would lose out too. When British solar panel manufacturers lose their £25 an hour jobs so that solar panels can be manufactured for £15 an hour abroad, the losers are the Brits whose wages have fallen, but the winners are all the other Brits who can now afford solar panels, and all the workers abroad who can now earn a living producing solar panels.

What's astounding is that when exactly the same logic of the trade off occurs in most other contexts, no one has any trouble with it. When Frank plays ten pin bowling with Dave instead of going to play snooker with Fred, both Fred and the owner of the snooker hall lose out. But everyone understands that trade off. When Lisa chooses to marry Pete because she thinks he'll be a better husband than Jim, everyone understands that trade off as well.

But when it is pointed out that trading with more efficient foreigners at the expense of less efficient British firms is a good thing to do, a large swathe of the population forget everything they understand about trade offs and instead declare their support for a man who wants to make us worse off and artificially interfere in this process on the basis of a misguided, insular Anglocentricity.

For those who still don't get it, I've prepared a little rationality test to examine your consistency.

1) When the polio vaccine was developed and sold over 50 years ago, the beneficiaries were everyone involved in the pharmaceutical industry that got to produce polio vaccines, and most importantly everyone who was saved from the risk of disability or death from polio. As a result of the success of the polio vaccine, there were far fewer crutches, wheel chairs, and iron-lung machines sold to polio victims. The development of polio came at a cost to everyone who made money from supplying medical aids to polio victims, but it benefited everyone else.

2) When solar panels were manufactured abroad at a more competitive rate than in the UK, the beneficiaries were everyone abroad who can now sell their solar panels and everyone at home who can now afford them. As a result of the success of foreign solar panels, there were fewer of them being produced in the UK. The development of foreign solar panels came at a cost to all the suppliers who made money from providing them less efficiently, but it benefited everyone else.

If you can see that both those scenarios amount to a considerable net benefit for human beings - fine, you are thinking clearly. If you cannot see that both those scenarios amount to a considerable net benefit for human beings, you either have a funny take on the world, or you have some brushing up to do.

I can, however, see absolutely no grounds on which someone could argue that scenario 1 brings about a considerable net benefit for human beings but scenario 2 does not, because they are both self-evidently scenarios in which humans are easily seen to be better off.

Alas, Corbynomics, with its favouritism towards artificially supplementing UK industries at the expense of foreign ones takes this very position - both he and his supporters would have no trouble seeing that scenario 1 is considerable net benefit for human beings, but they act as though scenario 2 should be treated differently.

This leads me to conclude that they are either too ill-informed to see how alike the two above scenarios are in terms of general human improvement, or that in actual fact they know how alike those scenarios are but yet they ignore that fact because they know that going against this wisdom and favouring UK industries gets them popularity and votes.

Whichever is the case, foolishness or cunningness, it is preposterous of them to try to take the moral high ground over Theresa May and her party - because not a single one of them seems to care about the letter of the statement a system "that works for everyone, not just the privileged few".

Libertarianism has the only genuine regard for a system that works for everyone, because it cares about all the people in the world, it understands that trade and competition are the main determiners of what works for human beings, and it is unbound by geographical borders and nationalistic preferences.

Oops! Someone Doesn't Quite Get This Human Progress Thing

Oh dear! I'm afraid this bit of research from the Pew Research Centre, telling us that for most people there has been stagnation in the past 50 years, because "real wages have barely budged for decades", is wide of the mark. It was written by someone who sees a very incomplete picture. We see this kind of absurd claim made time and time again, but it's facile, not so much in the speck of truth it asserts, but in the plank of truths it omits.

It is too lightweight an analysis to forget just how our earnings are linked to the substantial changes in the quality of life we've seen over the past five decades. The number of hours it would have taken to acquire many of today's basic luxuries 50 years ago far exceeds that of today. Equally, there are countless luxuries available today that weren't available to people 50 years ago, not to mention increased knowledge and connectivity, scientific and medical capabilities, amount of leisure time and increased life expectancy.

To use but one example by way of illustration - consider the Smartphone you own, and on which you may even be reading this blog post. Depending on how much you earn, it probably costs you at most one, two or three hours' wages per month. Now try to imagine how many hours' wages it would have cost you 50 years ago to enjoy even some of the benefits your Smartphone brings to your life - you could have worked for a year in 1966 and not acquired even a third of all the things you could acquire at the touch of a button while waiting at the bus stop for your ride home.

Even putting aside the immeasurable increase in convenience to your life that the instant phone calls, texts, camera and video-camera, music, movies, flashlight, calculator and sat-nav provide, imagine how many people and hours it would take to get you information on the nearest Thai restaurant, tomorrow's weather in London, the price of mattresses cost in John Lewis, whether it's currently safe to travel to Tunisia, and the countless other things you may like to know. And all that's nothing compared with the thousands of lorries that would be required to transport all the books, magazines and newspapers' worth of information available to you on your Smartphone.

Further, ask yourself questions like, would you rather live in a 1966 apartment or a 2016 one? Would you rather drive in a 1966 car or a 2016 one? Would you rather make Sunday lunch in a 1966 kitchen or a 2016 one? Would you rather be treated for cancer with the medical technology of a 1966 hospital or a 2016 one? To those questions, and many more like them, you would always choose the 2016 option.

The upshot is, only a very sub-standard enquirer looks to compare real incomes over several decades and tries to insinuate that we've been stagnating. Pick a dozen goods from a catalogue in 1966 and do the same with a catalogue in 2016 and, as well as the improved quality, figure out how long you would have to work to purchase those dozen items in respective years. The answer will be, longer in 1966. And that, along with the things aforementioned, is what constitutes the improvement, and blows the idea of 'stagnation' out the water.

One final hypothetical, purely for the fun of it: Who would be more astonished: Isaac Newton being shown the technology of Roger Penrose in 1966, or Roger Penrose in 1966 being shown the technology of Roger Penrose in 2016? It's probably a closer call than you might initially imagine.

The Philosophical Muser Goes Nuclear

MPs are set to decide on whether to renew Britain's nuclear weapons program (Trident) in a Commons vote. Jeremy Corbyn, the Green Party, the SNP and quite a few MPs scattered across the Commons are against the renewal, whereas everyone else in Parliament is for it.

It’s obvious that the world is a much less safe place with the existence of nuclear weapons – so obvious, that in actual fact it is probably untrue. When we consider which groups of people are most likely to commit mass harm with nuclear weapons, it seems fairly obvious to me that the existence of nuclear weapons in the hands of countries that are least likely to want to commit mass harm with them (Britain, America, France, China, India) are a significant deterrent against those groups that could one day want to commit mass harm with them (Pakistan, North Korea).

And that's not to mention the harm that numerous dictatorships and terrorist organisations would be able to cause with nuclear capability. Europe is still mourning the damage that one maniac did with a lorry on the streets of Nice. You just wouldn't wish to contemplate how much devastation he and his fellow terrorists would love to cause with the world's most powerful weapons. It doesn't bear thinking about.

On the issue of the world being safer with nuclear weapons - some will be eager to remind me that the only time nuclear weapons have been deployed was by America against two cities in Japan in the Second World War. This is true, but although it was a hugely devastating attack, it probably catalysed the reality we’ve seen in every subsequent decade since, that the last thing the world needs is any more nuclear attacks. To put it another way, Hiroshima and Nagasaki were probably the genies that kept the rest of the world’s nuclear war potential well and truly lodged in the bottle.

Nuclear weapons are relatively expensive, but not as expensive as the 500 years’ worth of time, effort, money and natural resources that went into creating all the world’s peaceful democracies. If there is one thing about which we can positively, definitely be risk-averse, it is this. While nuclear weapons aren’t without their problems, it is insensible to risk their discontinuation, given the cost if it all goes wrong.

We cannot prove that the existence of nuclear weapons in the hands of the world’s most stable democracies is the main reason why there have been no nuclear attacks in the past 70 years, but it’s a hypothesis we cannot afford to risk being wrong about.

Arms as the cause of war as well as the tools for war?

Last September I went away to an interesting festival in London where one of the speakers was the distinguished writer Alan Storkey. He's an interesting and very nice chap, and his basic thesis is that the market effect of arms sales, and propaganda, are the biggest drivers of war, and that excessive supply and excessive sales benefits self-interested groups like arms manufacturers, which leads to creating propaganda-based distrust between nations.

This then has the dual effect of enriching arms suppliers and creating tension between nations that makes war more probable, and consequently means the market for arms plays a huge part in creating wars and engendering mass loss of lives.

I think a lot of what he has to say in that thesis is correct, but what I think it doesn't consider is that the high-end market for arms trading (particularly the kind of sophisticated technology that can cause mass loss of life) is a fairly recent thing - only a few hundred years old - yet humans in their tribal and national groups have been warring and causing mass deaths for centuries, way before they had the sophistication to trade arms or do each other harm on a global scale.

So while it could be argued that the injection of market incentives thanks to self-interested arms manufacturers certainly has added a lot more woe to the situation, history makes it quite clear that humans have pretty much always had a tendency to be in conflict.

What about gradual multilateral disarmament?

In his book War or Peace (a play on words of War and Peace) Alan Storkey also propounds an idea for a world of peace through the vehicle of a gradual ten year, 10% per year, disarmament process involving all nations. After mobilising nations worldwide, what would follow would be UN legislation for full multilateral disarmament over a ten year period, with a 10% cut in military expenditure each year for a decade.

I’m afraid, though, that while it sounds like a nice idea, and may in fact be something that could be implemented in the future, I see many problems with this kind of idealism in the current climate, not least the fact that the chances of all nations multilaterally signing up to this project are slim. Moreover, how are we supposed to enforce it except by the means Mr Storkey is trying to diminish – by nuclear deterrent? I’m not sure it would be as straightforward as Mr Storkey imagines.  

I personally think there are too many nations that do not share this goal and are too unstable and have too much sectarianism for this to be realistically achieved. You have to remember that it took us several hundred years to get to go from feudalism to the advanced, stable, prosperous nation we are now, and it's quite understandable that the risk-aversion to even slight dangers are prominently part of a nation's national defence (plus I don't think the Americans would make it very easy for us to unilaterally decommission our nuclear capabilities, although that's a whole other complex issue).

I think a common goal of not having nuclear weapons in the world is a noble one, and not entirely unrealistic as we might evolve over the next century or so to a position where nuclear threats are a thing of the past. But it's one we are not currently ready to pursue in the manner that our anti-Trident friends wish us to.

Let's Face It, We're A Multi-Class Society Now

Economic growth has meant that in the developed world there are now more classes of people. Take Britain and America as prime cases in point. While the majority of the population were once easily categorised as either upper or lower class (with middle coming later), nowadays the elite and the upper class have split, as have the middle class, where we now have the traditional group and a new group that extends all the way into numerous tenets of the white collar groups.

 

Then there is a large group of factory workers and service-industry workers, and an even larger group of low-skilled workers whose wages need to be topped up with government in-work benefits. Lastly, there is a large group of the very poorest in society - those relying on welfare, and those for whom the prospect of a job is pretty narrow.

The reason we have more class groups (if it's even helpful to use the word 'class') is because we have more levels of industry and an increased range of working groups with varying skill requirements. This has a twofold bearing (or should do) on people in terms of progress. In the first place, the brightest, most talented and most aspirational in any group can more easily ascend upwards to the next most desirable group.

And in the second place, despite popular perceptions to the contrary, the people to be most concerned about are not the people several groups up from you, but the people competing with you in your group.

In other words, if you're in the low-skilled group your biggest rivals in the labour market are other people in your group. If a low-skilled immigrant comes into the UK and joins the job market, he doesn't disadvantage Alan Sugar or James Dyson, he disadvantages fellow immigrants and low-skilled British people.

The other factor beneficial to growth is that this new look economy has a lot more competition as businesses from all groups are competing with one another to improve the goods and services they provide.

The other system of demarcation is found in a natural caste system of establishment power. It used to be that the hierarchy consisted of military power, government power (most notably, the civil service), business power, and then cascading down to civilian power.

Given that the civilian group is always the largest group, there needs to be either a force of oppression to maintain the power, or in the case of a more modern parliamentary system a voluntary delegation of power.

 

The main change in order over the centuries is that while military power used to have leadership over government (and in some cases be the same thing), now elected governments have more authority than the military. In many prosperous countries the role of business is becoming ever-more influential in the state of affairs too.

You'll find that while in places like Europe and America this system has been well established for many decades (nearly three centuries in Europe, about half that time in America) other places throughout the world don't have such stability, as military dominance and (often corrupt) political governance are two wings of the same oppression.

 

For example, in places like Burma and North Korea and Pakistan the military oppression of its citizens is concomitant with governmental powers, as is the case in some African countries. In other African and Middle Eastern countries, the military/government duality of rule is underpinned by theocratic influences too, making the situation even more oppressive and totalitarian for the majority of its citizens.

The emergence of a multi-class society goes hand in hand with an emergent economy, where economic growth has engendered increased prosperity (in absolute gains) for almost everybody in this country. A couple of hundred years ago, almost everybody in the country was desperately poor. Now almost nobody is desperately poor.

 

It is because fewer and fewer people are desperately poor that we have a multi-class society, with at least two tiers of the middle class, and emergent services workers and an affluent working class group all doing better than ever. There's still a lot of hardship in society, but a multi-class society is one of those human constructs of demarcation to illustrate how life has got so much better for large proportions of society.

Gambler's Crime

There was an article in the Express yesterday talking about how absurd it is that criminals are receiving up to 10 suspended sentences before they are finally locked up. Yes, well, most of us know that you have to be a hardened career criminal to go to prison for any length of time these days.

The article writer asks what kind of message this sends out, if a potential offender is almost certain that he or she will not end up behind bars, there isn't much of an initial deterrent to stop them from going into crime. The key word here is 'incentives', and economics is very interested in the word. 

I remember as a child being told a neat piece of wisdom on incentives. How do you ensure that two brothers have an equal piece of a chocolate bar given to them by their mother? Get one brother to break it and then allow the second one to choose which piece he wants. That’s a sure fire way to encourage the first brother to break it as evenly as he can. The incentive is that he has self-interest in the equitable division of the chocolate bar. 

Incentives have the strongest influence when there is a tangible focal point. So, for example, in a national lottery, people will be more attracted to buying a ticket with one very sizeable jackpot (say £1 million) than with 10 smaller jackpots (say 10 x £100,000). Lottery gamblers prefer a reduced chance of a huge win over an increased chance of a less-huge win. 

The enquiring article writer would be pleased to know that this kind of psychology applies in ethics and jurisprudence too. Criminals generally prefer a reduced chance of a lengthy sentence over an increased chance of a shorter sentence.

So if you want the optimal deterrence for criminals it is better to focus on improving the rate of successful convictions more than increasing the jail sentences (although the latter may be prudent too if incarceration were to provide stronger steps towards rehabilitation and the bringing about of greater human worth, purpose and self-esteem).

Consequently, then, psychology says that a system in which an offender receives several suspended sentences before they are finally locked up would be improved greatly if there was an increased chance of being convicted and an increased chance of a prison sentence with unfavourable conditions.

It is clearly a problem that, for many, prison isn't much of a worse lifestyle than being free, particularly when offenders' feelings of self-worth make them fairly indifferent to either scenario. Therefore, I'd suggest a good balance would be to increase the chance of an offender being convicted, increase the chance of a prison sentence with not-too-comfy conditions, and ensure that rehabilitation transforms offenders' lives in a way that makes them positively not want to come back to prison.

Why There Are Too Many Sports Participants In The World

What do sugar, salt, rapists and breast cancer have in common? Answer: You can have too much of all of them, but in different degrees. Any incidence of rape or breast cancer is too much, whereas with sugar and salt, healthy amounts are good for you, and excessive amounts are bad for you. Sports stars are like sugar and salt - in moderation they are a good thing, but in excess there is superfluity, which amounts to a bad thing.

What do we mean, though, by excess? Quite simply, it's easy to imagine excessive sports stars, just like it's easy to imagine excessive amounts of pretty much anything. A world in which 90% of people were sports stars or taxi drivers or carpenters would be fraught: we'd have too few doctors, shop workers, chefs, farmers, and so forth. So it's easy to imagine what having too much of an occupation means.

It's then easier to ask, is the current number of sports stars too large? Consider if we just replaced one random tennis player and added one financial advisor to the market - the loss to the sport would be meagre (he or she would just be replaced in the hierarchy by another, slightly less good player) but the gain in the business sector would be significant.

Financial advisers have much better market incentives than sports stars. The rewards of a financial adviser (or a coffee grower, or a butcher) depend on the price of their supply per unit, which depends on the price consumers are willing to pay, which depends on the signals in the market of supply and demand. That's a sure fire way of producing neither too many nor too few of them.

Sports competitors are not constrained by anything like the same mechanism. Because of this, the reward of being a sports competitor is out of line with the value of his or her contribution. The many losing sports participants are contributing in an environment in which they are making up the numbers for the winners. This doesn't make them worthless, it just makes them too numerous.

Because we could remove 10% of all sports participants and still have the sport enjoyed almost as much, the top sports stars that reap astronomical rewards for adding only slightly more value to the sport do so at the expense of other competitors. A financial adviser, on the other hand, only reaps rewards to the same extent that price signals dictate, meaning there are almost no deadweight financial advisers in the same way that there are deadweight sports participants. The reason being, deadweight financial advisers would find the market dictates they do something else, whereas deadweight sports participants merely remain in the pool as losers.

 

For further reading, check out this blog in which I explain why top sports stars are overpaid.

Hey, Why Has No One Asked The Most Important Question About Our Next Prime Minister?

The most pressing concern for me about the Leadsom/May battle is not about whether motherhood matters in being a good Prime Minister (it doesn't, but it's something the media has been preoccupied with for decades because it thinks that reflects the feeling of the average voter), nor whether our prospective Prime Minister knows the price of a pint of a milk, and all that kind of malarkey.

No, what matters most for me is who is going to be best at pulling out the pre-scripted funnies at PMQs now Cameron has gone, and then pull that face that Cameron does afterwards when he's so pleased that he's made the house laugh?

Which of May or Leadsom will be most likely to welcome in a newly elected maiden Labour MP and then advise her to leave her phone on as she might be in Corbyn's shadow cabinet by the end of the day? Or which of them will be most likely to congratulate Corbyn (or an equivalent opposite number) on doing his share of job-creation by giving so many different MPs the chance to work in that self-same shadow cabinet?

 

Because if you're going to lead a Conservative Party that isn't in the least bit Conservative any more, against a Labour Party that is currently leaning too far to the left for even the majority of its grass roots supporters, you're going to need a decent sense of humour - and I'm sure neither May nor Leadsom are exactly going to give Voltaire, Mencken, Twain or Wilde a run for their money in leadership wit!

Two more things

On the discussion about whether the next Prime Minister needs to be someone who voted Brexit or not - I don't think so, as long as they invoke Article 50 of the Lisbon Treaty and respect the result, I don't have an issue if the PM voted Remain in the referendum.

In actual fact, playing the long game - one thing that may favour Theresa May is that when all the cross-party dissensions and media tensions are brought to bear on her leadership, a woman who voted Remain (albeit tepidly) but who steered us with some aplomb through the process of leaving the EU may actually in a very subliminal way be able to procure a modicum of connection and empathy with both sides.

Lastly, it shouldn't go unmentioned how interesting and ironic it is that the party that didn't go down the all-women shortlist route has ended up with two women contenders for PM on merit, whereas the opposition party that tried to design their representation of sexes with all-women shortlists and silly pink buses is all over the place and currently replete with second-rate female representation in senior roles, and three under-duress men at the forefront of their leadership.

Corbyn Needs To Learn The Contrast Between Two Very Different Words

On PMQs this Wednesday just gone Jeremy Corbyn asserted, as he has repeatedly before, that it's about time this government 'Invests in places across the UK outside of London'. Countless individuals up and down the country support this idea, and why wouldn't they? After all, investment is a good thing right?

Not quite. Corbyn's confusion lies in not identifying that what he's describing are not 'investments' they are 'costs'. Whatever projects he wants the government to invest in are actually costs of employing people to do things, and costs of natural resources (metal, wood, plastic, fuel) to do them. When Corbyn uses the term 'investment' he is making it sound as though he's describing the benefit of doing something, when he's actually describing the cost of doing something.

And projects that cost money and material resources only ought to be undertaken if they bring value to the country. The reason should be obvious; any labour or materials used for one thing are labour and materials that cannot be used for other things. The opportunity cost of doing x is not doing y and z.

Most of our politicians speak of creating jobs with taxpayers' money as a good thing. Using their logic, then, the more jobs they create with taxpayers' money the better it is for the country. But to see how foolish this assertion is, suppose for the sake of argument that the government is about to spend £50 million on wages for a UK Local Government building project, but then found out that they could hire a more competitive firm to do the job at the same standard for £30 million. 

According to Corbyn's rationale, the government should hire the £50 million workers not the £30 million workers, because spending an extra £20 million on the project increases the benefits of the project, and is better for the economy. It’s terribly obvious that the £20 million saved is a benefit to the taxpayer, because it can be spent on other public goods and services, as could all the labour gained be expended on other projects.

Equally importantly, whether a project adds value to our society is not a question that is best left to politicians, because in business private investors are much more likely to be prudent with their cost-benefit analyses, as it is their own money at risk.

If a project looks like a good investment, then investors can acquire the money from a bank, because a bank will usually lend if the borrower's ultimate gain from spending the money enables him or her to pay back the loan with interest. A government won't have anything like the same kind of risk signals, nor the same incentive for prudence because taxpayers pick up the costs of any imprudence.

When politicians proclaim costs as benefits, it leaves me wondering whether they are muddled economists or disingenuous hoodwinkers. Let investors invest with their own money - it is the best guarantee of value in the shape or consumer and producer surpluses, not politicians with other people's money.

This does not, of course, apply to financial donations given to the charity sector - but that is not what Corbyn means when he talks about investing in places in the UK - he means taking taxpayers' money to effectively subsidise British industries at uncompetitive rates to shut out foreign competition, and appeal to the insularities of so many regions of the UK.

Be very wary when politicians declare that they want to 'Invest in places across the UK' - the last thing you should ever do is encourage them, for they usually make us worse off in net terms, as well as making foreigners worse off too, as they lose out in the ability to trade in our economy.  

Chilcot's Philosophical Conundrum

Regarding the Chilcot report, the following philosophical point looms large in my mind. If there were actually weapons of mass destruction (WMD) but they were either a) in Iraq but undiscovered, b) moved out of Iraq, or c) destroyed (either deliberately or in conflict), there would be enough people unapprised of their existence to engender a mounting campaign of being deceived by Tony Blair.

So, do you think Tony Blair deliberately misled the British public with information he knew to be false?

I don't, actually - I think he believed it at the time, or at the very least played fast and loose with the element of doubt and the necessary caution that ought to have been employed.

Sometimes caution costs lives too though?

Indeed it can.

I wonder what those who are always banging on about the 'legality' of the Iraq war would have made of our heroic activities in both World Wars?

Yes it's a relevant question. Under the legal luminaries' pretext those wars would have been illegal too. I think it is evident from our observations of neighbouring Middle Eastern states in 2003 and before that Tony Blair and George Bush made a Dulce et Decorum est-type of decision that the intervention was their equivalent of Churchill intervening while Hitler was making plans for the Rhineland (albeit on a smaller scale).

But the two situations are hardly comparable are they?

No, and it is much easier to assert that with the benefit of hindsight. But every historical failure in preventing genocide contributes to the decision-making process. The failure in averting World War Two is one of the gravest mistakes in Western History, and it was clear that Blair and Bush were never going to make that mistake in the Middle East, especially not after observing the intentions (and in some cases, actions) of the neighbouring Middle Eastern countries. One only need think of Chamberlain's reaction to Hitler sending troops into the demilitarised Rhineland - it seems a fair point to suggest that if allied democracies had acted sooner they probably would have prevented the Holocaust.

What about Blair's claim that "The world is a safer place now"?

Yes, well, the statement is true in about the same way that the statement "Jeremy Cobyn is a UKIP politician" is true if you replace the words 'Jeremy Cobyn' with the words 'Tom Cruise' and the words 'UKIP politician' with the words 'short Scientologist'.

And what about Blair as a war criminal?

No, not a bit of it. Those who foolishly argue that Blair should be sent off to the Hague ought to consider the correlative effects if such action were taken. No future Prime Minster would dare sanction any intervention in the foreseeable future for fear of the same reprisals, and that would somewhat tie our own hands behind our back and make our enemies sit up and take note.

Fair point.

Thanks. In actual fact, we probably already have a comparable situation. One of the other main lasting legacies of the Iraq war is that no British government is ever likely to attempt an intervention process in that way and on that scale ever again.

But what about those elusive WMDs - do you think they were there or not?

Possibly. The real question you have to ask is, if they were there at some point and yet not found, how would we know about it? One cannot simply claim absence of evidence as evidence of absence. If they were there, then the almost unanimous belief in their non-existence must go down as one of the occasions in human history when the greatest number of people were mistaken.

I don't know if there were WMDs, but as regular readers of this Blog will be aware, I am not the sort of person who automatically trusts the consensual view either. I'm open to the idea that there were, because I have heard a positive claim for their existence, whereas on the other side we've only heard that a lack of satisfactory evidence for their existence is enough to rule out their existence (people do this a lot when the subject is God's existence too).

Really? Who made a positive claim fro the existence of WMD?

The positive claim for WMD was from a man who served under Saddam and openly testifies that he had WMD. That man is Georges Hormiz Sada: a retired general officer of the Iraqi air force and a born-again Christian. He has had a book published (called Saddam’s Secrets) in which he talks about Saddam’s plans to destroy Israel, his attempts to control the Arab world and how he aspired to command and occupy much more of it.

Mr Sada also talks about his own role in supervising the removal of WMD to Damascus in Syria because Saddam was worried that the Western troops would find them. There have been many other sources which expose Saddam’s complex concealment plans, and the media have nothing credible to say on this.

Hmm, but one man's word against a mountain of investigative analysis is quite meagre though.

It is, but that just takes us back to the philosophical conundrum at the beginning. I mean, it is more generally known, I think, that Saddam had a nuclear centrifuge - or at least it was in its incipient stages, which was found by US troops thanks to compliant scientists.

Moreover, there had also been emergent information about a plutonium-producing reactor in Syria which had been hit following an Israeli air-strike; it was a reactor being built by the Syrians with the help from expert North Korean engineers.

So this rather incriminates North Korea and makes them culpable for their actions in securing nuclear knowledge to rogue leaders.

It is quite worrying that America seems so impotent in the face of North Korea’s nuclear proliferation, and that they have faced no penalties for their criminal activities. That is perhaps the most trenchant argument against reticence when it comes to nuclear weapons in the international community.

The much derided doctrine of pre-emption still stands over counter-arguments – and it is supported by the realisation that once a country with a fanatical leader acquires nuclear capacity it is that much harder to do very much about it. Any exaggeration regarding Saddam’s capability does not detract from the fact that inaction was seen by Blair to have been too risky, and any misjudgement on the subject of WMD might have brought about a Middle Eastern catastrophe that was perfectly plausible with the knowledge they had at the time.

Don't get me wrong; I didn't believe it myself, even though the Middle East was (and still is) the most unstable region of its size in the world - because despite it being a horrible dictatorship, Saddam's rule did to some extent keep the genie in the bottle, particularly when contrasted with what is going on now.

Deporting UK-Based EU Migrants After Brexit Would Be As Foolish As Scratching Your Car Because You Don't Like How Others Are Driving

Theresa May is under fire for not unequivocally ruling out deporting EU migrants after Brexit, and the UK government believes it would 'unwise' to guarantee that EU migrants can stay in the UK unless they can secure a reciprocal arrangement from other European countries about Brits living abroad.

It would be absurdly imprudent to entertain the idea of deporting EU migrants living here, not to mention horrible - but for reasons that run deeper than the media is telling you. It's all to do with the free movement of people, and for that we need to start with perhaps the primary edict of libertarians - the non-aggression principle.

The non-aggression principle (while nothing like as absolute as many libertarians would have you believe) is an ethical axiom which says persons should not initiate force on other persons. In other words, your right as an individual and as a property owner must not be violated against your will.

It's a knotty issue and there are all sorts of ways (such as taxation) in which people semi-voluntarily trade off a proportion of their earnings into a state treasury fund for the perceived cross-national benefits and stability such a system brings. But generally, in a Sorites-type manner the principle holds for the majority of life.

To see why deporting EU migrants would be a bad idea, and why welcoming their ability to carry on living and working here is a good idea, we have to understand when free movement of people is a problem. Without an intelligent policy as a substratum, free movement of people can violate the non-aggression principle, because many of the citizens of the countries in which free movement is being enabled are not voluntary participants in the policy.

To take an extreme example, suppose there was a free movement of people arrangement between the UK and Somalia. With such an arrangement but also with disproportionately different size economies, populations and welfare states, there is asymmetry in the gains and losses (although one must also include the gains of the immigrants themselves).

This can lead to a situation where large swathes of people from the less-prosperous nation pour into the more-prosperous nation on the basis of a state-mandated arrangement and add all kinds of economic pressures and social duress on the citizens of the latter country.

A system that just allowed any number of prospective welfare claimants from some of the world's poorest countries into more prosperous nations would come with all kinds of strains on the health services, housing, school places, plus a drain on the economy through increased unemployment benefits and other financial entitlements.

However, a system intelligently managed whereby any citizen is free to travel, live and work in any nation is most welcome, and it would be an infringement on their liberties to have this denied to them. This is because a person going to work in another country is, by definition, bringing value to the economy in terms of consumer and producer surpluses.

Because the free movement of people policy is fairly well constructed in Europe, among nations that can offer each other beneficial migrations, we have, largely speaking, the positive kind of free movement of people where there is not too much asymmetry in the gains and losses.

So not only is it pretty evident that deporting EU migrants would be an opprobrious thing to do morally, it is also the case that robbing our nation of people that bring value to our country on the grounds that we are no longer in the EU would be a pretty foolish thing to do as well.

Of course, being a globally-minded citizen, it's important that human beings do all they can to help the world's most deprived people, and that is largely done through opening up their trade opportunities.

Alas, though, an awful lot of the problems nations face with mass immigration are problems created domestically by politicians (not to mention through their foreign policies): it is politicians that cause an awful lot of the shortage of jobs (minimum wage price controls, green taxes), the shortage of housing (over-regulated industry, environmental laws, and in some countries, rent controls), the shortage of school places (by not freeing up some of the education sector to the market of competition), and more generally, with far too much taxation.

The Dangers Of The Past's Prologue

Although media headlines are completely dominated at the moment by the EU referendum result, we still shouldn't lose sight of the fact we are currently in one of the most severe and globally unsettling refugee crises of the past 70 years.

Irrespective of domestic political leanings or views on the EU, let's never forget that we are human beings first, and that across the world right now there are hundreds of thousands of displaced people seeking a safe haven because they have suffered or have been in danger of suffering persecution by horrid groups like Islamic State or murderous dictators that run their country.

There's also a lot of feeling (correct feeling, in my view) that we in the UK are not doing enough to help refugees - particularly with the current crises in Syria, Iraq, Libya, and the countries like Yemen, Mali, the Central African Republic, Afghanistan, the Democratic Republic of Congo, Burma, Nigeria, Somalia and South Sudan that have endured decades of open-ended war and civil unrest from which many of their citizens have fled.

Because of this, there is repeated talk of whether our domestic politicians are doing enough to help (and I haven't exactly been silent on the issue myself). Given the foregoing, I thought you might be interested in this little bit of history that has been pretty much airbrushed from British and American discourse.

Once upon a time there was an initiative called the Évian Conference which was set up in response to the plight of the increasing numbers of dispossessed Jewish refugees fleeing Nazi persecution throughout Europe. Hitler's response to the conference was to say that if the nation state members (including the UK and USA) could offer them refuge he was ready to put them at their disposal and even send them on ships if necessary.

In response, most of those nation states were extremely reluctant to take in very many of the persecuted Jews - a mistake that was exacerbated when shortly after in that same year Britain and France gave Hitler the right to occupy the Sudetenland of Czechoslovakia, which led to a further 120,000 Jews becoming stateless.

After a multi-national failure to deal with the problem of so many persecuted Jewish refugees, we all know what happened next - Hitler dealt with them through his genocidal Final Solution, in which he systematically looked to eradicate as many Jews as he possibly could, and ended up exterminating two thirds of Europe's Jews.

One hopes that we'll never see anything so horrific on that scale again - but it's certainly a sobering lesson regarding the hell that can be unleashed when political leaders are casual and reticent about offering refuge to some of the world's most persecuted people. Let's hope we don't find what Antonio and Sebastian found in Shakespeare's The Tempest when conspiring to kill Alonso the King of Naples - that, unfortunately, "What's past is prologue".

If you're familiar with The Tempest you will recall that Antonio and Sebastian were thwarted by Ariel. Politicians by nature are usually narrow and provincial, and internal in-country political disagreements (what Freud called 'the narcissism of small differences') often means they are allowed to get away with most of it.

Consequently, unless we become a nation of caring and kind individuals that is outwardly vocal about wanting our politicians to represent that care and kindness in helping the world's most vulnerable people, they will continue to get away with their far too indolent attitude towards the refugee crisis. And given that there are some forces in the world who desire to unleash a hell even worse than that of Hitler, indolence and complacency is not something we should allow to continue.

Just Like The Kernel Of Wheat In Jesus' Parable, The Dead Seeds Of The EU Must Be Sown Into The Earth

Today, thousands of people with scant regard for democracy are marching through London to protest against the democratically voted for referendum decision to leave the EU. Putting aside the issue of valuing democracy, the people who voted Remain, and the people who voted Leave that are now regretting it, are worried about the future post-Brexit. They should not be, particularly once they get a handle on the bigger picture that extends several decades henceforward.

Sometimes a little bit of pain is required to prevent even more pain. If your young child comes to you with a splinter in his thumb, you know the best way to deal with it is to get it out from the under his skin straight away by pressing down on it with your fingernail.

Your young boy may resist the added pain, but you know that what is causing him that extra pain is actually reliving him from worse pain, soreness and possible infection in the long run. This is what is happening with our leaving the EU - we are getting out at a time when very few people understand that it is a gradually crumbling empire, and that in its current state it is going to have to eventually die before its constituent nation states can live.

Brexit will almost certainly set off a domino effect of other nations joining us with their own exit in the next few decades. It will be a slow dismantlement of the EU, but it is almost inevitable that it will happen, for reasons I talk about in greater detail in other Brexit-related blog posts. 

Don't misunderstand, I have no time for all the anti-immigration bile going around, and I'd hope that when the other nations follow suit and join us outside the EU that they'd do so because they can see how even more prosperous our nation becomes with independence, not under the influence of the plethora of extreme right-wing parties gathering momentum in the north-western European countries. But for the good of the continent, individual nation states need to save the EU from itself: it is stagnating, it is unsustainable by being inimical to growth, and no nation past or present that has copied its model has seen anything other than economic disaster.

Playing the long percentage game, with the exception of Germany, France and possibly Belgium and the Netherlands if things go their way, the majority of the EU countries are almost certainly going to trail behind the world's emerging nations in the next few decades, and it's for five main reasons.

Firstly, in a wider global market with most countries more actively involved than ever before, cross national competition is going hinder set-ups like the EU that impose tariffs against imports from non-EU countries.

Secondly, the market for consumable goods is steadily shifting away from Europe towards Asia, which will give them the advantage in the market for future consumables too.

Thirdly, the single currency (the Euro) ultimately works far better for Europe's big players - but it is in many ways a hindrance for the rest, which means Germany (in particular) is going to be involved in a lot more Greece-like scenarios as the predominance of the market shifts Eastward.

Fourthly, and this is a development of the second and third points, as the market predominance shifts Eastward, the quantities of advanced engineering products that Germany, Belgium and the Netherlands sell to China are going to diminish as China becomes the leading player in advanced engineering in the next two or three decades. And this won't necessarily be the case, but the yuan is the only realistic trading currency in the world that could become a gold standard.

Fifthly, the whole continent of Europe has a serious fiscal crisis in that it is catastrophically failing to restrain the pressures of increasing government spending with an ever-aging population. The tax burden necessary for a society of this kind is going to be severely detrimental to the economy even if it were a free trade area with the removal of barriers.

However, given that it's not a free trade area, it's a customs area under the thumb of a political superstructure that erects a common tariff bloc around its member nations and robs them of open trade with the rest of the world, I think we can replace the word 'detrimental' with the word 'ruinous' economy.

Forget for a moment about the world we do actually live in - the one where politicians, bureaucracy and establishment-interference is ingrained in our expectations - and consider this question. Why should the UK leaving the EU cause any market instability at all? To answer honestly is to admit that, it shouldn't, and that what's causing the bulk of the problems is the size of the interference in free trade of the politicians, bureaucracy and establishment-interference in the first place.

The moment we decided to leave the EU, nothing about the UK's productivity or its businesses' ability to create value changed. It's as not as though there was a national flood that drowned out the UK's commercial activity. When everyone awoke the following day they woke to the same physical UK. The big thing that changed, however, was that the EU, which regulates countless details of our exchanges became, in potentia at least, a different kind of obstacle for buyers and sellers to trade freely.

Moreover, the attitude of Eurocrats since Brexit was announced gives exhibition to the very reasons it was good to leave them in the first place. The reaction to the prospect of their not having such a big say in our lives, plus their threats of even bigger impediments to our free trade by further taxes, tariffs and social restrictions, demonstrates not just why we're better off out, it also gives a future hint of the fragility of the foundations on which its structure of constraint is built.

As long as each domestic government oversees the basic necessities of light regulation to protect consumers from any of the undesirable things that might affect a mutually voluntary transaction (trades description issues, health and safety breaches, quality of product, and so forth) - basically all the things that we as consumers wouldn't wish to be victims of due to asymmetry of information - there is absolutely nothing that prohibits mutually voluntary and beneficial trade between two people or two nations except the unhelpful constraints imposed upon them by politicians, bureaucracy and establishment-interference.

What we are in danger of is a self-fulfilling prophecy of doom, whereby pontificating about how troubled economy is going to be creates an insidious social instability which affects business and outside investment, which precipitates the more troubled economy for which everyone was blaming the opposition.

What we need, however, is to be smart and resolute, and understand that the freer we can be in becoming even more of a global trade power, the less turbulence we'll see in our economy, and the more other EU nations will begin to see how, in extricating ourselves from the union, and enjoying more mutually beneficial trade relations and increasing our status as dominant global economy, they too can follow suit and help signal the beginning of the end of many of the ways that politicians, bureaucracy and establishment-interference place unnecessary constraints on our lives.

Mark my words, here is what's going to happen - and I probably will be quoting this in a few years' time. After the expected volatility and instability over what people seem to be referring to as 'uncertainty', England (possibly without the union of Scotland, Wales and Northern Ireland, although they'd be mad to divorce us to become wedded to the crumbling EU) will be thriving with their improved global trade relationships, and perhaps (if our leaders are wise) a healthy attitude in not restricting the movement of people, goods and services in Europe.

Then, bit by bit, as the EU political union becomes ever-more precarious, and as more and more countries start to desire autonomy and obtain the domestic economic stability to break away*, the EU as we know it will fold in on itself, as Europe's nation states gradually claw back their ability to play to its market strengths outside the EU bloc, and as everyone gets wiser and wiser to the fact that models like the EU model just won't be sustained for longer than a brief-ish passage in humans' trajectory of gradual progression, less involvement by the establishment in their lives, and increased freedom and liberty.

* No one could have failed to notice what the Eurozone crisis has done to the likes of Greece, Italy and Spain.

Why Most Party Leaders Are Probably More Extreme Than The Average MP In Their Party

Today I stumbled upon a very interesting paper, in which the author Andreas Murr from the University of Oxford predicts that according to a Bayesian analysis there is a 95 per cent probability that having the larger winning margin in party leadership elections increases the chances of winning the General Election, and that the party leader with the largest winning margin will almost certainly become the next Prime Minister. Murr was one of the few people last May to predict what most people didn't expect - that David Cameron, not Ed Miliband, would be Prime Minister for the next term. 

What, then, does that say about the best kind of leader for a party to have? It's certainly a pertinent question, given that at the time of writing the Tories are looking to elect a new leader after the EU Referendum result has rocked their party, and that Labour is in a shambolic mess under Jeremy Corbyn.

Because politicians only exist by virtue of votes, popularity is the main driver of political rhetoric. If an idea is socially unpopular then any politician that holds it ensures he or she is stuck on the fringes, eliciting ridicule or opprobrium among the majority (a good example is Nick Griffin of the BNP). To hold such a position means you depart from the electorate's view of what mainstream, common-sense politics is all about.

By equal measure, once an idea is socially popular, anyone that departs from it is likely to be accused of being a socially toxic person. Given that party members want to be valued by their tribal group, the opinions each member holds are more likely to be in line with what they perceive the general opinion to be (obviously things like the EU referendum throw up spanners in the works).

If dissenting voices are known to be suppressed then there is usually a prejudicial reservoir flowing through the party, which increases the likelihood that the leader is going to be slightly more extreme than the average MP or party member.

But also, given that leaders are so important to the party's chances of winning an election, and that the principal goals of a party are to ensure in-group solidarity and cohesion (as much as possible) and to be popular enough to form a government, I suppose the goal of all parties is to have a leader that best represents a kind of weighted average of the nation, rather than a leader that best represents a kind of weighted average of the party, which also adds weight to the idea that the leader is likely to be slightly more extreme than the average MP or party member.