These Paroxysms Of Lust Over The Public Sector Are Truly Baffling

It constantly amazes me that there are still so many people in the UK who live under the long-refuted misapprehension that public services are better than the more competitive, efficiency-inducing private sector. Currently making the headlines at the minute is the news that if he got the chance Jeremy Corbyn will commit to bringing all rail franchises back into public ownership. I saw two articles out yesterday that give well-argued reasons why railway nationalisation is a bad idea – one from the Adam Smith Institute’s Eamonn Butler (see here), and one from the IEA’s Philip Booth (see here). I’ve also written a couple myself a while back, which you can see if you access my ‘Transport’ link on the side.

Despite many compelling arguments, one area that neither Mr Butler nor Mr Booth considered is the area of opportunity cost, which is what we consider when we factor in what isn’t done as well as what is. I'll explain. There's a well known comment by economist Milton Friedman who wanted to rebut the idea that if soldiers enlisted in the army for money rather than duty they would be mercenaries, because to join the forces for money casts an aspersion over their commitment and patriotism. Friedman refuted the idea that a paid volunteer in the army would be worse than a conscripted member by pointing out that compulsory conscription isn't impassioned patriotism either, as forced servitude also does not contain the volitional incentives for serving one's country with impassioned patriotism. Friedman said the following:

“In the course of his [General Westmoreland’s] testimony, he made the statement that he did not want to command an army of mercenaries. I [Milton Friedman] stopped him and said, ‘General, would you rather command an army of slaves?’ He drew himself up and said, ‘I don’t like to hear our patriotic draftees referred to as slaves.’ I replied, ‘I don’t like to hear our patriotic volunteers referred to as mercenaries.’ But I went on to say, ‘If they are mercenaries, then I, sir, am a mercenary professor, and you, sir, are a mercenary general; we are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.’ That was the last that we heard from the general about mercenaries.”

This kind of wisdom is the kind needed to show why proponents of government-run services overestimate the benefits and underestimate the costs. To show where they've gone wrong we need to see why the question of whether voluntarily paid soldiers or conscripted soldiers cost the nation more. Friedman showed that conscripted soldiers cost more by showing that costs are not the same as expenditure.

The expenditure of an army soldier is what he is paid in salary, whereas the cost of an army soldier is how much his being in the army robs society of the skills and abilities he could otherwise put in. Those who've chosen the armed forces are those who are getting paid for their chosen vocation; those who are conscripted are those who are now not free to do what they'd otherwise be doing.

When Elvis Presley was conscripted in the army, the cost of that conscription was whatever he didn't record or film whilst in there. If he'd been denied the reported $200,000 he was paid for shooting the film GI Blues then his conscription cost would have been $200,000, and the expenditure would have been whatever his military salary was (Muhammad Ali on the other hand refused to be conscripted on grounds of religious beliefs, which cost him personally his boxing title).

Alas, the politicians like Corbyn who are calling for re-nationalisation of the railways would do well to become mindful of the difference between costs and expenditure regarding government-run services. Not only do we see greater inefficiency and waste in government-run services due to the credit-guarantee that comes in the form of taxpayers, we see that government expenditure can't be considered without also considering cost too. The expenditure for nationalised railways is evident - although the extra costs, like pension contributions, sick pay, holiday pay, human resources costs, and so forth are usually overlooked, as are labour costs by being treated as beneficial jobs rather than expenditure (which is what they actually are). It's the costs that really bring about the inefficiency.

The cost of having 'conscripted' private sector employees in the railway is the cost of what they would be doing if they weren't being paid by the taxpayers. It's true some might be working in the rail industry, but they would be being paid by private company expenditure not taxpayers expenditure. So to put the analogy to effect in a more general sense, the cost of being nationalised is the cost borne by what those workers would otherwise be doing were they not funded by the taxpayer.

The other reality check pro-nationalisers need is over the issue of why the railways system is as it is. Train tickets are not priced as they are because there are private operators - they are priced as they are because the subsidies that used to keep the prices lower have been reduced. Whether the subsidy is increased or not, it is not an argument for re-nationalisation, which means running at a loss for the taxpayer, and more inefficiency too.

It's true that rail fares have crept up, and it's true that trains are delayed, they break down, tracks get damaged, and carriages get overcrowded, but to think that these problems are caused by not having the government in charge of the railways is really quite ludicrous. Consider prices – everyone’s favourite complaint. The complaint the rail fares are hugely overpriced, and that a government-run service would bring this back in check is overinflated, because the current profit margin for train operating companies is only between 3% and 5%. Ignore the fact that if the government makes no margin it becomes a very precariously run (and costly) enterprise – at 5% profit margins, a reduction of up to 4% on your train ticket is hardly going to amount to the kind of huge saving many imagine.

As for the issue of over-crowding (another favourite from people who think the trains run inefficiently), they may have missed the fact that the railway network is, actually, nationalised, it is only the train services operations that are tendered out privately. Given the limit on how many trains can viably enter a station at any one time, it is foolish to blame the private franchises for over-crowding. If anything, the sensible pricing that offers cheaper off-peak fares for people who are less price-sensitive or able to travel more leisurely under fewer time constrictions is exactly the kind of competition customers ought to value.

Consider that the government runs a comprehensive school monopoly and there is a shortage of teachers, but that shortage hasn't hiked up teachers' pay. Doctors, surgeons, lawyers and accountants all work in a prolonged qualification-based arena in which it is hard for competing forces to challenge, and that is not due to privatisation, it is due to scarcity. Also, scarcity power (which is what makes prices high) is not absent in government monopolies any more than private monopolies.

The paradox of competitive private industry is that it often starts as a nationalised company (as all the providers in the UK did - electricity, gas, telephones, water, etc), because otherwise there are few providers able to build the initial infrastructure to get their business off the ground. Generally, without governments' anti-monopoly policies one firm would rule because it costs so much to start a business that competition ends up costing too much to compete. For example, suppose no one was providing any large-scale water supplies around the UK. Thinking of economies of scale - to produce tap water, an aspiring water company had to invest in a huge network of water pipes stretching throughout the country. The fixed cost of this investment is very high. However, once in place any company that can distribute water to tens of millions of households brings the average cost down. Yet it often would not be worth another water company building another network of water pipes to compete with the existing company, because if they only got a small share of the market, the average cost would be very high and they would go out of business This is an example of a natural monopoly – but these largely occur when the goods or services provided are not fungible (see below).

That's why it's not always bad when the government first owns the means of production and then gets to the stage where it can sell off the rights of provision to competing companies, whilst stipulating a rule that they must compete for shares in the existing infrastructure.

What conditions this process is whether or not the good or service is a fungible one – by which we mean whether or not that good or service is easily replaceable in competition. The trouble with rail is that it is not a fungible good in the same way that food, clothes or cars are. If you need to take the train to London to Norwich you can't suddenly decide to purchase a vacuum cleaner instead and still get to Norwich, whereas if you're hungry and on arrival you find that sausage rolls at the station are too expensive you can buy some fruit from the nearby supermarket. Similarly, if the price of BMWs or leather jackets become undesirable, there are plenty of other alternatives you can seek, like Fords, Vauxhalls, wool or denim.

With trains things are not quite the same. The only competition for your train fare is other transport alternatives – driving, getting the bus, or occasionally cycling. But the competition in the railway services is not fungible: if you’re at Norwich station looking to get the 7:20am to London, you will not have a choice of trains like you will a choice of snacks and drinks in the nearby shops. A private monopoly or cartel that provides a service (like trains to 25 million people) is very hard to break, as competition for such a service is hard to generate. It's very costly to start up a rival firm to provide 25 million rail customers, and any small firm can be swallowed by being bought out by offering shareholders bigger shares in the larger company, as SKY TV did. Moreover, the fact that profit margins are under 5% shows that rail travellers are not getting ripped off - it is just simply the case that railway services are very expensive to run, they require lots of investment, and are large scale operations - and as such, they need to be run with the kind of efficiency that only the private sector is going to deliver.

My Favourite Metaphor For Evolution

Scientists have just published an incredible 'Tree of life' for 2.3 million species - a grand achievement in itself (see link at the bottom of the page). The tree of life is one of the very apt metaphors for evolution of life on this planet over several billion years - the other one is the web of life. Both are good in their own way of metaphorically illustrating patterns of evolution from the origin of life right through to the rich variety of life seen today - all of which share the same common ancestry.

My favourite metaphor, though - one which I don't think anyone else has used in relation to biological evolution - is what I call the 'cloud metaphor' for evolution. Scientifically the water cycle is an easily conceivable pattern. Our sun heats the earth’s water; water evaporates into vapour into the air; clouds are formed after the air currents that take the vapour up into the cooler atmosphere condense; those clouds precipitate after growth and collisions in the higher atmosphere, producing a water cycle for the earth. The cloud metaphor based on that cycle is already a very popular one in common parlance. We have distilled terms like ‘casting a cloud’ over a situation, to mean a negative occurrence, or ‘clouded’ to become troubled, or ‘cloudy’ blurred, or ‘clouded’ in suspicion. Nowadays we even have cloud-computing and web data stored in the 'clouds'. How can we apply that to biological evolution?

In the material realm of physics, chemistry and biology, metaphors are there to provide illustration and visualisation to mathematical models. In evolution we are used to the tree of life or web of life metaphors, because the phylogenetic 'tree of life' is good for studies of taxa and the many ancestral lineages (although in some cases, with cladistic ‘hierarchies’ it may be difficult to practically place species in their correct topological relations, even though the theoretics are robust).  But as for evolution as a whole, in what they call 'morphospaces' - a term coined by Matt Ridley - one can zoom in further on the mathematical details, whereupon we find my cloud metaphor comes into its own. I find it to be a beautiful metaphor, and I suspect the only reason we don’t use it much is because its complexity is difficult to conceive. 

Trees of life provide easy branching effects, whereas clouds of probability are much more like the studies of equilibrium and disequilibrium in thermodynamics, where small pockets of order cause slowly populated genetic algorithms that facilitate evolution. This is like a ‘cloud’ of probability searching the space and finding the states of survival systems.  Clouds, of course, are dynamic objects - they do not have a singular position or formation, they have no single coordinate or single velocity - they have a smeared formation over a complex volume of activity and internal movement, and they are continually in states of probability, which makes the metaphor for evolution at a mathematical level particularly compelling because it aptly describes how the laws of physics direct the evolutionary process, as random walk statistics are factored into the dynamics of the probability cloud. Because the laws of physics are driving evolution in morphospace, it means that the particular mathematical weighting on the construction paths is providing those stable pathways, due to the search space being severely skewed by the constraints placed on the system by the laws of physics.

So where in the tree of life metaphor, addition, subtraction and division would be modelled on natural selection, mutations and the consequent genetic variation – in the cloud metaphor it is more closely related to computations that program genetic algorithms, and the laws of physics acting as the programmer.  With this one mass of vapour that we observe in nature’s water system we can constructed a very rich and diverse range of metaphorical ideas from what we observe in nature.

  * Here is the full 'Tree of life' article

Let's Finally End This Myth About Thatcher

When myths are widespread, it's good and necessary to prick the balloon of illusion. Perfect cases in point are these anti-Thatcher memes that used to pervade through the jungle of left wing social commentary. Given that all of the world's most successful economies got the way they did by adopting the things Thatcher espoused*, one would think it should be rare to meet people who are still aboard the anti-Thatcher bandwagon. However, to my surprise I met someone last week who believes Thatcher ruined our economy and made people generally worse off through her industrial policies. When I shared this on Facebook it emerged from the resulting thread that this anti-Thatcher rhetoric is still alive and kicking.

Alas, anyone with even the sketchiest understanding of economics would know why this myth should have long been put to bed. The reality is, the reason Thatcher's economy was a terrific success was largely down to her government’s understanding of the relevance of the works of the likes of Smith, Ricardo, Bastiat, Hayak and Friedman - which, to put in a nutshell, state that global trade, competition, private industry, low taxes, a small State and hard work are the key tenets to a successful economy. It was because of the Conservatives' embracing of these qualities that, despite popular myths to the contrary, Britain actually manufactured more under the Thatcher years than in the decades that bookended her time in office, and increased its public spending in that time period too.

Since the Second World War, and the foundations laid down by the Clement Atlee socialist government, Britain had been awash with economic hardship and putrid nationalisation projects that were being choked by overly-powerful unions. This went on until the 1979 Thatcher years, when she and her party upset a lot of people by transforming an economically impotent Britain into one of the world's economic superpowers again**. It's true that a lot of this comes from, and remains in, London and the South East - but power law distributions make this unsurprising - the whole point is that Britain is an economic powerhouse once again, and it's largely thanks to Thatcher's terms in office in allowing the free market to bear the fruits it couldn't under a stultified socialistic system.

What needs to be grasped is that although the industries most constantly talked about (like coal and steel) declined as a proportion of the aggregate economy, other sectors (like service industries) expanded. To capture the point, next time you’re in London – the country’s economic epicentre – have a walk around and see how many sectors are providing steel, coal and timber compared with service-based goods.

You might also like to note that this isn't a pro-Thatcher bias - the exact same thing happened in all the other prosperous economies too - it's just the way the world was changing. When steel and coal industries declined across Europe and America, that declension was offset by huge expansion in service industries, in every case making the countries in which this was happening richer. The Thatcher government had a strategy to discontinue unprofitable industries - as all governments should with their responsibility to its taxpayers - because despite emotional attachments up north, this unprofitability couldn't carry on under the pretext of it being British unprofitability (replace 'British' with 'white men' and see how it sounds a lot like racism)

The reality is that due to the changing landscape, Britain's coal industry had been declining long before Thatcher. In fact, it's quite famously known that more coal pits were closed under Wilson's Labour governments than under the Tory Thatcher's ones. The reason is obvious - but also widespread across other advanced economies - we saw not only the rise of cheaper coal abroad, but also the rise of first oil and then gas and later nuclear as less ecologically unfriendly sources of power. With that comes a decline in industries that relied on coal, in favour of industries that relied on oil and gas.

A few crazy trade unionists would have preferred to have kept subsidising inefficient and less profitable coal mines (and have the taxpayer pay to prop them up), all in name of Britishness, but as well as sounding a lot like racism to me, it is certainly illogical and economically short-sighted.

I don't dispute that much of what happened to the UK under Thatcher was a hard pill for many to swallow, as jobs were lost, families broken up, communities' clubs shattered, and so forth - but equally what holds us together is going to have to be much more than industrial nationalism. In global economies, climates change all the time - and we humans have to adapt to those changes. Coal mines were shut down because coal could be bought cheaper from abroad. Cheaper coal is better than expensive coal for the one buying it, irrespective of the country from which it happens to come. Trade should have no national preferences, and generally coal mining in the UK is expensive compared to open cast mines in countries such as China, Russia, India, Australia, and Indonesia. It’s the old Adam Smith wisdom again - you can try to produce wine in Scotland, but much better to produce it in vineyards in sunnier countries like France and Italy.

What’s usually the case, as is with Thatcher’s critics, is that they have missed most of the costs and mistaken the benefits for costs, by having too narrow a vision in supporting the parts of the economy that are not healthy (which not-coincidentally, often seem to be the particular industries in which they find themselves). It's no use being emotionally affiliated to an industrial factory that's costing us money just because it happens to be one’s own, or because it happens to be based in one's own country

The argument that supports why enhancing the global connectivity is good for all economies is the same argument that supports why market economics on a global scale is more efficient than the Darwinian natural selection model for economics, and why Thatcher's critics have got it wrong - it is the efficiency of the relationship between prices, supply and demand. It is foolish and impractical to favour bailing out and propping up industries in Britain, when Britain (and the rest of the world) can benefit more greatly (and has benefited more greatly) from the efficiency of the relationship between prices, supply and demand on a global scale. Making good use of the efficiency of the relationship between prices, supply and demand on a global scale is the more or less the same as making good use of the efficiency of finding improved technology. Whenever a government departs from this mandate by trying to artificially improve industries on the basis that they happen to be 'our national industries' (as the Labour Government of the 1970's tried to do) it only succeeds in diminishing the extent to which opportunities to improve everyone's welfare exists.

Competitive markets is what brings about the allocation of resources with maximum efficiency.  Adam Smith showed in his seminal Wealth Of Nations that the different ways to allocate resources is only maximised to the best effect when competitive markets function freely (for further reading, this has also been proven mathematically by Debreu and McKenzie). 

There may be plenty of reasons to criticise Mrs Thatcher – but claiming she ruined our industry is not one of them – because, in fact, the opposite is true; she helped enhance our economy in ways that seemed unlikely in 1979.  To criticise her for that is as foolish as criticising all the people driving safely in China and India because you happen to prefer car crashes in Britain.

There is one simple reason why British manufacturing of consumable goods has gone downhill, and if you don't get this point you're not getting the whole picture; manufactured goods acquired from other countries makes Britain richer as well as making the exporting countries richer too. In the vast majority of cases the price system in the competitive marketplace couldn’t have favoured the companies that are no longer manufacturing in Britain – quite simply because consumers started to buy from cheaper manufacturers abroad.

Let me offer a schoolboy example that shows the logic is correct. Pretend that instead of two countries we have two schools – School A and School B, neither of which is permitted to trade with the other. Johnny at School A has a monopoly on pencil cases. Johnny can sell Billy a pencil case for £5. Now because of a new policy which enables School A to trade with School B, Billy can now buy a pencil case from Charlie in School B for £3. Johnny has two choices, he can match Charlie’s £3 selling price or he can find something else to trade in. If he chooses the latter he will ensure he is no worse off than a £2 loss, otherwise he might as well choose to match Charlie’s £3. So the worst case scenario is that Johnny carries on trading, losing £2 per unit. Billy’s £2 gain matches Johnny’s £2 loss, so there is no net gain or loss. But now consider Freddy at School A.  Freddy, who was never willing to pay £5 for a pencil case, buys one for £3 from Charlie in School B, and goes home happy (as does Charlie with another sale). 

Billy’s gain and Johnny’s loss cancel each other out, but Charlie’s gain amounts to a net gain.  The logic is compelling and simple – in net terms both School A and School B benefit from being able to trade with each other. Instead of two schools, relate that model to every country in the world, multiply that simple pencil case model by factors of billions to allow for an open and competitive market, and different countries’ resources, strengths and geographical positions, and it is obvious that each country benefits from unconstrained trade potential. 

But that’s not the whole story; I have only said why free international trade is good for economies. There is another important factor in this picture – impeding the process of free international trade actually harms the people the government wants to protect – its own industry (and thus, its own citizens). Here’s how it happens. Let’s use a simple and extreme illustration to explain what is a more complex but no less valid truth about why government interference is bad.

Let’s suppose there is a car factory in Newcastle that isn’t doing as well as the Executives or the Government would like, due to consumers’ preference for cars in Japan. The Government introduces a policy that favours car production in Newcastle over car imports from Japan.  How on Earth could that not be good for the British economy – Britain’s gain is Japan’s loss, right? Wrong. Quite simply, what you put into the pockets of the car factory in Newcastle you take out of someone else’s pockets elsewhere in Britain (as well as having people probably paying more for their cars). Consider Slough’s boiler factory; what you don’t see is an almost invisible chain of events; the boilers made in Slough are shipped off to Japan and sold to a company that makes its money producing nuclear reactors, the buyers of which are companies who trade in mineral oils, and those companies deal with companies who make cars in Japan and ship them to Britain. 

In other words, there is a complex economic process that is going on outside of your peripheral vision, whereby both the car factory in Newcastle and the boiler factory in Slough are both bringing cars into Britain. That is to say, if you protect the car factory in Newcastle from competition you must damage Slough’s boiler factory because somewhere down the line they are the competition. So the next time you hear a politician announcing how much he or she wants to do to protect British producers in one industry from foreign competition, be aware that he or she is unknowingly proposing an action that hurts other industries in Britain, and amounts to a net loss in economic efficiency. 

Finally, I'll leave you with a passage I wrote in this blog about the benefits of global trade and how it is similar to the innovations of new technology:

"Finding someone who will do the job for less is a good thing for the economy in a similar way to how improving technology is good for the economy (and in most cases it’s a good thing for the person doing the work too – because having accepted the lower wage job, one presumes he did so because the terms offered were an improvement on his situation prior to accepting it).  In fact, not only is finding someone who will do the job for less a good thing for the economy in a similar way to how improving technology is a good thing for the economy - they are more or less the same thing.  Here’s why. 

Suppose you have a car factory in Manchester, and on the staff team you have 3 innovative engineers; Tom, who designs a machine that assembles the engine valves 25% quicker than the current machine; Dick, who synthesises two compounds that vastly improves the engine oil’s ability to clean the engine; and Harry, whose newly constructed equipment can make seatbelt holders at £2.60 per item cheaper than the current equipment.  I think you’ll agree that those three advances have improved the car factory in Manchester.  And having agreed, it stands to reason that if you want to be consistent you are compelled to agree that finding cheaper ways to employ people is also good for the economy, because it’s the same thing.

When we outsource the work attached to call centres, medical data analysis, computer software design, electrical engineering, and so forth, we are doing something very similar to Tom, Dick and Harry’s improvements in the car factory in Manchester.  That’s the wisdom that it seems too many people miss; new business and trading links across the world are good for the world as a whole, just as new technological innovations are good for the world as a whole.  Hopefully in our lifetime we will get to live in a world in which we see the end of discrimination against total strangers because they happen to live in another humanly constructed geographical border.  Economics favours it, and so does human kindness and decency."

* This is about the empirical nature of economics and the results seen globally when governments learn how to engender freer trade, less state interference, lower tax thresholds, fewer barriers to trade, removal of cronyism and other vested interests and the encouragement of competition. Off the top of my head the two countries that are not embroiled in major instability or civil war but that have departed furthest from those qualities are countries like Cuba and Venezuela - and one can see clearly how undesirable it would be to live in either of those places (you might add North Korea to that too).

** Then Labour, particularly under the Brown era, tried to repeat the mistakes of the 1970s, with irresponsible spending and unmindful borrowing concealed by stealth taxes and misjudged accounting, injecting copious amounts of credit into the system which gave false signals about the cheapness of money and prudent borrowing.

Science Is The Missing Currency

As has often been said on here, the key drivers in the increase in prosperity and the mass reduction in poverty throughout the decades are the free market, increased trade opportunities, increased scientific and technology advancements and increased population. That is to say, you’ll find a causal relationship between each of these things and to what extent a country is able to prosper from them.

Increased population is hugely beneficial in being conducive to progress, except for in countries that don't have an abundance of the other qualities (I explained that in great detail in this blog post). And the nations that enjoy a healthy, competitive free market and abundant trade opportunities have a long history of being the ones that advanced first, and continue to prosper. However, much of that is commensurate with their scientific and technological advancements too – and this is not often considered as much as it needs to be, as a healthy market requires a healthy scientific development to propel its growth.

The key point here is that in a world in which a global market is pretty well established for most countries, the developing countries' progression race is likely to be decided in no small part by how scientific the country is - particularly in terms of money put into research, and the extent to which that research can bring them into closer competition with the bigger players in the global market.

The primary European nations (England, Scotland, Germany, France and the Netherlands) that dominated the market for trade in the late 19th century were also all the biggest players in terms of scientific endeavours too (joined by America shortly after). They remained the nations that lead the way in the global market, and were later joined by the likes of Norway, Switzerland, New Zealand, Canada, Sweden, Australia, Denmark, Belgium and Finland. Excluding China, which is an exception all of its own, the other recently developed countries that have the biggest edge on the developing world nations are the smaller countries like Japan, South Korea, Hong Kong, Israel and Singapore, which, unlike India, Brazil and Russia (prior to its own internal problems) are able to advance scientifically with a great degree of rapidity, and become big players in the global market without having a large proportion of the population still at the subsistence level.

The upshot is, we know full well that the free market, open trade, a stable government, rule of law and property rights are all key drivers in the increased prosperity and well-being of a nation’s citizens – and history has repeatedly shown that a lack of these things retards progression. It’s quite understandable why: a nation with internal civil conflict, threats of crime and social instability and a corrupt government (as well as geographical disadvantages like being landlocked) is going to find that trade is hindered by these things. You’re less likely to have a country of innovators if there is widespread fear that there is little protection from the state, or strife and unrest among your fellow citizens, or difficulty in imports and exports due to conflict.

But what’s not considered anything like enough is that a key vehicle for a nation's progression is a healthy scientific apparatus, including prodigious scientific investment in training and infrastructure. Having a growing scientific program doesn't guarantee a nation's progression, but not having one pretty much guarantees that the nation in question won't grow very fast until it acquires one.

But even though all that is true, the picture of the changing world in terms of free market progress and scientific global development is pretty astonishing.

 

Here's what it shows. In the 19th century, extreme poverty — defined here as living on less than $1.25 a day — was the pretty much the norm (and yes, this is adjusted for different purchasing power in different countries). In 1820, 94.4% of humans were below that line. Only a small fraction of the world enjoyed standards of living that were not terribly hard. So progress was initially a snail's pace, and by 1910 the share had only been reduced down to 82.4% — a 12 point drop over 90 years. But things picked up after the Second World War, and 89 years after 1910, only 28.9% of people were in extreme poverty. That is to say, from 1820 to 1910 there was just a 12 point drop, whereas from 1910 to 1999 there was more than a 53 point drop. In 2011, the most recent year represented in the chart, the extreme poverty rate had been cut to half its 1999 level: 14.4%

Regular readers will know that I've written before about the extent to which the free market and competition has been one of the primary drivers of the progression-explosion humans have seen in the past 200 years (see for example here, here, here, here, and here). This is the first time I have conveyed so much of an emphasis on nations' scientific progress as an accompaniment to the free market. They are natural bedfellows.

Why Parents Probably Don't Influence Their Children As Much As They Think

 

Over the years I’ve read a range of work on the nature–nurture question, including research influenced by people like Robert Trivers and by the broader tradition of behavioral genetics. The findings are consistently intriguing - more so than many people expect - especially regarding the surprisingly limited role that parents play in shaping many aspects of their children’s long-term personalities.

Twin and adoption studies give us the clearest evidence. Genetically identical twins share their entire genome whether raised together or apart. Biological siblings share, on average, half their segregating genes. If a trait is strongly genetic, then identical twins- whether reared together or separately - should resemble each other much more closely than non-identical siblings. Conversely, if a trait is shaped mainly by socialisation within the home, then any children raised together, even if unrelated, should become more similar than children raised apart.

Across decades of research, the general picture is clear: a substantial proportion of variability in personality - roughly 40–60% - is attributable to genetic factors, and identical twins raised apart are almost as similar as those raised together. Meanwhile, children who grow up in the same home but are not genetically related tend to be no more similar in personality than two random people from the population.

What’s striking is how small the shared family environment appears to be for personality. Contrary to the earlier assumptions of Freud, Skinner, and other early theorists, the portion of personality differences explained by the home environment shared by siblings is often very modest - near zero for many traits, and only around a few percent in typical contemporary samples. This does not mean parents have “no influence,” but rather that the influence they exert does not systematically make siblings more alike.

Judith Harris made this point vividly, arguing - controversially but with substantial empirical backing - that once a basic threshold of adequate parenting is met, the main environmental shapers of personality are not parents but the broader non-shared environment: peers, friend groups, school cultures, local hierarchies, and the idiosyncratic experiences that differ from child to child. Later researchers have added nuance to this picture, highlighting interactions between genetics and environment, and showing that parental effects often operate in child-specific ways that behavioral-genetics models categorise as “non-shared.”

Still, the overall conclusion remains: parents contribute enormously to children’s well-being, safety, values, and opportunities, but they do not deterministically shape their offspring’s personalities in the way many people intuitively believe. If you took fifty children raised in good, stable environments and hypothetically swapped the parents around, the children would, by and large, grow into much the same adults they were predisposed to become - allowing for the small but real effects parents do have.

This runs counter to common intuition, but the evidence strongly supports it. Children’s genetic endowments and their peer and cultural environments account for much of who they become. Parents certainly matter, but their most reliable influence is in creating conditions that support health, emotional security, and access to positive peer groups and enriching experiences - not in finely sculpting their children’s personalities.

From this perspective, the best a parent can do is not attempt to micro-engineer personality, but rather to provide love, stability, protection, and guidance, while ensuring that a child’s wider environment - schooling, friendships, social groups, and cultural context - is as positive and supportive as possible. Beyond that, much of the trajectory comes from within the child themselves and from the social worlds they grow into.

 

Let's Talk About Tax: Forget The Myth That The Rich Are Under-Taxed

Let's get a few facts straight when it comes to how much tax people pay. Last time I looked the top 20% of earners in the UK already pay a whopping 74% of all tax paid. But perhaps an even more compelling figure is that the bottom 50% of earners pay just 5% of all tax paid. I have to laugh when I hear people say that the rich aren’t paying enough tax. When a millionaire gets paid he gets taxed a whopping 50% on the majority of his earnings. If he acquires capital with the remains he gets taxed on that; he gets taxed on the money he saves; and he gets taxed on the goods he buys, the car he drives, the people who live in his house, the holidays he has, and so on, and so on. On one sum of money he can be taxed four or five times, and then if he dies and leaves it to his kids they pay tax on it yet again in the form of inheritance tax.

If he works in a corporation he gets hit with a double tax - on earnings and then on dividends - and on future income in the form of capital gains tax. This is a heavy bias against successful high earners, but it would never be tolerated in lower earners. To do so would be like fining someone for being drunk behind the wheel and then imposing a second fine for having too much alcohol in his bloodstream.

People who like Karl Marx tend to argue that this is quite fair because taxing corporation bosses is like recouping something back for the labour that earned those rewards. What these people don't realise is that such taxes are only a disguised tax on labour, rather like how minimum wage proponents don't realise that enforced labour rates are a price hike on goods and services. When companies pay high amounts of tax, those taxes are largely paid for by workers' wages and increased prices for customers.

Here is an example of the kind of thing the economic left never tell you when talking about inequality in the UK. Before the government has taken any tax from the highest earners and given any benefits to the lowest earners, earners in the top 20% have fifteen times the income of earners in the bottom 20%. However, after the government has taken tax from the highest earners and given benefits to the lowest earners, the income disparity drops to the much the lower figure of 4 to 1. So, those who are forever unhappy that politicians aren't doing more to tackle inequality should be made aware that State-intervening is already really really really going on with extreme measure.

Are Women Generally More Left Wing Than Men?

I've no empirical evidence for this apart from my own local experiential perceptions, but it seems almost certain to me that on average women are more economically left wing than men. By that I mean if you picked a random woman off the street there is a greater chance she'd be to the economic left than the economic right.

From what I gather, there is evidence that we tend to become more economically right wing as we get older too (is that due to increased knowledge and wisdom?), which may mean there is a greater proportion of leftism among younger women. One reason for this could be that proportionally there are many more women in the public sector than men, and many fewer women in the private sector than men, which could be a bearing on how state run institutions are viewed. Add to that the fact that welfare payments are given more to women than men (according to research done by the Fawcett Society) and it's easy to imagine why it might be the case that women tend to be more left-leaning than men.

Despite the foregoing, I think the most prominent reason for young women's leftism is one that is not popularly considered - it is to do with the risk aversion associated with female biology and the need to provide a stable family environment. With this in mind I decided to do some research to see if there had ever been experiments to test competiveness. It turns out there had, of which more in a moment.

People who are less competitive may well prefer a market that is constrained by a big state that shares out resources; they may desire ownership to be more evenly spread than it is; they may be more perturbed by the stratification between the rich and poor; and they may be less keen on low wages. Naturally proponents of the free market are more comfortable with all of those things because they sit more easily with the fact that prices (be they goods, services or labour) are controlled by supply and demand not the state.

Without knowing prior to writing this if there is any kind of human fulcrum for competitiveness that transcends gender-specifics, it was hard to know what the level of competitiveness actually is. Are uncompetitive women extraordinarily less competitive than standard men and women, or are competitive men extraordinarily more competitive than standard men and women?

The research I found gives some indication. Economists Uri Gneezy and John List proffered some studies in the different sexes’ appetite for competition, and performance in competitive situations. Men and women were asked to throw a ball at a target, with the prize-givers offering two scenarios. A cash prize if the ball hits the target, or a head-to-head against an opponent whereby the winner gets three times the value of the single ball cash prize and the loser getting nothing. Gneezy and List found that men like to compete in the head-to-head much more than women. But they also found that in matrilineal societies (like the Khasi population in India) women were more competitive than men. There are, of course, many more male-dominated societies than female ones, so it still holds that more men like to compete in the head-to-head than women - but the surprising findings in the Khasi give indication that socialisation could well be the key factor.

Naturally when the tests were run in the UK they showed that women were far less competitive than men - which is unsurprising given that male-dominance has historically been pretty pervasive in the UK. One other potentially important factor - men probably are naturally more competitive because of the male evolutionary story, where competing for females is inherent in their legacy. All these probably are important factors in making women less competitive than men, and as a corollary, more likely to be left wing.

It's Time We Stopped Talking About Supposedly British Values

I caught up with the last edition of Sunday Morning Live on BBC iPlayer yesterday. The main question was: Does immigration erode away British values?

Personally, I haven't got a lot of time for the term 'British values' - in fact, these days when you hear the term it's often spouted by some xenophobic knucklehead who thinks that diversity strips him of his national identity, or some claptrap like that.

As you may know, the Ofsted Handbook stipulates that British values are democracy, the rule of law, individual liberty, and mutual respect and tolerance of those with different faiths and beliefs. What should be obvious to anyone with half a brain is that these aren't 'British' values - they are human values, unbound by the national borders we've constructed or the seas that separate us from other nations.

There are no such things as British values. Sure there's a British culture consisting of old favourites like fish and chips, roast dinners, English tea, Royalty, Laurence Olivier, and what have you - but that's to describe culture and history, and they are quite separate things from qualities like democracy, the rule of law, individual liberty, and mutual respect and tolerance.

The reality is, our evolution of mental development, including those qualities, is the result of a lengthy percentage game - and my advice would be for everyone who uses the term 'British values' to stop using it, and apply a more generic human term to the qualities we value.

Heck, If European Leaders Can't Help In This Humanitarian Crisis Then What Exactly Are They Fit For?

The dreadfully upsetting crisis involving families leaving war torn countries to seek help in Europe is something to which we all desperately need to react - but it goes even deeper than that. I've never been a fan of this big EU super project, and goodness knows they have ballsed up the monetary system thus far - but for heaven's sake - if such an agglomeration of nations into a so-called cohesive European project is to be good for anything at all, then surely it is now, in crises like these, that we really need to see that demonstrated, and see them show their humanitarian mettle, don't you think? That is to say, it is precisely in tragic and precarious situations like this that the very qualities a union like the EU ought to possess can come to the fore in helping so many desperate human beings that need our help.

Families are trying to enter Europe largely on three fronts - people entering by land from Central Asia, people fleeing from Middle Eastern strife and entering through Greece, and people leaving Africa and coming through Italy. If our European leaders are to respond to this in anything like the right way, they must work out a conscientious and humane plan of action that will result in an agreement that these desperate people can be taken in and cared for, proportionally to each country's capacity.

The big problem with this crisis, of course, is that the better Europe becomes at providing refuge to people escaping their plight in Africa and the Middle East, the more migration it will encourage, which sadly will involve many more deaths in the process.

European leaders - and not just European leaders, world leaders too - have a mammoth task on their hands: they have to provide refuge for desperate people, whilst simultaneously doing plenty more in the blighted nations to tackle those crises and stop many more desperate people getting washed up in the Mediterranean or dying through starvation along the way.

As I said at the start, this is precisely the kind of crisis where nations chewing on the cud of this European project really need to come into their own and demonstrate how collectively they can respond to this multi-continental tragedy in a way that shows what can be achieved with a continent united.

But what can we individuals do - those of us ordinary citizens who don't have the same kind of clout as national leaders? There are two things primarily: one is donate to a good cause that will help - here is an excellent list of very good places to donate to - please share this blog as widely as you can if, if nothing else, it spreads around this link. And secondly, here's the other big thing that can be done - we must keep challenging anyone and everyone who talks of these people merely in terms of 'refugees' 'asylum seekers', and 'migrants', or who thinks of them as pests and nuisances - because fundamentally they are people: they are human beings who are hurt, terrified, vulnerable, and in desperate need of love and compassion and kindness from people much better off than them.

 

So it'll be great to donate what we can - but let's not just donate money - let's bestow a wealth of human kindness in speaking out against all those who forget the basic notion that everyone is a human being, and that when human beings desperately need help, the need to respond in a way that shows us at our most loving is a desperate need as well.

An Interesting Piece On Landlocked Countries

One of the almost ineluctable laws of economics is that countries with higher trade costs are poorer because of those costs. One way to make your country poorer is to limit your international trade. Another way is to place tariffs on imports. Because open trade enriches a country, it is essential that every nation tries its best to maximise its trading opportunities in the global market. This means that geography plays a key role in a nation's ability to trade openly and cheaply. Quite naturally a landlocked country in Africa - particularly one surrounded by other countries with civil strife and instability - is not going to have the import/export possibilities of somewhere like England, Spain, Italy, France or Germany.

But the question is; to what extent does being a landlocked country appear to disadvantage a nation?  A very informative article on this in The Economist came to my attention recently, which seems to give some indication of the answer to that question:

"With a few exceptions the world’s 45 landlocked countries are poor. Of the 15 lowest-ranking countries in the Human Development Index, eight have no coastline. All of these are in Africa, which is a poor region. But even compared with similar sea-front countries those without coastlines have lagged behind. Their GDP per person is 40% lower than that of their maritime neighbours."

You can read the full article here - well worth a look.

The Biggest Nail In The Coffin Of Corbynomics

Last week you probably saw the article doing the rounds trying to claim that 35 economists nutters support Corbynonics, and other articles by economists vociferously disassociating themselves from all things connected with Corbynomics. Going through all the pros and cons of each policy would be very time-consuming - so I won't do that. Instead I'll tell you one simple, over-arching reason why, even if the intentions are noble, Corbynomics fails. It fails because it has fatally unrealistic expectations about what an economy actually is. Here's why.

There are two main reasons that an economy is impossible to command efficiently from on high. The first reason is that the entire nexus of economic activity is just too complex and too diverse for any politician to get a handle on. The second reason is that human beings, even when acting rationally, are still very difficult to map to a final theory of predictable behaviour. Without having full knowledge of the entirety of society and every detail, even a world in which every human acted rationally for the majority of the time would still leave us unable to arrive at a gland slam model on which to base any kind of sovereignty.

Humans are often selfish but they will also act selflessly, particularly when there are selfish gains, but also for sporadic acts of kindness at a cost to themselves. They often have strong moral convictions in one area of life (it is wrong to avoid taxes) but relax their moral convictions in other areas of life (like being willing to cheat on a partner). They will often behave one way when caught up in a group collective, but depart considerably from such behaviour at an individual or familial level. They will be quite prudent in spending money on things they need, but in times when status-mongering or social gain is in front of them they will spend quite recklessly. The upshot is, let humans loose in society and they become a mess of contradictions and opposites.

Society isn't a giant piece of clay that can be moulded exactly as a potter wants it to be - it is a multi-faceted network of activity in which millions of people, including business owners (who themselves have a family and staff to think about), have to make local decisions most conducive to their own survival and well-being.

Consequently, then, the kind of Corbynomics that looks to favour some citizens in the free market against the free choices of other citizens in the free market only usually occurs by harming the latter group - most of whom are individuals trying to make the decisions they can to secure the solvency of their business and the jobs of that business's employees.

Here's what I think the real problem is - one that leads to most people having a far more idealised idea of the free market than is actually the case - it is that few people understand quite how we got to the stage we're at in terms of global development, and the varying degrees of it. Think about some of the diversity of things you could buy if you went to London tomorrow for a day trip. You could buy a crucifix necklace, a funk CD, some candy floss, a can of coke, a place in an eat all you can Chinese buffet, polyester trousers, a pack of post-it notes, a bunch of roses, antique spoons, and so on.

Now think about it, why do those things exist on sale and not some other variants of them? Why a funk CD and not some other musical genre that never took off? Why candy floss and not some other sweet treat that no one has ever heard of? Why do we tend to buy a bunch of roses as a gift and not some daisies or blossom flowers? There are easy explanations for all those questions, but the point I'm making is that you can only see these outcomes retrospectively - you could not possibly plan all this in advance.

The socialist or (heaven forbid) communist plans were flawed not just because of their disregard for economic liberty, but because they failed and continue to fail to understand just how complex and unpredictable the market is - because the market is the aggregation of billions of exchanges every day. No over-arching economic system of control would ever have produced the rich diversity of goods, services and jobs we currently see, and that's not just because we cannot plan or predict what we are going to value, it is also because there is no rhyme or reason to how much of our economic activity has panned out. Who in 1850 could ever explain why we would go on to value party poppers, rock music, pierced tongues or candlestick ornaments instead of other alternatives that never made it onto the market?

And now you have to extend that to the entire market of goods, services, labour to see how ludicrous the idea of such idealistic top-down micromanagement actually is. Human beings simply don't have the apposite knowledge or necessary timescales to govern an economy in a detailed manner, because every human being only has the immediacy of the local perspectives from which to derive his evaluations. As my above explanation of the free market will have hopefully made clear, a model of the economy that gathered the requisite data to enable us to run it would need to be as big as the economy itself. That is, we'd need the economy to model the economy, and thus we can do no modelling.

The Thing That Might Prevent Developing Countries From Catching Up

If you're wondering quite why there is so much fuss made of China's present economic difficulty, it is primarily because China is an economy that 'greatly' impacts the rest of the world. Its own economy accounts for around 15% of the entire global GDP, but its growth constitutes over 25% of the whole world economy, with perhaps as much as 35-40% in the near future. Because of this, any slow down in Chinese growth or any currency plunge is going to put emerging economies under duress, particularly the ones most dependent on China's economy for industry and growth. What underpins this truth is something very interesting regarding what the future might be like for the rest of the world in terms of economic growth.

I've said before that the past 200 years has seen an exponentiation of progress unprecedented in human history. The planet has never had such advanced technology, such a high standard of living, such increased well-being, so few people in poverty, such quality healthcare, and so many people trading in a global economy. As more and more nations have less corruption, a more stable rule of law, freer societies and increased market opportunities, we are seeing more and more prosperity come their way, and we look further ahead to how more and more countries could well join them.

However, one must not assume that the future growth of the next few hundred years will resemble the past growth of the last 200. In spite of the progression-explosion we've seen for so many countries, it is still the case that there about two dozen or so dominant countries that have the lion's share of the market in terms of supply and production. That is what might slow down future economic growth.

You may not have considered this before, but if you're a typical person in one of the many developed countries in the world, you pretty much have all the day to day goods and services you need - everything from a place to live, transport, food, heating, clothes, gadgets, holidays, health care, education, entertainment, and access to pretty much all the non-luxury goods and services you need.

Someone on median income in the UK has a way of life for which most aristocrats of 300 years ago would have given up the majority of their wealth – most notably for things like the internet, the vastly superior technology, the health care and medicine capabilities, and the ability to travel anywhere in the world in under 24 hours. The truth is, apart from buying expensive luxuries for status, enjoying more leisure time, and consuming better versions of what the rest of us consume, the rich have a fairly similar quality of life to the average citizen in Europe.

By and large, then, the diminishing returns attached to the improvements we've seen in recent times indicate that the improvements in the future are going to be of a similar nature. In other words, there probably won't be scores of new consumer goods or services devised to supplement the lives we already have. The corollary of this is that if the leading two dozen or so countries can pretty well cater for the relatively small number of new products devised, and also augmentations to already existent products (technological tweaks here and there) it could mean that there is very limited potential for other nations to break into the leading group of countries already dominating the lion's share.

So the upshot is, given that the citizens of the world's most well off countries are well catered for in terms of goods and services, and that they can also provide for a high proportion of citizens of most developing countries, it may well be that developing countries struggle to attain their own progression-explosion due to the difficulty in joining the dominant countries.

However, there is a flip side to that coin. While it's good avoiding the basic mistakes of sloppy growth economists who just assume the future growth of the next few hundred years will resemble the past growth of the last 200, the contention I just offered has to come with some caution too, because the things we consume (goods and services) are not fixed - there are going to be plenty of innovations that change the way we can be supplied in a global market.

It's a bit like the fallacy I wrote about in this blog - the one that forewarns of robots bringing an end to half of today's jobs by 2025. It’s certainly true that augmentations in technology will mean an end to many roles currently undertaken by humans (one need only think of all the jobs we used to do that are now being done by machines). But that doesn’t necessarily mean what the doomsayers believe it will mean – because as history shows quite clearly, humans have the capacity, imagination and skill to do other things.

Imagine if you were having this conversation with a journalist at the beginning of the Industrial Revolution, and he told you how fearful he was that these new farming, printing and transportation machines would bring a gradual end to humans’ ability to work. You'd simply have to tell him that a lot changed after the Industrial Revolution, and that those changes saw more people on the planet than ever before, and more jobs than ever before. The key reason why there probably is nothing to worry about is that what constitutes ‘work’ (where work means earning a living) changes with growing societies and increasing technological advancements.

In the early 19th century you wouldn’t have been able to imagine how people could earn a living, say, making films or television programs, doing stand up comedy, providing complex domestic litigation, designing cars, driving taxis, flying planes, building speedboats, producing Kindles, playing football, working at a bowling alley, advertising on websites, fixing telephone lines or analysing DNA or quantum mechanics.

The same is true of this generation – the future ‘work’ that lies ahead is currently bound by technological limitations and unawareness of the activities that are currently not jobs but will be one day. As technology increases and those robots do things we used to do, we go on to do things we never used to do. In other words, we lose jobs thanks to technology (and make our lives a little easier in the process) and we create jobs thanks to ingenuity.

The same probably will apply to the global market, as (hopefully) developing countries get wealthier by having more involvement in the global market, and come up with ways to attract buyers' attention, just as it happened in the above cases.

All that said, the point about the two dozen or so dominant countries and the extent to which they dominate the lion's share of innovation at the expense of less developed nations looms large - and it is because those countries can more than easily cater for the future demand of consumable goods that developing countries may find it hard to achieve their own progression explosion any time soon.

On Fairness & Equality

What's the difference between a parsnip and fairness? Their differences are too numerous to mention, but here's just one: Everyone agrees what a parsnip is without necessarily agreeing that they like it, whereas everyone likes fairness without necessarily agreeing what it is.

When I was a boy and my parents had company I would often want to stay up late to join in the merriment. My parents, knowing better, would still send me to bed if I had school in the morning. I would cry foul that their decision wasn't 'fair'. When children grow up into adults they understand more clearly what fairness means, and that decisions made on our behalf for our benefit are not as unfair as they seem. Sadly, when adults become politicians they often forget many of the things they learned about fairness. What they actually do is oscillate between two different types of fairness - the Marxist type and the Aristotelian type.

Just about everyone knows the Marxist conception of fairness, based on the maxim "To each according to his need, from each according to his ability.", where people can justifiably be treated unequally to bring about a perceived 'fair' outcome. And most people know the Aristotelian conception of fairness, which is a principle of proportionality about the need to treat equals with full equality when required, but also unequals unequally when required too.

In life we sometimes treat people unequally in order to achieve a more equal (i.e. perceived fairer) outcome. Other times we treat people equally in order to achieve a perceived fairer outcome even if that outcome produces less equal outcomes. Call the first one A} and the second one B}. An example of A} is progressive income tax. Earners are not treated equally in the tax system but the intention is to equalise society slightly more than it is by having higher earners contributing proportionally more tax. An example of B} is sport. A referee applies the same rules to both football teams (equality) even though it's more likely that the better team will win (less equal outcome).

 

When it comes to sport we are all pretty much agreed. If Real Madrid played Norwich in the European Cup they probably would win. A fair referee would adopt the Aristotelian type of fairness and treat both teams equally in terms of the rules. An unfair referee might adopt a Marxist type fairness and make biased decisions in favour of Norwich to give them a better chance of winning* .But I think the majority of fair-minded people are glad that sport is conducted under the Aristotelian type of fairness and not the Marxist one.

 

But when it comes to income tax we are not all agreed. Some people take a more Marxist view of fairness and want high and low earners treated unequally to bring about a fairer society, whereas some people would prefer an 'all people equally' Aristotelian approach which confers a flat rate of tax on everyone. And it’s not just income tax – there are many others socio-political issues about which people regularly disagree regarding fairness: the minimum wage, positive discrimination, drug use, education, and so on.

The problem that underpins this situation in politics is that most leading politicians are slightly more hamstrung because they work on the basis of "That which is good for vote-winning is a good model for fairness" - which means they apply the Marxist type and the Aristotelian type of fairness for their convenience, often inconsistently.

It’s exasperating to keep hearing politicians saying they want a 'fair' welfare system or a 'fair' pension system or a 'fair' tax system, without giving even the slightest elaboration on what they mean by fair. Is something 'fair' if the process by which it arrived is fair? Or is fairness an equitable distribution of something? If a politician fails to explain what he means by 'fair' his statement is ambiguous to the point of being facile.

 

They often mean equitable distributions when they talk of fairness - but an inequitable distribution need not be unfair. Take a factory as a good example: a floor worker, a supervisor, a manager and a company director have an inequitable distribution of the business's money but that doesn't make their salary unfair. Equally, stealing from the business in order to give everyone a fair slice of the pie would be an equitable distribution but the process by which it arrived is unfair.

They also often mean inequitable distributions when they talk of fairness - but an equitable distribution need not be unfair either. Take university education as an example. Cambridge and Oxford universities are the seat of academic excellence in the UK. The statistics show that only 10% of UK pupils are privately educated yet around 50% of Cambridge and Oxford graduates are privately educated. Politicians on the left continually bemoan this 'unfairness'. They are confused. A scholastic system is fair if results match ability, hard work and diligence. If Cambridge and Oxford are trying to attract the most academically gifted students in the country, and if 50% of the most academically gifted students in the country are in private schools, then Cambridge and Oxford's admission policy is completely fair.

 

Because of the ambiguity regarding fairness, politicians switch back and forth from A} an “equal to achieve an unequal outcome” meaning (like sport) and B} an “unequal to achieve an equal outcome” meaning (like progressive income tax), knowing they can get away with it because most people won’t notice. Sadly, there are plenty of instances of A} that should be a B}, and B} that should be an A}.

Here are some examples where politicians or the authorities adopt a Marxist conception of fairness when they should be adopting an Aristotelian concept, and vice-versa. The mansion tax, the minimum wage and positive discrimination are all examples where an Aristotelian conception of fairness would be better employed instead of the Marxist conception that is usually employed. People with mansions should be treated equally with regard to tax on their property but instead they are penalised unfairly. People in the labour market should have an opportunity to work commensurate with the value of their labour, but instead the imposition of a minimum wage unfairly precludes many low-skilled workers from employment. Positive discrimination laws artificially smooth the path for some by artificially disadvantaging others.

 

On the other hand there are examples where the Marxist conception of fairness would be better employed instead of the Aristotelian conception that is usually employed. Stop and search regulations are good cases in point. The authorities treat people far too equally here when instead they should be targeting people who have a greater probability of being the people actually committing the crimes.

Generally, this notion of equality has a lot to answer for, because humans are not equal. For a start there is the key differences between women and men, there is the difference between those who try hard and those who do not; there are differences in people's genetics, family background, upbringing, geography, natural talents, mental capacity, and so on. One also mustn't forget that nature is not very democratic at all. When it comes to health, looks, size, shape, talents, intelligence, sensory apparatus, opportunity and background - there is a notable difference in all of these human qualities in each of us, as nature pays no regard to democracy.

Not only do too many of our politicians hyper-inflate the notion of equality - they also pick and choose which conceptions of fairness they want to use in a way that best enhances their popularity and reputation. And that's not 'fair' on the general public at all.

 

 

* Sometimes in sport there is handicapping. In horse racing, handicaps are races which make more equal horses of varying levels of ability. The idea is that the better horses in the race carry more weight than the poorer horses, giving a more equal chance of slower horses winning, if they all run to the best of their ability. But handicapping aside I think the majority of fair-minded people are glad that sport is conducted under the Aristotelian type of fairness.

Ok, We're Having Fun; We're Going To Have Some More Fun - But Then This Nonsense Has To Stop

Jeremy Corbyn has hit the headlines yesterday after being accused of associating with a divisive, controversial figure whose views one ought to find repellent. But that’s enough about Diane Abbott. Let's talk about important stuff.  

A couple of weeks of Corbynomics has more than compounded the view that economically old Jezza is as daft as a brush full of Russell Brand's chest hairs. We've heard about his desire to reopen Britain’s coal mines; to renationalise energy companies, railways, and goodness knows what else; to end privatisation in the health sector; to scrap tuition fees; to introduce price caps; and to play Russian roulette with our international future by weakening our military and nuclear capabilities.

All this really means that he wants to take a lot more of our money through taxes and give some of it back to us in ways that are bound to make us less well off. To use an analogy, if Corbyn was managing a pizza parlour his economic policy would be to charge each customer for a 14 inch pizza, give them a 9 inch pizza, and tell them that they enjoyed a good deal on him. The analogy works equally well for his 'People’s Quantitative Easing' scheme as well - a scheme in which he wants the Bank of England mandated to invest our hiked up taxes in large scale socialist projects that would give us more of the things he thinks we need, while failing to realise that where the market isn't providing these things it is due to government interference hampering the process.

Regular readers of this blog will know precisely why renationalisation would be a horrid step backwards, why tuition fees are a good thing and should not be scrapped, why privatisation is the only thing that can save the health sector, why price caps are a terrible idea (you can read about all these things by searching on my topic sidebar to the right), and most of you already know why discontinuation of our nuclear potential makes the world less safe, not safer.

However, an awful lot of people do not understand these facts, so Corbyn will be able to run his polices by large swathes of the electorate and gather popularity in doing so.

What he really shouldn’t be able to get by anyone though, except perhaps the most dissonant out of work ex-coal miners, is even the entertaining of the idea that Britain should re-open coal mines - and nationalised ones at that. Surely such a prosperous idea can only be a vote-winning bribe designed to appeal to the most uninformed in our society - I mean, whoever is going to fall for that? Coal mines were shut down because coal could be bought cheaper from abroad. Cheaper coal is better than expensive coal for the one buying it, irrespective of the country from which it happens to come. Trade should have no national preferences, and generally coal mining in the UK is expensive compared to open cast mines in countries such as China, Russia, India, Australia, and Indonesia. It’s the old Adam Smith wisdom again - you can try to produce wine in Scotland, but much better to produce it in vineyards in sunnier countries like France and Italy.

That in a nutshell is what's wrong with Corbyn's idealistic idea of re-developing Britain's manufacturing industry - it's crazy talk, for exactly the same reason Adam Smith said - other countries are now much more efficient at manufacturing goods than us, as we have become primarily a services-based economy – and the future prosperity (as is demonstrably shown in London) involves playing to our service-industry strengths, not being stuck in the industries of the past.

The upshot is, while Blair had his WMD controversy, Corbyn has a PMD controversy – that’s Policies of Mass Destruction of our economy. Corbyn's economics is tantamount to buying votes with promises of bad policies paid for by taxpayers. It misses the key truth in all this - that supply and demand curves most efficiently balance at a particular price in the market (goods, services and labour) thanks to the freedom of the market itself, not politicians' involvement. That is, and always will be, the fact among facts that Corbyn and his supporters just won't grasp - because at heart they are, I’m sorry to say, uninformed idealists.