There's No Room For Such An Oppressive Law

As anyone who understands the basics will know, life in a free society involves making choices about what’s best for us by weighing up costs versus benefits. One such example is in deciding where to live. Any government that makes those decisions for us on our behalf by claiming to know what’s best for us better than we do enters the realms of being oppressive. In places like North Korea and Cuba such oppression is commonplace

Alas, I’m sad to read today that the UK government has shown its own oppressive tendencies in proposing a national minimum bedroom size of 6.5 sq m (70 sq ft) as part of a drive to stop landlords carving up houses into ever smaller rooms to maximise rental income, particularly in London where supply is short and demand is great.

While it’s true that some of these rented rooms are not exactly Buckingham Palace, they are rented voluntarily for one simple reason: that for the people in question the benefits of living in London far outweigh the costs of sleeping in a small room. I’ve mentioned before just how numerous the benefits are in living in a large, vibrant city like London. If people want to trade off some of their sleeping luxury to enjoy those benefits in a mutually agreed and mutually beneficial arrangement (not to mention be able to work), then they should be afforded the freedom to do so – not have their freedom oppressed by an interfering government. What this law will actually do is force potentially thousands of low skilled workers out of their rooms, and in many cases out of London and out of their jobs. 

India Is Right To Tell Greenpeace Where To Go

I was delighted to read today that India has told Greenpeace exactly where to go in meddling in its economic growth. I’m not even going to make a big deal as to whether India has de-registered Greenpeace because of fraud or mendaciously inaccurate reporting.

No, what’s most important here is that India is a developing economy that trails far behind the most advanced countries in the world – and still has millions of people in poverty. It is not a country that should have its economic growth impeded by special interest groups that don’t understand that countries like India need to become increasingly more industrial to provide the jobs to get more and more of its citizens out of poverty.

And as I argued in this article for the Adam Smith Institute:

"Although Pigouvian taxes bring in revenue for politicians short-term (for a few decades maybe), the long-term indicators are that the market left to run by itself will naturally make us greener anyway. The reason being: businesses are already looking for the most efficient means of supplying customers using as little energy as possible, because in a highly competitive market it is in their interest to do so to remain profitable. The goal to reduce energy output can, and has, come in various ways: replacement of human energy for machines, replacement of metal-based technology for higher intensity resources or carbon-cased materials, replacement of paper for digital devices, and so forth – and these are improvements in production that naturally improve business’s cost-effectiveness.

Consequently, compared with how the market engenders continually increased efficiency, emission taxes probably will turn out to have had only a much more negligible effect on lower energy output and more efficient use of resources than the free market, because the market is driven by efficiency far more than politicians with political interest. If there is a race to make us greener, politicians are more like the tortoise and the market is more like the hare."

 

 

 

 

 

Aha! My Theory About How Needless Traffic Jams Start Has Been Proven Right

When driving down the notorious A11, particularly before it was duelled, I would often be bemused at the occurrence of traffic jams when there were no road accidents and no maintenance work to hold up traffic. I would tell my wife what I was thought was going on - it's what I call the 'flow' factor being interrupted. The flow is how I describe the optimal driving process, whereby when there are no obstacles, if all drivers filter in, speed up and slow in ways that do not impede the natural movement of other cars they are not interrupting the 'flow'. An optimal driving state would occur when no one is made to slow down, speed up or stop against the flow.

As drivers we obviously need to slow down and stop for all sorts of reasons (traffic lights, junctions, roundabouts, queues in rush hour, etc) but a lot of the unnecessary delays are caused by the natural flow of driving being interrupted by people who brake more than they need to. Clearly, with short distances in diversely planned cities, small interruptions are minimal and don't really register on the radar (unless you are a particularly irascible and impatient driver), but on long A roads (like the A11) and motorways careless interruptions to the flow can result in long traffic jams, caused simply because someone was too heavy on the brake pedal.

I was pleased to see this week that there's actually a video which proves my 'flow' theory - it explains how one driver hitting his or her brakes too hard can slow everything down and cause a huge tail back as it sets off a ripple where cars behind it also need to brake until at the end of the chain reaction, traffic has come to a stand still. Naturally, even when cars start moving at the front, by then the tail end of cars is sufficiently halted to see numerous cars joining the back of the tail, and so it goes on, taking ages to clear.

Here is the video- it's the second half that is most compelling. So, from now on, drivers, please do go easy on the brake pedal - for all our sakes.

 

 

 

 

 

 

How Come So Many Students & Politicians Are So Ignorant About Value?

It astonishes me when something so simple and obvious is misunderstood by so many people. This doesn't happen as infrequently as one might expect - and in the case here, I'm talking about the notion that if you don't have tuition fees then vast swathes of important information about value is lost. Alas, the people causing civil unrest in London because they want a 'free' university education are not only blockheaded louts with a crass and arrogant sense of entitlement, they are unapprised of some basic economics - namely, that there is no such thing as a 'free' education, and that if you try to do away with the price of a university degree by passing it onto the taxpayer you distort the essential signposts to value.

 

Unsurprisingly, Jeremy Corbyn (backed by many of his Labour party affiliates) has come out in support, encouraging the angry mob to carry on protesting until university education is 'free'. It's worrying that so many of our students and politicians are this confused about value - not to mention prices, information, and supply and demand. Here is the reality that they are missing.

In proposing to artificially lower tuition fees people are showing contempt for the notion of pricing education at its value. The value of higher education is this. University fees should amount to exactly what it costs to obtain a degree, and fees (prices) should match demand, whereby the right number of people are getting degrees. How do we know what the right number is? This is down to a utilitarian efficiency, which is measured in terms of what we might call practical economic utility. What is meant by 'efficient' here is that an efficient transaction occurs when the overall increase in utility is greater than the overall decrease in utility. In other words, when degrees are priced at their true value - a value that measures costs associated with supply and demand - you have the right number of people doing degrees, and you have the right people paying for them, which is, it won't surprise you, the people actually doing the degrees.

When fees are too low, people will study even though the cost of going to university is greater than the benefits of a university education. When fees are too high, people will be put off studying, which means there'll be too few university graduates. A few of the low-fee protagonists have argued that a decline in applicants would be evidence that the fees are too high. It would not be; it would be evidence of less educational waste, with those no longer doing degrees being the people for whom the cost of going to university is greater than the benefits of a university education.

The current tuition fees system is pretty much the fairest system imaginable: the government loans to those who need the money to obtain a degree, and it only asks for payment when the post-graduate can afford to repay with a small proportion of their earnings. Anyone who thinks that that is unfair has a pretty peculiar idea of unfairness. What you have to realise is that nothing comes for free in education. If tuition fees are scrapped, then the cost of obtaining a degree is then picked up by the taxpayers. Tax that goes on to subsidise higher education amounts to lots of tax paid by low earners to subsidise people better of than themselves. We know this because we know that two thirds of working people do not have a university degree, and we know that on average obtaining a degree boosts one's life earnings by 60%.

Tuition fee subsidies do something else as well - they artificially ramp up demand for places, which has all sorts of negative spillover effects on how people value university education. Labour, under the Blair years promoted the ludicrous idea that they wanted to encourage 50% of school leavers to go on to further education. I assume they never bothered to consider that too many people would end up going to university. Similarly, people averse to tuition fees have presumably never bothered to consider whether too many people might go to university at a reduced rate, and that the lower fees might increase demand to an unhealthy or unmanageable level. As for the fact that however much you increase demand you will not increase the universities' capacity for more students than they can take....nope, there probably wasn't even a mention of that.

The irony is, instead of worrying too much about rising tuition fees, what should be considered is that putting up tuition fees, or demoting some degrees to college level qualifications, might actually be a good thing for the country overall. There's no doubt that higher education brings about huge financial benefits to the county, but there's also no doubt that having too many graduates devalues graduation in the labour market, and that in a state of diminishing returns the financial benefits would no longer bring about such efficiency. We know that currently around 20% of post-graduates are doing a job that doesn't require a degree (this figure might actually be higher) - which is indication itself that there is a surfeit of degrees in a labour market with too few degree-level jobs.

There is another very good reason why value is so important - if degrees are valued commensurate with the landscape of both supply and demand, and of the labour market, there is a better chance of the number of graduate-level jobs matching the number of graduates. For example, the future job market is going to see many current graduate-level jobs replaced by computer technology, but it will also see an increase in other graduate-level jobs that look likely to grow in number. Only a proper market-based further education system can be optimally responsive to a rapidly changing labour market environment, particularly with the proliferation of service-industry jobs.

As I often say on here, prices are the market's method of signalling how much of a good is available against the level of demand for that good. An expensive good (like a degree) costs resources (time and money) but those costs signal that those who value degrees most will get them. The abolition of tuition fees would mean that universities have no way of signalling the true scarcity and value of university places to prospective students, particularly as through a taxpayer-funded system high and low demand opportunities are going to be similar if not equal in price. Students, like people in general, make much more informed decisions in life when signals accurately match supply and demand.

How To Fix Schools

Education secretary Nicky Morgan wants to give parents greater choice in state-funded schools because she thinks schools will “up their game”. We hear this a lot from politicians - they regularly tell us they are trying to do us a favour by giving us more free choice in our public services. Basically, they are trying to sell us the choice-driven qualities of a private enterprise consumer market. Alas, what they fail to realise, or don't want to tell you, is that choice is always going to be sub-optimal when the things being chosen are funded by taxpayers.

Suppose the government nationalised handbags and gave them away for free by obtaining money from our taxes. What would happen? Demand would increase, but supply wouldn't be able to keep up with the demand, because there are a limited number of handbags. Consider a Gucci handbag for £2000 and a Next handbag for £30. Taxpayers cannot fund Gucci handbags for everyone, so they must be rationed. So wealthier people will have the Gucci handbags (because they've paid more tax) and others will queue for Next products.

The problem arises because the government won't be able to match supply to demand. The reason being: it doesn't know how much everyone values handbags, so nationalising handbags would be unsuccessful. The free market of private enterprise doesn't have this problem because the market of supply and demand dictates prices of handbags and tailors those prices to how much people value them.

Rich Rachel may wish to buy a Gucci handbag for £2000 and Skint Sally may only be able to afford a Next handbag for £30. But that doesn't just tell us about wealth; it tells us about desire for handbags too. Loaded Lorraine may have more money than Rich Rachel, but she might have no care for ostentatious handbags and instead prefer to spend £30 on a Next handbag and use the remaining £1970 to pay for a holiday or a painting. The right supply of handbags (and holidays and paintings) depends on how consumers make the trade offs.

Public services paid for by the taxpayers are not better off with the introduction of more choice because the government does not have the supply and demand price mechanism to factor in consumer choices - and thus it has no metric by which it can check people's valuation of the different products. Understanding this is the key to understanding why increased choice in taxpayer-funded services fails to capture what people value.

Suppose we have a city in which there are two only schools - let's call them S1 and S2. One of the schools is bound to be better than the other - let's say S1 is better. In a public sector system where prices are not attached to value, everyone is going to be paying for S1 or S2, but some parents are going to receive better service than others (apply this to state run anything and the same applies). In a state funded, unpriced system (obtained from taxation) everyone is going to prefer S1 over S2, and half the city's population is going to be disappointed that they got S2.

Let's take it to an extreme and suppose that there was no more nationalised education - and that schools were fee-charging, with tax for education (roughly about £10,000 per year, per person) staying in the pockets of families. Now S1 and S2 would operate under a much more efficient system. Here's what would happen. By charging for services, the inequality between S1 and S2 would turn into something better; there'd be an increase in demand for education in S1, which would bid up prices, which would engender lower prices at S2. This process would carry on until the differentiation between S1 and S2 matched the value parents placed on them. Those in S2 would be compensated by paying less for a less-good service, and because parents would be considering the average trade-off, they'd be free to splash out on better education, or have cheaper education and more money in their pockets.

My thought model only had 2 choices - imagine how much better with dozens of choices. Good and expensive or not so good and cheap is the kind of choice we should value (‘not so good’ ought not to mean ‘bad’ though). We are constantly being told that it's wrong to disadvantage those who can't pay for better education like the wealthy can. But not only is it undesirable to attempt to suppress those opportunities, it is also the case that if we stopped wealthy people's ability to buy more than their poor counterparts then monetary value would go out the window. Of course politicians don't really mean this - and neither do the electorate - they really mean everyone is entitled to a decent education. But this favours supply and demand in a free market because it is when choice is obtained and prices match value that standards improve.

I'll wager quite a few of you are uncomfortable talking about schools in this way - after all, education is such an important thing that all talk of cheaper, less good education is surely to be guilty of failing our children. Yes it would be if that were the case - however, given that education is such a precious resource it is precisely for that reason that competition ought to be the mechanism to improve standards.

Of course, it’s worth noting that no one has any trouble understanding this if the subject is mobile phones, cars or televisions. Everyone agrees that if mobile phones, cars and televisions had been funded from taxation for the past 25 years that the products would be far less good, and more expensive (or poorly allocated). Tax-funded projects would generate far less concern for providing consumers with better products at better prices. Why, then, do so few people understand this same principle when it comes to schools?

A system in which schools are funded by taxation frees schools from such a high burden of satisfying consumers' preferences, just as would be the case if this applied to Sony, Panasonic or Apple. By and large private schools provide better educations than state-funded schools, not just because fee paying schools contain a greater proportion of bright pupils, but also because, just like Sony, Panasonic and Apple, the school has market pressure to deliver the standard of education that the parents demand at the price paid.

The popular assertion from politicians that tax-funded schools are best because children deserve a good education gets things backwards. It is because education is such a vital resource that it needs price signals and market competition to allocate those resources better.

Finally, I will grant you that at the moment we are not quite ready to overhaul the current system and make children's education solely a matter for market forces - which means such a system ought to be brought in gradually, and tweaked and refined over time, not piled on to parents in one foul swoop.

But even so, to suggest that in the meantime more taxpayer-funded consumer choice will continue to generate a healthier competition that can greatly increase the standards of education in this country is at best naively optimistic, and at worst, just plain wrong.

Finally, if you are having trouble imaging a life where schools aren't the responsibility of the state, you may like to know (if you don't already) that politicians only took over education in Britain as late as the late 19th century, and in that period a much higher proportion of working class people could read and write competently (90%), whereas nowadays it is thought to be somewhere between 75-80%.

The Science Of Economics: The Truth About Britain Leaving The EU

We've heard a lot this week from EU-friendly politicians (which is pretty much everyone outside of UKIP and a few Conservatives) about the dangers to the economy and the job losses if the UK leaves the EU. The irony seems to be lost on so many - so let me try to explain why this narrative is largely a confused one.

Here's pretty much the bulk of the reality (barring a few exceptions). The vast majority of the jobs that would be affected by the decimation of the EU are the jobs currently taken up by the stuffy EU bureaucrats whose roles are to interfere in the market processes, create documents, employ delegates to push those documents back and forth, and generally just construct protocols and working practices to justify their roles. In many cases these people’s very existence in the job market is only justified because of the EU in the first place (and if you can’t see why that is a problem, you should read this Blog post of mine on opportunity costs).

There is no reason that jobs in the general sphere of trade require the EU to function - in fact, quite the opposite. It's no small irony that the majority of jobs affected by leaving the EU are going to be primarily the extraneous number of bureaucratic roles that are in place because of this monolithic EU structure.

Quite frankly, we would easily be able to enjoy all the benefits of Europe (free movement of people, greater multi-state cooperation, to give two examples) whilst obtaining the national freedom to trade openly and freely and make all our own laws as we see fit. To misunderstand this is to fail to comprehend exactly what a healthy free trade system looks like.

Economics as a science

The best way to explain this is to show how economics works when it is tendered most closely to its scientific principles. The principle it most closely resembles is nature’s principle of parsimony – the law of least effort. People who get this are people who are likely to understand why the market need not be so hampered by so many bureaucrats and their socialist impediments to free trade.

When it comes to how to deal with economics, humans could easily view the natural world as a very influential mother, because the fundamental principle of least resistance is written into the mathematical code of nature. Profligacy is not her game; she leaves nothing to spare on matters of efficiency, and she is always parsimonious with her energy expended. For example, when light travels it reverts to the path of least time; a hanging chain reverts to the shape of lowest centre of mass; and soap bubbles revert to the shape of least surface area and volume. In a similar vein, economics, if left to many of its natural paths of efficiency, would be in a much better state, and also it would be more science-friendly.

Just as nature's laws find themselves running according to the principle of maximum efficiency, so too would economics if it were left to the principles of economic laws based on prices, supply and demand. You may object that unlike chemical elements, economics involves that complex and erratic phenomenon known as human behaviour, but that's not a valid objection, for as Adam Smith reminds us, the invisible hand acts as a social mechanism that channels collective objectives toward meeting the needs of the people that make up that society, by ensuring competition between buyers and suppliers, which channels the profit motive of individuals into providing products that society desires at prices which are rarely above cost.

This means that in a market in which consumers are free and happy in being able to make mutually beneficial transactions, something resembling nature's fundamental principle of efficiency should play out across the economy.

Applying this to the problematic nature of the EU, we can see the issue more clearly by looking at chemistry. Chemistry is a noble science, and one which returns reliable and consistent empirical data. The main reason for this is that natural laws that underpin the material constituents are not compromised or retarded through human interference. When considering gaseous compounds, the masses of one constituent that combine with a fixed mass of the other constituent are in the ratio of (small) integers to each other. If scientists interfered in this law so that it was no longer obeyed by all gas mixtures, the fundamental constituents of chemistry would be undermined.

This applies pretty neatly to economics as well, at least to the greatest degree. Economics resembles science in that its truths are based on empirical observations and patterns distilled from data. If we treated economics as rigorously as we did chemistry we would find one of the golden rules of economics - the fundamental principle of least resistance (otherwise known as maximum efficiency) - playing out much more prominently.

Not to impute any kind of over-arching sentience to the market, but using sentience analogically here, prices are the result of billions of individual units of activity going on in the global market. Prices are, of course, dynamically in flux according to changes in supply and demand, but what all this amounts to is the fact that no politician, ideological group or economist knows the market better than the market knows itself.

Consequently, top down management or interference from on high are always going to be inadequate to the task of the way markets themselves know the price signals in response to supply and demand activity. Prices are to markets as the path of least resistance is to the natural world – and pretty much everything EU bureaucrats do to interfere in this process makes the European trade market worse off - which means we should have absolutely no qualms about leaving it and enjoying greater freedom to trade with whoever we want.


Edit to add: Of course, it's worth adding that although the natural flow of the economy tends towards the path of least effort, this is in some places a key reason why some kind of light regulation puts the brakes on some undesirable activity. For example, given the human tendency to do things as parsimoniously as possible, some regulatory protocols that guard workers and consumers against potential health and safety dangers in the workplace, product safety, built in obsolescence and some forms of asymmetry of information are quite welcome and necessary. What impedes the process is when politicians interfere in ways that are best left to the market forces - most notably, anything that artificially interferes with prices and the information-carrying signals they exhibit: be that the minimum wage, rent controls, tariffs, business subsidies and so forth.
  

Arguing With Feminists About Rape

It's not often I do this, but sometimes reflecting on a public conversation can prove to be pretty informative in highlighting particular areas of erroneous thinking. Here's one such example. I won't disclose names here, but a popular Spectator writer wrote an article about the dangers of rape after nightclubbing in relation to dress, and one of his points caused lots of indignation and opprobrium, with feminists from all over the shop wading in to attack him. The point he made that angered them so much was quite simply this: that a woman in a nightclub is at greater risk of sexual assault if she dresses provocatively.

It's the kind of statement that an economist would have no trouble understanding to be fairly evidently true. But equally it's the kind of statement ripe for twisting to justify annoyance. After the Spectator columnist made that comment he was subjected to waves of abuse from (mostly) women indignantly asserting that:

"Just because a woman dresses provocatively it doesn't mean she deserves to be raped"

"That's bollocks because a great many women are actually raped by someone they know, including their partners"

"It's disgraceful blaming the victim and not the offender"

Alas, the reactionary statements above suffer by being irrelevant to the principal point the article was addressing - that there is an obvious correlation between what we do and what happens to us. Don't misunderstand, I wholeheartedly agree with the feminists' comments above: that dressing provocatively doesn't mean a woman deserves to be raped, and that it's disgraceful blaming the victim and not the offender, and also that a large number of women are actually raped by someone they know - but they are different points to the point that probabilistically a woman in a nightclub is at greater risk of sexual assault if she dresses provocatively.

The backlash statements made by the feminists above are as misjudged as hearing someone say "You are more likely to be mugged in the daylight in Brixton than Kensington" and then responding with "No, that’s wrong because most people get mugged at night, not in the daylight". 

The point the Spectator columnist made is actually a simple point to digest - it was a statement specifically about the relationship between dress and rape - it was nothing to do with letting off rapists lightly or accusing women of deserving what they get if they dress provocatively. Unfortunately the Spectator columnist didn't go into any detailed defence to back up his statement, which is probably why he was the target of a backlash. Equally that is why I stepped into his defence in the discussion, because he was being falsely accused and having his name smeared unfairly.

Let me explain the probability. It's not very difficult to see why if a woman is raped after nightclubbing then probabilistically it is more likely to be a woman dressed provocatively. Imagine a nightclub and a guy with a date rape drug who is going to rape someone that night - you will find that probabilistically he is more likely to end up raping a woman who looks as though she is a candidate for casual sex. This has nothing to do with what any woman deserves to happen to her, or how a lady is advised to dress, or theories of rape overall, it is a simple case of likelihood.

For simplicity's sake, let’s imagine last year there were 20,000 rapes connected to women who were clubbing. The people who committed the rapes will be two different types of offenders: the first group will be those who pre-planned their rape and came equipped looking for their victim; and the second group will be those who ended up raping someone but had little or no expectation of doing so prior to meeting their victim. Predators who brought in date rape drugs would almost always choose women who were dressed provocatively – as few items of clothing as possible – anything to make the rape easier for them, in case it has to be quick in an alley or behind a bush. Some will carry a pair of scissors and target girls with very accessible dress straps where two quick cuts and the girl is naked gives them an advantage. If you looked at crime figures detailing these 20,000 rapes after clubbing you would find the greater proportion were those dressed provocatively. Next, in these situations, women dressed provocatively would often be seen by men as better bets for success in leaving the club with them, and girls who are on the pull will often dress in a manner that lets guys know they are approachable for a romantic liaison (this is inherent in our evolution too).

But that's not all of it: that only takes into account the cases where rape is premeditated. Many unplanned rapes occur when a man leaves with a women and she is too drunk to stop it – she may have passed out, or she may simply be so inebriated that a man can take advantage of her. This I consider rape too because if she is in no fit state to be able to consent then a man should not take advantage and go ahead with intercourse.

So think how many times this occurs over all the weekends spread over the year, and then look at probability again – more attempts will be made by guys to approach girls dressed provocatively, because they will be inclined to head straight for the girls they think are dressed to attract a mate. This means more cases of two such people leaving together, leading to the greater number of women who end up being raped in this way increasing. Or to put it another way, the causality isn't merely due to provocatively dressed women being targets for premeditating rapists, it's due to the fact that lots of rapes end up happening against women who were on the pull or available or open to suggestion - and statistically there is a high probability that women in this sample group will be dressed provocatively, which is why the statement "A woman in a nightclub is at greater risk of sexual assault if she dresses provocatively" is true.

Probability is like that - it isn't a comment about rights and wrongs of an action, it is merely an expression of likelihood. By a similar measure one could say that you're more likely to get burgled if you don't have a burglar alarm; you're more likely to have your car broken into if you leave valuables on the seat; and you're more likely to be a victim of a sexual assault if you're inebriated. Of course, no one deserves to be the victim of burglary, car theft or sexual assault - these are merely observations about the correlation between behaviour and outcomes.

The Home Secretary Is Hasty Over Police Diversity

Home Secretary Theresa May has just issued a so-called “wake-up call” to the police about its chronic shortage of black and ethnic minority officers – a failure she claims reduces public confidence in the force.

Alas, this is a nonsense narrative that fails at every basic level. Just because blacks and ethnic minorities are heavily outnumbered by white people in the police force does not mean that there is overt discrimination going on, much less that this supposed imbalance can and should be corrected by any kind of state mandated action. You would think someone pretty foolish if they said that the primary reason that there are so few female garage mechanics or female bricklayers is because women are being discriminated against. It's a short-sighted and hasty thing to presume that imbalances of gender or ethnicity in the workplaces are naturally due to discrimination.

Why might blacks and ethnic minorities be under-represented? Given that if you're an employer discrimination is an illogical thing to do as it harms you as well (as I explained in this blog post), the most obvious answer to the question is that blacks and ethnic minorities are under-represented because they are more difficult to recruit - probably due to a combination of the number that don't want to work in the police force, and the number that are unqualified or ill-equipped to do so.

Those who condemn discrimination and the supposed undermining of civil liberties by arguing that the police should positively discriminate in favour of more black and ethnic minorities are missing the fact that their proposal is simply another kind of discrimination with the signs reversed. Quite simply, you cannot artificially smooth the path for one group (whether it be for more black officers in the police force or more women in Parliament, or whatever) without artificially hindering the path of the rest of the group (or groups) that fall outside of the purview of the group for whom you are trying to positively discriminate. 

I'm all for looking for new ways to encourage more black and ethnic minority people to acquire the skills and enthusiasm to make themselves candidates for the police, if such things are lacking. But no one should be given a job purely because of their ethnicity or skin colour just to fill a quota.

Jobs should be awarded on two things; on merit (skills, experience, personality, enthusiasm) and on the basis that certain groups of people do actually want these jobs. If most women don’t want to be bricklayers, and if most police officers are white due to the pretext of merit, desire, or some other reason, then this needs to be acknowledged before anyone makes an automatic assumption of unfair discrimination and tries to redress a hastily perceived imbalance.

The Best Way To Derive An 'Ought' From An 'Is'

One of the long-standing moral problems in philosophy, dealt with most famously by David Hume, is the 'is–ought problem' of how to derive an 'ought' from an 'is'. Hume's 'is–ought problem' is the contention that deriving an 'ought' from an 'is' is not possible on deductive grounds - that is, you cannot 'prove' something normative from something descriptive. Or to put it more simply, in moral or ethical terms you cannot prove what you 'ought' to do from what 'is' in the factual scheme of things. So for example, statements like 'John doesn't pick up his dog's mess when he fouls on the park' and 'America spends millions on space exploration' are both descriptive. Hume is saying that nothing in experience enables us to prove that John ought to pick up his dog's mess or that the money America spends on space exploration is either too much or too little.

However, proofs aren't everything, and Hume was quite willing to concede in his An Enquiry Concerning the Principles of Morals that moral propositions are built on a decked succession of experiences related to preferences, feelings and strategies regarding our well-being. This is because, being a strict empiricist, Hume's primary concern is how these actions play out evidentially, i.e., how empirically they affect us. He didn't insist that morality has to be 100% factual; he merely insisted that our moral thinking is derived from general maxims built on analyses of particulars in everyday experience.

The trouble Hume has is that any connection we make is only one link on the chain - a chain that involves other links of connection, which ultimately lead to a brick wall. On this basis Hume is being ultra sceptical about how easy it is to make moral statements. If you recall, Hume's fork says that the whole human interface with reality can be demarcated into either matters of facts (experience of the physical world) or relations of ideas (logical and definitional connections of those experiences). Using Hume's fork we are unable to prove logical and definitional connections of morality (ought) from experience of the physical world (is), not because we can't make valid empirical statements (such as "If John wants to be knowledgeable he ought to study hard) but because under Humean terms being knowledgeable is only a preference humans have.

Similarly, we could say that it is better for the body to eat healthily, but that then leads to the corollary question, why is better to be healthy? A response might be 'To live longer', but that comes with the further question "Why is it better to live longer?". None of these answers are able to be proved deductively, so every answer always begs the question, and brings us eventually to this epistemological brick wall.

Sometimes, though, where philosophy reaches brick walls, economics can dig holes through those walls, particularly given that economics concerns itself with human behaviour, incentives and actions as well as arithmetic, graphs and bell curves. You may recall that studies from Paul Eckman show that the capacity for emotions like fear, joy, distress, anger, surprise and revulsion is not learned, it is innately part of being human. Cultural nuances dictate how people feel about those emotions, but that just about everyone has them is beyond reasonable doubt. What can be derived from this is that there are things that are objectively better and worse for all humans, and David Hume summarised the body of the book with this statement in good company with Eckman's finding --

"The final sentence, it is probable, which pronounces characters and actions amiable or odious, praise-worthy or blameable... depends on some internal sense or feeling, which nature has made universal in the whole species".

Or to put it in economic terms, humans as a species are very alike, and they do demonstrate numerous ways that their preferences turn into behaviour and actions. When it comes to questions of morality and ethics and right and wrong behaviour, rather than looking for any formal proofs, the question regarding deriving an ‘ought’ from an ‘is’ in economic terms is more about whether it is possible to arrive at a general consensus on morality, and if so, how we reach such a consensus. I’ll add that we can only attempt to do this in the first place because our experience of the world shows us that logical systems work in approximating reality. Consider this statement: “Plants take up carbon dioxide in the atmosphere by the process of photosynthesis”. Within the realms of the body of science we have constructed, this statement is a factual statement, because to contest it would involve departing from the standard rubric of the natural order and proposing an alternative statement that could be subjected to scientific scrutiny. Now consider this statement; ‘John shouldn’t bunk off school in order to steal cigarettes from his local newsagent’.  That is not a factual statement – it is the expression of a desire or feeling which requires much more complex analysis, and which, when subjected to intense scrutiny, would take us further and further into the realms of subjectivity and arguments about consensus. 

But pretty much everyone would naturally agree that it is correct that John shouldn’t behave that way. John shouldn’t bunk off school because evidence shows that poor education inhibits people’s chances of progress and it contributes to their downfall. Similarly, John shouldn’t steal because evidence shows that theft is generally bad for the individual and the society as a whole. John would be advised not to take heroin because evidence shows it will be detrimental to his health. We could come to agree that such statements could reasonably qualify as facts, because we have reasonable grounds on which to state it as fact. That's perhaps the best we can do. But arguably more importantly, the evidence for these propositions is based on how humans behave in order to arrive at goals, the values they have, the empirical evidence for what is good for us physically and psychologically, and what's consistent with human behaviour regarding the purposes we construct.

Given that we have limited knowledge of the empirical world, the only way I can see to derive an 'ought' from an 'is' is imperfectly by using our old friend probability. Once one gets one's head around the notion that almost all knowledge is about probability it becomes clear. To illustrate, there is a well known paradox that can shed light on this situation - the ‘sorites’ paradox. The ‘sorites’ paradox is attributed to Eubulides, who had a handful of beans, and in front of his students placed one bean at a time on the table asking them each time whether that particular bean made it a heap of beans.  They continued to say no, and then when the 15th bean was laid down, they said 'yes', that's a heap'.  The paradox asserts that it’s absurd to just declare that 15 is a heap.  Why is 15 a heap and not 14? Why not 16? What about if Eubulides did the same experiment to another group of students and they thought a heap was 13?  What if one or two in the group thought a heap should be 18?  The take home lesson is that although people adhere to systems they believe are assented to with rigorous reasoning, most often what they are actually dealing with is the arbitrary classifications.

Thought about logically, the question 'When does a heap become a heap?' can only be answered in two ways. We can say a heap of sand must exceed n where n equals a designated number for qualification. Or the other way to solve the heap problem is to say that the probability of calling the pile a heap increases with every grain added. The latter is the correct epistemological route to take because the world is full of many comparable examples, where things of which we think we are certain are really feelings we have based on probability estimates. This is perhaps the best rule of thumb for knowledge and for moral axioms; almost all knowledge is probability based, and everything that constitutes knowledge is arrived at in exactly the same way as the Sorites situation – each increase in evidence or data increases the probability of something constituting knowledge or a moral axiom.

Why We'd Be Better Off If Restaurants Charged Us To Reserve A Table

Restaurants should charge for booking a table at peak times as well as for eating the meal. I'm telling you this not just because I want to tell you something interesting which you may not have considered, but also because what I'm now going to say serves to explain well the economic concept of value, and why we would all be better off if restaurants charged for booking a table at peak times.

It's obvious to everyone that the laws of supply and demand factor in to the dining out experience. A 6pm booking on a Tuesday night at a restaurant that has been open for 10 years is bound to be in much lower demand than a 7:30pm booking on a Saturday night at a restaurant that has only been open a few weeks. That is why taking bookings on a first come first serve basis distorts the true signals of value.

A couple that phones up and books a table at random or a few friends who walk past and grab a table on a whim may not value their table as much as people that would have paid an extra surcharge to eat in there. Consequently, charging for table bookings increases the chances that the people who most value a dining experience have that experience, while at the same time leaving room for less discerning people to choose other restaurants. Plus, if non-price sensitive people pay more at peak times, price-sensitive people should find cheaper meals of the same quality at non-peak times.

So why, then, don't restaurants charge for booking a table? It could be for the same reason that hugely popular concert tickets don't sell for more. But it's probably also the case that popular individual restaurants that adopted this policy unilaterally would place themselves at a disadvantage against other popular restaurants that chose not to charge a booking fee. In all likelihood, this is why reservations do not have the kind of prices that would allocate diners with restaurants more optimally, and create extra societal value in doing so.

It's Rare To See This Much Confusion About Trade

If the UK steel situation has taught us one thing this week, it's that most UK citizens, and apparently many politicians too, do not understand the benefits of trade. In wanting to protect British industry with barriers to foreign imports these people are showing economic ignorance of the worst kind. Take this article in The Guardian, for example - it is staggeringly rare to find so much economic illiteracy in one piece of writing. Rather than going through a point by point rebuttal of all the individual errors, I'll just explain the benefits of import/export trade and the way trade barriers harm both sides.

Suppose it costs a UK plant £120 to produce a tonne of steel, and a Chinese plant £100. And suppose the reverse is true for pharmaceutical products: while it costs a Chinese pharmaceutical company £120 to produce 1kg of a particular medicine, it costs a UK company £100. If there are no barriers to trade, the British will buy Chinese steel and the Chinese will buy British medicine.

But suppose the UK government wants to protect the British steel by imposing a tariff of £40 per tonne of imported steel, pushing the price up to £140 per tonne, this is good for British steel providers, but it's bad for British steel buyers who must pay more. But it's also bad for other British companies too, because some of that money would have been spent in their industry.

On the whole, it's fairly easy to see that Brits are worse off from the tariffs, because they hamper the process of best value based on market clearing rates. It's equally obvious how subsidising our own industrial exports has a further damaging effect. Suppose that the UK government subsidised British steel to the value of £40 per tonne - this would advantage British steel producers and the foreigners to whom they sell, but it would disadvantage everyone else.

This kind of economic ignorance is rife - so much so that I'll bet if you asked everyone in the UK if it's true that imports benefit the UK whereas exports take away some of that benefit and give it to other countries, a lot would say they agree.

But, alas, in agreeing they have their reasoning backwards, because what we consume (goods and services) is the true measure of the value created. If we export a product, people outside our country consume it; if we import a product, we consume it. If we export more than we import, our consumption is not in surplus in relation to what we produce. It's true that a trade surplus means there is more money coming into the country from foreign buyers, but money has value only in what is consumed from it - without consumption it is merely 1s and 0s in a bank account. It is only when consumption occurs that the real benefits of money are brought to bear, which means it ought to be more obvious that you do not need a surplus of imports over exports to be better off, and you certainly do not need import tariffs to make your country better off.

What They Forget To Ask About Recycling

When it comes to the issue of recycling, there is an important question we in the UK should be asking, but apparently are not:

Are we recycling too little, the right amount, or too much?

Bound up in this question are the issues of cost, time, the environment, and the question of which products we should recycle and which we should not. As far as I can tell, you won’t find this out by consulting any research papers, because from what I can see there hasn’t been any research done on this (if anyone finds evidence to the contrary, do let me know).

Never mind, even without the research, we know that millions of people spend extra time and money each week sorting, washing out and recycling their different products, which amounts to billions of extra hours and pounds consumed by these recycling projects over several decades.

Given that time is just about the only precious resource that we cannot get back, it is irresponsible to not enquire whether we are recycling too little, the right amount, or too much. Even in my lifetime there has been a seismic shift in our attitude towards recycling. The pro-recycling lobby has gathered rapid momentum over the past few years - much like an aggressively propagated religion gathers momentum. Given its similarities to a fundamentalist religious cult, this leads me to suspect that we are probably recycling too much, and that the political powers are just getting warmed up in the extent to which they'll impose their green-centric mandates on us. This kind of Gaia liturgy is quite commonplace now:

"Every home in the country will have to cope with compulsory rubbish recycling schemes by next year, according to papers released by ministers yesterday. Instructions prepared for councils have revealed a move to bring in separate collections of paper, metal, plastic and glass in order to meet recycling targets set by Brussels"

The bureaucrats in Brussels desire for our future recycling targets to be around 70% or 80%. Of course, recycling isn't a new phenomenon - market forces have been dictating its efficacy for a long time. The most obvious example is metal: gold, steel, aluminium, copper and brass - they can be recycled for profit. This means that if you had an old ring, or a car engine block, or a catalytic converter it would be worth your while recycling it because of the profit obtained (profit here meaning not against the original purchase price, but against the time consumed in the task of recycling it). Recycling tasks that add value make us better off as a society. Recycling tasks that do not add value have the opposite effect. Most things can be recycled - you could even have cement turned back into concrete if you so wished - but that doesn't mean there would be any value in doing it.

What is the right amount of recycling?

In asking this, we've acknowledged something that should be obvious to everyone, but clearly isn't. There can be too little recycling in the world, the right amount of recycling, and too much recycling. If we recycled nothing, that would be too little, if we recycled everything that would be too much; so the task of good recycling is to find the optimum amount. The optimum amount is the amount of recycling that adds the most value to society. When I see Brussels setting future recycling targets of 70% or 80% I get anxious, because they seem to be operating under the mistaken assumption that the more we can recycle, the better. Have they stopped to ask whether 50% is a good amount? On what grounds is their 70% or 80% better than 50%? As far as I can see, they never tell us. I'm always very suspicious of people who declare an agenda without justifying how they arrived at that decision. They give the impression that they believe on moral grounds that it is our ethical duty to recycle. But even if that's true, it is dangerous. If you believe that recycling is the right thing to do, you are almost certainly going to recycle too much. If in doing too much recycling you feel you're making a moral contribution to society, you're very unlikely to pay much attention to the economic arguments against excess recycling.

What about the financial implications?

As I said, I can find no comprehensive financial data to consult. But to give you an idea of how data can be skewed, have a look at this from the Green Alliance:

"The UK spends £1 billion a year in landfill costs just to dispose of plastics, wood, textiles and food – and in the process destroys these valuable commodities. If a landfill ban was introduced just on these products and materials, £1 billion worth of costs would be avoided and a further £2.5 billion of value would be recovered"

This is a good example of letting an ethical conviction blind you to the economics. Just because the UK spends £1 billion a year in landfill costs disposing of plastics, wood, textiles and food, this doesn't mean it's an argument against landfills. We'd need to know comparative costs for recycling those materials, which are not provided - and these are costs that would need to factor in all the hidden costs (transportation, congestion and, most importantly, time). The other clear anomaly is that if there really is a further £2.5 billion of value in the materials being put into landfills people would be making money out of those materials. The basic error the Green Alliance is making is in counting the value of the materials (which may well be worth £2.5 billion) but ignoring the cost of processing those materials into profit. If it costs more than £2.5 billion to process the materials (which the scarcity of a market for them suggests it does) then their intrinsic value is irrelevant.

Which products should we recycle?

You may think it's hard to determine whether something should be recycled or not. But it isn't. Consider an illustration that will demonstrate why. Suppose you're unemployed and you want to determine what you could do to put your time to good use and earn a bit of cash in hand. What would determine 'good use' in terms of a financial exchange for your efforts? The answer is that something would be considered to be good use in the market if someone will pay you to do it. Someone will pay you if the value of what your labour produces exceeds the cost in pounds and pence. You might be able to get some people to part with cash to have their car washed or their weeds pulled up and disposed of. But you won't get anyone to pay you to count the pieces of shingle in their driveway or brush the dust off their garden wall.

Recycling follows a similar rule. Suppose you have an item you want to dispose of. To determine whether that item is rubbish or a resource you'd have to find out if anyone wants it and will pay you for it. If someone will buy it from you, or if you or someone else can re-use it somehow in a cost-efficient way, then it is a resource. If no one will take it, and it is not re-usable, and you have to pay someone to dispose of it (either directly or through taxation) then it's usually rubbish. Therefore the right level of recycling should be this: recycle all the resources and dispose of all the rubbish. If we recycle resources of utility then in terms of overall resources we'll see a net gain. If we recycle rubbish then in terms of overall resources we'll see a net loss.

Writing for BusinessGreen, columnist Jessica Shankleman argues that that increasing landfill tax improves the argument for more recycling. No it doesn't. If you charge people more for one thing they will buy more of something else. If the price of apples doubles, people will buy more oranges, pears and bananas. That wouldn't mean that apples are not over-priced. Similarly, landfill taxes encourage more recycling, but that doesn't mean an increase in recycling efficiency, it means people are being coerced into recycling because of the inflated expense in landfill (an expense which, incidentally, encourages illegal dumping and burning rubbish). The facts wouldn't support Jessica Shankleman anyway - the cost of recycling (which includes collecting, transporting, handling, sorting, cleaning, repackaging then re-transporting again) exceeds the cost of landfills.

Lastly, there are other spillover effects to recycling too - one of which is our complacent wastefulness when we know something is being recycled. Take things like kitchen roll and paper towels. If you use them with the knowledge that the paper is going to be recycled you will use more paper than if you know it won't be (you might also like to know that recycling paper means there are fewer trees in the world now, not more).

The free market of supply and demand is the ideal arbitrator of our actions. It is the most efficient mechanism we have for adjusting for human mistakes. If you make mistakes in the market, the driving forces of that market will see you punished financially. Sadly, because of the ethical duress everyone is under, societal forces deem it the right thing to do to recycle as much as we can, which means that questions about cost-effectiveness become moot. Such duress is only likely to distort the truth about how much we should be recycling, and cause us to err by recycling too much. At the very least, it is utterly shambolic to fail to ask how much recycling is a good amount, and just assume that more = better.

* Photo courtesy of rcsrecycling.co.uk

The Left Hate Grammar Schools Because They Don't Want You To Become Middle Class

I was pleased to read that the first grammar school in 50 years is to be approved (well, it's actually an annexe, as grammar schools are banned by law). Education secretary Nicky Morgan is one of the less bright cabinet members (by a long way), but this is a good move, and let's hope many more grammar schools appear in the future. While they are not perfect, they can provide a good environment for bright children to do well in ways that the too often poor standards of education in comprehensives currently cannot. While this country rightly works hard to help children with less scholastic potential, one gets the sense that some of this ethos comes at the expense of bright children, and this is where grammar schools come into their own.  

By the way, in case you hadn't thought to ask, banning them is disgraceful you know - it is rather like banning Shakespeare and Herodotus because too many people are only at the reading level of Nick Hornby and Audrey Niffenegger; or banning expensive cars because some people can only afford cheap ones. The cult of fabricated equality is the one of the most socially noxious things humans have ever invented.

This surely ought to be obvious to most, but the 1960s Labour comprehensive school experiment clearly hasn't worked, but it's the reason why it hasn't worked that doesn't get enough attention. Labour's comprehensive school experiment was underpinned by the woolly idea that a mixture of bright and less-bright children would be good for lifting up the bright children to a higher potential. Doubtless there are plenty of cases where that does happen: I'm sure most of us can recall enjoying positive influences from other bright children at school.

But at a wider level, our evolutionary legacy of being rank ordering primates put paid to the general efficacy of 50 years of comprehensive school aspirations, because the main driving force of the majority of human beings, even at a young age, and admittedly often subliminally, is to get ahead of their peers. Status and relative achievement are big preoccupations with humans, and that very likely produces more stratification between pupils within the same comprehensive schools than the stratification between grammar school and comprehensive school pupils.

I know you will have read that diverse schools perform best, and it's true that diversity of ethnicity, culture and religion confers significant benefits on groups, but our rank ordering proclivities see to it that ability is a highly self-serving and egocentric thing, and social mobility is likely to be better when, alongside providing big help for kids with lower ability, bright kids are given the best chances to fulfil their potential.

It has long become clear to me that the majority of people on the economic left are not that interested in facts and truths, they are largely only interested in what they want to believe and in sustaining the pride of the tribalistic 'in-group' mentality.

The reality is, the spurious Marxist proletariat vs. the bourgeoisie stratification has never gone away - the working classes (the proletariat) are still seen as the labourers under the thrall of the capitalist pigs that own the means of production (the bourgeoisie - the social class that holds economic supremacy, supposedly riding roughshod over the working classes).

That was why the perceptions about grammar schools being elitist and favouring middle class children were propagated, when of course the opposite was true - the grammar school environment was precisely the place where bright disadvantaged pupils could stand a better chance of reaching their potential.

But that was exactly what the working classes didn't want - for the same reason they are always banging on about the evils of capitalism - their in-group anti-bourgeoisie tribalism could not bear to think of working class kids actually doing well and joining the group (the wealth creators) to which they were so fervently opposed. It's rather like when a talented footballer leaves the local club you support (say, Tottenham) and joins a rival club (like Arsenal) with better prospects - the Tottenham supporters are never glad for the player that he's going to fulfil his potential, earn more money and win more trophies - they are full of vitriol and resentment that he's left their group and joined the rivals.

The working class attitude is too often like that of Tottenham supporters, and it's pretty evident that it has played a significant part in their egalitarian dislike of grammar schools, because ultimately when tribalism rules your discourse you care more about people not betraying their proletariat routes than you do their successful journey into the bourgeoisie.

The anti-grammar school ideologues demand that they want diversity fully represented in the comprehensive system. How ironic that a nation that can generate terrific diversity with a full menu of schools - grammar schools, state comprehensive schools, private schools, public schools, academies, free schools, and special schools - is something that causes the left to scoff. Deep down I fear we know why; they never really wanted the kind of diversity whereby those at the bottom had the best chance of climbing up the social ladder - they only want the kind of class warfare where people stay loyal to their roots and remain on side in the enduring 'Them vs. Us' battle of wills.