Let's Have Social Beneficence With A Big “S” & State With A Small ‘s’

Oh ah, a day after my blog post on the recent issues surrounding charity, the church and the State, we have The Guardian’s Zoe Williams perpetuating the leftist complaints that food banks are supplied by the Trussell Trust charity and not by a State agency.

Consequently, I feel compelled to add a tiny bit more to this debate, because we have lots of hard-right-leaning folk lamenting food banks as emblematic of a culture of welfare-dependent decadence, and lots of hard-left-leaning folk calling their very existence a national disgrace and emblematic of a failing State. Underpinning this is the hard-right view that welfare-dependent people are mostly useless wasters, and the hard-left view that the State should automatically be the custodians of everyone's skills, wages, vocations and social well-being. To me, both sides clearly are wide of the mark.

The State has a responsibility to its citizens, and should apply it better to our welfare needs, particularly those not in work. For me, finding the right balance is about seeing that both the State and we as individuals have a role. It's easy to delegate responsibility to the State to such an extent that we absolve ourselves of our responsibility to each other. In fact, I'd argue that we have been so accustomed to the State's role in our lives that we've forgotten just how much of our past, present and future relies on our own social beneficence (let's call it social beneficence for simplicity's sake). By 'social beneficence' I mean our necessity to help one another, show love, grace and kindness, and to generally demonstrate mindfulness for each other's well-being. We already do this all the time, of course - for friends, family, neighbours, work colleagues and people in our social groups - but the Christian message is that everyone is to be included in that mandate. 

As studies in evolutionary biology in the past few decades have shown, this mindfulness of our fellow humans in implicit in our mental hardware - and was an instinctive part of our evolution long before we developed sovereign States and trading. That is to say, we couldn't have arrived at those progressions without an up and running mindfulness of our fellow humans and developing empathy towards their needs. So while the Smithian notion of a free market of self-serving interested parties demonstrably engenders major social and cultural progress, the financial economy is obviously not the be all and end all of our social well-being - our social beneficence underpins a great deal of it.

It's strange to hear so many people automatically deferring problems to either the State or the market, without recourse to the most powerful of all human qualities - the freedom and ability to be socially beneficent to one another. The work of the Trussell Trust Christian charity represents the best of social beneficence, and serves to remind us of how much better society would be with even more beneficence on top of that. Yes of course the State needs to sort out its own bureaucratic house and ensure that people's welfare entitlements are paid, but I fancy that many modern humans of today may have become so accustomed to the State sovereignty and its involvement in our affairs that they've been habitually primed to give too little regard to our own individual responsibilities to each other. If you recall, the Christ-influenced acts of grace, love and kindness that spread through the societies in the New Testament portion of history were not bootstrapped by a benevolent, democratically elected sovereign State - they occurred in a society oppressed under a Roman dictatorship, with no welfare state or global free market. The solution, I think, is to have Social Beneficence with a big “S”, to enable us to have State with a small ‘s’.

The Award For Biggest Misunderstanding In An Article This Year Goes To………..

 

Aditya Chakrabortty, for this moment of half-wittery in his Guardian article:

"Officers and researchers sat down and worked out how much money Enfield's 300,000 residents sent the way of big businesses: 11 Tesco stores, for instance, provided the PLC with around £8m of its annual profit. And what did the area get back? Not very much, but the highlight included a community toilet scheme and some charitable giving from the supermarket’s corporate social responsibility department."

Actually I don’t want to be too harsh – up until that point Aditya Chakrabortty was doing okay and asking one or two pertinent questions about the relationship between the State and the market. But then - "What did the area get back? Not very much." What the heck is this wally on about, not very much? A chain of supermarkets that made £8m profit would have sold around £200-300m worth of groceries. The value of a supermarket is what it produces, so what the residents of Enfield got back was the £200-300m worth of shopping they wanted. Consequently, as well as the community toilet scheme and some charitable giving, Tesco gave value to Enfield in the form of providing them with somewhere to park, shop, and somewhere to obtain the multitude of goods they wished to buy for their weekly shopping.

So it shouldn’t surprise Mr. Chakrabortty to know that what Tesco and the Enfield residents got out of each other was exactly what they hoped they would; Tesco got £8m profit from the transactions, and the Enfield residents got all their fruit, vegetables, meat, tinned food, and so on. I will agree that any more the big supermarkets can do to help with food banks, fair trade, etc, the better – but to exclaim that the residents of Enfield got back ‘not very much’ from Tesco is ridiculously short-sighted.

The Church of England & The State Should Play To Their Strengths

The Church of England has some confused views about economics. In my mind there are too many church spokespeople calling for us to move away from capitalism and give increased power to the State to intervene and tackle all the so-called injustices that occur in a free market economy. Even if we ignore the fact that for all intents and purposes it's impossible to 'move away from capitalism', the church is still doing itself no favours on this issue.

For several reasons the Church of England would have more social credibility and greater societal relevance if it argued for less State intervention, and departed from its erroneous view that the general mechanism of the free market is lacking in ethics. As I've argued before, the free market is not this illusory moral vacuum devoid of ethicality - its success depends on moral agents being honest, reliable, trustworthy and diligent in their outputs (read this book if you want your doubts quashed).

Try to remember what Christ’s incarnation was like on earth - He vocally opposed the oppressiveness of the theological State and establishment teaching, and He was no friend of the Sanhedrin or the Roman authorities. Whatever the topic - be it religion, economics, politics, or whatever - authoritarian top-down management from the State is not the optimum situation for citizens governed by that State. For the church to obtain more social relevance it should be championing a smaller State not a bigger one. The church is precisely the institution that should be filling in the gaps left by the overarching forces of government and the market. In other words, the places where the State and the market can't reach are the places the church should be most prominent: it already is when it comes to theology and salvation issues - it should be with ethics, charity and social justice too. The church's involvement in food banks and soup kitchens, for example, is exactly the sort of societal influence it should be having, and thankfully is.

The fallacy of enforced generosity

The same can be said of charity - it is the church that always ought to be leading the way here (and again, often is). I remember a couple of years ago hearing David Cameron defending the governmental increase in the foreign aid budget on the basis that 'Britons are generous people'. No, this is wrong. Somebody should give the Prime Minister a dictionary and get him to look up the word 'generous'. He'll see that being generous means giving away something of your own accord. It doesn't mean being forced to give away something over which you have no control. If I draw out my life savings and bail out Harty's Diner then I have been generous (wisely or foolishly) - but I have been generous because I wanted to bail out Harty's Diner. If the government taxes me with the threat of imprisonment and bails out Harty's Diner (wisely or foolishly) on my behalf then I have not been generous, because I had no say in the matter.

Now I'm all for increasing in the foreign aid budget and helping the world's neediest, but David Cameron had his reasoning backwards there. The governmental increase in the foreign aid budget must have been necessary because too many Britons are not that generous of their own volition. Giving to the world's neediest of your own accord is more generous than the government giving to them on your behalf after taxing it from you. If Britons were increasingly generous people it would lessen the need for governmental foreign aid not increase it.

As I argued here, when the church leaders and spokespeople advocate a bigger State and more substantial governmental redistributive policies they go against their own fundamental Christian theology. Further, we should never forget how Christianity is so often worse off once political influences are infused and soaked into its material, and how Jesus’ teaching regarding His Kingdom being 'not of this world' confers onto the message a marked boundary line that is likely to be burred when Christianity and State become excessively commingled.

As usual The Guardian has got the wrong end of the stick about food banks, but alas so has the Archbishop of Canterbury Justin Welby, as he asserts that the government should get more involved with them, and that the very fact that people need food banks is a national disgrace. Naturally a lot of people who fancy themselves as leftist revolutionaries have the same idea.

In this blog I explained why a rise in food bank users doesn’t necessarily mean a rise in poverty. Let’s broaden it out a little. Apparently according to The Guardian article 60% of food bank users received only one sanction, which basically means they were one time users, probably due to temporary hardship. From what I can gather from looking into it a bit further, many of these cases are due to missing appointments, penalties for misuse of the system, and various bureaucratic issues that delay benefit payments for a week or so.

But even if we make allowances for these cases, it is true that many people in the UK are suffering genuine economic hardship. And when that happens people are quick to play the blame game, with the first target for opprobrium usually being the government. In my view this is lazy-thinking. Sure, the government makes mistakes, and it has some counterproductive policies, but should anyone really be satisfied with blaming politicians when in doing so it exculpates people from the decisions they make in life? It's not as though the British government is making a total mess of things - the recovery is stronger than it might have been, and healthy compared with the rest of Europe. As well, unemployment has continued to fall, inflation remains low, interest rates are falling, and the pound is fairly strong. And also the government has finally cottoned on to the necessity of a rise in the threshold at which low earners pay income tax.

For many struggling people, the cost of living exceeds their income, but I'm not sure why the government gets the blame for this, as politicians don't control wages in the private sector, nor do they control prices of goods and services (except for this caveat: by often making them artificially high due to subsidies, tariffs and other regulatory measures). We have to face facts, there are a lot of things that go on that are not the fault of the government. People make life choices - some good some bad - and Christianity, if it insists on one thing about our life circumstances, it is that there is a good deal of reaping what one is sowing (Galatians 6:7).

Now the job of the Christian (and, as it happens, the compassionate citizen of any belief too, but particularly the Christian) is to show mindfulness and understanding when we see people in difficulty, even those whose difficulty is largely their own doing. To deny that reaping is causally linked to sowing is to not help anyone.

Myths and generalisations

And one thing is clear on this; blanket generalisations won't add any intellectual gravitas to the discussions. Let me give you an example to show what I mean. The other day in his Guardian column Owen Jones was complaining that wages are too low for people to make ends meet, and that this apparent Dickensian misery that plagues the UK at present is down to low paid workers being treated unfairly. The obvious thing wrong with his claim is the same thing that's usually wrong in his reasoning - he only thinks in hasty generalisations and he fails to ask the right questions about causality. So yes, it's true that a lot of people have a wage that is low enough to make them feel the struggles of daily life, but there are many reasons why people are on low wages, and most of them are not down to government measures.

There is no denying that most people would like more pay for the work they do, but that's not to be confused with the so-called 'injustice' of low pay. There are reasons many people are in low paid work, and it is alarming that these reasons are never mentioned in articles written from the hard left. Let's start with the general pattern; low pay is a price signal that indicates an abundance of agents able to sell their skills or labour at that price; and high pay is a price signal that indicates a scarcity of agents able to sell their skills or labour at that price. To use a particular example, that's why there are more people ready to stack shelves at Sainsbury's than there are people ready to be the Chief Executive. If there is a plethora of people in the lower end market it would suggest that many people are not receiving the training or education needed for the demands of the market.

But moving away from the general onto particulars, there are a multitude of reasons why people start and remain in low paid jobs, other than the fact that they don't have the skill sets to do the higher paid jobs. Many people are in low paid jobs because they want to be. It's easy to imagine why - for many people the trade off between higher paid jobs that entail further training, more responsibility, better people skills, unsociable hours, more pressure, greater risk, and so forth, leaves them favouring the lower paid positions with less responsibility, less pressure and a safer day to day working life. This is a fact I see on a weekly basis in local authority - a promotional position will come up with the majority of employees being uninterested in applying for it. Many are older people in the latter years of their working lives, some are mothers for whom it wouldn't pay to earn more or increase their hours; some simply don't have the ingenuity to try to further themselves; some are intermittent workers; and some are happy having a comfortable 9 to 5 job and focusing more on their extra curricular talents and interests.

We’ve digressed, but it has been to make an important point – that general criticisms are faulty when people don’t get to the finer details of causal links. Just as not everyone on low pay is the victim of injustice, similarly not every incidence of charitable help is due to injustice either. As I said in the blog link above, rather than food banks always being an indication of injustice or increased economic hardship, they most likely are a demonstration of our increased ability to respond to economic hardship with donations of food for those that need it.

Or to put it another way, food banks are a great achievement of the Trussell Trust  - a private Christian charity, because they provide help and retain a social relevance highly consistent with the church’s ethos. As things like the food bank scheme and soup kitchens become better known and grow in efficiency, it's quite understandable that more people will use them. Government involvement in this would be a bad idea - it will come on a wagon train of bureaucracy, as well as increased inefficiency, and it will discourage much of the voluntary beneficence that motivates people’s giving.

The Guardian writers often complain that food price rises are exceeding people's living capacity, but these are just as much due to the aforementioned government subsidies and regulations that stop the market forces that would lower food prices.

One irony about many people's biases (both in the church and outside) is that in wanting to make the world a better place by constraining the free market and tempering corporation power they are pulling their own hand away from the problem they are trying to solve. Basic first year economics informs us that a freer market and fewer regulatory protocols is the best solution to corporate power. So what's usually thought of as "the government isn't doing enough" is, in fact, usually the case of "the government is doing too much". State regulations create artificial barriers to entering the market, which stultifies competition, and artificially drives up prices, giving us a rinse-and-repeat cycle that brings people to need to use food banks.

Just as the church embarrasses itself and tarnishes its reputation when it distorts established science in favour of the delusive and counterfactual claims of young earth creationism, so too it embarrasses itself and tarnishes its reputation when it displays ignorance of basic economic principles and loads up that ignorance to unleash misjudged social commentary. The success of food banks is one of the church's greatest achievements in modern society - it gives exhibition to conscientious, caring individuals who want to do their bit to help struggling people. If this isn't the playing out of the instructions given by the writer of Hebrews to "not neglect to do good and share what we have", I don't know what is. The church should be seizing on the momentum already gathered and using it for even greater good by encouraging more and more people to be kind, caring and conscientious citizens, not furtively attempting to compromise this momentum by transferring the emphasis back on the bureaucratic State.

* Photo courtesy of Euronews

Good and Evil Are Still 'Opinions'

Dennis Prager, speaking from the religious right says:

"If there is no God, the labels “good” and “evil” are merely opinions. They are substitutes for “I like it” and “I don’t like it.”

This is a misjudgement on a number of levels - most notably (and this should be trivially obvious), belief that God exists is also an opinion, and one that, if held, still requires views about ethics and morality to be constructed in accordance with that belief (as you've probably noticed, a lot of religious people disagree on moral and ethical matters). So whether you believe in God or not, terms like 'good' and 'evil' remain within the realm of human opinion, because we don't have the capacity to proffer anything other than personal opinion based on personal interpretation.

To even hold the view that God is good, one needs a mobilisation of conscience-related experiential qualities; from a psychological framework, to engagement with other humans, right through to wider socio-personal familiarisation and the faculty of conceptual reasoning. As history has shown, those human experiential qualities have brought about mixed results - and that's putting it mildly.

 

 

* Photo courtesy of Carnage & Culture (Dennis Prager's Blog)

Black Friday, Squabbles, Prices, Who Pays What, & Why

Lots of people are aghast at Black Friday - they see news bulletins showing people fighting, squabbling and climbing over each other to get discounted goods in a 24 hour period. If they knew what was really going on they'd be less surprised - they'd see it as simply a more extreme version of what they get involved in every day - it's a phenomenon called price sensitivity, and here's how it works.

Let me tell you about two products from Starbucks.

There is a regular Cappuccino, for which you'll pay about £2:

There is what's called an Iced White Chocolate Mocha, for which you'll pay around £3.50:

What's the difference between the two products in terms of ingredients and production cost? Almost nothing at all. Why, then, is the second priced at £1.50 more than the first? The answer is to do with 'price discrimination' - a tool for seeing who is price sensitive to more expensive goods and who is not. Imagine you've just set up a new coffee shop - how should you price your items on the menu? Ideally you'd want to charge every customer the most they'd willingly pay - but you can't do that because you don't know how much each individual would be willing to pay. Plus if rich Rick pays more for his coffee than poor Pete there'll be an outcry.

By pricing similar products at different prices, what you're basically saying is: if you're the sort of customer who is price sensitive you'll probably buy the Cappuccino for £2, and if you're not you'll probably buy something more expensive, like the Mocha at £3.50. Let me expand this to other examples. Suppose Sainsbury's added 20% to the price of 30% of its wine, vegetables, linseed and sunglasses - those who are price sensitive would seek out the cheapest products on the other shelves - and those who are not would hardly notice they are paying more.

Have you wondered why in supermarkets the 'own brand' cheaper varieties look so unappealing in package design? They are mostly plain and un-alluring, but for good reason. The 'own brand' product appeals to very price-sensitive people, but it is also there to make more expensive alternative products more appealing. Someone who wants the cheapest corn flakes possible won't worry about the awful Tesco own brand packaging - she'll be glad of the savings. Others will consider the extra money well worth it to have Kellogg’s - and Tesco does not mind either way.

Here are other examples. When attending music festivals, price sensitive people will bring as much of their own food and alcohol as they can - those who aren't bothered and would rather have less to carry from the car to the tent area will just pay the marked-up festival prices. Hotels offer discounted prices on the Internet because they know that Internet shoppers are more price-sensitive bargain hunters. That's also why mini-bars have such expensive drinks - they know many guests won't pay for anything, choosing instead to get their water, fruit juice and beer from a near-by supermarket, but they know that guests who are not price sensitive won't worry too much about paying extortionate prices if it saves them having to go to the shop. Similarly in terms of prices paid for London transport, Oyster cards are there for price sensitive travellers, and full fares are like mini bars - they are there for those who are so insensitive to price that they can't even take the time, or have no need to take the time, to get an Oyster card (many tourists, for example).

 

As well as price discrimination, there are other factors that dictate prices - factors that go beyond customer price sensitivity. An example of a hiked up price with a rationale behind it is restaurant desserts. Have you noticed how desserts are disproportionately expensive in restaurants compared to the main meal? You can pay £10 for a big meal with meat and all the trimmings, and yet you can pay £5 to £6 for a couple of scoops of ice cream thereafter. But there is a good reason why: the value of the ice cream is not what you are being charged for primarily, it is the value of the table time*. While you're extending your stay to order and then eat dessert, you are taking up a table that otherwise could be sold to waiting customers who want to order a main meal. Naturally sometimes there'll be no waiting customers, other times there'll be several - but the restaurant can't know in advance, so it can't fluctuate its prices every half an hour according to demand, it must set fixed prices to allow for it.

Pricing is all about getting the balance right. Take pubs and tap water. Most pubs don't charge for a glass of water, but some do. Why should they charge for tap water that's so readily available and at such a small cost? It's for a similar reason to the price of desserts - water is a substitute for other liquid - while you're in the pub drinking water you're not drinking coke or lemonade or beer. Giving you a glass of water means giving you a substitute for the thing they are trying to sell - pub drinks. Now in most cases water drinkers are sparse; sometimes they appear alongside friends who are drinking other drinks bought at the bar, or they have water with a meal - and it is because of their sparseness that most pubs do not make a charge for water. Those that did probably would find the gains would be outweighed by the losses - water drinkers and their friends may well choose a different pub - one that makes no charge for water.

So why, then, are there so many Black Friday squabbles?

After reading all that about price discrimination and price sensitivity, it should be easy to see what's really going on in that 24 hour Black Friday period. If we need toilet paper, petrol or a new washing machine to replace the one that broke yesterday, we can't be too sensitive to whether those items are on sale or not - we have to make the purchases. In other words, they are not discretionary purchases. Now a lot of the things people buy on Black Friday are discretionary purchases - people buy them because they are on sale, but they wouldn't otherwise buy them. So on ordinary days shops set their prices to attract price insensitive shoppers, with sale items being for price sensitive customers. On a day like Black Friday stores know that price sensitive shoppers will be out in their droves, with price insensitive customers likely to stay away to avoid the crowds and squabbles. The less well off you are, the more price sensitive you are likely to be, so the more keen you'll be to struggle at close quarters among the crowds to grab that bargain you couldn't otherwise afford.

It's easy to see a couple of instances of civil unrest on the news and look upon Black Friday with utter regret (and yes, there are plenty of things about the concept to regret) - but to only have a downer on it would be to overlook the obvious gains. The millions spent yesterday will be a huge boost to businesses and their employees, as well as being a huge benefit to the tens of thousands of consumers who are currently struggling and couldn't afford to pay the non-discounted prices, but now have something they wanted.

* And to some extent the same applies to starters

Why Doesn't Ed Miliband Offer The Kind Of Help That Will Actually Be Helpful?

Ed Miliband is drumming up support for his party in the pre-election campaign by promising financial help to small businesses to enable them to hire more staff. He is, not for the first time, confused. Post-tax incomes of businesses are not the primary determiner of employment levels. Employment wisdom is simple: if the output for additional staff has a value that covers their salaries then an employer should employ them. If not, then they shouldn't. This rule applies irrespective of whether you're a high street kebab shop or a multi-national corporation. Ed Miliband's financial incentives won't help raise employment levels.

To see why; suppose you've just eaten a nice big two-course meal in a restaurant, and the proprietor comes and offers you a free dessert. If you're stuffed, and you care more about your health and comfort than capitalising on a freebie, you will politely decline the proprietor's kind offer. Your optimum level of food consumption does not depend on whether you've paid for your food or not - it depends on your body's metabolism. Just as you will not take on more food unless your body needs it, similarly you will not take on more staff unless they bring a value that covers their salaries. If they will, then you don't need Ed Miliband's supplements - they would be better spent elsewhere; and if they won’t then Ed Miliband's supplements will not go towards raising employment levels.

This is why, rather than governments getting involved, it is much better if banks loan to small businesses of their own volition. A bank will lend if the borrower's ultimate gain from spending the money enables him or her to pay back the loan with interest. A government won't have anything like the same kind of risk signals, nor the incentive for prudence, as it is spending other people's money, not its own. Miliband’s claim that tax cuts for small businesses will help increase employment is a sure-fire vote winner. But like many sure-fire vote winners, it is fallacious.

What would work better would be large tax cuts for middle and low earners. You see, unlike rich people who delay spending and consume higher end products (Ferraris, yachts, swimming pools, £500 handbags, etc), middle and low earners are likely to increase their spending, which will increase employment. The exact same wisdom applies to minimum wage laws too. Instead of a minimum wage law that creates unemployment, hikes up prices and places an unfair burden on employers of low-skilled workers, the government could simply reduce the tax burden of low earners.

The answer to the question - Why Doesn't Ed Miliband Offer the Kind Of Help That Will Actually Be Helpful? - is that the helpful way is less of a headline grabbing vote-winner, so it's one he's unlikely to pursue with the same enthusiasm.

* Picture courtesy of bbc.co.uk

A Mansion Tax Has Got To Be One Of Ed's Most Idiotic Proposals Yet!!!

Myleene Klass is largely right when she barks at Ed Miliband, telling him that the mansion tax will be a tax on far too many people (predominantly in London) that have lived in those houses for years and years, and are not all that rich in terms of disposable income.

Labour's proposal for a mansion tax is an incredibly stupid idea for a tax, particularly given that home owners already incur tax through council tax, stamp duty when a house is purchased, and inheritance tax when the owner dies and tries to pass it on.

The other negative consequence that Klass didn't mention, though, is that due to inflation and planning restrictions, politicians continue to cause the huge rise in property prices, as they ensure that supply cannot meet demand. The perpetuation of this will only continue to give them even more tax, thus reducing even further the chances of trying to sort the housing problem.

It really does beggar belief that such an obviously stupid proposal is being considered by any politician. It is so blindingly obvious that a blanket tax on properties of £2 million is not going to hit people fairly. Yes the Russian oligarch with his big £5 million mansion in London may be one of the success stories of this tax, but for every one person like him, there will be countless London-based elderly couples (doubtless many widows and widowers too) who have paid off their mortgage, lived in that house for decades and seen the value of their home rise over that time.

Tax proposals that have this adverse effect on unsuspecting people are ridiculously ill-conceived, short-sighted ideas, in particular due to the fact that unlike, say, income tax and consumptions taxes, there is no transaction exchange or cash stream with home ownership. This means that all Ed Miliband will do is hit people indiscriminately and at the same time eliminate some of the value of their homes. Given this fact, a system that differentiates between Russian oligarch in Mayfair and widow in Battersea or Pimlico will be so complex, bureaucratic and costly that the net returns will be negligible (and that's if they're even planning on having any kind of rigorous system in place).

Alas, every day becomes more and more obvious that, if there's one thing this country needs in next year's general election, it is that everything must be done to ensure this current bunch of Labour no-hopers gets nowhere near to forming a Government. This realisation - a realisation that I think is starting to be realised more and more - may well be prove to be enough to ensure that Labour gets fewer votes than the current forecasters predict. Gosh I really hope so.

 

On Africa & Trade

So, Alex Salmond publicly announces he is going to donate his annual pension to charity after stepping down as Scottish first minister. That's good of him, sure, but I can't help being suspicious that it's very much based on courting publicity and reputation mongering. If he wants to give to charity, why not do so quietly, as though the cause is what's important, not the attention? As a wise man once said, "When you give to the needy, do not let your left hand know what your right hand is doing" (Matthew 6:3).

Things aren't that way, of course, for Bob Geldof - he relies on a public persona to get the British public donating money. Reports say he may have got the hump with Adele and other performers for not joining him on his latest version of Band Aid’s patronising charity single. Not to worry, she probably couldn't give two hoots what Bob Geldof thinks - and as Bryony Gordon reminds us in her Telegraph article – “Later, we learnt that Adele had quietly made a private donation to Oxfam. But in the shallow, self-promoting world of celebrity, the simple and silent act of handing over money to charity is not the done thing.” I say Geldof ' may have got the hump' - it seems uncertain whether he did, although he denies it publicly - but he's certainly calling for us all to give more to charity, and in the process he's dividing opinions regarding how he goes about it.

Of course, despite Geldof's apparent arrogance, and the crassly condescending song lyrics and over-inflated egos of so many of the slebs involved, any money raised is most welcome (perhaps they could give it to the DEC or Oxfam to ensure maximal good is done in fighting Ebola). But whatever good is done to fight Ebola, and whatever help is given to those beset by its plight, the big questions about Africa continue to be raised - with the reality of the bigger picture being that what Africa needs more than aid is trade - and we prosperous nations don't help as much as we could. As well as the many internal problems that hold back Africa’s progress, the CAP denies Africa many vital trading opportunities with their barriers to Europe’s market for (in particular) agriculture and their EU subsidies, which deny Africa the ability to compete in a global economy. As I said a while back in this Blog post:

“Government subsidies and high tariffs on imports are two examples of how richer countries are distorting the free market by preventing poorer countries from competing to sell their resources. The European Union subsidises European farmers and the American government subsidies American farmers, placing African, Asian and South American farmers at a huge disadvantage, because they cannot easily sell their own produce as they are unable to compete with richer countries in the price market. When George Bush affords American farmers 180 billion dollars in subsidy deals to buy American votes (which he did when he was President), he depresses prices across the globe, which robs unsubsidised (and much poorer) Africans Asians and South Americans of their ability to be able to sell their crops competitively in the global market. This costs poorer countries tens of billions of dollars in lost revenue.

In subsidising farmers, the governments in question don't just disadvantage those struggling in developing countries, they retard innovation locally too. Stopping the subsidies helps farmers explore new market potential; it incentivises them to innovate, to diversify their output, and to generally be more economically prudent without government funds to fall back on. When a government subsidises farmers it removes some of the need to run a business in accordance with market demands and price fluctuations. Non-subsidised business owners are much more alert to profit and loss signals, just as any business that makes decisions with other people's money tends to make those decisions less prudently than with their own money. Furthermore, business owners who receive subsidies try to curry favour with the politicians handing out the cash, when they should be trying to win the customers by providing a good business practice and competitive prices. Farm subsidies in the shape of the very rich giving to the relatively rich at the expense of the relatively poor are a disgrace - and no nation can claim any kind of moral accomplishment in the global scene while they continue to engage in this egregious policy of subsidising their own at the expense of those desperate to get a stronger foot in the free market.”

It's good to hear the trade policy adviser for Oxfam agreeing with this, and being fully seized of what needs to change:

"Not only does the Common Agricultural Policy hit European shoppers in their pockets but strikes a blow against the heart of development in places like Africa. The CAP lavishes subsidies on the UK's wealthiest farmers and biggest landowners at the expense of millions of poorest farmers in the developing world. The UK Government must lobby hard within the EU to agree an overhaul of the CAP by 2008 to put an end to the vicious cycle of overproduction and dumping. The £30bn-a-year EU agricultural subsidy regime is one of the biggest iniquities facing farmers in Africa and other developing counties. They cannot export their products because they compete with the lower prices made possible by payments."

  
It should be remembered - and this is so often forgotten - that poverty and material hardship is not an unusual thing for humans to experience. In the middle ages we in the UK were about as poor as the poorest countries are now. We gradually crept out of our plight to become prosperous, and we did so by finding out that prosperity comes from a combination of material resources and human resources (including education). During the time of long working days, low life expectancy and severe hardship we also found out that the fundamental key to increasing prosperity is conflating those material resources and human resources to create value through innovation.

Once we reached the inceptive stages of our scientific and industrial enlightenment, it took us about 250 years to go from severe hardship to wealth and prosperity - and being one of the first nations it naturally took longer than it would in the modern day when if you are a country plighted by severe hardship you are in a world in which many countries are prosperous and able to help with aid and investment. Don't forget that even as late as the 1970s China's GDP still resembled the GDP of England pre-Industrial Revolution. Just 40 years later China is one of the world's biggest economies and looks set to be the biggest in a few decades (although prior to this happening I predict that China's recent rapid growth will slow down in the short term future while it sorts out its internal contradiction of having a communist state whilst relying primarily on its exporting of consumer goods). The upshot is that when lots of countries become wealthy, poorer countries increase the speed at which they join them. Don't get me wrong, there is still lots more that needs to happen, but as well as China one can see this expedition with the likes of South Korea, Taiwan, Hong Kong and Singapore, all of which were mired in poverty a few decades ago but are now rising in prosperity and stability.

All this prosperity, though, won't happen for the current poorest countries without at least one other vital change - the end of political corruption and oppression. It doesn't take a genius to work out that when a dictator or political party wins a huge majority in a country in which they are vastly unpopular there is corruption at the heart of it. And, of course, if you are a political oppressor running a nation it's no use pillaging a country to its total demise. That is to say, if these dictators are to exploit their citizens and take a proportion of their earnings, they need to keep them at a level that doesn't destroy the economy but keeps everyone poor enough and regulated enough so that they lack the powers to engender revolutionary changes.

It's easy to see why such an effect keeps people poor. Under such a tyrannical regime, there is little incentive to innovate or progress when the State takes much of your earnings and fails to protect your basic human rights. It is the kleptocratic people in charge that keep their citizens in their plight and deny them the ability to trade properly. Prosperous countries begin to be prosperous when the conditions facilitate it - and those conditions rely on people taking actions that benefit others, not just themselves – namely through the vehicle of free trade. Citizens that are forced by their corrupt State to practice the kind of self-interest that only has negative effects on other citizens (directly or indirectly) are going to find it difficult to climb out of their poverty trap.

Given the foregoing analysis, it's not hard to believe the contentions that much of the aid money that went to Ethiopia in the mid-1980s was used to entrap starving citizens into state camps, from where over half a million were said to have been deported and where tens (probably hundreds) of thousands are thought to have died. How much of Somalia's, Uganda's and Zimbabwe's aid finds its way into the hands of corrupt officials and warlords? It wouldn't be surprising to find out that the answer is the vast majority. Thus the onus is on us to research well and ensure that the charities to whom we choose to give are ones that are going to do the most good. 

It was primarily trade that made the Western world prosperous, and it will be, and is, primarily trade that lifts Africa out of poverty. The forecast for Africa looks brighter with every passing decade – and what will expedite this process is a reversal of the things that have retarded the continent for so long, namely the engendering of more stable governments, the lifting of trade restrictions, and the improved ability for Africa to compete more propitiously in the global market economy.

On The Myth That You Can't See Evolution Happening

 

A strange assertion from evolution-deniers is that the theory of evolution is questionable because "It has never been seen to be occurring". It's a strange assertion because it isn't in the least bit true. Imagine teaching a child to tell the time by showing him how long a second is, how seconds convert to minutes, how minutes convert to hours, how hours convert to days, how days convert to weeks, and so on.  As long as he had enough multiplication data he wouldn’t be unapprised of what a year is like, nor a decade, nor a century, nor millennia.

Evolution is a bit like that - once we have the data that explains how it works, we don't need to live for thousands of years to see evolution happening in individual species. Evolution in the simplest observation would be changes in allele frequencies in a population over time. An allele is one of two or more alternative forms of a gene that may occur on a chromosome, affecting the expression of a particular trait. If we are looking for the simplest evidence that evolution occurs, then our observing bacteria is enough to piece together parts of a jigsaw - it gives us evidence of changes in the genes and gene frequencies in populations.  Bacteria are an effective model because they have both huge populations and incredibly fast life cycles, and as such one can observe quite easily the changes in the frequency of any one allele in a set of genes.

Imagine a huge colony of bacteria with a compound in the substrate; those that can tolerate the compound probably will survive and those that cannot probably will die.  The ones that survive will do so because of a natural variation within the population, and this allele will yield dominance in the colony due to the negative selection against other alleles on that loci.  That is evolution at work - the demonstrable observation of a colony of bacteria and change in the allele frequencies of a specific gene coding for a product through changing generations. This manifests itself with clear observations of mutation and natural selection, from which we can see evolution at work in organisms.

Here's a good real life example. In Japan we have something called "the nylon bug" which arose from a strain of bacterium. These bacteria have evolved a completely new gene for the digestion of nylon. This gene, called nylonase, allows these bacteria to live where there is otherwise no food. This capacity occurred due to a single-step mutation that survived because it improved the fitness of the bacteria possessing the mutation. The acquisition of that function trait was so successful that it has given rise to an entire species of bacteria.  

Evolution is full of examples of similar kinds of mutation and natural selection that have played out in populations. There are types of radiotrophic fungi that have evolved to withstand the highly radioactive interior of the Chernobyl reactor. We have a similar example in the UK, where there are piles of ore outside old lead mines. Lead is toxic to snails, but within the last one hundred years or so, local snails have evolved a mechanism to live in lead-rich areas by incorporating the lead into their shells. 

From this information alone we can see evolution at work, just as a young boy can see linear time at work by looking at the clock on his mantelpiece. We can piece together an epistemological jigsaw and use componential analysis to work out that evolution is occurring in every living organism and has been for billions of years.

Why Robots Won't Make Most Of Us Unemployed

Two articles came to my attention today; one in The Daily Mail Fail forewarning of robots bringing an end to half of today's jobs by 2025, and one in The Guardian lamenting an apparent decrease in social mobility. I’ve put them both together in a blog post because the error of reasoning that underlies their contentions is more or less the same in both cases – failure to understand the elasticity of future changes.

Let’s start with the Mail’s fear of enhanced technology 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 – you see, 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. That the Mail (and it turns out, The Guardian and The Telegraph) have been so short-sighted in their panic is poor on their part.

I now turn to The Guardian's take on the apparent decrease in social mobility. Dr John Goldthorpe, collaborator in the analysis, said:

“For the first time in a long time, we have got a generation coming through education and into the jobs market whose chances of social advancement are not better than their parents, they are worse.”

In illustrative terms, a similar thing is happening to the above, except the effects are being seen here in the labour market. That is to say, as job-types differ, we see different flows in social mobility too. Once upon a time, owning lots of land was the key to having the most social mobility. Now, it is not so important. There is a decrease in social mobility in some quarters of society, but they are offset by increases in social mobility in other areas of the labour market.

Moreover, let us not forget another important fact that was omitted in the article - that general prosperity and well-being are about more than just earnings and career prospects. A proper analysis must factor in all sorts of other pertinent things like improvements in technology, services, scientific capabilities, access to knowledge, health and medicine, worldwide communication, and so forth, that give this generation so many huge advantages that their parents and grandparents never had.

All this does, though, lead me on to what I think is the most important issue related to the above – that we have a generation of young people for whom upward social mobility may be like a passing cloud they can never catch up with. The spectres highlighted in the articles above are not so much a worry for the reasons the writers claimed – they are a worry because there are a large number of young people who lack the basic literacy, numeracy, social awareness, family support, mental health, hope and aspiration to be a force in the job market, or in many cases, get a foot on the ladder at all.

Social mobility, like natural selection in biological evolution, is a strong genetic factor in human progression. People at a young age look to climb the social ladder, increasing their skills and earnings along the way - which means that people with better abilities are generally (not always, but often) in higher positions.

Thanks to what were at the time up and coming advancements, like stream powered cotton mills, coal mining, increased agricultural machinery and major increases in the production of metals, textiles, and many other manufactured goods, there were thousands of job opportunities emerging for people at the incipient stages of the Industrial Revolution - creating a new middle class and transferring lots of wealth from the richer faction of society down to those now taking part in industry. As this continued, 19th century social mobility rose fairly consistently throughout all the UK population, as opportunity to work begat further opportunities to work. While it was far from all rosy, there were the embryonic foundations for what is now a very prosperous modern Britain. Similar developments are occurring throughout the world in countries that are currently as poor as Britain was a century or so ago.

There is currently a generation of young disenfranchised people that may not have the kind of leg-up that their 19th century counterparts had. Yes, it's true that in terms of quality of life and access to things, the current crop have it astronomically better than those before them - but a labour market that continually manages to replace more menial human tasks with machine capability may well struggle to find jobs for many of today and tomorrow's youth who lack the basic literacy, numeracy, social awareness, family support, mental health, hope and aspiration to climb the ladder. And if that is the case - it is there that the State will have to show its mettle and give them much more of a helping hand than is currently the case.

 

Current Politics Briefly Explained With Poker Analogy



There's trouble at t'mill in Ed Miliband's Labour camp, with pressure from some of his party members for him to stand down. Of course, most of us know he's not Prime Minister material, but I find these disgruntled Labour party members' behaviour quite peculiar, given that Ed Miliband is perhaps the best magician in politics right now: he's managed to make his party favourite for the next election while simultaneously having the worst policies in modern Labour Party history (I'll leave it up to you whether you want to include Clement Atlee's socialist party as modern history).

In terms of policies and political credibility, the current political landscape is roughly along the lines of this poker hand analogy. UKIP has about the equivalent of Jack high; The Liberal Democrats have a pair, as do The Green Party; Labour has two pair; The Conservatives have an eight-high straight, and The Libertarian Party has a full house.

Unfortunately, with the current backdrop we live in a nation in which many don't understand the rules of poker. There are an emerging number of hardcore Brits who think high cards trump all other hands; many neo-socialists and Gaia demagogues who think poker is about acquiring pairs; many who over-inflate straights, and a great many who haven't got to grips with the true value of a full house.

Alas, there isn’t a Royal Flush party (I doubt any bunch of humans could create one) – but if there were ever to be a party that would be roughly equivalent to having a four of a kind hand, it would be a party that understands all of the following. That….

Capitalism and science are the primary vehicles for improving people's prosperity, well-being and living standards all over the world.

Heavy regulation is bad for the economy, as it usually hurts the people the policies intend to protect.

Price controls create scarcity; they do not help those struggling to pay their bills.

Small business subsidies are a crass interference in the market of supply and demand.

The minimum wage creates unemployment, hikes up prices and places an unfair burden on employers of low-skilled workers.

Market forces shield workers from discrimination far more than governments do.

The banking industry suffered because it was too heavily regulated, not because it was left 'unfettered'.

Chancellors don't really ever balance the budget or induce growth.

Tax cuts are not what cause deficits.

In the arms race between green governmental policies and greener scientific and technological capabilities, the latter is almost sure to win out.

Inefficiency, waste and poor management are predictable features of public sector, nationalised and government-owned services.

Having a 'trade deficit' does not mean that the country is poorer because of it.

Protecting British businesses over foreign ones hurts other British businesses as well as foreigners.

Buying cheaper products from abroad is better for our country's people, not worse.

Protectionism, import tariffs and farm subsidies help a privileged few, but they make everyone else poorer.

Without interest income there'd be virtually no investment at all.

Big governments create too many hidden costs and only relatively few superficial benefits in the free market.

If Only They'd Get The Message About The 'Living Wage' Fallacy

Oh ah, finally the ill-conceived ‘living wage’ pressures being applied on businesses have brought about the outcome people like me keep banging on about – redundancy and unemployment. After coming under intense pressure to pay their workers a ‘living wage’, Ritzy cinema finally relented – an action which amounted to a reduction of about 20 staff members.

I just hope all the misinformed people who keep going on about a living wage are very pleased with themselves. Might it be too much to hope for that they could just realise that the more they apply this ‘living wage’ pressure, the more we’ll see of this kind of employee reduction?

Sadly, it’s not the first time I’ve had to talk about this minimum/living wage fallacy:

“As well as unfairly loading the burden on firms that employ low earners, it also encroaches on low end business, it reduces job availability, and it often causes inflation of prices as firms try to recoup their losses on increased wages. A minimum wage does two further things. It shifts capital from employers in an unstable competitive market to low paid workers, and it induces some employers to let their staff go because they cannot afford the wages. If you’re getting £7 per hour and only bringing £6 per hour worth of benefits to your company, you’ll likely find yourself on the dole. If you are a lower paid man or woman going from here to there in different jobs, you will find less work available with every rise in the minimum wage – and the higher the rate the more unemployment. This might amount to a road block for young, unskilled workers and the unemployed – which is why tax credits are a more effective method because they target those who have children or high level benefits, and need high wages to make it worth their while signing off benefits, but who don’t have the skills or experience to command that kind of salary. “

Why is such a simple thing so difficult to grasp for those on the economic left? If prices (that’s goods, services and wages) are artificially set higher than their natural profitability or productivity, the costs will have to be offset elsewhere, either by increased prices for customers or, as is the case here, a reduction in staff. I’m sad to say that I think the only explanation for this continued fallacy is that a great many supporters of the living wage are not interested in what’s best for low paid workers, they are only interested in self-congratulation and moral posturing. That is to say, in seeming to support the underdogs they don’t mind hurting them as long as there are enough credulous people out there conferring praise on them.

We see a similar thing going on with trees and paper. Some people claim to care about preservation of trees. Such people stridently champion paper recycling as the best way to preserve our forests. The reality is, if they really cared about trees they should be against paper recycling, not for it. It is not hard to find out that paper is cheap and that recycling is worse for trees and for consumption. Trees are farmed for economic reasons too, and in commercial terms they are planted for future sales. To give you a compelling analogy, does anybody think that if we recycled chicken breasts there'd be more chickens in the world? Of course not. It's the same with trees. People who are for paper recycling share this commonality with people for the ‘living wage’ – they are either outrageously misinformed, or they are not interested in the number of trees in the world and the number of low-skilled people in work, only in moral posturing. 

What makes me so sure of this? Easy, it’s the fact that they have been told time and time again that there is a better way to stand up for the underdogs – a way that boosts their income but doesn’t jeopardise their employment - yet they continue to ignore it. All the government has to do to help low earners is take them out of tax and national insurance – thus making their wage more like a living wage, but not jeopardising employment levels or penalising employers of low-skilled workers.

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

On Being Offended

Consider these 4 statements, and which ones are good positions to hold:

1) Everyone has a right to be offended

2) Everyone has a right not to be offended

3) No one has a right to be offended

4) No one has a right not to be offended

I think statement 4 is a strong 'yes' - 'no one has a right not to be offended', because there is no right that protects you from hearing something that offends you. Things are bound to crop up that will offend, because the honest pursuit of facts and truths makes that inevitable.

Given the foregoing, the statement 'everyone has a right to be offended' (statement 1) has concomitance with statement 4 'no one has a right not to be offended' - as both involve the environment of free expression, frankness, and probability of being challenged or affronted.

This leaves statements 2 and 3. Some people advocate the principles of statement 2 - 'everyone has a right not to be offended' - but as a viewpoint I think it is manifestly unhelpful, as such a right would be to insist on being quarantined from any contra-views that might affront you. Similarly I can't even envisage a condition under which 'some people have a right not to be offended' is ever going to be useful to anyone. As for statement 3 'no one has a right to be offended' - that is also one to reject if we agree that free expression, frankness, and being challenged are qualities bound up in our having a right to be offended and no right not to be offended.