Socialists and planning

This investigation into PFI contracts is fascinating:

PFI schools were introduced by the last Labour government as a way of getting new buildings without paying upfront. Hundreds of new schools were delivered. But the contracts, which typically last 30 years, require high annual payments throughout that time and must be honoured regardless of the effects of population change or parental choice on school rolls.

The new Bishops Park School, in Clacton, Essex, was open for only three years before closing after expected housing development failed to materialise.

The building has been taken over by another school, Clacton Coastal Academy, which is temporarily teaching some former Bishops Park pupils in it. However, the academy’s head teacher said he wanted to move them to its main site in Clacton town centre.

About £10?million has already been paid for the school but the PFI contract still requires payments of £1.8?million to be made for the building each year until 2035. In total, taxpayers will have to repay about £55?million for the school, more than twice what the building would be worth even if it was in full use.

In Brighton, the city council had to pay £4.6?million to buy out the contract for the Comart PFI school after it closed due to falling rolls. In County Down, Balmoral High School was closed but taxpayers must still pay the PFI contractor £370,000 a year for the empty building until 2027. Some of the classrooms are in temporary use by another school.

Leave aside the why it was done: Gordon Brown wanted to have lots of infrastructure but didn\’t want to have to say he was paying for it. So get it financed off the books.

Leave aside the opposite point, that it isn\’t as expensive as it seems, for it rolls together capital and maintenance costs in a way that other methods of budgeting don\’t.

Think instead of what this shows us of the socialist (or if you prefer, plannerist) mindset that infest so much of UK society. No, this isn\’t limited to the left it\’s just more virulent there.

That we should be planning the future: indeed we must. Failing entirely to understand that you simply cannot gather enough information in order to be able to plan the complexity for three decades out.

Sure, of course, you do need to be able to decide where and how large to build schools and you\’d rather like them to have a decades long life as infrastucture. But it all needs to be a lot more flexible than deciding 30 years in advance who is going to, or even when they\’re going to, repaint the walls.

And if we have this problem with schools, which we do, then imagine how much more difficult the planning of the production side of the economy is going to be? We might be able to make a good guess about what is going to be the hot new technological area in 2018. But anyone seriously predicting what it will be in 2035 (except in the most general terms, biopharma perhaps, or renewable energy) would and should be derided as entirely barking.

And yet we do still have those who would say it is both possible and desirable that we should, through politics and the bureaucracy, try to plan these things.

Even when we\’ve the evidence that in something much more stable, schooling, the wheels come off such planning attempts after only a decade.

In short, it\’s not just the way that PFI was financed. It\’s the way that an attempt was made to plan in detail decades out. something that really just doesn\’t work.

Real wages are falling

No, not as a result of the neoliberalism of the past 30 years. I\’m afraid that those who want to say that there has been no improvement in living standards since the 1970s are simply wrong. But real wages are indeed falling:

“In 2011, real wages are likely to be no higher than they were in 2005,” he said. “One has to go back to the 1920s to find a time when real wages fell over a period of six years.

Capitalism does have its booms and busts and we\’re in a bust now. We\’ve given up all the gains of 6 years of economic growth. Or rather, a couple of years of growth and a few years of not growth have cancelled each other out.

Now yes, it\’s true that we humans really don\’t like giving up what we already have, valuing what we have much more highly than the equal amount that we could have had but didn\’t. So a fall in real incomes is something we dislike much more than a rise that we could have but didn\’t get.

But, here\’s the crucial point about this capitalism/free market mix. It\’s the only system we know of that gives us the booms, in which real wages advance, even at the cost of the busts. And on average over the decades, real wages do increase. Even at 2% (which is somewhere around the historical average) real wages double every 35 years, every generation. And we really haven\’t found another system which does such. This doesn\’t mean that there isn\’t one out there, just that we haven\’t found it yet.

Oh, and the real wages of 2005? Bach in 2005 they looked pretty good really, didn\’t they? Highest ever?

While now may not be all that enjoyable for the above reasons, it\’s rather difficult to say that because real wages are at 2005 levels, we\’ve all been plunged into penury.

No, prefabs won\’t work

The cheap housing method, whereby homes are built off-site and dropped into place, is once again the future of building, according to an independent report commissioned by the Royal Institution of Chartered Surveyors.

But while today’s versions – dubbed “modular” homes – are still low-cost, with prices starting at £20,000, they boast state-of-the-art design and impressive \”green\” credentials.

Pre-fabs got a bad name for shoddy design and poor construction after they were churned out by the thousands to solve the post-war housing crisis.

The reason this won\’t work is because the problem we have with UK housing (most especially in the SE and London) isn\’t that a house itself is too expensive. Sure, prefabs could being down that part of it from £100,000 ish to that £20,000 ish (although I would imagine that it would be more than £20,000 for a prefab 3 bedder, while construction costs for something the size of a prefab would be less than £100,000 using traditional methods) asnd that would be nice.

The problem though is the cost of land upon which you are allowed to put a house. Planning permission in short.

It\’s Mr Wadsworth who has in the past done the numbers for us but I seem to recall that it\’s something like £100,000 a house and up just from the planning permission.

For example, there was a case where the court had to decide about whether the planning permission for houses which had been destroyed in the war was still valid. As there was an act that said that any house which had been blown up could be rebuilt they decided that it was. So, a corner of a park in south London, which had once had 6 (mebbe 8) houses on it was not worth the £15,000 the council put on it as a piece of the park. It was worth the £1.5 million that land with planning permission was worth.

Agricultural land can be bought in the SE for £8,000 a hectare these days. Bad stuff, bad agricultural land for less. Get planning permission on such and it goes well over £1 million a hectare.

To really be able to provide cheap and good housing we\’ve got to deal with this problem as well. If we were allowed to put £30,000 (so, a little larger) prefabs on land that cost £8,000 a hectare then we really could have affordable housing for all. Just to be extreme, say £10,000 a house for connecting all the services to low density developments, say 4-8 a hectare. 3 bed houses with quarter to half acres gardens for under £50,000 each.

To provide 80,000 houses a year (the desired goal apparently) we would be building over 0.08% to 0.16% of England each year (10,000-20,000 hectares of the 13,043,900), or in a decade we would expand the built environment from the current 10% ish to 11% ish.

We can absolutely have affordable housing. We just need to clean up the planning system first.

In which we beg for a scientific paper

Furnace smelting and extractive metallurgy of red mud: Recovery of TiO2, Al2O3 and pig iron

  1. Erol Erça?,
  2. Re?at Apak

Journal of Chemical Technology & Biotechnology

Volume 70, Issue 3, pages 241–246, November 1997

So, anyone got access to a .pdf of this paper?

Update: this could be a record: 3 minutes….so I have this now, thank you!

The book: Over a Million!

Yes, the book, the book, it\’s now well over a million!

That\’s err, well over one million on the US Amazon\’s best seller list.

Then again, it\’s only been available from US Amazon for a day so far and they\’ve only three left in stock, so get in early.

Yippeee! Finance is shrinking!

Gross Domestic Product (GDP) decreased by 0.5 per cent in the fourth quarter of 2010, compared with an increase of 0.7 per cent in the previous quarter. The GDP estimate was significantly affected by the bad weather in December; more analysis is provided in the bulletin. The decline in the fourth quarter is due to decreases in two of the component aggregate series, namely services and construction.

Total services output decreased by 0.5 per cent in the fourth quarter compared with a rise of 0.5 per cent in the previous quarter. The largest contribution to the decline in this quarter was from business services and finance.

How excellent! This is just what everyone wants, isn\’t it!

Total production output rose 0.9 per cent in the fourth quarter of 2010, compared with an increase of 0.5 per cent in the third quarter. Manufacturing made the largest contribution to the growth, where output rose 1.4 per cent compared with an increase of 1.1 per cent in the previous quarter.

How glorious! All these people who have been telling us how we\’ve got to shrink finance and increase manufacturing. It\’s happening!

Isn\’t this just wonderful? Ed Balls will greet these figures with glee of course, Mr. Murphy will just be hugging himself with excitement….what?

What?

This is what they\’ve been saying we all need isn\’t it?

But we\’re talking about hippies here

While the police may claim that they did have stringent policies and that a couple of rogue officers fell in love while on the job, the sheer number of sexual relationships between activists and undercover officers looks like something more than a coincidence.

No, I don\’t think so really.

We could use the existence of many affairs as evidence of something going off the rails if, within the grouping we\’re examining, such affairs were unusual. Among the Amish perhaps.

But to use the existence of casual sex among hippies as evidence of something unusual is probably going a little over the top really.

Quite amazing from Georgie Monbiot

It\’s bonus season, the time of year when bankers show us what they really believe. As soon as they get their money, they spend much of it on land and houses. They know that these are safer investments than the assets in which they trade. If they trash the economy again, they at least will survive.

Well, yes, it\’s called \”diversification\”.

It\’s at the very heart of all and any sensible savings or investment structures.

You certainly don\’t want to have your savings where your job is: you don\’t want you pension to be in he shares pof the company you work for. You want them to be in other assets, entirely (as far as is possible) unrelated. So if your job goes boom then you\’ve got your savings: or if your savings go boom then you\’ve still got your job.

And the same is true within an investment portfolio. You want to have a little of this, a little of that, spread the risks around, so that one piece or sector of the market going boom doesn\’t wipe you out.

There is another little point to make though. Let\’s just for the fun of it, set up a situation whereby a trader in mortgage bonds gets his bonus. Instead of buying land or a house, he thinks to himself, well, you know? I\’m one of the world experts in mortgage bonds. I should put my bonus into mortgage bonds. Trade them, just like I do in hte day job. In fact, with all that knowledge from the day job I\’ll be able to make a very good returon on my money.

What an excellent idea, eh? And we\’ve even got a name for this sort of behaviour:

Insider trading.

The rest of George\’s column is entirely bizarre. Quite simply he\’s complaining that the Government had a negotiating position, which it negotiated for, and which it didn\’t manage to achieve, over bankers\’ bonuses.

And that\’s it. George seems entirely ignorant of the point that this is what politics is: negotiation between interest groups and compromise. That\’s actualy why we have politics, so that we can have negotiations and compromise.

In which I agree with Ritchie again

The first is that there is an in-built tendency for manufacturing to be weak and the City to be strong.

Quite true.

It\’s called the international division of labour.

There have been two great outbreaks of this international division of labour. In the 1880-1914 ish times and 1980 to today.

Both times we found that Germany specialised in heavy industry, especially the manufacture of capital goods. The UK specialised in international finance.

*Shrug*.

OK then, we\’re just seeing the playing out of the comparative advantages of the two economies.

What I don\’t understand is why he\’s complaining about it.

Perhaps he\’s like to go back to the sources? Perhaps he could tell us why Adam Smith was wrong about wealth coming from the division and specialisation of labour and the associated trade, why David Ricardo was wrong about how comparative advantage adds to this process?

On the subject of Johann Hari\’s fact checking

So he goes to meet the environmental activists who are trying to stop this poisoning of their children, and watches as – terrified – they are carried away to prison. (Imagine if Al Gore had been imprisoned for exposing Love Canal, and was still in solitary, and you get the idea.)

Oh Aye?

\”I called for a congressional investigation and a hearing. I looked around the country for other sites like that. I found a little place in upstate New York called Love Canal. Had the first hearing on that issue,\” Gore said.

\”That was the one that started it all. … We made a huge difference and it was all because one high school student got involved.\”

In August 1978, Gore did chair hearings on the matter by the House Commerce Subcommittee on Oversight and Investigations – two months after the Love Canal homes were evacuated and President Carter declared the neighborhood a disaster area.

It would appear that Johann doesn\’t realise that the Al and Love Canal story is as true as the Al and Love Story story and the Al and inventing the internet story.

If you repeat the lie often enough

Then it becomes true.

And John Vidal is carrying on.

No, commodity speculation isn\’t the reason why people are going hungry.

No, there were no big relaxations of regulation in the 90s.

Yes, there have always been speculators in food.

And even if all of these things were not true, even if the allegations are true, you\’re still peddling a sack of shite.

For if speculators are in fact raising the price of corn now, that\’s exactly what we want to be happening now: a rise in the price of corn now.

As Adam Smith pointed out in the Wealth of Nations. Book VI, Chapter 5, start reading around para 42.

FFS, we\’ve known this for 235 years now. Why can you not grasp this simple point?

Well yes Mr. Preston

It is indeed true that in hard times perhaps a sharp and beady eye should be run over top peoples\’ pay.

For example, should Vice Chancellors be getting £382,000 a year at a time of cuts to the higher education funding system.

A most interesting question, I agree.

As is whether the head of Guardian Media Group should be getting £411,000 a year when Guardian Media Group has just lost £171 million.

No?

Somebody teach Tristram Hunt some economics, please

He\’s whining that the Wedgewood Museum might be broken up and sold off. Fair enough to whine about that (he is the MP for the area and arguing that everyone else must stump up for your constituents/constituency is part of the job description) but the argument he uses is nonsense.

Ask Britain’s leading ceramics designer, Emma Bridgewater, why she came to Stoke-on-Trent to build her world-renowned business, and she will tell you it’s all about the history and culture of the city. The craftmanship, design and ingenuity that turned six towns in north Staffordshire into the famous Potteries remains apparent some 250 years on.

….

Over the past 30 years, just as County Durham has erased its pit-heads, Manchester its cotton mills and Birmingham its workshops, so the Potteries has cleared its pot-banks and bottle-kilns. But this disdain must end: if we want to re-balance the British economy and wean ourselves off financial services, we should begin with some pride in our industrial history. Not least because the ceramics sector is booming again. After years of job losses and out-sourcing, new companies and young creatives are back at work in north Staffs inspired by the city’s great heritage.

For Stoke, the dispersal of the Wedgwood collection would be an act of cultural vandalism. Its demise would be to strike at the very meaning of the Potteries – the ethos that still attracts, in Emma Bridgewater and others, our modern Wedgwoods.

No, it\’s not the museum which leads to this: flogging off the stock to collectors would make no damn difference at all.

The reason that you open a new pottery in The Potteries is the same reason you open a weird metals business in Rotherham or Sheffield, a chlorine based business in Hartlepool or a wholesale financial one in The City.

What economists call \”clustering\”. Or if you prefer, the actual history of the place, not the representation of it on museum shelves. That all the various specialist suppliers you might want are there: for that\’s where all their other customers are. The workforce is there, trained and available.

For example, holding a job hiring fair for people who can paint the glaze onto the pots in Bridgewater won\’t get you all that many people. Do it in Stoke and you\’ll have a queue around the block three hours before you open.

It\’s the accumulated physical and human capital that makes Stoke the place to put a pottery: not the existence or otherwise of a museum dedicated to it.

The Joy of Markets

Europe\’s banks are facing an exodus of staff to US rivals as regulatory and political pressure drives a growing pay divide between financial institutions headquartered on either side of the Atlantic.

So, maybe bankers really shouldn\’t be earning big bonuses. Maybe they should be?

Maybe paying them is to the benefit of shareholders? They get the best doing their best?

Maybe they\’re not to the benefit of shareholders? Perhaps they are simply the extraction of rents to their detriment?

Given that we\’ve now got something of a market in the regulation of these bonuses, looks like we\’re about to find out really, doesn\’t it?

And that\’s one of the joys of markets. We find out, not what ought to be as a result of theorizing, but what actually will happen when such theorizing is applied to actual people.

This is, of course, why some people really don\’t like markets very much: there are, sadly, those wedded to the theorizing rather than the people.

Numbers, numbers

I don\’t think this is true really:

Dr Julian Little, chairman of the Agricultural Biotechnology Council, pointed out that more than 300 million acres of GM crops are planted in the world every day.

300 million a day is 109,500,000,000 acres a year. There are 247 acres to a square kilometer. So we\’re saying that 443,000,000 square km are planted with GM crops each year.

Total land area of the Earth is 148,940,000 km2.

So, the statement as it stands is that we\’re cropping the entire land surface three times a year with GM crops.

No, I don\’t think so really, I just don\’t.

Not sure who we should call them out on, Louise Grey or Dr. Julian Little, but someone really should call the numeracy police.

OK Willy, I\’ll go along with this

British democracy is coarsened by a media that is becoming ever more partisan and uninterested in impartial dissemination of information.

Yup, OK, impartial dissemination of information.

Media should.

So what\’s this we find in your article then?

Britain must confront a taboo – our refusal to tax property.

We refuse to tax property then, do we?


Showing latest available data.

Rank Countries \"\" Amount \"\"
# 1 United Kingdom: 11.9%
# 2 Japan: 10.3%
# 3 United States: 10.1%
# 4 Canada: 9.7%
# 5 Australia: 8.9%
# 6 Switzerland: 8.1%
# 7 France: 6.8%
# 8 Ireland: 5.6%
= 9 New Zealand: 5.4%
= 9 Netherlands: 5.4%
# 11 Italy: 4.3%
# 12 Sweden: 3.4%
= 13 Belgium: 3.3%
= 13 Denmark: 3.3%
# 15 Finland: 2.5%
# 16 Norway: 2.4%
# 17 Germany: 2.3%
# 18 Austria: 1.3%
Weighted average: 5.8%

What\’s that? We get more of our tax revenue from taxing property than does any other OECD country?

That\’s refusal is it?

Roll on the impartial dissemination of information in the UK media say I.

An argument I\’m delighted to use myself

From Tyler Cowen:

Charles I. Jones, an economist at Stanford University, has “disassembled” American economic growth into component parts, such as increases in capital investment, increases in work hours, increases in research and development, and other factors. Looking at 1950–1993, he found that 80 percent of the growth from that period came from the application of previously discovered ideas, combined with heavy additional investment in education and research, in a manner that cannot be easily repeated for the future. In other words, we’ve been riding off the past.

And…..

Oddly, it is the so-called \”economic right\” — which complains bitterly about decades of increasing taxes and regulation and litigation and government privilege — which finds such a claim hardest to accept.

No, no, this \”economic rightist\” is simply overjoyed to accept, even promote, that argument.

For it\’s is saying that the great Post WWII economic expansion was nothing to do with high unionisation rates, Bretton Woods, restrictions upon capital movements, high marginal tax rates, fixed exchange rates or any other of the \”liberal\” or \”social democratic\” (use one for the US, the second for Europe) theories that are so often advanced.

It was driven by the lack of economic growth in 1929-1945, a lack of economic growth which was accompanied by technological and productivity advances. That is, Post WWII growth happened not because of the policies enacted but despite them.

Another way of looking at this: we all know that growth when you\’re well behind the possible technological production frontier is easier than growth when you\’re at it. This is why a poor place like China or India can grow at 8-10%, year after year, for decades even, while mature economies struggle to manage a consistent 2.5-3%.

There was somewhere between none and fuck all economic growth in the US (and many other economies) in the 1929-1945 period. But the production frontier continued to move outwards, indeed, the 30s are one of the all time great decades for both technology and productivity improvements. The 50s to the 80s were simply playing catch up, in the same way that China and India are now.

I\’m not sure I understand this

A group of women are holding a protest tomorrow morning in London against what they call an abuse of women by police spies.

Really, I don\’t.

Women in the UK should not have to worry about being sexually abused by policemen. It is as simple as that.

In response, we call for women to come together for a blockade of Scotland Yard, in protest at political policing and in solidarity with all women who have been exploited by men they thought they could trust.

What happened to \”I am Woman, hear me roar\”?

I thought that half the point of the last 50 years was to free female sexuality from the patriarchal constraints that had been traditionally put on it?

Now that consenting adult women find out they\’ve been lied into bed they want someone to be jailed?

Don\’t you get this freedom and liberty thing? While it allows you to do all sorts of lovely things it\’s also the freedom and liberty to quite literally fuck up as well.

And no, you don\’t get to choose to allow only one side of the bargain: that\’s what sexual freedom and liberty actually mean, that you get to deploy your gonads as you wish but then so does everyone else as well.