Odd to agree with Sir Vince

But there we are, oddities happen at times in an infinite universe:

Sir Vince Cable’s defence of Royal Mail privatisation could be minuted, perhaps uncharitably, as “It’s a dog, that’s why we sold it”.

He’s right, of course, however politically unsuitable it is to tell the truth to people. As he notes, the share price is now half what the government sold at, which is pretty solid vindication. Remember, too, that he and the coalition government were pilloried for selling it off too cheaply after an initial spike in the share price. A few years on, theirs looks like an eminently sensible decision.

After all, those who manage the nation’s assets should at least try to take the profits and dump the losses.

Trump and tariffs

Tariffs are simply a bad idea both in theory and practice. They make us poorer, which isn’t the point of this economic game at all.

But then, well, we’re in an election period, aren’t we? So, economic interventions aren’t going to be made on the basis of good economics but mere political calculation.

Which brings us to the most worrying thing of all: of the people running to be president, Trump is the least interventionist. Everyone else insists there should be more politics in economic decisions. Lord, help us all.

Don’t like the sound of this

So, I do stuff at Seeking Alpha. That website not working at present. The message, when asked why, being:

Hi Tim,

You’ll be hearing from the Contributors team within a few days.

Best,

Abby

That’s not good, is it?

It’s one thing to have a change in what can be written, where, for how much. It’s another to lose a couple of month’s already earned income….

Timmy elsewhere

A new gig, might work out:

Apparently Travis Kalanick, serial entrepreneur and Uber co-founder, is investing heavily in “dark kitchens” along with some vast numbers of people. The point here being not that his or anyone elses’ investment is going to be successful but that the general move toward dark kitchens is both logical and inevitable. After all, what is it Domino’s has been doing all these decades?

The idea of dark kitchens is an extension of the various food delivery services. Just Eat, Uber Eats, Deliveroo, every urban centre the world around is now packed with companies offering to pick up and deliver from the local restaurant scene. It is beginning to click that the traditional front end of the restaurant is the portion of the system that isn’t necessary nor profoundly profitable.

Think through the economics of that trade.

Now here’s posh

The Joint Economic Committee:

When Barack Obama became president, the economy was experiencing what former Federal
Reserve Chairman Ben Bernanke called “the worst financial crisis in global history, including the
Great Depression.”2

Footnote 2 leading to me at Forbes. Whoop, eh, Whoop!

Of course, they entirely ignore what I said but then, you know, politicians and economics.

Elsewhere

A new start up opiniony place sorta thing. Good folks running it. You should read the site often:

It seems a fair and reasonable contention that if we are ruled by the ignorant then we are going to be ruled badly. An acquaintance with reality would seem to be a useful attribute for anyone making the rules by which others must live.

This is not a left or right issue, since surely even the most determined planner would agree that the whole system works better when the brightest and best-informed people are those doing the planning.

The question then becomes: do we end up with the best informed as our rulers? The answer, unfortunately, is we do not. The planning delusion, therefore, moves on from the socialist calculation problem to something that simply does not work under any circumstances.

Since we find ourselves subject to rule at the hands of the ignorant, our rulers should be allowed as little control as possible over what we may do. Laissez-faire is justified not on moral or efficiency grounds but through the lack of knowledge of the planners.

The Nobel

Perhaps children learn better on a full belly? Or perhaps parents keep children away from school simply so that they can feed them? Or even send them to work so there’s enough money to feed that child? Any of those would suggest that feeding the child at school will lead to more learning and a better attendance record. Michael Kremer has evaluated just that, and finds that it’s true. Feeding children in absolute poverty (the $1.90 a day income kind, not something that exists anywhere in the United States) leads to much better educational outcomes. So if we subsidize school lunch in places too poor to afford it, we make the world a better place.

At which point we come back to one of the older lessons of economics: Just because something should be done doesn’t mean that getting government to do it works. A charity called Mary’s Meals does just this for $20 per child per year. The U.S. government has a program to do the same, which costs about $200 per child per year. Both are feeding millions a year — which is great, but think how much more could be done if it were all being done efficiently?

Banerjee, Duflo, and Kremer are well deserving of their Nobel Prize — not so much for making this vale of tears less dreadful, but for arming us with more of the tools we need to work out how to do that.

Elsewhere

Both were, one or two generations back, substantially poorer than the UK. Abjectly poor in fact. They are now both richer than the UK – substantially so. GDP per capita in 2017 was Singapore $57,700, Hong Kong $46,200, UK $39,700. Their growth rates are substantially higher too – the gap is growing, not shrinking.

In fact, the low redistribution rich countries are the only ones that are growing at even the global average – all of the high redistribution states have had growth rates below that global average for decades now. And what is it that will determine the living standards of the poor in 20 and 30 years time? It’s going to be how rich is the economy being lived in, not whether 10 or 20% is sliced off the rich to give to the poor.

Elsewhere

This really isn’t new at all. Way back in 1987, Biden’s first run for the nomination derailed when he plagiarized a speech by British politician Neil Kinnock. Stealing bits of a speech from someone who got steamrollered by Maggie Thatcher might not be all that much of an error to be honest, she tended to have that effect upon opposition. But from someone who then went on to lose to John Major?

I do think that people are being more than a little unfair to Biden at present. It really isn’t true that he’s too old and losing it. Joe’s problem is he never did have it in the first place.

Elsewhere

The argument that the tech giants have to be broken up in order to foster journalism is for the birds. We have, in the English speaking world, plenty of evidence that it’s not necessary.

There is one joy to this though. It is true that the tech giants profit from network effects. But then so too did the newspapers, as above, when they were the local monopolies themselves. And there is a certain satisfaction to seeing those who lived by network effects dying by them too.

Br’er Boris

But they don’t take into account one key option available to the UK: that of reverting to our historic position and declaring unilateral free trade by abolishing all tariffs. This would, as Patrick Minford has been telling us all this past decade and more, be hugely beneficial to us all.

If we do that, the worst that can happen to the UK would be that we get to buy, as we wish, from the finest and most economic producers of everything around the world without restriction or limitation. The Prime Minister is therefore in a rather handy position when he discusses who sends who a cheque in the near future – please don’t force me into that thicket of free trade to the nation’s great benefit.

And if Johnson can’t win a negotiation playing such a hand then we’ve still got a few people left who haven’t had the opportunity to be Prime Minister yet, haven’t we?

Elsewhere

This does not mean we should not tax property, or wealth; other arguments are available both in favour and against such. We do rather a lot of taxing of property already through rates, council tax and so on. The OECD records Britain as gaining 12.5 per cent of all tax revenue from property, well over twice the OECD countries’ average of 5.6 per cent. It is the taxation of property transactions that needs to go.

Part of the solution to our current housing woes is that those with more space than they need — empty nesters, say — downsize to make room for the next generation. A transactions tax actively militates against this. Perhaps Mr Javid would like to revive Nigel Lawson’s gleeful shooting of a tax each budget. If so, stamp duty should be the first up against the wall.

This is something new for me

Sure, and I occasionally get to write for the Times. And they’ve even, once or twice, rung up for a bit of advice – rare earths I recall one time. But this is the first time I know of that a piece elsewhere has been used by them as a source – a proof perhaps – for a contention being made by someone else.

The state should leave obese people alone as their early deaths would save the NHS money in the long run, the BBC presenter Michael Buerk has said.

He said overweight people should be allowed to indulge if they wished, and that they were “weak, not ill”.

Well, quite so. The end of the piece?

Tim Worstall, of the Adam Smith Institute, has called warnings that obesity poses an NHS funding crisis “nonsense on stilts”. He wrote: “When you add in the costs of the state pensions that those who die young don’t get, smoking and gorging save the government vast sums of money. Having us all slim . . . would cost the NHS very much more money than the current level of topers, smokers and lardbuckets does.”

Elsewhere

Why? Why would we want to invest a lot in a sector which pays lower than average wages? This would just be making us all poorer, obviously. Think on it: Fast food workers make less than accountants, so therefore we must invest in burger joints not financial management? No, of course not, we want to invest in the industries that pay the higher incomes to the workers, on the sensible grounds that we think it a good idea that people get higher incomes. Investing in manufacturing, given those lower wages, thus makes us all poorer — both by gaining more lower-wage jobs and also by losing the higher incomes that would have been gained by more sensible policies.

By the way, the very complaint being made of free-market economics is that it’s already doing this, investing in the better-paid sectors. That’s why there’s a plan, to force the market to stop investing in nice highly paid service jobs and to spray money at impoverishing manufacturing ones. The basic insistence here is that laissez faire economics is by itself and on its own making us richer. By golly, surely this must be stopped!

A letter in The Times

ELIZABETHAN LAW
Sir, Simon Szreter (“Elizabethans knew how to boost our productivity”, Thunderer, Jul 12) tells us that we should bring back the principles of the Elizabethan Poor Law. Those principles were that the impotent poor — the disabled — should and would be taken care of through that system of progressive taxation upon land. The able-bodied poor, unable to work through some economic happenstance, would also be cared for, but at the cost of their working on some task while they were — say, those on jobseeker’s allowance having to sweep the streets or stack shelves. The idle poor were sent to the House of Correction, or possibly prison. My suspicion is that there would be a lot of votes today in a system that jailed the workshy. I think Szreter very brave, in that Yes Minister sense, for proposing it.
Tim Worstall
Senior fellow Adam Smith Institute, London SW1

Which has been worrying about ‘leccie companies going bust

There is always moaning about the functioning of a market economy. The latest fuss comes from Which?, concerning the operation of the energy market. The complaint is that companies arrive, charge unsustainably low prices, go bust and customers — 283,000 households this year — get transferred to companies that charge more. That last being what keeps the lights on, as they don’t go bust.

This isn’t a problem, nor something to be regulated away. Which? seems not to realise that suppliers going bankrupt isn’t an error of the system, it’s the designed function of a market economy.

Sadly, the editor changed my use of “mither” to moaning in that first sentence.

Pity, I like the world mither…..