February 2011

Jonathan Porritt asks

And then ask yourself if there is one single, teensy-weensy residual reason not to sign up to the “Million for a Billion” petition.

Well, yes, actually there is.

90% of the changes in actual fertility come from changes in desired fertility, only the residual 10% comes from access to contraception.

Ramping up the spending on contraception therefore won\’t change desired and thus actual fertility much. It\’s people getting rich that does that…..

Is this actually good?

And why I am not the only one who has been gripped by the heart-stopping playing of principal viola Amihai Grosz, who performs Mahler symphonies as if they were string quartets – and quartets as if symphonies.

Mebbe it\’s just me, but shouldn\’t symphonies be played as symphonies, quartets as quartets?

You know, like waltzs in 3/4 and foxtrots in 4/4, as they were written to be played?

In which we answer Richard Murphy\’s question

Ritchie asks us a question today. An important question too.

Why do we allow the free movement of capital?

We do not allow the free movement of people.

So why do we choose to let capital roam as it wishes? Why is it acceptable to let capital minimise its tax? Why can capital use artifice, from the limited liability entity to the tax haven, and yet we impose the cost of supporting its errors on people?

What is the reason for condemning 5 billion of the 6 billion or so people in the world to poverty to make sure capital can make money?

Why have we made this choice?

The answer is here:



Because it works.

As the good little liberals that we all are we desire that the poorest and most destitute of our fellow human beings rise up out of the child killing poverty, the miserable hand to mouth existence, which is the Third World peasant lifestyle.

Depending upon where are roots are, our forefathers managed this some several centuries ago (for, say, England, other parts of the UK following hard behind), Sweden managed it starting at the turn of the last century, Hong Kong starting in the 1950s perhaps, and so on, to China and India in the late 70s, early 90s, and as you can see, Africa in the mid 90s. Do, just for a moment, note what rising \”Sen Welfare\” means. It means that both inequality is falling and that average incomes are rising.

We can all also note that, while we can happily argue about how much government was needed to prepare for these various lift offs, each and every one of those lift offs was correlated with a move to a more liberal economic policy. Freer trade, fewer restrictions upon what people could do with their lives, more capital movement.

And this more liberal set of policies is what is known today as \”neoliberalism\”. If you wish, the rediscovery of the classical liberals: Smith\’s leaving the money to fructify in the pockets of the populace.

All of which is why all us good little liberals might sign up for things like the Washington Consensus. Yes, including the free movement of capital.

Because these last 30, 40 years of the triumph of neoliberalism has led to the greatest reduction in poverty in the history of our whole species. The poor are getting richer, global inequality is falling.

Which means that we can answer Ritchie\’s question: why do we allow the free movement of capital?

Because it fucking works, dunderhead.

Berkeley Earth project

I\’ve no idea at all about how this is going to turn out but it has at least the possibility of being very interesting indeed.

And yes, this is the sort of thing that science really should be trying to do. Go back to the original data and try to replicate the findings of others. If you can replicate, all well and good, if you can\’t, try to work out why.

UK freezes Gadaffi’s assets – but why now?

That\’s the question Ritchie asks so let\’s try and provide an answer, shall we?

Britain said it was revoking the diplomatic immunity of the Libyan leader and his family, including his high-profile son Saif al-Islam, who has had close links with the UK. David Cameron echoed Barack Obama in calling on him to go. The PM said: \”All of this sends a clear message to this regime: it is time for Colonel Gaddafi to go and to go now. There is no future for Libya that includes him.\”

OK, that\’s a start. Prior to this move as the de facto and de jure ruler of a sovereign state, Gaddafi enjoyed immunity.

This is a pretty basic piece of international diplomacy. We really may not like having to o this but it is necessary to deal with the world as it is, not as we would wish it to be. Some arrogant little creep comes to power somewhere: Gaddafi, Mao, Stalin, Herr Hitler and all the rest. And if we\’re not actually at war with them, we\’ve got to accept that, however they gained their state power, they do in fact have that state power.

The gravity of the crisis was reflected in Saturday night\’s vote by the UN security council to impose travel and asset sanctions on Gaddafi and his entourage and a belated arms embargo on Libya – even if these moves are now largely symbolic. Gaddafi also became the first sitting head of state to be referred to the international criminal court by unanimous vote of the often-divided UN security council. British officials also said his exclusion from the UK was an unprecedented act.

See, we\’ve got international laws about these things.

Britain froze the assets of Muammar Gaddafi and his five children on Sunday evening at an emergency meeting of the Privy Council at Windsor castle presided over by the Queen.


We may know that someone\’s an arrogant thieving thug, that he routinely steals power from the people along with their cash. But as sovereign, we have to deal with them. So we do. We may all wish to see Gaddafi hanging from his heels from the light fittings of downtown Tripoli but while he\’s a seat at the UN, is acknoweldged by the \”international community\” as The Bloke, we cannot do anything else.

Once he\’s not so regarded, of course we can.

So that\’s the \”why now?\” answer. He had both diplomatic and sovereign immunity. Now he doesn\’t.

And shouldn’t we now freeze the assets of the leaders of a great many more states?

And if not, why not?

Because Richard, in order to do so, you\’ve got to get the UN, that guardian of international law (I know, snigger) to vote that you can.

Gosh, isn\’t the Lisbon Treaty wonderful?

Basing insurance rates on statistics about the differing life expectancies or road accident records of men and women is standard practise across Europe.

It is specifically permitted in EU anti-discrimination rules which allows member states to discriminate on insurance rates and benefits \”if sex is a determining risk factor, and that can be substantiated by relevant and accurate actuarial and statistical data.\”

But an Advocate-General at the European Court of Justice has advised judges that the concession in the EU \”Gender Directive\” is countermanded by \”higher-ranking\” equality provisions set out in the Charter of Fundamental Rights in the Lisbon Treaty.

If that legal \”opinion\” is upheld in Tuesday\’s final verdict, it will mean insurers can no longer gender-based different prices on a range of products including car insurance, private medical insurance, pension schemes and annuities.

Don\’t you just love what the miserable little cock-suckers have done here?

Insurance rates are based upon reality: men die younger so get higher annuities, young men drive worse so pay higher car insurance. These two aspects of the universe, it\’s now (possibly) going to be illegal to acknowledge them.

And as for private medical insurance: are we to see men forced to buy cover for pregnancy and women for prostate exams?

I should, perhaps, note that there is a saving grace to this fuckwitted nonsense. It shows that the European Union really is a Babelian Tower of nonsense upon stilts, a direct rejection of Canute\’s lesson to the world that that real world is more powerful than the commands and desires of the rulers.

We learnt this a millennium ago: our Continental partners seem not to have done so as yet.

Fuck \’em, can we leave yet?

I think I\’ll go with Sam Bowman here

The Adam Smith Institute has described the Social Market Foundation\’s suggestion that the Government should raise the minimum wage as \”ludicrous\”.

Steve Coulter, an associate fellow of the SMF and economics analyst for BBC News, said the Government should raise significantly the minimum wage. \”The Government should set out a strategy to significantly increase the national minimum wage over the medium term in order to encourage firms to upgrade the skills of their workforces, boost productivity and reduce \’low-road\’ employers\’ dependence on state wage subsidies like the working tax credit,\” he said in a report published today.

Mr Coulter said research indicates that \”higher minimum wages produce higher productivity in low-wage industries\” because employers \”substitute skilled for unskilled workers\”.

Well quite. Employers substitute skilled for unskilled workers when the price of low end workers rises. Which means that the low skilled workers en up doing nothing rather than something. We thus find ourselves staring at a rise in unemployment among the least skilled workers. You know, like that 20% or whatever it is of the young, people with no training, no observable skills, who are currently on the dole.

But Sam Bowman, head of research at the Adam Smith Institute, attacked Mr Coulter\’s proposals and said that raising the minimum wage would result in higher unemployment.

\”The proposals are ludicrous. Wages are related to people\’s productivity, and people whose labour is worth less than the minimum wage will be a net loss to employers,\” he said. \”Raising the minimum wage would price even more people out of work when jobs are already scarce, and raise labour costs for businesses. Wage controls that price unproductive people out of work are the last thing that the unemployed need – the SMF should be trying to learn from the mistakes of the 1970s, not repeating them.\”

Yes, as I say, I think I\’ll go with Sam here. For there\’s another way of putting the point that Steve Coulter is making here:

Mr Coulter said research indicates that \”higher minimum wages produce higher productivity in low-wage industries\” because employers \”substitute skilled for unskilled workers\”.

If you raise the price of something people will substitute away from it. In this case, raise the price of labour and people will substitute capital for labour: this is exactly the same statement as higher productivity. For it\’s adding capital to labour that raises productivity. Coulter doesn\’t seem to realise that the very thing he\’s arguing for is fewer jobs in total, with the unskilled left entirely outside the job market.

On that BP compensation fund

Pinellas Marine Salvage has filed suit in Florida against the Gulf Coast Claims Facility and its federal administrator, Kenneth Feinberg, claiming it is not acting sufficiently in the interests of victims.

Pinellas Marine Salvage is seeking economic, compensatory, and punitive damages.

The local company claims that Mr Feinberg and the fund \”circumvent many of the rights provided to victims of the BP oil spill under the Oil Pollution Act of 1990,\” and employs a \”delay, deny, defend\” strategy against claimants.

Hardly unusual for someone to sue at this stage. The amounts of money lying around have all the lawyers gagging for a case they can try and argue.

But arguing this particular law in their favour is really quite interesting: for this is the law that caps BP\’s liability to private sector claimants to $75 million.

So they are arguing that paying out $20 billion not $75 million is damaging those the damages are being paid out to…..

Fracking wastes are detroying the water supply!

Blimey, this is pretty weak beer:

Yet sewage treatment plant operators say they are far less capable of removing radioactive contaminants than most other toxic substances. Indeed, most of these facilities cannot remove enough of the radioactive material to meet federal drinking-water standards before discharging the wastewater into rivers, sometimes just miles upstream from drinking-water intake plants.

Which is, of course, why we have drinking water treatment plants: because we don\’t expect the rivers, aquifers, nor even the run off from sewage plants, to meet drinking water standards.

In which I am cruel about Catherine Bennett

Concering women on the boards of companies. We should have tokenism, we should have quotas, we should have women appointed to boards willy nilly right now!

So says woman with only another decade or so of her career in which to get onto boards.

Update: Oh, how glorious, as in comments. The piece is by an entirely different writer altogether. Argument XVI for Timmy to have more coffee before blogging. Note, not all stroppy females in the Observer are called Catherine Bennett.

Resolution Foundation: dodgy, dodgy, statistics

And yes this does seem to matter more than the usual wonk tank playing around with things. For Ed Miliband is, apparently, going to base some part of his strategy upon this.

People on low to middle incomes are facing a \”perfect economic storm\”, which is cutting their living standards and dramatically reducing their ability to buy their own homes, new research will show this week.

The independent Resolution Foundation is to launch a major inquiry into living standards among the so-called \”squeezed middle\”, having identified economic trends – in existence since the 1970s – that have led wages for this income group to grow at a slower rate than the economy.

Umm, yes, we know that some incomes are not growing as fast as the economy: we have rising income inequality so the idea that some incomes are growing faster than the entire economy, others slower, isn\’t all that much of a surprise.

But note the little switch there.

Hmm, no, let us have a numerical example. Imagine that the economy is, post inflation, growing at 3% a year. (You can use 2% if you like, the long term average growth lying somewhere between the two).

And let us say that the incomes of these squeezed middle are growing at 1% a year.

Their incomes are growing more slowly than the entire economy. But this is not the same as saying that their incomes or their living standards are falling. For they are not, they are still growing at 1% a year. That\’s our first bit of bait and switch in this story.

The foundation, which aims to improve the lot of 11.1 million people, will reveal evidence that home ownership is slipping out of the reach of those living in households with below-median earnings.

It defines low and middle earners as those with incomes between £12,000 and £30,000 for a couple with no children and up to £48,000 for a couple with three children.

Hmm…this is the second bit of the bait and switch. We\’ve just come out of a period when people buying houses they couldn\’t afford became the major problem facing the economy as a whole.

Complaining that we\’ve solved this by making sure that people who cannot afford a house do not buy a house is off, no?

The foundation will say that 41% of young low-to-middle earners live in privately rented accommodation compared with 14% in 1988, suggesting a dramatic reduction in the number of those who can afford to get on the housing ladder.

Well, no, not really. This is our third bait and switch. There\’s been a massive expansion of the private rental market over the past 25 years. A quite deliberate policy decision as well. To some extent, there was a quite deliberate post war policy of eradicating the private rental market. It worked quite well too: this will surprise some of the young shavers out there but early 80s it was actually physically difficult to find a private rental. No, it wasn\’t about price: there just weren\’t many. Reforms, most especially to security of tenure and the abolition of \”fair rents\” have led to a huge expansion of this market.

Rents might be more expensive, but it is actually possible to find somewhere to rent.

And, erm, where should \”the young\” live if not in rental accomodation? With the average age of marriage, of primagravidae, now racing past 30, this sounds like a very sensible indeed situation. Given, of course, the situation where single no kids people are never, ever, going to get a look in at social housing of any type.

It will also highlight evidence showing that someone at the lower end of these incomes will take 45 years to accumulate a deposit to buy a home if they save an average 5% of their income a year. This compares with less than 10 years during periods in the 1980s and 1990s.

Might this just possibly have something to do with the rise in the required deposit? You know, this reaction to the troubles we\’ve had from people buying a house without having much skin in the game?

Oh, and this is gorgeous:

It defines low and middle earners as those with incomes between £12,000 and £30,000 for a couple with no children and up to £48,000 for a couple with three children. Broadly, they are defined as not wealthy enough to benefit from private markets but too prosperous to receive benefits from the state.

What does \”not benefit from private markets\” mean? Their incomes are low because they don\’t have ravenously competing capitalists trying to exploit them? Tesco and Sainsbury offer nothing to those with below median incomes? That there are squiddley number of car manufacturers instead of a state owned Trabant factory does not increase the quality, the choice, and reduce the price paid for cars?

Seriously, these numpties are trying to say that \”markets\” only work for those on above median incomes?

And this is going to be the core of Labour\’s revival?

The findings will be seized on by Labour leader Ed Miliband in a speech at the launch.

2015 is looking rather safer really.

Huge surprise!

Pregnant women on benefits have used NHS fruit and vegetable vouchers to obtain cigarettes and alcohol, a Government report has found.

Well of course this will happen. Near cash alternatives will be used in much the same way as cash.

No one\’s all that surprised when housing benefit cheques, designed to be spent on rent, get diverted into booze n\’ fags. Just one of the things that happens.

No Polly, no

This is a real-life economic experiment, one last chance to prove that Herbert Hoover was right after all and Franklin Roosevelt and Keynes wrong.

So, what was it that Herbet Hoover actually did in those years?


Oh my, you mean Herbert Hoover did exactly what Keynes would have recommended? As the recession/depression hit you mean he began running, by the standards of the time, vast budget deficits? Do not forget that at this time federal spending was 3-4% of GDP in total, so a deficit of 3% really is a large number.

And when did Frankie Roosev get into power? Why, I believe it was 4 th March 1933.

Hmm, wait a minute, maybe Hoover still cut spending but the fall in taxes is what increased the deficit?


Nope, he doubled federal government spending. That\’s how the deficit went from a surplus to 3 % of GDP.

So, Herbert Hoover reacted to the Depression by doubling/tripling government spending and financing this with a deficit.

D\’ye know, I have this feeling that the current economic policy (whatever you might think about it) is actually an attempt to prove Hoover wrong, not right.

Responding to Will Straw

Will\’s got a new little book out telling us all how \”smart government\” will save us all.

My response at CiF:

An alternative approach is needed that understands the role of smart government in promoting growth.

Well, yes Will.

The question is, how do we get the smart people to go into government?

Further, how do we get over the impossibility of anyone at the centre ever getting enough information to be able to actually plan the economy.


\”Author: Edited by Will Straw
Contributors: Philippe Legrain, Duncan Weldon, Gustav Horn, Richard Seline, Charles Leadbeater, Kitty Ussher, Adam Lent, Gerald Holtham, Andy Westwood, Stian Westlake, Anna Turley, Tony Dolphin \”

You\’re seriously putting these people forward as the \”smart\” people who know how the other 65 million of us should earn our living, run our economy?


In turn, you\’ve a eurocrat, Hattie\’s recent economic advisor, another (ex) eurocrat, the \”White House Liaison to the Persian Gulf Task Force at the U.S. Environmental Protection Agency\”, the \”devisor\” of Bridget Jones\’ Diary, Virginia Bottomley\’s niece, a TUC apparatchik, a hedge fund guy, an education bureaucrat (GuildHE even!), another quangocrat, another quangocrat, a wonk from the wonkery that published your pamphlet…..and, of course, you, a SpAd.

You are really willing to stand up and insist that these ever so bright, incredibly \”smart\” people know better how to run the fifth largest economy in hte world better than the other 65 million of us do?

It is to laugh.

And if you\’re going to say that no, no, it\’s government that should be smart, not the writers of this book: well, have you actually looked at them? And the alternatives?

Seriously? John Denham\’s the man to run the UK economy? Ed Balls?

Well yes Mr. Seymour, this is the point

As a share of GDP, wages have fallen from a high of 64% in 1974 to approximately 54% in 2010.


Amid a certain fashionable revival of Marx in some corners, it shouldn\’t be controversial to call this for what it is: a stark increase in the rate of exploitation. What has happened is the direct culmination of Thatcherite class war, aimed at breaking up the bargaining power of labour in order to restore profitability to what was a crisis-hit British capitalism.


If you go back to the immediate post war period you\’ll see that the wages share of GDP was around that 54% level (running on memory, perhaps a tad higher, 55, 56%).

And then we had that exercise of union power which increased that wages share. To the point at which, by the mid 70s, the profit share was insufficient to encourage people to invest.

You\’re absolutely correct that the profit share has risen since then. But your underlying assumption that that high wages/low profit share in the mid 70s was a good thing, or even a stable split, is the error.

Another way of putting this is that union power put the wages share too high to encourage the necessary and continual investment needed to keep the economy growing. Thus it had to fall.