May 2011

Larry Elliott and economic statistics

Never the twain shall meet, eh?

Comparisons with the 1930s can be overdone. Britain\’s public finances were then in a much healthier state than they are today, while the country\’s industrial base was much larger.


while the country\’s industrial base was much larger

You serious?

That\’s from something called the Index of Production and it\’s a chart of the value of manufacturing output in the UK since just after WWII. It\’s an index and 100 is defined as the level of output in 2005. As you can see we produce some two and a half times what we did in the 40s, when absolutely everyone, to hear the stories told, was gainfully employed making whippet flanges. So at first glance it would seem to be untrue that we actually produce less than we used to.

Facts are, as the saying goes, sacred.

@richardjmurphy error of the day

But then he gets really desperate: he says:

Ask yourself what would happen if we raised corporation tax to 50% or 100%. Would that create jobs? So my verdict is “nice try, brothers”.

The answer would be “that’s so stupid a suggestion no one would do it – and no one is saying they should”.

Note: corporation tax at 50% is so stupid a suggestion no one would do it.

Except of course the UK Government between 1973 and 1983.

You know, back when the TUC Ritchie works for had a great deal more power than it does now?

Today\’s Guardian editorial nonsense

The US space agency Nasa has announced the ultimate smash-and-grab raid: the first attempt to collect a handful of asteroid rock and bring it back to Earth. There are three reasons why astronomers and space buffs should cheer the seven-year, $800m robot mission and one reason why they should sob.

And in the comments:

I\’m a bit perplexed what the author means about being \”the first attempt to collect a handful of asteroid and bring it back to earth\”. The Japanese probe Hayabusa was the first to attempt this, from asteroid 25143 Itokawa, and also the first to succeed, returning to Earth on 13th June 2010, with a small sample. It\’s a bit late to be first.

Still, better than most of their economic coverage which is usually 50 years out of date.


No, this isn\’t funny

For people are dying.

Rather, it\’s enraging:

An E coli outbreak that has killed 14 people and made more than 300 seriously ill in Germany has spread to other north European countries and is expected to worsen in the coming week.

\”We hope that the number of cases will go down but we fear that it will worsen,\” said Oliver Grieve, spokesman for the University Medical Centre Schleswig-Holstein in north Germany, where many of those afflicted are being treated.

The source of the virulent strain of the bacteria is unknown, German authorities said on Monday ahead of a meeting of federal and state officials in Berlin.

I saw yesterday (where, sorry, forgotten) that the source is known.

Imperfectly cooked manure used by the Spanish organic producer.

This back to Nature movement has something to answer for: for everyone seems to forget that Nature, Mother though she is, has a habit of devouring her children.

There\’s more bugs out there trying to kill us than you can shake a stick at: making nice pure fertiliser from the air and a bit of natural gas is much safer.

Government buys private sector goods shocker!

Coalition\’s £56m a day bill to private companies

Woowee, eh?

The coalition has contracted private companies at the rate of nearly £56.6m a day since January, according to a Guardian analysis of government documents that casts new light on the extent of Whitehall\’s reliance on firms to do its work.

Ooooh, my!

The Treasury spent £532,767 on desks for its Westminster offices, the contracts, which span the surprising and mundane, reveal.

That might be a lot, too much, a good deal, who knows? But is there any turd blossom sufficiently socialist left to think that the government should be running a desk making factory?

And, umm, near £60 million a day eh? £600 million every 10 days, £6 billion every hundred, let\’s call it £24 billion for the year eh? Bit of rounding etc.

Err, The Guardian does know that the government spends some £240 billion* a year on goods and services from the private sector, yes?


*Number dimly remembered from a Ritchie post so Lord knows whether it\’s even in the right dimension.

Ban lobbying say lobbyiers!

Or at least, don\’t listen to those lobbiers over there, only listen to these lobbiers over here:

Britain is being accused of undermining a European-wide drive to ban forecourt sales of petrol and diesel derived from the carbon-heavy tar sands of Canada.

The Co-op and green groups claim coalition ministers are refusing to back other countries which want tar sands specifically named in a new fuel quality directive scheduled to come into force this autumn.

\”It is extremely disappointing that the UK has caved in to pressure from Canada, which sees Europe as setting a dangerous precedent for the rest of the world to follow, potentially closing one market after another,\” said Paul Monaghan, head of social goals and sustainability at the Co-op.

\”If it really does want to be the greenest government ever, it must lead by example and not be swayed by aggressive Canadian lobbying,\” he added.

Of course, what Mr. Monaghan himself is doing doesn\’ty count as lobbying, does it?

For his heart is pure.

Taxing the carbon from low carbon research

This does sound pretty weird:

World-class research into future sources of green energy is under threat in Britain from an environmental tax designed to boost energy efficiency and drive down carbon emissions, scientists claim.

Some facilities must find hundreds of thousands of pounds to settle green tax bills, putting jobs and research at risk.

However, assuming that you think carbon taxation is sensible in the first place, it does make sense.

Across the UK, laboratories will be required to pay around £1m in annual CRC bills to the DECC. Almost all of that will be met by diverting grants from other areas of government, such as the Department for Business, Innovation and Skills.

And that\’s the reason why.

We could, obviously, simply release the government research facilities from the requirement to pay such taxes. But that would be a bad idea for two reasons:

1) It would be a subsidy. And we want subsidies to be out in the open. We want to be able to add up what whatever rule or regulation, tax or charge, actually costs us. So we don\’t want any hidden subsidies at all. This applies to everything: council house rents should be full market rents, even if that means everyone gets housing benefit. We can then look at the benefit bill and see how much housing the poor costs us. Trains and farmers should pay full whack on fuel duty, even if that means we then have to send them a cheque to compensate. We want to be able to see, exactly, what their subsidy is.

2) We absolutely do not want things run by politicians and bureaucrats to be free of the rules politicians and bureuacrats impose upon the rest of us. It\’s our only hope of reducing the complexities, that they have to struggle with their impositions as we do. Note the screams from MPs as their expenses are doled out in the same manner the dole is doled out. Quite bloody right too.

So, yes, weird as it may seem, research into low carbon energy should be paying tax on the carbon emissions of such research.


George Forman, the ukulele player

According to the Australian subs at the Telegraph:

The ukulele is hard to take seriously, thanks to its associations with George Forman, but the musical instrument is enjoying a very substantial return to fashion.

Must be hard to do with those boxing gloves on.

Or is he more famous for prancing around with a grill fork in his hands these days?

EU twatishness on bank regulation

No, leave aside what the regulations should be for a moment and think about who should be designing them and how.

The men are concerned about \”maximum harmonisation\”, an idea gaining traction in Brussels, which will see national rule books applying the same standards in areas such as capital and liquidity requirements.

Mr Sants said: \”Within the European Commission there is discussion about standardising rules.

\”In other words, national regulators could not allow banks to go above or below the European standard… all we would be doing is policing European fixed standards.\”

Ah, no, that\’s not the way we should be going. Recall what we had under El Gordo. A set of rules adminstered by the FSA. Written, firm, rules, with bureaucrats ticking boxes.

Did that work? No, it didn\’t did it?

What we actually want to return to is the old system of Bank of England regulation. One where, while there are of course rules, there are also unwritten rules. Where it is possible for the regulator to call people in and say \” that\’s not on\”. For that\’s the only way that regulation can be done in something as fast moving as finance.

Local regulation by local people for local markets.

UK regulatory bodies such as the PRA, which are designed to apply a forward-looking, judgment-based style of muscular regulation, could be left weakened.

Exactly. So bumping the rule making up to EU level is exactly the wrong thing to be doing.

What a very weird rule

But Ferguson, a long-time critic of the academy system, insists that the changes cannot come quickly enough for English teams.

“We are only allowed to coach [schoolboys] for an hour and a half [each week].

An hour and a half each week?

Academy regulations state that young players can receive no more than 3,760 ‘contact time’ hours on the training pitch up to the age of 21.


Yer average public schoolboy will have 4-6 hours of sport a week.

Anyone know why this academy limit is so ludicrously low?

The Mahdi Bunting on banking

She tells us that we\’re just swept aside, told it\’s all too complicated for us to understand:

This public deference is also evident in how effectively the banks have used complexity and expertise to dodge accountability. \”You wouldn\’t understand\” was the mantra provided to regulators, politicians and the public, just as priests in a cult might tell devotees. The complexity required a superior intelligence and skill, insisted the \”masters of the universe\”, as they recruited the sharpest minds.

Is it all too complex to understand?

Just over 200 \”core\” staff at Barclays took home £554m last year, while thousands of shareholders, who had lent £51bn of equity capital, were left with £653m in dividends.

Apparently so for you don\’t \”lend\” equity capital.

Greenpeace and renewables on the grid

They seem to think that this is an argument in favour of their plans:

So, will the Energy [R]evolution mix in the year 2050 guarantee
a safe and secure 24/7 power supply?
The answer is yes! The analysis showed that there is only a 0.4%
chance – or 12 hours a year – that high demand correlates with
low solar and wind generation.

Meaning that for only half a day a year does the entire continent get plunged into the Middle Ages of no electrical power at all as the grid falls over.

This isn\’t quite the same as what I would call \”reliable\”, you know?

What\’s also amusing is that they define photovoltaics as \”fully commercial\”. So, why in buggery are we offering a feed in tariff of four times the going rate then?

Doesn\’t convince somehow.


Timmy elsewhere

At the ASI.

Turns out that (Surprise!) it\’s economic then civil liberty that matters the most for economic development. Entitlements and government spending aren\’t really in the running: even counterproductive.

No, you can\’t build dams either

So, when a country decides that it\’s going to go gung ho for renewable energy, going to tap its hydro-electric potential, what happens?

Turkey\’s Great Leap Forward risks cultural and environmental bankruptcy

Turkish government\’s rush to build dams, hydro and nuclear power plants angers villagers and environmental campaigners

Yup, the Greenies complain again.

You\’ve got to start thinking that they don\’t actually want a solution to climate change really, that they\’re much more ionterested in imposing a life of agrarian, peasant, stupidity upon us rather than anything else.

Top of the Pops theme tune

In an obituary for one of Pan\’s People, we find this:

And they came to be as synonymous with the much-loved chart show as cigar-chomping Jimmy Savile and the pounding Led Zeppelin theme tune.

Ah, no, the theme tune wasn\’t Led Zep. It was a reworking of a reworking. CCS had reworked it, then it was done again each week for the show.

Both CCS and the ToTP orchestra were roughly the collection of all the decent session musicians in London at the time. Alexis Korner, Alan Parker, Herbie Flowers…..not sure if it actually happened but it\’s possible that, for example, Herbie was playing on the theme tune, then in the orchestra, while also being a member of T-Rex on the stage and (well, unfortunately not, for he\’d left T-Rex by this point) also being the writer and producer of the Clive Dunn song that kept T-Rex off the No 1 spot.

For, it wasn\’t actually the records that were played, but recreations of them by that ToTP orchestra, or specially recorded versions:

Initially acts performing on the show mimed to the commercially released record, but in July 1966 — just after the show had been moved to London — and after discussions with the Musicians\’ Union, miming was banned. After a few weeks during which some bands\’ attempts to play as well as on their records were somewhat lacking, a compromise was reached whereby a specially recorded backing track was permitted — as long as all the musicians on the track were present in the studio. The TOTP Orchestra, led by Johnny Pearson augmented the tracks when necessary.

Union rules, don\’tcha just lov\’em?

Damian Carrington: tool

My word, the cornucopia of choices that the man gives us!

Bridging that global gap between rich and poor requires a major transfer of wealth. That money, spent on low-carbon development, would fund the clean emergence of the developing world from deprivation. Put starkly, it is nothing less than using the engine of the world economy, energy, to tackle the world\’s poverty. It could be done by agreeing binding, global goals for cash and carbon: a top-down approach.

OK, yes, top down approach, not going to work as governments won\’t agree, agreed.

If not, a bottom-up route is all that remains. In this scenario, each government sets its own national goals and the people of the world hope they all add up to something short of calamity.

Eh? The bottom starts with national governments now does it? Nothing about the people themselves? Or companies, technologies?

No, of course I don\’t insist that a properly bottom up approach would/will work, despite my internal prejudices thinking that it\’s much more likely to do so than anything mandated by governments. But it is at least possible to sketch a way in which a bottom up approach would work.

What anyapproach needs, as its final product, is a low carbon manner of generating all the energy we desire. Do that an all of the other problems simply go away. Is this in itself possible?

Note that, if it isn\’t possible to get there at all then it doesn\’t matter who is calling the shots: we\’re all entirely screwed anyway. If low caron powering of society isn\’t possible it doesn\’t matter that it is or isn\’t governments that can\’t deliver it.

But is it possible? Well, we\’re told (admittedly by Greenpeace International, but what the heck) that solar PV will be price comparable with coal fired \’leccie from the grid in the whole of Europe by 2017.

True, we don\’t have a storage method as yet…..well, actually, in fact we do, solid oxide fuel cells. They\’re not priced right yet, but they certainly work and there\’s no theoretical reason why their price won\’t drop over the next couple of decades to where they will be, combined with solar PV (which isn\’t going to get to coal prices and then stop, prices will continue to fall, there\’s at least two more generations of solar PV technology to come), the (possibly) economic technology of choice.

We\’ve just found out that shale gas can provide 200 years of lower (if not low) carbon energy for the world.

OK, so we\’ve got our interim lower carbon technology, we\’ve got at least a damn good candidate for the one a couple of decades out. And they\’re that wonderful thing: cheaper than the alternatives. Meaning we just don\’t need mandates, controls, people will adopt them precisely because they are cheaper.

That\’s what a bottom up solution would look like.

And, if I\’m to be honest about it, that\’s what I think the solution will be: cheap low carbon power.

And not a government in sight.