“We have not built a reservoir since 1992 or a nuclear power station since 1995, but we have raised the age of using sunbeds to 18.”
– Daniel Hannan, Sunday Telegraph.
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September 29th, 2024 | 15 comments - (Comments are closed)
 Politicians of all stripes like to talk about “sustainability” – although I’ve noticed that some of the enthusiasm for this when it comes to the “green” angle has been dented by rising energy costs and worries about how we keep the lights on when the wind does not blow and sun does not shine. The realities of how to produce energy when fossil fuels are off the table and nuclear is not taken seriously are going to bite us, and hard, in the years to come. Even so, sustainability is a useful word, and it is a shame that it gets tainted as the word “liberal” does by association with bad ideas. (The same goes for “progressive”, while we are at it.) Well, one point I come across in my day job in covering business and finance is how family-owned/run firms can often show superior returns, when compounded over time, and be more robust, and more sustainable, than those that don’t have a family connection. That’s not cheesy sentimentality about how a business is better when Grandad, Mum and the cousins are around. (There can be very tricky succession and control issues with families; wealth advisors often earn big bucks advising families in how to resolve conflicts. And we’ve all seen Dallas.) Even so, for all the caveats, family businesses are important. They employ millions of people. In countries such as Germany and Italy, family-run firms have been the norm; the fashion houses, specialist sportscar firms, and many others, have deep and long family connections. Same goes for agriculture and food, for example. Here is some UK family business data that shows how big these firms are, in aggregate. Well, it seems that one thing that the UK government is thinking of is ending the business property and agriculture reliefs from inheritance tax. At present, the tax – 40 per cent above a “nil-rate” threshold of £325,000 – does not hit if you inherit a family business, including a farm. In the US, such tax is called Estate Tax, and thresholds are far higher than in the UK. But apparently, Rachel Reeves, the UK Chancellor of the Exchequer, is considering sweeping some of these reliefs away. It means family businesses where the stake in a business are high might get broken up and sold, such as to corporations and private equity firms, when a founder or business holder dies. Family-run farms will be a one-generation gig. And corporates, sovereign wealth funds and big groups such as pension funds will consolidate their ownership of business, including the land. Wealth becomes more centrally concentrated, not more dispersed. This seems a very paradoxical outcome from a supposedly egalitarian government. Maybe Ms Reeves does not understand this point or is indifferent to it. However, ignorance is only part of it, I think. There’s a general hostility towards inheritance of any kind in our culture today, from my impression. There is a lot of the “tall poppy” mindset around. Years of central bank QE also inflated asset prices, and certain groups did well, but that’s not really what is going on, in my view, because things such as QE are too abstract for the average voter. I think resentments are given more respect today, when in fact they should be called out. I think we allow jealousy of others’ good fortune to be given the time of day, when in the past that would be seen as a bad thing. There are many good, consequentialist reasons why this dislike has bad outcomes when used as a motor for public policy, but there are important moral arguments against this attack on inheritance: the rights of those of those who own the property and want to give it to this or that cause are being violated. If I want to give my sons and daughters a business, or a 400-acre farm, for example, that’s my affair, period. Whether those persons “deserve” what I give them, in the eyes of some sort of social justice advocate, is irrelevant. If economics is not a zero-sum game, such demands for redistribution are just thieving. What inheritance taxes do, at root, is make it clear that ownership of wealth and control of it is at the sufferance of the State. The justifications of insisting on this servile relationship may vary – sometimes by reference to the flawed ideas such as those of a Thomas Piketty – but the underlying position remains. I see little by way of fundamental critiques of this assault on inheritance of honestly acquired wealth. The Tories, now in opposition, don’t really take the discussion to this level; neither do other supposedly more conservative parties in other parts of the world. But the monstrosity of what attacks on inheritance amount to needs to be more widely remarked on than it is. On the subject of the family and why protecting it is subversive of overweening authority, I can recommend this book, The Subversive Family, by former Downing Street policy unit figure and journalist/novelist Ferdinand Mount. He’s deeply influenced by the Origins of English Individualism, by Alan Macfarlane, for example. On a more prosaic level, the ever-widening burden of tax in much of the developed world, and particularly in the UK, means that even people who are not by any means well off are going to learn about the joys of inheritance tax and all that goes with it. That might ultimately shift the needle against the tax. But a lot of hard work in changing attitudes is also needed. September 17th, 2024 | 24 comments - (Comments are closed)
Shocking news from today’s Sunday Telegraph:
September 15th, 2024 | 21 comments - (Comments are closed)
[…]
I doubt this idea would scale up, but if growing food to give to others gives people pleasure, go for it. I cannot bring myself to feel outraged about the odd unauthorised carrot in a municipal flowerbed. And long have I waited to see lines like those I have put in bold type appear in the pages of the Guardian:
September 14th, 2024 | 32 comments - (Comments are closed)
I have read that in the days when newspapers still used metal type, the compositors used to keep commonly used headlines ready-formed. The Bloomberg headline below would require only the substitution of the appropriate country name to work for anywhere in the world in any decade since governments came to vex mankind:
Emphasis added. That’ll go down well with the PVV, currently the largest party in the Dutch House of Representatives. August 28th, 2024 | 11 comments - (Comments are closed)
I have seen the light. The man who convinced me of the truth of MMT was someone called Daron Medway, who replied to a tweet by Richard Murphy that said,
with this extremely persuasive point:
August 20th, 2024 | 23 comments - (Comments are closed)
The following article comes from Paul Marks, regular commenter here. Thomas Paine (author of Common Sense, The Age of Reason, and others) is someone who, at one point, would have been as familiar to an American or Briton of decent reading as, say, the Founders, or a character such as Davy Crockett or Daniel Boone. Paine’s books were read as avidly as any social media post today, and were arguably far more influential and profound. Paine was immensely influential in his time. But he had serious flaws in his views, as Paul Marks argues, and was foolish in the extreme about the French Revolution and where it might lead. He ended up nearly losing his life in France. I can recommend this book by Yuval Levin, comparing and contrasting Edmund Burke (who supported the American colonists in their bid for independence), and Paine. See also this book about the Founding by Timothy Sandefur, which readers might enjoy. And one more is America’s Revolutionary Mind, by C Bradley Thompson. Of course, this sort of topic might appear “arcane” to some, but at a time when the Founding, and the the origins of the greatest free nation on earth, are sometimes questioned and even attacked, it is never a waste of time to re-visit the territory and learn new lessons. Anyway, over to the “Sage of Kettering”: Thomas “Tom” Paine is mocked for holding that it was wrong for monarchies to have fiat money (rather than gold and silver coin), and high taxes and lots of government spending – but just fine for democratically elected governments to-do-the-same-things. His position was indeed absurd – but what was the source of his specific economic position that high taxes, specifically high land taxes, should fund lots of benefits, education for the poor, old age pensions, money for the poor generally – and-so-on? Well Adam Smith implied there was something special about land taxation – and David Ricardo and Henry George developed this idea long after the death of Mr Paine – and the idea was not fully refuted till the American economist Frank Fetter just over a century ago, although experience in Ireland in the 1840s where the British government tried to run the Poor Law welfare schemes by a land tax, assuming that this would just hurt “the landowners”, should have discredited the idea that taxing land is somehow special – in Ireland the economy totally collapsed and between a quarter and a third of the population either died or fled the country. But there is more to all this than just taking a few, false, hints from Adam Smith and running wild with them. As far back as John Locke there was a mixing (by slight of hand) of individual consent and majority consent. Gough (Oriel Oxford about 70 years ago now) showed in his book on Locke that medieval thinkers understood the difference between majority consent and individual consent – and that Locke, in his “Two Treatises on Government” mixed them up – in order to imply that a government is not coercive if it has majority support, that you as an individual are not being coerced, no matter what government does to you, if you had a vote – if only one vote out of millions (a doctrine that makes no sense – but a doctrine that both Mr Paine and Rousseau before him, later ran wild with). Nor is it just the political side – there is also an element of economic thinking that Mr Paine may (perhaps) have taken from John Locke. Locke held, contrary to Hugo Grotius (the Dutch theologian and legal thinker) and other theologians and legal thinkers, that God gave land (the world) to humanity in-common – rather than land being unowned till claimed (the Roman or Common Law position). As Locke held (by his interpretation of the Book of Genesis in the Bible – thinkers such as Hugo Grotius held to a very different interpretation) that the land was originally given to humans in-common, he held that private ownership had to be “justified” – either by “as much and as good left for others” (clearly impossible with a rising population) or by some sort of payment to meet the “Lockian Proviso” – see how Mr Paine might get the idea of a land tax and various benefits funded by it, from this position of John Locke? Although, yes, Thomas Paine rejected Christianity – and it was from his interpretation of Christianity (opposed by many other Christian thinkers) that Locke got his ideas, in this area, from. John Locke even held that if a ship’s captain with a cargo of food refused to sell it in a port where there starving people, seeking a better price at another port, the captain was “guilty of murder” – seemingly oblivious to the fact that this would (given there have always been hungry people in some part of the world) bid the price of food down to zero, bankrupting not just the captain – but also the farmers. It is also just legally wrong – as the captain may (may) be a very morally bad person (lacking in the virtue of charity – mercy), but he is NOT “guilty of murder” as any lawyer (of either English Common Law or Roman Law) could have told Mr Locke. So, in all this, if (if) ideas are developed in a certain way it is quite possible to go from John Locke (supposedly the founder of English liberalism) to the Collectivism of Thomas Paine or even Rousseau – and of the French Revolution rather than individual private property based American Revolution. This is one of the reasons why American Founding Fathers such as Roger Sherman and John Adams were so opposed to Thomas Paine. August 8th, 2024 | 16 comments - (Comments are closed)
I get the daily posts from the Law & Liberty blog, and this struck me as interesting, because of the preamble:
The author of the article, David P Goldman, goes on to explain the problem. As the article is free to access, I won’t reproduce other paragraphs here apart from the two final ones:
This seems right to me. I think AI is going to produce marvels, but I don’t see it removing the need for boldness, risk-taking and ability that all great businessmen have to “look around corners”. To ome extent I am a techno-optimist, as the likes of Marc Andreessen, the US venture capitalist, is. But I am not, I hope, Panglossian, or the opposite of a perma-doomster, either. It is also interesting to consider how governments, for example, might seize the idea that AI makes it possible to co-ordinate human activity in ways that eliminate all that pesky free market exchange and messy entrepreneurship. This line of thinking resembles the view of certain science fiction writers who tried to imagine a post-scarcity world. (Science fiction often contains lots of economics, as this article by Rick Liebling shows.) Eliminate the idea of scarcity, so the argument runs, and then the underlying foundation of economics – “the study of scarce resources that have alternative uses” – falls away. It is easy to see the utopian attractions if you like to mould humanity to your will. I mean, what could go wrong? Eliminate scarcity, then who needs enforceable property rights and rules about “mine and thine”? In a post-scarcity world, where will the sense of urgency come – the sense of adventure, that drives great businessmen to create and innovate to push back against such scarcity? (This is also the fear that some might have of universal basic income – creating a world of indolent trustafarians who, like a couch potato, suffer muscle loss and mental decline because they don’t have to work or struggle to build anything.) Karl Marx dreamed of a post-scarcity world – that seems the logical end-point of his communist utopia, to the extent he fleshed it out at all. (The irony being that his ideas helped inspire some of the greatest Man-made famines and loss of life in recorded history, in part because of the failure to understand the importance of property, prices and incentives.) I am sure that some of this post-scarcity thinking might be encouraged by AI. But then again, AI uses a lot of electricity, and even without the distractions of Net Zero (no laughing in the class, people), producing the power necessary for modern high-potency computing requires a lot of stuff. And mention of science fiction reminds me of the “There Ain’t No Such Thing As a Free Lunch” that came from Robert A Heinlein, and later taken up by Professor Milton Friedman. August 5th, 2024 | 39 comments - (Comments are closed)
“Economics without price theory is knowledge without wisdom. Any economist can analyze data to estimate how many lives you’d save by requiring car seats for toddlers on airplanes. It takes a price theorist to ask how many lives you’d lose when the resulting increase in airfares prompts families to drive—which is far more dangerous—instead of fly. Price theory breeds wiser policymakers and wiser voters. If we fail to teach it, that’s a tragedy.” August 4th, 2024 | 14 comments - (Comments are closed)
The first piece is how pensions work, and what’s gone wrong with them. In our state pension (I’ll say a little about private schemes at the end), we don’t “save up for our retirement”. When we started the system after the war, we needed to pay retirees immediately. Pensions have therefore always been met each month out of taxes paid by workers that month. At any given moment, there is only a week or two of funds in the government’s “State Pension account”. While that arrangement solved an immediate problem, it created an enormous structural problem. When the pension scheme was started, life expectancy was about 68. Now it’s about 82. And birth rates started falling in the 1960s, meaning that more and more pensioners incomes are being funded by fewer and fewer workers. The result is that the average person born in 1956 now takes out around £290,000 more in retirement income than she paid over her working life. The plan for addressing that problem was to grow the economy each year by an amount sufficient to generate enough tax receipts to keep funding the expanding retirement bill. And for most of the 20th century, while we benefitted from a global hydrocarbon and nuclear energy system that for decades doubled in size every 7 years, that plan worked. “Net Zero” puts an end to that. July 30th, 2024 | 21 comments - (Comments are closed)
As I keep saying jobs are a cost not a benefit. We do not want to go around the world – or even our own country – creating costs now, do we? No, no, jobs really are a cost, they are not a benefit. Think on it. We have some amount of human labour available to us. So, if we use that labour to do this thing here then we cannot use it to do this other thing over there. The cost to us of using the labour to do this thing is therefore losing the opportunity to do that other thing over there. Yes, I know, people like to be able to consume. For most of us that means having an income with which we can purchase our consumption. But even to us that job is a cost. The work we’ve got to do is the cost of gaining the income. And, obviously, a job is a cost to the employer – the production is what they desire, the job is a cost of gaining it. It’s entirely true that renewables require more human labour than other forms of energy collection and or generation. But that means they make us *poorer*. July 25th, 2024 | 31 comments - (Comments are closed)
The count through the night after British elections makes great TV. What could be more juicy than thrusting a microphone into the face of someone who has just made their concession speech and asking them how they feel? ITV’s election coverage roped in a lot of ex-politicians who had been there themselves to carry out this task, including two former Chancellors of the Exchequer, one Labour and one Conservative, Ed Balls and George Osborne. The two former rivals seemed very pally. As is the custom, they interviewed both the winning and the losing candidates in various constituencies just after the results were announced when emotions are at their most raw. So, in the early hours of Friday morning, Steve Baker was standing in Stoke Mandeville Stadium where the Wycombe count took place, having just lost his seat to Labour, being quizzed by a visibly gloating Ed Balls. Baker talked about three factors that got him into politics, all of which had been presided over by the government of which Balls was a part: Extraordinary Rendition, Labour bringing forward the Lisbon Treaty to avoid having a referendum on the Constitution for Europe, and “that your government rode an enormous credit boom within which the money supply tripled, leading into the global financial crisis”. Chuckling, Ed Balls said, “Goodness me, Mr Baker, I have to say, y’know, it’s 2024. You’ve just lost your seat in your constituency. You’ve sort of thought of three different things which all happened over seventeen years ago. Are you maybe in denial?” Freed of the obligations of being a minister, Baker’s response did not spare either the Labour or the Conservative Chancellor:
Commentators as varied as the financial journalist John Stepek, the IEA’s Reem Ibrahim, and the very left wing Aaron Bastani have reposted Baker’s reply. As Stepek said, “Sorry but @SteveBakerFRSA is mostly, perhaps entirely correct in his analysis here. And the smug reaction – ridicule, not to mention the extraordinary notion that 17 years ago is ancient history with no bearing on the current situation – exemplifies why voters are fed up”. July 7th, 2024 | 62 comments - (Comments are closed)
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