It depends upon what your definition of austerity is

Apparently we can’t have tax cuts because that would be to continue austerity. This rather depending upon what our definition of austerity is:

Boris Johnson’s plans to slash taxes for high earners is likely to cost more than £20bn and will make it “almost impossible” to end austerity, according to a leading economic think tank.

The assessment of the Conservative leadership frontrunner’s tax cuts comes after his party pledge to end austerity last year.

The Institute for Fiscal Studies believe the pledges will cost “north of £20bn”, its head, Paul Johnson told The Telegraph.

“There’s £15bn of headroom in which to spend while keeping [public] debt on a downward trajectory,” said the IFS chief. “In a world where you don’t want debt to rise and introduce a £20bn tax cut it's almost impossible to end austerity.”

The definition being used here is not a reasonable or workable one. A return to the rough fiscal balance we had under Gordon Brown’s Chancellorship Terror is something we really shouldn’t be describing as austere. At the time we were all remarking upon how his spending imitated that traditional inebriated matelot.

The basic facts are that the tax burden, at 34 and a bit percent of GDP, is at an historically high level. Spending as a portion of GDP is still higher than it was before the Crash. This is not austerity.

We’re not greatly taken with that basic Keynesian settlement, that public spending should blow out in harsh times. One reason being that, as things turn out, that stimulatory flashing of other peoples’ cash becomes seen as the new baseline. Any attempt to return to a more reasonable settlement, where individuals decide on the disposal of, say, the results of two thirds of their own labour becomes those harsh cuts to government.

Which is indeed exactly what we’re seeing here now. The actual Keynesian ideal is that we do have that expansion in those harsh times, then we withdraw it all in more normal. For to fail to do that would be to create a ratchet whereby government as a portion of everything continually jerks up over the inevitabilities of the continued business cycle. This is exactly the - wrong - definition that the IFS is using of austerity here. Now that we’re out of the woods is when we should be returning to that status quo ante, and doing so isn’t austerity. It’s simply good fiscal management.


The mad San Fran vape ban

Inspired by countries like Thailand, Cambodia, Vietnam, and the Philippines, puritanical officials in San Francisco have voted to ban the sale of e-cigarettes. The law is due to be signed off by San Francisco’s mayor within 10 days and, barring legal challenges, will come into force seven months later. Cigarettes will remain on shop shelves as before.

The vape ban will leave San Franciscans unable to access one of the safest and most popular alternatives to cigarettes. The best available evidence shows that e-cigarettes are at least 95% less harmful than smoking and twice as effective as nicotine-replacement therapy for smoking cessation. Aside from inevitably creating an unregulated black market, the simple truth is that these paternalistic zealots are putting more people in the ground in the name of ‘public health advocacy’. 

All of this is premised on a classic argument from the Nanny State playbook: think of the children. Petty bureaucrats are also concerned that vaping is a gateway to smoking cigarettes despite all signs pointing to the contrary. Writing earlier this year for The Washington Times, Carrie Wade and David Bahr of the R Street Institute explain:

Studies supporting the notion that kids who try vaping will dive head first into combustible use are critically flawed — they cannot control for kids who would end up smoking anyway and rarely acknowledge those who use e-cigarettes in the first place. In reality, vape use is highly concentrated in those who already smoke or have tried smoking.

Indeed, the National Academies of Science notes that associations between smoking and vaping do exist, but they are contradicted by population data citing opposing trends in e-cigarette and cigarette use among youth in recent years, and do not confirm person-level positive associations with vaping and smoking.

While accepting that American high school students have started using e-cigarettes more in recent years, Public Health England also reject the idea of a gateway from vaping to smoking. Rather, they follow the evidence and argue that teenagers who vape also tend to be the sort of person that ends up smoking cigarettes. They conclude that “the ‘common liability’ hypothesis seems a plausible explanation for the relationship between e-cigarettes and smoking implementation.” Looking at the data on youth smoking and vaping rates, it’s not hard to see why they’ve arrived at this position (graph originally from Chris Snowdon here):

us graph.jpg

Even in the implausible worst case scenario—where teenagers who would otherwise be non-smokers are tempted to regularly vape—policymakers have to acknowledge the far greater costs of an e-cig ban. While sensible efforts to prevent youth vaping are welcome, it would take 20 extra teens taking up vaping to negate the benefit of just one person using e-cigs to quit smoking.

So here’s my message to the anti-nicotine San Francisco politicians who think this approach is a good idea: Banning a product that accomplishes your own aims more successfully than any serious tobacco control policy isn’t just stupid—it’s playing politics with people’s health and lives. People who want to quit smoking will die because of the ban, and their blood will be on your hands. 

I’m the Pied Piper, follow me

There are different versions of the legendary story, but the Lüneburg Chronicle records that it was on June 26th, 1284, Saint John and Paul’s day, that the Pied Piper took away 130 children of the town of Hamelin, luring them after him with his melodic pipe, and took them into a cave, from which they were never seen again.

The tragic event was recorded on a stained-glass window, circa 1300, in the Hamelin church where the adults were at prayer when the children were led away. The piper, clothed in multi-coloured fabric (pied), had appeared to offer to free the town from its plague of rats. The mayor agreed to pay him 1,000 guilders, whereupon the piper charmed the rats with his magic pipe into the Weser river. When they all drowned, the citizens reneged on their deal, and the piper took his revenge by leading their children away.

Some versions record that three children alone remained. A lame one could not keep up, a deaf one could not hear the seductive music, and a blind one could not see where he was going. They were left to tell the adults what had happened when they emerged from their church service.

Some interpretations say that the piper is an allegorical death figure, leading children to their deaths from plague. Others have it that it refers to a mass emigration of young people. Whatever the truth, the city of Hamelin marks the event with Rat Catcher’s Day on June 26th, and even today, no music or dancing is allowed on the Bungelosenstrasse, the street on which the children were last seen.

It is easy to see why the story has resonated. Many children are easily entranced by the music of false promises. Commentators have remarked that if children could vote, ice-cream would be elected. Some young people listen to the music of Jeremy Corbyn, Bernie Sanders and Alexandria Ocasio Cortez, and eagerly follow the promises of free university education, cancellation of student debt, high minimum wages for youngsters in starter jobs, and “affordable” fixed rents at levels that no landlords can afford to provide.

The music plays its seductive sound of free goodies that someone else will pay for, and the children follow. They are told that their cornucopia will be filled by “the rich,” or by “business,” without also being told what would happen to those groups, or to the economy in general, if redistribution on this scale were to be enacted. They are not told that it would be “the rich” and “business” that disappeared, rather than the children.

Politicians such as these, in their multi-hued (but mostly red) garb, play their sweet music to entice young voters to the never-never land where no-one pays for anything, and goodies come free if you follow them. We who are left know what’s inside that dark cave, because we’ve seen the people of other countries led into it.

The problem with the four day work week

We have a claim that Britons are all behind moving to a four day work week. And why not of course, leisure is indeed a luxury or superior good, as we get richer we devote more of our income to it.

Reducing the time we spend working would be welcomed by many. A recent UK poll found that 74% of people supported a four-day week.

Super, great, let’s do it. Except, well, there’s a proviso here. It’s a YouGov survey, which asked a rather more subtle question:

However, support falls off substantially if a four day week were to shrink the national economy and leave people worse off financially. Under these circumstances, only 17-26% of people would support making the shift.

That is, we’d like the extra leisure but we don’t want to be poorer by having it. Or, the same statement, we don’t think we’re rich enough yet to take that extra leisure.

The importance of this being that the claim about the four day week is being advanced to bolster the case for our all walking more lightly upon the planet:

By working less, we produce fewer goods and services that require precious resources to make. We also consume less in the process of getting our job done.

Consuming less is, by definition, being poorer.

So the claim advanced - we should work less to reduce consumption. Many people would like to work less but only if they don’t have to reduce consumption. The number who don’t want to reduce consumption can’t be used as an argument in favour of reducing consumption now, can they?

Orwell and the Left

Eric Arthur Blair was born on June 25th, 1903. The world knows him by his pen-name, George Orwell, named from the Suffolk river not far from where he'd lived. He is best known today for his two satirical novels, Animal Farm (1945) and Nineteen Eighty-Four (1949), both critiques of the brutal Stalinism that ruled the Soviet Union in the 1930s.

Orwell wrote much more than those two works, however. In addition to them he wrote four more novels, three non-fiction books and literally dozens of essays and newspaper columns. His style is distinctive in that he speaks in plain, everyday language, avoiding any pretentiousness or jargon. He tells things as they are, with a searing insight and honesty.

To find out what life was like for the poor, he took to living rough, like a tramp, first in London, then Paris. He describes how putting newspaper inside your shirt keeps out the cold of winter nights. While discarded cigarette ends can be reassembled into cigarettes, matches to light them with are rarer, and become a valuable currency on the streets. His experiences formed his first book, "Down and Out in Paris and London" (1933).

His "Road to Wigan Pier" (1937) describes what life was like in the North of England, the daily struggle, the occasional sense of hopelessness, and the minute details of the shabby furniture and the plain diet that was all they could afford. It brought home to his educated readers how the majority actually lived, in a way that Cobbett's "Rural Rides" had done in the early 1820s.

Orwell fought in the Spanish Civil War and was wounded. He chose to join the POUM, a Workers' Party of Marxist Unification, and described the chaotic and under-supplied struggle against Franco's forces. His book, "Homage to Catalonia" (1938) caused disquiet on the Left because he described how the Communists had denounced the POUM as Trotskyists and betrayed them.

Orwell's disenchantment with the Soviet Union reached breaking point when the Nazi-Soviet pact was signed in 1939, paving the way for Hitler to wage war in the West. He reviewed Arthur Koestler's "Darkness at Noon" (1940), which covered Stalin's 1930s show trials, and remarked, "What was frightening about these trials was not the fact that they happened – for obviously such things are necessary in a totalitarian society – but the eagerness of Western intellectuals to justify them."

Orwell was very English. He was a heavy smoker, rolling his own from strong tobacco. He liked strong tea, beer, roast beef, kippers and marmalade. He wrote about the mythical ideal English pub, "The Moon Under Water," and had a deep affection for the patriotic and unpretentious English working class. He wrote, "people can be trusted to behave decently if you will only let them alone."

He led a full life, working at times as an empire policeman, a teacher, in a second-hand bookshop, for the BBC, and as a full-time writer. His experiences come through and colour his writing. Several of his essays achieved legendary status, and some feature in school syllabi today. He set out the rules of good, precise, clear writing:

* Never use a metaphor, simile or other figure of speech which you are used to seeing in print.

* Never use a long word where a short one will do.

* If it is possible to cut a word out, always cut it out.

* Never use the passive where you can use the active.

* Never use a foreign phrase, a scientific word or a jargon word if you can think of an everyday English equivalent.

* Break any of these rules sooner than say anything outright barbarous.

He is still highly relevant, rewarding us not only with his fluent prose, but with his honesty. He self-identified as a socialist and a man of the Left, yet he saw and wrote about what people actually did in the name of socialism. His refusal to excuse the cynical brutality of those who claimed to carry its banner but betrayed all of its ideals, made him many enemies on the Left. If Orwell were alive today, he would have no time for the squirming around the brutality and squalor of the anti-Western regimes and movements that many on the Left are so ready to act as apologists for.

The value of charging university students for their education

There’re a number of justifications behind charging university students for their education. One being that such a qualification is likely to lead to a higher lifetime income. Therefore why shouldn’t those who gain the privilege pay for doing so, rather than our taxing the lower incomes of the general public to finance it? We can also consider the choice of courses. An economic decision made where there’s real money at stake should lead to better decision making. We can hope therefore that fees will lead to more engineers and less grievance studies.

One more - fees make the universities accountable to the students:

A university has apologised to students after a review found teaching on a health and safety course fell "short of the standards" expected.

The errors were serious:

An investigation found a lecturer got "very basic scientific information" wrong - for example he claimed that bleach was an acid when it's an alkaline, says the Times.

He also said that "voltage" was named after Voltaire, the French philosopher - when it's in fact named after the Italian physicist Alessandro Volta.

Perhaps not such very great terrors.

The inquiry found the lecturer, who was teaching safety and business risk modules, suggested that oil could be heated to 360C - when it can actually catch fire at 250C.

Ah, no, that is serious.

At which point we could say that this should never have happened and that this shows that we’ve done something wrong to the universities. Which is to be in error for mistakes - and incompetence - are always going to happen. What matters is the response to such, the incentives in place to at least try to avoid:

The students affected were studying for a masters degree in safety, health and environmental management.

The university said it offered students the chance to repeat or substitute the affected modules at no cost - so their qualification wasn't affected.

It also offered compensation - thought to be around £2,000 - to students because of the inconvenience.

By paying the students have become customers. By being a producer taking consumer money the university is at the very least bound by normal contract law concerning the quality of the goods provided.

That is, both sides now have real money at stake. We can expect the decisions on both sides to be rather better. At least, the incentives are there and they’ll no doubt work through the system in time.

Our online freedom is under attack

State control of the internet is no longer a foreign reality, a distant intrusion reserved for the Chinese and Russians. It is about to start happening right here in the UK.

The Government’s Online Harms White Paper proposes the most comprehensive regulation of online speech in the Western world. The Government is placing legal responsibility on social media platforms, and any other websites with user-generated content, like search engines and web forums, to curate the content posted on their site and to eliminate what they loosely deem as “harmful”. This is being called “duty of care” and will require all companies to make huge, costly changes to avoid fines, jail time, or even website blocks. It also calls for the creation of a new regulator, who will have the extraordinary power to decide what is harmful and when websites are failing to comply.

These heavy regulations are prompted by what the Government has called “harmful content” on the internet, such as child exploitation, terrorist material, and promotion of suicide. But the White Paper goes much further by targeting a very wide array of “harms” - raising the question: what is harmful?

The White Paper itself qualifies harms necessitating regulation as legally clear and unclear. For instance, harms with “less clear legal definitions” include “intimidation,” “trolling,” and “coercive behaviour”-- who will define the intimidating and coercive or trolling and how dependent will this qualification be on the majority power in Parliament?

The threat to free speech is palpable. This proposal stands to name the government as the arbiter of acceptability online. But, what’s more, the White Paper’s proposals will block out small competitors from challenging Big Tech.

The Adam Smith Institute’s new paper, Safeguarding Progress: The risks of internet regulation, explains that this regulation is not only a serious threat to free speech, it is also disproportionately costly to start-ups, hurting competition and innovation.

The “duty of care” will require a large number of personnel, costly automated technologies, and sizeable funding for algorithm redevelopment. The capital required for this overhaul is conceivable for big companies like Google or Facebook, but start-ups just don’t have the resources and could be crowded out of the market. No wonder Facebook founder Mark Zuckerberg came out in support of state regulation of social media in his Washington Post op-ed. In it, he writes that the government needs to play a role in defining and enforcing the limits of free speech. And what is he doing to uphold these proposed regulations? Companies like Facebook and Youtube are currently employing thousands of people (Facebook currently boasts 50,000) dedicated to monitoring posts and comments, deeming them as acceptable or unacceptable based on company policy. Small start-ups surely lack this capacity, and should regulations be mandated be imposed, they would be scrambling for resources.

Furthermore, the rules companies like Facebook have been providing content monitors are complicated and often criticized (undoubtedly foreshadowing shady government rules). Facebook has over 1,000 pages of guidelines dedicated to outlining what is “unacceptable” speech. These guidelines are by no means comprehensive and are often contradictory. They are, most problematically, often subjective in interpretation. Many feel Facebook has taken too much control and is becoming authoritarian. Critics like Ben Shapiro on the right, for example, feel that their content is being pushed out by a liberal agenda in Big Tech speech policies. Therefore, if the government provides the guidelines, fingers won’t be pointed at Big Tech anymore, they’ll be pointed at policymakers.

But we must also remember that the actions of the technology companies do not sit in a bubble. The increased harshness of their speech policies - which are of course their own private business choices - come in the context of growing state pressure to censor the internet. “PC culture” and the implications it has on companies’ reputations come at the cost of overly cautious censorship.

The choice looms ahead: either accept the offensive pockets of the internet or regulate Big Tech into stagnancy while pushing speech limitations to the point of censorship. Eliminating “the offensive” comes at the steep cost of freedom of speech and innovation.

The Berlin Airlift countered the Soviet blockade

The postwar allied occupation of Germany saw the country divided into 4 zones, one each run by the US, the UK, France and the USSR. Its capital, Berlin, was divided into 4 similarly controlled zones. On June 24th, 1948, the Soviets suddenly blocked access routes across East Germany to West Berlin. They cut off road, rail and water-borne transport and traffic. It was a response to the introduction of the Deutsche Mark in West Germany and West Berlin.

The Western allies were reluctant to force a land corridor through to West Berlin for fear it would provoke a conflict in a theatre in which the Soviets had massive military superiority in conventional forces. Rather than give in to Soviet blackmail, they decided on an airlift to ferry supplies into the besieged city. It was a huge undertaking calling for high-level logistical planning.

Several air forces took part, including those of the US, the UK, France, Australia, New Zealand and South Africa. It came to involve hundreds of flights a day into the city’s two airports. Initially they used mostly C-47s, the military version of the DC3 Dakota, but later added the heavier C-54s. They soon exceeded the estimated 3,475 tons of supplies a day it would take to sustain the population. Indeed, by the time the airlift ended a year later, they were flying in more food, fuel and supplies than had previously been coming in by rail.

To cut down on the time the crews needed for refreshments, the overall commander had jeeps equipped as mobile snack bars to refresh crews on the runway while their planes were unloaded. Allied pilots noticed that German children would crowd the flight lines below them to watch the stream of planes coming in, and took to dropping sweets and chocolates to them, a gesture much appreciated given the rationing then in place.

In one year over 200,000 sorties were flown, one every few minutes in a constant line of landings and take-offs. On May 12th, 1949, the Soviets realized their bullying tactic had failed, and lifted the blockade. By then the Deutsche Mark had established itself as one of the hardest currencies, and the German Economic Miracle was under way as free markets and deregulation worked their magic. The Airlift was not without cost. There were !01 deaths during the operation, including 40 British and 31 American airmen, mostly killed in non-flying accidents. The financial cost was estimated at between a quarter and a half million US dollars, perhaps just over $5bn in today’s money. It was worth it, in that West Berlin survived as a free city. There are monuments in the city to those who died to save it.

Wars are often caused by uncertainty. When potential aggressors do not know if they will be met by force, they might be tempted to try it. If they are made aware in stark terms that force will be responded to in kind, they are usually deterred. The Berlin Airlift made it abundantly clear to the Soviets that the Western Allies were not prepared to lose West Berlin. It was a measured response, in that an attempt to force open a land route might have provoked war, but an airlift was not aggressive.

The lessons of the Berlin Airlift remain. Enemies must know that acts of aggression against us or our allies will be met with a measured but forceful response. Jeremy Corbyn might want to leave NATO and renounce our nuclear deterrent, but these, not the goodwill of the Soviets or of Russia today, are what has kept the peace these past decades. Corbyn seems ignorant of the most basic rule of defence: "si vis pacem, para bellum."

What a very French approach to cannabis legalisation

Yes, of course, we Britons do tend to tease our closest neighbours simply because they are our neighbours. But isn’t this a delightfully French approach to the question of cannabis legalisation?

A government-tasked commission has advised France to legalise cannabis to “take back control” of the black market, calling prohibition an abject “failure”.

Of course, entirely so, we agree with the basic sentiment. Of course there should be legalisation.

State-controlled cannabis stores would be the best way to control drug trafficking and “restrict access” to younger would-be users, they argued.

By their calculations, cannabis could bring up to €2.8 billion (£2.5bn) per year into state coffers and create up to 57,000 jobs.

Good points no doubt.

Part of the revenues could be channeled into “town and educational policies in sensitive urban areas”, the wrote.

Hmm, well.

The French debate appears to be about the efficiency of control, the tax revenue that might be raised, how that could be spent. All useful contributions to the discussion of course. But there seems to be no reference at all to the issue we think most important, freedom. Liberty if you like. That a consenting adult should indeed, absent third party harm, be able to do or ingest as they wish.

Which is odd really, when you think of how the triplet goes, Liberté, Égalité, Fraternité. The liberty bit being one of the things we’ve rarely seen mentioned in debate across the Channel. But then as we know, political slogans usually mean their opposite.

It’s not “Special,” It’s Socialism

I still remember my childhood trips to Venezuela and long what I left behind. Caracas was a vibrant city, filled with nice restaurants, busy malls, and close to gorgeous beaches. Weekends on Venezuela’s main vacation island - Margarita - were identical to days at upscale resorts in Florida or the Carribean. It was metropolitan and very wealthy nation - not far off from some of our Western democracies.

During the period I visited—throughout the early 2000s—Chavez’s welfare reforms won him reelection and the poor, as well as Labour politicians, worshipped him. The working class flocked to his rallies and faithfully turned out to vote. Poverty rates went down and support soared, but one thing was clear - the center could not hold much longer. Not as Chavez’s nationalized industries shrank oil production and national revenue dropped.

Throughout his time as president, Chavez had some key victories for his socialist cause. For one thing, he succeeded in banning term limits on his presidency. Though not an explicitly socialist policy, it broadened his reach to promote his brand of Chavismo - a wholly socialist vision. As for the poor, Chavez indeed decreased poverty rates and raised literacy and health statistics among the poor. And he did so by nationalizing private industries.

Free education, sweeping healthcare benefits, food subsidies, and nationalized industry—it should all sound familiar. It might conjure pictures of Bernie Sanders or Jeremy Corbyn, of happy students and excited voters. But what do we get in the end? Hungry children and congested hospitals—pictures are not reality.

Chavez pursued - wait for it - social welfare policies. Venezuela was not an outlandish, utopian state, as many Labour or liberal pundits would have us believe. It was a mainstream case of democratic socialism. And this worked. For a little bit.

These changes—though temporarily positive—were built on a shaky platform. Chavez funded his social programs with national oil revenue from PDVSA, Venezuela’s state oil company, nationalized in 1976, and secondarily from revenue gained by nationalizing 1,168 companies, spanning from agriculture to petroleum, from 2002 to 2012. What’s more, in 2003, Chavez took away PDVSA’s largely autonomous status and replaced tens or thousands of workers with loyalists. Now, cash was available for the government to spend, but what would be the fate of these state industries? In the words of Juan Carlos Hidalgo, a Latin American policy analyst at Cato: “Most of them were run into the ground due to sheer incompetence, sleaze and negligence, decimating Venezuela’s productivity.”

The plan initially worked twofold: Chavez could be praised for his generous welfare and progressive thinking while also benefiting from the corruption and mismanagement of the oil industry that cost the country billions and enriched its leaders. PDVSA itself claims that its main end is to enrich the people and the nation: it is a company “subordinated to the Venezuelan State and profoundly engaged with the genuine owner of oil: The Venezuelan People”. And for a time, this was true. According to the World Bank, poverty dropped from 54% in 2003 to 26.4% in 2009. Chavez was elected to office in 1999 and replaced PDVSA engineers and employees with loyalists throughout 2002. At the same time, his most loyal supporters were being enriched with billions of dollars and Chavez, himself, was living in luxury.

The hoax of socialist policy is such: you can immediately deliver on your promises. Until the money runs out, you can spend it, and you can spend it on helpful measures. But what happens when the money ends? What happens when these programs do not have another source of income? What happens when you drain your country to its last drop?

All of a sudden, in 2007, after a major loss of professions in the petrol industry following Chavez’s mass-firing, oil production went plummeting. According to a BP review, production went from just under 3.5 million barrels a day to about 1.5 million a day in 2017 under Maduro. Yes, PDVSA may have been “profoundly engaged with the genuine owner of oil: The Venezuelan People”, but it also fell victim to “sheer incompetence, sleaze and negligence” under the control of self-enriching, underqualified Chavista cronies.

PDVSA (being a nationalized company) could not keep up with the global oil market. It failed under Chavez and thus, the welfare programs that depended on its revenue also failed. In the face of these inefficiencies and government price controls, poverty rates skyrocketed to 82% in 2017.

What’s more, a nation that had briefly experienced the benefits of a robust welfare state was immediately left with nothing. The centre fell through and left a disaster: no welfare and no competitive oil industry to salvage the economy.

Is this a detached reality for places like the UK, where socialism is becoming the mainstream? Is Western socialism more “sophisticated”? Well, for one thing, these places are not that different from Venezuela. Venezuela is not a “special,” “off-brand” form of socialism. It is true that it is a country plagued with corruption - but that is inevitable when all power has eventually been usurped by one entity - the government. Venezuela was once the gem of South America and a very rich nation - one where Europeans settled and entrepreneurs flocked. Today, still sitting on one of the largest oil reserves in the world, it stands decimated.

Yes, we may be rich, and yes, we may have good intentions, but how far can these factors take us? Venezuela was primed for success, and within a decade, not-so-utopian socialist reforms destroyed the country and left its once-poor people, even poorer.