If the planning system’s not working then, well, the planning system’s not working, right?
From the Sec of State:
Further measures to streamline the delivery of energy projects will be included in the Planning and Infrastructure Bill, the Plan stipulates. These will include changes to environmental impact and outcome reporting.
…
Another key change is that onshore wind will be added back into the Nationally Significant Infrastructure Project (NSIP) regime in England after it was removed under David Cameron. This is touted as a means of easing the delivery of projects of 100MW or larger.
As well as energy generation assets, the Plan emphasises the need for planning changes for transmission network infrastructure, stating that a far higher level will need to be under construction by 2026 if enough new renewables are to be added to the grid by 2030.
An admission, an agreement, that the current planning system makes it near impossible to actually do anything.
From a Governor of a state:
Gavin Newsom is scheduled to ease building restrictions for victims of the Los Angeles wildfires – part of a reconstruction effort that he said on Sunday would need a California version of the Marshall Plan, the US-led effort to rebuild western Europe after the second world war.
The interesting point about both actions is the admission contained. The current planning system doesn’t allow anyone to actually do anything. Therefore, in order to get something done it is necessary to - for some time, for some projects - abolish said planning system.
But, of course, this being politics they’re getting the lesson wrong. Largely because being politicians they’re getting the economics wrong. Economies do not grow - a synonym for people being able to do things - by large projects. That’s Soviet thinking, Virgin Lands (or Groundnut Scheme) thinking. Economies grow by marginal tinkering. Taking a second hay crop off the water meadow, the hot dog stand hiring some bod to be there when the pubs clear out, the addition of a mansard roof and so another floor of dwellings in a city centre. And on - all economics happens at the margin, it is those small, seemingly trivial, margins that then produce that growth that market economies are so good at. As - and as we so enjoy continually pointing out - Bob Solow insisted provided 80% of the 20th century growth in the market economies. It’s the little bits here and there that, in aggregate, make us so much richer.
Further, those grand projects can afford the costs of fighting to be allowed to do something. A £100 billion railway scheme - however stupid it actually is - can afford a few hundred millions on lawyers and applications. A mansard charged more than a few hundred pounds for such permission simply does not happen. Nor the experiment of selling meatish tubules to drunks if there are upfront costs to the attempt.
That is, the actual growth that market economies provide cannot afford the weight and costs of a strict planning regime. Which is why we’re not having such growth. As both the Sec and the Gov are admitting when they say that in order to be able to do anything those planning systems must be ignored.
Our economies are constipated by the rules that insist upon permission to be able to do anything. The answer is a purgative, an emetic, for the system. Abolish that planning, permissions, system altogether. The most important part being to abolish it at the small scale, at that margin where economic advance actually happens.
Yes, such clear outs can be messy, smelly, even sometimes embarrassing if they take effect untimely. But here’s the point about laxatives - they do actually work.
Tim Worstall
If the UK wants AI Action, Labour is going to have to do things it doesn’t like
Today’s coordinated media blitz from the government concerns the government’s latest “AI Opportunities Plan” in which Sir Keir Starmer hopes to secure Britain’s global leadership in the field of artificial intelligence, or AI.
To carry out this plan Labour announced that three “major” tech companies (really a bunch of private companies or small/mid-caps) – Vantage Data Centres, NScale and Kyndryl, whoever they are – had agreed to commit (read: haven't actually invested yet) £14 billion to develop AI in the United Kingdom.
Publishing a working plan is all well and good. To dominate the AI market, the UK is going to need to do much more than what was contained in this strategy, and will have to do something that it doesn't, historically, like doing.
The UK needs to get the government out of the way. Sir Keir needs to take a good hard look at what the UK did 20 years ago to lose the battle for the future of the Internet, and ask himself how the country can avoid repeating those same mistakes.
What I did not see in the Government’s “game changing” (their words, not mine) AI opportunities plan was any such acknowledgement. What I saw instead was classic British political procrastination; “we need a plan in six months, we need another plan to start expanding research capacity within six months, we need to appoint some program directors who will make additional plans within six months.”
The overall scheme of the plan is in three parts:
(1) Wooing data centres to set up shop in the UK;
(2) Using public-sector pilots to encourage private-sector adoption; and
(3) Becoming the “best state partner to those who are building frontier AI.”
The only thing this shows is that the Government can’t see the wood for the trees:
(1) The UK has the highest industrial energy costs in the world, making data centre provision there completely uneconomical.
(2) The idea that the public sector should or even could lead the private sector in AI is laughable, with private sector adoption of AI in practically every domain racing ahead in places like the United States.
(3) You cannot claim to be a good state partner for entrepreneurs at the same time as you've instructed the Met’s counterterrorism directorate to investigate the owner of one of the world’s leading AI companies, xAI, for his entirely lawful shitposting on the social media platform he owns. Other Internet entrepreneurs with opinions that fall outside of the British centre-left consensus have noticed everything the UK is trying to do to Elon.
It's not a good look for the country.
If you want to beat the Americans, you must become the Americans, and that means allowing British citizens and residents to do the same things with technology that Americans do, in exactly the same manner Americans do.
The UK doesn't need plans. It needs to unleash technology business to be maximally creative in the minimum amount of time. Here’s what it can do – today, at no cost – to actually change the game without spending a penny:
1) Immediately repeal the Online Safety Act in its entirety. Nobody is going to develop AI in the UK if they’re going to get sued or arrested when the AI says something that violates UK speech laws. Nor will they be eager to neuter their AI to appease Ofcom and other UK speech commissars. (The UK will probably also need to repeal its speech crimes, too, because American AI and social media tech leaders will be very hesitant to relocate to the UK and give up their US-style political freedoms.)
2) Enact an equivalent to Section 230 immunity for both online platforms hosting third party user content and those hosting or distributing AI large language models. Otherwise, companies will host these models in the United States and deploy them from the United States to avail themselves of the liability protections of the United States.
3) Immediately repeal the notice-and-takedown provisions of the Defamation Act in its entirety.
4) Offer massive tax breaks to anyone working in the field of AI or starting AI companies.
5) Immediately start building ten full-scale nuclear power stations.
6) Clean up London and make it the nicest city in the world to live in once again. You might not be able to beat New York on price, but it should be feasible to beat New York on the experience.
The UK has one shot to get this right, else be left behind forever. Will it take it?
War on Waste
So we are to have a ‘war on waste’ in the public service, in order to help the dire pressures on the government’s Budget. When have we heard that before?
Quite often, is the answer. In the early 1970s, the Marks and Spencer Chief Executive, Derek Rayner (later Sir Derek, then Lord Rayner) was brought in by Prime Minister Edward Heath to improve public service efficiency. Rayner was known for his tight management controls and strong management practices at M&S, which was reckoned to be Britain’s best-managed business at the time, and the hope was to introduce these busness principles into the public sector. But public spending, and borrowing, continued to rise through the Heath era, and inflation soared to over 20%.
Rayner also advised Margaret Thatcher on improving government efficiency. In 1979, she established the Efficiency Unit to explore ways of saving money in departments. The Unit would also attempt to change the practices, culture and skills of the civil service, hoping to change the way the whole Whitehall structure worked, and make it more businesslike. But the results of this ‘change from within’ project were disappointing. For example, there were efforts to cut down the number of civil service meetings, and even economise on the tea and biscuits that were served at the longer ones. But the blob responded by making meetings longer so they could justify breaking out the rich teas. And when Rayner left, things pretty much reverted to normal.
By 1982 it was obvious that this ‘reform from within’ strategy had made precious little difference to Whitehall efficiency. It was time for a different strategy — Strategy Two, to quote the title of an Adam Smith Institute report by Madsen Pirie. In it, he argued that the only way to bring real reform to public services and state owned companies was to get them out of Whitehall control. In other words, to privatise them, and let the chill wind of market competition do your reforming for you. It was a strategy that was pursued with vigour after Margaret Thatcher was re-elected in 1983.
There was one more attempt to reform the civil service from within, in 1988. Rayner’s successor as the Prime Minister’s adviser on efficiency, Sir Robin Ibbs, conducted a full review of Whitehall and made recommendations in the Next Steps report. His main proposal was to strip Whitehall departments down to a core of policymakers, with other officials being transferred to work in free-standing agencies.
It made a lot of sense, and for a while it worked well. To take but one example, the time taken to issue a UK Passport fell dramatically once the Passport Agency had been separated from Whitehall and could take more control of its working practices. But over the years, the ‘core’ civil service continued to grow itself and to add agencies, boards, committees and quangos that were very much in the Whitehall circle.
Another part of the current government’s new strategy to make the civil service more efficient is to establish ‘Challenge Groups’, with outside experts, to confront civil servants with different ways of operating. Like Derek Rayner’s Efficiency Unit, it is unlikely to achieve nor save very much — particularly since there is no senior minister whose job depends solely on making it work. Again, one can expect the ‘outside experts’ to be absorbed by the existing culture, a sort of Stockholm Syndrome, but this time a Whitehall Syndrome.
During the 1980s, the Adam Smith Institute promoted the ‘different ideas’ strategy, but on the outside track rather than the doomed-to-failure inside track. Its Better Government Competition invited the public to propose ways in which public services could be made to work better. A surprising number of entries came from former civil servants, who of course knew their stuff.
One entry — this was before Robin Ibbs’s Next Steps had appeared — was precisely to split agencies away from Whitehall and give them more results-driven independence. My friend Edward Leigh, who was a minister at the Department of Trade, invited me in to explain the idea to him. When I arrived, the table was groaning with Permanent Secretaries, Under Secretaries and who know what else. “They insisted on being here,” Edward explained. And they spent the next hour rubbishing the proposal and telling me why it couldn’t be done and why we would be a laughing stock if we published it.
With that, I was determined that this entry would be declared the winner of our competition, as it was. Whereupon, of course, that very thing happened. But today it makes me think that the ‘Challenge Group’ experts will get precisely the same treatment — with civil servants finding clever ways to dilute, ridicule, or ignore any sensible proposals. Or even file them, so they will never appear in public again.
The magic solution Rachel from Accounts is looking for - markets
We’re told, by the Number Two, that there’s going to be a big crackdown upon waste:
I will not accept this consensus. Of course, to grip waste there will be no one silver bullet. If it was easy, the Conservatives would have achieved it. This will take hard work, difficult decisions, and a ground-up approach which interrogates every single line of government spending. That’s the difference between this Government and the last – we will roll our sleeves up, do the hard work, and make the tough choices.
It is true that our own analysis is that government does too many things - among them stopping anyone else from doing anything - and that the solution is simply for government to do less. That’s not in accord with the current zeitgeist of course.
So, let us take this claim seriously. Government contains waste which needs to be rooted out. Do the same things but more efficiently. OK.
We’re told that in mathematics a useful technique is not, in fact, to solve the problem in front of one. Instead, convert it to one where the solution is already known and thus QED.
OK. Waste is the inefficient use of resources. We are using £100 of resources to achieve the desired goal when, in fact, it would be possible to reach that same end point with £90 of resources (or, with government, £10). The £10 (or £90) is thus waste to be excised.
We can convert this problem to low productivity. More specifically, to low total factor productivity. Not much of a conversion because they are, in fact, the same thing. Using £100 where we could use £90 (or £10) is being less productive in our use of resources than using the lower number to gain that same goal.
We have thus converted our description but not the thing. Government waste is low tfp in those areas of the economy done, those activities undertaken, by government.
Low total factor productivity is a problem we know how to solve. As Paul Krugman once pointed out by one estimate the Soviet Union - using politics, planning and central control - managed to improve tfp by not one single iota, percentage point or smudge in its entire 70 year existence. As he quotes Bob Solow, the market economies gained, over the same period, 80% of their growth from this more efficient use of resources - less waste.
We can approach the same point via Will Baumol’s work. Government can indeed invent stuff but innovation is near entirely beyond it. It is innovation that improves tfp and that’s the thing that markets are wildly better at.
We have converted our waste problem into a tfp problem. We know that markets improve tfp in a way that governments do not. Thus the recipe for the reduction of waste is to do more things by markets.
Which is the solution that Darren and Rachel are looking for. More markets.
Now of course that is the answer you would expect us to come to near whatever the original question. But the fun thing here is that however unfashionable this is as a political idea currently it does have the wondrous quality of being correct.
It is markets that improve efficiency. We wish to improve the efficiency of government. Therefore we must use more markets in governance. QED.
Tim Worstall
Why we don’t let climate scientists determine what to do about climate change
Sadly though we do, to an extent, but this is why we should not allow climate scientists to determine what is done about climate change:
But planetary overheating is really just the most geophysical symptom of extractive colonial capitalism – “billionairism” – a system designed to pump wealth from the poor to the rich, creating billionaires, the healthcare crisis, the housing crisis, genocide, hierarchies like racism and patriarchy, and a great deal of suffering.
Umm, right.
The thing that gives me hope, strangely, is that I’ve accepted the end of this form of profit-obsessed modernity. Extractive colonial capitalism has been a death cult for hundreds of years, and now the masks are off. I know humans can do much better than this. But before the new thing can emerge, we have to let go of this billionaire-creating, planet-overheating, healthcare restricting, genocidal thing we have now. I hope to live to see something better arise, a society whose goal is the wellbeing of all, even though it will, unfortunately, be on a hotter planet.
A level of analysis that Wolfie Smith might feel was a tad naive.
The actual climate change problem is that humans like travel, mobility, cooked food and houses that are warm and toasty. Plus all the benefits of industrial civilisation. Fossil fuels are - directly - cheap ways of getting all of those things but with those large indirect - the externalities - costs to them. Nothing to do with billionairism at all. Societies that didn’t have either billionaires nor even capitalism, colonial or not - say, the Soviet Union - made exactly the same calculation. Fossil fuels were the cheap - directly - way to provide what the populace wanted.
This comes from:
Peter Kalmus is a climate scientist and author of Being the Change: Live Well and Spark a Climate Revolution
Who is actually employed to be expert:
I am a climate scientist at NASA’s Jet Propulsion Lab. I use satellite data and models to study the rapidly changing Earth, focusing on extreme heat and human health, ecosystem breakdown, and severe weather. I have a PhD in physics from Columbia University and a BA in physics from Harvard.
In his specific field he is in fact expert. But we must always recall Professor Feynman’s point:
I believe that a scientist looking at nonscientific problems is just as dumb as the next guy.
As everyone will tell us all these days economics is not a science. Therefore scientists are indeed just as dumb as the next guy.
We’re perfectly happy with the idea that we should indeed listen to the physicists, meteorologists, chemists, even the climate scientists, in their field(s) of expertise. Outside those knowledge realms not so much. More specifically, what we do about climate change is the province of resource allocation and human incentives. That not a science of economics.
That’s the only way to avoid proposed solutions that would embarrass Wolfie. Perhaps we should try that idea out?
Tim Worstall
Put the blame where blame should be - price regulation
The California fires are a terrible tragedy for many. Pointing fingers while disasters are still happening is not usually helpful - nor meet. Yet it is, sadly, necessary to intervene in the story about insurance before myths become established.
California is “becoming uninsurable” as wildfires leave a $50bn (£41bn) trail of destruction in Los Angeles, experts have warned.
JP Morgan analysts said the wildfires ripping through Hollywood would cost insurers an estimated $20bn – “even more if the fires are not controlled” – while the total economic loss stemming from the fires could reach two and a half times that.
US-based experts have warned that California has become increasingly uninsurable, with home insurers cutting coverage in the state in recent years owing to the risks involved.
Well, sorta, to the point of, well, no.
Everything is insurable - at a price. If insurers are not allowed to charge that price then the desired insurance will not be available. Which is what has been happening.
CA ranks 50th in rate suppression - approving rates 29% below what actuaries show is needed for homeowners insurance.
In plain English: regulators force insurers to sell WAY WAY below cost.
Therefore they do not sell. A full paper on the subject is here.
Stopping the fires, consoling those who have lost, then working out how to stop having them, that’s the correct sequence of actions. But it is still necessary to point out that the lack of insurance is because no one is allowed to charge the price that insurance costs.
Does everyone remember when Venezuela decided to set the price of toilet paper? It’s an essential, after all. So, the government set the price of toilet paper nice and low. At which point there was no toilet paper.
That.
Sorry about this but despite the simplicity of Econ 101 it is in fact true. When the price setters set prices nice and low then supply vanishes. This is simply what happens among humans.
The lack of property insurance in California is because the price of property insurance has been set nice and low. Something for all to remember for it applies to everything.
Tim Worstall
Let us not make the American mistake
Living in rural has its benefits. It also has its costs - like, not gaining access to some of the urban niceties of life. We think that’s fine and fair, obviously. As it is also true that those who live in urban don’t gain access to some of the joys of rural.
We do not, for example, guarantee mains electricity to every house in the country. We don’t even guarantee piped water and sewage services to every dwelling in the land. They can be purchased, certainly, but at their cost of provision. That cost of provision varying with the degree of rurality.
Water, sewage, ‘leccie, we agree they’re all great things to have but we do not guarantee them to all geographies. So, we think, it is and should be about mobile phone signals or broadband internet.
The solution may depend on the world’s richest man. Elon Musk’s Starlink, which currently provides home internet signals over satellite, is launching a new generation of spacecraft that can connect to mobile phones.
A new space race is pitting SpaceX, Starlink’s owner, against rival satellite firms hoping to fix “not spots” on the ground from hundreds of miles above the Earth’s surface.
If their plans come to fruition, finding yourself up a mountain or in a valley without a mobile connection could become a distant memory.
As the price of these desirables changes then of course the decision over whether or not to have that desirable changes. Fine, markets adapt very well to changes in technology.
But that American mistake that we need to avoid.
The Broadband Equity, Access, and Deployment (BEAD) Program provides $42.45 billion to expand high-speed Internet access by funding planning, infrastructure deployment and adoption programs. All 50 states, the District of Columbia, and the five territories participating in the Broadband Equity, Access, and Deployment (BEAD) program have approved Internet for All plans. NTIA approval means all 56 states and territories are taking the next steps to request access to their allocated BEAD funding and select the providers who will build and upgrade the high-speed Internet networks of the future.
That mistake is having a huge plan to do this. Further:
In 2021, the Biden Administration passed the Infrastructure Investment and Jobs Act, which included a provision to give $42.5 billion to the Broadband Equity, Access, and Deployment (BEAD) program to provide under-served and rural areas with internet access. To date, it has connected nobody.
The plan required U.S. states and territories to submit plans for investment and deployment by the end of 2023, which all have done. Expected roll out won't occur until 2026 by most optimistic deadlines.
As we understand this Mr. Musk’s technology is banned from this program. On the slightly odd grounds that it’s Mr. Musk’s technology. At least that’s how it appears.
Our point is about plans. Technology is changing, as technology does. That then tips things at the margin. This piece of rurality can now be connected at acceptable cost so let’s connect this specific piece. Then, perhaps, wait a little longer for that next foot forward in the technology of provision and so on.
The grand advantage of this is that we have decision making exactly where it should be. Certainly there’s a value to broadband, to a mobile signal. There’s a cost to it too. The optimal coverage is where the benefit exceeds the costs. Something best worked out by those who gain the benefit having to pay the cost and thereby doing their own calculation.
You know, markets?
Tim Worstall
What is truth?
A complaint from the regulatory classes about the outbreak of free speech on social media:
This is an extinction-level event for the idea of objective truth on social media – an organism that was already on life support, but was clinging on in part because Meta was willing to fund independent factchecking organisations in order to try to maintain some element of truthfulness, free from political bias.
As with Pontius, it’s necessary to ask well, what is truth?
The truth* is, as with markets more generally, that it’s a process not a thing. This is before we get to how those appointed editors of objective truth near exclusively came from one side of the political argument and so on. And before the evidence we’ve now got that so many of their declarations (laptop, lab leak, etc, etc) were not in fact true.
Markets more generally work on try everything, do more of what works. The pursuit of truth on everybody gets to say whatever and in that way we zero in on what appears to accord with reality. The Wisdom of the Crowds in fact. The only tried and tested method we’ve got of avoiding the echochamber of groupthink.
This is true even in science let alone more general subjects. Everyone knows that continents go up and down until they don’t, in fact they float around.
Truth is a process, everyone gets to take part in that process. Gatekeeping simply delays, diverts or even prevents that process.
You know, free speech, even on social media. It’s the only thing lies, distortions and propaganda fear.
Tim Worstall
*See what we did there? Ahahaha.
The great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.
That would be the regulatory classes. That combination of politicians and those associated with politics who gain so much from the political regulation of the economy.
Cage fighting tycoon and close Donald Trump ally Dana White has joined the board of Mark Zuckerberg’s tech empire Meta.
Mr White’s appointment was announced on Monday and comes as Silicon Valley seeks to build closer links to Mr Trump ahead of his return to the White House.
The cage fighting tycoon’s appointment was also confirmed days after Sir Nick Clegg announced he was leaving Meta, which owns Facebook, Instagram and WhatsApp.
Sir Nick is said to have earned somewhere between £25 and £80 million from his days at Facebook. His job was to run political interference for the company. Now that the regime has changed it is necessary to have someone with a different coloured political coat to do that blocking job.
This is an obvious outcome of the entry of politics - and politicians - into regulating Facebook. The company will, entirely reasonably, react by having someone from the correct class and set of contacts to deal with the importuning. As the political wheel turns that definition of “correct” changes.
Who, specifically, benefits from this changes with the twists of electoral politics. But the group, the class, benefits from the extension of politics into the economy. Therefore the incentive for each member of the class, as well as the class collectively, is to increase the effrontery with which the influence of said class intervenes into the economy. Because it creates a whole raft of jobs for the boys and gals. And let’s face it, it’s only necessary to have a few years of such employment to gain generational wealth, right?
This is, obviously, possible to describe as a cynical view. We prefer the description “realist”. For this really is what happens. As a new sector of the economy becomes more prominent there are increasingly whining insistences that it “must be regulated”. The effect of which is to produce a number of sinecures for those who regulate. Both in doing the regulating and in reacting to it.
The answer is, of course, not to allow such regulation. Not to allow the vampire squid class to jam their blood funnels into yet more of life.
This other example is perhaps more rumour than fact, and yet. Some years back there was a new series of regulations about certain minerals from a particular geographic area. Just the first year’s implementation cost $4 billion. The rumour we’ve heard is that a prime campaigner for this new set of rules now makes a solid income - some millions a year - consulting to companies on how to comply with the new regulations. The actual problem on the ground is just as it always was. This is not an addition to the wealth of nations despite the individual benefits.
One of the problems - one of - with regulation is who benefits from it. It’s near enough to make one Marxist about class interests….
Tim Worstall
Quantitative Easing
When the Bank of England responded to the 2007-8 financial crisis with Quantitative Easing, I thought it was the right thing to do. Yes, they eased too much, but the markets needed liquidity. My main doubt was whether the Bank would ever be brave enough to rein things in after the crisis was over. It wasn’t, of course, and the result was a chronic dependence on the drug of monetary laxity that peaked with the raging inflation of 2023-4.
Another doubt was the risk of asset bubbles, and we got those aplenty. QE works through the Bank buying financial assets, which enjoyed a Klondike boom. And with interest rates pushed down to ‘emergency’ levels for years, plus the lubrication of too much liquidity, the Bank encouraged excessive risk-taking that further inflated those asset bubbles.
Which was fine for rich folks with assets. But not much benefit made its way down to the real economy. Instead, those persistently low interest rates were very bad news for ordinary people — like pensioners with savings and younger people trying to save to buy their first home amidst spiralling house prices.
It was fine for the government too. With the Bank buying up government securities, it could carry on spending like Croesus, with not a notch of belt-tightening in sight. And when Covid came, Rishi, Boris & Co had no concerns about letting out another £280 billion notches. Which again will burden ordinary taxpayers for a very long time.
We really can’t let the ‘independent’ — meaning unaccountable — suits in the Bank of England mess with our money. We must remove their latitude and instead maintain a monetary rule that targets long-term price stability. Take your pick of the candidates: any would be better than the incontinence that got us to our present sorry state.