Now the United States has followed the Canadian example and pulled out of the illiberal, anti-semitic and vitriolically anti-Western Durban II "anti-racism" conference. The UK should do the same.
Wednesday, February 06, 2008
Another country quits Durban II
Now the United States has followed the Canadian example and pulled out of the illiberal, anti-semitic and vitriolically anti-Western Durban II "anti-racism" conference. The UK should do the same.
Will big business leaders defend economic freedom?
Chris Dillow reckons they often won't and uses Mark Moody-Stuart's desire to ban high emission cars as an example. I think Chris is right. Bosses don't present the same danger to economic liberty that Government does - Moody-Stuart cannot actually do the banning. However despite being in a fine position to understand the benefits of a liberal economic order - their capital will chase less regulated, low tax economies - they're clearly very unreliable allies for economic liberals. Why?
I can see two key reasons.
1) They're facing a prisoner's dilemma. Firms face a host of different groups trying to lobby them to accept various curbs on economic freedom - greens, animal rights activists, safety bores and innumerable others. Few of them have much political clout but it doesn't matter. Each company faces a simple choice:
The firm can concede the argument to those pressuring for economic illiberalisms: that brings political kudos for being the good guys if your competitors don't follow suit, if they do then at least you won't be singled out for abuse. Or, our firm can choose to resist calls for coercion: if all the others do the same then everything's fine - they'll fight the good fight - but if other companies don't follow suit our firm risks ExxonMobil's fate - being singled out, boycotted and hounded at every turn. The rational choice is obvious isn't it? Give in.
Everyone will make the same decision if they're behaving rationally and the bosses won't stand up for free market capitalism.
2) Incumbents can be defended from new entrants by regulation. Most bosses, unsurprisingly, work for companies that already exist. Regulation can increase the cost of starting a new business or make it hard for some companies, with smaller margins or capital constraints, to stay in business. If a big business can get rid of some or all of its competition by encouraging new regulations then it could easily be better off even if the regulations increase its own costs somewhat.
An international coffee cartel was maintained for some time thanks to America - the coffee growers' biggest customer - agreeing to act to enforce the agreement by freezing those who welched on the deal out of the market. Big coffee roasting companies in the States used their political influence to encourage the US Government to take up this role. The new cartel would cause their smaller rivals far more trouble than it would them, might put many out of business, and reduce competition.
Bosses are human. If they have every incentive to kowtow to the anti-capitalist tendency then many will do so. We shouldn't rely on them standing up for the free market.
I can see two key reasons.
1) They're facing a prisoner's dilemma. Firms face a host of different groups trying to lobby them to accept various curbs on economic freedom - greens, animal rights activists, safety bores and innumerable others. Few of them have much political clout but it doesn't matter. Each company faces a simple choice:
The firm can concede the argument to those pressuring for economic illiberalisms: that brings political kudos for being the good guys if your competitors don't follow suit, if they do then at least you won't be singled out for abuse. Or, our firm can choose to resist calls for coercion: if all the others do the same then everything's fine - they'll fight the good fight - but if other companies don't follow suit our firm risks ExxonMobil's fate - being singled out, boycotted and hounded at every turn. The rational choice is obvious isn't it? Give in.
Everyone will make the same decision if they're behaving rationally and the bosses won't stand up for free market capitalism.
2) Incumbents can be defended from new entrants by regulation. Most bosses, unsurprisingly, work for companies that already exist. Regulation can increase the cost of starting a new business or make it hard for some companies, with smaller margins or capital constraints, to stay in business. If a big business can get rid of some or all of its competition by encouraging new regulations then it could easily be better off even if the regulations increase its own costs somewhat.
An international coffee cartel was maintained for some time thanks to America - the coffee growers' biggest customer - agreeing to act to enforce the agreement by freezing those who welched on the deal out of the market. Big coffee roasting companies in the States used their political influence to encourage the US Government to take up this role. The new cartel would cause their smaller rivals far more trouble than it would them, might put many out of business, and reduce competition.
Bosses are human. If they have every incentive to kowtow to the anti-capitalist tendency then many will do so. We shouldn't rely on them standing up for the free market.
Tuesday, February 05, 2008
Should taxpayers care about other people's obesity?
In a debate over anti-obesity policy at CentreRight.Com Peter Franklin argued that the problem of obesity cannot be ignored because of "the long-term consequences that will be visited upon the taxpayer for decades to come". Peter Cuthbertson responded that, although he also thought tackling obesity would be great, he didn't think Government intervention stood much chance of success. He also noted that obesity might not cost the taxpayer at all according to new research quoted in the Telegraph.
The new research suggested that the obese actually save health services money as they die earlier and from less lingering diseases than Alzheimer's and Parkinson's - which create far more expense.
In response, Peter Franklin argues that "these sort of studies are as selective as they are cynical", "did not take into account the social and economic costs of ill-health in younger people" and even "the Dutch academics who authored the study [in] question admitted that "their research did not look at the total costs of obesity and smoking, just the narrowly-prescribed health costs.""
He's utterly missed the point. If the Dutch academics are right that health costs are not increased by obesity then his original contention that there are consequences that will be visited upon the taxpayer is massively undermined. The social and economic costs that the Dutch academics did not cover are mostly not costs to the taxpayer." Absences from work due to illness and employment difficulties" are important but apart from a pretty marginal effect on economic growth their cost to taxpayers will be minor.
While I'm sure obesity is a very bad thing, thanks to those other costs, if taxpayers aren't going to foot the bill an appeal to their interests should not be used to support government lifestyle interventions.
The new research suggested that the obese actually save health services money as they die earlier and from less lingering diseases than Alzheimer's and Parkinson's - which create far more expense.
In response, Peter Franklin argues that "these sort of studies are as selective as they are cynical", "did not take into account the social and economic costs of ill-health in younger people" and even "the Dutch academics who authored the study [in] question admitted that "their research did not look at the total costs of obesity and smoking, just the narrowly-prescribed health costs.""
He's utterly missed the point. If the Dutch academics are right that health costs are not increased by obesity then his original contention that there are consequences that will be visited upon the taxpayer is massively undermined. The social and economic costs that the Dutch academics did not cover are mostly not costs to the taxpayer." Absences from work due to illness and employment difficulties" are important but apart from a pretty marginal effect on economic growth their cost to taxpayers will be minor.
While I'm sure obesity is a very bad thing, thanks to those other costs, if taxpayers aren't going to foot the bill an appeal to their interests should not be used to support government lifestyle interventions.
Jeremy Leggett attempts to bend the logic of peak oil to secure more subsidies for renewables
The Guardian are still allowing Jeremy Leggett space to lobby on behalf of his industry - those renewable companies making big profits on the back of the Renewables Obligation that pushes up energy prices. His new article is about peak oil.
First, he accuses oil firms of profiteering because Shell and ExxonMobil are making big profits. That's a bit rich coming from a renewables executive (see link above) and only part of the picture. Not all big oil companies are enjoying soaring profits. Just today British Petroleum announced dissapointing figures. That means all the rest of Leggett's rhetoric about oil firms pocketing the cash rather than investing in new exploration is a little empirically weak.
From then on he starts arguing that peak oil is going to ruin us and lambasting complacent economists:
"Economists tend not to see the problem. As the oil price goes up, they assume more cash will be available for exploration, the oil majors will duly explore, and they will find more oil."
It is reasonable to assume that oil exploration spending will increase with a higher oil price - and that does appear to have happened. In just one year, from 2004 to 2005, oil exploration budgets increased by 31 per cent. Leggett argues this kind of statistic is misleading:
"Moreover, the International Energy Agency has described recent apparent increases in exploration spend as "illusory" because of inflation in costs in the far-flung places where the industry is now forced to look for new oil."
So they are spending more money looking for oil. It's just that those colossal amounts of money are being spent to find oil in increasingly remote and challenging places to drill, where oil production hasn't been nationalised - most of the world's productive oil fields are off limits.
Of course, oil won't magically appear from the ground when the majors increase investment. While there is still a lot of oil there - rising prices are still dependent upon OPEC holding down supply - it will be increasingly difficult to meet rising demand. While that contradicts the straw man assumption set up by Leggett - that economists think oil production will always rise to meet demand - it doesn't really create the need for panic he seeks to establish. The economy is filled with rational actors who don't want to pay higher energy bills who have plenty of other ways to respond to rising fuel prices.
If incentives to discover more oil - high oil prices - don't create an increased supply then resulting high energy prices will create other incentives. Incentives to use energy more efficiently; to seek out new economical sources of power; to shift towards other existing sources of power such as nuclear. All this will be done without subsidy. That means there isn't a need for new taxes and Government attempting to pick winners. Shortages in a particular resources encourage innovation, economy and substitution. That is why economists do not expect high oil prices to create a long term crisis, although there may well be costs in the short term.
Those short term costs will be larger if the rise in energy prices is faster and smaller if it is slower. It is more costly to adapt to rising prices more quickly. What that implies is that the correct policy response to peak oil would actually be to do everything we can to slow rises in energy prices - and give the economy longer to adapt - that would imply dumping measures like the Renewables Obligation. That way we could replace subsidies now with a more gradual rise in energy prices. That would allow time for market incentives to encourage investment in alternative sources of energy that aren't subsidy junkies like wind farms.
Not quite the policy conclusion Leggett had in mind?
Photo by Flickr User neilharmer used under a Creative Commons License.
Cross-posted from the TaxPayers' Alliance blog.
Monday, February 04, 2008
Chaos in China
The pictures coming out of Guangzhou and the rest of snow-bound China are incredible. They're a reminder of how - for all its newfound strength - modern China is still very fragile.
Infrastructure is stretched to breaking point. Families have become thoroughly disjointed as opportunity only knocks hundreds of miles away from remote rural villages abandoned to children and the elderly. For a country that appears to have such a bright future I found, when I was in Beijing, a lot of anxiety among young people worried about their prospects.
It should come as no surprise to see China's fragile side. It is attempting to industrialise at an incredible pace and with a lot of very shaky institutions. Internal economic migration weakens the social structures that can keep communities together in face of hardship. With so many people seeking to get ahead there will be a lot of frustrated ambition.
I don't think its a bad thing that we should be occassionally reminded that, while China is a powerhouse, the Chinese are having to work very hard just to keep the trains moving, maintain social stability and ensure a basic level of political and cultural harmony. That knowledge is a tonic to an melodramatic fear of China the dominant, the superpower. When you realise China's vulnerability you realise that the Chinese actually have every reason to want to cooperate with, rather than confront, us.
The human cost of wind power vanity projects
Today the Financial Times reports on the poor performance of the Renewables Obligation in encouraging wind farms: "The amount of new wind capacity added in 2007 was less than three-quarters of that built the year before." This is despite subsidies that make wind farms massively profitable:
"Under the current regime, and thanks in part to high power prices, wind turbines can pay for themselves within about five years, out of a working life of at least 20 years.
In its energy white paper last year the government described the RO as the “primary mechanism” for meeting its goals of reducing fossil fuel dependency. However, Andrew Wright, managing director of markets at Ofgem, the electricity regulator, told the Financial Times: “The RO is a very expensive way of providing support for renewables.”
Peter Atherton, head utilities analyst at Citi Investment Research, said: “It’s a bonanza. Anyone who can get their nose in the trough is trying to."
The problem is that wind farms are getting stuck in the planning system. Now, it is important at this stage to note that they aren't just facing the same "not in my back yard" opposition that many industrial developments do.
Part of the problem with windpower is that each turbine has a very low capacity and, as such, you need massive numbers of them - covering a huge amount of land - to get the kind of power you would get from a small number of conventional or nuclear power plants.
As such, wind farms are poor value in two ways: They are poor value for money as you need to provide a lot of subsidy to produce a relatively small amount of capacity. However, they are also poor value for environmental disruption as you need to ruin a lot of landscapes in order to produce a relatively small amount of capacity. The Government have offered a massive subsidy that has meant it is unnecessary for wind power to offer good value for money. However, they have not found a way of absolving wind farms of the need to provide good value for their geographical footprint - because of that large footprint the planning system is proving particularly difficult to traverse for wind power.
It would be bad enough if the Renewables Obligation, the largest source of subsidy to wind power, were merely expensive - a waste of every taxpayers' money. However, as it functions by obligating energy companies to obtain a certain share of the energy they provide from renewable sources - thereby increasing the cost of electricity - it has particularly pernicious social consequences. The poor spend a significantly larger proportion of their income on electricity than the rich (graph from the TaxPayers' Alliance report The Case Against Further Green Taxes):
The poor could, in theory, be compensated for the additional bill created by the Renewables Obligation with some sort of additional benefit - an increase in the Winter Fuel Allowance, for example. However, benefits are a poor subsitute for keeping your money in the first place. When a Government policy creates an uncertain burden - it is hard to know exactly what the Renewables Obligation will cost people, how much it will raise utility bills - compensation will often be insufficient, slow to arrive and otherwise poorly targetted.
In this particular case the burden of regulation is likely to be not just unwelcome but actually lethal. In 2006-07 there were 23,900 excess deaths in the winter (PDF). These are predominantly the elderly suffering in the cold and making it more expensive for them to keep warm seems almost certain to increase the number of deaths. Poor pensioners - forced to try and cut corners by, among other things, higher council tax bills - should not be forced to choose between a more pressing struggle to make ends meet and the dreadful risks of living in a cold home.
An additional financial burden upon the poorest and deaths among the elderly are a high price to pay for a failing attempt to encourage slight increases in the amount of renewable power we use.
Photo by Flickr User wdrwilson used under a Creative Commons License.
Cross-posted from the TaxPayers' Alliance blog.
Britblog Round-Up
A fine Britblog Round-Up is up at Westminster Wisdom. Lots of blogs well worth reading.
The Superbowl
I just watched my first American Football game. It was superb. Great fun, really tense at the end. Fortunes shifting and more than one comeback. A shame for the New England Patriots that they couldn't complete their record breaking run but a huge achievement for the New York Giants with their incredible underdog win.
I like the sport. I'm going to watch some more of it and, next time I get over to the States, might see if I can see a game live.
I like the sport. I'm going to watch some more of it and, next time I get over to the States, might see if I can see a game live.
A happy second birthday for Sinclair's Musings!
As of today this blog has been going for two years. I started it in order to make sure that I kept in touch with a broad spectrum of issues - didn't get stuck in an intellectual niche. That objective has been more than met. This blog's archive covers a range of issues from Islamism to climate change to the philosophy of social conservatism to foreign policy, particularly with regard to China and Pakistan, to public service delivery to transnationalism to economic and trade policy.
Beyond that, I've taken a huge amount from engaging with other bloggers. A lot of really brilliant people bringing unique perspectives to the world through their blogs. I won't name any names to avoid embarassing late night omissions. You know who you are - thank you.
I'm proud of this blog and I've taken a huge amount from the experience of writing it. Thanks for reading - your comments and eyeballs make blogging so much more rewarding. Here's to another two years.
Beyond that, I've taken a huge amount from engaging with other bloggers. A lot of really brilliant people bringing unique perspectives to the world through their blogs. I won't name any names to avoid embarassing late night omissions. You know who you are - thank you.
I'm proud of this blog and I've taken a huge amount from the experience of writing it. Thanks for reading - your comments and eyeballs make blogging so much more rewarding. Here's to another two years.
Sunday, February 03, 2008
Bio
Born in Reading, Berkshire in 1983 I grew up in Letchworth, Hertfordshire. I then went to the London School of Economics to study Economics and Economic History BSc and then Economic History MSc.
While at university I wrote for the LSE student newspaper, the Beaver, and did a lot of debating. At the Beaver I became a rather successful editor of the features section and a rather mediocre managing editor. In debating I reached the grand final at Oxford and won the University College London and Manchester Intervarsity and World Masters' competitions.
In breaks from university I worked for a life assurance company based in Birmingham, travelled to China to make a start at learning Mandarin and ventured to Siberia to investigate Lake Baikal.
Over the last year I've been working at the TaxPayers' Alliance as a Policy Analyst - focussing mostly on public service delivery and environmental policy. In my spare time I've been writing this blog since 2005. It has covered just about every issue imaginable and was nominated for the Conservative Home Best Young Conservative Blogger award.
While at university I wrote for the LSE student newspaper, the Beaver, and did a lot of debating. At the Beaver I became a rather successful editor of the features section and a rather mediocre managing editor. In debating I reached the grand final at Oxford and won the University College London and Manchester Intervarsity and World Masters' competitions.
In breaks from university I worked for a life assurance company based in Birmingham, travelled to China to make a start at learning Mandarin and ventured to Siberia to investigate Lake Baikal.
Over the last year I've been working at the TaxPayers' Alliance as a Policy Analyst - focussing mostly on public service delivery and environmental policy. In my spare time I've been writing this blog since 2005. It has covered just about every issue imaginable and was nominated for the Conservative Home Best Young Conservative Blogger award.
Research work
TaxPayers' Alliance research is invariably a collaborative effort and I am neither claiming sole responsibility for these reports nor suggesting that I'm not proud of the part I have played in the other work of the TPA since I started there last May. However, these are the studies that I played the most central role in producing:
The Looming Winter of Discontent, May 2008: This report sets out how Britain faces a looming winter of discontent as public sector pay costs have increased massively in recent years, leaving little money left, and public sector staff are going on strike far more frequently than their private sector counterparts.
The Cost of Crime in London, April 2008: The report presents the first estimates of the cost of crime in each of the 32 London boroughs. The total cost of crime for London was £3 billion or £400 per person last year.
The Economic and Political Case Against Higher Fuel Duty, March 2008: The report shows that people living in marginal constituencies are more likely to drive to work and how motorists are already paying too much tax. It calls on the Government to abandon the 2p rise in Fuel Duty set for April.
Budget 2008 Report, March 2008: The report shows how higher spending on public services has failed to deliver results and how controlling spending and reducing taxes could deliver significant economic benefits. It also sets out the savings from not rehiring the quarter of civil servants due to retire over the next decade.
Wasting Lives: A statistical analysis of NHS performance in a European context since 1981, January 2008: The report sets out the ongoing failure of the NHS to match European levels of healthcare performance and the inability of new money, since 1999, to rectify the situation.
Funding Hate Education, January 2008: In the first of a series of papers analysing the effectiveness of expenditure on overseas aid, the report reveals disturbing evidence showing how British taxpayers’ money has been spent helping to fund hate education and promote violence in the Middle East.
Rewards for Failure: Hospital Acquired Infections, December 2007: Presents a list of the 25 NHS trusts with the worst C. difficile hospital infection rates and compares these infection rates with the pay of the trusts’ Chief Executives.
Response to the Conservative Quality of Life Policy Group Report, September 2007: The TPA attacks the intellectual assumptions behind the report and argues that the Policy Group’s recommendations would lead to more tax, regulation and bureaucracy, would curb vital infrastructure development and would undermine free trade.
The Case Against Further Green Taxes, September 2007: The first comparison of official and academic estimates of the social cost of Britain’s carbon emissions with the revenue raised from green taxes shows that environmental taxation is already above its optimal level. The report also presents an audit of current green taxation, showing that each green tax has major flaws.
Green Tokenism: Government Cars, August 2007: The research note finds that if the Government had not bought hybrid cars, it could have planted 74,000 trees with the money saved, a far better environmental move.
Effect of the 2012 Olympics on Construction Inflation, August 2007: The research note calculates that the London Olympics will add £4 billion to construction inflation in London and the South East.
The Global Warming Industry in Local Government, July 2007: The research note gives details of employees working to reduce carbon emissions in a random sample of 25 local authorities.
Beyond the Dome: Government projects £23 billion over budget, July 2007: A systematic investigation into cost overruns in over 300 public sector capital projects over the last two years reveals a £23 billion total.
The Looming Winter of Discontent, May 2008: This report sets out how Britain faces a looming winter of discontent as public sector pay costs have increased massively in recent years, leaving little money left, and public sector staff are going on strike far more frequently than their private sector counterparts.
The Cost of Crime in London, April 2008: The report presents the first estimates of the cost of crime in each of the 32 London boroughs. The total cost of crime for London was £3 billion or £400 per person last year.
The Economic and Political Case Against Higher Fuel Duty, March 2008: The report shows that people living in marginal constituencies are more likely to drive to work and how motorists are already paying too much tax. It calls on the Government to abandon the 2p rise in Fuel Duty set for April.
Budget 2008 Report, March 2008: The report shows how higher spending on public services has failed to deliver results and how controlling spending and reducing taxes could deliver significant economic benefits. It also sets out the savings from not rehiring the quarter of civil servants due to retire over the next decade.
Wasting Lives: A statistical analysis of NHS performance in a European context since 1981, January 2008: The report sets out the ongoing failure of the NHS to match European levels of healthcare performance and the inability of new money, since 1999, to rectify the situation.
Funding Hate Education, January 2008: In the first of a series of papers analysing the effectiveness of expenditure on overseas aid, the report reveals disturbing evidence showing how British taxpayers’ money has been spent helping to fund hate education and promote violence in the Middle East.
Rewards for Failure: Hospital Acquired Infections, December 2007: Presents a list of the 25 NHS trusts with the worst C. difficile hospital infection rates and compares these infection rates with the pay of the trusts’ Chief Executives.
Response to the Conservative Quality of Life Policy Group Report, September 2007: The TPA attacks the intellectual assumptions behind the report and argues that the Policy Group’s recommendations would lead to more tax, regulation and bureaucracy, would curb vital infrastructure development and would undermine free trade.
The Case Against Further Green Taxes, September 2007: The first comparison of official and academic estimates of the social cost of Britain’s carbon emissions with the revenue raised from green taxes shows that environmental taxation is already above its optimal level. The report also presents an audit of current green taxation, showing that each green tax has major flaws.
Green Tokenism: Government Cars, August 2007: The research note finds that if the Government had not bought hybrid cars, it could have planted 74,000 trees with the money saved, a far better environmental move.
Effect of the 2012 Olympics on Construction Inflation, August 2007: The research note calculates that the London Olympics will add £4 billion to construction inflation in London and the South East.
The Global Warming Industry in Local Government, July 2007: The research note gives details of employees working to reduce carbon emissions in a random sample of 25 local authorities.
Beyond the Dome: Government projects £23 billion over budget, July 2007: A systematic investigation into cost overruns in over 300 public sector capital projects over the last two years reveals a £23 billion total.
Redesigning Sinclair's Musings
As you can see the site is undergoing something of a redesign at the moment. With its second birthday coming up it seemed appropriate to clean up the blogroll, there were a number of dead links and duplications, and see if I could make the look of the site a little more interesting and inviting. The picture is a landscape by Salvator Rosa, the same artist whose work formed the backdrop to the old logo.
Next step is to add new sites to the blogroll and then set up some pages that collect my favourite Sinclair's Musings posts on a series of the topics that it has discussed most.
Next step is to add new sites to the blogroll and then set up some pages that collect my favourite Sinclair's Musings posts on a series of the topics that it has discussed most.
Saturday, February 02, 2008
Trading Emissions: Full Global Potential by Simon Linnett
Simon Linnett's plan, written for the Social Market Foundation, for a global response to the threat of anthropogenic global warming (PDF) is entirely misconceived. At each stage it chooses the worst possible path forward from its analysis of the threat, to the manner of the response, to the scale at which it is organised.
Framing the problem in terms of changes we 'must' make
Lurking in the background in this study, and in many other doubtful contributions to environmental policy thinking, is Sir Nicholas Stern's study on climate change. This was the study that most successfully pushed the idea that climate change is not just one more challenge that threatens to impose particular costs on the world economy and humanity at large but instead a likely catastrophe warranting a messianic response.
The TaxPayers' Alliance study The Case Against Further Green Taxes (PDF, Box 1.3) summarised how his analysis has not stood up to scrutiny well at all. Stern's study took no account of the possibility of adaptation, chose an unrealistically low discount rate and cherry-picked the most pessimistic predictions of future conditions. This left him proposing that we take dramatic policy steps in order to make an uncertain contribution to conditions not ten or a hundred years from now but in the distant future - more than half the harms described in the report are expected to occur after 2800. As I set out some months ago, when looking so far beyond the horizon it is absolutely important not to assume that technologies and societies are fixed, as Stern does, and discount harms for an inventive society's ability to adapt to them.
At no point does Linnett even consider the case that the earlier approach to climate change economics might be correct. He clearly has decided that the time for such debate is past and prefers to move onto the loftier task of proposing theoretical trasnational institutions. Unfortunately, not considering the more established literature in climate change economics leaves him with an absolutist view of the kind of measures that are needed which leaves little room for the balancing of costs and benefits that should inform a sensible response to any external threat.
'Cap and trade'
Cap and trade can sound, at first, like a very sensible, market-based solution. This is how Linnett describes it. After all, it implies "trading" and creates a market. Unfortunately, that picture is very misleading.
Emissions trading schemes have had a very poor record so far. Again, a more detailed summary of the case against them is contained in the TaxPayers' Alliance The Case Against Further Green Taxes report (chapter six). The European Union Emissions Trading Scheme has been a complete farce so far with oil and electricity generation companies making a profit and NHS hospitals facing big bills. Negotiations towards the establishment of Phase II suggest that little improvement can be expected any time soon. Cap and trade schemes in America have had little more success with erratic prices, thanks to the political nature of the market, making business planning impossible and killing the incentive to invest.
Cap and trade does not involve the private sector more than a carbon tax. The key difference between the two is that with a carbon tax the Government sets a price for carbon dioxide emissions and then the market is free to use or not use as much carbon as is economical, where the benefits outweigh the costs of increased climate change. This means that an incentive to greater efficiency is created but the market is also involved in deciding the level of carbon emissions at which the social cost is balanced against the benefits. By contrast, with cap and trade the absolute amount of permissible carbon emissions is set by Government, which needs to reach some political understanding of the costs of carbon emissions cuts - and sometimes also to allocate emissions permits between different providers - and the market is only involved to try and seek an efficient means of cutting emissions. Cap and trade is not the market solution.
Failing to stare the costs of cutting emissions in the face
This entire scheme is predicated on Government capping emissions and then the market miraculously making the actual cuts. It takes no account of the cost of emissions cuts for two reasons discussed already: First, Stern's hyperbolic account of the costs of climate change is designed to forestall a meaningful balancing of costs and benefits - and Linnett's study is predicated on Stern's analysis. Secondly, cap and trade - as a mechanism - takes no account of the cost of cutting carbon emissions as it is centred around absolute limits to emissions. The cost of meeting those limits is a problem left to industry.
This is another fatal flaw in Linnett's report. Any meaningful plan for a global reduction in emissions has to deal with the central problem that to do so with today's technology would be incredibly expensive. He argues, at one point, that to join this scheme would be in China and India's interests as the scheme would aim to base emissions allocations on population and that would give them a valuable resource - emissions permits - to trade. This just can't be reconciled with the kinds of brutal arithmetic that combining a growing world economy with big cuts in emissions implies:
This brutal arithmetic, and the clear implication that developed country cuts won't be enough, is the result of developing world growth that swamps any change in developed world emissions.
The cuts mentioned would all need to be on top of the continued improvements in energy efficiency that we should expect regardless of climate change policy as companies seek to avoid expensive fuel bills. Unless we can find some new and miraculous source of energy efficiency those cuts in emissions will require commensurate cuts in national incomes. Massive sacrifices of economic growth and living standards. All this and more was set out in a presentation by the White House Council on Environmental Quality and illustrates just how challenging it will be to cut carbon emissions on the scale thought necessary by those proposing deep emissions cuts.
Linnett found space in his report to discuss where his proposed World Environment Agency's offices should be, London apparently, but doesn't even mention these massive, intractable challenges that any such institution would face. The scale of the cuts needed to meet the targets thrown around in so cavalier a fashion illustrate why countries will have every incentive to interfere, seek advantage and screw with a World Environment Agency. This brings us on to the final, critical flaw in Linnett's plan.
Transnationalism
This organisation removes yet another element of policy from the sovereignty of national parliaments. Linnett does little to address the problems such a move creates. The lack of accountability that plagues all existing supranational institutions, particularly the EU and the UN; the extremely watered down nature of any democratic involvement; the establishment of government by an international, bureaucratic aristocracy. This institution would be Tranzi central.
Beyond that, by creating a single organisation with so much power and little accountability you create a superb target for interest group capture. Whether led astray by intense lobbying, nations threatening to leave or actual corruption a World Environment Agency's power is unlikely to be used in an enlightened matter, even if it is set up with the most benign of intentions. The stakes would be too high for powerful interests not to get involved and try to sway decisions.
Conclusions
Linnett's analysis and proposal both have severe problems. The best policy response to climate change remains the following three-pronged strategy, set out in more detail here:
1) Technology - cutting emissions to the level Al Gore, Zac Goldsmith or even Chris Huhne would like isn't impossible. It just requires a miracle. Fortunately science has a history of providing what, to previous generations, would have seemed miracles. There are economical steps we can take that don't screw over our economy and might make such a miracle, or just an incremental technology that reduces our emissions a bit, more likely.
Prizes for technological discovery, an alternative to patents that was very successful in encouraging important developments during the Industrial Revolution, were proposed by Jim Manzi in a recent National Review article and might offer a good way of encouraging green technologies.
2) Adaptation - we can make sure our flood defences are in order, our crops will respond well to the new seasons and take other steps to prepare for the challenges of a warmer world. We can help poor countries do the same. This needn't be particularly expensive and we should avoid doing too much while we don't know precisely what we'll be adapting to but adaptation is clearly a central response to climate change under any sensible programme.
3) Resilience - Manzi put it well: "Wealth and technology are raw materials for options". The most important thing to do in order to be able to withstand an ecological crisis is make sure you're rich to start off with. Rich countries are so much better able to withstand the harms of global warming. If we screw up our economy in a vain attempt to avert climate change future generations will not thanks us.
Framing the problem in terms of changes we 'must' make
Lurking in the background in this study, and in many other doubtful contributions to environmental policy thinking, is Sir Nicholas Stern's study on climate change. This was the study that most successfully pushed the idea that climate change is not just one more challenge that threatens to impose particular costs on the world economy and humanity at large but instead a likely catastrophe warranting a messianic response.
The TaxPayers' Alliance study The Case Against Further Green Taxes (PDF, Box 1.3) summarised how his analysis has not stood up to scrutiny well at all. Stern's study took no account of the possibility of adaptation, chose an unrealistically low discount rate and cherry-picked the most pessimistic predictions of future conditions. This left him proposing that we take dramatic policy steps in order to make an uncertain contribution to conditions not ten or a hundred years from now but in the distant future - more than half the harms described in the report are expected to occur after 2800. As I set out some months ago, when looking so far beyond the horizon it is absolutely important not to assume that technologies and societies are fixed, as Stern does, and discount harms for an inventive society's ability to adapt to them.
At no point does Linnett even consider the case that the earlier approach to climate change economics might be correct. He clearly has decided that the time for such debate is past and prefers to move onto the loftier task of proposing theoretical trasnational institutions. Unfortunately, not considering the more established literature in climate change economics leaves him with an absolutist view of the kind of measures that are needed which leaves little room for the balancing of costs and benefits that should inform a sensible response to any external threat.
'Cap and trade'
Cap and trade can sound, at first, like a very sensible, market-based solution. This is how Linnett describes it. After all, it implies "trading" and creates a market. Unfortunately, that picture is very misleading.
Emissions trading schemes have had a very poor record so far. Again, a more detailed summary of the case against them is contained in the TaxPayers' Alliance The Case Against Further Green Taxes report (chapter six). The European Union Emissions Trading Scheme has been a complete farce so far with oil and electricity generation companies making a profit and NHS hospitals facing big bills. Negotiations towards the establishment of Phase II suggest that little improvement can be expected any time soon. Cap and trade schemes in America have had little more success with erratic prices, thanks to the political nature of the market, making business planning impossible and killing the incentive to invest.
Cap and trade does not involve the private sector more than a carbon tax. The key difference between the two is that with a carbon tax the Government sets a price for carbon dioxide emissions and then the market is free to use or not use as much carbon as is economical, where the benefits outweigh the costs of increased climate change. This means that an incentive to greater efficiency is created but the market is also involved in deciding the level of carbon emissions at which the social cost is balanced against the benefits. By contrast, with cap and trade the absolute amount of permissible carbon emissions is set by Government, which needs to reach some political understanding of the costs of carbon emissions cuts - and sometimes also to allocate emissions permits between different providers - and the market is only involved to try and seek an efficient means of cutting emissions. Cap and trade is not the market solution.
Failing to stare the costs of cutting emissions in the face
This entire scheme is predicated on Government capping emissions and then the market miraculously making the actual cuts. It takes no account of the cost of emissions cuts for two reasons discussed already: First, Stern's hyperbolic account of the costs of climate change is designed to forestall a meaningful balancing of costs and benefits - and Linnett's study is predicated on Stern's analysis. Secondly, cap and trade - as a mechanism - takes no account of the cost of cutting carbon emissions as it is centred around absolute limits to emissions. The cost of meeting those limits is a problem left to industry.
This is another fatal flaw in Linnett's report. Any meaningful plan for a global reduction in emissions has to deal with the central problem that to do so with today's technology would be incredibly expensive. He argues, at one point, that to join this scheme would be in China and India's interests as the scheme would aim to base emissions allocations on population and that would give them a valuable resource - emissions permits - to trade. This just can't be reconciled with the kinds of brutal arithmetic that combining a growing world economy with big cuts in emissions implies:
"Even if you were to miraculously cut developed world emissions to zero, complete de-carbonisation, the developing countries would still need to cut their emissions by 9.5 gigatones, 46 per cent. Growth in poor countries will mean that the rich world just can't do all the work in cutting emissions. If your cut in developed world emissions is more realistic, two-thirds for example, then the developed countries would need to make a 74 per cent cut."
This brutal arithmetic, and the clear implication that developed country cuts won't be enough, is the result of developing world growth that swamps any change in developed world emissions.
The cuts mentioned would all need to be on top of the continued improvements in energy efficiency that we should expect regardless of climate change policy as companies seek to avoid expensive fuel bills. Unless we can find some new and miraculous source of energy efficiency those cuts in emissions will require commensurate cuts in national incomes. Massive sacrifices of economic growth and living standards. All this and more was set out in a presentation by the White House Council on Environmental Quality and illustrates just how challenging it will be to cut carbon emissions on the scale thought necessary by those proposing deep emissions cuts.
Linnett found space in his report to discuss where his proposed World Environment Agency's offices should be, London apparently, but doesn't even mention these massive, intractable challenges that any such institution would face. The scale of the cuts needed to meet the targets thrown around in so cavalier a fashion illustrate why countries will have every incentive to interfere, seek advantage and screw with a World Environment Agency. This brings us on to the final, critical flaw in Linnett's plan.
Transnationalism
This organisation removes yet another element of policy from the sovereignty of national parliaments. Linnett does little to address the problems such a move creates. The lack of accountability that plagues all existing supranational institutions, particularly the EU and the UN; the extremely watered down nature of any democratic involvement; the establishment of government by an international, bureaucratic aristocracy. This institution would be Tranzi central.
Beyond that, by creating a single organisation with so much power and little accountability you create a superb target for interest group capture. Whether led astray by intense lobbying, nations threatening to leave or actual corruption a World Environment Agency's power is unlikely to be used in an enlightened matter, even if it is set up with the most benign of intentions. The stakes would be too high for powerful interests not to get involved and try to sway decisions.
Conclusions
Linnett's analysis and proposal both have severe problems. The best policy response to climate change remains the following three-pronged strategy, set out in more detail here:
1) Technology - cutting emissions to the level Al Gore, Zac Goldsmith or even Chris Huhne would like isn't impossible. It just requires a miracle. Fortunately science has a history of providing what, to previous generations, would have seemed miracles. There are economical steps we can take that don't screw over our economy and might make such a miracle, or just an incremental technology that reduces our emissions a bit, more likely.
Prizes for technological discovery, an alternative to patents that was very successful in encouraging important developments during the Industrial Revolution, were proposed by Jim Manzi in a recent National Review article and might offer a good way of encouraging green technologies.
2) Adaptation - we can make sure our flood defences are in order, our crops will respond well to the new seasons and take other steps to prepare for the challenges of a warmer world. We can help poor countries do the same. This needn't be particularly expensive and we should avoid doing too much while we don't know precisely what we'll be adapting to but adaptation is clearly a central response to climate change under any sensible programme.
3) Resilience - Manzi put it well: "Wealth and technology are raw materials for options". The most important thing to do in order to be able to withstand an ecological crisis is make sure you're rich to start off with. Rich countries are so much better able to withstand the harms of global warming. If we screw up our economy in a vain attempt to avert climate change future generations will not thanks us.
Wednesday, January 30, 2008
Group Polarization and Credulous Bayesians
Ed Glaeser is a very smart man. I can think of a lot of groups that this paper (PDF) describes quite well, there is a deep ring of truth to it all:
The lesson is clear: keep plenty of people you disagree with within your social circle (both in real life and on the blogs). It'll keep you sane.
"Unlike perfect Bayesians,Credulous Bayesians treat offered opinions as unbiased and independent and fail to adjust for the information sources and incentives of the opinions that they hear. There are fourproblems here. First, Credulous Bayesians will not adequately correct for the common sources of their neighbors’ opinions, even though common sources ensure that those opinions add little new information. Second, Credulous Bayesians will not adequately correct for the fact that their correspondents may not be a random sample of the population as a whole, even though a non-random sample may have significant biases. Third, Credulous Bayesians will not adequately correct for any tendency that individuals might have to skew their statements towards an expected social norm, even though peer pressure might be affecting public statements of view. Fourth, Credulous Bayesians will not fully compensate for the incentives that will cause some speakers to mislead, even though some speakers will offer biased statements in order to persuade people to engage in action that promotes the speakers’ interests.
[...]
We then turn to the possibility that an individual’s friends and social networks are not a random sample of the population. A group of people might have skewed views on questions of policy or fact, and group members may not sufficiently adjust for that fact. We formalize this possibility by assuming that noise terms in the sample are correlated, rather than independent, as they could be if the group has been selected on some attribute or taste. Credulous Bayesians underestimate the correlation of the signals and act as if their neighbors are a random sample of the population as a whole. In this case, Credulous Bayesianism again causes more extremism and more error. Here too, larger group sizes (so long as they do not produce representativeness) can make decision-making less accurate. For a wide range of parameter values, more correlation decreases accuracy. This is our first result favoring intellectual diversity."
Glaeser's suggestion is that most people are actually pretty easily influenced by the opinions of those around them. This might sound cynical but if you consider just how long it takes to become genuinely informed about an issue from facts alone we do need to accept that most people will access truth socially. That means that when you socialise with those you agree with it is really easy to become convinced of radical ideas; the extreme ideas you here sound entirely normal because everyone around you holds them.
The lesson is clear: keep plenty of people you disagree with within your social circle (both in real life and on the blogs). It'll keep you sane.
Douglas Carswell thinks about an anti-Tranzi rebellion
This piece, for CentreRight.com, is incredibly provocative. The very idea of a "Pim Fortuyn moment" when an outsider crashes down a political class consensus that the wider population have little time for is incredible coming from an MP, and in a country so used to stability and incrementalism.
Setting up new parties in a first past the post electoral system is foolishness and we're a very different country to the Netherlands so a British "Pim Fortuyn moment" wouldn't look like the Dutch one. Most likely it would either be within a current party or non-party. However, there are opportunities. Imagine if an MP had really taken the Government - and the wider political class - to task for their pathetic response to the Danish Cartoons crisis; their lamentable failure to defend free speech against threats and religious hysteria. I think there were signs in the polls that they might have found a very receptive audience.
Out of sparks like that it might be possible to build a movement that would build upon deeply felt nationalism, discontent at an increasing decline in personal sovereignty and robust attachment to Western values.
"Voters sense Britain is becoming a state of failure; billions of pounds go into a health service riddled with delays and MRSA. More money on schools has seen standards actually decline. The criminal justice system is often useless. Government has lost control of our borders - as well as its own agencies and quangos.
[...]
Ponder the possibilities. A popular mood of radical anti-politics mixed with the internet; it could get interesting...."
Setting up new parties in a first past the post electoral system is foolishness and we're a very different country to the Netherlands so a British "Pim Fortuyn moment" wouldn't look like the Dutch one. Most likely it would either be within a current party or non-party. However, there are opportunities. Imagine if an MP had really taken the Government - and the wider political class - to task for their pathetic response to the Danish Cartoons crisis; their lamentable failure to defend free speech against threats and religious hysteria. I think there were signs in the polls that they might have found a very receptive audience.
Out of sparks like that it might be possible to build a movement that would build upon deeply felt nationalism, discontent at an increasing decline in personal sovereignty and robust attachment to Western values.
Tuesday, January 29, 2008
Shady dealings in support of Red Ken at the LSESU
Remember Fadhil Bakeer Markar? He was last seen on this blog sending an inflammatory and highly biased letter about Israel to every LSE fresher. Now he's abusing his position again, this time in support of Red Ken. Signing a letter to the Guardian with not just his own name but also that of the LSE Students' Union. This is an abuse of his position and quite possibly a breach of charity law. Here's an article that was published in the latest issue of the LSE's student newspaper - The Beaver (not online elsewhere I'm afraid) - which sets it all out:
Case for resignation
The signing of the letter in The Guardian supporting the re-election of Ken Livingstone by two SU representatives is illegal and unconstitutional
by Alex Teytelboym
This week The Beaver has kindly pointed out that Fadhil Bakeer Markar, our already disgraced General Secretary, and Ruhana Ali, the hitherto low-profile Education and Welfare officer, signed a letter to The Guardian newspaper supporting the mayoral re-election of Ken Livingstone (can be found on the Guardian Unlimited website).
Livingstone is not a particularly pleasant character. Dubbed 'Red Ken' for his notoriously left-wing views and support for Venezuelan rogue socialist regime, he was nevertheless popular among Londoners. The signatories of the letter claim that Livingstone has "championed a policy of tolerance, understanding and mutual respect of communities." That policy famously expired when Livingstone was suspended from office for four weeks in March 2006 for intentionally calling a Jewish Evening Standard reporter a 'concentration camp guard'. According to his lawyers he was not acting in official capacity. Of course he was not. Nor was Mel Gibson.
Livingstone's nasty character is entirely beside the point. The point is that the letter was signed thus: "Ruhana Ali, Fadhil Bakeer-Markar, LSE students union". From a point of view of a casual Guardian reader, it may seem as if the LSE SU, a charity, supports a political candidate. But the Charity Commission states very clearly on their website: "Following the principles, it is acceptable for a charity to advocate support for a particular policy, even if that policy solution is advocated by a political party or candidate, providing the the policy is in furtherance of the charity's purposes. However a charity must not support a political party or candidate". No mention of clear policies in the letter, by the way.
At last week's UGM, Bakeer Markar was very angry with me for pointing out that he potentially broke the law. He claimed that he and Ali signed the letter "in a personal capacity". If Tony Blair signed a letter to Vladimir Putin saying "You suck!" and signed it "Tony Blair, Prime Minister of Her Majesty's Government of the United Kingdom, in personal capacity", what do you think the repercussions for the Anglo-Russian relationship would be? How do you think it would be reported to Vladimir? And would Vladimir ever bother to read a letter from any old Tony?
The same logic applies here. Bakeer Markar and Ali abused their positions as elected sabbatical officers and trustees of this Union and betrayed its members. Last year our students voted for them in the confidence that they would use their positions for the betterment of the Union. These two sabbaticals have used our trust to advance their own political goals. As Daniel Finkelstein pointed out on the Comment pages of the Times in October: "Charities are allowed to engage in limited political activity but only to support their genuinely charitable, non-political objectives and only if they are careful not to allow these activities to to dominate their work, becoming the main way of achieving their objectives." Politics has dominated the agenda of Bakeer Markar and Ali since before their re-election, although their precise associations remain unclear. It is no secret that they received ardent support from murky, fraternity-like NUS organisations, such as the Student Broad Left and former sabbaticals.
Bakeer Markar and Ali must reveal who approached them to sign the letter. On 3 January a letter appeared in the Guardian Comment is Free section. It was signed by 63 prominent individuals and charities, of which about a third are closely linked to fundamentalist Muslim organisations according to the Centre for Social Cohesion. Lord Falkner challenged The Guardian to publish a list of Muslims supporting the other candidates. Instead, two days later the letter, signed by our sabbaticals, appeared in the newspaper. Bakeer Markar refused to answer questions from The Beaver reporters about the letter and reveal who approached them to sign the letter. Ali invented a new deadline for quotes and went to consult him. This conspiratorial behaviour suggests that Bakeer Markar and Ali may have some embarassing political associations and influences, including the signatories of the first letter.
It is in my opinion, that Bakeer Markar and Ali signed the letter under instructions from someone, who is closely connected to the mayoral office. It shows no signs of independent thinking, rather a following of orders. Both of them appeared at a party recently thrown by the mayoral office for London students' union sabbaticals. I wonder how much of this article has been censored. Last time a key quote from my new investigation on Bakeer Markar mysteriously dissapeared. He then pressured The Beaver to install "in my opinion" in front of almost every controversial statement on these pages. The Beaver executive editor bravely defended my article.
Bakeer Markar has something in common with Livingstone. They both refuse to apologise and admit their mistakes. In the denial of wrongdoing, they both look pathetic. As Livingstone should have two years ago, Bakeer Markar and Ali should resign today.
Case for resignation
The signing of the letter in The Guardian supporting the re-election of Ken Livingstone by two SU representatives is illegal and unconstitutional
by Alex Teytelboym
This week The Beaver has kindly pointed out that Fadhil Bakeer Markar, our already disgraced General Secretary, and Ruhana Ali, the hitherto low-profile Education and Welfare officer, signed a letter to The Guardian newspaper supporting the mayoral re-election of Ken Livingstone (can be found on the Guardian Unlimited website).
Livingstone is not a particularly pleasant character. Dubbed 'Red Ken' for his notoriously left-wing views and support for Venezuelan rogue socialist regime, he was nevertheless popular among Londoners. The signatories of the letter claim that Livingstone has "championed a policy of tolerance, understanding and mutual respect of communities." That policy famously expired when Livingstone was suspended from office for four weeks in March 2006 for intentionally calling a Jewish Evening Standard reporter a 'concentration camp guard'. According to his lawyers he was not acting in official capacity. Of course he was not. Nor was Mel Gibson.
Livingstone's nasty character is entirely beside the point. The point is that the letter was signed thus: "Ruhana Ali, Fadhil Bakeer-Markar, LSE students union". From a point of view of a casual Guardian reader, it may seem as if the LSE SU, a charity, supports a political candidate. But the Charity Commission states very clearly on their website: "Following the principles, it is acceptable for a charity to advocate support for a particular policy, even if that policy solution is advocated by a political party or candidate, providing the the policy is in furtherance of the charity's purposes. However a charity must not support a political party or candidate". No mention of clear policies in the letter, by the way.
At last week's UGM, Bakeer Markar was very angry with me for pointing out that he potentially broke the law. He claimed that he and Ali signed the letter "in a personal capacity". If Tony Blair signed a letter to Vladimir Putin saying "You suck!" and signed it "Tony Blair, Prime Minister of Her Majesty's Government of the United Kingdom, in personal capacity", what do you think the repercussions for the Anglo-Russian relationship would be? How do you think it would be reported to Vladimir? And would Vladimir ever bother to read a letter from any old Tony?
The same logic applies here. Bakeer Markar and Ali abused their positions as elected sabbatical officers and trustees of this Union and betrayed its members. Last year our students voted for them in the confidence that they would use their positions for the betterment of the Union. These two sabbaticals have used our trust to advance their own political goals. As Daniel Finkelstein pointed out on the Comment pages of the Times in October: "Charities are allowed to engage in limited political activity but only to support their genuinely charitable, non-political objectives and only if they are careful not to allow these activities to to dominate their work, becoming the main way of achieving their objectives." Politics has dominated the agenda of Bakeer Markar and Ali since before their re-election, although their precise associations remain unclear. It is no secret that they received ardent support from murky, fraternity-like NUS organisations, such as the Student Broad Left and former sabbaticals.
Bakeer Markar and Ali must reveal who approached them to sign the letter. On 3 January a letter appeared in the Guardian Comment is Free section. It was signed by 63 prominent individuals and charities, of which about a third are closely linked to fundamentalist Muslim organisations according to the Centre for Social Cohesion. Lord Falkner challenged The Guardian to publish a list of Muslims supporting the other candidates. Instead, two days later the letter, signed by our sabbaticals, appeared in the newspaper. Bakeer Markar refused to answer questions from The Beaver reporters about the letter and reveal who approached them to sign the letter. Ali invented a new deadline for quotes and went to consult him. This conspiratorial behaviour suggests that Bakeer Markar and Ali may have some embarassing political associations and influences, including the signatories of the first letter.
It is in my opinion, that Bakeer Markar and Ali signed the letter under instructions from someone, who is closely connected to the mayoral office. It shows no signs of independent thinking, rather a following of orders. Both of them appeared at a party recently thrown by the mayoral office for London students' union sabbaticals. I wonder how much of this article has been censored. Last time a key quote from my new investigation on Bakeer Markar mysteriously dissapeared. He then pressured The Beaver to install "in my opinion" in front of almost every controversial statement on these pages. The Beaver executive editor bravely defended my article.
Bakeer Markar has something in common with Livingstone. They both refuse to apologise and admit their mistakes. In the denial of wrongdoing, they both look pathetic. As Livingstone should have two years ago, Bakeer Markar and Ali should resign today.
Network versus Human Capital
Chris Dillow's post explaining what Tony Blair brings to Zurich Insurance is very interesting. Essentially, Chris accepted the argument Bryan Appleyard made that it wasn't Blair's, rather dubious, experience with climate change policy. He set out how what Blair really brought was 'network capital'.
The colloquial term Chris uses for this contribution is 'contacts'. I'm not so sure that captures what Blair brings to Zurich. Phone numbers aren't hard to get hold of and despite Blair's clearly fine networking skills I doubt he has a personal relationship with a significant number of people that Zurich would want to influence. I think that Blair's reputation is likely to be the major source of his network capital.
Even people who do not know him personally will want to be a part of the Blair 'club' (not everyone, but enough important people to justify his salary). As one of the longest serving Prime Ministers, Quartet envoy to the Middle East and now director at J P Morgan Blair is a big deal. People don't need to have a personal relationship with him already. They'll want to form one because it will make them feel honoured, respected or otherwise special to have an undeniably big cheese like Blair getting in touch.
Reputation isn't always so thoroughly divorced from skill. Plenty of people have a reputation for possessing a certain useful human capital. However, reputations do have a life of their own and, particularly among the big cheeses, have value beyond the immediate profession or environment in which they were initially earned. As such, while reputation can be a signal for real human capital I think that it is, more broadly, a part of network capital.
Chris's post discusses how valuable and important network capital can become. This set me to thinking about my own situation - at the dawn of my career as Blair's enters its twilight. My real wealth at the moment is almost entirely tied up in expected future earnings. They are likely to be larger than my earnings right now and will take place over more years. Any change in the size of the roughly 40 years of future earnings that I can reasonably expect in the years to come is likely to swamp the financial returns to my job right now.
Now, I am certainly improving my human capital; I'm learning a lot. However, it seems quite plausible that my gain in reputation and contacts is worth more than this. That when a report of mine does well it boosts the value of my reputation and contacts by more than the experience of preparing the report boosts the value of my human capital.
I'm not sure if my understanding of all the various concepts is sound. Still, the ideas underlying it all are interesting.
The colloquial term Chris uses for this contribution is 'contacts'. I'm not so sure that captures what Blair brings to Zurich. Phone numbers aren't hard to get hold of and despite Blair's clearly fine networking skills I doubt he has a personal relationship with a significant number of people that Zurich would want to influence. I think that Blair's reputation is likely to be the major source of his network capital.
Even people who do not know him personally will want to be a part of the Blair 'club' (not everyone, but enough important people to justify his salary). As one of the longest serving Prime Ministers, Quartet envoy to the Middle East and now director at J P Morgan Blair is a big deal. People don't need to have a personal relationship with him already. They'll want to form one because it will make them feel honoured, respected or otherwise special to have an undeniably big cheese like Blair getting in touch.
Reputation isn't always so thoroughly divorced from skill. Plenty of people have a reputation for possessing a certain useful human capital. However, reputations do have a life of their own and, particularly among the big cheeses, have value beyond the immediate profession or environment in which they were initially earned. As such, while reputation can be a signal for real human capital I think that it is, more broadly, a part of network capital.
Chris's post discusses how valuable and important network capital can become. This set me to thinking about my own situation - at the dawn of my career as Blair's enters its twilight. My real wealth at the moment is almost entirely tied up in expected future earnings. They are likely to be larger than my earnings right now and will take place over more years. Any change in the size of the roughly 40 years of future earnings that I can reasonably expect in the years to come is likely to swamp the financial returns to my job right now.
Now, I am certainly improving my human capital; I'm learning a lot. However, it seems quite plausible that my gain in reputation and contacts is worth more than this. That when a report of mine does well it boosts the value of my reputation and contacts by more than the experience of preparing the report boosts the value of my human capital.
I'm not sure if my understanding of all the various concepts is sound. Still, the ideas underlying it all are interesting.
Health service productivity continuing to fall
The picture emerging from today's report (PDF) on health service productivity, by the Office for National Statistics, is stark:
"From 2001 to 2005, productivity fell, as high growth in health care was lower than even higher growth in inputs. Even with the available adjustments for quality change in output, productivity fell by 2.0 per cent a year, on average, between 2001 and 2005. Without quality adjustment for output, productivity over the same period would have fallen by 2.5 per cent a year on average"
That's a pretty substantial fall.
The quality improvements are a little questionable. They consist of things like falls in waiting lists - very vulnerable to manipulation - instead of actual improvements in health outcomes. If we're going to focus on output productivity instead of improvements in health outcomes the straight 'quantity' measure is more instructive. It tells you about the direct return - in terms of consultations with doctors and drugs bought, for example - we're getting for our money. If those activities have become more useful that is an important, but separate, issue.
If you want a measure of actual outcomes then you should look to our report (PDF) Wasting Lives: A statistical analysis of NHS performance in European context since 1981 which studies mortality amenable to healthcare.
Those 2.5 per cent falls in output might seem marginal but they become very significant over time. The crucial table is this one, part of Figure 2:
What that shows is that productivity value has fallen from 100 to 89.8 over the period. This means that we're getting 10 per cent less today from every pound we spend on the NHS than we were in 1995.
Given how much we're spending that fall in productivity implies a massive waste of money and the failure to get the improvements in output we might have hoped for had productivity performance been better implies a massive waste in lives. The step change in healthcare performance we were told we would get for our money hasn't arrived - neither has the end of mixed-sex wards, another promise. The Government's healthcare policy has failed.
Cross-posted from the TaxPayers' Alliance blog.
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