Bruno Prior's blog

Britons have been indulging in a bout of self-flagellation over our bottom-ranking in a recent UNICEF report on childhood well-being. Each person, of course, chooses to blame the result on their personal bête noire. No doubt there are many things wrong with British society and many complex causes, but before rushing to our knee-jerk reactions, no one seems to have bothered to consider how much water this report holds. It's from the international body representing children, so it must be impartial and accurate, right?

Well, not exactly....

Rather a big question for a blog posting. This is not going to provide an answer, but a couple of observations.

1. Trying to measure inflation objectively by means of indices is nearly impossible. Take wage inflation, often seen as one of the two principle causes of an inflationary spiral (and intimately connected with the other commonly-cited cause - cost-push inflation - on the basis that wage inflation is often the result of inflation in the cost of living). The FT carried an article today entitled "Comfort for Bank on wage increases", in which they reported the ONS's figure for wage inflation of 3.7% for the final quarter of 2006 and the EEF's (Engineering Employers Federation) assessment that settlements amongst their members had averaged 2.9% in the three months to the end of January 2007. On the other hand, the Daily Telegraph's jobs supplement (ironically printed on FT-pink paper, and not currently available online) led with "Inflation fear as pay rises touch 4.5pc", based on the Daily Telegraph Croner Reward index, which showed rises in basic pay increasing from 4.2% in November 2006 to 4.6% in January 2007. Strangely, however, Croner Reward's own figures showed that the average settlement over the last 4 months upto January 2007 was just 2.6%. What is a poor central bank to do? Perhaps that explains the FT's other headline on the subject: "MPC plagued by inflation uncertainty". Even if it is no longer in the power of the Bank of England to control, we need a return to the concept of inflation as the measure of expansion of the money supply, not the measure of some artificially-constructed, and subjectively-compiled index.
2. This might sound like general economics, and nothing to do with Picking Losers. But allowing inflation to take hold is, in fact, one of the classic ways for a government to create winners and losers. Naive economists, who treat aggregate statistics as though they represent a generality that exists in real life, talk of inflation-levels, wage-levels, price-levels etc as though those things move homogeneously across the economy. In practice, the averages conceal wide variations across the economy. Inflation does not occur equally at all places and at all times. Some parts of the economy experience it before others. Those whose incomes inflate ahead of cost inflation are winners in the process. Those whose costs inflate ahead of their wage-increases are losers. Those who make goods whose prices inflate early in the process (e.g. ahead of the prices of their suppliers) are winners. Those who make goods whose prices are pushed up towards the end of the process to take account of already-experienced increases in costs are losers. Hence the complaints of the many (perhaps the majority) who feel themselves to be considerably worse off than they are told that they should be, according to the aggregate statistics. They are experiencing reality, not some artificial average.

What effect it has depends on where the money is injected, but inflation is always a monetary phenomenon. We need to find a way to bring the spiralling growth of our money supply back under control.

Everyone in the energy industry knew that last year's Energy Review was a fix. Now a judge has recognised it too, and told the Government to consult properly on the nuclear issue. Labour have such contempt for the public that they couldn't even pretend to be listening.

What is really revealing is Tony Blair's response to the decision. "This won't affect the policy at all", he says. So what exactly is the point of consultation, if the Prime Minister rules out the possibility that any submissions will present any argument or evidence that might affect his thinking?

The Independent is never shy of calling for more government money to be spent on one thing or another. Now we know why. Apparently taxation is not a drain on the economy, but a means to create wealth.

They report today that the Department for Transport estimate that "road pricing could raise up to £28bn by 2025". Let's not worry about how they can so precisely calculate a figure so far in the future, or whether they took the costs of the scheme into account. It's rubbish, of course, but we'll leave that for another post some other time.

What I am interested in here is what we can learn about the understanding of at least one leading journalist at The Independent about how the economy works. Because, in their box-out "The case for (and against) charging" (the brackets nicely illustrate the "balance" that they bring to this argument), they report that road pricing would "benefit the economy by £28bn".

Silly me. There was I thinking that we need to keep taxes under control because they represent a drag on the productive part of the economy, when all along I should have been pushing for ever-higher taxes, because the government can apparently magically double the value of money in the hands of taxpayers, simply by taking it off them.

Next time you read analysis in The Independent making a moralistic (and usually simplistic) case for more spending on this or that, remember that, in their eyes, they'll not only be improving the lot of those on whom the money is being spent, but expanding the economy as well. Then put the paper down, and buy one written by economic literates.

The Heritage Foundation has recently brought out the 2007 version of their annual Index of Economic Freedom. This assesses and scores countries according to their performance on a range of factors, and then combines them to provide an overall score for each country's degree of economic freedom. Full details can be found at the excellent website - www.heritage.org/index/ - that now accompanies the book.

A couple of things leapt out from an initial scan of the analysis:

1. The top seven countries (Hong Kong, Singapore, Australia, USA, New Zealand, UK and Ireland) were all Anglophone.
2. The way in which the Freedom from Government category was calculated - primarily based on tax revenues as a proportion of GDP, but also taking account of the scale of nationalised industries - yielded improbable results, such as the suggestion that countries such as Zimbabwe, Burma, Venezuela and China are relatively free from government, which would be news to the inhabitants of those countries.

With regard to the latter point, the authors do not claim that this category is anything other than it is. The title is perhaps a misnomer, probably better replaced with "Size of Government". Even that alternative title would not reflect the possibility that a government (for instance, the pre-war National Socialist government of Germany) could dominate, through direction and enforcement, all activities within its borders without having to own much or tax much. One should bear in mind, when considering the numbers, that there are many incalculable factors such as this that simply cannot be taken into account, but the method of calculating that which is calculable is set out clearly, and the reader is free to use the numbers so derived to whatever ends they see fit. The conclusions of the authors of the Index might need putting into context, but they are not invalidated.

With regard to the former point, the dominance of those countries whose political and economic systems derive from the Anglo-American model does not necessarily indicate the superiority of the model. Prima facie, it proves only that those economies value the same things that the authors of the Index value, to a greater extent than other cultures. Nevertheless, it is interesting to note the greater correspondence amongst this group than amongst other groups, such as members of the European Union, who are supposed to share cultures and economic models. In fact, the wide gap between the scores of liberal countries such as Britain and Ireland, and those of illiberal countries such as France and Italy (respectively in 45th and 60th place, with such economic giants as El Salvador, Armenia, Uruguay, Georgia, Botswana and Bahrain above them) probably does illustrate a real gulf in the philosophies of members of a club aiming for ever closer integration on the spurious grounds that there is an homogenised European social and economic model to which we all aspire. Whatever the rights and wrongs of the different philosophies, it is clear that culture, language and historical friendship are stronger ties than geographical proximity, and that the Anglophone countries could more easily work together on a shared philosophy than they could with their geographical neighbours.

All sorts of environmental issues are now presented not just as practical but as moral issues - if you don't recycle, you aren't just a wasteful person, you are a bad person. In Radio 4's Start the Week today, Andrew Marr's guests included Mark Dowd, a former Dominican friar turned journalist, who has put together a programme for Channel 4 called God is Green, arguing that environmentalism is a religious issue. So now it's not just practical and moral, but religious.

Another of Marr's guests, Michael Portillo, was an honourable dissenter from this view, but Dowd's view was supported by the other guests - Wangari Maathai (Kenyan environmental and human rights campaigner) and Christine Riding (curator of Tate Britain). Majority support in the studio for a moralistic approach to environmental issues may well reflect the tendency in the country at large.

Let us assume, for the sake of simplicity, that it is a religious question to the extent that it is a moral question. Dowd tries to make the case that it is more than that - it is embedded in the religious texts. But his example - the fact that there are 261 references to the creation in the Quran - does not seem like strong evidence that environmental care is mandated by God's instructions. So let's stick to the question of morality.

Some projected consequences of global warming, if accurate and allowed to proceed unchecked, are clearly immoral. If global warming caused the destruction of home and habitat through flooding and drought, and my actions contributed knowingly to global warming, those actions would be immoral in so far as they were reasonably avoidable, where I had done nothing to mitigate their effect.

The latter provisos are important. To some extent, my very existence is contributing to global warming. I emit carbon dioxide when I breathe, methane when I fart, and rely on production and transport of goods to satisfy my wants. I might be able to minimise my dependence on produced goods, but it is unrealistic, in a world dependent on division of labour to maximise efficiency, to imagine that I will eliminate entirely my dependence on others' produce. Were we to set that as the moral "gold standard", we would have to acknowledge that a necessary corollary of complete self-sufficiency is the abandonment of mechanisation (which requires factories for production of the machines) and chemical fertilisation, both of which have substantially increased agricultural yields. In such a world, the population that could be supported without further encroachment into uncultivated land would be very much lower than it is today. Moralists would have to explain how this dramatic reduction of world population is to be achieved (and for those religions opposed to birth control, how the lower level is to be maintained).

Any realistic moral philosopher would have to recognise that some continuation of division of labour, mechanisation and transport is necessary to the welfare of mankind. Happily, the Earth has the ability to absorb a certain amount of carbon annually. Upto a point, carbon emissions can be not only necessary to human welfare, but also beneficial to our environment. The trouble comes (in theory) when we emit more than the Earth can absorb. But as every inhabitant of the Earth is contributing to carbon emissions to some extent, it can be difficult to identify which emissions are responsible for which effects. How are we to distinguish by ethical assessment which activities are moral or immoral?

One approach is simply to dictate that certain acts are "good" and other acts are "bad" - simplistic, rules-based morality. We are told that recycling is good. The trip to the bottlebank fills the recycler with a sense of wellbeing that they have done a good deed. But what if the contents of those bottlebanks cannot be sold for a price that justifies the transport to the factory, and are instead tipped in a landfill? That is not an uncommon result. Or what if the carbon released in the travel to the bottlebank, in the transport of the broken glass to a reprocessing factory, and in the conversion of the broken glass into useful product exceeds the carbon that would have been released if those products had been produced from raw materials? Was the act of recycling moral in those circumstances? A rules-based approach to environmental morality is insufficiently flexible to be realistic. Policy to deal with global warming requires consideration of real impacts in real and variable circumstances, not one-size-fits-all dirigisme.

Another approach is to apportion equally to every member of the human population rights to emit their share of a "sustainable" level of greenhouse gases, and condemn as immoral any activities that cause a person to exceed their allocated emissions rights. But why would equal allocation be fundamentally moral? Communist economies (in China or the Soviet Union), by ensuring all had very little, were not inherently more moral than capitalist economies, where even the poorest are better off than were the majority under communism, but where allocation is inherently unequal.

Almost no one now pretends that Labour has achieved its ambitions for education. Government ministers continue to trot out their stale statistics about how much they have spent and how much the average grades have improved, but very few are fooled into thinking that this statistical trickery equates to a real improvement in educational standards. We are all aware that the huge increase in funding (52%) has largely been wasted, with grade improvements being achieved largely by submitting children into easier subjects, and coaching them to pass their tests rather than giving them a broad education. Fraser Nelson and James Forsyth have administered the last rites to any remaining delusions of political adequacy amongst education ministers, in an excellent article in this week's Spectator.

Their claimed success does not prevent ministers from searching for solutions to their failure. There is no shortage of voices offering to help. Today's Times gives prominence to two suggestions:

1. Mick Waters, Director of the Qualifications and Curriculum Authority (QCA), wants a complete overhaul of how schools structure their lessons, with some being combined (e.g. science and PE, languages and music, or history and geography), some being narrowed to short, repetitive sessions (say ten minutes of a language three times a day, five days a week), and some being broadened into a fully immersive week of tuition (e.g. a week of ICT).
2. Mark Walport, Director of the Wellcome Trust ("the country's largest independent funder of biomedical research"), advises that teaching techniques need to be tested by controlled experiment before being rolled out.

Though both are well-motivated suggestions, they conceal the assumption that is at the real heart of our problems - the idea that someone in a central position of authority has a solution that fits all. This was undoubtedly not the intention of Mr Waters, but the fact that the Director of the CQA saw fit to pronounce on scheduling in its generality revealed the subconscious reluctance to allow headteachers to determine the curriculum and schedule for their school. The implication of central control was less concealed in Mr Walport's suggestion - controlled experiments to establish best techniques imply standardisation once the results are known.

I missed the story two weeks ago on Cheryl Gillan's proposal to voucherise charity funding. If I'd been in the country (I was skiing), I'd have laid into it at the time, but for such an idiotic proposal, late is better than never.

The comments on Tim Montgomerie's reporting of the suggestion on ConservativeHome were generally supportive. It shows how drippingly wet the modern Tories are getting. I propose a new term, of which this is a classic example: Camoronism. A Camoronism is an idea that looks superficially cuddly and attractive at first sight, but which on closer inspection turns out to be ugly and dumb - in fact downright moronic.

The idea is that the Tories want to encourage charities to do more of the work currently carried out by government, but don't want to fund it directly because government is not good at deciding how to allocate funds. So far, so good. As so often, the diagnosis is sound, but the prescription is more dangerous than the disease. Cheryl's prescription is to provide vouchers to volunteers, entitling the organisation for which they volunteer to a share of state funding.

Charities need both labour and money. They do not necessarily need them proportionately. Nor is it the case that those who cannot commit labour (for instance, if they are working hard to support a family) have neither the desire to give nor the judgment to choose which charity to support. Why would those who volunteer for charities have a better idea of how to spend my money than I would?

How is volunteering to be measured? Will an hour a year count? Or will the value of the vouchers be proportionate to the time contributed? Will all volunteers have to keep timesheets to "prove" their contribution? How will their claims be audited? Who in the process would have an incentive not to exaggerate?

There has been condemnation today of the stale news (perhaps pumped up to make the new IPCC report more interesting) that the ExxonMobil-funded American Enterprise Institute (AEI) have been offering to fund research questioning the orthodoxy of climate-change science. The Guardian, which "broke" the story, did not see fit to provide the full text of any of the letters sent by the AEI, so we are left to imagine how bad they must have been from the few excerpts provided. These consisted of:

• a claim that the IPCC are "resistant to reasonable criticism and dissent and prone to summary conclusions that are poorly supported by the analytical work";
• a request for essays that "thoughtfully explore the limitations of climate model outputs";
• a figure ($10,000) that would be paid to scientists and economists who provided such essays;
• a quote from Kenneth Green, the author of the AEI letters offering such funding, defending the offer on the basis that "right now, the whole debate is polarised. One group says that anyone with doubts whatsoever are deniers and the other group is saying that anyone who wants to take action is alarmist. We don't think that approach has a lot of utility for intelligent policy."

Shocking stuff. If these are the highlights, one can only imagine how much more damning would have been the complete letter. How dare anyone in the energy industry fund research that dared thoughtfully to question the intellectual orthodoxy? What right have we to expect the IPCC to pay attention to "reasonable criticism" or to provide thorough analytical support for their conclusions?

Wat Tyler posted an entry on his excellent Burning Our Money blog, pointing out that yesterday's interest-rate hike was a positive sign that the Bank of England Monetary Policy Committee were deciding to get back on top of inflation, not a disaster for an economy, as it was reported by much of the mainstream press. As usual, Wat is quite right, but I questioned the final part of his post:

"this time through all those pensioners, widows and orphans who've invested their savings in fixed income debt such as government bonds will be protected. For the first time since we abandoned the Gold Standard....Let us all give thanks for sound money."

I questioned not whether an increase in interest rates is necessary, but whether it is sufficient. Is it sufficient, for the purposes of maintaining sound money, to target changes in inflation indices with interest-rate adjustments, or can those inflation indices be misleading? In particular, I questioned whether expansion of the money supply and net sale/consumption of capital could conspire to give the appearance of only modest inflation (according to price indices) when the real value of our money and national wealth was falling faster than the indices indicated.

The Tree Council is calling for historic trees to be awarded "blue plaques" like historic buildings, concerned that "historic trees are left to wither and die".

Are blue plaques (or something equivalent) supposed to stop trees from withering and dieing? Can the Tree Council hold back the forces of nature?

The joy of protecting buildings is that owners are prevented from carrying out many essential improvements. Now owners of properties on which "historic trees" are located are to be faced with the same constraints.

"Doing nothing is not an option." So says the Government's spokesman, as an explanation for why they will press ahead with road pricing against strong public antipathy.

The culture of doing something because "something must be done" is what this site exists to challenge. Though it is endemic, you rarely hear this approach to government expressed so baldly.

There are arguments for and against road pricing. And there are arguments against those arguments. But "doing nothing is not an option" is no argument either in favour of any particular option, or against people who oppose that option. On that basis, you might as well stick your arm in the fire, because the flame is dieing and "something needs to be done".

This is what happens when you fund political parties using taxpayers' money:

The excellent Open Europe think-tank reports in its Daily Press Summary that the British National Party (BNP) are to receive a share of the £130,000 of funding that the EU has been obliged to provide to a grouping of extreme nationalist political parties. The entry of Bulgaria and Romania has given such parties sufficient representation in the European parliament to entitle them to the funding that is automatically provided by the EU to pan-European political groups.

The Times reports that tax inspectors are being offered bonuses related to the amount of money collected.

It seems that job satisfaction isn't enough - the respect of your fellow man, the pleasure of a job well done, the happiness brought to your customers. Nor is a decent wage. To do their job properly, they need to be incentivised to collect as much as possible. After all, we don't want tax collectors collecting only what is reasonable, do we? We want them trying to screw every penny they can out of businesses. And recent experience of tax inspectors has shown what a slack job they have been doing - almost throwing money at businesses in their generosity.

The Treasury are forecasting, according to the Daily Telegraph, that the tax burden "will rise for 50 years" - in other words, until long after most of us are dead. Our tax-take will rise from 38.4% at the moment to 41.6% of GDP, and public spending will rise similarly from 40.9% at the moment to 43.8% of GDP.

The tensions of excess, both in private and public sectors, are starting to display themselves in debates over the just level of wages for various occupations. These debates occur every now and then, usually provoked by a sense of disparity related to imbalances in the economy, themselves created by lopsided government intervention. Not surprisingly, given Gordon's predilections for the City, big corporates and micro-management by an overweening bureaucracy, the focus at the moment is on the remuneration of bankers, business leaders, management consultants, politicians and senior civil servants.

Following the recent announcement of record profits and record bonuses at many of the leading Wall Street and City banks, the Telegraph reports today that the number of public sector staff on six-figure salaries (i.e. > £100,000) has trebled in the past five years, whilst Brendan Barber (general secretary of the TUC, but usually a measured critic of business) has called for a "debate" about "how big and how justified" the rewards of directors of FTSE 100 companies should be, given that they have increased 105% in real terms since 2000, while average wages have increased only 6%. Put another way, these bosses now earn 98 times more than their employees. Bosses of AIM-listed businesses haven't been doing too bad either, some of them being paid over £1m for the first time. MPs' recent claims that they deserve an increase in their basic salary from around £60,000 to £100,000 received mixed press - some people feeling that it was worth paying to get a better quality of politician, others feeling that they didn't deserve a pay increase given their supposedly poor levels of performance and the pay squeeze on other public servants. There was further criticism of the high levels of pay for many public-sector executives (i.e. quangocrats), whose average pay awards are now second only to bosses in the City financial sector. Quangocrats' pay levels have been causing concern for a while now, without any sign of a retreat.

These debates are always characterised by an absence of intellectual consistency. Most participants argue that those they favour should be paid as much as is necessary to get "the best person for the job", whilst those they do not favour should be paid no more than is necessary to fill the post. Some eschew these generalisations for even greater simplicities - people should be paid according to the amount of work they put in, according to their performance / the results of their efforts, or, for the unreformed socialists, according to their needs. Whatever system is used, what unites almost all commentators is that they seem determined to invent their own personal scale of worth, as though it would be possible to devise a just scale of wages that could be imposed from above if only people would recognise the truth of the commentator's personal value system.

What is the truth? How are we to know whether people are being paid enough or too much?

Major General Richard Shirreff, commander of the British forces in Southern Iraq, has called for a renewal of the "military covenant between the nation and its soldiers", to provide proper support for the military in terms of "training, infrastructure, barracks, accommodation". Though he scrupulously avoided pointing the finger at the Government or any individual group (and rightly so, as financial support for the military was no more forthcoming from the previous Conservative government than from the current administration), the Ministry of Defence (MoD) clearly understood who the message was aimed at. They tried to excuse themselves by pointing out that the defence budget had "steadily risen" by £3.7bn over the past three years.

The Tories are trying to work out the best way to develop our transport network, including consideration of the installation of a magnetic levitation (MagLev) railway line, or the extension of the Channel Tunnel rail link as a British equivalent of the French TGV high-speed rail link. The businessmen who will fund, develop, and operate any new rail services will doubtless be delighted that the politicians have removed from them the necessity of making a commercial assessment of the best solution. After all, politicians are so much better at this sort of thing.

The Institute for Public Policy Research, the Government's favourite think-tank of the "Third Way" (by their own lights, the "UK’s leading progressive think tank", using "progressive" in the sense that has been coopted by the soft-left to imply that solutions other than their own are regressive), has suggested in a report published today that the way to stem the rising tide of illiteracy is to stop testing for it. Instead, teachers would make their own assessments. Limited tests would still be run, but not in all areas of all subjects, and the results would be used only to moderate the teachers' assessments, not to assess individual students' performance.

Mark and Lezley Gibson and Marcus Davies were convicted on 15 December of distributing cannabis-laced chocolate bars to multiple sclerosis (MS) sufferers. They await sentencing on 26 January.

Lezley is herself a MS-sufferer, who was told at the age of 21 that she would be incontinent and wheel-chair bound within a few years. Conventional treatment (steroid injections) had such unpleasant side-effects that she could not continue. In her search for alternatives, she came across comments on the benefits of cannabis, which she discovered worked for her. She is now 42 and living a quality of life that the medical profession had considered improbable when she was first diagnosed.