Left Outside

What if the immigration debate ended but nobody noticed?

There is no difference between the parties now. I know that sounds like the hyperbole of a political try-hard, but I think it’s true. In the early 2000s Labour solved the problem of asylum seekers and it took everyone a long time to realise. At some point in the last few years the problem of European migration was solved and people still haven’t noticed. The rhetoric will vary but the UK’s immigration policies for the next generation are set. Unless the UK leaves Europe we know what immigration policy is going to look like. 

Refugees

In the early late 1990s, southeastern Europe tore itself apart and refugees started to appear in the UK. Labour passed lots of laws that stripped refugees of their rights. It worked, but Labour get little praise for their achievement.The numbers of asylum seekers in the UK sank from 84,130 in 2003 to under 20,000 from 2009 onwards. The asylum seeker question is settled. They should be prevented from arriving, but if they make it here we don’t let them work, give them the worst housing and £5.23 a day each for food, sanitation and clothing.

Asyum UK

Despite the number of refugees staying high globally, Labour successfully helped the UK dodge its internationally responsibilities towards the world’s refugees. Labour don’t get any thanks from the Tories or Lib Dems but everyone is a Blairite now when it comes to asylum policy. There are no suggestions we weaken sanctions or accept more refugees, the matter is dead. All eyes are on the politics of European migration.

Refugees Global

In 2004 the UK, Ireland and Sweden opened their borders to the A8 ex-communist states, the rest of Europe waited to see what happened. We received not 10,000s of migrants as predicted, but 100,000s. Just as the asylum problem was “solved” a new front opened. Europe, specifically poor Eastern Europe, is the political problem and as John Rentoul points out, there’s very little between the main parties on migration. At Question Time on Thursday Rachel Reeves and Michael Heseltine both banally agreed it had been a mistake to let in the Poles.

Just as the asylum problem was solved and nobody noticed so has the problem of European migration. If in 2017 we vote to leave the European Union then we will see a drop in migration. Much more likely though is us staying in Europe and accession states having their free movement restricted. How this policy will manifest is difficult to predict but each party will follow a similar line. Migration will stay in the low 100,000s because the UK, for all its faults, is much better than most other places and we won’t leave the EU. Asylum Refugees will remain betrayed and politically unimportant and non-EU migrants will remain able to move here for family reasons or if they’re rich, well educated and have a corporate sponsor.

People will keep moaning about immigration, but “Europe and immigration” now means “what do we do with Ukraine and Turkey.” Geopolitically Europe wants them in their sphere of influence but don’t want to deal with over 100 million new European citizens. On immigration the parties are agreed. On geopolitics too they want Turkey and Ukraine to be in the European sphere of influence. Managing this will be a huge challenge but its a very different immigration debate to the one we’ve been having for a decade and a half. That debate is over but I’m not sure anybody has noticed.

 

Filed under: Migration

The main reason I don’t believe the Iranians

Nuclear weapons are great. But why on earth would you want a civil nuclear energy industry?

Filed under: Politics

The Tories are very good at controlling our border

So are the Labour Party. In fact, the British state is excellent at controlling our border, if you mean keeping people out. They are so secure that word has got around and most people don’t even bother trying to get in. Berghain has a reputation for exclusivity, but it is nothing like as selective as the British state.

One of Parliament’s least pleasant anti-immigrant, anti-science libertarians published this earlier:

Climate change denial aside, the comment on controlling our borders really rankled. Sure, lots of people have moved to the UK in the last decade, but a lot less than would like to. Douglas Carswell is pretty deluded if he thinks it’s only Poles, Bulgarians and Romanians who want to move to the UK.

Gallup conducted a survey in 2007. Doubtless it’s a little out of date now, but it’s still useful. They asked where people would live if they could live anywhere in the world. They constructed a representative data set and worked out how many people worldwide wanted to move where. The US came top, as you’d expect, and the UK came second. [1]

juqmrwi4eaguwkusefrxa

150 million people want to move the US and 45 million want to move the UK. That will be a conservative figure as some people would move the UK were it the only option realistically open to them.

So how many people actually make it into the UK? Well, to be fair I’ll use gross migration and include Brits who are just coming home. Net migration is the common figure, but it subtracts those leaving from the gross figures. I want to use the most upwardly biased figure possible. So, for good measure, I’ll take the gross number from Migration Watch: 503,000 by their reckoning.

45 million people want to move here (conservatively) and (as an upper bound) 503,000 actually did last year . That means every year just 1% of those who want to move the UK actually can and do. This figure isn’t meant to convince anyone who doesn’t already agree, but just so you know, anyone who says the British state can’t control its borders is a fucking idiot, Douglas Carswell included.

____

[1] If that fills you with dread rather than pride you’re a weirdo.

Filed under: Migration

The Swiss are restricting immigration, but that doesn’t mean immigration restrictions are back

Switzerland just narrowly passed a referendum to restrict immigration. Prior to the 1990s Switzerland operated a quota system and many people could only work in the country for nine months before having to leave. Europeans have long enjoyed the right to live and work in Switzerland but it seems like a return to the old, more restrictive set-up is certain.

Switzerland is one of the most open countries in Europe. As a small manufacturing economy it has to be, it relies on trade, transport links and labour from the rest of Europe. Similarly, as a small country it has to import footballers. Say hello to the new Swiss national squad.

BgHn780CMAEaHPS

I don’t have any intention to live or work in Switzerland nevertheless I find it sad when a country restricts the right of people to work. and live where and how they want. Its especially galling as the areas with least migration voted most strongly to restrict it. I don’t know much about p values but I know a sloped line when I see one.

BgD8M6yCYAERZra

There’s also a helpful map if that’s more you thing. The south of the country is Italian speaking and has lower (but still non-negligible) migrant populations. The west (Geneva) and north (Zurich) have lots of foreigners. Those with least experience with migrants voted to reimpose restrictions, those with the most experience voted to continue open European borders.

BgD1YH-CQAEYmSl

A similar pattern reproduces itself in the UK. Areas with the fewest migrants are the most likely to wish to see it curtailed. Those with the most neighbours from another country were the least likely to want to see further migration curtailed. The same pattern prevails in the US. If you presume migration is a bad thing this is counterintuitive. If you presume it is a good thing this makes perfect sense. I do have a graph, since you ask, here it is.

Reduce

This isn’t just a historic thing, even in areas that saw the fastest change in the mid-2000s, the white british population were less likely to want to see immigration reduced. However, as you can see, less restrictionist is still quite restrictionist: more than half of the most sympathetic still want immigration reduced.

That’s from IPSOS-MORI’s excellent paper on perception and immigration. Enough meat there for everyone to find something of interest. Do stop reading my blog and download the pdf, I shan’t be offended. Bryan Caplan thinks more immigration is the answer to anti-migrant sentiment. Tyler Cowen thinks that plan has run its course. I’m not so sure.

A few tens of thousand swiss votes the other way and we would be having a different discussion. Until now Switzerland has been the most immigrant tolerant nation in the world – I don’t count Luxembourg, because, seriously, who does? It may have banned Minarets but it homes 300,000 Kosovan muslims.

Switzerland accepts an immigrant inflow equivalent to 1.5% of its population each year. The UK would have to accept double this number of gross migrants to even come close. Even with restrictions Switzerland is likely to accept levels of migration well above the rich country norm. Good for the Swiss. Three cheers for them, even now.

Filed under: Migration, ,

Iain M Banks on Immigration

I strongly suspect the things people believe in are usually just what they instinctively feel is right; the excuses, the justifications, the things you’re supposed to argue about, come later. They’re the least important part if belief. That’s why you can destroy them, win an argument, prove the other person wrong, and they still believe what they did in the first place.

Iain M Banks Use of Weapons

Well, not actually Iain, and not about immigration, but you get the idea.

Filed under: Politics

Do addicts need help…

…or do narcissists need mocking?

IN my last year on Wall Street my bonus was $3.6 million — and I was angry because it wasn’t big enough. I was 30 years old, had no children to raise, no debts to pay, no philanthropic goal in mind. I wanted more money for exactly the same reason an alcoholic needs another drink: I was addicted.

Our Galtian Overlords ladies and gentlemen… And oh it gets better…

The first year was really hard. I went through what I can only describe as withdrawal — waking up at nights panicked about running out of money, scouring the headlines to see which of my old co-workers had gotten promoted. Over time it got easier — I started to realize that I had enough money, and if I needed to make more, I could. But my wealth addiction still hasn’t gone completely away. Sometimes I still buy lottery tickets.

What bizarre behaviour, worrying about money and occasionally gambling, I’m sure none of my readers could possibly sympathise.

Filed under: Blogging, Economics

Great sentences of our time: sex-selective abortion bullshit edition

It is pretty obvious here that the Indie’s entire article stems from what has to be easily the most spectacularly misconceived and shoddily executed fishing expedition since Captain Ahab went off chasing Moby Dick – and yes, I know that’s fiction, but then so is Indie’s entire fucking analysis.

Unity on blazing form: read his take of the Indie’s sex-selective abortion nonsense.

Filed under: Politics

.@Give_Directly to 1,300 Poor Households in Kenya

GiveDirectly12022013

Give Directly are my favourite charity and they should be yours too. They give money to poor people. Not just any poor people, but really poor people in East Africa. There’s a minimum of bureaucracy and they are innovating new ways to remove the bureaucracy which currently exists. It is simplicity itself, and it works. And you can donate this month and double your donation.

Supporting Give Directly gives you the warm glow of helping the most needy people imaginable, but more importantly it also gives you the warm glow of having your ideological predispositions confirmed. If you’re anything like me you just can’t beat it. Donate and you too can bask in the heroin-like glow of confirmation bias.

They regularly audit and they get amazing results. Business and agricultural income increased 28% of the average grant size, implying a 28% annual rate of return. With a doubled donation you’ll be getting a 128% rate of return. Plus mental health improves, crime and conflict doesn’t change, it doesn’t cause localised price inflation and it reduces domestic violence and increases female empowerment.

They’ve also begun using community-based targeting: in a subset of villages, they got the community to help them categorize households by poverty level. Wherever there’s cost and bureaucracy they’re looking for ways to remove it. Wherever there is local knowledge they’re looking to use it. So far:

  • Most people think housing materials are the best indicator of poverty — reaffirming the criteria we already use. Furniture and source of income were also popular.
  • People generally agree on how to apply the housing criteria. When we asked communities to categorize each household as “rich” or “poor”, they agreed in 9 out of 10 cases.
  • Engaging local leaders in the process can help, but also raises a risk that they will ask for “compensation” for tasks they are supposed to do for free.

Honestly, if you’re not supporting this charity (I think this would particularly suit Jackart, Chris and Frances) I don’t know what’s wrong with you. Oh, and they have no marketing budget, so yes, you will have to put up with regular half press release, half begging letter posts here, essentially, forever. Or until we end poverty. So its up to you really.

Filed under: Economics, Foreign Affairs, Politics

Will Half The UK Be Obese Before 2050? Are The Press Credulous Nincompoops?

No. Yes. For fucks sake, what is wrong with the media? Lots, I suppose, but I’ll concentrate on their innumeracy and credulousness for now. I will also cover their prejudice and scientific illiteracy. Which is a lot to do in under 1000 words, but when you’ve such densely packed stupidity as our Obesity Crisis Bleughly etc. you can really go to town.

First, a little history lesson: in 2007 a report commissioned by the government stupidly predicted that if people continued getting obeser at the same rate by 2015 36% of males and 28% of females would be obese. By 2050, 60% of males and 50% of females would be obese. By the end of the century everyone would be obese and robots would need adamantium reinforcements to maneuver the nation’s vast bulk. A nightmare scenario, I’m sure you’ll agree. Here’s the chart:

British fat

Yesterday, the National Obesity Forum stupidly updated that stupid extrapolation. Rather than half of Britain becoming obese by 2050 they believe this will happen much sooner and that we need to something about this. Especially for the children. It’s always for the children (or the women). Their report helpfully recommends negging on fat people, bullying children who don’t like PE and the creation of government sinecures for ex-Forum busybodies. 

To come up with their dread warning, they’ve used an extra five years of data from the UK to update the projection above. It’s a projection not a prediction because of the data they leave out. If they included data from the US their scaremongering would fail and these busybodies might have to get real jobs: America’s stopped fattening. We don’t need to hypothesise about how fat we could get, we know. None, none more fat.

America fat

Something that can’t go on forever, won’t. That’s a simple thought, but scaremongers know when you’re scared you don’t think. Waistlines can’t expand forever. Eventually a population has to stop getting fatter and now we now know when this happens. America, the land where everything’s big, is no longer the land where everything’s getting bigger. When a third of a society get obese obesity levels off.

Predicting that half of Britain will become obese, when we’ve recently discovered the obesity event horizon should earn you derision. Instead it gets you wall to wall coverage. Incapable of crunching the numbers, the press report as fact a ludicrous projection using incomplete data and biased methods. I don’t want you to confuse my anger with surprise, this is par for the course. Innumeracy and credulousness covered, let’s talk about the press’s prejudice and scientific illiteracy.

Being fat is unhealthy right? Wrong. Okay, not fat, but being obese is bad, right? Wrong. Dead wrong, in fact. And I have a meta-study to prove it.

final_cochrane_logoThe words “I have a meta-study” should inspire joy or dread, depending on your position. A meta-study is a study of studies and they’re incredibly useful. You can read more halfway down this old post on how they save lives and reveal truths that might otherwise be hidden.

We’ve been looking at obesity for a very long time, and lots of individual studies have been done, but each has its own problems and each has its own margin of error. Collating several studies allowed researchers to look at 3 million subjects, from 12 countries, and use only the best data to assess the effects of weight gain on health.

The results might surprise you. They found that people with a Body Mass Index of 18.5-25, the “healthy” people, have higher mortality risk than every group of people up to BMIs of 35. The obese were less likely to die than the “healthy” people and the overweight people were significantly less likely to die than the “healthy” people.

Pick a random 5’4″ woman weighing 8 stone (remember to say hello). She has a higher mortality risk than a 14 stone woman of the same height (say hello to her too). You might be incredulous, you might even be angry: but I have a meta-study.

The below table isn’t very layman friendly, but click through to the paper, or read this op-ed, if you don’t believe me. I’m not saying you should gain weight, or lose weight, I’m saying that weight is a particularly poor indicator of health and that you should care about your weight a lot less. Especially care less about other people’s weight.

m_jrv120009t2

Not only are predictions of a looming obesity crisis based on nonsense maths, they’re based on nonsense science and reported by a nonsense press. The press are incapable of holding people with a shiny pdf and a slick press release to account. Because of this its all too easy for people to be bullied and for public health (physical and mental) to suffer.

Filed under: Blogging, Economics, Politics, The Media

The most Daily Expressy Daily Express that ever Daily Expressed

Bd0B5mACcAE1jp6

Alzheimers!

Maddie!

Weather!

Immigrants!

Benefits!

Bonus burglars!

Who ever had January 13th 2014 in the sweepstake please collect your prize.

Filed under: The Media, , , , , , ,

Policy Bullshit Bingo: Robert Rubin in the @FT edition

I wanted an early night. But Nooooooo. Robert Rubin had to publish something stupid and now I’ve had to stay up to mock it. Scheduled to land at 9am. I hope you’re all feeling bitter this morning.

Debates persist in the US and eurozone about growth and job creation versus fiscal discipline. This false choice diverts fiscal focus away from a balanced approach that could achieve both imperatives.

Yes, it’s a false choice and that is why literally nobody on earth is proposing it.

The US recovery remains slow by historical standards – even if recent signs of improvement are borne out. One reason is that our unsound fiscal trajectory undermines business confidence, and thus job creation, by creating uncertainty about future policy and exacerbating concerns about the will of Congress to govern. Business leaders frequently cite our fiscal outlook as a deterrent to hiring and investment.

Actually, in the US policy uncertainty has come from Republic malfeasance in the legislature. It has nothing to do with fiscal policy.

A sound fiscal trajectory is also a prerequisite for interest rates conducive to growth.

Interest rates are zero, and are low a long way out. I don’t think its the 1990s anymore Mr Rubin. Although your glasses are!

hqdefault

Continued unsound fiscal conditions will almost surely destabilise markets at some future point.

Oh, it will “will almost surely destabilise markets at some future point”? That’s a concrete foundation on which to make policy decisions…

1355190369_borat-not-jb

Recent reductions in deficit projections do not change the basic structural picture – except that healthcare cost increases are slowing – and are partly based on sequestration, a terrible policy that already looks too onerous to stick.

Policy successes which address exactly what I worry about do not count. For no specific reason.

In the eurozone, the threat is more immediate. Bond markets in troubled countries were in dire conditions until the European Central Bank’s famous – and as yet unimplemented – 2012 promise to do “whatever it takes”.

The promise was the action. You want to bet against the ECB? No? Then it worked, the plan was implemented.

The right criterion for action, however, is not the absence of alternatives, but an assessment of costs and benefits.

This sentence stands apart as a magnificent example of self-parody.

In the US, there are widely posed questions about the benefits of QE3, but the risks are significant. One is that central bank action will reduce market pressure on political leaders to act.

You read that right. The danger is this policy might work. Then people won’t listen to Robert Rubin’s terrible advice. Never waste a good crisis eh Robert?

Yet waiting too long to tighten heightens the risk of inflation at some point. The Fed’s dramatic expansion of bank reserves could feed excessive credit growth. Along with the possible erosion of Fed credibility on inflation, that could also feed inflationary expectations.

If they are feed inflationary expectations nobody is doing much about it. The TIPS spreads on US debt doesn’t show anything. You can lend money to the US government and get a nominal return guaranteed, or an inflation protected return guaranteed. The difference tells you a lot about expected inflation. If inflation was coming you could sell one and buy the other. But that hasn’t happened. Look at expected inflation from 5 year bonds:

fredgraph (1)

Such a regime should be enacted now to stabilise, or preferably reduce, the ratio of debt-to-gross domestic product over 10 years, and protect discretionary spending. Implementation, designed in ways difficult to undo, should be deferred for a limited period to allow for recovery. Fiscal discipline could provide room for reasonable stimulus to create jobs. The partially cancelled sequestration should be fully rescinded to eliminate its fiscal drag. Fiscal funding should come largely from revenue increases and beginning the entitlement reforms necessary for long-term sustainability – as President Barack Obama has proposed.

I WANT A PONY.

Structural deficit reduction would address growing deficits in the decades beyond the next 10 years. The eurozone, too, should reject false choices. Instead, it should strike the right balance between fiscal discipline to win market and business confidence, and macroeconomic room for growth.

Unconventional monetary policy and stimulus can be part of a successful economic programme for a period of time. But they are no substitute for fiscal discipline, public investment and structural reform.

Welcome to your policy elite, they’ve literally learned nothing in the last 15 years. They’ve especially learned nothing in the last 5.

Filed under: Economics, Foreign Affairs, Politics

Thank god the police don’t shoot people more often

I’m with the rodent in thinking the Duggan Inquest verdict deserves a healthy dose of scepticism. I’m not saying it’s a stitch up, but giving the police 8 hours to confer in private before submitting their evidence doesn’t fill me with confidence. I don’t find it comforting either that a lawful killing can follow from an operation completely botched at every stage.

But the Duggan Inquest is above my paygrade, so I won’t pontificate. I haven’t followed the case too closely and I don’t have a legal background. That won’t stop lots of other people. But they’re twats who probably haven’t read the jury’s statement. The maximum I could offer is my opinion and you know what people say about opinions.

What I can offer though is surprising stats. Since 1990,  1,475 people have died in police custody or following contact with the police. However, in this country the police almost never shoot at people. Which is a blessed relief given how they’ve handled Duggan’s killing. I was surprised by how often the police shoot people, so I’ll reproduce the yearly tallies for you.

From April to April 2001-02 the police fired their guns eleven times.

In 2002-03 ten shots were fired.

In 2003-04 four shots were fired.

In 2004-05 five shots were fired.

In 2005-06 nine shots were fired.

In 2006-07 three shots were fired.

In 2007-08 seven shots were fired.

In 2008-09 five shots were fired.

In 2009-10 six shots were fired.

In 2010-11 four shots were fired.

In 2011-12 five shots were fired, one hit Mark Duggan’s arm then one hit him in the chest killing him and sparking a weekend of rioting. These 85 shots killed 44 people. My sympathy goes out to Mark Duggan’s family and the families of the other 43 dead people.

But over the last decade fewer than 0.1% of all incidents involving police guns see them fired. While the police are discharging tasers thousands of times a year, they almost never use guns. I am very glad they don’t know we know what happens when they do.

For grisly context,  in 2011 American police shot 1,146  people and killed 607. However, they don’t even collate stats on how often the police discharge their weapons, so we can’t make a like for like comparison.

As usual the conclusion is: our system is pretty fucked up, but at least we’re not American. 

UPDATE: The NYPD fired their guns 92 times in 2010, 13% less than the 106 shootings in 2009. It’s the lowest number in the 40 years that the NYPD has tracked such data. That’s about 20 times more than Bris did, for a population a third of the UK’s. Pretty scary stuff.

Filed under: Politics, Society, , , , ,

Prisoners, pensioners, death

What the above, possibly slightly fuzzy, graph shows is that immigrants who arrived over 40 years ago (the second column from the left) are about as anti-immigrant as the Brits are on average (the far left column). This is good news in a way. Since it goes to show that sooner or later immigrants to assimilate. Of course, the bad news is that they end up just like us.

Perhaps slavs are more cosmopolitan than Jamaicans, but this just shows older people become more reactionary as they age and that become tend to become more like their peers. In this country that means being anti-immigrant, even if you’re an immigrant. The cognitive dissonance is worth it to fit in and have something to moan about. I empathise, I really do.

You might realise it, but this segues nicely into the government’s incredible plan to introduce prison sentences of 100 years of more in place of life sentences. The sentences need replacing because the European Court of Human Rights has told them life sentences without parole are no longer legal. To skirt this the Coalition are proposing a technical fix in which nothing changes.

Somebody needs to tell the coalition that being technically right only matters at a pub quiz. I’m not a lawyer, but I have a feeling being technically right will enamour them to the ECtHR in the same way being technically right will enamour you to your family in a Trivial Pursuit game at Christmas.

The link is that people change and people die and that by the time you’ve reached old age there isn’t a lot of the young you left.I’m glad Noah Smith has written this, because I had the same idea, but he’s written it up in a much better way than I ever could. Change is death. I’m not much like I was 10 years ago, and I will probably be as different again in 10 more. He writes that this means that there’s not much to fear in dying one day, because you already have. But this view of the world makes dying in prison all the more terrifying.

The man who dies after decades in prison isn’t the same one who murdered another, because they died long before them. If you’re an old Jamaican immigrant you complain about scroungers to your #hardworking Bulgarian nurse and look silly. Under the coalition’s proposed plans, if you’re a prisoner then your old body and older mind will be locked up for good. I can find no solace or justice in that.

Filed under: Migration, , , , ,

4 charts that prove you know nothing about the housing market

As we all know, Thatcher privatised our housing stock and pocketed the funds. She made billions from Right to Buy and we provided billions in subsidy to the already well-to-do, but she didn’t bother to build any more houses so we got screwed. That’s where our housing problem comes from. A picture tells a thousand words and a big white space probably tells even more:

Bc99isdIMAAB_w7

But not so fast! It might look like a lot of housing is getting built after the war, but that’s misleading. As not so many of us know, we didn’t just build lots of housing, we cleared slums on a vast scale. 15% of the UK’s population was affected and the overall building rate looks a lot less impressive. The blue line (via Neal Hudson) shows the net effect.

Bc-gTOCCIAAb2CU The post-war years still look good, but at a lot less stellar. Thatcherism doesn’t come out of this well, but New Labour? They look good. Which was news to me, as I’m sure it’s news to you. the housing stock expanding at its fastest rate for decades during the mid-2000s…despite us…not really building many houses. “Hang on, how does that work?” you’ll be asking. “Don’t worry.” I say, “this is 2014 and all explanations now come in chart format!”

Bc-igZLCEAA770k (1)

What this graph shows, again from Neal Hudson, is that houses were being built, but they were also being subdivided and other stock was being brought into use. Houses were cut in half (or more) and commercial properties were converted. The high prices that tight housing supply created actually caused the number of terraced houses in London to decrease from 2001-2011, such was the rate of flat conversions. So New Labour did have a solution and it was high prices. But it would be remiss to blame New Labour, when you can blame Old Labour. There’s bipartisan support for that.

Not so fast! As a different all of us know, it was the Town and Country Planning Act of 1947 that caused the housing shortage. The 1930s saw a phenomenal rate of private home building, far in excess of anything achieved before or since, only brought to a standstill by Hitler and rearmament. Private builders can build lots of housing and the Planning Act is one reason they didn’t when the state stopped building. But there’s no wishing away the Planning Act for a magical return to the 1930s.

housing-supply-1923-2011

“Build more houses” is a good rally cry, but how? NIMBYs have rights. These rights are property rights. When they bought their houses they also bought the right to block other building nearby. This wasn’t a mistake, this is what they were told and what people consider normal. That’s a right in anyone’s book. If we want to build more housing we will have to expropriate them or buy them. And they ain’t selling cheap.

You know nothing about the housing crisis and that any easy solution you have is wrong (except maybe a simple plan). You should also realise there’s no libertarian solution to the housing crisis through deregulation. These rights are held inalienable. The same rights block a social democratic solution of more council housing. The only thing that remains is a Stalinist solution: the socialisation of property rights and the liquidation of NIMBYs as a class.

If you want to blame Attlee, Blair or Thatcher for the housing crisis you haven’t been paying attention. And you’re not nearly being ambitious enough with your cliches. The real villain behind the housing crisis, if there is one, is Hitler. And like Hitler the only solution will be Stalin.

UPDATE: Now with bonus chart!

A very good point, and one which partially vindicates the slowdown in homebuilding in the 1980s (although not its continual stagnation). The below chart shows the deceleration, stall and gradual increase in population growth from 1960-2010. Graph of United Kingdom: Population growth (annual %)

Filed under: Economics, Society, , , , , , ,

Merry Christmas everyone!

A propos this, I thought I’d also say Merry Christmas.

Thank you for sticking around as this blog’s changed and my output has declined and become more erratic. I still love writing but I’m more cynical than ever before, and it can be easier to get that out of my system on twitter. I was going to post a spirited defence of Love, Actually but I can’t be actually be bothered now, too much food to eat, drinks to sink and friends and family to see. So until 2014 (or until I get bored of my family) have a Merry Christmas and a Happy New Year.

Filed under: Blogging

If negative interest rates are a tax then positive interest rates are a subsidy from the future

I find people’s instinctive negativity about about negative interest rates a little annoying. This post is particularly strange. I pick it out for no other reason than Frances Coppola tweeted it.

Interest rates are kind of a fiction. When we save we’re buying something now to sell later, that is what is actually happening and it is intermediated by finance. Islamic Finance has a much clearer mechanism to illustrate this. People do not expect the European economy to be much large in the medium term than it is now, this means that  durable assets, equity and other savings vehicles won’t be worth much more either this makes finding a positive return difficult.

This has nothing to do with Keynesian ideas of natural rates of interest or socially optimal policy. Transmitting purchasing power through time is just really difficult so periods of negative interest rates shouldn’t be seen as an aberrant tax but as a consequence of technological stagnation in finance or terrible macropolicy making.

I think you can make a very strong case for bot. Finance has grown faster than the rest of the economy since the 1940s but it hasn’t proven four times as effective at intermediating.

NYUGDPFinancialShare

I’m on record calling the ECB insane and I’ll do it again. Bad policy making is an incredibly important reason for why interest rates might go south of zero. It’s difficult to be confident we’ll be richer in the future than the past when unemployment in Europe is doing this:

Screen-Shot-2013-12-14-at-1.29.44-PM-e1387045885452

At the moment far too many people want to buy stuff now relative to the future. Ten percent of firms close each year. You need to spend one percent of your home’s value on upkeep each year. This is another way of saying that buying stuff now and then selling it for more in the future is a pretty amazing thing, low interest rates, even negative interest rates are nothing to be amazed by. They’re the only way to reconcile the present and the future.

Filed under: Economics, , , , , , , ,

To the surprise of absolutely no one the British public have no fucking clue what the country is really like

IPSOS-MORI Year in Review

IPSOS-MORI Year in Review

The whole slideshow from IPSOS-MORI’s year in review is instructive, have a look. Long story short, the public systematically think things are worse than they are.

The reassuring takeaway is that if you think the public hold odious views its only because they have no idea what they’re talking about. This brings to mind the aphorism that people should get what they vote for, good and hard.

Pessimistically, the public are massively biased against benefits claimants, single mothers, immigrants and engage in “emotional innumeracy” and motivated reasoning to make themselves feel reasonable about their dickishness.

That this means the public would think they were being dicks if they knew the truth. However, campaigning on the “you’re really a dickhead, mate” platform is a one way ticket to lostdepositville.

Dissolving the people and educating another is also a terrible policy because it’s not going to work. Bad news sells and fact checking is a pretty loveless hobby.

All in all, this is pretty terrible news anyway you cut it, although it does make me like the public a little more and wonder at the human mind. Faced with dickhead beliefs your brain totally warps reality so that you become reasonable. It explains a lot actually.

Filed under: Politics, Society, , , , , ,

A #longread for your weekend: Karl Polanyi in Beijing

Thank you for reading last week. If you would like this week’s posts collated as an essay you can download a pdf of “Karl Polanyi in Beijing.” You can also download a pdf version of Karl Polanyi’s The Great Transformation itself here. I recommend you do both. The collated posts also follow below the fold. I hope you’ve enjoyed reading these as much as I enjoyed writing it.

Read the rest of this entry »

Filed under: Economics, Foreign Affairs, History, Politics, Society, , , , , , , , ,

Karl Polanyi in Beijing, or There and Back Again

In this post we’ll finally talk about the Third Plenum, but first a little anecdote.

An important landmark on the road towards a labour market was the remarkable change in government policies that took place in the mid-1990s: A reform of the state sector that had as its centrepiece a programme of mass redundancies which was intended to eliminate or reduce surplus labour in the state sector. This policy was forced on the government by the falling profits and rising losses of the state-owned enterprises (SOEs), which threatened to curb economic growth and government revenues. The 1999 urban survey, analysed in Chapter 6, showed that the incidence of job loss was widespread: 19 per cent of households and 11 per cent of workers had experienced a retrenchment. This remarkable shake-up meant that suddenly there were millions of unemployed urban-hukou workers searching for jobs in competitive conditions. As though in a deliberate experiment, a labour market had been created by decree!

In a book entitled “Towards a Labour Market in China” two academics announce their astonishment that labour markets were created, rather natural. I hope you now realise that this is very silly. The problem with economists is they expect man’s propensity to “truck, barter and exchange” to do a lot of leg work. Polanyi’s point, in its most sanitised form, is that this isn’t true. All economics needs supporting by institutions which have nothing to do with truck, barter or exchange.

Polanyi’s point is more complex than that. I want to discuss his thought first as The Great Transformation is a rich book which deserves discussion. He argued that redistribution and reciprocity were just as important to economics as exchange. I think modern literature has borne him out.

Adherents of New Institutional Economics, of which both David Cameron and I are fans, have criticised Polanyi. The argument is that he over diagnoses. What he sees as reciprocal or redistributive relationships, they claim are actually coasian “side deals.” I think this is economic imperialism. You can think of them as side deals but nobody receiving unemployment payments thinks of it as a side deal to stop them rioting and nobody who gets disability support thinks they’re getting a bung to keep them off the conscience of hand-wringing liberals. Or perhaps they do. But what they hope they’re receiving is something which attests to their worth as a human being.

A man is lost after visiting a new town. He walks up to a stranger and asks him the way to the station. “Right that way” says the man pointing towards the post office, “would you post this for me on the way?” He asks handing over a letter with a smile. “Of course!” says the man, as he walks away, opens the letter and pockets the £20 inside.

A useful concept is that of a low trust society, Francis Fukuyama has written that a lack of trust acts as a tax on all economic activity, it’s a deadweight loss that makes every transaction more difficult. The self-regulating market has few processes for creating high trust societies. Societies dominated by large intrusive states are similarly burdened. Alex has written lots about the UK’s transition to a low trust society and its economic damage. Jamie has written about the idea of China as a low trust society. Here three decades of communist rule (an over emphasis on redistribution) has been followed by the destruction of those institutions and the elevation of exchange. It’s resulted in situations like this:

On the morning of Sept. 4, in the riverside boomtown of Wuhan, Mr. Li, an 88-year-old man, fell in the street and injured his nose. People passed him by, but no one raised a hand to help as he lay on the ground, suffocating on his own blood.

This week, China’s netizens have expressed an outpouring of sympathy – for the bystanders. This is nothing new here. In recent years, there have been several high-profile cases of elderly men and women who have collapsed or suffered accidents in public spaces who then sue the good Samaritans who have tried to help them. These cases have created a genuine and widespread fear that helping a person in need will lead to personal financial loss.

Inequality of market outcomes can drive a decline in trust and make economies perform poorly. This effect isn’t a big as Polanyi would have predicted because it’s pretty hard to smash reciprocal relationships, but its there.

What I’ve documented is that there are lots of way to conduct economic activity and that there are a variety of capitalisms, sometimes all in the same country. More than that, I hope that thinking about Karl Polanyi can give you a deeper  understanding of the necessary and inevitable institutions that surround society and the economy.

Moving on to the specifics, Polanyi argued that a countermovement was inevitable, necessary and would be led by a class. I don’t think this has been the case in China.

1) Polanyi placed class at the centre of his analysis. In China, class power has been weakened by the CCP. From the 1950s the state not only became the solitary organiser of production but it also chose to intervene into every aspect of its citizens lives. The brutality of the CCP in stepping away and demanding a market function has been stronger than Polanyi could imagine. For example, institutions which demand workers are paid on time have been slow to form because workers are weak.

2) Polanyi relied too heavily on formal institutions. The system of guanxi instituted by working people has created an odd, but powerful, informal countermovement and illustrates that, when possible, society will always attempt to insulate itself from the market. This is different to the process Polanyi describes, but not too radically so to invalidate his work. Similarly, capitalists rebelled against the market in the UK and demanded cosy cartels and regulation to keep out competitors. In China tight but more informal state-society institutions are more the norm. Again, probably because of the historic role of the Party in the state and production.

3) Polanyi has also been proven half-right concerning land. He insisted that a countermovement was inevitable; however, this essay has shown that if class interests prove too weak this may not, in fact, be true. Although the tide may finally be turning. He was ultimately correct when he argued that commodifying land would lead to “annihilating the… natural substance of society.” Pigou taxes are one way you can embed the economy in society, but without the necessary institutions or a class to push for them they won’t happen. This is a problem for mainstream economics, just because a solution exists economically doesn’t mean it will be implemented politically.

I’m still concerned that China will implode but I’m more confident that it  could muddle through. It seems that unembedded markets work much better than Polanyi thought. Before I concede that the big man was wrong, I want to propose a theory. Unembedded relations work quite well for manufacturing, but not services. Manufacturing exhibits unconditional convergence in productivity. This means that even in basketcase countries the manufacturing sector’s productivity will converge on the production possibility frontier.

When Polanyi wrote The Great Transformation, England was a dozen times richer than the poorest countries, today the richest counties are 100 times wealthier. Now it is possible to trash your environment and annihilate the human and natural substance of society and get 10 times the return you used to. So long as China could find replacements for the broken men and shattered earth to pour in as commodities to its satanic mills it would get a good return and the unembedded economy would hum along nicely. Well, nicely according to the headline figures. That trend isn’t sustainable, but as we’ll see in a second it looks like it won’t be sustained thanks to The Third Plenum. Food for thought. But it’s only a theory for now.

I’ll repeat that the one thing Polanyi isn’t is an advocate of state planning. The Great Transformation offers, an account of the deleterious effects of statist intervention, as well as an attack on market liberalism. He saw the state as necessary to guarantee justice, regulation and recognition and the market as an important sphere of exchange. But neither state nor market can be relied upon to be the sole method of ordering the economic life of society. It lots of ways China has attempted to swing from one to the other extreme and getting a bit of the worst of both. Its clear that a market society is superior to a state society, but there are lots of ways to get the balance wrong.

Polanyi was not a pessimist. He argued that there has never been a stark choice between capitalism and communism — between the callousness of the market and the clumsiness of the plan — he demonstrates that, in fact, many different worlds are possible. Amid a vast, growing, and contradictory literature on China’s rise, there have been both fears of its ascendant power, and assurances of its imminent collapse. Neither account truly satisfies; this is because China is an economy in flux. Chinese society is faced with a balancing act, it obviously still desires economic growth, but it must weigh this interest against what it has witnessed in the last thirty years. Its productive organisation has achieved

The Third Plenum made its announcements last month to much head scratching. But there’s some meat to the proposals, even if nobody’s sure whether the market’s move from “fundamental” to “decisive” is good news or not. A clear pattern emerges though to confront the problems discussed in the last week’s post. There are institutional solutions to market problems, a double movement is evident.

Farmers will be granted more property rights and it will be more likely they’ll be enforced. A real-estate property tax will be introduced to create a formal system of managing land use in urban areas. The government will accelerate the reform of the household registration system which will facilitate urbanisation and bring more of China’s migrant workers back within the formal institutions of the state. Together these reforms create institutions to support land and labour. Perhaps more importantly the Chinese state is giving the judiciary more independence from local government. Jamie has pointed out this might just mean more central control,  but its through this process of institutional evolution and bargaining that we get anywhere. The developments all make sense in Polanyian terms and all focus on creating rules and institutions which better manage the market and state.

The Chinese are often characterised as passive and obedient, but they have a long history of rebellion1989 saw the outbreak of a movement which actively tried to challenge the ruling class. The militant strike waves seen in China illustrate that internal stability is not guaranteed. In China the market has been planned, and it has been startlingly successful, but the reactions have been spontaneous and they aren’t happy with the status quo.

_______

Coda: These posts have been a collaboration. The other author is me, but me aged 21, the same age I was when I started this blog. If any of you remember him then four and a half years and several hundreds of thousands of words later he and I would like to say “thanks for reading.” I’ll probably have the weekend off blogging, but I’ll be back on Monday.

Filed under: Politics, , , , , , , , ,

Karl Polanyi in Beijing: why are China’s capitalists so successful?

The economic reforms introduced in the late 1970s were, argued the CCP, essential to combat economic stagnation and waste of the Mao years. So it was the Party that created the market in China. In Europe, Polanyi described an insurgent middle classes who “developed an all but sacramental belief in the beneficence of profits” and faith in the market. In China the market was introduced to break the bureaucratic control of the economy, but reform has ironically led to the enrichment of China’s bureaucrats. It has also left land and labour deeply unprotected. In contrast, China’s private and state-owned businesses are deeply embedded in social relationships. Its a deeply contradictory and complicated place as only a country of over a billion people can be.

In The Great Transformation (full pdf) Polanyi runs three chapters concurrently, Market and NatureMarket and Man and Market and Productive Organisation. These posts have followed a similar course and this penultimate post will look at China’s breakneck economic growth and discuss whether that invalidates Polanyi’s idea that “a embedded economy will be more efficient than a disembedded market.”

I started by saying that China’s party decided to create a market, that is how Polanyi and I talk about it, but it isn’t the normal parlance. The main school of thought on liberalisation emphasises the spontaneous creation of private enterprise wherever the state withdraws; this school draws on Adam Smith’s assertion about man’s “natural propensity to truck and barter.” I haven’t much truck with this. Capitalism got going in large part thanks to the fiscal strength of the British war state being able to enforce property rights and help capitalists accumulate capital through dispossession. Likewise in the US the government opened up the west with bloodshed and dispossession which helped America’s farmers accumulate land and helped prop up the wages of its working class. But I digress.

One half of Polanyi’s theory was that while laissez-faire was planned, the response was automatic and universal, even capitalists rebelled against the market. Good free marketeers like Tim and Chris see this as lamentable, they should see it as inevitable. Polanyi insisted that against the tide of market utopianism even capitalists will strive to protect themselves against the market. In China there has been no unconditional acceptance of the market, and its implementation has been limited, even if its effects have been broad. Contrary to the liberal belief that those engaged in private business will seek further economic and political freedom, it appears that those engaged in business in China prefer stability to economic liberalism. There’s more parallels to this: authoritarian capitalism can be pretty stable, Bismark’s Prussia, Meiji-era Japan and Pinochet’s Chile were all stable for extended periods of time. Just like in these countries, embedded markets can be remarkably effective at delivering growth.

China’s business operations rely more on connections than on private property, they are embedded networks of guanxi. I think you should conceptualise guanxi differently for migrant workers versus business men. For labour, it has arisen as a protective last resort, a countermovement which provides shelter in place of hollow labour laws. For businessmen it has become an integral part of “doing business.” Rather than decreasing as China’s economy develops, guanxi has increased its prevalence as businessmen develop new ties, and deepen old ones, in order to achieve their aims.On one level it functions, not as a system protecting against the market, but as a method for smoothing the transition between different state policies, in which extralegal activities are permitted in order to maintain smooth operation of business. There’s a parallel in the Soviet Union were boxes of cigarettes and bottles of vodka lubricate the workings of a badly drafted plan. In China gifts lubricate systems of insecure exchange.

At a macro level, the state also supports businesses and economic growth. The ideal developmental state, as described in Monday’s post by Evans possesses a “concrete set of social ties that binds the state to society and provides institutionalised channels for the continual negotiations of goals and practice.” Is is easy to dismiss guanxi as clientalism, or “crony capitalism” that distorts a natural market conditions. In reality China’s capitalists have the ear of the Chinese state and mutually assured destruction ensures they are focused on growth. Where Scott Sumner sees pragmatic policy making I see the fear in their eyes.

The state has laid the foundations for China’s economic growth and like other developmental states, it has sporadically suppressed market activity and supported strategic investment at the behest of its capitalists. China’s business situation is a system in which legal foundations of private property do not matter as much as ensuring that personal connections with local government and party are good. This can be a method by which private capitalists can extort money, power and influence from society at large. But it is also a method for ensuring capital investment is incentivised and profitable opportunities exploited. The institutionalisation of guanxi is a symptom of the decentralization of power which has occurred in China as both an impetus to, and consequence of, China’s economic rise.

To a degree the Chinese state has failed. For the majority of China’s development, while attempting to build global leaders the vast majority of the Chinese economy remained wedded to low-wage manufacturing. “Manufacturing” may prove to be  a superlative a word for what occurs in China. It can perhaps be better described as “assembling” imported inputs. High-value adding components are constructed outside and shipped to China for final manufacturing before being re-exported. The challenge for a developing country is to move up the value added chain. In the mid-2000s I was relatively sceptical of this happening, now I am more optimistic.

From The Independant, taken by Leonardo Finotti

From The Independant, taken by Leonardo Finotti

The tight state-industry link hasn’t been severed and remains very strong. In return for a huge degree of state control Chinese capitalists can help direct infrastructure spending. Britain has built one new runway since the Second World War. China has been building ten a year or more for over a decade. Britain was rather well endowed with runways following the war, but China’s achievement is colossal. China’s expanding its infrastructure at an astounding pace and it is a close coalition of capitalists and bureaucrats directing it. While some reports suggest lots of this investment is in empty ghost cities and roads to nowhere others are more optimistic:

In the case of Henan’s Zhengzhou—frequently dubbed China’s “largest ghost city”—Ms. Wong notes that a number of media portrayals of the city’s newer areas have used photographs taken between 2010-12, before the metro system connecting the district to the city’s more established neighborhoods was completed. On her most recent visit there in August, Ms. Wong said she saw many cars, “hordes of pedestrians” and considerable ground activity in addition to curtains and air-conditioners installed in numerous residential buildings.

“I asked local people about what they think…about Zhengzhou being a ghost city and the answer is, ‘What?’ They don’t actually have any idea they’re being labeled a ghost city,” Ms. Wong said.

Western reporters are the least likely to understand movement and patterns of production in China. Infrastructure investment is being directed by a coalition of capitalists and bureaucrats using local knowledge passed through to the might of the Chinese state.

From the BBC, taken by Pu Yongfang

From the BBC, taken by Pu Yongfang

Of course, the state can also be expected to expropriate the poor as necessary. As the poor and dispossessed become wealthier and therefore more powerful it seems that land grabs are becoming a little rarer than they used to be. This could also be because all the good land has already been grabbed. In any case, capitalist production is closely embedded in the state apparatus. Seizing land isn’t fair, but it is a pretty good way to accumulate capital. Capitalists are also more productive than poor people and development is all about putting things to their most productive use. This is the ugly side of development, and China is very good at it because its capitalists and government need to keep the economy growing.

The Chinese economy contains a business community embedded in close sets of social ties, this having given it the potential to direct its domestic industry in socially productive ways. To some degree it has certainly succeeded. In centres of development on the coast modern economies have grown up but it is unclear that this will spread to China’s interior. Firms are moving up the value added chain but China remains a very poor country. I’ve discussed in past posts that increasingly large tail risk is being built up in the poor treatment of China’s workers and its environment. China has managed to leverage some of the connections between business and state towards useful investment but at great cost to people and planet. Tomorrow’s post will tie together some of the ideas discussed over the last few days.

Filed under: Economics, Foreign Affairs, History, Politics, Society, , , , , , , , ,

When NGDP is Depressed, Employment is Depressed

Subscribe to Left Outside

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 8,309 other followers

RSS D Squared Digest

  • An error has occurred; the feed is probably down. Try again later.

RSS Stumbling and Mumbling

RSS Blood and Treasure

RSS Britmouse

RSS IOZ

RSS Phil Dickens

RSS Norm Geras

RSS Steven Baxter

  • An error has occurred; the feed is probably down. Try again later.

RSS Jack of Kent

RSS Suggy’s Blog

RSS A Don’s Life

RSS Adam Smith Institute

  • An error has occurred; the feed is probably down. Try again later.

RSS Alex Massie

  • An error has occurred; the feed is probably down. Try again later.

RSS A Very British Dude

RSS Thomas Byrne

  • An error has occurred; the feed is probably down. Try again later.

RSS Heresiarch’s Dungeon

  • An error has occurred; the feed is probably down. Try again later.

RSS Paul Krugman

RSS David Beckworth

RSS Kantoos Economics

RSS Duncan Black

RSS Noahpinion

RSS Knowing and Making

RSS Ta-Nehisi Coates

RSS Will Wilkinson

  • On the SOTU
  • What This Guy Says about Inequality Will Make You Stand Up and Cheer (or Puke)

RSS Unlearning Econ

RSS Jared Bernstein

RSS Acemoglu and Robinson

RSS Mark Thoma

RSS Overcoming Bias

RSS Baseline Scenario

RSS Macroeconomic Advisors

Increase NGDP, Put These People Back to Work

Follow me on twitter

April 2014
M T W T F S S
« Mar    
 123456
78910111213
14151617181920
21222324252627
282930  

Archives

Politics Blogs

Testimonials

Paul Sagar

Left Outside is always worth a read for passionate, and frequently irreverent, analysis and comment.

Sunny Hundal

Oi! Enough of the cheek!

Chris Dillow

Left Outside is, I think, entirely wrong

John Band

This might be the least well informed piece I’ve read on LC, which is quite an accolade.

DEC Appeal

License

Creative Commons License
Left Outside by Left Outside is licensed under a Creative Commons Attribution 2.0 UK: England & Wales License.
Based on a work at leftoutside.wordpress.com.
Permissions beyond the scope of this license may be available at http://wp.me/PvyGQ-gt.

Follow

Get every new post delivered to your Inbox.

Join 8,309 other followers