Why governments' attempts to pick winners produce more losers than winners.
My policy of paying no attention to the news had been going well, and then the boss decided that we simply had to respond to an article in The Times. So it's temporarily back to banging my head against a brick wall, as you may have guessed from the appearance of this post.
The article in question was a Guest Comment by Sam Laidlaw, Chief Executive of Centrica, whose heading summarises his argument pretty well: "Put a price on carbon, but not a tax". This might seem to be a reasonable, even a liberal argument. Unless you are close to the energy industry, you would probably not realise how this was just another example of the way that energy policy has become a plaything for the energy corporates to try to gain commercial advantage. The Government's policy is practically being dictated by the positions of companies like Centrica, who are very clever in dressing up self-interested positions as plausible, apparently impartial and principled arguments. I will let the letter I sent to The Times explain how so in this case:
Sir,
Sam Laidlaw says that we must "put a price on carbon". He does not differentiate between sources of carbon, and rightly so. Our climate does not, and neither should we.
One of the many failings of cap-and-trade, unlike a carbon tax, is that it is not practical for highly-fragmented markets, such as the very large market for domestic heating. The domestic consumer of 'natural' gas (or heating-oil or LPG in remote areas) is therefore not "forced to pay", which reduces incentives for householders to act sensibly and to consider alternatives like renewables.
Mr Laidlaw opposes the intervention of government(s) in setting the price of carbon, but in fact such interventions pervade the system of cap-and-trade. In the absence of a carbon-tax, the only other levers that the Government can pull in the domestic sector are either partial, bureaucratic and poorly-funded grant-mechanisms (such as the Low-Carbon Buildings Programme, in which Centrica’s subsidiary British Gas has been given a privileged position), or regulations and obligations (such as the Energy-Efficiency Commitment, in which again only the major energy suppliers, such as Centrica, can participate).
Mr Laidlaw presumably prefers these mechanisms to a tax that is the only practical way of pricing carbon equally across all types of consumers, large and small, but he then must accept that most of his customers are insulated from the cost of carbon, an approach that he says is wrong. Policymakers and consumers ought also to be concerned that those measures embed the power of the incumbent energy suppliers, and inhibit innovation and competition from new entrants.
Yours,
etc.
It was not published, of course. I have no complaint - that is their prerogative. But more strangely, I also tried, when it wasn't published, to post this message (in two parts, because of the 1000-character limit) to their website, but it hasn't shown up there either. Another message that I posted afterwards, in response to another poster who suggested we should have a government-subsidised investment fund rather than carbon-pricing, has appeared, which makes me wonder why the earlier posts didn't show. Was this a technical hitch, or was it moderated? It seems unlikely to be a technical issue, as the later post got through fine, and it is strange for both halves of the first message to suffer a technical glitch that other messages did not experience. My guess is that it was moderated, but why?
Apologies to the regular visitors to this site (both of you), for the abrupt termination of posts, and then the more recent disappearance altogether (a technical hitch that went uncorrected because I wasn't paying attention).
A combination of factors led me to give up on the site.
It may yet happen that I am forced back in to working full-time in the British economy (which naturally means the British political sphere, as there is barely anything left of our economy that is not heavily influenced by government policy), in which case PL will probably be revived as an outlet for my frustrations. But I hope to God not. I am so repulsed by the shallow, self-deluding, self-serving and yet naive (in their failure to understand the bigger picture) machinations of most of the figures who are put forward as being worth listening to (whether politicians, civil servants, academics, journalists, lobbyists or "captains of industry") that I have developed an aversion verging on allergy to all topical "debate" in the media. It usually only takes a sentence or two before my head feels like it will explode and I am wanting to throw the TV, radio, or paper out of the window. Life is too short to waste on continuous uphill struggles, and likely to be all the shorter if I do. So for now, I am signing off, and if I never sign on again, you will know it is for the best.
It is being reported that the heir to Blair now wants to be the heir to Thatcher - apparently the whole Blair thing wasn't working. The good news out of all this is Cameron has realised that green taxation as a means of looking green rather than actually tackling the issues associated with climate change was a bad thing after all. It is expected that Cameron will u-turn at next week's election and scrap the bonkers talk about taxing second flights and car parking at supermarkets. All he need do now is get rid of Zac Goldsmith, never ask John Gummer to write him a report again and prepare for a humiliating defeat at the polls in a month's time or so.
The government has made a sensible choice on the issue of light bulbs, I believe. The headlines ran that traditional light bulbs will be phased out by 2012 - but the key here is that the initiative is voluntary. Supermarkets and energy suppliers have agreed to gradually phase out incandescent bulbs from next year. It is supposed that while energy saving bulbs cost more to buy they last up to 12 times as long and use nearly 80% less electricity. Which can only be a good thing. Other countries have introduced an all out ban, such as Australia who will ban conventional bulbs beyond 2009.
Greenpeace has responded by saying: "The government needs to go further and introduce tough mandatory efficiency standards rather than relying on weak voluntary initiatives. For every year of delay in getting rid of these bulbs, 5m tonnes of CO2 are emitted into the atmosphere unnecessarily." But how is working closely with the industry, letting the market decide and getting a sensible and effective result a bad thing? Well done environment secretary Hilary Benn, I say.
Government
The new Brown government is doing an incredible and shameless job of presenting a whole new load of ideas as though the past ten years were a massive mistake that was none of their doing. In the same way we don't vote for a Prime Minister come election time, we vote for a party (the Labour elite trotted this line out - fairly - prior to Brown's coronation) by getting rid of the leader does not somehow erase all the mess that the government has made over the past ten years. You got rid of one man - the rest of you are still there. In fact, while Blair was trying to make himself leader of the free-world, Brown pretty much ran domestic policy. So why, all of sudden, were you wrong about the NHS, wrong about education, wrong about Iraq and now wrong about crime? What has changed? You all voted and backed these measures, yet you seem to be passing the buck saying "it was nothing to do with me, guv" like the most clueless of henchmen.
Government
Ed Balls has finally admitted that the government has got it wrong on education over the past ten years and that their pledge to have their three main priorities as education, education, education has been a total failure. At least, he inadvertently implied it anyway - you didn't really think he'd actually say that do you?!
Despite only a month ago the government dismissing claims that exams were getting easier and the education system has been dumbed down, the children's secretary is expected to announce today plans to split the Qualifications and Curriculum Authority in two. One body will establish and oversee the curriculum and exams system, the other will act as regulator. This will effectively create an independent exams watchdog. The move is being compared to Brown's decision to make the Bank of England independent in 1997. Balls hope that it will quell the annual dumbing down debate. In practice, not only is this an admission that Labour got it wrong but it means when it goes wrong in the future they can blame the "independent" body. All for the princely sum of £144m invoiced to the taxpayer.
The war on motorists looks set to get worse in the suburbs. Nottingham council has said that they expect that by 2014 commuters could face a "car parking tax" of as much as £350 a year to park at their workplace. Failure to pay the charge would be £175 per offence.
Now, I understand parking charges on council owned property, but charging companies tax to have their employees park on private property seems a little unfair. Of course, employers will probably pass this cost on to employees. They see this as an alternative to a congestion charge. Once again the government and local government fail to realise that, for many, there is no alternative. People do not sit in traffic for the fun of it; they do it because they have to. It is all very well to have a congestion charge in central London, where there is a mass public transport infrastructure, but those in the suburbs and countryside can not jump on the tube or have the luxury of a constant stream of buses dropping outside their doorstep. They have to drive and so they have to pay the financial penalties... then again, may the government and local government know this all too well - does wonders for raising coffers even if it doesn't tackle climate change or congestion.
Yesterday Gordon Brown made one of the most ground breaking, novel, ingenious, brilliant promises any politician has ever made. The saviour of the NHS promised us clean hospitals for all. Yes, that's right - while the rest us having been trying to work out what the most basic, obvious thing a hospital should be, Brown put his finger on it by making the pledge that we will no longer have to suffer from catching disease and viruses from the one place we go to get rid of them.
Why does he have to make this pledge in the first place? The man has spent billions upon billions upon billions on the NHS and ten years down the line he talking about making them hygienic! Surely a hygienic hospital is the first thing it should be - not the after thought of ten years failed investment.
Mr Brown said: "We know that over time, ingrained cleanliness problems build up, especially in hard-to-reach places like ceilings and ventilation ducts, which cannot be dealt with by day-to-day cleaning. So over the next year, for the first time, every hospital will receive a 'deep clean' designed to return our hospitals to the state they were in when they were built brand new." What on earth is he talking about?
Apparently “No government should ever be in the business of protecting executives who make the wrong call or bad decisions,” or so said Alastair Darling at the opening of yesterday's conference. But isn't this exactly what he did little over a weeks ago with Northern Rock?
Yesterday on Andrew Marr's programme Gordon Brown refused to answer straight when probed about when he knew about the Northern Rock's troubles. Marr showed his weakness by not pursuing this further as he clearly had Brown on the ropes but then just let him go... probably why he does the Sunday morning show and Paxman the evening one. The government has looked a bit stupid over all this, and well they might - they have made it up as they went along and now look like they are doing a massive u-turn when they realised they had inadvertently nationalised the banking system. Despite this fiasco, the Tories have lost even more ground to Labour in the polls. Surely this is the clearest sign yet that even if the government cocks up the economy they are still better than going with any of the other realistic options? The political system is not working in this country - we are stuck with dumb or dumber.
Government
Conservatives
Another day, another report telling us that the government has wasted £43bn of taxpayers' money on the NHS. This time the source is... the patients themselves! And not just a few disgruntled ones either. 1.4 million of them were surveyed!
The Picker Institute, a health research charity, found 48% of hospital patients were not as involved as they wanted to be in decisions about their care. The proportion had not changed since 2004 - despite increases in spending of £43bn. The proportion of patients saying they were given enough information about the side effects of medicines actually fell from 61% in 2004 to 58% in 2006. The government spokesman was wheeled out by the Department for Health to comment. He said "We take the views of patients extremely seriously, and have put their needs at the centre of our health service reform. Only this week, the health minister Lord Darzi hosted a series of engagement events across the country as part of his NHS review." So, you badly invest £43bn of our money and then listen to what the patients want? Haven't you got your processes back to front here?
British ministers are refusing to cooperate with the US criminal investigation into allegations of corruption against BAE, Britain's biggest arms company, the Guardian can disclose. More than two months after an official request for mutual legal assistance (MLA) was received from Washington, the home secretary, Jacqui Smith, has not yet allowed it to be acted upon. The US investigators believe the British are being obstructive.
http://www.guardian.co.uk/baefiles/story/0,,2173947,00.html
Britain's stocks of plutonium are kept in "unacceptable" conditions and pose a severe safety and security risk, experts warn today. The Royal Society says ministers must urgently review the way more than 100 tonnes of the radioactive element, separated during the reprocessing of spent nuclear fuel, is held at the Sellafield complex in Cumbria. The society, Britain's premier scientific academy, says a previous warning to the government has been ignored, and that the rise of international terrorism means the UK must now find a way to use or dispose of the material.
http://www.guardian.co.uk/nuclear/article/0,,2173837,00.html
Government consultation are a bit like the old Saturday afternoon wrestling, with the government playing the role of Big Daddy and the rest of us the enormous, yet hopeless, Giant Haystacks. Everyone knows who is going to win, but we have to go through all that nonsense before hand before Big Daddy is, once again, declared the winner. And so with the nuclear consultation - the government clearly wants pro-nuclear to come out favourite, everyone knows it will be the favoured option, but we have to go through all the nonsense before hand to make it look like there was some sort of contest.
Of course this is the second time the government has "consulted" on nuclear new build in the past 12 months. This is because, last time the audience were watching the big fight between Big Daddy and Giant Haystacks they smelt a rat. They started to realise that it was a bit odd, given that Giant Haystacks was twice the size of Big Daddy, he kept losing. Now far be it from me to suggest that the old Sunday afternoon wrestling was a fix, but something was up there wasn't it? And something was up with the last nuclear consultation too - so the courts ruled that we needed a rematch!
Government
Lib Dems
Security breach on Government's £12bn upgrade computer system shocker! So the new computer system in the NHS isn't a tight as Fort Knox or even as secure as the flies on John Prescott's trousers it turns out. What a surprise. Amusingly, it was a celebrity whose details have been pried upon by some geek locked away in his bedroom somewhere, no doubt, with the hope of making a few quid out of the News of the World. Unfortunately they didn't name the celebrity involved, though it was in the North West region and probably someone with a sort after medical history... it couldn't be a certain Mr Blair could it? Wishful thinking, but the poetic justice would be perfect, wouldn't it? (Mr Blair is a celebrity now, isn't he? – in fact he always was!)
This whole project, as I have said before, is a vast waste of money and is inevitably going to create as many if not far more problems than it solves. If they can't get this right, then how they are getting away with going ahead with ID cards I have no idea.
The Times is reporting that town halls would be forced to take action over petitions with more than 200 signatures under new proposals to devolve power to voters. This is Hazel Blears' big idea for making councils act on demand of the power of the people. This is straight out of "The Big Book of Stupid Political Ideas" (foreword by some unknown Lib Dem - probably their leader). Blears has obviously given this "giving democracy back to the people" idea a lot of thought. Even the figure of 200 signatures isn't entirely arbitrary. She says "If the number was too low, say about 25, a small group of people could waste the council’s time. But if the number was too high, at around 500, it might be difficult to get enough signatures for an important issue.” Very scientific.
All this does beg one or two questions...
Firstly, as we all know from the No.10 epetitions, most people are more interested in the "making the PM stand on his head and juggle jelly" issues rather than slightly more pressing issues such as crime or health. Never fear, good old Hazel has thought of this too. Any petition getting the required signatures would mean that councils would be required to respond, either by changing policy or giving a full explanation of why the request was turned down. So they act in exactly the same way as if anyone asked the council to do something then?
"Liberty is the soul and element of commerce; she excites the genius and application of merchants who never cease to meditate on new methods to make discoveries and found enterprises. [Liberty] kindles a perpetual movement which produces abundance everywhere. The moment we limit the genius of merchants by restrictions, we destroy trade", quoted in Murray Rothbard, Economic Thought Before Adam Smith