tisdag 2 april 2019

Rampant mercantilism

I picked this up in an article headed “Would the UK be better off outside the Customs Union.”
A YouGov survey last July found that independent trade policy was voters’ joint fourth Brexit priority, behind control over immigration, and ending EU rules and budget payments.
Trade experts say deals get more contentious once they become real. “It is one of those things that sounds great but when it actually comes down to it trade has always been controversial because people always want something from you,” said David Henig, who was heavily involved in negotiations on an EU-US trade deal. “New Zealand want to sell more lamb and Australia certainly want to sell us more lamb. That’s not going to go down very well in Wales or Scotland.”
Henig’s mercantilism is showing. Cheaper New Zealand and Australian lamb would go down very well with shoppers in Cardiff and Glasgow. Why is there this blindness to the obvious? Should this man be in charge of negotiating trade deals when he evidently has such a limited idea about the purpose of trade?

torsdag 7 mars 2019

Is anti-Zionism Jew hatred?

There is a long article on this subject by a in The Guardian today, not open to comments. Zionism is a philosophy of Jewish nationalism originating at the end of the nineteenth century as a response to widespread persecution in Europe, particularly in the Russian Empire, though it was the Dreyfus trial in France which gave the movement its impetus. It was originally opposed by many, if not the majority of Jews, who had not the slightest interest in trying to set up a Jewish state in a country consisting mostly of sand dunes, swamp, semi-desert, and eroded rocky hillsides. The USA, the Golden State, was the goal.

It was the events of the 1930s and the aftermath of the Second World War which caused Zionism to gather momentum. Even then, the land of the then Palestine was a last choice, or Hobson’s choice, for the majority of those who went to live there. As late as the nineteen-fifties, in countries where Jews felt safe and comfortable, Zionists were regarded by other Jews as slightly cracked. There were also, and still are, religious groups who consider the notion of a Jewish state as contrary to the will of God, and this is in fact an old tradition.

The author of the article, himself a Jew, draws much the same conclusion when he says that to be opposed to Zionism cannot in itself be anti-Semitic. What he neglects to mention is that it has become an obsession among non-Jews  – especially on the left – to the point that they are silent about all the other evils in the word; the most recent example is the imprisonment of a million or two Muslims in Chinese concentration camps. It then has to be concluded that the anti-Zionism is driven by anti-Semitic emotion.

tisdag 5 mars 2019

Hydrogen train hype

Hydrogen powered trains are in the news at the moment. They are being promoted as a means of making railways less dependent on carbon as a fuel. The idea is that the unwanted electricity from wind generation can be electrolysed and used as fuel in fuel cells. The system is being trialled in Germany on a new train, the i-Lint, and in the UK on a converted class 321 multiple unit train dating from the late 1980s.

There are at least four snags.
  • The hydrogen has to be compressed and stored in heavy tanks.
  • Overall energy efficiency is about 27%.
  • Fuel cells have a limited life.
  • Cost.
I have attempted to obtain figures for the power output of these devices but a search reveals nothing on the subject, not even on the website of the manufacturer, Alstom. My guess is that it is around 1000 hp, about the same as diesels such as British Railway class 20, or a class 4 steam locomotive such as the 80xxx class 2‑6‑4 tank class. The latter, burning light oil and with draughting modifications to suit, turn in a thermal efficiency of around 12%. Because steam locomotives have a small number of large parts, they are relatively inexpensive to manufacture using modern CADCAM and 3D printing techniques; given a sensible production run, the cost of a locomotive in the equivalent power category should be of the order of £1 million. Given that the capital cost of rolling stock accounts for about a quarter of the cost of running a railway, when will someone drop their prejudices and have a proper look at this supposedly outdated technology?

As for the unwanted hydrogen, there is a simple solution - feed it into the gas grid. This would have to be in defined areas as combustion requires different air:gas volume ratios than are used for natural gas. The hydrogen can then be used for on-site electricity generation in combined heat and power systems, which results in minimal waste of energy.

torsdag 28 februari 2019

Brexit fiasco a national disgrace

The economic case for Brexit was never put, because of the incompetence of Minford and his associates. Short of full-blown communism, it would be difficult to devise a worse set of policies than those at the heart of the EUʼs trade and economic policies: CAP, VAT, the tariff wall and the Euro. The so-called four freedoms are in reality a way to ensure that skinflint employers and greedy landlords can pay the lowest wages and charge the highest rents. Employment Rights are a fig leaf and do nothing for those on the edge of the labour market.

However, CAP and the tariff wall are a useful source of pocket money for the dukes and lords whose rental income would have been hit. Since the same people are the leading Tory grandees, they were bound to insist on it being replaced by a home grown version of the same thing, which is what has happened. On top of that there is a clueless Chancellor who is taken in by surfaces appearances and does not appreciate how much of the headline yield from VAT disappears in costs and losses. To cap all that, there is a Labour Party which is asleep and dreaming Marxist dreams.

Whilst there is a good case for remaining, the support for remain among the better informed section of the population would not have been anything like as much as it was if the flaws in the EUʼs policies had been appreciated and sensible post-Brexit alternatives thought about.

Without no sensible post-Brexit strategy, the entire point of Brexit disappears, since the egregious EU policies are replaced by home-grown versions of the same thing.

The whole episode is a national disgrace which reflects badly not only on the politicians but on the British public at large, above all, on those who are meant to be the more intelligent and better educated section of the population. Remainers - the Guardian and FT were leading offenders - were too busy arguing for remain to get their heads around the need to ensure that the worst of the EU policies were dropped and sound policies put in their place.

tisdag 26 februari 2019

Brexit is losing its point

I am coming to the conclusion that Brexit is becoming an irrelevancy. After the announcement by Gove - a leading Brexiter - of new UK food tariffs to replace the EUʼs, I am coming to the conclusion that Brexit is becoming an irrelevancy. What is the point of it?

The EU has been running four egregious trade and economic policies from its outset: CAP, VAT, the tariff barrier and the Euro (fortunately the UK avoided the latter, but the fact that it even exists is proof of the incompetence of those responsible for the those policies). It is becoming evident that the leading supporters of Brexit are intent on replacing the EU policies with home-grown versions of the same thing. It is as if a prisoner is told he is free, but remains in his cell, and is then required to pay for his food and lodging in the jail. Such a Brexit is all pain and no gain.

The ERG - this includes J Rees Mogg - and Economists for Brexit, should have raised their voices in protest when Gove announced his proposals for the tariffs, which have not been denied. Labour and the left should have raised voices in protest on the basis of their own principles. Economists for Brexit have not helped the case through their claim that British agriculture and manufacturing would be destroyed.

As regards agriculture, it appears that there has been no rigorous study, ie based on a Ricardian analysis, made on this subject, not by DEFRA, nor by any think tank, nor by any academic institution, nor even the National Farmers Union. Such studies as have been made are inadequate, since, like the ESRC one, rents are regarded as an input cost, or in the case of that by the NFU, rents and imputed rental incomes are rolled up into the category of farm profits. This is astonishing, considering that many universities, including Oxford, Cambridge, Newcastle, Reading and Bangor, have departments of agriculture and agricultural economics well equipped to crunch the numbers properly and predict what would happen if cheaper food from outside the EU became available.

If nobody in authority knows what to do with the freedom Brexit gives, and the EUʼs dysfunctional policies are replaced with UK versions of the same, what is the point of it?

måndag 25 februari 2019

Post Brexit agriculture

Uplands farming seems to be most at risk from Brexit. The land will not, of course disappear. The uplands, and, indeed, the landscape as a whole, should be regarded as a national resource which needs to be managed for a variety of objectives.
  • to maintain, and preferably increase, opportunities to earn livelihoods; 
  • to enhance its aesthetic value; 
  • to enhance its biological diversity so as to support native species; 
  • to protect downstream areas from flooding; to make a contribution to the carbon sink; 
  • sustainability. 

This needs to be done is such a way as to ensure that the enhanced rental values resulting from public investment are efficiently recovered for the exchequer. Although the sums of money involved are relatively small, this strengthens the case for land value taxation on agricultural land. However, it should not be forgotten that present taxation gives rise to an artificial margin where land which could support economic activity in the absence of tax cannot do so if such activity is subject to taxation. In these situations, tax is the deal-breaker.

The question that arises is whether DEFRA is up to the task.

söndag 24 februari 2019

Will Brexit destroy British farming?

Will Brexit destroy British farming if it is not protected? Remainers say it. The National FU says it‒but then it would, wouldn’t it? The leading Brexit economist, Minford, has said it. What is the truth of the matter?

Agricultural rents are in the range £50 to £200 per hectare. Faced with a general fall in farm gate prices, the worst land, by definition marginal land, goes out of agricultural use and rents of all other land must fall. The cut-off point comes where rental values drop to zero. This is standard Ricardian theory.

Some agricultural land will obviously go out of its present use, but the questions are how much, and what other uses will replace them? I have not seen any analysis of the problem, neither by Brexiters or Remainers. In the absence of any sound analysis, all there is on both sides is blind speculation.

The apparent dearth of well-publicised and solid information is a mystery. The calculations are not the kind of thing that can be done on the back of an envelope, but many of the country’s think tanks and academic institutions, including both Oxford and Cambridge Universities, as well as the NFU and DEFRA, have the resources to do the work. When making forecasts of impending disaster, there is no excuse for not producing supporting calculations which would give an indication of the extent of the damage.

Rampant mercantilism

I picked this up in an article headed “ Would the UK be better off outside the Customs Union .” A YouGov survey last July found that indep...