Archive for the ‘Economics’ Category

You are not just yourself

Thursday, May 11th, 2017

Sometimes people feel powerless, like their individual action does not matter. That is not true, it matters tremendously and it is enormously powerful, I am going to explain one of the reasons why.

When you make a decision it is not just you making that decision, it is also people like you making the same decision for similar reasons. No one exists in isolation or acts alone, every individual is part of many overlapping, interconnected, and interdependent groups, most of which they are not even aware of. When you make a decision you make it based on how you think and what you know (consciously or not). Other people like you will be in similar situations and make the same decision, you make it together.

This means that every action you take does matter because it is not just you, it is people like you doing the same thing. Your individual action might be tiny, but your collective action might be huge. If the only thing stopping you is that you do not think it will make a difference because it is just you, then do it, if you do it then other people will too, if you do not then they will not. You have the responsibility to make the decision and to do the thing, but in doing it, you will not be alone.

There are lots of reasons to vote and this is only one of them, but you should.

There is a dark side to the fact that you are not just yourself, you are a community, and that is that if others control the inputs to your community and target them carefully for every group, then you are not yourself, you are theirs.

Think carefully, think twice, install an ad-blocker and make your decision.

 

Now that sounds horribly patronising, which it is, and so this academic is going to get off his ivory tower with his simplistic notions and go and do some work.

Brexit

Tuesday, June 28th, 2016

The United Kingdom of England and Wales will not be great in power but it could yet be great in love.

It will not be able to lead as it formerly could when it was a great power, but it could enthusiastically follow when other countries or supranational organisations like the EU lead in good directions.

It will not have the military power to wage war but perhaps it might help maintain peace.

 

It will be a long road back from fear and division, from racism and xenophobia, to tolerance, peace and love. Let us begin.

Houses in Multiple Occupation (HMOs) should be encouraged, not restricted

Saturday, June 2nd, 2012

One of the key differentiating policies between the Liberal Democrats and Labour at the recent local elections was that Labour were considering restricting the proportion of Houses in Multiple Occupation (HMOs) that could occur in a section of road of a certain length. Labour won (at least in my ward) and I think that imposing such a restriction would be a particularly bad idea. Hence it is my democratic duty to try and explain why this is the case and so help prevent this happening. Essentially this proposal is equivalent to a proposal to throw me or people like me out of our houses so I should probably take this reasonably personally.
A House in Multiple Occupation is one in which 3 or more people who are not of the same household are living where household is defined by blood or by marriage or similar.

As I understand it the main reasoning behind restricting HMOs is that they are bad for the community due to lack of involvement by the residents (and perhaps bad behaviour on the part of the residents) and that they tend to be poorly maintained and so be bad for the area (house prices etc.).
Now those things might be true, or at least there might be a statistically significant increase in poor maintenance of HMOs and of lower community involvement by the residents of HMOs or even a higher incidence of reports of antisocial behaviour against people living in HMOs.
While it seems perfectly possible that those things might be the case I have not seen studies that have shown that to be the case I have not seem them (to be fair I have not looked). If there are no such studies then clearly no restriction should be imposed because before you start throwing people out of their houses (or at least saying “no you cannot live there”) you should at least be sure that the reason you are doing that is valid. It would be rather embarrassing to find out that this sort of thing had been done on the basis of a lie.

However even if it is true that residents of HMOs are more likely to be antisocial/anticommunity and take poor care of their property that is still no reason to restrict where residents of HMOs can live. It boils down to a “We don’t want your type around here.” attitude. Sorry I thought we were living in a free society in the 21st century where anyone could come and live next door as long as they are not currently in prison and can afford it. Perhaps if there was some sort of causation between being a bad person and living in HMOs there might be some more justification but even then – really is that the kind of society we want to live in?
So who lives in a HMO, well clearly people who don’t have a big enough household to fill a house or enough money to have a house to themselves and have done so. So mainly single people, probably also mainly young people. So after high levels of unemployment and debt young people are put at a further disadvantage by being discriminated against when trying to find houses to rent not only by the letting agents and landlords who would already much prefer families (and make this clear) but also by their local government. That does not strike me as a good move and seems likely to further alienate a group of people who might legitimately feel let down by society and so rather apathetic about supporting it. There are already quite enough problems to deal with this century without further unnecessary building of inter-generational tensions.

Now I think marriage is important so I would not get married just to be able to get a house but if people start getting told “Well if two of you got married then you could all live here.” some people might decide otherwise. This renders the whole thing unenforcable.

Monitoring which houses are HMOs in order to prevent the concentrations of HMOs exceeding defined thresholds involves some significant bureaucratic overhead which will have its own cost, it also means that the information on which houses are HMOs must be publicly available in order for letting agencies etc. to be able to work this out and hence know who they can rent the houses to. This would be a violation of the privacy of those living in these houses and would be likely to allow targeted advertising (and perhaps political campaigning) based on this information.

So if people are not allowed to live in HMOs what is the alternative? Well they could live in a family house instead. So they could go back and live with their parents (and leave their job, sounds like a great idea) or they could get married but that is not something someone can necessarily do. Or they could live in a house of single occupancy. However that would be a really silly idea.

It is significantly more efficient for a house to have more than one person living in it because then the constant costs of a house (such as kitchen space etc.) can be shared out between multiple people this also reduces the rent, utility bills etc. per person. Leaving more money for other things like saving up for a house or paying off student loans. This also reduces CO2 emissions and so HMOs help save the planet. There is currently a significant housing shortage in the country and to a significant extent that is due to a reduction in the number of people living in each house rather than to a increase in the number of people. So our current housing shortage could partly be addressed by encouraging people into houses of multiple occupancy or at least to fill spare bedrooms with people.

In summary restricting the number of HMOs is discriminatory, unenforcable, bureaucratic, privacy invading and precisely the opposite of the kind of housing policy we should be encouraging.

So having rejected that policy as a thoroughly bad idea what kind of policies might actually address the problem?
People are more likely to invest in their local community if they feel they have a vested interest in its success and if they do not feel like they are outcasts from it.
If people are not sure how long they are going to be living in a location then it will not feel as worth while for them to get to know their neighbours when they might be moving in a few months or a year. Hence policies which increase peoples assurance that they will be able to stay in their present house long term are likely to encourage community involvement. Policies that make people think they might be forced to move by their local government because of who their neighbours are on the other hand…
Encouraging community is a very important thing to do and a very hard thing to legislate for because fundamentally it is a thing that people need to do collectively. Government can encourage it though and I am sure that there are many things that can be done by government to improve the situation. Society as a whole needs to decide it wants community and then to go out and do that. All of this is hard so we better get started.
Anyone for tea? coffee?

Carbon taxation

Saturday, January 14th, 2012

Under our present economic system we are reasonably good at minimising costs and finding efficiencies that save companies money. However we do not price negative externalities. So companies and individuals can do things that are bad for other people, or which only become bad when lots of people do them. There is no actual incentive for them to not do this except when there is legislation in place which provides that incentive.
Companies and individuals are good at acting in their own short term best interest but much worse at considering the longer term and the wider system of which they are only a small part. One of the primary duties of government is to ensure that this short term best interest lines up with the long term best interest of the country and the wider world.

Currently various places have carbon trading schemes. These just do not work. Companies are granted the right to produce a certain quantity of carbon dioxide, if they produce less they can sell the spare to other companies, if they produce more they must buy some. The problem here is that if companies can persuade their governments that they need slightly more right to emit then they can then sell this right at a big profit. This also results in the particularly tiresome behaviour where deliberately inefficient systems are built, and then made more efficient and large quantities of money obtained for the efficiencies that have been made (yey carbon offsetting).

Market systems do work but require things to be properly priced, carbon trading doesn’t do that. Instead a carbon tax where each tonne of carbon dioxide equivalent is given a fixed price by a certain quantity of tax being due for its emission. Here I mean tax in terms of the manner of its collection (imposed by government) but what it is is an encapsulation of the actual cost of the emission. The money raised could not just be used for arbitrary purposes but only those which help deal with the problems caused by the emission (investment in renewable technologies, efficiency, retrofitting insulation etc.).

Of course none of that is new, it has all been said before.

However normal schemes would fail as it is not in the best short term ‘economic’ interests of a country to impose an additional tax on carbon dioxide equivalent production. This is because foreign imports will have lower costs due to their emissions not being paid for. Hence to avoid shooting themselves in the foot by destroying their local industries and just relocate the pollution to other countries where it is harder to legislate for its reduction but with moral responsibility for it still lying with the importer. Hence import taxes based on the carbon dioxide equivalent in the country of manufacture and of the transport of it are required.

Such import taxes would as I understand it be illegal under international agreements through the WTO[1]. Tedious. However this is not a normal ‘tax’ it does not exist to raise revenue for a particular government (it should probably be focused on ensuring developing countries move straight to clean technologies without an intermediate dirty state) or to protect industries in a particular country. It is an enforcement of an actual cost, as long as it gets paid it doesn’t matter where. So it could be charged by the government in the country of origin and kept by them and then the importer would not need to charge it. This should hopefully mean that governments don’t get so upset with each other.

I envision three classes of countries, those fully into carbon taxation for whom all production inside their countries and for them in other countries is properly costed. Those countries who export to the first class ones and charge the cost for those exports in their own country. Those third class countries which don’t charge anything and if exporting to first class ones see the import tax charged but don’t get the money from it.
The main additional requirement for first and second class countries is what they do with the money they collect – they must not use it to subsides the very industries they are taxing though they could use it to provide loans for efficiency improvements etc. – as otherwise it would not have the correct incentiveising effect and would be anti-competitive.

That would of course require a huge quantity of political will and is fairly unlikely to happen, however when enough people start dying politicians will be forced to take notice. Unfortunately this will likely be rather late in the day.

The main difficulties are in calculating the quantity emitted and in fixing the cost. Calculation by “assume the worst possible method unless proved otherwise” should give pretty good incentives to provide good proofs of efficient methods and this becomes much easier when these things are priced in at the beginning. For example application when petrol is first petrol rather than misc oil then it is destined to be burnt so apply the tax then. When some coal comes out of the ground – going to be burnt so apply tax. An additional incentive for encouraging people to apply these things early in the supply chain when it is easier is to have a linearly increasing cost where each second it gets ever so slightly more expensive. So we start from 0 and run up to 1 over the course of a year so as to get the bugs out of the system before particularly large quantities of money get involved (10 per household is not much) then draw a straight line between 1 and 100 in price between then and 2050. Picking the currency to price this in is hard as its value is built on rainbows and not tied down to anything. Using the euro of the dollar might make sense but I am not clear as to what the best method would be for this.

[1] Though we do apparently have a tax on the import of components but not finished products which helps destroy our manufacturing industry, see petition to change that.

This begins my series of “ideas I have had”. Time for you to find all the holes in it :-)