economics – Common Infirmities

“Unfair to other rich people”

The UK government is making a big show of considering, though they ultimately probably won’t follow through, scrapping the so-called “golden visa” programme, which allows wealthy people to bypass immigration constraints to move to the UK, in exchange for investing at least £2 million. This scheme is generally considered to have grossly abetted the growth of London as a world centre for money laundering.

Now, The Guardian reports, “London lawyers who help the global super-rich apply for “golden visas” to enter the UK have called on the government to reconsider its decision to abolish the Tier 1 investor visa scheme, warning that it would be “enormously damaging” to the economy.”

Kyra Motley, a partner at the law firm Boodle Hatfield, said the UK was jeopardising billions of pounds in overseas investment “because of a popular myth that foreign money is dirty money”…
Chetal Patel, a partner at law firm Bates Wells, said scrapping the investor visa because of increased tensions over Russia’s threat to Ukraine would be “unfair” to other rich people wishing to come to the UK.
“Since the introduction of golden visas in 2008, the UK has benefited from billions of pounds of investment. It would be enormously damaging to the UK economy if this was to be cut off.”

Weirdly, despite the fact that this is a purely economic argument the only people quoted are lawyers, not economists. I wonder whether The Guardian would be equally open to splashing on their home page claims by a group of economists that a new tax law would damage the integrity of the UK legal code? Particularly if those economists admitted — indeed, if their sole claim for expertise in this matter — was their personal pecuniary interest in having the law changed.

Honestly, is there any reason to think that the UK is suffering a shortage of foreign investment — as opposed to, say, a shortage of farm workers, which is well documented, and has been driven by intentional government action to exclude foreigners. And this despite the fact that — “popular myth” or no — the incidence of criminality among billionaires (domestic or foreign) is clearly higher than among farm workers.

Transferable skills

The US federal government has ordered that all nursing home personnel need to be vaccinated against Covid, which seems like an absolute least-you-could-do sort of measure, given the extraordinary risk of outbreaks among the frail elderly. But there’s a problem.

The American Health Care Association, a nursing home lobby, said it appreciated the order but that the mandate should apply to other healthcare providers as well so that workers who refuse vaccination won’t have a reason to change jobs within the industry.

Surely there can’t be that many openings for medical staff who aren’t willing to take minimal steps to protect their patients? Well…

David Grabowski, a professor of healthcare policy at Harvard Medical School, said that, because many nursing home aides are paid only the minimum wage or slightly higher, they would be more likely to seek out work at retail establishments. “The risk isn’t that they go to the hospital down the street—the risk is they go to Starbucks or Target,” he said in an interview. “It’s great if you want to mandate the vaccine, but you also want to make sure these workers are making a living wage.”

Hmm… if Starbucks is hiring unvaccinated care-home nurses to sling lattes for the same salary, there must be some vaccinated baristas who want to transfer in the other direction. What’s that you say? You can’t just hire any bored 20-year-old to care for the elderly? You need training and experience to do the nursing job, and it’s a far more gruelling job!

Then why are they earning the same salary? Low salaries are not immutable constants of nature, however much employers would like to suggest they are. Like

Jon Green, CEO of Pinewood Manor Nursing and Rehabilitation in rural Hawkinsville, Georgia, said the “vaccines are necessary for control of the virus,” but “if we would have mandated it ourselves, it would have caused [many workers] to leave.’’

Panic goods

I was listening to a talk by Ian Diamond of the Office for National Statistics, about the statistical response to Covid. He showed the results of a survey that was organised spontaneously a year ago by ONS, of the price changes of various “panic goods”. There were 22 product categories on the list, including

antibacterial surface wipes
baby food
toilet rolls
vitamin C
tomato puree
nappies
paracetamol
pet food

The choice makes perfect sense. And I found myself imagining showing this list to myself 2 years ago, and being challenged to guess what the theme of the list is…

Less than zero, part 2

In a long-ago post I wrote about how huge debts don’t make you poor, and illustrated this with the story of real-estate mogul Donald Trump. Negative large fortunes are closer to positive large fortunes than either is to zero. (I later had to correct my interpretation later, on discovering that the counterintuitive behaviour of Trump’s creditors was largely a reflection of their involvement in money laundering.)

Now we learn from the N Y Times that Trump has been paying $750 in federal income tax each year as president. Presumably that’s just an arbitrary number that he made up so that he could say it wasn’t zero. (Apparently even Trump has some limits to his his explicit lying.)

But here’s the thing: $750 is probably worse than $0. People have been assuming he wasn’t paying taxes. It sounds like a general insult. $750 is too specific (as well as being too small). The number becomes a shorthand for his tax-dodging, as well as inviting people to compare their own tax bills to Trump’s.

This demonstrates again how absurdly miserly Donald Trump, above and beyond his criminality. He had to choose an amount to pay purely for the symbolism of possibly needing to tell average Americans how much he had paid. He could certainly have afforded not to choose an amount large enough that even Americans of modest means would find risible. At least four figures…

Covid-19 and climate change

I’m wondering whether the pandemic disaster might in some way mitigate our climate-change disaster. I don’t mean in the trivial short-term sense that the collapse of travel and general economic activity reduces CO2 output. I mean that the experience of the pandemic undermines the intellectual foundations of climate-change denialism. Again, not in a trivial, debating-point sort of way, but a visceral “I refute it thus“.

Climate-change denial rests, it seems to me, on two intellectual — or perhaps it might be better to call them “mental” — pillars. I refer here not to the occasionally valid but always irrelevant sand-in-the-eyes technical quibbles that are used to convey the impression of scientific disagreement. I mean the actual intellectual motivations for the position that drives the search for these quibbles, to the extent that the motivation is not simply pelf or partisanship. These are

The world is too big for humans to change meaningfully. Often they say it is “arrogant” to imagine that insignificant humans could do something as grand as to change the Earth’s climate.
Action against climate change is woolly feel-good sort of stuff. Maybe it would be a good thing in principle, but hard-head thinkers care about people’s jobs and the here-and-now.

In a sense these are opposites: The first says human activity is trivial compared to the whole planet. The second says human activity is autonomous, and far more significant than the whole planet.

The experience of the pandemic is likely, it seems to me, to make people much less receptive to these arguments. Seeing how small the planet is, that a virus originating in one market in Wuhan can infiltrate the whole world within a few months is liable to leave people feeling that the Earth is quite a fragile thing.

And then, the economic cost of this pandemic is likely to be far higher than even the upper end of estimates of the cost of achieving carbon neutrality. Faced with the pandemic, we are thrown back on the material reality of the economy: Not jobs but work, not production but material goods such as food and shelter. We pay the cost because the alternative is clearly more expensive, in lives and social disruption. And this time, people have been willing, mostly, to pay the cost in advance, believing that the disaster would be vastly greater if we waited. The timeline for the climate-change apocalypse is much longer, but it is not implausible to suppose that the same frame of mind might then allow people to see that global catastrophe is a real thing, and worth making some effort to avert.

(Of course, the opposite might be true. People might say, the apocalypse-averting cupboard is now bare. Come back to us in a decade.)

Extra precision: Currency edition

I have commented before on the phenomenon where changing units turns an obviously approximate number into a weirdly precise one. Here is a new example, from the Guardian’s disturbing report on the mass slaughter of donkeys for the use of their hides in traditional Chinese medicine:

Since the booming skin trade has driven up donkey prices, owners struggle to replace their animals when they are stolen. The cost of a donkey in Kenya increased from £78 to £156 between 2016-19.

£78 seems like an oddly precise figure for what is surely a very diverse market in animals of varying qualities. Even weirder is that that precise figure precisely doubled in the period under consideration. Then it occurred to me, at current exchange rates £78 is about what you get when you convert the round number of US$100. So I’m going to hazard a guess that the reporter was told that the price had risen from around $100 to around $200, and simply converted it to pounds for the UK market without further comment.

Early comments by Johnson on the impact of no-deal Brexit

Fully consistent with what the PM is saying now:

There came two other gentlemen, one of whom uttered the common-place complaints, that by the increase of taxes, labour would be dear, other nations would undersell us, and our commerce would be ruined.

JOHNSON (smiling). ‘Never fear, Sir. Our commerce is in a very good state; and suppose we had no commerce at all, we could live very well on the produce of our own country.’

This was Samuel Johnson, in the 1770s, who also wrote that

The interruption of trade, though it may distress part of the community, leaves the rest power to communicate relief; the decay of one manufacture may be compensated by the advancement of another…

Johnson, of course, also famously said that “patriotism is the last refuge of the scoundrel.” Which may somehow be relevant.

Pareto’s revenge

Several months ago I suggested that no one could ultimately support soft Brexit, because the soft Brexit strategy — something like EFTA, formally outside of the EU, but still in a customs union and/or the single market, still recognising most rights of EU citizens in the UK — is, to use a bit of economics game-theory jargon, Pareto dominated by staying in the EU. Even if the damage wrought by a no-deal Brexit would be vastly better worse by a negotiated surrender, if you look at it category by category — rights of UK citizens, disruption to markets, business flight, reputation, civil peace, diplomatic influence, sovereignty over market regulations — staying in the EU would be even better. There’s nothing you can point to and say, this is what we got for our trouble (which is why Theresa May was at such pains to bash immigrants when announcing her deal). We’ll always have Parisians.

Apparently, some other leading Brexiters are noticing their Pareto trap. Earlier in the week Dominic Raab resigned in protest that the deal (that he was responsible for negotiating himself!) was worse than staying in the EU. Today it’s Shanker Singham, leading trade adviser to the Leave campaign, who says “From a trade policy perspective this is a worse situation than being in the EU.” (Much of the Guardian article explains how this leading intellectual light of the Leave campaign has a mostly fake CV.)

The effect will be zero. The Brexit dead-enders only need to keep Parliament in turmoil and run out the clock, until their glorious Thelma & Louise consummation. I’m sure Jacob Rees-Mogg has shorted the pound, and the FTSE, so he’ll be fine. Would that count as insider trading?

Anti-publishing

George Monbiot has launched an exceptionally dyspeptic broadside in the Guardian against academic publishing, and in support of the heroic/misguided data scraper Alexandra Elbakyan, who downloaded millions of papers, and made them available on a pirate server.

I agree with the headline “Scientific publishing is a rip-off. We fund the research – it should be free”, but disagree with most of the reasoning. Or, maybe it would be better said, from my perspective as an academic his complaints seem to me not the most significant.

Monbiot’s perspective is that of a cancer patient who found himself blocked from reading the newest research on his condition. I think, though, he has underestimated the extent to which funding bodies in the UK and US, and now in the EU as well, have placed countervailing pressure for publicly funded research to be made available in various versions of “open access”, generally within six months of journal publication. In many fields — though not the biomedical research of most interest to Monbiot — it has long been the case that journal publication is an afterthought, with research papers published first as “preprints” on freely accessible archive sites. Continue reading “Anti-publishing”

Boris Johnson has an attack of the sads

Haunted Boris Johnson

Now that Theresa May has forced her cabinet to acknowledge a tiny portion of the reality of Brexit, Boris Johnson has apparently taken to moping around Whitehall to make certain that no one will think that he’s happy to now be conspiring with reality to betray his cause.

The best line is this:

Those close to the foreign secretary say that he feels he has been “bounced” into agreeing to a deal that is a world away from the hard Brexit he campaigned for. “He thinks that what’s on the table is so flawed we might even be better off staying in,” one said.

Continue reading “Boris Johnson has an attack of the sads”