Suchergebnisse

These ideas are always fun and they also near always run into the usual bureaucratic quicksands:Donald Trump has said he will hire Elon Musk to save the US money by cutting government costs if he wins the November election.Obviously, we wish them luck if circumstances make the experiment possible and all that. But the lesson of what Musk has done at Twitter needs to be kept in mind. An 80% fall in staff headcount with an - at worst - mild decline in performance seems acceptable. But simply to think of firing 80% of the government isn't quite the point. For the thing that Twitter did was identify what didn't need to be done any more. Like, armies reading every tweet to see if they should be allowed.Now, yes, it's possible to say that people shouldn't say hurty things online. Our view being that if free speech doesn't include being able to say hurty things then speech isn't free enough. JS Mill was right about fists and noses that is. The shift was that if hurty things may be said then the army of hurty checkers was no longer needed. The same is true of government. It isn't just that the entire edifice is grotesquely overstaffed with people doing nothing - which, obviously, it is. It's that government is doing many things which, even under the most favourable analysis, only very marginally need to be done. Not doing those things might - maybe - at that margin very slightly degrade the lived experience. But not having to pay for them to be done will so improve life through fructification in the pockets that overall life will improve. That is, it's not that we merely want more efficient government. It's that we need less government. The trick to reforming government is not, as so many businessmen drafted into it so often mistakenly think, to do it better. It's to do it less.Tim Worstall

Even, what could be described as an attempt to mislead people:Ed Miliband has been urged to cut household energy bills by £200 with a cap on "pylon levy" charges imposed by electricity distribution companies.The Energy Secretary is being encouraged to launch a review of the profits made by power distribution networks, which manage the cables that connect homes to the grid. In contrast to heavily regulated suppliers, their operating profit margins can be as high as 42pc.Dale Vince, the Labour donor and founder of energy business Ecotricity, suggested that trimming the companies' profits to a lower level could cut £6bn from standing charges – saving customers an average £200.The trick in there is that word "operating". As we've noted before - spitting with rage as we did so - this has been tried on the margins of children's homes operators. The trick is to look at the gross margin before all the capital costs of the infrastructure necessary. The higher the capital costs of the activity - like, say, having a home to put children in - then the higher that gross margin that can be shrieked about. Exactly the same trick is being used here. For the regional electricity distribution companies absolutely none of the costs of having a regional electricity distribution network are included when calculating that 42pc. But, you know, having the wires and the pylons and there substations and all that is a pretty important part of being a 'leccie distributor.Once we do account for all that properly: He argued that because the industry was highly capital-intensive, a better measure would be return on capital – which averaged around 5pc.Imagine that - no, go on, just imagine - the government ran these. Borrowed at those famously low rates that government can borrow at. Base rate is 5.25% at present, so the cost of the borrowing would be about, -ish, 5%. That's now much net margin government would have to make to pay the capital costs of having the network. That is, a good guess would be that these companies are making their cost of capital, there are no economic profits, economic rents here at all. But that claim of up to 42% - that's simple casuistry, no? That insistence upon measuring profits by operating profits, by the closely akin EBITDA, rather than actually including the capital costs of the existence of the business at all.Why are they trying to so mislead, gaslight, us all? Tim Worstall

From The Guardian:Sewage pollution of Scotland's rivers and beaches is far more widespread than realised because ministers have failed to take the problem seriously, an environment watchdog has found.Environmental Standards Scotland (ESS) said there were thousands of sewage overflow incidents last year, and that nearly half of the country's storm overflows released sewage more than 50 times.Of those, a third released sewage at least 100 times, and four sites more than 500 times. Few of these incidents were publicly disclosed; most failed to be justified as exceptional."It is clear that some sites spill much more frequently than should be expected"," the agency said, with human health and the environment put at risk. Unlike in England, where nearly all outflows are monitored, only 8% of Scotland's are checked.As is well known it is only possible to manage what is measured. The English water companies do measure those sewage overflows. They've a lower level of such overflows than Scotland - according to the incomplete information currently available - and also a better record of reducing them in recent decades. Therefore, obviously, the correct solution is to privatise Scottish water. Glad we could help here. Tim Worstall

The results of the latest renewables subsidy auction are out and the Secretary of State for this sort of stuff, Ed Miliband, says it's a wondrous example of how he and his newly installed in government confreres have been able to change things. Well, yes, sort of. The change in strike prices was actually announced in November last year. But that's probably allowable politics - claiming that all good things that happen are your good things is par for the occupation. There is something that worries rather more.






















































































































That's all in 2012 prices. Because that's how those prices always are reported. All of those prices are also uprated by CPI from 2012 to whichever year the money is actually handed over. The BoE's inflation calculator seems to think that inflation this dozen years has been about 40%. Therefore all those prices are, in fact, in actual money paid, upped by 40%.That is also before a number of variations possible. Page 5 here.Costs not included in DECC's standard levelised costs: CfD top-up payments will be paid on the basis of generation after taking account of the generator's share of transmission losses, known as the Transmission Loss Multiplier so the strike prices need to be increased to account for this.  PPAs: The revenue received by the generator is a combination of the wholesale price and the CfD top-up, which is the difference between the strike price and the reference price. If the generator cannot achieve the reference price because it sells its power through a PPA at a discount to the market price, the strike price must be increased to compensate for this. PPA discounts reflect route to market costs including the costs of trading and imbalance costs. Contract length: The levelised cost is defined over the operating life of a project. If the CfD contract length is shorter than the operating life and wholesale prices and capacity market revenue post-contract are lower than the levelised cost then, all other things being equal, the strike price must be increased above the levelised cost to compensate for this.We're not wholly sure about that last but we think it says that if a wind farm falls apart before its scheduled end of life then we've got to pay them more for the electricity they've produced? We agree that could be wrong, clarification encouraged.But the thing that confuses us. The Sec of State, Mr Miliband, keeps telling us that renewables are much cheaper than fossil derived electricity. It would, obviously, be great if this were true for that would mean we've solved climate change. At those 2012 prices it's also, just about, possible to make that claim - sure, there are a couple of experimental technologies but the big volumes there etc. Except that the actual prices to be paid are that 2012 price plus 40% inflation plus those other costs and any future inflation to boot. Which is - at least as far as we understand it - significantly above the current gas derived electricity price. Which is the bit we don't understand. Why are prices so deliberately reported in this manner? Why are all the announcements of prices 33% below** the actual price being paid and so not comparable with current market prices? We're sure there must be a reason for this other than trying to gaslight*** us all. We just can't think of any that is other than that attempt to gaslight****.Answers on a postcard to the Rt Hon***** Ed Miliband, 3-8 Whitehall Place, London, SW1A 2EG.*Aha, aha, aha**Yes, that's how percentages work, roughly*** Aha, aha****Aha*****Possibly

As we've pointed out a number of times before homelessness - in the sense of rough sleeping - is not, in fact, a problem of not enough housing. Which is something made clear here: As the light fades in Christchurch Gardens, a man, hooded with a soiled blanket hanging across his shoulders, rummages through a bin. Another is having a violent argument with an invisible enemy under a streetlamp. A drunk retches loudly into a flowerbed. Welcome to Westminster, the gilded backdrop for a crisis that mixes mental health, drug and alcohol abuse, migration and homelessness into a horror show for tourists.Yes, obviously, these people are homeless. But it's not all caused by the lack of homes.Between April and June this year, there were 752 rough sleepers in Westminster, up 39pc compared to a year earlier, according to the Combined Homelessness and Information Network (Chain).And? Between April and June, there were 624 people in Greater London who were classed as living on the streets, according to the Chain. Nearly one in four of them, a total of 143, were in Westminster.There are a number who pass through such rough sleeping, there are those who remain in it. Those passing through obviously have had a problem but there is also some system that aids them in coming out the other side. Which is good, obviously.A quarter of rough sleepers in Westminster have problems with alcohol and 29pc have drug problems. More than half (51pc) have mental health issues while 29pc have previously been in prison and 13pc have been in the care system.Note that we've more than 100% there. There are those with more than one problem. But the problem of those rough sleepers is those problems, not housing itself. From other reports we know that at least some of them have already been placed in sheltered accommodation and then left it again. It's the inability to cope that is the problem, not housing itself.OK, so what might we do about it? It is a problem that Labour is desperate to fix, with a promise to boost social housebuilding,That's the wrong answer, isn't it? "I haven't seen the Government actually making the commitment to social rent that is really needed," says Lord Best, chairman of the Affordable Housing Commission. Not addressing the cause of the problem in the slightest. Housebuilders have warned Labour's target of 1.5m homes over five years will be impossible to achieve and the housing associations who build the vast bulk of social rent homes have warned they do not have the money to ramp up development.Without a cash injection, local authorities will be unable to fulfil their existing homelessness duties, adds Jasmine Basran, head of policy and campaigns at Crisis. We had rough sleepers before we had a shortage of housing, we'll have rough sleepers after we don't have a shortage of housing. For housing itself isn't the problem being suffered. What the actual and correct solution is is another matter - perhaps devolving mental health and addiction care to the community of the fresh night air wasn't the right decision - but as ever we can only solve a problem if we divine and define it correctly in the first place. That hard core of hundreds of rough sleepers is not caused by a lack of housing. Therefore more housing won't cure it.Tim Worstall

So, Monkeypox has broken out again and this time around the solution is not just to ask the promiscuous to be less so for a bit. OK. There is a vaccine, why isn't it available to these who need it? African nations hit by mpox still waiting for vaccines – despite promises by the westLast week's planned rollout of doses faces further delays as campaigners complain of greed and inequalityAh, yes, we know that one, don't we? We must overturn capitalism in order to make the world a better place. "The continuously unfolding injustice of mpox owes to long indifference and inequity, stigma, slowness, anaemic use of public power and yes, greed," said Peter Maybarduk, access-to-medicines director at US-based campaign group Public Citizen, which signed the letter.Quite so, quite so.But we actually have a system to deal with this problem. Sure, maybe capitalism does need to be overthrown but what is going wrong with the system we've already got to ameliorate this particular and specific problem?Unfortunately, a new Mpox variant is now spreading in the Democratic Republic of the Congo and nearby countries. Here's the crazy part: despite declaring Mpox a public health emergency on August 14, the WHO has not approved any Mpox vaccines. You might think, "Who cares what the WHO authorizes?" After all, the FDA, EMA, and the UK have all granted emergency approval. But here's the catch: the WHO's approval is crucial for GAVI, the vaccine alliance that donates vaccines to developing countries. Without WHO approval, GAVI is reluctant to provide vaccines to the Congo. To add insult to injury, the Congo itself has approved the Jynneos and LC16 vaccines. Yet, the WHO refuses to authorize and GAVI to donate these vaccines, citing vague concerns about safety and efficacy.Oh. The problem is in the international bureaucracy we've put in place to ameliorate the problems caused by capitalism. So, obviously, the solution is to abolish capitalism and have more of life determined by international bureaucracies. Right?No, come on, it's obvious. Can't be any other solution at all. Clearly the world is made better by giving more power to the incompetent, how can anyone think otherwise? Tim Worstall

Yea, even in economics that reference to the actual universe has its merits. Which brings us to the latest idea from Danny Blanchflower and Richard Murphy. Calling themselves the Mile End Economists they are to:We are not. We believe that what is being done by Rachel Reeves since she became Chancellor in July is deeply dangerous for the people of this country.It looks as if she is heading to deliver Austerity 2.0, the first version having been delivered 2010. That will be her prescription when she goes to the dispatch box in October to deliver her first budget. And we think she's making a fundamental mistake.There is this little difficulty. A difficultette perhaps. As one wag has put it about current politics:It's bleakly entertaining watching people who've spent the last 15 years complaining about austerity now in government and having to face up to the fact that there actually wasn't any.Or as one of us put it elsewhere:Yet the current meaning that has real value among the electorate is that the Tories, the b*stards, just stopped spending government money. Those are the 'cuts' they are expecting a new government to simply reverse and let the milk and honey flow again.Yet the Conservative Party didn't, in fact, spend the last 14 years reducing government spending: quite the opposite. Large parts of the Labour electorate have however convinced themselves – egged on by a large part of the press – that government spending has fallen and that it will be easy to reverse. But they have been taken in. There is no switch on spending waiting to be flipped. Or as we've said here:It's also possible to wonder about something else. If government spending has risen by 6% of GDP - which is a lot, even a lorra lots - then what is this story about austerity? Seriously, what austerity? The Mile End Economists are to campaign against an austerity that never happened. Ho Hum. Still we suppose it beats their usual shouting at clouds.Don't forget, it's actually a Labour Party advertisement currently claiming that the Tories overspent. What austerity? Tim Worstall

The current plans about building housing fail because the arguments are about entirely the wrong thing: Strict affordable housing rules proposed by Angela Rayner will make construction projects unaffordable and derail her goal of building 1.5m homes by 2029, an executive at the UK's biggest housebuilder has said.The planned target, for 50pc of properties on green belt developments to be affordable, is "baffling" and risks ruining the Housing Secretary's broader ambitions, according to Philip Barnes, land and planning director at Barratt Developments.Don't forget, affordable here doesn't mean cheap - something achieved by just building more - it means below market price. The wider industry backed Mr Barnes' views on Linkedin. Patrick Murray, executive director of policy and public affairs at Northern Housing Consortium, wrote: "The reality is subsidised housing needs subsidy and it can't all come from landowners."Well, yes. But what's happening here is that the planners are looking at the effect of the grant of planning permission. This - massively - increases the value of that land that now may be built upon. So, the demand that landowners subsidise that affordable housing. Plus the associated Section 106 demands that they build schools, GP surgeries and all the rest to go along with the new housing. There's a chunk of profit there at the stroke of the bureaucrat's pen so, well why not?, a chunk of that profit should pay for local goods.They why not is that there shouldn't be planning uplift. There is no good reason at all that that stroke of the pen should increase the value of the land. Why would we limit building permissions? The only effect of that is to make the houses finally built more expensive after all. The aim of a rational planning system is to reduce the value of planning uplift to nothing. At which point, of course, we don't require specially labelled "affordable" housing for all housing will then be cheap. Which sounds like a plan really. Just issue so many planning permissions that none of them are of any value. Or, obviously, just abolish the Town and Country Planning Act 1947 and successors - blow up, proper like, kablooie - and be done with the idiocy itself.Tim Worstall

The Guardian complains:'Profit is being prioritised over climate action' – British fashion is falling behind on sustainabilityHow excellent say we. One useful definition of the word "profit" is the value added in whatever it is that is being done. We like value added. All of us do. Value added is what we consume of course - in the GDP definition all consumption equals all production amd production is measured as value added. The existence of profit, in this sense, is exactly what makes us all richer.True, we can also define profit as the amount of that earlier profit meaning that the producer manages to retain. We're only worried about that in the sense of there being enough to incentivise the production of profit in that wider meaning. We want capitalists (or workers' coops, whatever) to retain enough of the value add to make sure they keep adding value, that's all.If sustainability is something that all of us out here desire enough that we'll pay for it then a profit maximising firm will bow obeisance to that sustainability. If we out here give sustainability the same respect we give to the average catwalk fashion - interesting perhaps but no one's actually going to wear that, are they? - then a profit maximising firm won't. Therefore profit maximisation is perfectly aligned with the revealed preferences of the population of consumers. Thus, despite the Guardian's shock at this finding, fashion firms are perfectly aligned with the consumer. We out here apparently don't give the proverbial monkey's about sustainability so nor do they. How perfect is that profit driven world, eh?Tim Worstall

There's a long string of people out there who insist that housing just isn't like any other market. Financialisation, or assets, or everyone needs a home, or summat. Near always the introduction to reasoning which insists that actually, therefore, politics and the State must be the provider of said housing. This is not, in fact, true:Over-optimistic house sellers who end up having to reduce their asking price typically see the property take more than twice as long to sell as those more competitively priced from the outset.The finding comes in analysis from Zoopla, the property website, which said that while all key measures of activity in the housing market are higher than they were at this point last year, it remains a buyers' market.If you try to sell a house at higher than market price then you can't. You have to then lower the price - which takes the time - and then you can indeed sell the house. That is, house buyers are rational - they'll not pay more than market price - and that forces sellers to be so too.We have simple and obvious market effects going on here that is. Which does indeed mean that housing is a market like any other. Supply, demand, prices, we're in that Econ 101 world.Which is fortunate because we know how to deal with an Econ 101 world. It's not exactly a startling proposition that near all of us - other than those currently trying to sell a house - think that the market price of houses is too high. In the Econ 101 world we therefore only need to build more houses, increase the supply of them, and we'll lower house prices. So, as we've been known to say. Blow up the Town and Country Planning Act 1947 and successors, proper blow up - kablooie. Job done. For if we simply allow people to build more houses then more houses will be built - the price is high, right?Tim Worstall

Obviously an amusement at the nominative determinism here:Rachel Reeves is about to hoodwink Britain with a disastrous tax raidHow Thatcher's chancellor could be the unlikely inspiration for Labour's capital gains taxAdam SmithHowever, in all this talk of how capital gains tax is to be reformed the one thing we've not seen mentioned. It's not going to increase tax revenues very much if at all.The Resolution Foundation describes the current CGT regime as a "source of unfairness in our tax system" and Dan Neidle of Tax Policy Associates wrote that "it's inequitable that a type of income received mainly by the wealthy is taxed less than other types of income".These arguments are persuasive on the left of centre and frankly quite compelling to the general public. A number of high profile, new Labour MPs such as Torsten Bell, previously head of the Resolution Foundation, have been making them for years and I assume would continue to do so.So, fairness, equity and all that. Fair enough.To try to counter those groups Rachel Reeves could turn to an unlikely source of inspiration for a Labour Chancellor: Nigel Lawson. When he equalised capital gains with income tax in his 1988 Budget he argued that "taxing them [capital gains and income] at different rates distorts investment decisions".Also fair enough. But it's still not going to increase tax revenues very much if at all. For back when Lawson did it he included an inflation adjustment. Indexation that is - and that has to be a part of the calculation of what the capital gains tax rate should be. Think on it. As the BoE calculator tells us inflation over the past 5 years has been 24% (or, more accurately, that what cost £10 then costs £12.40 now and we're not going to bother with adjusting that to a proper inflation rate because our maths is not up to that, not up to even working out whether that is the correct inflation rate). Or 15 years 54% and 25 years 85%. So, obviously there needs to be indexation because why would we tax people on gains made purely from inflation? When the CGT rate was dropped, as it was, to lower than income tax rates the indexation allowance went as well. And the calculation was that, over all collections and over time, the revenue yield was going to be about the same. A lower rate, but charged upon purely inflationary gains as well as real, would collect about the same amount of tax as a CGT = IT rate with indexation. Well, OK. But that then means that if we change the system back, CGT rates are now to equal IT rates but we bring back indexation then the revenue collected is also going to be about the same. So, sure, maybe the change makes sense in some political meaning of "fair" but it's not going to do much for revenue collection. Shrug.Obviously indexation will come back as well. For the current analysis is that Britain's economy lacks that patient and long term capital necessary for truly useful investment and economic development. So of course no one's going to bring in a capital gains tax where the rate increases the longer you hold the asset now, are they? That would just be ridiculous, insane even. Hold an investment for 25 years, there's an 85% gain that you'll be taxed 45% upon but that gain is purely inflation and so you're paying tax to not even be able to stand still? No, obviously, indexation will come back as well as the equalisation of rates and there will be no more money for anyone to spend. At which point really, why bother? Other than the political optics of course. Hmm? What's that? You think they'll equalise rates but not bring back indexation? Ahahahahaha, gurgle, snort, aha, aha, aha. No, really, there's no one in Britain that damn'd insane. Not even in politics.Tim Worstall

We all know of the grand experiment in the Magic Money Tree of recent years of course.According to the lore the last print run wasn't worth enough to buy the ink for the next print run.But there are other examples. We've always been very taken by De La Rue's problems over printing money for Venezuela: The British banknote printer De La Rue reported an £18.1 million ($22.8 million) "exceptional charge" on its annual results due to unpaid bills from the Central Bank of Venezuela, as its chief executive resigned.The obvious solution, simply sell the banknotes to pay the bill for printing the banknotes couldn't be used. For no one other than the Central Bank of Venezuela was willing to pay for "strong" bolivars and the CB of V wasn't able to.But Modern Monetary Theory insists that those aren't fair cases. A proper government ("proper" here having definite colonialist, even eurocentric, overtones) can't end up producing so much money that it becomes worthless. Why, they can insist you must pay taxes in that currency and that will always support the value. Oh yes? The Royal Mint has left millions of unwanted 1p and 2p coins abandoned in warehouses across Britain as speculation over the future of copper coins grows.Roughly 260m surplus copper coins worth around £4m are piling up after being stored indefinitely in cash centres across the country, industry data shows.This includes roughly 150m – or two thirds – of all the 225m 2p coins in the UK as well as 110m of the 200m 1p coins that have been minted.The amount of surplus cash is now so large that the total volume is the equivalent of more than 2,000 washing machine-sized cages – each weighing a tonne – filled with coins.No one wants them as coins (tho', to be fair, we'd happily take delivery ourselves, shipper pays of course) so they're worthless? Well, melt them down for the copper then!The Royal Mint, the official maker of British coins, has not recycled or melted down surplus coins since it closed its smelting facility more than a decade ago.Tsk, Tory austerity, eh? Except, no, not so. Traditionally we made coppers from a copper, tin, zinc alloy (a "bronze") but copper and tin - especially tin - are far too valuable to be used in mere money these days. They're now steel with a copper coating. That is, they used to be worth melting down and now they're not. So close that furnace then - to say nothing of the required tech being entirely different anyway.But, but, steel has a scrap value, right? And indeed it does. But in steel scrap the thing to look out for is "tramp elements". Things that wander through the system when you don't want them to do so. Copper being the big bugbear in steel recycling. Therefore copper tainted steel doesn't, in fact, have that much value. Possibly even a negative value given the cost of transport.So, yes, even a "proper" money issuer like the UK has managed to make the money of the country - even though you can pay your taxes with it! - valueless. Magic Money Trees have their problems, see? The difference is only the speed at which it happens.Tim Worstall

CN Parkinson that is:Peter Bridgewater has a clear message for the International Whaling Commission (IWC) that he once led. The organisation – which played a critical role in ending whale hunting in the 1980s – has become a zombie institution that should vote to disband itself at its meeting next month."The commission did great work, but that was last century," Bridgewater told the Observer last week. "Today it has – like so many other international conventions or organisations – outlived its useful life and should be quietly disbanded."Some take Parkinson's Law to be that work will expand to fill the time available for its completion. We tend to take another lesson from the book which is that bureaucracy will, inexorably, expand (as in the essay in The Economist, the last useful article published in that source). The job and duty is therefore to be continually, inexorably, pruning that bureaucracy in a countervailing manner.Another of C Nothcote's derived points was that a bureaucracy strives simply to continue to exist - as with any other lifeform. The only way to properly curtail the attempts at continued expansion is to kill, not merely prune. So, yes, kill off an international bureaucracy and the Montreal lot about the ozone hole - now solved - also seem to be being discussed. Excellent.But we think we should go further - as we always do think we should go further of course. The essential job of any management - private, state, anything - is to continually prune, kill off, those bureaucratic barnacles upon the ship of state or enterprise. To continually strive to close down things to avoid them becalming the whole effort. Markets contain their own incentive, those that don't do this go bust. But governance? Some way back we actually suggested a Viscountcy for any Minister who successfully closed down their own department. We should revive that perhaps. Would have to be proper close down of course. Raze the buildings, sell the workforce back to the private sector, plough the ground with salt, the full Carthaginian. But why not? After all, a Viscountcy is pretty cheap to create and there's no right to sitting in the Lords that goes with it - it's an award, not a thing. Possibly we should extend the idea. Manage to close down a smaller bureaucracy and gain a lower level award - GCMGs, CBEs and possibly the MBE for sending only a handful out of comfy offices into the howling gales of the marketplace? After all, we do want an incentive for public sector managers to curb the growth of bureaucracy and we've not got any other one at present, do we? Tim Worstall

Obviously we think this is a bad idea:Labour's biggest union backer is demanding that Rachel Reeves imposes a wealth tax on the richest 1 per cent to give public sector workers a pay rise.Ahead of the Chancellor's first Budget in October, Unite has put forward a motion at the Trades Union Congress to demand the levy to raise billions for public services.The motion from Unite, which gave Labour almost £2 million in the year up to the election, says such a tax would raise £25 billion a year and could be used "to give public sector workers a 10 per cent pay rise".Now several whys we think this is a bad idea are obvious. Wealth taxes are a bad idea because of deadweight costs. Every tax, by its existence, destroys some amount of economic activity. Wealth taxes do this more, per £ revenue raised, than income or consumption taxes. Therefore if more money is required then we make ourselves poorer by raising it through wealth, instead of income or consumption, taxes. Then there is the point that we think government should not have more revenue anyway. Currently they're getting 40% of GDP, 40% of everything, and the plan is that this should rise. We'd very much prefer 30% and number go down. We really do believe in that fructifying in the pockets of the populace idea. But let's be more specific. The current fashionable analysis of the UK economy is that it's locked into a low investment and therefore low wage disequilibrium. We need to increase investment - possibly substantially - to shock it back into the preferred high investment, high growth and thus high wage alternative. At which point the insistence is to liquidate the current capital stock of the country to pay the wages of public sector workers? How does that get past however few synapses are being employed here? Tim Worstall

And, as the saying goes, if you're going to ignore opportunity costs then whatever it is you're doing it's not economics:The festivities are open to everyone, thanks to the community-led, non-commercial efforts of the Carnival Village Trust (CVT), a registered charity, with funding from the Greater London Authority, the Royal Borough of Kensington and Chelsea, and Westminster Council. That funding of the Notting Hill Carnical is a cost. Obviously.Like other cultural events and community initiatives, however, the Carnival has increasingly faced difficulties securing funding. This is part of a broader crisis. The arts and culture sector contributes more than £125 billion to the UK economy and employs more than 2.4 million people, yet it has faced severe funding cuts, and public spending is far below that of Britain's European neighbors.All of that funding is a cost, obviously. At which point we want to know what are the benefits? Sure, a great party, that's a benefit. But among those things being counted:Performing in the bands, building the floats, designing the costumes, cooking the food, and contributing in other ways generates roughly £100 million in economic value.All of those are costs, not benefits. They are the effort that has to be put into having a damn good party. Those efforts could also be directed elsewhere - opportunity costs. It may well be that the party is worth those costs, that the other opportunities produce less value from those inputs. But we really must - because opportunity costs - insist upon counting inputs as costs, not benefits.One million working hours are devoted to designing and hand-making the 15,000 costumes on display and rehearsing the performances of more than 80 bands.One million working hours at minimum wage is what, £12 million? About? That's a cost of the carnival, not a benefit of it. Those million hours - worth that £12 million - could be devoted to weeding the parks, caring for the old, finally building a ferry for Scotland or lauding La Mazza. Any of which might have greater value - opportunity costs - than the grand party. They're a cost, not a benefit.The festival creates a hive of productivity thatLabour spent upon something unpriced, by definition, reduces labour productivity.The Notting Hill Carnival is a perfect example of why we need a new narrative for policymaking and economic development. The arts should be seen as a core governmental responsibility, with the long-term finance it requires viewed as an investment, not a cost.As ever we tend to think that before designing a new economics we should understand the old. Inputs into a process - labour, say - are a cost of that process, not a benefit.Actually, that's not even economics, is it? That's just basic accounting.Tim Worstall