Monday, 30 May 2016

This could be the London or the Home Counties


The obsession of London's politicians with their 'green belt' really is a crying shame. But, as this quote from Joel Kotkin tells us, it's not a problem unique to the Home Counties:

To meet the needs of its increasingly diverse population, and particularly the next generation, California needs to reform its regulations to more fully reflect the needs and preferences of its citizens. Once the home of the peculiarly optimistic “California Dream”, our state is in danger of becoming a place good for the wealthy and well-established but offering little to the vast majority of its citizens who wish to live affordably and comfortably in this most blessed of states.

When you have to pay half a million pounds to buy an ex-council flat in Stockwell there is something wrong. Seriously wrong. And anyone who tells you the planning system - the means by which we decide which chunks of land can have houses built upon them - is not the main reason is simply deluded.


Why we can't buy Ghanaian chocolate bars


I was quite struck by this article about a woman making artisan chocolate in Ghana:

Ruth had come over to meet potential trade buyers and told me her story. Chocolate was for her currently a cottage industry, using her garage as a factory and employing her mother to grind beans obtained from a nearby farm. To my mind, it was a chocolate equivalent to a micro-brewery, converting local crops for local consumption. Surprisingly, she is the first independent business to make artisan chocolate in Ghana.

It's a reminder - as the writer makes clear - that Africa is a very different place from the myth presented by NGOs like Oxfam or Save the Children with their images of starving children, subsistence agriculture and wicked foreign investors. Instead, we've a glimpse of an increasingly urban society filled with enterprising people like Ruth. It also tells us that the traditional source of funding - the bank loan - can be difficult for traders like Ruth to secure.

But before we get to tied up in feeling sorry for Ruth and her mum, let's remember she has the resources to travel to London to pitch to trade buyers at an exhibition promoting hundreds of Ghanaian businesses to buyers in the UK. The writer suggests - because he's from a cuddly social enterprise background - the sort of crowd-funding approach to financing Ruth's business that Hotel Chocolat and Brewdog has used. Make an offer - whether it's a cash return or free chocolate doesn't really matter - to potential small investors.

And it struck me that, regardless of the way in which investors are rewarded for their investment, this is a very good way of financing a business - the business-owner transfers the risk to the investor. And it's true that crowdfunding can be an effective means for many initiatives - Bradford's Drunken Film Festival for example - but wouldn't a better route for nascent small businesses like Ruth's being the issue and sale of share capital? Either through 'Dragon's Den' style angel investors or other routes to equity markets.

The other problem for a Ghanaian chocolate business is, of course, the way in which the developed world protects its chocolate business:

Cocoa producing countries limit themselves to mainly exporting beans -rather than manufactured cocoa, or chocolate products- mostly because of tariff escalation. The EU has a bound rate of 0 percent for cocoa beans, but a 7.7 percent, and 15 percent ad valorem duty on cocoa powder and chocolate crumb containing cocoa butter respectively;
Similarly, Japan applies a bound rate of 0 percent for un-processed cocoa beans, but charges a 10 percent tax for cocoa paste wholly or partly defatted, and a 29.8 percent duty on cocoa powder containing added sugar;
The US has no ad valorem on cocoa beans, but imposes a duty of 0.52 cents/Kg for cocoa powder -with no added sugar- and tariffs could go up to 52.8 cents/Kg for imported chocolate products containing cocoa butter.

Maybe that's for another day but it's a reminder that, for all our heart-on-sleeve keening about Africa, we consistently make it more difficult for businesses from places like Ghana to do business - other than on our strict and expensive terms - here in the developed world. To start with Ruth will get some protection if she focuses on small consignments but the tariffs will kick in the minute she's exporting for resale rather than individual consumption.

The best thing - other than investing - the the developed world can do is stop placing barriers between producers and manufacturers in places like Africa and the markets they needs to succeed in Europe, North America and Japan.


Wednesday, 25 May 2016

Local protectionism is no way to raise economic growth in poor places - a critique of inclusive growth


The RSA, that trendiest of slightly left wing think tanks, has launched a thing called the 'Inclusive Growth Commission':

Chaired by former BBC economics editor Stephanie Flanders and building on the success of the RSA’s City Growth Commission, the Commission will seek to devise new models for place-based growth, which enable the widest range of people to participate fully in, and benefit from, the growth of their local area.

The core of the Commission's argument is:

Public services and welfare remain fragmented; economic and social policies often seem to pull in opposite directions. Although growth is happening and unemployment falling, large sections of the population are not benefiting. Big wealth gaps and large numbers of economically inactive people have negative impacts on local economies, life chances and social cohesion. Costs to the state remain high, growth is low and prosperity the privilege of a few.

It seems an entirely noble idea to look more closely at how, to borrow a phrase, the proceeds of growth can be shared. The focus - entirely right for a geographer like me - is place-based, stressing the uniqueness of a particular town or city and seeking development solutions that resonate with that locality. The problem is that the RSA, like many other such organisations, has taken as its text the idea that inequality is the cause of poverty in places like Manchester, Liverpool and Bradford.

The worry I have with this place-based model, especially when coming from a centrist, 'government is good' ideology, is that we fall easily into the ideas about resilience, the local multiplier and social models of business. Here's Neil McInroy from the Centre for Local Economic Studies (CLES):

Overall, the plans to build a more inclusive growth model faces a choice. On the one hand the commission can add a stronger social face to an economy which works for the few, not the many. In this, they will reveal some of the problems of growth and this will prompt some policy changes. However, will the commission’s recommendations alter the longstanding frame to local economic activity – where productivity and growth has a pre-eminent position and is viewed as having much higher importance than that of inequality and poverty?

McInroy sets out a 'critique' based on his organisation's position - alongside the New Economics Foundation, Transition Towns and the New Weather Institute - as advocates of what I call local protectionism. For McInroy there is a dominant regional growth model - agglomeration - that needs to be challenged if we are to get an inclusive economy. Essentially in the critique the place-based model means that growth has to be spread across a region rather than being focused on city centres and 'growth hubs'. McInroy will point to the success of Manchester city centre and then to the fact that, despite this success, the metropolitan area of Manchester still contains many of England's poorest places.

It also has losers – city region peripheries, smaller towns and the low skilled. We must look at areas beyond city centres to outer boroughs. We must focus much more on local supply chains and ensure investment to local small businesses is on an equal footing to global corporates and global investors.

In here we have the problem - that reference to 'local supply chains' will be familiar to anyone reading the output of CLES, NEF and NWI. It refers to the view that local supply chains keep more money within the community than supply chains based on the national economy. The idea of the local or regional multiplier is central to this assertion - NEF make a good living from plugging their LM3 model to all and sundry (despite it having no real theoretical basis or any robust empirical support). The problem is that the local multiplier is something of a myth - the impact of excluding national supply chains is, in effect, the same as any act of protectionism. So any gain from having the money circulate within the community for longer is lost in that community having to pay higher prices.

The second element here is the persistence of the view that welfare payments somehow contribute to a local economy. It's true that the very poor places in Manchester and Liverpool receive large amounts of the money we redistribute (giving the lie to those who say there is no dispersal, no 'trickle down') but it is also true that, however valid that welfare payment might be, it still carries an opportunity cost. If the money wasn't raised in taxes it would have been used in another way - perhaps on consumption, maybe invested.

No-one disputes the objective - we'd like more of those people dependent on benefits not to be dependent on benefits. I'm guessing that's what the RSA mean by inclusive growth. The issue is how we go about this - do we run the risk of a slower rate of growth by insisting that large sums are redistributed in some way. If we reject the idea of agglomeration as a driver of growth, then we have to put something in its place. The problem is that the alternatives on offer from the likes of McInroy will act only to futher damage local economies by raising prices and decoupling them from the more successful national economy.

In the end local economies thrive because government does not direct them - the vanity of the RSA position and the stupidity of the CLES outlook is that there is some magical role for local or regional government in delivering both economic growth and a less unequal society. For me the reduction of actual poverty is more important than endlessly fretting over measures of inequality (or 'relative poverty' as folk like to call it) and this is brought about by government not obstructing the drivers of growth. It implies lower taxes when often poorer places have high taxes. It demands less regulation and intervention when the preference of big city governments is to intervene more. And it requires that we connect poor places to the rich places making it possible for people to travel - economically and physically - from the former to the latter.


Tuesday, 24 May 2016

Ted Cantle and Chuka Umunna are wrong - Britain is not getting more segregated

For many people in Bradford the 7th July 2001 is a date that brings back dreadful memories. Forget about the declining textile industry, the struggles of our city centre and our poor education system for a second - the one event that most damaged our city's image and reputation happened on that day. A small section of the City's population, in one relatively small part of the city rioted, looted, wrecked the livelihoods of local businesses and turned Bradford into a byword for segregation and racial tension.

And it was a small part of the city - from Westgate and White Abbey Road up to Carlisle Road, along Oak Lane and a part of Manningham Lane. I could walk you round the sites of that violent day, show you where the pubs and car showrooms were burned out, point to the shop that before that day was one of Bradford's oldest Polish delis and show you the spot where burning cars scarred the surface of the roads. That walk would take - with stops to reflect on this damage - perhaps an hour. Yet ask someone from elsewhere about our city and, chances are, that something referring back to that day will come up - perhaps a reference to our large Asian community, to crime, or drugs, racism or segregation. Even today, as the recent anti-semitism row shows, we allow the vocal presence of a large minority community - Asian Muslims - to dominate the discourse about Bradford.

There were two major reports commissioned into the riots, their causes and their consequences - one from Sir Herman Ouseley (Community Pride, not Prejudice) and one from Ted Cantle (which had a wider remit by looking at events on the same day in Oldham and Burnley). Cantle coined the term 'parallel lives' to describe communities in these places and, since Bradford was the biggest and most high profile of these riot-torn places, his characterisation of our city as a place divided became the basis for how elsewhere viewed Bradford.

From Cantle's work came the idea of 'community cohesion', a sort of catch-all phrase to cover working to reduce 'tensions' alongside the old concept of 'community development' and ideas around race, faith and integration. The premise of 'cohesion' is that it is an antonym of 'segregation' - cohesive communities are where different cultures not just share a place but live together in a place. Some people chose to see this agenda as a rejection of multiculturalism, arguing that integration is essential to cohesion whereas others took Cantle's argument as a case for embedding that multicultural agenda further into schools, workplaces and the wider 'community'.

When Bradford Council's Executive first sat down to consider the response to the riots - in a terrible irony on the afternoon of 11th September 2001 - we knew that our decisions would be subject to central government scrutiny and intervention, not least because we were then a Conservative-led authority under a Labour government. The Council's leadership (or which I was then a member) was not happy with either the Ouseley report - commissioned before the riots - or Cantle's 'parallel lives' report. We felt, and still feel, that the description of Bradford was limited, failed to acknowledge the wider city and ignored reasons for riot that were not about segregation at all but more to do with drugs, crime and racist policing.

This is a long context for a response to Ted Cantle's comments yesterday in The Guardian that suggest somehow segregation today is worse than it was back in 2001:

Speaking to the Guardian 15 years after he called for action to reduce polarisation following violent riots across northern England, in Oldham, Bradford, Leeds and Burnley, Cantle said he was alarmed by the direction the country had headed since then.

“There is more mixing in some parts of our society. But there is also undoubtedly more segregation in residential areas, more segregation in schools and more segregation in workplaces,” he said. “That is driving more prejudice, intolerance, mistrust in communities.”

Superficially the evidence for Cantle's argument is strong and is set out in the article - a growing number of electoral wards with a non-white majority, schools with a majority minority intake and 'segregated' workplaces. I fear that this tells us only part of the story, problematises race and provides justification for the race or culture based special pleading that is such a driver of division. There is another, more positive story. Here from the Centre for the Dynamics of Ethnicity (CoDE) at Manchester University:

Inner London has experienced a decrease in segregation for most ethnic groups, with an increase of 3% or less for the White British, Caribbean and African groups. The White British group saw their greatest increase in segregation in inner London, although this was very small at 3%. Outer London’s decreasing segregation is particularly notable for the Bangladeshi (-12%), Chinese (-11%) and Mixed (-8%) groups. Segregation has decreased in metropolitan districts for all ethnic groups except White British. The White British and Other White groups saw marginal increases in segregation in other large cities. For all other ethnic groups, segregation decreased in these urban districts, in particular for the African group, with a decrease of 20%. The picture is one of decreased residential segregation in urban areas. An important mechanism for this change is dispersal from major cities to suburban and rural areas, in particular by families.

What we have here is a very different picture from that presented by Cantle and others - rather than seeing the colour of people living in a place as a mark of division, we see the same process of dispersal from immigrant communities we saw for previous generations of immigrants. People from Indian, Bengali and Pakistani heritage, as more of them succeed in life, molve away from the dense urban places of their arrival (or, for many, birth) in the same way that the children of poor East End Jews moved outwards to Golders Green, Hendon and Mill Hill. These Jewish families did not lose their faith or culture but their otherness was diminished by the things they shared with their new neighbours. There is no reason to suppose that the same dispersal for Hindu or Muslim, Asian and Black communities will not result in greater rather than less cohesion.

The reason for those statistics and for the frightening agenda apparent from Chuka Umunna is that the past couple of decades have seen the most concentrated influx of immigrants to the UK in our history. Whatever we think about this fact - The Guardian reports 1.2 million into London alone (although these are defined as not "white-British" so could be white European I guess) - if we define the lack of cohesion by simply counting how many black people there are in a given place then we fall into company with racists. Moreover, we define people by the box they tick on an ethnic monitoring form (a pox on these things) rather than on what they actually think, do or say.

The South Asian population of Bingley Rural - the ward I represent - was 482 in 2011 (it has likely risen a little since then - so maybe 600) and was 164 in 2001. In a small way this illustrates this dispersal. This is around 3% of the population, yet we elected a resident of Pakistani heritage as a councillor this May. If I were to be blunt, I doubt this would have been possible in 2001. Of course there is racism, I met people who said they wouldn't vote for Naveed because of his race and faith but overwhelmingly people seemed to see beyond that fact to the person underneath.

The Guardian article - indeed much of what I read in the press about the affect or impact of immigration - fails to touch on the truth about integration. Just as people don't judge me as a Roman Catholic or my wife as Jewish (although we've some problems with this), we are beginning to stop judging people by their skin colour. We've a way to go with Islam - we still make assumptions about a woman in a headscarf, for example - but even there the extent of our experience and witness of what most Muslims are like is beginning to change how we view that faith.

The way in which Ted Cantle frames his argument - focusing on numbers and concentration rather than actual evidence of segregation - doesn't reflect the reality of immigration, integration and dispersal. There's nothing new about recent arrivals clustering together - this takes advantage of family links, community and faith institutions, and provides the necessary social capital to support the new community in a foreign environment. But every example of a new community has seen that concentration diminish as they become established. This isn't to say that there won't be continuing concentrations - Indians in Harrow, Jews in Alwoodley, Pakistanis in Heaton - but these places are no longer inward-looking ghettos but just places where a lot of the residents happen to be Jews, Hindus or Muslims.


Sunday, 22 May 2016

Socialism. A terrible and popular stone age creed.


It is a continuing shock to me that every time socialism is shown to be destructive a new generation of socialists emerge like the worst sort of zombie apocalypse. It seems we're programmed to like this ideology - it's our stone age sensibility that makes us support a creed that serves mostly to take us back to that stone age:

According to Professors John Tooby and Leda Cosmides of the University of California, Santa Barbara, human minds evolved in the so-called “Environment of Evolutionary Adaptedness” between 1.6 million and 10,000 years ago. “The key to understanding how the modern mind works,” Cosmides writes, “is to realize that its circuits were not designed to solve the day-to-day problems of a modern [humans] – they were designed to solve the day-to-day problems of our hunter-gatherer ancestors.”

With the result that:

...humans are, by nature, envious, resentful and unable to comprehend, let alone appreciate, a sophisticated economic system that has evolved in spite of, not because of, our best efforts.

We're wired to think the economy is a zero-sum game, a thing of 'them' and 'us' and we resent hierarchy as well as being envious of those who have more, are stronger or seem more powerful. This is the core emotional content of socialism and explains why so many reject - despite the evidence of its success - the idea that self-interest drives innovation, invention and growth in a world unlimited in the scope of its creativity.

Socialism is a terrible ideology founded in envy and too often resulting in the very opposite of what its adherents profess to want. Yet so long as our brains respond with envy, resentment and incomprehension there will be socialists. Part of me feels we should be training these negative reactions out of people - but that would be brainwashing so probably not the best of ideas!


Friday, 20 May 2016

There is no such thing as neoliberalism. It's just the left's favourite straw bogeyman.


There is no such thing as neoliberalism. At least not as an ideology that determines the policies of governments across the globe. Trust me on this - there really isn't a thing called neoliberalism. Except in the febrile minds of people who think sociology is a science, go on marches against capitalism and join organisations with names like 'Cuba Solidarity'.

I know you don't believe me - after all there's all this guffle on Wikipedia to turn to:

Neoliberalism (or sometimes neo-liberalism)[1] is a term which has been used since the 1950s,[2] but became more prevalent in its current meaning in the 1970s and 80s by scholars in a wide variety of social sciences[3] and critics[4] primarily in reference to the resurgence of 19th century ideas associated with laissez-faire economic liberalism.[5] Its advocates support extensive economic liberalization policies such as privatization, fiscal austerity, deregulation, free trade, and reductions in government spending in order to enhance the role of the private sector in the economy.[6][7][8][9][10][11][12] Neoliberalism is famously associated with the economic policies introduced by Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States.[7] The implementation of neoliberal policies and the acceptance of neoliberal economic theories in the 1970s are seen by some academics as the root of financialization, with the financial crisis of 2007–08 one of the ultimate results.[13][14][15][16][17]

That's a reference dense chunk of the on-line encyclopedia. But trust me folks, there simply isn't an ideology out there called 'neoliberalism' - it's just a tag applied by people, typically but not exclusively socialists, who oppose free markets, free trade and globalisation. The whole and enormous body of academic 'knowledge' around neoliberalism is, in essence, a colossal straw man constructed from the prejudices of left-wing academics with its framework filled in by the echo chamber of socialist punditry. It is the bogeyman that left-wing mums and dads use to scare their children. It is the scary monster that keeps young socialists from straying. It is a myth.

You still don't believe me? Let's look a little further. If I search on-line a little I can find a bewildering array of socialist organisations - socialist doctors, socialist lawyers, socialist economists (an oxymoron if ever one existed), socialist christians, socialist scientists. People place themselves in a spectrum of socialism - my geography lecturer at university proudly described himself as a 'radical Marxist geographer (whatever that may actually mean). As an ideology, socialism is very well embedded in our culture. Indeed, in academic humanities and social sciences (HSS), socialism in its various guises is the dominant orthodoxy - being anything other than left wing in these HSS disciplines is almost unheard of.

Apply the same test to neoliberalism - supposedly the dominant ideology of our times - and there is nothing. There aren't any Neoliberal Societies at universities, there is no Neoliberal Lawyers Association, no neoliberal doctors groups, not even any neoliberal economist clubs. As ideologies go neoliberalism is spectacularly unsuccessful - no-one identifies with the belief, there is no body of writing promoting the creed, and there are no organisations basing their political message around neoliberalism. There is no such thing as neoliberalism - it's simply a collation of things left wing people dislike or disagree with, a convenient set of 'attitudes' as one tweeter proclaimed.

Here's an example of how the users of the term neoliberalism are confused:

So the gist of this argument - it's from Alex Andreou - is that climate change deniers and opponents of the European Union are neoliberals. And that the essence of neoliberalism is opposed to taxation, to international co-operation and state intervention. Indeed that neoliberals are ideologically wedded to greed and short-termism. OK I've got that - neoliberalism is about rent-seeking and protectionism.

Or is it? Here's some more neoliberals:

They are single-minded about the irreversible transformation of society, ruthless about the means, and in denial about the fallout. Osborne – smirking, clever, cynical, "the smiler with the knife" – wields the chopper with zeal. Cameron – relaxed, plausible, charming, confident, a silver-spooned patrician, "a smooth man" – fronts the coalition TV show.

Neither of these men are opposed to the EU or deniers of climate change and the need for action. Yet they are neoliberals - they support international co-operation, oppose protectionism and support free trade (more-or-less). Yet despite this they are neoliberals. And the only reason they are described as such is because they are also opposed to the ideas of the regressive left - economic stasis, state direction of the economy, isolationism and an over-powerful government.

There is no such thing as neoliberalism. Not once it's definition is so vague that it can encompass radical libertarians like the Koch brothers as well as populist protectionists like Nigel Farage. If Don Boudreaux, doyen of academic libertarians, is a neoliberal there is no way in which Hillary Clinton can be a neo-liberal. This is the core of the problem - neoliberalism is not a recognisable ideology:

What Boas and Gans-Morse found, based on a content analysis of 148 journal articles published from 1990 to 2004, was that the term is often undefined. It is employed unevenly across ideological divides; it is used to characterise an excessively broad variety of phenomena.

That is academic speak for neoliberalism is an empty slogan.

So next time you read some cheerful left-wing pundit and, about half way through their measured and considered analysis of some or other issue, the word 'neoliberal' crops up - maybe something like: "this is a result of neoliberal economics..." - remember that there is no such thing as neoliberalism, nobody self-identifies as a neoliberal, it is just a convenient way to describe something that the left-wing pundit dislikes. A convenient set of "attitudes" those left wing folk attribute to entrepreneurs, to conservative politicians, to directors of international institutions and to bankers.

There is no such thing as neoliberalism. It is just the left's favourite straw bogeyman.


Wednesday, 18 May 2016

The myth of the obesogenic environment


The full article is gated but the abstract is unequivocal about the findings:

The prevalence of obesity has doubled over the last 25 years. We estimate the effects of multiple socio-environmental factors (e.g., physical demands at work, restaurants, food prices, cigarette smoking, food stamps, and urban sprawl) on obesity using NLSY data. Then we use the Oaxaca–Blinder decomposition technique to approximate the contribution of each socio-environmental factor to the increase during this time. Many socio-environmental factors significantly affect weight, but none are able to explain a large portion of the obesity increase. Decreases in cigarette smoking consistently explains about 2–4 % of the increase in obesity and BMI. Food stamp receipt also consistently affects the measures of weight, but the small decrease in food stamp program participation during the period we examine actually dampened the increases in obesity and BMI. Collectively, the socio-environmental factors we examine never explain more than about 6.5 % of the weight increases.

So can we now shut up about banning advertising, refusing permission for fast-food shops near schools and a host of other irrelevances. The rise in obesity is down to a more sedantry lifestyle and that our energy intake hasn't declined as fast as our metabolic need for that energy.