Brexit

Emily Skarbek offers her thoughts in the immediate aftermath of the referendum result:

"The results of the referendum are in and the UK has voted to leave the European Union. The official campaign was littered with awful arguments that play to the public's worst sentiments - and the decision was likely driven by ignorance and the older voting population. As a foreigner in the country and someone who believes passionately in free trade, open immigration, and the principles of a free society - I am nervous.

The markets have slid and there is uncertainty over what this will mean for the future of the UK and Europe. David Cameron has resigned. No one knows just how this is going to play out. The longer horizon will depend on the course that is chartered in policy negotiations and positions adopted by the UK. 

Many of the people I have discussed this with in academic and policy circles want a freer, more open society. This led some to vote remain and others leave, based on divergent predictions about which course of action would lead to a more open society. I take this as one reason for optimism amidst the fear. 

The aftermath of this vote will require a broader coalition of liberals to push for an open trade and immigration policy. Trade policy that is crafted in the next few years will be crucial to the economic impact of Brexit. Britain desperately needs policy entrepreneurs, City of London, and leaders in Parliament to craft a solution that maximises openness to counter the populist, nationalist, and collectivist sentiments that may have got us here. It is hard to see this now, having just voted to leave the EU single market.

As my friend Sam Bowman points out, the biggest reason London is a great city is due to immigration. We want more of that, not less - from Europe and everywhere else. The voices for free trade must be louder than ever."

Good Interview with Dame Judith Hackitt on the IChemE Blog

Published last week, but I'm still catching up with my regular blogs after getting back from holiday on Sunday.

Some excerpts:

"[Interviewer:] Now you’re moving to become Chair of the EEF, what are your plans while [you're] there?  I took a sample size of 12 EEF customers and only one had a female CEO.  Is that on your agenda as Chair?

[JH:] I honestly don’t think that it’s front and centre of my mind.  What matters to me is not about gender equality, it’s about diversity.  And I think there is a real danger in playing on this ‘what we need is more women on boards’ debate.  It’s not.  What we need is boards to recognise how important it is to have diversity of thinking.  That is what will make them more robust, more resilient – and we need that more than ever in the challenging times we live in right now.  If you recognise that need for diversity of thinking, the rest will follow.  Women will become more numerous, along with other men who think and act differently from the stereotype that currently populates those boards."

"[Interviewer:] What else would you like to address in your new role at EEF?

[JH:] If you ask most people what manufacturing in the UK is about right now there is a perception that there used to be a manufacturing industry, and it’s now gone.  That’s so far from the truth it’s unbelievable.

The truth is we have some amazing new and exciting manufacturing industries out there.  The innovation that is going on is incredible.  I’m also on the board for the High Value Manufacturing Catapult and some of the things that come out of that is amazing in terms of new products and innovative processes."

Reblog: The Open Borders Manifesto

I repost here a copy of the open borders manifesto, which I first shared on this blog one year ago today, on Open Borders Day, 16 March 2015.

This seems especially pertinent now that the UK Government are moving to introduce, in April of this year, the spectacularly illiberal measure of imposing a minimum earnings threshold of £35,000 pa* for non-EU citizens wishing to live and work in the UK.**

"Freedom of movement is a basic liberty that governments should respect and protect unless justified by extenuating circumstances. This extends to movement across international boundaries.

International law and many domestic laws already recognise the right of any individual to leave his or her country. This right may only be circumscribed in extreme circumstances, where threats to public safety or order are imminent. We believe international and domestic law should similarly extend such protections to individuals seeking to enter another country. Although there may be times when governments should treat foreign nationals differently from domestic citizens, freedom of movement and residence are fundamental rights that should only be circumscribed when the situation absolutely warrants. 

The border enforcement status quo is both morally unconscionable and economically destructive. Border controls predominantly restrict the movement of people who bear no ill intentions. Most of the people legally barred from moving across international borders today are fleeing persecution or poverty, desire a better job or home, or simply want to see the city lights.

The border status quo bars ordinary people from pursuing the life and opportunity they desire, not because they lack merit or because they pose a danger to others. Billions of people are legally barred from realising their full potential and ambitions purely on the basis of an accident of birth: where they were born. This is both a drain on the economic and innovative potential of human societies across the world, and indefensible in any order that recognises the moral worth and dignity of every human being. 

We seek legal and policy reforms that will reduce and eventually remove these bars to movement for billions of ordinary people around the world. The economic toll of the modern restrictive border regime is vast, the human toll incalculable. To end this, we do not need a philosopher’s utopia or a world government. As citizens and human beings, we only demand accountability from our own governments for the senseless immigration laws that they enact in our name. Border controls should be minimised to only the extent required to protect public health and security. International borders should be open for all to cross, in both directions."

Originally from http://openborders.info/open-borders-manifesto/

Happy Open Borders Day!  Spread the word.


* £35,000 pa is way above (~35%) the median income in the UK, which according to the ONS was £496 pw in December 2015, which equates to £25,802 pa.  The government claims that the £35,000 figure was arrived at because it was the median pay of the UK population in skilled jobs which qualified for Tier 2 ("graduate level") at the time of the Migration Advisory Committee’s consultation in 2011.

** Note there are exceptions to this rule.  The new restriction only applies to a certain group of immigrants, specifically those working in what the government defines as "graduate level" jobs.  There are other exceptions in specific circumstances also.

See also here: https://petition.parliament.uk/petitions/118060

Thoughts on the Scottish Independence Debate

Warning: This post is very long and somewhat wonky.

I realise that I'm quite a bit behind here, but I only had the time to watch the debate last weekend and then had to find the time to write all this down during the last week.


General thoughts:
I found Alex Salmond to be relatively weak, particularly on the issue of a formal currency union with the rest of the UK.  He was evasive of questions that obviously made him uncomfortable.  He quoted Darling out of context and several times referred to obscure documents rather than answer questions directly.  I find the case for independence to be lacking, particularly of any really good, practical reasons for why we should want to be independent.

Alistair Darling's performance was perhaps slightly stronger, although he missed a few tricks.  His best moments were when he quipped to Alex Salmond that "I didn't vote for you." and with his observation that a formal currency union between Scotland and the rest of the UK would require agreement on both sides.  I think Darling was needlessly evasive when questioned by Salmond on whether he thought that Scotland could be a successful independent country, probably out of fear of how it would look of how he might be later quoted out of context (judging by this debate, most likely by Salmond himself).


Opening Statements:

Alex Salmond opened by citing figures of 49 out of 71 Commonwealth countries and 12 out of the 28 EU countries are the same size or smaller than Scotland [pop. 5.3 million]; presumably by way of example that there are plenty of successful small countries and that therefore Scotland could be as well.  The 49 out of 71 Commonwealth countries figure is disingenuous, since not all 71 of these 'countries' are independent states - for example England, Scotland, Wales, Northern Ireland, Gibraltar, the Falkland Islands, St. Helena. and the Cayman Islands to name but a few which are not.  There are 53 independent states in the Commonwealth, 31 of which are smaller than Scotland, one - Singapore [pop: 5.4 million] is about the same size and another one - Sierra Leone [pop: 5.8 million] is not much bigger.  I'm absolutely baffled as to why Salmond would present these figures like this, since the reality doesn't weaken the point he was making anyway.  The 12 out of 28 EU countries figure is perfectly reasonable; there are 9 EU countries smaller than Scotland and 3 of roughly the same size: Slovakia, Finland and Denmark.

He mentions the large number of food banks in Glasgow and rhetorically asks how there can be people reliant on them in this prosperous country [Scotland].  The implication presumably that it is due to failings on the part of the UK government in Westminster.

He then alludes to the Trident nuclear weapons at Faslane and states that £100,000 million (i.e. £100 billion) is planned to be spent on them "over the next generation", of which £8 billion is "Scotland's money" (by which he means is the equivalent paid in tax by the people of Scotland in order to cover this expense).  This is a drop in the ocean compared to other government expenditure, something I've already covered in another post here.

He mentions that for more than half of his life Scotland has been governed by parties that "we" didn't elect at Westminster and that these parties have given us the "Poll Tax" and the "Bedroom Tax" (which of course is not a tax).

Salmond ends his opening statement by stating that: "No-one, absolutely no-one will do a better job of running Scotland than the people who live and work in Scotland." this is a very reasonable point taken in isolation, but it strikes me as somewhat ideologically inconsistent to support Scottish independence on this basis whilst simultaneously expressing a desire for an independent Scotland to remain within the EU.  He's essentially taken polar opposite positions regarding the UK and the EU.

Alistair Darling's opening statement contained exactly what you would have expected it to, he stated that he was proud of Scotland and wants it to prosper, but doesn't believe independence is the best thing to do and cited the strength of the UK.  He advocated a "best of both Worlds" approach.


Economic Prosperity & Social Justice:
The debate began with the themes of economic prosperity and social justice, which were bizarrely lumped together.  Economic prosperity is self-explanatory enough, but the definition of "social justice" is more difficult to nail down and I suspect many people understand it to encompass various different things.  The reason I find it odd that these two things are lumped together is that certain things which some people would consider part of the definition of "social justice" I view as being at odds with economic prosperity.

Darling claimed that as part of the UK, Scotland enjoys unimpeded access to a much bigger market.  This would be a good point were it not for the existence of the EU, which provides the same benefit across all 28 member states.  He also observed that Scotland enjoys additional security as part of a bigger country.

Alex Salmond stated he had a "vision for Scotland" which includes a prosperous country/economy and a 'just' society; at no point did he define what he meant by 'just'.  He referenced over 30,000 children in Scotland in poverty due to social security changes (he wasn't specific on what social security changes specifically).  He also mentioned the "bedroom tax" (a misnomer since IT IS NOT A TAX!) affecting 80,000 families in Scotland.  He didn't offer any discussion on how these issues would be any better/worse in an independent Scotland.

Salmond went on to cite a "risk assessment" by a "major accountancy company" completed "last week" which ranked Scottish independence as the 6th risk behind the UK leaving the Euro amongst other things.*  The whole point was rather incoherent - how do you compare such a diverse wide array of potential risks that may or may not affect a nation and rank them.  Even if you can do so, the 6th biggest risk is really high up the list of all possible risks (which is an infinitely long list).

Asked about the risk that the Union will keep pensioners poor Alistair Darling noted that being part of a bigger, stronger economy spreads the risk.

On Salmond's point that an independent Scotland would always get the government "it" voted for Darling quipped that he didn't vote for Alex Salmond.  As I mentioned here this was more than just a joke, it highlights an important fundamental truth about democracy.

Right at the end of the first part of the debate a gentleman in the audience asked Alex Salmond how ending peoples reliance on food banks is to be achieved in an independent Scotland, whether it is by encouraging people who are able to make a contribution or whether by raising taxes and paying out more in benefits.  Unfortunately ITV cut back to their "spin room" immediately after this excellent question was asked and they never returned to it for the rest of the debate, so Salmond got away without having to detail any specifics of his proposed means to this end.


Cross-Examinations:
Darling pointed out that a formal currency union between Scotland and the rest of the UK would require agreement on both sides.  Darling was very persistent in trying to get an answer out of Salmond on what is his plan B if an independent Scotland is unable to negotiate a formal currency union with the rest of the UK?  I found Salmond's response to be very weak, he repeatedly avoided the question stating only that a currency union was in Scotland's best interests and that he would therefore push for that.  When pressed on the issue he refused to give any clarity on any alternative arrangements.  A casual observer could easily take this as an admission of not having a plan B.

Salmond referenced the Fiscal Commission Working Group Report, which you can read in full online here.  Salmond referred to page 4 of the report, but that's just part of a Foreword, the actual bit we're interested in here is Chapter 7 (pp. 121) and the "Technical Annex - Assessment of Key Currency Options"

In a nutshell, the report sets out 5 potential options for currency in an independent Scotland:

1. Formal monetary union with the UK
2. Informal monetary union with the UK (sterlingisation)
3. Join Euro
4. Set-up new Scottish currency (floating exchange rate)
5. Set-up new Scottish currency (fixed exchange rate)

Salmond quoted Darling speaking on Newsnight Scotland describing a currency union between an independent Scotland and the rest of the UK as "logical" and "desirable" for both countries.  This is selective quoting by Salmond who has cherry-picked these words specifically to make it look like Darling has either backtracked (Gasp! Someone changing their mind? - How awful!) or is being disingenuous now.  In fact, if you watch the clip you'll see Darling has been remarkably consistent in his views on a potential currency union - he states that it makes sense within the context of political union (and points out that this is what we have now!).  Watch the clip here and get the full context of his comments for yourselves.

Salmond then quoted David Cameron saying that Scotland could be a successful independent country and pressed Alistair Darling on whether he agreed with this statement.   I think Darling was needlessly evasive of this question.  I think Salmond was probably correct when he stated that Darling probably does agree with the statement, but just doesn't want to say so for fear of how it will look (or possibly for fear of how it will later be quoted out of context by Salmond).  I think this was a waste of an opportunity for Darling, he could have said something along the lines of:

"Yes, I do, but I think that Scotland can be even more successful as part of the UK."

Or, he could have asked Salmond to clarify exactly what he meant by "successful"?  There are all sorts of different criteria by which we could reasonably measure success.


Audience Questions:
Alistair Darling pointed out that public spending per head in Scotland is higher than in the rest of the UK - something that he supports.  I disagree that this is necessarily something to be supported in and of itself.**  That being said, I think Darling's answer touched on two important points: firstly, that Scotland is financially better off as part of the UK; secondly, and more importantly, even if Scotland would be financially better off if it were independent from the rest of the UK, using this as a justification for independence is on shaky moral grounds.  An analogy: the 10% of richest people in the country could be financially better off were they independent from the other 90% as they then wouldn't have to subsidise or support poorer members of society - does anyone seriously think that's a good justification for the richest 10% to secede from the rest of the UK and declare themselves independent?

It's interesting that there's a general narrative amongst the nationalists that the Scottish people would be better off financially if Scotland were independent from the rest of the UK (since they wouldn't be subsidising others in other parts of the UK on average), but at the same time they pursue statist policies, including taxpayer funded higher education, taxpayer funded medical prescriptions, etc. and that they don't seem to see a contradiction in these positions.  The whole nationalist narrative is full of contradictions and seems to be based around a general xenophobia or misplaced feelings of oppression rather than based on any fundamental principles as such.

Darling references this IFS report and suggests that in the event of Scottish independence, in the early years of independence circa £6 billion of cuts would be required.  I'm assuming Darling has estimated this from the figure of £6.4 billion reported in Table 1 (pp. 19) as the budget deficit of Scotland in tax year 2010-2011 (the most recent year covered in the IFS report) based on a geographical share of North Sea oil & gas revenue (the most realistic, but also the most optimistic case).

Darling described "free" (read: taxpayer funded) higher education as a "theoretical right" in reference to cuts of 130,000 college places.  I don't like this - basically because it is an outright nonsense.  "Free" higher education cannot possibly be a right for anyone because it costs resources to provide.  This is the distinction between negative rights and positive "rights".  If there were a right to receive education without paying for it directly that would put an obligation on someone else to pay for that education - who is that someone else and why should they be paying rather that the person receiving (the vast majority of) the benefit of the education?  This blog post is already far too long to get into a detailed discussion of such concepts, so I'll save any further comment for another day.

Alex Salmond answering questions on the issue of pensions referred to Scotland's declining working age population.  He referred also to 37,000 young people leaving Scotland each year and spoke about retaining these skilled people within Scotland and ensuring they are allowed to stay here.  He gave no details about how he planned to achieve this or how it would be any easier/better within an independent Scotland.

Darling attempted to emphasise the additional economic opportunity that comes with being a part of the UK.


Closing Statements:
Darling's closing statement was a narrative of not introducing any new borders or boundaries to increasing wealth and opportunities and the additional security that comes from being part of a larger country such as the UK.

Salmond's closing statement was a reiteration of the points he made in his opening statement.  He emphasised that Westminster governments have often not reflected the votes of the Scottish population, that Scotland is a wealthy nation with abundant natural resources and that this can be used as a basis for a more 'just' society and that no-one will govern Scotland better than the people who live and work here.


* It would have been helpful if he'd mentioned the name of the company that carried out this "risk assessment" - the cynic in me suspects that no such document exists and it's all rhetoric.
** I'm in favour of public spending being as low as possible - after all, the goal is not to spend as much money as possible, it's to get the best and most cost-effective results possible.  Put another way - we want to get as many public goods/services as possible for the lowest possible cost.  One is also reminded of the law of diminishing returns as well as the fact that one will never spend others money so carefully as they would spend their own.

On the Cost of Trident

During the Scottish Independence Debate between Alex Salmond and Alistair Darling, Mr Salmond alluded to the Trident nuclear weapons at Faslane and stated that £100,000 million (i.e. £100 billion) is planned to be spent on them "over the next generation", of which £8 billion is "Scotland's money" (by which he of course means is the equivalent forcibly extracted in tax from individuals living & working in Scotland in order to pay for this expense).

He's not explicit about exactly what time frame is a generation.  Assuming a generation is say 30 years and taking these figures on face value, that means £3.33 billion per year, of which £270 million per year is coming from Scottish taxpayers.

The UK government budget 2014 estimates total expenditure of £732 billion in 2014-15 (ignore for now that they also estimate revenue to be only £648 billion - if you earned £648 per week would you think it a particularly sensible policy to spend £732 per week?)

Scotland represents approximately 8% of the UK in population terms, so assuming similar patterns of taxation and spending as in the UK as a whole (it's not going to be exactly the same, but it'll be close enough for my back-of-the-envelope estimate), total government spending in an independent Scotland would be circa. £59 billion.

£270 million is less than 0.05% of £59 billion - that's a rounding error!  It's about 50 quid per person per year.

To put this into perspective, the UK government is forecast to spend £222 billion on 'Social protection' this year alone (this includes state pensions, child benefit and jobseekers allowance) - that's billion with a b.  This works out at over £3400 per person.  That's 68 times larger (or two orders of magnitude larger) than spending on nuclear weapons.

Believing that Scotland should get rid of it's nuclear weapons on the basis that you don't agree with them on moral grounds or on other principles is one thing, but to argue for getting rid of them on the basis of cost is a very weak argument indeed when their cost is so much smaller than so many other things the government spends our money on.

The General Election & Electoral Reform

I had been expecting an interesting election and an interesting election is what we got.  For the first time since 1974, the second time since the end of WWII, we have a hung parliament.  We still don't know for certain who will be the next Prime Minister [EDIT: We do now, David Cameron has been confirmed as PM, with Nick Clegg Deputy PM in a Con-LD coalition government], all we know at this stage is that Gordon Brown is stepping down from the post this year.

Anthony Wells, over on UK Polling Report, has a thorough breakdown of general election statistics, both here and here.

The most unusual statistic perhaps being that whilst the rest of the UK saw large swings from Labour to the Conservatives, Scotland showed a small swing from the Conservatives to Labour, precisely the opposite direction from the rest of the country.  Despite this though, not a single Scottish seat changed hands, the results were so close as to make no difference to those of the previous election in 2005.  I had expected the Tories to do less well here than in the rest of the UK, but I had expected at least a few of the more marginal seats to change hands, if not to the Tories then to the Liberal Democrats.

Given the current situation we're in, I think now is an appropriate time to share my thoughts on electoral reform.

I was about to start writing about how our current voting system is unfairly biased towards the two largest political parties and cite the fact that the Lib-Dems have less than 9% of the seats in the Commons, despite receiving 23% of the popular vote*, when I came across this piece from Tim Harford, who explains that 8% of the seats is not the same thing as 8% of the influence in the Commons and in the current situation the Lib-Dems have as much voting influence as Labour.

Tim is right, the maths does back him up - commentators are wrong to suggest that the outcome of this election was a bad one for the Liberal Democrats.  However, this is but one election and the Lib-Dems are but one party of many.  The fact that they hold more power than seats in this circumstance is surely not the point though?  (Tim acknowledges this fact in an update where he also points out that many people have missed the point he is making.)

Peter Henley has written here about the difference which would be made to the outcome of this election were it conducted under the Alternative Vote (AV) or Single Transferable Vote (STV) systems, as opposed to our current First Past The Post (FPTP) system.  However, these numbers will involve some pretty big assumptions, so can't be taken as a reliable prediction.  I do agree with the general conclusion made by Peter though, that there would be less of a difference from the existing system with AV than with STV.  This should be pretty obvious, since as a voting system AV resembles a mixture of both FPTP and STV.

First Past The Post (FPTP)

The problem with FPTP is that a party can gain a lot of public support and win a lot of votes, but due either to geography or gerrymandering can win relatively few, if any, seats.  The FPTP system favours Labour, whose voters tend to be concentrated in urban areas, at the expense of smaller parties and parties with less geographically concentrated supporters.

I have only heard two arguments put forward in favour of the FPTP system, one of which isn't even a proper argument:

1. "We do it this way because we've always done it this way."
2. FPTP gives you a representative local MP, something which you don't get with proportional representation.  (i.e. Parliament taken as a whole may be unrepresentative of what the nation wants, but at least each individual MP is representative of what their own constituents want.)

As I've mentioned the first of these is not even an argument, just because something is tradition or has always been done a particular way is not a good reason to continue, or to not seek to improve it in some way.  The second point has more substance to it, but even then there are systems of proportional representation which can go most of the way to addressing this issue.

Alternative Vote (AV)

This is the system promised by Labour in their latest manifesto and the system the Tories have discussed implementing to gain the support of the Lib-Dems in Westminster.

In an Alternative Vote system, also known as Instant Runoff Voting (IRV) instead of putting an 'x' in the box next to your preferred candidate you simply rank the candidates by preference (put a '1' in the box next to your favourite candidate, '2' next to your second favourite, etc.)  This is simple for the voter and the system for counting votes has the advantage of being simple too.

The advantage of AV over FPTP, and the point which is generally used to argue in it's favour, is that it minimises "wasted" votes.

The way it works is very simple:

• In each constituency an absolute majority (i.e. more than 50% of the votes) is required to win the seat.
• If no candidate has an absolute majority the candidate with the least votes is eliminated and their votes are re-allocated based on their next preference.

This process continues until one candidate has an absolute majority and is declared the winner of that seat.

Under AV it seems likely that more people would vote for who they actually wanted to win (i.e. less likely to vote tactically), since they can specify a second, third, fourth choice, etc.

Also, more people would be happy with the outcome of the vote in their own constituency, with every MP having gained an absolute majority of votes.

The disadvantage is that it still doesn't necessarily lead to a more proportional share of the seats in Westminster compared to the proportion of votes won for any particular party.  A party could secure a huge number of votes, but come a close second in the vast majority of seats, winning hardly any for themselves.

Single Transferable Vote (STV)

This is the system currently favoured by the Lib-Dems.

With STV the voter votes in exactly the same way as with AV (ranking candidates by preference).  The difference comes in the way constituencies are arranged and the way in which votes are counted.  AV is actually a special case of STV, where only one candidate is elected per constituency.

Rather than having small(ish) constituencies like we do now, with STV the country would be split into much larger constituencies or regions (maybe 5 or 10 times** bigger than our current constituencies).  Say, we combine 10 existing constituencies into one super-constituency, assuming the number of MPs stays the same we then need to elect 10 MPs from this one region.

The system for electing these MPs is the same as that used in the AV system, only instead of requiring an absolute majority each candidate requires the number of votes specified by the Droop quota in order to win a seat.

It works in a similar way to AV:

• In each constituency, any candidate who has reached or exceeded the quota is declared elected.
• If a candidate has more votes than the quota, their surplus votes are transferred to other candidates, proportional to the next preferences listed on that candidate's ballot papers.  Votes that would have gone to the winner instead go to the next preference listed on their ballot.
• If no one new meets the quota, the candidate with the fewest votes is eliminated and that candidate's votes are transferred.

This process repeats until either a winner is found for every seat or there are as many seats as remaining candidates.

Similarly to AV, people are more likely to vote for who they actually want to win and more people are likely to be happy (or at least not dismally disappointed) with the result.  The advantage over AV is, providing the constituencies or voting regions are large enough, the composition of MPs in Westminster will be proportional to the total number of votes received by each party nationally.

In case it is not apparent from my discussion of the voting systems above I am in agreement with the Lib-Dems and in favour of switching to the STV system.  If you disagree with me I'd be keen to hear from you in the comments.

* The Lib-Dems actually gained in terms of total number of votes and share of the vote, but lost seats.

** Maybe more, I use these numbers just as an example.