Random Comments

Summer is all but over in the UK at last, with some very welcome drizzle in London to partially compensate for our horrendous summer.

We’re starting to see some of the bigger news organisations come out with think pieces on what Andy Burnham might do in the October Budget. I’ve not dived into any deeply yet, but I may try and do a 10 things to do if I were Andy Burnham next week.

For now we’ll turn back to our usual interesting ideas and articles. This week we have articles on the UK needing more reservoirs, what the North Sea actually is to the UK, and an interesting take on metapolicy.

https://hannahritchie.substack.com/p/uk-reservoirs?r=22u0c&utm_campaign=post&utm_medium=web

• Hannah Ritchie examines the UK and concludes that:

• The UK does not have a rainfall problem. It has a summer rainfall problem.

• Interestingly, our winters have been getting much wetter, whilst summers have somewhat reduced. The obvious solution is to build more reservoirs, yet the UK has failed to build a proper one since 1992, according to Ritchie.
• A couple of explanations are examined here, including privatisation and the planning system. While she doesn’t explicitly blame either one, it’s clear that we are lacking reservoirs in the UK.

• If all 10 projects went ahead, were delivered on time, and at the proposed capacity (that’s a lot of ifs), what difference would this make?
• I’ve extended our cumulative capacity per person line out to the 2050s, assuming these all get built.3 These would need to all happen, and on time, to basically hold water supplies per person at their current levels. Fail to build, and per capita reservoir supplies will keep going down.

• This is such a massive failure for a developed country of the UK’s size and geography it’s almost beyond belief. How can the UK be on the verge of seeing per capita reservoir supplies fall for nearly five decades. This system doesn’t work at all.
• As Ritchie notes, reservoirs attract a lot of nimbyism given that they’re just holes with water. Communities don’t necessarily benefit from them directly under our current model. I’d look into financial incentives – cheaper water for you if you have a reservoir nearby, and if you sell into other counties, you get to keep that profit.
• Interestingly, what I didn’t realise is that planned reservoirs alone don’t account for the majority of England’s future water deficit.

• Even if these reservoirs (and other supply options, such as small amounts of desalination) get built, they’d only make up around one-third of the deficit. The rest, it proposes, will come from water efficiency and recycling improvements, and reductions in leakage (which is surprisingly large).

• Leakage is the big rallying cry for environmental campaigners, politicians, and consumers. I get it – it’s infuriating to see talk of major disruption needed when you can see old pipes dripping constantly or water disruptions on your streets. But ultimately, we have to adapt. Our world is getting warmer; our summers will continue to be drier. Fixing a leak does no good if you have enough water in the first place. Reinstating a reservoir-building programme is an absolute necessity.
  

https://edconway.substack.com/p/the-north-sea-is-not-just-about-the?r=22u0c&utm_campaign=post&utm_medium=web

• Ed Conway talks about the North Sea here, and as an aside, we should be very grateful for journalists like Conway who continue to talk and write about complex national issues in such an approachable way.
• An interesting problem for nations like the UK – we have built our gas system on the flavour and calorific rating of our North Sea gas. So, if the North Sea is running out (or we are choosing to use less of it), that implies expensive conversion costs for importing gas.

• To put it another way, if the only thing you cared about was carbon emissions, you could make a strong case that the green thing to do is to try to squeeze as much gas out of the North Sea as possible. This will sound counter-intuitive for many people, but it is the logical consequence of the energy transition.

• As Conway notes, domestic gas production means lower shipping costs, LNG in particular being very energy intensive, at the cost of higher UK carbon emissions. This runs into a domestic political problem in the UK:

• However, politicians (and the various climate frameworks they’ve signed up to) fixate instead on domestic carbon emissions. So, yes, by this yardstick, more North Sea drilling would be bad for the UK’s domestic emissions and humiliating for the politicians who promised to reduce it at a particular speed.

• Conway then examines the argument that a lot of the pro-net-zero crowd make, namely that if the UK were to backtrack on these domestic commitments, this would lead to other global players reneging on theirs and thus contributing to significantly higher carbon emissions.
• Firstly, what evidence is there that other major global emitters have been inspired by the UK policy on net zero? Just looking at the global emitters ranking, China dominates at 33%, the USA is second at 12%, and then India and Russia are third and fourth respectively at 8% and 5%. Importantly, this is not to say that we shouldn’t consider carbon emissions at all. But it’s about acknowledging the global environment. We have some of the highest industrial energy prices in the developed world, and we steadfastly refuse to do anything about them.
• Secondly, what is the advantage to the UK in maintaining these targets and not using our domestic resources? We have seen our industrial capability wither, and in return for what?
• This comes into sharp relief when we consider Norway. Conway again:

• Either the UK’s side of the North Sea simply has less oil and gas available, or this comes down to politics and economics, down to the differences in the way Norway runs its side versus Britain. I’m not sure there is yet a definitive answer to this question, but it seems like a reasonable one to ask. Would the UK, with a regime similar to Norway, be able to produce as much oil and gas as Norway?

• Right now we don’t know for certain, because we refuse to allow ourselves to explore. This may have made sense when our energy prices were low, China was not an industrial superpower, and the global order was stable. In this world of resilience and geopolitical upheaval, this now looks foolish in the extreme.
  

https://restate.substack.com/p/why-we-need-metapolicy?r=22u0c&utm_campaign=post&utm_medium=web

• Joe Hill from Re:State examines the need for the state to learn from metascience and apply it to policymaking, i.e. how to use policy to make better policy. A couple of select quotes below:

• Our policymaking class (mostly, but not entirely, in the Civil Service) has been slowly giving up its responsibility as a professional institution, and in many cases the “policy profession” has become a kind of client function for political crisis management, stakeholder liaison and serving the never-ending demand for government ‘comms’.
• Conscientiousness, and avoiding disagreement at all costs, often mean that difficult trade-offs are avoided. A common phrase in Whitehall is ‘finding a form of words’ to get around a tricky issue, rather than discussing it in the kind of detail that may be uncomfortable but would make it easier to arrive at the right solution.

• I’d be interested to see when it really started to go downhill – was it with the rise of 24-hour news, the internet, social media, or something else? And how much of it is also due to over-centralisation and an ever-expanding government scope?
• Hill identifies the three big areas where new policy is made: in a crisis, through “strategies”, and in fiscal events. All of these suffer to varying extents from a lack of time or attention. Policy is dictated by what can pass through parliament in the short term, rather than what would actually be best for the country.
• Hill then examines two areas to think about:

• One key debate for metapolicy thinkers is whether policymaking institutions can be reformed, or whether better practice needs new institutions to be set up instead.
• Another key debate is whether good policy requires a new settlement for the question of who ‘does policymaking’. The UK is unusual in how overwhelmingly reliant the country is on professional policymakers in the Civil Service. More devolution is pushing more policy decisions to regional and local government, but their policymaking operations are still small or in their infancy. Ministers appoint hardly any political advisers (far fewer than any other comparable country), and political parties have very little in the way of an internal policy staff.

• I can’t help but feel that a lot of this comes down to our relative poverty mindset in politics. We continue to insist that our political parties operate as they did in the 1970s, in a much more complex world today. They have little research capacity, and heavily rely on external advisors and the civil service.
• Given how we have hollowed out local government since the Thatcher era, this naturally places even more pressure on our civil service to come up with ideas than before. We have restricted the ability to try new ideas and policies on a regional basis – it can still happen, but it needs the authorisation of the centre to do so.
• Logically, if we are going to centralise (we have), then we should at a minimum empower the centre significantly – as many Special Advisers as they want, and much greater budgets for research and internal policies. Political parties should be able to draw upon much greater resources, and develop deep institutional theories of their own, rather than just relying on other actors.
• Alternatively, if we dislike this prospect, we need to create new independent power centres and allow regional experimentation. Again, I do not think this will lead to widespread success. Some areas will inevitably fail or be worse than now. But the potential upside from successful policies, like we have seen in the USA with technology in California, or energy in Texas, or in Europe with its much stronger city economies, makes it worth pursuing in Britain.
  

Another heatwave, and I am fed up with it. I’d like us to skip the phase of deciding if air-conditioning is a moral outrage and join the rest of the world in adopting it. How we choose to power it is another question; solar definitely seems like a more viable option than it would otherwise (at least during the day).

We’ve seen Burnham talk about areas around vape and betting shops, alongside changes to how companies manage subscriptions, and a consultation on how companies do discount offers. Look, this is arguably good politics – easy enough to understand, voters hate how vape shops are everywhere, and anyone can understand the pain in cancelling a subscription. But is this what a new government should be prioritising right now? In their own words, cancelling subscriptions could save £14 a month, which isn’t groundbreaking. What are the highest costs? Housing, especially rent, and energy are the biggest issues, coupled with stagnant wages.

There’s a need for a new Prime Minister to act quickly in their first year to make their mark and establish an image in voters’ minds. So far, I’m getting a sense of a better political communicator than Starmer (low bar), with a Mayor’s instinctual awareness of retail political issues… but not much more. Perhaps this is simply buying time until he deems an election suitable, but I don’t understand the wait. The perennial worry is that there really are no ideas or opinions on how to get economic growth going.

With that cheery view out of the way, let’s look at the links this week. Firstly, an area where the Prime Minister is definitely passionate about: social care. We examine Europe’s China dependence first, and then the current internal Chinese debates.

https://open.substack.com/pub/charliegdavies/p/the-indignity-industry?r=22u0c&utm_medium=ios

• Charle Davies returns with a post on the need to build a dignified care system in Britain that doesn’t simply rely on cheap imported overseas labour.

• The indignity does not end there. Families frequently discover that alongside the emotional pain comes financial devastation; Britain has developed a care market in which private providers compete for vulnerable people while local authorities struggle to fund even basic provision. Those fortunate enough to have accumulated modest assets throughout their lives are often confronted with a cruel choice: sell the family home to finance care, or watch savings painstakingly built over decades disappear into fees that can reach thousands of pounds every week.

• It is quite astonishing how toxic the current settlement is. The UK effectively says that if you have a primary medical condition, the NHS will treat you. But if the long-term needs aren’t considered a primary health need, this results in no NHS support, and back to you or the council. The council then examine your wealth, with a staggering £23,250 enough to get you off their books.
• No wonder this issue is so brutal. Watching your parents’ or loved ones’ savings be destroyed to fund their poor social care, while you see others have their care completely covered by the NHS or council, is brutal. This is also significantly contributing to local councils going bankrupt, along with SEND provisions. Reforming it should be a matter of national urgency.
• However, the early signs are concerning, at least to me. Suggesting that we go down the route of the NHS, given its well-documented problems with rationing of services, seems a bad idea. The temptation here, as it is in the NHS, is to plug gaps with immigration, regardless of the social or political consequences. There are much better alternatives that we should be looking at (I’ll come back to them).

• If the wages paid within social care are insufficient to allow workers to support their families without wider welfare support, then surely the problem is not the immigration rules but the structure of the care sector itself. Why should the state continue subsidising an employment model that relies upon chronically low wages rather than addressing the reasons those wages remain so poor? Why is the progressive response to defend the existing model instead of transforming it?

• The UK continues to dodge this. We do not want to face the upfront costs for care, and so we turn overseas to solve this problem. It’s notable how this has gone from a disreputable view in the early 2000s into the mainstream, despite the obvious issues of increasing migration.
• The drawback to Davies’ article is the lack of alternatives suggested here, as unfortunately, while we all may nod and say of course care is important, our revealed preference is for this to go away. Luckily for us, other countries have reached more sustainable and fairer models.
• Nations like Germany use insurance to pay for adult social care, with individuals contributing part of their income into care insurance. This stops social care being a lottery, means individuals and families can maintain their dignity, and the burden is shared across society. Hopefully, Burnham can see this and be inspired by it as a much better way to do social care.
  

https://open.substack.com/pub/samolsen/p/europes-china-dependence-is-becoming?r=22u0c&utm_medium=ios

• Sam Olsen writes a response to Brussels Tea House criticism of the European Union’s increasingly hostile approach to China, arguing that the Second China Shock is about to devastate Europe

• In July, the European Commission opened an inquiry into whether Chinese producers were selling Pekin duck in Europe at unfairly low prices.
• The sums involved are modest, but the symbolism is not – this is the first time the EU has targeted Chinese agricultural imports. Restaurant-bound duck has become the latest front in Europe’s widening economic dispute with China.

• As Olsen notes, this is another move by the EU against China, having already targeted vehicles, solar, and other industrial goods. The Chinese view is that this is unfair European protectionism against Chinese competitiveness, which Olsen notes has some validity. European movements towards net zero and higher energy costs, and a lack of start-ups due to stagnant labour markets have contributed to Europe’s poor economy.

• China’s economic model is state-directed, supply-side and scale-driven. It combines industrial policy, public investment funds, preferential access to capital, protected domestic markets and regulatory coordination. Strategic sectors can be supported through periods of weak profitability, while production can continue expanding even when domestic demand is insufficient.
• Europe’s model is different. Companies remain more constrained by expected returns, competition law, higher energy costs and fragmented national policies. Investment must generally be justified commercially, while governments intervene slowly and inconsistently.

• This is key, and why the United States, for all of its unpredictability, has had cross-party support for tougher action on China. Chinese companies, particularly in electric vehicles, batteries, and many other areas, are genuinely incredible in their scale, quality, and competitiveness. But as Olsen notes, this is in the Chinese economic model that deliberately subsidises investment, with low consumption. This model is now overwhelming the rest of the world, with much greater tension on the global trading system than ever before.
• Europe must solve its domestic issues to be globally competitive first and foremost. But it needs to reckon with what China really is and understand China’s economic model and its objectives.

• Europe neither can nor should sever its economic relationship with China. But unless it restores enough industrial and technological capacity to make meaningful choices of its own, it may preserve access to cheap goods while losing the industries, skills and freedom of action required to remain a serious power.

• Nothing further to add.
  

https://substack.com/inbox/post/209547651

• Bill Bishop’s Sinocism has a monthly report from Sinification, giving us hugely valuable and interesting information about how China feels about domestic and international issues.

• European integration once suggested an autonomous pole capable of preventing a US–China bipolar order and a third world war, but Brussels has instead become an institutional vehicle for confrontation with China. Recent consultations pulled both sides back from the brink—China still values the European market and strategic autonomy and Brussels doubts it can withstand Chinese retaliation. However, the two sides cannot resolve the structural conflict rooted in Europe’s declining competitiveness and export controls on the advanced goods China actually wants to buy.

• A great tie-in to the prior link, but one from the actual Chinese side. Unsurprisingly, China considers the EU to have become a geopolitical rival of sorts, but fascinating how China seems to recognise no responsibility for this. Furthermore, Beijing is probably correct in that Brussels cannot or will not be able to accept retaliation from China for now, short of red lines being crossed – so far no evidence to date that Europe has any red lines on China. Finally, note the area where Europe initially has some leverage over China is in turn countered by the United States.

• Britain’s seventh prime minister since the Brexit referendum was open to cooperation with China at the local level, but will face a more complicated position as prime minister. Burnham inherits economic decline, social division and international uncertainty, as well as the risks associated with chronic leadership churn. This means that his priority is likely to be domestic repair rather than diplomatic reinvention.

• I have touched on the UK and China before in this blog. Just to recap, given the CCP’s hostility to the UK, our relatively small exposure to China, and its control over supply chains, we should absolutely be avoiding any further dependencies. It seems that China doesn’t particularly expect much from Burnham vis-à-vis Anglo-China relations. I would not expend energy on this.

• Strong supply and weak demand are not the result of short-term fluctuations, but originate in an unbalanced pattern of growth supported by institutional and structural factors…Only by reducing the savings rate and increasing terminal demand can capacity utilisation be raised. China should reduce its total savings rates, reform its tax system, encourage private enterprises to increase dividends, funnel RMB20 trillion of listed state capital into social-security funds, use 50 per cent of macroeconomic to address the problem, raise pensions to release consumption and use housing support to address the mismatch facing migrant workers

• I love finding pieces like this, in this case from the former Vice-Chair for the Committee for Economic Affairs. It’s easy to imagine under the CCP, and particularly under President Xi, that China has an intellectual monoculture. This piece helps to disprove that. Whether or not it has any influence at the very top of the CCP is another question altogether, but it does give me hope for life after Xi. The world economy needs China to rebalance towards consumption.
• There is a great deal more content in here, including AI, Chinese graduates, and other geopolitical topics such as Latin America. It is well worth a read.

An overdue post this time, and I’ve decided to do the book review on Europe in this edition rather than a separate one. Some may say I didn’t have enough links that I found interesting enough to talk about, but I have nothing to add here.

A bit of a hodgepodge of links this week, with the first on Starmer’s last act, and an interesting read on football influencer Fabrizio Romano. Lastly, my thoughts on “Can Europe Survive?”, by David Marsh.

https://marginalrevolution.com/marginalrevolution/2026/07/the-apples-and-oranges-tribunal.html

• A short but scathing post by Alex Tabarrok from Marginal Revolution on the ridiculous Equality Act’s “equal value” provisions, which essentially mandate that a judge decides the value of labour.
• This is the best explanation about why free markets are necessary:

• Free markets are the only institution that aggregates that knowledge, articulates it in prices and gives people a reason to listen and respond. A price is a signal wrapped up in an incentive.

• Turning back to the UK:

• How is it going? The Tesco litigation began in 2018; the tribunal’s fact-finding hearing ran 36 days, its judgments run to more than 900 pages resting on some 19,000 pages of training manuals, and the independent experts have yet to begin the report that will actually say whether a shelf-stacker’s job equals a warehouse worker’s. Eight years, and the calculation has not started.
• The government now proposes to add race and disability comparisons and an enforcement unit to publish official guidance on which reasons for a wage difference are permissible. A bureau of allowable scarcities.

• This has been mostly slept on in the UK, at least in most of the mainstream press I’ve seen. I’m speculating, but perhaps because it says “equality pay provisions”, people believe this is rectifying differences in pay between men and women for the same job.
• In reality, what is actually happening is a tribunal is deciding what a job is “worth” and deciding it is equal to another one on court-decided criteria. Hence, a warehouse worker and an employee at the till are treated as the same. Up is down, left is right, and so on.
• This is set to get even worse under the Labour government, who are extending the criteria to race and disabilities. The chance of further massive legal liabilities for companies and other entities is increasing, when the economy is already fragile.
• Alternatively, we could stop trying to mandate what is fair through the legal system, and return to economics. Your focus as the “Labour” party presumably is as high a salary for the lower and middle income groups as possible. Return to the basics of supply and demand – make it easier for demand to rise by undoing NIC rises and the Employee Rights Act, and reduce supply by reducing immigration in low-wage sectors. Let the market tell you what jobs are worth when individuals are scarce.
  

https://goldengoal.world/2026/06/10/from-agueroooooo-to-here-we-go/

• Elle Hardy goes into detail about the rise of football influencer and transfer guru Fabrizio Romano, before examining the corruption around the wider game.

• By helping to transform the transfer market into a minute-by-minute drama, he’s ensured that for a certain subsection of fans, the decisive moment in their footballing lives isn’t necessarily when a goal is scored on the pitch. For many, that moment of ecstasy is now delivered with a flurry of thumbs, condensed to his three-word catchphrase when a deal crosses the line: here we go.

• Perhaps some context for those without any ball knowledge here: transfers are addictive to fans. It allows us to dream of world-class players coming to our clubs who can lead us to glory, and for the most part, you don’t have to be bound by realism (until the accounts are revealed).
• Romano is not someone I follow, but it’s impossible to escape his influence, which is incredible given he’s just an individual.
• In the second half, Hardy turns her attention to how football has increasingly been dominated by money, increasingly so under Gianni Infantino, and how Romano fits into this.

• Consider the trajectory of football’s most famous sounds. For a previous generation, not so long ago, the apex was Martin Tyler’s howl as Sergio Agüero’s goal crossed the line in the dying seconds of the 2011–12 Premier League season, seeing Manchester City overhaul bitter rivals Manchester United to win their first league title in forty-four years: “Agueroooooo!” For millions of fans today, the equivalent is “here we go,” posted by Romano upon confirmation of the closing of a transfer deal. Football’s narrative power, for so long directing the dreams of billions, has moved from events on the pitch to the surrounding financial machinery. This is not entirely Romano’s doing, but he has been its most effective chronicler, and its most powerful accelerant.

• I think there is no doubt that football is increasingly dominated by money, and that there are new generations of fans primarily interested in the “financial banter” – who did you sign, who did you sell, who came out on top, etc etc. But I also note I have never seen as good content on clubs, including tactics, history, deep dives into tactics and player analysis. Though much less flashy than Romano, the true core of fandom remains.
  

Can Europe Survive?

• I’ve been meaning to read this for some time but only just got around to it fairly recently. Given its nature – history, geopolitics, economics, and international relations, I felt confident I’d be interested in it. I’m glad to report that it was a good read and should be added to the reading list of anyone interested in understanding how Europe got here.
• Something to immediately flag right now is that given the book scope, there are inevitable shortcomings – it covers a huge amount, and each chapter, from the Europe-US relationship to France-Germany, to the history of the Euro, and so on, could have been books in themselves. But what really elevates it is the number of individuals interviewed for it, across both sides of the Atlantic.
• Given the subject, there’s a huge number of areas to cover. In no particular order:
  
  • The Euro is a huge part of Europe’s history and therefore the books. The obvious problem is that if you form a monetary union, you need a fiscal union as well; otherwise you risk being vulnerable to crisis. As the book explores, from the beginning the Euro was a political instrument – a way to embed the newly unified Germans into the European project, while making Europe a rival to the dollar, and increasing influence. The amount of energy European leaders have had to spend managing this since 2008 has been extreme and has almost certainly distracted them from other equally pressing challenges.
  • It’s hard to say what will happen here. Ultimately, I can’t really see the Euro being allowed to fail, given the amount of prestige and investment in keeping it going. But until it is properly economically rectified, it will continue to hang as a millstone around European countries’ necks.
  • The Europeans (and the Americans) got the post-Cold War order badly wrong. It’s striking just how much attention and time was dedicated to Putin in this book, with Germany in particular looking very poor here. Chancellors such as Schröder and later Merkel appeared to ignore Russian history or believe that economics was enough on its own to prevent war. What I appreciated in Marsh’s story was the immediate post-Cold War history, and the interviews around the NATO expansion into the Baltic states. Arguably, Russia had a point about being misled about this (but then, try not to constantly invade your immediate neighbours and then be surprised that they never want this to happen again). Where Europe went wrong was forgetting that defence is an insurance payment. Even in good times it needs to be paid, and unfortunately we just refused to. Now we are in catch-up mode, in a much more difficult global environment.
  • China is also crucial here, and I found it striking how even now it seems that Europe is unable to reckon with such a geopolitical rival. China’s economic model will strangle European industry, indeed, it is already doing that. But we consistently see attempts by European leaders to praise the Sino-European relationship and to try to position Europe as a third player between America and China. That is deluded. Until Europe reactivates its economy, which is mostly down to domestic reforms, Europe will continue to be dependent on the USA and vulnerable to China.
• Marsh naturally does think Europe can survive, but needs significant reforms to do so, such as those outlined in the Draghi report. In a way, this is pretty old news. Europe has not been renowned for its dynamic job markets, technology sector, and economic growth for some time. The question is, why would it change now? I’m increasingly pessimistic about this. Stagnation is harder to get out of than outright collapse, as problems can be hidden or slowly emerge, as we see in the UK right now. The short-term domestic pressures across Europe tend to act against radical reform; why suffer economic pain and poor polling for an uncertain return?
  

As expected, Andy Burnham is now the Prime Minister and has already started with eye-catching policies that don’t particularly help the UK. VAT cuts for pubs are mostly irrelevant next to the cost of energy and labour due to the NI hike Labour implemented. The £2 bus policy is surprising from a devolution perspective – let regions set the appropriate rate for themselves, particularly given £2 won’t cover the cost, and it appears to be unfunded anyway.

There are some rumblings about trying to sort out adult social care, which would be an important change, but until we get further details I’ll be sceptical that there’s a plan for this.

Anyway, onto today’s links. We have the impact of Blair on Britain’s constitution, the need for deportations in a liberal democracy, and an interesting diversion into Roman concrete.

https://substack.com/inbox/post/207194579

• Dan Lewis (who runs an excellent Substack, in particular on the 1947 Town and Country Planning Act) examines the legacy of Blair’s changes on Britain’s constitution.
• What’s interesting about Blair’s changes is the thinking behind them. In Lewis’s view:

• Inside the Labour Party, the election result prompted a different conversation. If one Prime Minister, elected by 42% of voters, could reshape so much of Britain in less than a decade, perhaps the issue extended beyond Margaret Thatcher herself.

• So, some interesting thinking here. Normally we see parties in power implement policies or expand their powers in ways that would terrify them if the opposition had done it. But given Labour’s history, this dispersed power approach makes some sense, but as we will see later, wasn’t really thought through.
• The first way power was dispersed was to the European Union – notably the Amsterdam Treaty in 1997, which, as Lewis notes, meant that Britain would still be bound by EU actions, even if it had voted against these.

• Between 1997 and 2009, around 6.8% of UK primary legislation and 14.1% of secondary legislation played some role in implementing European obligations. The government’s own estimate placed the EU origin of legislation carrying a significant economic impact at around 50%. Both measures omit much directly applicable European regulation and vary enormously according to what counts as a law. Their combined message remains clear: ministers worked across broad areas where many of the governing rules had already been settled above the national level.

• This ties back into what we’ve explored previously, in particular in Between the Waves by Tom McTague – Britain’s relationship with the EU was misunderstood by Remainers (it doesn’t have that much of an impact) and Brexiteers (it’s not that powerful). It is what it is – a powerful regulatory body, with significant economic gravity, that has significant influence on our legislation.
• The next area is devolution, which I want to emphasise. Scotland, Wales, and Northern Ireland got significant new powers, but without much revenue accountability. As a result:

• Under Blair’s model, Holyrood could announce more generous services and attribute fiscal pressure to Westminster. Westminster could increase the block grant and attribute poor outcomes to Holyrood. Voters now had a blurred answer to the most basic democratic question: who paid for it?
• That design fits devolution’s political origins. Blair regarded it as a means of accommodating Scottish national identity, preserving the Union and completing the Northern Irish peace settlement. The settlement delivered autonomy over services while retaining the Treasury as the financial centre of the state.

• If Burnham or whoever comes after is serious about devolution, this will have to be seriously reconsidered. It makes no sense that regions can drastically diverge from the centre, but receive no benefits from doing so, and, critically, no significant consequences for poor policy decisions.
• So far I have yet to see Burnham reckon with this, particularly with his comments about wanting good growth in all postcodes. This doesn’t accept the inherent nature of devolution – you are accepting unequal outcomes, which reduces fairness overall, in the hope that in aggregate we all benefit through faster regional growth.
• The next area that Blair changed was the rise of quangos, and the reduction in central government power. This consistently comes into conflict with the UK government’s own stated objectives, such as housebuilding being blocked by Natural England. Starmer never grappled with this, despite bemoaning his seeming inability to achieve his goals. Burnham will have to reckon with this too if he is serious about prosperity. Again, these devolved bodies have zero consequences for stopping the government or growth – they are following the law and their own regulations.
• Finally, Lewis examines the legal changes implemented by Blair. The Human Rights Act requires compliance with Convention rights wherever possible, and requires domestic courts to take Strasbourg judgements into account.

• The system reaches beyond legislation. Every public authority – government departments, councils, police forces, prisons, regulators and much of the NHS – must exercise its powers compatibly with Convention rights. A broad statutory discretion can therefore become a narrower operational power once officials account for the HRA and subsequent judgments.

• So, devolved bodies that are already unaccountable have another legal layer on top. Hence the frustration that nothing seems to work well, and yet nothing is reformed.
• Lewis then goes into Blair’s instincts behind this, and examines what he got right and wrong, which is absolutely worth a read. I’ll just emphasise the devolution point here again. Blair and the Labour Party were terrified of another Thatcher transforming the country, and hence put checks and balances into our constitution. But they then didn’t do the logical next step – give local regions and municipalities, etc the powers they once held before Thatcher and even before World War II. And as I keep emphasising, doing this while ensuring the costs were also recognised by the relevant authority too.
• Right now we have a highly centralised country, but the most powerful actors are often quangos, courts, and other actors, rather than the government.
• What gives me hope is that for most of these areas identified by Lewis, the progenitor was Parliament itself. Parliament agreed to limited devolution, the creation of quangos, and much more powerful legal Acts. These can be undone, or significantly reformed to give accountability and power back to the government of the day, or the relevant local authority. It just needs a party with an awareness of what Blair did, with its own theory of power to act again.
  

https://substack.com/inbox/post/207294936

• Alexander Kustov examines the squeamishness that liberals have over deportation and the need for it in a liberal democracy. While this article focuses on the USA, I think it’s increasingly applicable to the UK as well.

• That sentence sounds harsher than it is because immigration debates have trained us to hear “deportation” as either unnecessary cruelty or restrictionist toughness. But the better way to think about deportation is to consider it, just like incarceration or even capital punishment, as one of the legitimate policy instruments our democratic governments have to enforce its laws and to maintain order. If our asylum procedures are meaningful, some claims will fail. And, if court review matters, some appeals will be exhausted. In the end, if we want to ask citizens to trust a generous immigration system, their government must be able to carry out the system’s own decisions.

• This is so incredibly important, in particular the final sentence, that it should be read again. When we look at opinion polls, there are broadly three types. Firstly, absolutely zero immigration whatsoever, and naturally their opposite – any immigration is fine. But critically, there is a middle ground: some immigration is acceptable, but it must be controlled. The failure to control immigration has caused immense damage to faith in democracy in the last two decades in the UK.
• What I appreciate is that Kustov makes a real attempt to examine it from the other angle properly.

• When government agents deport migrants, they commit coercive state violence against people who are, in the vast majority of cases, guilty of nothing beyond wanting a better life…
• It can violate international law when it deports people to persecution, while migration adjudication decisions are made under genuine uncertainty, with trauma, bad translation, missing documents, and uneven access to lawyers, all raising the odds of error. On top of all that, sometimes there is no functioning state to deport anyone to, or no willing state to accept anyone.

• I can’t help but feel that in the British context, and this feels incredibly daft to write this, but deportation is not nice. And therefore for far too many people, it cannot be an option that a liberal democracy can accomplish. Which I think is acceptable, but only if you maintain acceptance through the following:
  
  • Very strict immigration controls, so you only have immigrants that the wider population has accepted
  • For immigrants that do not meet the requirements of the UK, there have to be enough detention/holding centres so that they don’t enter the UK. There also need to be significant deterrents to other illegal immigrants in this context.
• The problem is that those who recoil from deportations also shy away from the above as well. As a result, the pro-immigration group has enraged the other two-thirds of the population. The wider immigration system is completely undermined, and support for even legal immigration is lower than it would otherwise have been.
• If I were a political party in the UK or the Western world, I would be laser-focused on controlling this, to avoid losing popular legitimacy for my government and also for the immigration system. The revealed preference is that this isn’t happening, and therefore voters are turning to the radical (usually rightwing) parties as a consequence.

• enforcement predictable enough that the rules feel real in everyday life for regular citizens and noncitizens alike. The goal of this all should be a deportation system that is credible, bounded, and boring.

• This is the end goal that a liberal democracy has to reach in order to restore legitimacy to this wider system. Until we get here, the UK will continue to see support for Reform and other parties who promise to bring immigration under control.
  

https://www.smithsonianmag.com/smart-news/how-has-roman-concrete-lasted-for-millennia-a-1900-year-old-latrine-offers-new-clues-about-the-materials-impressive-durability-180989115/

• And for something completely different, Sara Hashemi examines how Roman concrete has been so durable.
• Modern concrete usually has a lifespan of about 100 years, according to the article, which I didn’t realise. This makes the Roman legacy even more impressive.
• Something I didn’t expect:

• The sprawling estate is an architectural marvel, but one of its scientific gems are the communal toilets. They offer an unprecedented opportunity to study Roman concrete in its original state, unaltered by modern hands.

• But it makes sense, as they note later, nobody is keen to restore a communal toilet, and so we get a look at the original materials.

• However, a closer look at the concrete’s pores and fractures revealed that calcite, a mineral with calcium, carbon and oxygen, was the primary binding agent.
• When atmospheric carbon dioxide reacts with the calcium compounds in the concrete, it forms the hard mineral calcite, which contains a lot of the compound calcium carbonate. The mineral fills small cracks and pores in the concrete, allowing ancient structures to strengthen and heal over time.

• An amazing find, and I look forward to seeing how this is incorporated into modern concrete going forward.
  

A slightly different post this week, with only two links, a book review, and some thoughts to replace the usual third one.

I’ve also just finished Can Europe Survive by David Marsh, which deserves a post of its own. It’s a great deep dive into the European Union’s political formation, the decisions made, and the key actors across the recent era. Naturally, given its scope, there is a lot that couldn’t make it in and areas of disagreement, but it’s a great read regardless of where you fall on the EU spectrum.

Now, onto the links:

https://taipansam.com/long-march-2029.html

• Lovely to see an actual website, in this case from Taipan Sam, rather than just a Substack.
• Essentially, the British State has lost sight of the fact that fairness is the fundamental underpinning behind the social contract. Areas like immigration being much higher than voters want, the grooming gangs scandal, Henry Nowak’s murder, and the high levels of taxation for a worsening public realm are toxic to the average person.

• This is because, fundamentally, a British understanding of fairness is that it can be bad for everyone as long as it is a fairly distributed level of badness. People will tolerate difficulty if they think the burden is shared. They will tolerate austerity, or pressure, or scarcity, or trade-offs — of course complaining about them too, as is their God-given right — if the thing still feels morally legible.

• It’s an interesting point with austerity – although you could argue that this wasn’t as universal as imagined, given the Triple Lock introduced in 2010. But still, in the context of recent moves by the Labour Party (such as over the Winter Fuel payments allowance), this is quite telling. It does make me more optimistic that we can implement tough reforms, but these must be shared broadly.
• The section on immigration should be drummed into the incoming Burnham administration:

• The public often gets the wording wrong here, mixing asylum, illegal migration, legal migration, small boats, students, dependents and everything else interchangeably. This gives politicians and commentators an easy way out, as they can shrug and say: “Well, you do not understand the categories, see? You have mixed up asylum seekers with illegal immigrants. These are different things!” But directionally, people can see what is happening.

• Fail to deal with this issue of unfairness, and you invite Reform or its equivalent, into power.
  

https://open.substack.com/pub/riancwhitton/p/the-singapore-test?r=22u0c&utm_campaign=post&utm_medium=web

• Rian Chad Whitton argues that reindustrialisation needs specific targets to be a credible aim for any British government, using Singapore as an example.

• If we combined agriculture, manufacturing, extraction and construction, we would have a production economy with a value of £485 billion in 2025, or 19% of total GVA. Alarmingly, this sector reached its high point of £504 billion (£2025 money) in 2006. Having your capacity to manufacture, build, and produce energy and food stagnate for 20 years is probably not fine.

• Even more worrying is that in 2006 we had a broadly stable global order, a strong public balance sheet, and reasonably strong armed forces. Remove all of those strengths, and add a loss of industrial capacity, and the alarm bells should be ringing across the British state.
• Interestingly, according to Whitton, manufacturing makes up 20% of Singapore’s economy (8% for the UK). Obviously there are a lot of issues with comparing the UK to an island city-state, but even compared to the USA, we appear quite low.
• To rectify this Whitton proposes two criteria:

• For Britain, I recommend a 10-year minimum target for the value-added growth in manufacturing of at least 50%
  
  • There should be a target for the share of the economy we want manufacturing and production to represent.

• This is a strong start and would be a serious challenge to Britain’s current political economy. You’d almost certainly have to remove net zero as it stands, which is going to be very difficult for the Labour Party to accept.
• You’d also have to change our taxation and immigration system significantly – much more generous investment tax breaks and subsidies, offset with lower immigration (i.e., companies cannot use immigration as a cheap substitute for investment).
• Do I believe that Burnham will achieve something like this? As it stands, it appears he’ll follow the 2024 manifesto – so no reform to net zero. This could change if he calls an early election, but until then, I suspect he’s unlikely to succeed.
  

The Children of Abraham thoughts

On occasion, a book will influence how I think, or provoke me to respond – for instance, Tom Holland’s Dominion, or more recently Between the Waves by Tom McTague. The Children of Abraham was certainly thought-provoking, and I wanted to share some of those thoughts below.

Marc David Baer has taken on the task of providing a nuanced and balanced history of Muslim and Jewish relations, which seems ever more important globally. Fundamentally, Baer argues that there was never a golden age, but, importantly, there was no barbaric age either. However, the creation of Israel represented a fundamental rupture in relations with no historical parallel.

Baer then splits the book into theological underpinnings and history. The theological section is essential to understand the issue, if a little hard work for someone like me who tends to misunderstand religion. I’ll focus more on the history here.

Initially, Muhammad and the Jewish tribes formed an alliance and a wider community. However, this didn’t last – the tribes were destroyed, and one was sent into exile. Here, I think this is the fundamental tension behind Baer’s book – this is about power relations. When the Muslim community is clearly number one, it can accommodate Jewish members quite successfully, indeed much more so than in most contemporary Christian societies. For instance, Jews in the Ottoman Empire were able to hold exceptional levels of power and trust with the viziers, which they struggled to do in Christian Europe.

However, as soon as the Muslim community perceives a threat to their social standing, this swiftly falls apart – though, as Baer notes, this doesn’t mean universal rejection of the status quo. But the dhimmi system is unsustainable in these circumstances.

The other key issue is the creation of Israel itself and its conquests in 1967. For the first time, there is a Jewish nation in the modern world, meaning that Jews in Muslim nations have an alternative (and Muslim states in turn fear mixed loyalties from their Jewish population), making the status quo unsustainable. Note that Israel also feeds into this by depopulating Muslim and Christian regions as well, leading to more distinct borders. Given this, I don’t see how there is an easy way (or frankly any way) for Muslim and Jewish relations to reset to a more cordial state on their own terms. Which is quite depressing, but is what it is.

Overall, I think it’s a very informative and noble book about a contentious part of history that absolutely needs further study. While I accept Baer’s view that there was never a golden or a barbaric age, I slightly disagree on the role of interreligious power dynamics. This of course has troubling implications for the future relations between the two religions, but perhaps that’s a subject saved for another time.

Further signs that the Labour Party are going to continue this path of raising taxes to fund welfare, without considering second-order effects or indeed the role of private enterprise. I wouldn’t be surprised if there’s an overwhelming demand for an election in 18 months and Labour are still in the doldrums.

Anyway, interesting links and comments below, starting with:

https://open.substack.com/pub/thetwocents/p/europe-chose-insurance-america-chose?r=22u0c&utm_campaign=post-expanded-share&utm_medium=post%20viewer

• Hanno Lustig makes the argument that while Europeans accepted less growth in return for insurance against any of society’s ills, Americans chose the opposite.
• However, while this worked previously – see drugs market development, software development, other tech innovations, where Europeans could free-ride on American spending, this is increasingly untenable

• Start with the raw divergence. Since 2000, on a per capita basis, real disposable income has grown almost twice as much in the US as in the EU. The gap in the level of GDP at constant prices has doubled, from roughly 15 percent to 30 percent — partly demographics.2 The Draghi report attributes the widening gap primarily to a productivity shortfall, not to Americans working more hours or Europeans taking longer vacations.
• the U.S. technology lead is not helping the two continents in the same way, and the gap in wages and profits widens each year. The fiscal half is, if anything, more damning. Europe’s social model is not financed out of consumer surplus; it is financed out of taxable income and taxable profits. Europe consumes ChatGPT; it does not collect the capital gains, the payroll taxes on million-dollar AI engineers, or the agglomeration effects.

• There’s a good argument that Europe as a whole needs to consider itself much closer to a developing nation, rather than purely as a rich one. For instance, imposing AI regulations on a nascent industry (over which you have no control) is not the way forward.
• Instead, it should be about making it much easier for your domestic companies to get somewhere. That means allowing risks again, including allowing a greater amount of venture capital (and accepting there will be losses), flexible labour markets (and accepting that will mean workers dismissed with 2 weeks’ notice) and so on. It also means focusing on areas for growth, such as integrating capital markets and promoting labour market mobility through recognising qualifications, and so on.
• Arguments like this make me much more reticent to back the UK rejoining EU calls, beyond the other objections. Why would we want to cut ourselves from the future industries, in which we are doing fairly well, with good exposure to the leaders in the USA?
  

https://tomforth.co.uk/agglomerationbeyondlondon/

• Tom Forth writes frequently about devolution, and in this piece, he looks at the performance of the UK’s regions post-devolution referendums.

• From the modest overperformance of Wales of just 4 percentage points, to the big overperformance of Northern Ireland, Scotland, and London of between 12 and 15 percentage points, this is evidence that devolution drives growth. It remains weak evidence — there are too many other factors at play, the measurements are inaccurate at small geographies, boundary effects and changing commuting patterns (especially around London) cause distortions, and controls on demographics, sectoral mix, historic trends, and much more have not been carried out.

• As he notes – we don’t have firm evidence that devolution on its own necessarily correlates with growth. But crucially, there isn’t much evidence that devolution would harm growth, which is particularly relevant given the UK’s incredibly poor economic record since 2005.

• I have done many of these controls using synthetic control methods like those used to estimate the cost of Brexit to the UK and my best guess of Scotland’s overperformance with this method halves to just 6 percentage points. But I have also shown that this result is not statistically significant.
• So yes, the evidence that devolution drives growth is weak. But it is not that weak.

• He also notes that London benefits disproportionately from public investment, e.g. the National Data Library, the ARIA, and continued support for Heathrow expansion (despite successive London mayors being opposed and so on) – so why not move said public investment into areas that welcome it?
• For me, this is the strongest case for devolution – it has to be based on a system of winners being able to benefit from the gains they generate and crucially, of accepting that there will be losers here. Some areas will lose through their own choices (e.g., if Forth is right, London, Cambridge and Oxford would increasingly lose as they block development), but this is the quid pro quo argument. This would entail major reforms to our political economy and repealing the 1947 TCPA, among other areas.
• I have no clue how this ties back into a Labour political philosophy that seems to talk about universalism and the concepts of “good growth in every postcode”. There will be losers in this scenario; there has to be, and I don’t think Labour are truly prepared for that. For this to be politically viable, the losers cannot be bailed out by more productive regions, i.e. London and the South.
• Furthermore, given how fiscally constrained we are, how is Burnham prepared to manage this transition? Germany alone spent something like two trillion euros across two decades to get East Germany up to West German levels (and even then with some mixed success). A truly radical idea for devolution would be allowing the regions to rewrite labour, planning, and change taxation rules if they so wished (with no subsidy from London), and see if this led to growth. But again, I cannot for the life of me see this current version of the Labour Party being willing to endorse this kind of devolution, and I suspect this is one reason why it will fail.
  

https://open.substack.com/pub/baiguan/p/is-hukou-still-a-thing-in-china-now?r=22u0c&utm_campaign=post-expanded-share&utm_medium=post%20viewer

• David Fishman explores the reality and myths of the Chinese Hukou system and comes back with some interesting findings.
• A brief recap of the old problems:
  
  • Your healthcare or children’s education was dependent on your registration location – so if you came from a poorer rural area, tough luck.
  • There used to be two types, rural and urban. Rural hukou had the benefit of land usage rights, so if the land were sold to the national government, some form of compensation would be received. Urban had access to urban public services and pensions, which were usually better than those of rural hukou.

• In 2001, the topic of hukou reform also caught the attention of the then-governor of Fujian province completing a doctorate at Tsinghua University, a promising young cadre named Xi Jinping. In his dissertation, titled “A Tentative Study on China’s Rural Marketization”, Xi urged an acceleration to hukou reform

• In 2014 and 2015 China began a new phase of reform, including beginning to relink public services back to the place of residence, rather than the hukou status. By 2024, according to Fishman, 85-90% of migrant workers qualified for a local hukou. What is interesting is that, while this is the case, there still appears to be a 17% gap, which, given China’s size, means a staggering 240 million people living in urban areas without the ‘correct’ hukou.
• The key problem:

• Once you deregister your home village hukou, you’re also at risk for your household to be unenrolled from the village land collective registry, sacrificing your precious (and unique!) land usage rights.

• So, individual incentives are to remain with rural hukous when possible, but significantly benefit from urban healthcare and social services. I’d be very interested to see how China continues its reforms, given its ageing society. At some point, does China do away with the system entirely and transition to full-on insurance for individuals, or something else entirely?

Some early signs for concern from the Burnham team, with reports in the Financial Times that his team don’t see the point of Waymo, and he is apparently set to ban Palantir from the NHS. This, in addition to not taking any questions from the press and his Reddit thread (where he said HS2 was down to local concerns not being taken into account, despite the tens of billions spent on precisely this), doesn’t bode particularly well.

Still, we can only hope there is more to come.

https://gbtt.info/guest-opinions/the-price-of-playing-it-safe/

• Kathryn Porter writes for Great British Think Tank about how the UK and much of the Western World refuse to accept that risk and discomfort are part and parcel of life and necessary .
• While she initially talks about the Online Safety Act and COVID, she also references Hinkley Point C’s fiasco:

• Natural England disputes the caricature, arguing that mitigation requirements were part of the original development consent and that it is not currently delaying the project.
• But even that dispute proves the deeper point. A country serious about energy security and decarbonisation cannot allow nationally significant infrastructure to become trapped for years in technocratic argument over marginal impacts, uncertain modelling and ever-expanding process.

• We refuse to accept that this is a trade-off – we are prioritising minor environmental issues at the real cost of our economy and lives. This has been compounding for decades, and we cannot get out of this without reckoning with the tradeoffs to date.
• Furthermore, she mentions the financial markets, which I’ve touched on in my early post on the UK. We have exacerbated this with the recent changes to the UK job market through much greater protections for workers – again, an attempt to protect workers from real downsides, but refusing to acknowledge that this makes our economy much less dynamic, and so we all suffer in the long term. Furthermore, early signs are that the Burnham government want to focus on UK independence in AI, and ensuring British sovereignty. Great – how are you going to do that with high energy prices, a static labour market, and an inability to build domestically? Taking some risks could be beneficial…
  

https://spectator.com/article/devolution-has-failed-try-telling-andy-burnham/#comments-container

• Stephen Daisley in the Spectator has a punchy argument about how devolution has failed, and will continue to fail in the UK. Given I’m more sympathetic to devolution than most, I thought this was quite a good, challenging read.
• Focusing on Scotland:

• Since control of most domestic policy was transferred from the Westminster political class to its Holyrood rival, Scotland has become the drugs deaths capital of Europe, has seen educational outcomes plummet, emergency and cancer care targets missed for years on end, and a shipbuilding nation has spent more than a decade building two fault-ridden ferries at several times their original budget.

• I don’t think there’s any denying that devolution, on the terms first set out by Blair, has not succeeded. The SNP have dominated Scotland for nearly two decades, and in Wales, Plaid Cymru is now the largest party. The constitutional settlement was fundamentally dependent on a Unionist party (Labour historically) holding Scotland and Wales – a big point will be how would Reform winning change this?
• Going back to Daisley’s points (as a bonus, see Ed West’s latest Substack on Scottish politics here), I have to acknowledge this is a real drawback to devolution – of course there have to be winners and losers. The Scottish government has the freedom to set education policy, NHS reforms, among other areas. Unfortunately, these have been a clear example of what not to do.
• The problem that I see is that devolution seems to be strangely designed – Scotland and Wales get grants (courtesy of the Barnett formula), but really don’t have to own their decisions. So poor economic decisions don’t really get reflected in Welsh or Scottish politics – it is easy enough to blame Westminster for these decisions.
• I come back to our post-WWII setup – we have tried to have the government control key parts of the economy, namely land and housing. Development is curtailed by the state, which is mostly still set by the centre. This has to be unwound – in theory, no reason why this cannot be done at a national level and set to pro-development policies, but I don’t believe it’s possible in the UK today.
• What I could potentially see working is a repeal of the 1947 Town and Country Planning Act, but with the carrot of allowing local regions to block development, but with the understanding that costs will be felt (e.g. lower council tax revenue, lower business rate revenue, and so on).
• One of the key reasons why I am more pro-devolution than I was previously is precisely this fear of central control – I like allowing the possibility of experimentation in politics and economics. Unfortunately, so far we have allowed political experimentation without economic consequence. This has to be resolved for devolution to work.
  

https://open.substack.com/pub/worldpolitics/p/why-dont-elephants-get-cancer?r=22u0c&utm_campaign=post-expanded-share&utm_medium=post%20viewer

• And now for something completely different from World Politics, on why elephants don’t get cancer.
• A few interesting facts about the TP53 gene, which apparently acts as a tumour suppressor, and is present in about 50% of human cancers.

• A gene called LIF6, which in most mammals is a non-functional pseudogene, has been reactivated in elephants and contributes to the apoptotic response, working alongside p53 to eliminate damaged cells.

• So elephants have got a mostly dormant gene going again, that helps them avoid getting cancer. Very interesting and exciting for human cancer research.

Another heatwave in Europe and the UK this week, with the increasingly sad outrage and divide over whether to install air-conditioning or not. A problem that was solved a long time ago worldwide, and yet, due to our combination of puritanical beliefs and energy issues, is a political red line.

Domestically, we have more political shenanigans as Andy Burnham seems set to take power in the UK, with early talks over much greater devolution, but let’s wait and see what emerges.

This week, a new Substack discusses the Treasury and UK defence, Ed Conway on why A/C is so poor in the UK, and Dan Williams offers a thoughtful piece on our political realities.

https://open.substack.com/pub/jeegar/p/the-treasury-thinks-defence-is-a?r=22u0c&utm_campaign=post-expanded-share&utm_medium=web

• Jeegar Kakkad goes into detail about why the Treasury refuses to fund the UK’s defence, and the MoD’s own poor record of development and procurement.
• Right now, we are in a tough spot domestically. We’ve had stagnant growth for over 20 years, very high debt levels, and voters do not see the tangible benefit of higher defence spending vs other forms like welfare.
• However, internationally, we are more vulnerable than ever. As I explored previously, our three core pillars of foreign policy have changed, and hostile actors such as Russia and China are increasingly flexing on the global stage. We’ve also run down our military since the Cold War and in particular since 2008, and this will require a significant rebuild.
• Kakkad has a very interesting take on defence spending in economic terms. The Treasury (and the MoD) will not have the same level of information as any sellers, and so the advantage is with the sellers.

• Akerlof’s paper was never advice to buyers. His point was that lemons markets are not fixed by haggling; they are fixed by institutions. A buyer who responds to quality uncertainty by discounting harder and deferring the deal does not get a better one. Akerlof explained what happens next: wary buyers price down, good projects get stuck, the better sellers leave, and the market collapses. That’s exactly what’s happening in the UK defence market today.

• The way to solve this is through institutions – combining the MoD and Treasury into a team under Number 10, ensuring that sellers have skin in the game (losses and gains), and export the state’s lower cost of capital than private enterprise.
• We are in an extremely fortunate position of being relatively secure, but we are increasingly complacent. We need to get our defence sorted as a matter of urgency.
  

https://open.substack.com/pub/edconway/p/the-missing-pipe?r=22u0c&utm_campaign=post-expanded-share&utm_medium=web

• Ed Conway looks into the British heating system (and how we chose the wrong one), and more pertinently this week, why our portable a/cs are maddeningly inefficient.
• We have what is called a “wet” system – we heat water with our boilers, whereas most of the rest of the world uses “dry” air systems instead.

• Air-based systems (HVAC as they’re sometimes called) aren’t perfect. The air they puff out can be stuffy and dry, though you can add filters and humidifiers if that bothers you. And you usually need a separate unit to heat your water. Even so, they have one enormously attractive advantage: connect them to a heat pump and they can both heat and cool your home.

• Naturally, this is increasingly useful in our warming world, although annoyingly Conway notes that the government is much less generous with these systems and does not mention air conditioning as a side benefit. At some point, this will change, but it seems a pointless headache for the public.
• Turning to portable aircons, I was staggered to learn this:

• The second problem with portable AC units is that – and I’m not making this up – they arrive without the right pipes. When you buy a portable AC in the UK, it will, almost without exception, come with a big hose at the back, which you need to stick out of a window.

• Historically, yes, we didn’t have that many hot days a year and hence demand for portable a/c was lower. This is not tenable now – I will be very interested to see which manufacturer moves first to two-pipe systems.
• As a depressing side note, check the comments in his piece. So much noise and energy about whether or not a/c is good or not, when the rest of the world has just moved on and adopted it fully.
  

https://open.substack.com/pub/conspicuouscognition/p/how-tribes-construct-rival-realities?r=22u0c&utm_campaign=post-expanded-share&utm_medium=web

• Dan Williams takes a look at how political tribes view reality differently, or indeed construct it differently. This goes beyond interpretation and goes towards understanding what the basic facts are behind political news and current events.
• Williams contrasts the Henry Nowak murder and the George Floyd murder in the USA, and in particular, at how on the right, Nowak’s murder was evidence of a two-tier system, whereas for the left, this was considered a single tragedy and not to be politicised.
• This was inverted in the George Floyd case. It was proof on the left of the systemic issues in American institutions and policing, whereas on the right, it was viewed as a one-off event.
• Williams examines this through Walter Lippmann’s book, Public Opinion, from 1922:

• Public Opinion’s central thesis is simple and, on reflection, obvious. In contrast to the relatively small-scale social worlds our species engaged with for most of its history, the modern world is far too big, complex, changing, and inaccessible for any individual to engage with directly or completely. Most events, trends, regularities, and public affairs are remote. They happen in places we have never been, involve people we have never met, are affected by complex systems and institutions we cannot fully understand, and turn on countless facts we cannot personally verify.

• The ‘problem’ now is that to deal with the above, we relied on gatekeepers – newspapers, journalists, politicians, etc., to explain the reality to us, as in most cases it was impossible to get the original ‘truth’ behind the event. But this no longer works and probably hasn’t since 2007 or so. Social media and smartphones have changed the game – everyone has a camera, and everyone’s opinion can be expressed and shared easily. It is easier than ever to find dissenting views that fit closer to your view, regardless of how grounded they are in reality.
• So, what to do now? Williams notes that Lippmann favoured a technocratic solution – experts and institutions would provide the rational explanation. However, Williams correctly notes that these institutions themselves are influenced by the wider environment, and can even be fully captured. Furthermore, these only have power if individuals trust them – if these places are perceived as biased, there is no chance that they can be considered independent mediators.
• Williams gives two obvious starting points to help:

• Most importantly, we should improve the reliability and impartiality of our epistemic institutions, which are too often politicised and advocacy-focused. Ideals of perfect objectivity and neutrality will never be fully achieved, but they are not simply a cover story for hidden interests either. The left’s growing institutional dominance in recent decades, combined with a prominent strand of left-wing thought that seeks to replace norms of objectivity with social justice activism, has had bad effects on these institutions’ quality and trustworthiness.
• Representatives of these institutions also need to be better at adapting to the constraints and incentives of the new media age. The days of relying on establishment gatekeeping and elite control of the public narrative are long gone. We now live in a more fragmented, more competitive attention economy, one which favours more direct, authentic modes of communication.

• A couple of disparate thoughts from this. Firstly, the UK, particularly under Labour at the moment seem to be directly trying to fight against this, i.e. doing exactly what Williams advises against – relying on establishment figures and elite control. See recent social media bans, attacks on ‘politicisation’ and ‘division’ from social media influencers, rather than addressing the fundamental issues at hand. Your message has failed and will continue to fail – appeals to authority are not enough at this point.
• When horrific events happen like Nowak’s murder, speed is of the essence. Release footage and information as soon as it is available, as I guarantee it’ll already (or a distorted version) be all over social media anyway.
• On a related note, any public-facing figure, such as police, NHS workers, etc, should almost certainly have cameras on them at all times for events precisely like this.
• Our debates over free speech need some serious revamping, considering the realities of social media platforms, messaging apps, and so on. Right now, we are attempting to police matters on an old framework. We still broadly treat speech on social media as if it were in a newspaper or other traditional media. Simply trying to suppress unwelcome realities and alternative points of v view, even if ugly, will only lead to corrosive effects on society.

So, Burnham has won the by-election handily, making him probably the next Labour leader. There’s little more to say on him at present, but I thought this from Ian Leslie, https://open.substack.com/pub/ianleslie/p/andy-burnham-is-going-to-be-yet-another?r=22u0c&utm_campaign=post&utm_medium=web, summed it up nicely. I sincerely hope to be wrong.

I’m currently reading Children of Abraham by Marc David Baer – thinking this will need to be a book review post, which I will hopefully get around to over the next week or so.

This week, we take a look at Egypt and Sri Lanka, along with an interesting thought piece on the UK.

https://open.substack.com/pub/chinatalk/p/notes-on-egypt?r=22u0c&utm_campaign=post-expanded-share&utm_medium=web

• Nick Corvino of ChinaTalk heads to Egypt’s new administrative capital, imaginatively called “The New Capital” to assess China’s involvement.
• It’s worth having a scan of the article just for the photos alone – eerie, gigantic buildings in the desert with no sign of humans.
• Corvino notes that while Egypt / China can authorise construction, and then build at scale (unlike most of the US and the UK), the actual constructions don’t seem to be nice to live in. Some of this he puts down to leap-of-faith bets and authoritarian desires for less walking (fewer chances to spontaneously organise a protest), but most of it is corruption and optics.
• Two very interesting points:

• What’s emerging in Egypt and Indonesia and China looks like one half of a widening split: authoritarian and semi-authoritarian states with the capacity to build at an extraordinary scale, and liberal democracies that have lost much of that capacity, gridlocked by process, litigation, and political fragmentation
• The actual dividing line, therefore, might not be China versus everybody else, but between countries with entrenched rule of law and weak political consolidation on one side, and countries without either constraint on the other.

• I guess a simple take is what do we prefer – a lack of homes for everyone, or massive ghost cities with little to show for all that investment? Maybe a slightly more interesting take is how long it would take the West to rediscover/rebuild that capability again – would it take us decades even if building on that scale was legalised tomorrow?
  

https://panmureliberum.com/need-for-speed-must-be-part-of-andy-burnham-s-economic-argument-1/

• Simon French of Panmure Liberum raises an interesting point that Burnham (or whoever is the next Prime Minister) needs to rediscover pace in the UK’s governance.

• Whilst there have been recent encouraging signs on major infrastructure projects being fast-tracked and exempted from tactical lawfare from opponents, this cultural trait runs much deeper. It has been building for decades under governments of all colours.

• French cites separate examples from construction (HS2, Heathrow, COVID inquiry, defence, Social Care) as areas that have been beset by delays, from reviews to legal challenges.
• Ultimately, though, we have to go back to incentives, and as we have seen, in particular in construction, this is an inbuilt feature of a system that ignores price.

Ongoing Commissions into the future of Social Care and Pensions will take years to report despite everyone close to these issues being aware of the policy imperatives, and trade-offs. It speaks to governments who play for time, rather than grasping the nettle.

• Ultimately, we get the economy and politics that we deserve – we give regions and areas little incentive to vote for growth, and then despise the results that this leads to. Areas around social care, pensions, and the COVID inquiry have to please everyone, and therefore please nobody. Until we get a grip on our regulatory sandbox and our overcentralisation, it’s unlikely that we’ll re-emerge as one of the world’s most dynamic economies.
  

https://www.youtube.com/watch?v=1S2wwbX_p_E

• Jon Y of Asianometry (there is an accompanying write-up on his website) goes into detail about Sri Lanka’s organic fertiliser debacle in 2021.
• I vaguely remembered both reading about the ban and thinking “strange”, and then seeing the accompanying economic disaster and thinking “yep”, but this was a great deep dive into the thinking (or lack of it) behind the ban and other key details.
• Obvious things that I didn’t know:
  • The soils are diverse but poor, due to sitting on old crystalline rock.
  • Part of the ban was due to the Sinhalese Buddhist religion that most of the Island follows, with an emphasis on purity and self-reliance.
  • There was talk of moving towards more of an organic fertiliser, but this was expected to be phased in over a decade or so.
• The rest is quite an epic narrative of state failure and incompetence, including turning to the Chinese, and then trying to go back on their deal, before eventually accepting an IMF bailout.