The Grenfell Tower and Sprinklers

From the BBC:

London’s fire commissioner says the Grenfell Tower blaze must be a “turning point”, calling for sprinklers in all high-rise council flats.

Dany Cotton, commissioner of the London Fire Brigade, said: “I think Grenfell should be a turning point.

“I support retrofitting – for me where you can save one life then it’s worth doing.

“This can’t be optional, it can’t be a nice to have, this is something that must happen.

“If that isn’t one of the recommendations (of the Grenfell Tower inquiry) then I will be so very disappointed.”

Firstly a little on the background of Dany Cotton:

Since 2017, she has served as the Commissioner of the London Fire Brigade and is the first woman to hold this position. She had previously been the Director of Safety and Assurance at the London Fire Brigade. In 2004 Cotton became the first woman to be awarded the Queen’s Fire Service Medal. She is the National Chair of Networking Women in the Fire Service.

Aged 19, she had been a full fire-fighter for just three months when she attended the Clapham Junction rail crash. In 2007, she was assigned the post of Area Commander, becoming the highest-ranking woman in the British Fire Service.

Her professional biography seems to be a lot more about being a woman than a firefighter. But let’s look at her remarks.

Retrofitting sprinklers into an existing building will be extortionately expensive:

Croydon Council, in south London, has taken the decision to retrofit sprinklers in its 25 high-rise blocks at a cost of £10m.

I bet that figure will triple. Of course, somebody who has only every worked for a taxpayer-funded organisation like Cotton wouldn’t care too much about what things cost. Look at this statement again:

for me where you can save one life then it’s worth doing.

For a public servant in charge of safety to come out with this is rather illuminating, as it appears she has no idea about how resources are applied to minimise risk. When it comes to safety, you want to spend the money in the areas where it will have the most impact. For example, do you spend £10m on sprinkler systems if the same money spent on networked fire alarms and better fire doors would save more lives? This is something a risk assessment and cost benefit analysis would tell us, and this is what should have been done. The fact that we have the head of the London Fire Brigade saying sprinklers should be retrofitted regardless of cost and their effectiveness suggests that it hasn’t. Then again, nobody seems even in the slightest bit interested in what caused the initial fire, so perhaps we ought not be surprised.

The money from these sprinklers has to come from somewhere, and this will mean cuts to other services or an increase in rents. If the latter, it will push those at the margins into cheaper, less safe accommodation. The video here is not an outtake from The Lord of the Rings but an interview with a spectacularly smug and idiotic Welsh MP talking about Wales being the first country ever to make sprinklers mandatory in all new homes:

I hope they will just look and listen, and I think this idea about over-burdening and over-regulating has proved that we do have to have those regulations. You know, sprinklers have been around since 1886 and the building industry haven’t used them successfully so, you know, if you’re not going to use them in goodwill, then as we have done in Wales, we’ll mandate for you to use them to keep people safe.

Aside from the first sentence being gibberish, at no point does it occur to her that there are good reasons why not a single country in the world has insisted sprinklers are installed in ordinary homes since their alleged invention in 1886. But apparently the Welsh know better and have made it compulsory, and now want to foist this idiocy on the rest of the country.

All this will do is push up the cost of housing, which in the UK is the last thing you want to do. Again, this will simply push those at the margins into cheaper, less safe accommodation. And presumably all homeowners and tenants will know exactly how these systems work and are maintained. I know I wouldn’t.

There’s also the issue of how effective sprinklers are in houses and flats. My understanding, at least from how they’re deployed on oil and gas installations, is they exist to keep surfaces cool and stop fires spreading as opposed to putting fires out. From what I can work out, the fire protection philosophy in buildings is to contain the fire using fire doors, use sprinklers to stop it spreading and keep the escape ways clear, giving you time to evacuate. The fire brigade then come in and put the fire out. In other words, they make sense in places with a proper evacuation plan but not so much in stand-alone private residences.

Interestingly, I’m sat in a 40-storey tower built between 1982-85 which has no sprinkler system. They have fire hoses on each floor but (and I’ve just checked) no sprinklers in the offices, corridors, or stairwells. Is the building unsafe? Probably not. Every door is a fire door, they have a decent alarm system and in the event it goes off everyone evacuates. I suspect a more modern tower would have a sprinkler system in, but I am reasonably sure its purpose would not be to put out an actual fire.

Would sprinkler systems help in a tower like Grenfell? Probably. Would they make much difference in the absence of fire doors and an evacuation procedure? Probably not. They might keep the stairwell clear, but if they’re installed in the apartments themselves you can expect a lot of spurious discharges as people set them off by mistake or maliciously, which would upset those in the flats below. Are they worth the money? In a new-build block, probably. But to insist they’re retrofitted regardless of cost or the lives they’ll save is madness, as is mandating their installation in new-build houses. The money would be far better spent on other fire-safety measures.

I think people have seized upon sprinklers as the solution of the day without really knowing what they’re for or how they work, let alone what they cost. That the head of the London Fire Brigade doesn’t seem to know any better ought to shock, but actually it doesn’t, not at all. This is the new normal. At least she’s got a few medals.

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Let’s not delude ourselves about today’s youngsters

I confess, I am still reluctant to label all those youngsters who voted for Corbyn as IRA-loving Communist anti-semites. The American left like to portray anyone who voted for Donald Trump as an ignorant racist who must clearly hate women because this is easier than trying to understand who voted for him and why. Plenty of decent, ordinary Americans voted for Trump, as they did for Clinton: let’s not pretend that every Hillary vote came from a deranged, blue-haired feminist living in a 20sqm apartment in Brooklyn with seven cats for company.

I am too old, out of touch, and bone idle to actually do any research on this, but I can think of a few reasons why a half-decent twenty-three year old might vote for Corbyn’s Labour. I’m not saying they are right, mind. I’m just saying what they might think.

I believe economics, and the way economics has shaped society in the past 15-20 years, plays a major role. Sure the young Corbyn supporter doesn’t understand economics, but point me towards a demographic that does. Every government in every western country is staring down the barrel of ballooning deficits, a debt which will take millenia to pay off, and not a single major party anywhere wants to even talk about it, let alone do anything about it. A simple reduction in planned expenditure increase is dressed up as a savage cut by damned near everyone: the Tories’ supposed austerity isn’t some fringe issue on the left, it is a widely accepted truth across the whole electorate. The people pointing out that these cuts are anything but are basically a handful of cranks on the internet. Like, erm, me. If any government program is threatened with a cut taking expenditure levels back to what they were in, say, 2010 half the country screams that medieval times are making a comeback and the other half believe them. The knowledge of economics among electorates is woeful, and almost all of them have signed up fully to the belief that all government expenditure is necessary, good, and wise and any cuts are bad. Nobody wants to even think about the size of the deficit and the national debt, it just keeps racking up. So if we’re going to criticise the young Corbynistas for not understanding the consequences of unsustainable economics demanded by ignorant voters, we might perhaps want to first ask where they got such ideas from. It’s too easy to blame Marxist indoctrination in schools when supposedly conservative governments, backed fully by the supposedly conservative middle classes, have been so irresponsible with public finances for several generations. Conservative governments might not be quite as reckless as Corbyn would be, but we’re talking about the difference between disaster and a catastrophe here.

So our youthful Corbynista looks to the generations above him and what does he see? Well, mainly a bunch of people who have gotten moderately rich by not doing very much. I’m going to be honest here: I am no great example of somebody who has done quite well by working very hard. Sure, I did what was necessary and sometimes went beyond that. I dragged myself through a mechanical engineering degree that was bloody difficult, and then I made some decisions (i.e. moving abroad and living in shitholes) which took some effort but I went largely for the adventure. And yes, I’ve laboured on farms and building sites and worked in shitty retail jobs to make some spare cash so I knew how to work when I was younger.

But on the measures by which a youngster will think I’ve “done well”, i.e. career path and wealth accumulation I have done so mainly because somebody has paid me to sit in an office, send emails, shift paper about, take part in meetings, and do what my boss says. This is what everyone in a modern business or public sector job does, even in something as supposedly “real” as oil and gas engineering. Sure, people might do some programming or calculations or some other task with genuine added value, I’m not denying that. But please, could my generation and that above it stop kidding ourselves that we are some kind of Lewis and Clarke pioneers who built log cabins with our hands while fighting off savages and created something to which future generations can aspire? We didn’t strike out for distant shores, risking all and having only our wits to rely on. I know people – mainly first-generation immigrants who are now retired – who really did this. People who moved from Greece to the USA with two toddlers and nothing else, worked like hell in restaurants until they could buy their own – and continued to work like hell because that’s all they knew. Teenagers who fled the Salazar regime in Portugal on foot, came to France and worked as taxi drivers, hospital porters, and the like and never got above that station yet still managed to buy a house and raise a family.

Sorry, but my generation of Brits didn’t do that, nor the one before it. Perhaps my father’s generation did, I don’t know. But what we have now is a system which rewards dithering, compliance, following procedures, arse-licking, and arse-covering. Do you see anyone making bold decisions that bring about radical improvements and taking responsibility if it all goes wrong? No, me neither. It is possible, nay easy, to make yourself rather wealthy in this day and age by sitting in a comfy, air-conditioned office shifting paper and saying “yes sir” when required in the fulfillment of a bureaucratic task that didn’t exist a decade ago. In fact, if you strip down what middle class professionals actually do these days, this accounts for well over half of it. And this applies to both the private and public sectors.

So what impression do you think this makes on the young Corbyn fans? Do they look at their older peers and marvel at what they have created, in the way tourists marvel at the Hoover dam? No, they see people – their parents, for instance – take twenty minutes to describe what they actually do all day and still leave them none the wiser, yet notice they always have the latest iPhone and seem to be doing all right. They see them living a lifestyle largely funded by government debt – free healthcare, free schooling, (often) entitled to an unfunded state pension, endless sops and subsidies which keeps them voting for more of the same instead of dipping their hands in their own pockets – and think why the hell can I not do that? And why not indeed? If it’s unsustainable and provides all the wrong incentives, it’s up to the middle classes to surrender it first, not expect the young to simultaneously pay for it and exclude themselves from the party.

When I think about it, I think it’s probably a good thing that the young don’t understand economics. If they did, heads would roll. It is they, and future generations, who are on the hook for unfunded pension liabilities, interest payments on government borrowing used to bribe the older generations and provide them with cushy jobs, and who are (as I wrote in my previous post) locked out of the housing market by the very same people who have demonstrated all the financial responsibility of a sailor on shore leave. And then they get called selfish because they “want it all” and “don’t know the meaning of work”, this coming from a generation that shoves paper around in an office and voted for more government largesse every time it was offered. I could stomach somebody who dodged machine-gun fire at seventeen saying “you don’t know you were born”, or someone who lived through perestroika and the period that followed. But somebody born in the UK after 1970? Please.

If I were a young person today I’d be voting a lot worse than Corbyn. I’d read the opinions of the metropolitan elite and look at how the middle classes are living and the system they’ve built for themselves and say “fuck that” and vote for whoever will pull the whole rotten system down so that I benefit. Selfish? Yeah, just like everybody else. It seems that today’s young aren’t as keen on Attila the Hun as I am and so they’ve voted for somebody who appears to be promising more of what everyone else has enjoyed for years. What do we expect them to do? Vote for “conservatives” who have proven interested only in feathering their own nests albeit using slightly different language than Labour?

Sorry, but if the middle-aged middle-classes wanted the young to vote responsibly, maybe they ought to have done so themselves. It’s time they stopped kidding themselves that they are something to aspire to, instead of the root cause of the whole fucking mess.

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Poverty as described by Australian students

This article on the appalling poverty suffered by Australian students found its way into my Twitter timeline:

Molly Willmott, 19, has been going to job interviews fruitlessly for a year and a half now.

Retail. Hospitality. Spends her time trawling employment websites. She went for one job as a telemarketer. Another as a warehouse assistant.

She’s in Melbourne. Most of these jobs are held by people whose names are hard to pronounce, brought in under policies favoured by Australian progressives.

“It’s rough,” says the politics and sociology major at the University of Melbourne.

Progressives like those studying politics and sociology, for example. But at least, in trawling employment websites for menial jobs, Molly is getting valuable experience on what she’ll be doing once she graduates.

“There’s that stereotype of a student surviving on two-minute noodles and it’s very true. I know a lot of people who’ve had to sacrifice food to be able to pay rent and bills. It’s more common than you think.

Property prices and rents in Melbourne are absolutely extortionate, mainly thanks to government policies favoured by the middle classes whose sons and daughters go to university.

Willmott, who lives with her mother and two siblings in a rented house in Melbourne’s south-east, acknowledges she is one of the lucky ones.

“I am in a very privileged position to be able to go home and have my family there just in case. I don’t like asking them for money but if push came to shove I can do that.”

The UK is somewhat unusual in that it is normal for people to go to another city to study; in a lot of countries people simply go to the university in their town. Because of this, there is usually plenty of cheap(ish) student accommodation in British university towns. I don’t know how things work in Australia, but it seems to me there is a scarcity of student accommodation in Melbourne.

But the luxury of living at home in the suburbs means it’s more than a three-hour round trip to trek to campus in inner-city Parkville, via three different modes of public transport.

“I take bus, train, tram and something’s always late. Travel alone takes a third of what money I have. It just drains away throughout the week.”

Rents are cheaper the further you go from a city centre, but you spend more on transport. This is not a trade-off unique to students.

She’s looking to move out within the next six months, partly because jobs have proven hard to come by where she lives, but she’s not sure how she’ll afford to move.

Jobs are hard to come by in a city where the minimum wage is around $15 per hour for a 19 year old part-timer with no experience. I can’t think why.

Her fortnightly budget has a lot of holes. There’s nothing allocated for clothing, and Centrelink loans for textbooks have been used to buy warm clothes for winter.

“Centrelink has an optional $1,300 loan to buy textbooks every semester. I’ve used that to buy clothes so I can be warm through winter and given rest to my mum. There’ve been times I haven’t been able to buy textbooks and readers.

Hang on. I’ve lived through a Melbourne winter and it’s not that bad. And she’s from Melbourne: it’s not like she’s moved down from Brisbane and had to buy a raincoat for the first time in her life. What was she wearing before she went to university? Do you really need to spend $1,300 on winter clothes in your hometown?

I’ve got so much anger about the treatment of students by the Government at the moment. The welfare system is incredibly underfunded and understaffed. When I got my Youth Allowance I needed to get it urgently. I needed to start uni and buy textbooks and it took four months for that to go through.

A 19 year old is living in one of the world’s most expensive cities and having to borrow money to buy politics and sociology textbooks. Somebody is being fleeced here all right, but unless she’s angry at the government over job-destroying labour laws, insane housing policies, and unnecessary credentialism I think she might have picked the wrong target. Go and ask your tutors why, in the age of electronic publishing and the internet, you need to spend a grand on politics textbooks.

The Minister for Human Services, Alan Tudge, says waiting times will be cut by the 250 additional Centrelink call centre staff announced in the federal budget. He says massive investment in technology has halved wait times for Youth Allowance and Abstudy claims.

Government creates an unsatisfactory solution to address a problem largely of said government’s own making; affected persons nevertheless demand more government.

Education and Training Minister Simon Birmingham, said his message to students was clear: “Taxpayers, including those who have never been to university, will continue to pay the majority of your fees for going to university.”

“And taxpayers will pay all of the cost of your student loan up front and not expect you to repay it until you’re actually firmly in the workforce, on track hopefully in your career. If we’re to preserve all of those opportunities for the future we need to ensure the higher education system is financially sustainable.”

Blimey! I didn’t expect that: well said, sir!

Three or four hours’ work a week at the local McDonald’s doesn’t help much.

“It really is borderline impossible to find a decent job. Most places want younger people. McDonald’s — even cafes and stuff — they want to pay junior wages. Or they hire lots of people but then they only give you one shift a week.

Minimum wage laws allow firms to pay 19 year olds less than 21 year olds, thus pricing 21 year olds out of the market. If only there were a branch of academia that could explain all this.

Or they hire lots of people but then they only give you one shift a week.

“It’s that whole underemployment figure. If you earn under a certain amount they don’t have to put in for your super.”

Employers look at the total cost of employing somebody and set shift patterns accordingly? Whoever would have thought?

Colee once had savings from a $9-an-hour traineeship at her local council during a gap year, but that’s gone.

She had a gap year? Why didn’t she get a full-time job?

Right now there is $23 in the bank. Her pay won’t deposit for another couple of days. Rent is due in three.

Here is a picture of her stood in her kitchen. Tell me, does this look like a student hovel to you?

Okay, I’ll not pretend I didn’t live in a very nice flat when I was a student, thanks to a generous father (cheers Dad!) and a flatmate who came from money. But that kitchen above is bigger and smarter than any I’ve seen in Paris and looks as though it belongs to a detached 2 or 3 bedroom house. There looks to be a stainless steel dishwasher in there, FFS! My guess is the “student” accommodation in Australian cities has been snapped up by people from China and the Indian sub-continent who are working full-time, and Australian students don’t even know such lodgings exist. I’m thinking back to the student kitchens I saw at university, and they didn’t look much like the one above. There are no slug trails across the surfaces, to start with.

There is no allowance in Colee’s budget for social activities.

“If I want to go to the pub, I’ll buy a pint of cider which is $9 and drink that all night.

So there’s no money for social activities except for drinking cider at $9 per pint. Back in 1996 I used to buy beer for a quid a pint; I know that was a long time ago and it was in Manchester, but where are all the cheapo student bars in Australia? Or has the nanny state banned them?

“It’s meant to be the best time of your life. You’re constantly told you should go to university while you’re young. You’re told at school it’s everything, that you can do this if you study hard. Then you get there and realise you have to basically buy your way into university because you can’t afford to live without help.

“It’s really hard to struggle in this sort of way and then be told by the Government that I chose this because I wanted to get an education.”

An education in International Studies.

[Welfare advisor Stuart Martin] says government policy on the issue was too often “hollow rhetoric from politicians who are not held accountable for their statements”.

“We have far too many people in Parliament who have sucked for free at the teat of the state and still trot out this mantra about self reliance.

Quite. When do the hangings take place, and do I bring my own knitting or will it be handed out free?

“Things are even harder if you happen to come from a disadvantaged background or have other struggles in your life.

“If you have a mental health condition or family obligations that make it difficult to keep a part-time job, then your grip on study is extremely shaky.

If you have mental health problems that prevent you holding down a part-time job, should you really be going to university?

“Education is seen as the thing that breaks the poverty barrier,” says the 21-year-old, who is studying history and sociology at La Trobe University’s Bendigo campus.

Another useful subject.

“You have parents making sacrifices to give their children an education, only for students to find once they enter the system it’s just gradual entrenchment of poverty.”

One would have thought there would be a lot more attention paid to what was being studied under such circumstances, but apparently not.

He makes sure to shop at a low budget supermarket, spending $10–20 once or twice a week.

Surplice is lucky enough to have a car. A second-hand Mazda he bought from his aunt. “It gets me from point A to B,” he says. “It’s got fuel in the tank.”

A poverty-stricken student with a car.

However, he’s sometimes had to go without insurance or rely on the charity of family to pay his registration.

Oh marvellous! So if he maims somebody or deprives them of their only vehicle when he’s driving about uninsured, that’s their tough shit!

“It’s everyday student culture for people to be saying, you know, ‘I’m so broke this week’. You’ll hear it from 10 different people in one walk through the student union.”

Have any of them been t-boned by an uninsured driver?

There’s a lot of time spent in his bedroom at home, or between different volunteer positions on and off campus. Active in the labour and union movements, every Monday is set aside for campaigning. There are also volunteer shifts as a tour guide at a Buddhist temple. The odd bit of cash-in-hand work.

A labour and union activist who engages in cash-in-hand work to supplement his own income. Principled.

“You have to put extra effort into extracurricular stuff to get noticed by employers. I’m the president of two university clubs, which means my ability to look for work is restricted to non-existent.”

Try studying a proper subject. And note there is enough time to be a labour and union activist, but not enough time to look for a job.

It’s not just the financial cost, Surplice says, but the psychological effect.

“I cannot envision my future. Don’t get me wrong — I’d like to one day be settled down in a house with a partner, but the actual practicality of even a simple existence like that? I have nothing but anxiety.”

I once worked with a guy who was sent to fight in Vietnam when he was 18. A lot of his friends didn’t come back. This chap is 21.

National Union of Students president Sophie Johnston says it’s time to “acknowledge the failures from successive governments that have left today’s young people far worse off than generations before us”.

“This generation will be the first priced out of the housing market, our penalty rates are being cut, underemployment is rife and we’ve seen drastically low wage growth for decades.

She is complaining that penalty rates – legally mandated pay levels – are being cut while complaining of unemployment in the same sentence. Hurray for university education!

“Today’s young people are not asking for a free ride, we are merely asking to be afforded the same opportunities as generations before us.”

Ask Grandad which university he went to, what his weekly wage was, and what his house was like.

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More Psychology than Economics

Years ago I worked as a banqueting steward in Manchester’s Victoria & Albert Hotel, which at the time was a Meridian (it’s now a Marriott).  A large part of my job was to wait the tables in the massive function room, which people would hire for weddings, conferences, balls, etc.  We didn’t do a lot of silver service thankfully – most of it was plated, meaning the chef and his team would prepare a hundred or more dishes on plates and half a dozen of us stewards would distribute them among the tables.  I never learned to carry more than four plates at once, but some people could carry six or eight.

When times were quiet and there weren’t many functions on I used to take the occasional shift in the restaurant behind the bar.  I can’t give you exact figures because I can’t remember them and inflation will apply, but the place was extortionately expensive.  In fact, everything in that hotel was one giant rip-off, and I expect – as I learned recently from a discussion on wi-fi prices in hotels over at Mr Worstall’s – the higher-end hotels rip people off because they assume it will all be submitted as a business expense.

Anyway, between the banquets and the restaurants I noticed there were a lot of complaints and food was being sent back, or we’d be collecting plates with uneaten food.  Chefs being chefs, they generally dismissed all this as the customers being heathens who simply wouldn’t know vegetables are, apparently, best served near-raw.  I was young then and still had a long way to go towards finding my place in the world, but nevertheless I was able to see what the problem was: it wasn’t that the food was bad, it was that we were charging too much for it.

We were charging a lot of money for the supposed privilege of eating in our fine establishment and enjoying food prepared by our top chef, and so customers’ expectations were sky-high from the beginning.  If the slightest thing was wrong they’d complain, and rightly so.  But if the same thing had been served up at a lower cost they’d have eaten it gladly.  I learned during my time in that hotel that when customers complain it is not so much about quality or price but of unmet expectations.

I experienced this myself when I checked into the Pullman hotel in Cologne some years back and found they charged for parking and wifi on top of the 250 Euros per night room rate (I was paying in Accor club points).  Now I know they are just ripping off businessmen but at the time I didn’t and I was incensed.  I could understand the Ibis in Heidelberg charging for wifi and parking because their room rate was about 70 Euro per night, but I thought the Pullman in Cologne was ripping me off.  I complained and to their credit they waived the charges in pretty short order.

This weekend I am going to Lille, just for the hell of it.  I have found a hotel which charges 200 Euros per night, and an additional 20 Euros per night for parking.  Reading the reviews, I see that a few people are quite pissed off by this extra charge.  Sure it reflects the market rate for parking in Lille city centre, but as a guest of a 200 Euro per night four star hotel, having to pay extra for parking grates a bit.  Again, it’s not so much the price but the feeling that you’re being fleeced; it makes you feel that you’re dealing with an outfit more akin to Ryanair than a luxury hotel.  I suppose these outfits must run the numbers and find the additional revenue compensates for the complaints and negative comments, but often I wonder how closely the management pay attention to these things.

It appears that British Airways does.  Via the ever-traveling Michael Jennings who posted this link on his Facebook page:

In the annual Investor Presentation to the City back in November, British Airways revealed plans to re-introduce Club Europe on UK domestic flights.

This is almost certainly linked to the introduction of ‘buy on board’ catering from next Wednesday.  BA’s biggest nightmare is that someone paying £7,670 for a fully flexible Club World ticket from Edinburgh to Tokyo decides to switch to a Middle East carrier or KLM because they are insulted at paying £2.30 for a cup of coffee on the connection.

And that’s exactly what would happen: if you’ve shelled out all that money and then somebody asks you to pay £2.30 for a cup of coffee between Edinburgh and London, you’d never fly with them again.  It’s not about the money, but the principle: people don’t mind spending money, but they don’t like being ripped off.  It’s more psychology than economics, in fact.

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Revealed Preferences

It was via Tim Worstall that I first learned of the concept of what economists call Revealed Preferences:

Revealed preference theory … is a method of analyzing choices made by individuals, mostly used for comparing the influence of policies on consumer behavior. These models assume that the preferences of consumers can be revealed by their purchasing habits.

Things get especially interesting when revealed consumer behaviour differs from what they have previously said.  In other words, don’t listen to what people say but instead watch what they actually do.  It is fun to spot such examples in the wild, as Adam has done over at Pushing Rubber Downhill:

It turns out, shock horror, that while people might be very outwardly positive and vocal about bringing those “poor refugees” to Australia, when it comes to sending their own kids to school with them it seems that they’re not quite as keen.

The local council, City of Yarra, says the district has been a proud “Refugee Welcome Zone since 2002”. Yet in Fitzroy, Carlton and surrounding suburbs, progressive, middle-class families have been accused of shunning public schools with high refugee populations.

“They are fleeing!” African community leader and former refugee Abeselom Nega says of white, inner-city families who apparently are rejecting diverse schools. This year, in a Melbourne newspaper, Nega accused families who avoided inner-Melbourne schools with large African-­Australian student cohorts of ­racism.

The yawning chasm that stands between middle-class virtue signalling and how they actually behave makes the Grand Canyon look like a drainage ditch.

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Newsflash: Counterfeit Goods are Cheap!

Either I am being dense, or the BBC is:

The man who sparked outrage last year by hiking the price of a life-saving drug may have met his match in some Australian schoolboys.

US executive Martin Shkreli became a symbol of greed when he raised the price of a tablet of Daraprim from $13.50 (£11) to $750.

Now, Sydney school students have recreated the drug’s key ingredient for just $20.

The Sydney Grammar boys, all 17, synthesised the active ingredient, pyrimethamine, in their school science laboratory.

“It wasn’t terribly hard but that’s really the point, I think, because we’re high school students,” one boy, Charles Jameson, told the BBC.

The students produced 3.7 grams of pyrimethamine for $20. In the US, the same quantity would cost up to $110,000.

The issue was never how expensive it is to make the drug, it was who held the license to make it and sell it in the US.

Mr Shkreli, also known as “Pharma Bro”, was chief executive of Turing Pharmaceuticals when it acquired exclusive rights to Daraprim.

Clearly some people don’t realise this:

Dr Alice Williamson, a University of Sydney research chemist, supported the boys’ project through online platform Open Source Malaria.

“They’ve transformed starter material that’s worth pennies into something that has a real monetary value in the States,” she told the BBC.

No, their product has no monetary value in the States.  Let them try to sell it over there and see what happens.

“If you can obtain it cheaply in schools, then there’s no excuse for charging that much money for a drug. Especially from people that really need it and probably can’t afford to pay for it.”

Dr Williamson called the pricing in the US “ludicrous”.

We have a chemist working in research at a university who thinks the price of drugs is driven by the cost of the ingredients, and shit turned out in a school lab is the same as that certified for distribution in the US by the FDA.

Next up from the BBC: Chinese students make a Louis Vuitton bag for $10, undercutting the flagship store on the Champs-Élysées by $490.  Praise all ’round.

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Economics at The Independent

The Independent has put out an article on how much employees of various multinationals are “worth”:

Tech companies are famous for the high salaries and bonuses potential candidates get when they join their firm. But the true value of the employee is actually much more, according to new research.

Focusing on the top 100 companies in the world by revenue and the number of employees they have, analysts at Expert Market have worked how much each employee is worth.

Expert Market worked out how much each employee was worth by dividing the revenue of a company by the number of employees and found the following:

Oh dear.  Expert Market don’t appear to have much expertise if this is what they’ve gone and done, and nor do journalists from The Independent.  Revenue divided by number of employees doesn’t tell you much: the company might be making catastrophic losses for all we know, meaning all those employees aren’t adding much value at all.

It is profit, not revenue, that is the measure of a company’s added value and therefore to work out what each employee is worth on average you’d need to divide profits by the employee headcount.  Here’s what they’ve done with Shell:

Shell: £2,681,470.00 per employee

Revenue: £252,058,180,010

Number of employee: 94,000

No, just no.  Look here instead:

Shell 2015

Financial Year Revenue(bn) Profit(bn) No. of Employees Profit per Employee
2015 $265.0 $1.94 93,000 $20,860
2014 $421.1 $14.9 94,000 $158.510
2013 $451.2 $16.4 92,000 $178,260
2012 $467.2 $26.7 87,000 $306,896

Bit of difference, isn’t it?

UPDATE

Alex K. makes some valid points in the comments, and Tim Worstall sets me straight on a similar point here.  I’m learnin’.

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A Post About Boilers

Commenter Alex M. chimes in under this post on the subject of boilers, and I thank him for that:

My plumber has a handy sideline reselling perfectly good boilers than people replace because they fall for all the guff about modern energy-efficient equipment. New boilers may use slightly less oil but the savings will never cover the cost of replacing an old serviceable boiler, never mind the much higher maintenance costs and the fact that new condensing boilers are only designed to last around ten years. A bog-standard 20th century non-condensing boiler will last fifty years or longer with regular servicing.

It is probably not surprising that I never owned a property with a boiler until recently.  My employer has always been generous enough to supply me with accommodation wherever I’ve been posted, and the place I bought in Thailand back in 2009 has nothing more than a small water heater for showers and washing up, for obvious reasons.  That changed when I bought a property in Annecy a couple of years ago, a modern apartment which was fully electric (i.e. no gas) and independently heated (i.e. unlike the older apartment complexes, there was no centralised heating system for the whole development).  The boiler was new, so the previous owner told me, and he had receipts to prove it.

When II collected the keys I didn’t even have a place to sit down, and so after looking around I switched off the water and the power and went back to Paris.  That’s one of the advantages of an apartment over a house: you can drop the shutters, switch everything off, and just leave it unattended for months.  Do that with a house and you’ll find things have gotten inside and taken up residence.  Anyway, I made a habit of visiting the place every few months and then switching everything off when I wasn’t there.

I arrived at the property on 22nd December last year, intending to spend Christmas there, and found the boiler leaking.  It wasn’t a bad leak and fortunately there was no damage to my property or that of my neighbour, and I could even still take showers, but something had gone wrong with the boiler.  I found it odd that the leak wasn’t coming from the bottom, but about halfway up.  I couldn’t see any hole but I could feel that below the leak the casing was warm, but above it was cold.  The water was dripping down the inside of the casing.

My first reaction was to swear loudly.  This was 3 days before Christmas, remember.  And plumbers are known to be cheap and readily available, especially with foreigners close to a major holiday, oh yes.  My second reaction was to pull out the warranty.  I called the service number and as I was on hold a passage in the warranty terms caught my eye: the warranty is void if the power has been off for more than 24 hours.  Mine had been off for seven months.

I’m an engineer, mechanical according to the certificate.  Not a good one, but an engineer nonetheless. I know about corrosion and how it works.  I’d suspected the leak was caused by corrosion, but was struggling to figure out how the hull had been breached so fast.  Now I knew.  Modern boilers are made from paper-thin steel to save costs, make them lighter, and make them more energy efficient.  This is inherently sensible.  The problem is corrosion: even the slightest degradation of thin steel will cause a hole to appear.  All boilers deal with corrosion by using sacrificial anodes, but they need to be replaced every few years increasing servicing costs.  You can avoid this by using a powered anode, which does not deteriorate with time but – as the name suggests – needs to be powered.  When I pulled apart my boiler I found a small 9V battery underneath: that would be the emergency supply when the main power is switched off for whatever reason.  The anode wouldn’t need much power, but a 9V battery is not going to keep it working for seven months.  As such, the anode stopped working and the boiler itself corroded in short order.

This all came as a surprise to me.  The house in which I grew up in rural Wales had a boiler, which from memory was made of steel an inch thick and probably needed a crane to install.  If the anode lost power there would be enough allowance in the steel to withstand months or even years of corrosion before springing a leak.  But modern boilers have no such margin, they will be made using thin steel and will become useless at the slightest sign of physical degradation.  So you have to keep the damned things powered up.

I was fortunate enough to find a decent plumber in Annecy who replaced it on 23rd December with a better one for 1,200 Euros including installation, taxes, etc.  It was a bit of a dent in the wallet, but it didn’t mean Christmas was ruined.

This isn’t a rant about disposable boilers, though. Old-style boilers might last forever, but that comes at a cost too: you need a strong floor to put them on, and you certainly can’t hang them from a wall like you can the modern ones.  You also can’t install them with one person and another one helping, you’d need some serious kit to move them in and out.  And they’d also be more expensive to run.  There is a reason why modern French apartments are all electric: heating technology and insulation has gotten so good that you no longer need a heavy, industrial central heating system or a gas-fired boiler, and all the equipment you need can be bought from a DIY store and chucked in the back of your car (just about).  In the long run, I suspect the savings on heating costs would easily pay for replacing the boiler once every ten or fifteen years (though perhaps not every seven months).

But there’s another point, which as an employee of an oil company I understand well: CAPEX versus OPEX.  Most people would rather pay for a cheap boiler and replace it every ten years – $700 up front, then two $1,000 payments at year 10 and 20 respectively, totalling $2,700 – than pay $2,000 up front on Day 1 and not pay anything for the next 20 years.  What do economists call it?  The time value of money, or something.

And that’s the real benefit of modern boilers: they are cheap according to the price tag hanging off it in the shop.

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Les Brocantes

As a follow-up to yesterday’s post on the folly of diverting Sweden’s labour pool to repairing bicycles instead of just letting white collar professionals buy replacements, I want to talk about the very French event called a brocante.

As the linked site says:

The flea markets, second hand markets and car boot sales are very popular in France especially in the summer and before Christmas, in fact, that’s an understatement – it seems to be the national pastime to spend weekends visiting the different types of second hand markets.

Some of these brocantes are permanent, but the ones I have seen are held periodically in each suburb perhaps once or twice per year.  The local municipality closes off a few streets and sets up collapsible tables and the local residents come out with all their old junk and spend the day trying to flog it.   These events are very popular and people pack the streets, but from my observation most of them are just nosing around and not buying anything.  They can also be a pain: I woke up one Sunday morning in June to find a brocante going on in my street; clearly I’d not bothered reading the signs that had been posted.  As such, I couldn’t get my car out of the underground car park to go anywhere.  The French expression governing what to do in such a situation is “toff sheet”.

A brocante is basically the French equivalent of the British car-boot sale or jumble sale, or the American yard/lawn sale.  They are also similar to the school fetes which used to go on in the 1980s when I was a kid, where parents would bring junk they wanted to sell.  I have no idea if this still happens.

It might be my memory playing tricks on me, but I seem to remember the jumble sales and school fetes of my childhood turning up some bargains for my various family members.  Decent books were a favourite, and I managed to snag myself a hardback second edition of The Lord of the Rings for 50p back in 1992 which I still have.  But you also stood a chance of finding a good piece of furniture, some tradesmen’s tools, gardening equipment, kitchenware, sports gear, and other items which were bargains in the sense that to buy them new would cost a lot more, assuming they were available.  I recall people used to get quite excited by what you could find, myself included (I was usually after piles of old Beano and Dandy comics).

By contrast, when I walked around the brocantes of Parisian suburbs I found there is little of any value and nothing that could be considered a bargain.  It is mostly toys, children’s clothes, shoes (I always wondered who bought second-hand shoes; that was the one item that was not hand-me-down when I was growing up), and obsolete rubbish like CDs, VHS cassettes, and mobile phone chargers.  You might find the occasional fishing rod or ski gear, but not much else.  Even the books seem to be junk, very little by way of early edition hardbacks and lots of Da Vinci Code.

I think the reason for this is that a lot of stuff is so cheap now that when it breaks it is simply thrown away and replaced:, e.g. tools, kitchenware, and furniture for example whereas before this stuff could stay in a family for generations before being packed up for a jumble sale after a clear-out.  Perhaps another reason is that nobody would buy items which can break, e.g. kettles, microwaves, lawnmowers, DVD players, bicycles, drills, flashlights, etc. when buying one brand new with a warranty is only marginally more expensive and people have more disposable income.  There’s also the effect of eBay: there is no need to trawl through jumble sales looking for an obscure item at a bargain price when you can do that sat on your sofa with an iPad.

In short, things getting cheaper and more readily available has killed the second-hand market for many items which would have appeared in jumble and car-boot sales a generation or two ago.  It’s the same reason why people are choosing to replace broken appliances and other items in Sweden rather than having people fix them.  It is nice to engage in a nice spot of nostalgia about going through a jumble sale and finding a set of vintage cast-iron kitchen scales for a fiver, but the very fact such an item was being traded second-hand shows they were expensive new and not within reach of everybody.  Cast-iron kitchen scales might look nice, but it is probably better that every household can now buy an electronic set for ten quid in Argos and there is no second-hand market any more.  It’s called progress, and it’s a sign we are all better off.

Perhaps the Swedes ought to have taken a wander through a brocante or two before meddling with their economy.

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Sweden’s Economic Brainwave

I’m sure Tim Worstall will get around to this, but I’m going to tackle it anyway.

To combat its ‘throwaway consumer culture’, Sweden has announced tax breaks on repairs to clothes, bicycles, fridges and washing machines. On bikes and clothes, VAT has been reduced from 25% to 12% and on white goods consumers can claim back income tax due on the person doing the work.

Years ago I had a Russian friend who moved from Dubai to Sydney.  Within a few weeks of her arrival she told me she found some aspects of living in Australia frustrating.  The example she gave was that she needed an old, decrepit wardrobe removed from her house, only to do this she had to call a removal company which could come some time next week and charge $200 for the job.  Whereas in Russia, she said, you just find a couple of alcoholics and buy them a bottle of vodka or two and they’d happily do it.  They’d probably go on to sell the wardrobe, too.

One of the big differences I noticed while moving between countries as economically diverse as France, Nigeria, Australia, Russia, and Thailand is that the wealthier a country is, the more difficult it is to get simple repair or semi-skilled trade jobs carried out.  The reason for this is obvious: as a country gets wealthier and more educated, the value added by each individual in the workforce increases, and a lot of low-value jobs simply disappear.  For example, in a poor country a guy can make a reasonable wage repairing bicycles: it might be the best way for him to make money and other people can’t afford to just buy a new one.  Whereas somebody living in London can make more money doing almost anything other than repairing bicycles, and he’d anyway have to charge so much that customers would find it easier and possibly cheaper to just buy a new one.  Economics, in other words.

You would therefore expect a developed country with an educated population like Sweden to have its workforce employed doing high-value jobs: technology, services, manufacturing, etc. rather than low-skilled jobs like repairing clothes.  And funnily enough that’s what they have, but now they’ve decided this ought to change:

The incentives are intended to reduce the environmental impact of the things Swedes buy. The country has ambitious targets to reduce greenhouse gas emissions, but has found that the impact of consumer choices is actually increasing.

They appear to have stumbled on the concept that a low-tech economy in which consumers have fewer choices produces fewer greenhouse gases.  Now they want to move to such an economy, which is in the precise opposite direction everyone else is moving.  We have the developed world.  We also have the developing world.  Sweden wants to kick-start the undeveloping world.

The scheme is expected to cost the state some $54 million in lost taxes, which will be more than outweighed by income from a new tax on harmful chemicals in white goods.

Erm, okay.  But isn’t the point of this new scheme to reduce the number of new white goods being bought?  So if it is successful, this new tax take won’t materialise, will it?

Moreover, Sweden’s economy is growing strongly and the government has an $800 million budget surplus.

My bank account is in surplus.  I’m therefore going to quit heart surgery and take a job in McDonald’s.

I interviewed the man behind the scheme, deputy finance minister Per Bolund, a member of the Green party and a biologist by training.

Ah.

He spoke about nudging people towards better choices; creating jobs for skilled manual workers; and Sweden’s six-hour working day.

Moving workers from skilled to semi-skilled jobs is a better choice?  This doesn’t seem to be consistent with the history of the human race.

I think many of us have had a bike standing around broken and we don’t fix it and then start using other modes of transportation.

Which suggests the individuals concerned aren’t so interested in riding a bike, doesn’t it?

This will expand the number of companies giving these kinds of services, so it’ll be easier for consumers to have things repaired.

How many unrepaired bikes are lying around in Sweden, exactly?

And sometimes you can be surprised by how a small change in fees can really change behaviour.

Oh no, we are quite aware of how fees – especially taxes – can change behaviours.  For example:

And in white goods, the tax break is actually quite substantial since most of the cost of repair is actually labour, so it can really make a quite big difference.

You’ve taxed labour to the point semi-skilled jobs have vanished.  Now you need a tax break to bring them back again.

It’s actually a tax on chemicals. So if the appliance has harmful chemicals in the production process or incorporated in it there will be a levy, but if, on the other hand, you decrease the amount you can actually get a much lower levy, or even a zero increase. So that will give an incentive to producers to decrease the use of harmful chemicals, and we know that appliances are a major contributor to the amount of them in the everyday environment.

Great.  But what if by using less of the harmful chemical the appliance becomes less efficient, thus needing more power for the same performance?  I’m pretty sure this would apply to a fridge or air conditioner.  I’m also pretty sure nobody has thought about this.

The idea is to help the private and municipal sectors use nudges to make it easier for consumers to act responsibly and reduce their environmental impact with everyday choices.

Translation: we’ll make you pay more if you live in ways of which we don’t approve.

We don’t anticipate that this will make people avoid buying things overall, but hopefully it will be easier for people to buy high-quality products because they know it’s affordable to have them fixed if something breaks. So it’s a lessened incentive to buy as cheap as possible and then scrap something.

People generally buy high-quality products because they don’t want them to break.  Nobody buys a high-quality product thinking it is a smart purchase because when it breaks, Olaf from around the corner can fix it on the cheap.  All people will do is buy the cheaper (and probably less efficient) appliances and get them fixed if and when they break.  The high-end appliances, subject to the “harmful chemical” surcharge, will suffer a drop in sales.  And I bet the repairs will still be too expensive compared to scrapping and replacing goods made in China.

And we also know that repairs are more labour-intense than production, which has been largely automised, so expanding repairs could actually contribute to an expanding labour market and a decrease in unemployment.

So you want to go from a lower-cost, automated process to a high-cost, manual process to achieve the same result?  Progress!

Especially because repair services often require high skills but not very high education,

Highly-skilled jobs requiring no education.  I suppose this is the theory underpinning Sweden’s immigration policies.

so we believe there’s a currently unemployed part of the labour force that could benefit.

Why not get them doing jobs that need doing, rather than getting them to do tasks which without meddling with the tax system nobody has a demand for?

Of course it is a boost for the local labour market because repairs are by their nature done near where you live. So hopefully this will contribute to the growth of jobs locally all over the country. Whereas large-scale manufacturing is very centralised and can only happen in a few locations around the nation and internationally.

A blast-furnace in every garden!

We’ve managed quite well to decrease emissions within Sweden – by some 25% since the early 1990s – but we see that the environmental effects of consumption are actually moving in the opposite direction, they’re increasing. And since Sweden wants to be a leader in sustainable development on a global scale, we feel a responsibility to do what we can domestically to decrease the impact of consumption.

No new bike for you, Erik!  The government has decided you must get your old one fixed.

What do you think of the six-hour working day, which is being tried in Sweden?

There’s no national scheme, but municipalities and private employers have tried it, and in general found it quite beneficial for the labour force. They experience better working conditions and you can see some effects when it comes to health, you get fewer sick days.

The fewer hours people work, the fewer hours they spend off sick.  Who knew?

And what I think will really change consumption patterns is the growth of the sharing economy, which has so many benefits for the individual – getting easy access to things like vehicles without the responsibility of ownership and maintenance. That could be a game-changer.

Oh, it’ll be a game-changer all right.  Look at how well the Soviets got on with collective farms which had no responsibility of ownership or maintenance for machinery and vehicles.

I think this is what happens when you make a biologist the deputy finance minister of a country.

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