Madsen Pirie

I went on Adam Boulton’s programme on Sky News on Thursday alongside Richard Brooks of Private eye.  The morning had just seen a new Witches-of-Salem trial by Margaret Hodge’s Public Accounts Committee, and the charge was that firms such as Amazon and Google were manipulating the system to pay as little tax as possible.  I made the point that this is what the law allows.  Indeed, in the case of the European Single Market, it is what the law intends.  Anyone setting up in one EU country can trade equally with them all, and nations are not permitted to tax them again once they have paid in their host country.

A more important point I made as that the value of a company is not determined by the tax it pays, but by the goods and services that it makes available.  My life is enriched every day by Google, and every week by Amazon, and not because the government gets to spend a little of the money they make.  The value to me, and to my fellow citizens, lies in the goods and services that firms like these make available.

I made the point in passing that when firms do have to pay more tax, many studies have shown this comes mostly out of wages.  Richard Brooks described this as ‘contentious,’ but it is well backed up by academic studies.  I also suggested that instead of trying to end low tax jurisdictions such as Ireland and Luxembourg, a better strategy would be to copy what they are doing and make ourselves more attractive.  This whole discussion is a red herring laid by politicians to divert hounds from the real scent: governments are spending too much and taxing too much, and are preventing us from growing richer by doing so.

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Shale gas has changed the game for the world’s energy future, giving us many decades (even centuries) of reserves of a fuel that is cleaner than coal and oil, and at prices that will not inhibit economic development.  Furthermore, much of it is located in regions that are less susceptible to political turmoil than many current oil producers.  Now shale oil from the US has made its appearance as a major factor in future supply.  It is estimated that the US will produce a third of the world’s new oil supplies over the next few years, becoming a net exporter rather than an importer.  It will be self-sufficient in energy by 2035, some analysts think even sooner.

An obvious question is “Where does this leave the Middle East?”  The answer is that it leaves them with their economies dependent on a product that is declining in importance.  The extra supply of US shale oil will put downward pressure on prices, and the switch from oil to gas will do the same for demand.  This is a recipe that points to political upheaval.  Some Middle East regimes have used the wealth from oil revenues to keep popular discontent at bay.  If that wealth begins to dry up, uprisings might follow.  On a geopolitical level, the advanced economies, especially the US, will be less concerned with developments in the Middle East, and will have less inclination to be deeply involved in them.  Put bluntly, the Middle East is going to matter far less than it has done.  It may not be a bad thing to see Western economies relatively indifferent to what happens there.

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Dr Alice Roberts, professor of public engagement at Birmingham University, has made a public plea against the recreation of extinct species.  The point of her remarks is her recognition that scientists are on the brink of being able to do this.  Japanese researchers have extracted the DNA of a hairy mammoth from the bone marrow of a specimen preserved in the permafrost, and will soon set about cloning an animal from it, probably bringing the embryo to term using an elephant as a surrogate mother.  Her objection is based in the fact that their habitat is gone, and they were herd-living animals, so it would be cruel to recreate a single individual for a zoo.  Yes, but once we have one we can recreate a herd, and we can recreate a habitat for them just as we have game reserves for elephants.  Dr Roberts will present a forthcoming BBC2 series, “Ice Giants,” about creatures that became extinct 20,000 years ago.

Our ancestors almost certainly played a large part in the extinction of these creatures, and I have no doubt that we will restore some of them.  I saw the baby mammoth, partly crushed by the pressure of mud, that the Russians displayed in an exhibition some years ago.  It was mind-blowing to see a creature that died so long ago, still with skin and hair.  It looked incomparably cute, and my guess is that mammoths, especially baby ones, will become the megastars of the animal kingdom when we bring them back.  They are a link with our lost past.  And dinosaurs?  Will we do a Jurassic Park?  I think the odds overwhelmingly favour it.  We are unlikely to find viable DNA from blood-sucking mosquitoes preserved in amber, as Michael Crichton imagined, but we don’t need to.  Lurking within the junk DNA of flightless birds is probably everything it would take to make a dinosaur.  We need analysis to identify it all and incredibly complex computer programs to sift through it all and establish the function of each section.  Then we turn on the parts that recreate the jaws with teeth that preceded beaks, the limbs that became wings, and the spiny tails.  We’ll probably have some clues from such DNA strands as can be identified.  Once we have one, we can recreate variations from it that give us others.  Oh yes, they’ll be back, and the world will be richer for it.

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It is always amusing to see when the UK media develop a ‘narrative’ on a subject and interpret every new development or incident in that light.  The narrative is currently “Tories in disarray on Europe,” so every turn of events is adduced as yet more evidence of this.  David Cameron’s plan to introduce a bill in this parliament to make a referendum binding in the next one is described as “a panic reaction,” “ill-conceived,” “adding fuel to the flames,” and all the usual stuff.  In fact it looks rather clever.  The government cannot bring in such a bill without the consent of their coalition partners, which the Liberal-Democrats will not give, so it will be introduced as a private members bill which most Tory MPs will support.  A few Labour MPs will support it as well.

It puts Labour on the back foot, in that if they oppose it they will be denying the UK public the right to have a say in their future.  That is partly what David Cameron has in mind.  He also has in mind that it will strengthen his hand in negotiations with our EU partners for a more independent relationship with them.  And he undoubtedly looks at how this might neutralize some of the UKIP support recently seen.  All in all, it’s a rather clever piece of politics that addresses many problems simultaneously, but the media will not take it that way.  They will shoehorn it into their ‘narrative’ as “more evidence of Tory disarray,” “public relations disaster,” and so on.  Ah well, they’ll learn.  As for the referendum, I think it’s going down.  The local council elections lit a fuse that leads at the end of it to Britain’s withdrawal from the EU.  Our partners simply will not allow us to run our own affairs, because if they did, everyone else would want the same.  I predict that there will be a referendum, and the electors will vote to leave.

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Rather inaccurately describing the Bow Group as a “leading right-wing think tank (it is none of those three), the Telegraph reports its dire warnings about the impending privsatization of Royal Mail.  In a letter to every Tory MP, the Bow Group chairman, Ben Harris-Quinney, said:

“The privatisation of Royal Mail is likely to swiftly form a poisonous legacy for the Government now, and a poisonous legacy for the Conservative Party going forward.”

Mr Harris-Quinney added privatisation could endanger “the financial stability of Post Offices” in rural areas by separating Royal Mail further from the 11,500-network.

Oh yes, and he also warned that the price of stamps is likely to rise when people can least afford it.  Ah, Memory Lane, and the scents and sounds it brings back.  Of course, people said this of Post Office telephones when that was privatized in 1984, and they have said it about every privatization since.  In most cases prices fell in real terms as competition clicked in.  Look at our phone services now.  In some cases prices rose to provide the recapitalization required after decades of under-funding and poor maintenance under state management.  The result has been a modernization of services that have helped British businesses to compete internationally.  The odds are overwhelming that a privatized Royal Mail will introduce modern technology faster, giving us a more streamlined, more effective service.

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The National Institute of Agricultural Botany is just around the corner from me in Cambridge.  I mean that almost literally, in that if I turn right onto Bridge Street and walk awhile, I’ll come to their buildings.  It is with some Cambridge pride that I learned of their announcement of a new type of wheat that could help to feed the world in the future.  Wheat already provides 20 percent of the world’s calories (and rice provides another 20 percent).  The Green Revolution saw increasing yields as new strains, better management and fertilizers took effect, but the increase has slowed.  Future increase will use genetic engineering to increase the acreage on which wheat can be grown, plus the yield from each plant.

The Cambridge development was not achieved by genetic modification, as the Institute carefully points out, no doubt to prevent environmentalist thugs from smashing their labs and trampling their crops.  Instead the scientists used cross pollination and seed embryo transfer to incorporate some of the qualities of goat grass, an early ancestor of wheat, into modern varieties.  Goat grass is one of the varieties of primitive grasses that evolved into modern wheat about 10,000 years ago when our ancestors took up farming.  The researchers were looking to add greater resilience and disease resistance, but found that one strain achieved a 30 percent increase in yield.  There is much testing and regulatory approval to be done, but after that, bigger harvests lie down the road.  It is this sort of imaginative progress that gives to lie to the doom-mongers who tell us that the world will starve.  Well done Cambridge!

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I wrote about my participation in last month’s Intelligence Squared debate on Karl Marx. The motion was whether he was right to say that capitalism will collapse under its own contradictions. Of course I did not think so, and spoke accordingly.  It was quite a big night at the Royal Geographical Society, with an audience of just over 600 people.  The debate is now up on the Intelligence Squared site, and anyone who wants to catch it can do so here.  My 7 minutes start at 0:30:05, and I’m on for a brief 95 second summing up at 1:33:40.  As I reported, although the audience was roughly evenly divided at the start, our side won over most of the undecideds, giving us a majority of over 100 at the end.

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