Sugar tax leaves a sour taste

THE figures are startling and should be cause for concern however imposing ill thought through taxes is not the answer
According to recent figures one in three children leaving primary school is overweight, or obese. This is not to say, as some newspapers have claimed, that this same proportion of children are obese, just that they are over the recommended weight for their size.
The Common’s Health Committee is now proposing a tax on sugary drinks to help combat the epidemic of obesity which they see as infecting the country. A pigovian tax on sugar in the UK would fail to do anything more than cause even more fear among those parents already aware of the dangers of too much sugar and penalize families from the lower end of the income spectrum though. At best it would create a temporary decline in the amount of sugary drinks being consumed as a result of the media coverage; however, the overall impact in the long term would be negligible on the consumption habits of individuals.
Much has been made of the impact a similar tax has had in Mexico. Proponents of the legislation are only relying on a micro focus rather than looking at the larger picture. In Mexico the tax is based on per litre servings of sugary drinks. While the data shows that there has been a drop in the consumption of larger bottles experts have calculated that this reduction can be explained by people shifting to purchasing smaller servings. One such study led by Emilio Gutiérrez, a professor at Mexico’s ITAM University calculated that this shift in consumption habits from larger to smaller servings could account for 60% of the documented drop, while not actually creating a decline in the overall amount of sugary drinks being consumed.
Pigovian taxes are intended to address problems associated with negative externalities in the market, such as the health risks linked to too much sugar. By imposing these taxes states hope to combat inefficient market outcomes by imposing a cost for negative behaviours. They are already used in regards to smoking and alcohol and it has been suggested that such taxes should be imposed on fatty goods as well as sugar.
One of the key problems in imposing them though is in ensuring that the negative social consequences of the good, or action being taxed, is correctly calculated to ensure that it is balanced against the rate of tax being imposed.
Due to the overall costs of sugary drinks the level of taxation on each bottle would result in minimal revenues and marginal, overall, increases cost of the end product. In Mexico the tax started at about 10c on the dollar before being reduced to 6 cents. This type of increase would in most case be absorbed by the producers, who will still be making supernormal profits on their goods, and in cases where it isn’t is unlikely to be enough to deter people from making the purchase.
The cumulative effect of the increase, in the cases where it is passed onto the consumer, is most likely to hit those at the lower end of the income threshold. The theory of the tax increasing the substitution effect fails to take into account behavioral triggers which drive particular groups to purchase specific goods. Certain labels have a cache about them which creates a system of conspicuous consumption, particularly among the young and less educated, which will not alter with the creation of the tax and won’t be altered by any amount of substitution factor.
The concept of the tax has been drawn up by well intentioned individuals who haven’t realised the real draw of sugary drinks. There is a reason why people buy Coke and not the supermarket own brand. It isn’t about the cost. If obesity is really to be tackled then taxes on sugary drinks won’t do it. Increased education about health issues and more exercise programmes in school may be the way to go, if only we could find a way to fund them.

Inclusion trumps isolation in the war on terror.

The events in Paris have simultaneously brought out moments of the best and worst of humanity in the news. The demonstrations of solidarity throughout the world are incredible and should be supported. Never before has the overuse of red, white and blue neon lighting been so welcomed across the world.

Meanwhile, however, there is a growing feeling of isolationism and hatred which has started to take grip. It is no longer a surprise that Republican Presidential nominees have to take an anti-immigration stance if they want to appeal to the vocal right, what has been something of a surprise is just how vile some of the recent comments have been. When Donald Trump suggests that Muslims should have to sign a register or Ben Carson likens them to rabid dogs and they can still stand a chance at winning the nomination then there is something very wrong with the system.

As easy as it is to ridicule the Republicans and their increasingly isolationist ideas it isn’t just the American system of government which is taking an anti-refugee, anti-immigration stance. Across the world the fear of refugees has been growing and the attacks in France have just helped elevate the rhetoric of the right wing to new heights.

It is easy to explain that we should be helping people who need it. It is pretty obvious to most people that the majority for those who are fleeing for their lives are not planning terrorist attacks. The amount of news coverage has made it clear to the majority of semi educated individuals with an average GCSE reading age that the potential proportion of refugees who may harbour jihadist sympathies is such as small fraction as to be mathematically insignificant. Of course the risk of one individual with a bomb must be taken seriously and sensible measures taken to prevent them. Denying millions of the chance of a safe life away from the bloodshed is not the way.

New housing policies in the UK for example, ensuring that landlords have to get specific documentation and id from potential tenants, will not prevent people running to Britain. It may delay them from finding shelter, however, after living rough for months and spending all of their money getting there is unlikely to deter them for long. What it will do though is start to create isolated communities, communities which are willing to only accept people of the same religion, ethnicity, culture. Instead of protecting the country it allows for a sense of isolation to spread and from there the increased risk of radicalisation.

There are many other policies being suggested across Europe and the West and almost all of them will lead to an increase in the threat of radicalisation. Terrorism fails to flourish when people are educated about multiculturalism. It relies on a feeling of persecution and hatred, it is almost impossible for it to spread in an atmosphere of inclusion and understanding.

If governments are serious about stopping the spread of terrorism then they need to dramatically alter their current mindsets. Of course threats need to be identified and stopped but creating a persecution complex is not the way to do it. Only be promoting genuine understanding and tolerance can terrorism truly be defeated. Although isolating some of the Republican Presidential candidates may not be an entirely bad idea.

Cost of terror

The tragic events in Paris last Friday have left Europe reeling. Politicians have been clamoring to denounce the atrocity and by chance announce their latest round of measures to tackle any such threat in the future.
Social media has been inundated with people declaring their solidarity with the French. Others though have criticised the outpouring of emotion as a colonial attitude which should have been just as strong when a suicide bomber in Beirut murdered more than 40 people, or Islamic State allegedly brought down a passenger jet leaving Sharm el-Sheik.
Why have people not been so quick to share their sympathy? Of course there is the sad fact that many people do only care about things which happen on their doorstep . They know where France is and therefore it means more to them  This is not the reason for so much emotion over one event and not the other. The sad fact is that a suicide bomber in Beirut or a passenger jet being blown out of the sky aren’t shocking any more. We have become inculcated against the emotion response that they should engender.
This is a terrible fact to acknowledge and it has even more terrible consequences. As we become more used to a wider variety of terrorist actions then the terrorists will have to start becoming even more extreme if they want to maintain the same level of fear among the population.
Terrorism isn’t new. It isn’t about religion, ideology, politics, hate, or any of the multitude of different reasons which are trotted out. It has little to do with an influx of refugees, aside from acknowledging that these are the same people they are fleeing from. It is down to individuals. Individuals who believe that they are somehow better than other people. They may use religion as an excuse  it Islam has as little to do with IS as Christianity does with the Klu Klux Klan.
Terrorists have been around for hundreds of years and over that time their actions have evolved as people become less affected by what they see and hear. Their objective rarely shifts though and it is this which really should cause the fear.
Even in their deluded minds IS members probably do not imagine that they will be parading down the mall as part of the conquering army. If they are to bring down governments then they will do it be crippling the economy.
The bombing of the Russian airliner has already started a chain reaction which will see holiday resorts lose millions as tourists stay away for the time being. The attacks in Paris merely highlight to potential holidaymakers that they aren't safe anywhere and would be better of staying at home.
The full impact this will have on trade and currency is yet to be realised, however, the markets are already seeing the affect as stocks drop in value.
Meanwhile governments, already suffering from economic woes and looking to make cuts, are forced to expend more money than budgeted on increasing security, even though they know that this is mostly for perception rather than practical reasons.
Terrorism is a criminal rather than military action. To call then soldiers or declare war against them elevates them in people’s minds and increases the threat. They are murderers and thieves. If viewed as this then their impact starts to be diminished. Their effect on the economy minimised. It is only when we allow the fear they want to spread that they can harm us. Their greatest fear is that we unite, not just French and English, European and American but everyone, Syrian, Iraqi, Russian. We need to work together to create a strong global economy and remove their only hope of ever achieving close to their ambitions.

A free market economy

ECONOMICS could soon be facing its greatest shakeup since Adam Smith put pen to paper. Previous notions of supply and demand are being eroded as consumers shift their interests to an increasingly digital, and open source world.
Obviously this is just hyperbole to garner a reaction and we are not about to see the collapse of our entire economic system. What is likely though is that we are approaching a new phase in economic theory as consumers cease to meet a price equilibrium with suppliers.
This shift in consumer’s preferences has started to have a profound impact on the way in which companies think about business. For media outlets digital has created a far more diverse and expanded market than could ever have been considered for a solely print organisation. With this expansion of customer base comes an increase in competition.
People no longer view news as something to be mulled and reflected over. Whereas once today’s news was, at worst, tomorrow’s fish wrapper, it is now forgotten by next minute. Free news sites and the the explosion of citizen journalists on social media has overwhelmed the old guard. Each media group has looked to itself, and its readership, and modified their business models. Paywalls, direct marketing, dynamic and tailored advertising based on reading preferences, each has its own idea of what will work and time is yet to confirm which will be right.
Meanwhile the larger publishing industry faces competition from the rise of ebooks, and individuals ability to publish their own so quickly and easily. The internet is monetising people’s hobbies like never before and in so doing places an increased burden on pre-existing business models.
So what is the problem? Industries shift and change all the time. Technological advances have always been viewed with caution as naysayers warn of dire consequences for people’s jobs. In previous models though as technology created a shift in people’s spending and consumption habits it also created an expansion in the sale of substitutable goods.
Where the digital revolution differs from the industrial is in people’s perception that certain goods should be free. The rise of free downloads, news services, torrents and ebooks is likely to create an unsustainable pressure on the production of these goods.
In some cases the gaps in the market will be filled by people willing to supply their time for free. The issue therefore becomes one of quality in certain markets. For current economic thought it is the quantity of goods supplied which effects supply and demand. As more people flood the digital market, handing out services either free of charge,  or as is growing on a peer  to peer level removing the need for companies and by extension employees, it will become the quality of the goods supplied which will make the difference.
The traditional economic model may need to shift therefore but it is most certainly not broken. As people realise that they cannot obtain the standard they want from free and non-regulated goods and services they will start to move back towards paid for products. The digital revolution is upon us but it is a revolution and as such will  come back around. Adam Smith may be reassured that his invisible hand is still at work leading to what could be rising standards in the future and an improvement in socially desirable options later down the line.

Brexit would break Britain

THE main problem with the Eurosceptic campaigns is that Britain doesn't deal well with isolation.
Despite its resolute status as an island nation for most of its history the United Kingdom has been reliant on resources outside of its own borders. Culturally and economically it isn't geared towards going it alone.
There are unquestionably some areas of  Britain's membership of the European Union which could potentially do with a bit of a dust down and shake up but for the most part we are better off for our part in it.
The strangely cereal sounding "Brexit" as the tabloids have coined it is not the way though. For all the benefits, of which there are few, which may materialise shortly thereafter the long term damage would feasibly cripple the UK economy. Meanwhile any argument which could highlight the benefits of leaving will automatically be eclipsed by the economic issues surrounding both the in and out campaigns.
The rallying cry of the right "£55million spent daily on EU membership" may make a good Daily Mail headline but it misses a fundamental point of business, you have to spend money to make money.
First off the figure of £55million which has been quoted  by some of those pushing for Britain to jump out of the EU boat is a gross miscalculation of the data. This is primarily as it is taken from gross rather than net figures, which, based on 2012 statistics, placed the net daily contribution at £33million.
Even this figure is heavily skewed as it takes into account non-fiscal factors, or more simply it guesses at possible losses caused by such factors as the Common Agricultural Policy, lost jobs through free trade and labour movement with other EU states and additional costs from regulations.
On a household basis the cost of the EU paid by the government is actually knocked down to approximately  £20million per day.
At this point this amount then needs to be offset against the negotiated rebates Britain already has, roughly £8million, so the figure of £55million is now down to £12million. Even these figures, however, based as they are on EU spending and investment returns can be debated further when compared to United Kingdom Treasury figures, which are based on central government calculations and only factor in “official” government transactions rather than the money saved and spent by British households.
This amount could still be seen as too much by those who want to see an isolated Britain though, after all why spend £12million when you could be spending none and keep that money in your own treasury? Here in lies the crux of the matter the “off the books” money. The EU currently counts for approximately 45% of UK exports, based on 2015 figures. Meanwhile Britain relies on the favourable terms for trade it has with countries in the bloc to facilitate 53% of its annual imports, all of which will cost more following an exit from trade agreements.
Then there is the external trade factors. America, China, India et al have already expressed concern over a British exit. For all its former glory Britain isn’t seen as a key trading partner for non-EU countries because of what it once was. It is seen instead as a gateway to the rest of Europe. Preferential trade agreements are based on the idea that it will smooth the way for larger deals on mainland Europe. Brexit removes this impetus and will rapidly drive foreign direct investment out of the UK and elsewhere.
The long and short of it that leaving the EU may be a boon for some historic ideal of an solitary powerful Britain but it doesn’t face the facts of the current global economy. For Britain to survive it must integrate. Brexit would do nothing more than break Britain.

Who will pay for gun control

ON OCTOBER 1st America reached 1000 mass shootings in the three years since the Sandy Hook massacre, which left 20 young children dead.
The recent headline grabbing attack on a campus in Oregon was number 994, meaning there were a further six on the same day. It was the 294th mass shooting in America this year. Following the shootings, which left nine dead, not including the gunman, United States President Barack Obama gave yet another press conference calling for stricter gun controls.
It isn’t the first time he has made this plea though. The same call for action was made after Sandy Hook, Charleston, Fort Hood... In total President Obama has called for more regulations governing gun ownership fourteen times.
Why then is it that America still won’t give up its arms? One reason is the Republican right, which has viewed the right to carry arms as a constitutional matter and therefore something to be clung onto irrespective of rational arguments against. Perhaps the key case to be made against the second amendment, aside from its ambiguity concerning who can actually carry arms, is that it was written at a time when you had to take a tea break to reload between shots. Guns have moved forward and it is time that legislators came to terms with this.
If the Republican right really believed that handing out more guns would help prevent more deaths then they would only have to look at the statistics for mass shootings on military bases to see the flaw in the argument.
Politics is just the public face of the case against tighter gun control. It is the economics behind the politicians which are the real reason President Obama will inevitably have to give another press conference before his term of office is over.
In 2012 the National Rifle Association was reported as spending approximately  $15million on Republican political campaigns in an effort to thwart President Obama from regaining office. American Presidential campaigns have become known for their multimillion dollar war chests. The size of the NRA’s fiscal support for the pro-gun republicans gives a sense of the money involved though and the scale of the opposition President Obama is facing in his attempt to overhaul gun laws.
While the arms industry is notoriously hard to find exact figures on the Norwegian Initiative on Small Arms (NISA) estimates that American small arms purchases in 2009 accounted for 38% of global total of imports at $1.8billion, more than 47 other leading importers combined. Meanwhile figures given in 2010, relating to 2007, by the US Census Bureau estimate that domestic sales revenue for smalls arms sales could be $2,742 million per year, with a payroll for employees in America of $507million.
The money involved is vast and the interest groups powerful. It isn’t an unwinnable battle though. The government’s long running campaign against big tobacco, and its loosening of the corporation’s stranglehold on politics shows that it can be done. It won’t be through good intentions though and will require a shift in focus for the Republicans, among others. The American constitution has been amended and updated before as circumstances required. There is no longer the same need for armed citizens, forgoing the argument of enhancements to the guns they are carrying. The only thing holding back the debate is the question of who will pay the price, the coffers of the arm trade or the lives of the next victims?

May's speech ignores the facts of immigration

A RISING fear of the impact of migration is starting to give right wing politicians the opportunity they have been looking for to gain votes. Even politicians who had previously styled themselves as appealing to the middle ground have started to shift to an increasingly right wing, anti-immigration stance in an attempt to pander to the fears of the electorate.
On Tuesday British Home Secretary Theresa May demonstrated just how far she was prepared to go in her bid to become the next Conservative leader. Making up for a lack of facts with an over abundance of inflammatory remarks during her speech at the Conservative Party Conference Ms May showed that she is prepared to play to the right and drive a wedge through British society.
Instead of looking at the figures Ms May seemed intent on stereotyping immigrants as coming to Britain to steal jobs and be a burden on the public purse. It didn’t seem to matter to Ms May that this flew in the face of the information generated by a report from her own department which stated: “There is relatively little evidence that migration has caused statistically significant displacement of UK natives from the labour market in periods when the economy is strong.”
This use of refugees as scapegoats is not new, politicians have always looked to shift the blame and focus away from their own incompetence. It is however concerning that in a day and age where information is so prevalent and verifiable that such a senior figure within the British government can think that it is acceptable to mislead the electorate in such a blatant way. Perhaps more concerning is the knowledge that many people will listen and believe it.
Serious studies on the economic impact of immigration show that at worst it makes little to no difference in the structure of a society or its fiscal stability, at best it creates significant further employment opportunities, higher wages, long term growth and increased stability within the structure.
In many European countries an ageing population means that within the coming decades there are quite simply not enough people to do the jobs which need doing. This does not take into account the jobs being created by the influences of skilled migrant workers and the additional revenue to the treasury brought  in over time by through the earnings of new entrants in the labour market.
At its very simplest the migration creates an increase in supply and demand. Through more people entering demand for a good rises. To meet this demand supply needs to be increased and to do this you need people to create the good in the first place. The people doing this earn wages and using these they buy more goods, and so the cycle goes on.
While this is an incredibly simplified explanation, lacking in the nuanced details of economic modelling it is a demonstration of why Ms May is so wrong in her analysis of the situation. Meanwhile statements that immigration drives down wages goes against the figures demonstrating how even low skilled workers help drive up pay in numerous industries.
Immigration reduces the deficit through the increased number of taxes being paid, which in turn is used to prop up the public services Ms May seems so sure will disintegrate under the pressure. As for the argument that it "impossible to build a cohesive society” as Ms May so vilely asserts, that argument has been used before, It was used to argue against equal rights for women, it was used for why the slave trade could not be abolished, it has been used to defend every heinous and reprhensible act committed in the name of preserving the status quo.
Times change, cultures change, people change. Immigration won’t collapse our economy, destroy our culture or threaten our society. Immigration is what sustains these things. Immigration enables us to grow culturally and economically. It creates new opportunities for business and provides a basis for jobs in the future. In short it is the opposite of everything Ms May claims it to be.