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Saturday, June 29, 2013

X-Prizes - The World's First Open Argument Against Them Fisked - shock horror - mpg prize won by petrol using car

    When surfing Libdem blogs I ran across this from, who else, the Guardian. It is the first article I have ever seen that says X-Prizes are a bad idea and is clearly driven by Cameron giving them a very limited bit of support. Expect to see similar fact free rubbish in the senses stunning tradition of the fact free anti-fracking and anti-GM lobby's "we shouldn't try it until it has been tried for decades in case something or other is bad about it".

So a light fisk.

Innovation prize-mania seems to be infiltrating policy corners and important institutions everywhere, from the NHS to NESTA and the UNDP. This week, The Queen Elizabeth Prize for Engineering made its first £1m award. A few weeks ago, Cameron launched the £1m Longitude Prize. Earlier in the year, the $3m Breakthrough Prize and the $1.5m Tang Prize were launched with considerable fanfare by celebrity billionaire founders.
Clearly scared

Nature reckons it's "wise to accept such gifts with gratitude and grace". Innovation policy researchers are being asked to provide support to other important institutions, ranging from DfID to the EC. Maybe they want to join the band-wagon and set up yet more prizes. It feels as though it's only a matter of time before there are prizes for the best prize. It could be the meta-prize, the X2-prize, or the sur-prize.
2 paragraphs in and the closest to factual criticism is inventing a name and disapproving of it

So far, innovation researchers have largely held their tongue despite problems with both types of prizes – recognition and inducement. Recognition prizes .....(irrelevant to the main point - criticising a different sort of prize is sleight of hand appearing to link to the real target)....

But it is the hyperbole surrounding inducement prizes that seem to attract the most flies Gratuitous rudeness passing for reasoned discussion. Advocates for inducement claim that a prize will stimulate or even procure innovation, but prizes often fail to address three very well-established facts of contemporary innovation: (1) Innovation is uncertain, (2) innovation is cumulative and (3) innovation is collective. One might well answer 'So what?' to these stylized facts, let me address that.

So what if innovation is uncertain? Uncertainty means you can end up handing over a prize for an innovation that isn't all that great. The $10m Automotive X prize for designing a car that achieves 100mpg went not to an electric car, but to a design that opted for sticking the good ole internal combustion engine into an extremely light frame. Exactly how stupid isYuqub - complaining that a prize designed for an MPG vehicle was won by one that used petrol - does he really not know what "mpg" means or is he saying that any prize should always be won by something PC irrespective of the prize terms

 Reducing battery-size, -weight and -cost would have required one to pursue a trickier research trajectory. When chasing a prize, researchers won't want to get bogged down exploring basics (or basic research) absolutely untrue - prizes work partly because the most basic research often does not pay off so well as the later discoveries it is built on, for example Lindberg's first plane across the atlantic carried fewer passengers (none) than current 747s What he really means is that inventers look for the easiest, cheapest and thus most commercial way of doing something when Guardianists want only the politically approved way, whether it is commercial or easy at all

 and pursuing ambitions beyond the minimum specifications of the prize. Again the complaint is that the prize goes to the person who hits the target set. One can see from this why government grants tend to go to the politically approved & grants awarded by Guardianistas (ie our civil service) don't hit the target

Conversely, if you craft the specifications too precisely and know exactly what you are going to get in advance, then it's not really innovation that you're asking for when you set up a prize. So when the Longitude Prize was put up for measuring Longitude it would have been better if it had been put up for measuring something less specific, like sustainability?

 The more you take uncertainty out of the prize criteria by nailing down the specs, the more you take the innovation out of the activity you're stimulating.

Getting the 'uncertainty-specification' balance right is hard, but getting it wrong can be costly when the prizes are big. The problem is that, as Stian Westlake points out, the stakes are high when it comes to innovation. Prizes would need to be really very big to have much of an effect. It's telling that not a single major car manufacturer bothered to enter; $10m isn't enough for them to get out of bed. In any case, why bother with electric innovation when there is a massive network of infrastructure supporting combustion. This is what really scares him. not that Cameron will offer a "piddling millions pounds to solve the world's most serious problem" but that that some of the £800 billions poured into subsidising windmills will be offered to somebody who produces working solutions (by definition if they don't produce a solution it isn't won & costs nothing. ...

So what if innovation is cumulative? Without knowledge accumulation, some innovations remain impossible. No amount of prize money in the 1800s could have produced wide-spectrum antibiotics or, indeed, a satellite capable of orbiting the moon. But in fact this is an argument FOR prizes because if government puts up an unwinnable prize it won't be won, unless we are very lucky, whereas if the offer a government grant for, say, drilling a hole through the global crust it will go to the leader's friend who will spend all the money and produce nothing

A translation of this point for economists: 'The supply of certain classes of inventions is at some times completely inelastic' – (courtesy of Nathan Rosenberg). I offer the translation because economists are often prime culprits for assuming that innovation is about articulating market demand, correcting failures by mimicking the market with big prizes, strong patents, well-aligned incentives between principal and agent, etc. Only last month, yet another economist was singing praise for prizes last month to induce innovations in issues as complex as pandemics, vaccines and HIV.
Although a prize pay-out isn't necessary until researchers come up with the goods, the problem is that without other innovation policies, you might be waiting forever for your goods. But in fact it is a lot more likely that if you rely on grants you will be waiting forever - for example how is this AIDs vaccine, he takes as his preferred example, governments have been funding in the conventional way for over 20 years going?

 Knowledge doesn't accumulate by itself (myth of unfettered research); innovative efforts need to be co-ordinated. Given how important it is to manage the knowledge accumulation process, one might turn the issue on its head and ask if certain innovations may have happened anyway, regardless of the existence of a prize. The 'effectiveness' of prizes depends on how much you buy into the illusion that incentives are what make innovation events happen presumably this idiot is on record as saying it is an illusion that Tesco supplies goods for the incentive of money. I would be interested in some actual evidence it is an illusion

 Unfortunately, despite efforts to associate the moment of innovation with light-bulbs, sparks or other candescent metaphors, modern innovation is a process - not an event - that relies on accumulated knowledge and capabilities.

So what if innovation is collective? Collective innovation makes it less clear who to award the prize to. Presumably he is also on record as saying that commercial considerations made it impossible for Edison labs to collectively produce light bulbs. In fact Edison's claim to have invented bulbs is dubious and probably would not have survived if there had been serious financial pressure to award the first ....

Prizes fuel the illusion that innovation is about heroic lone inventors, and that pitting them against each other is good for making an exciting race. But races hinder dissemination (and knowledge accumulation) by encouraging researchers to keep their results secret for as long as possible to retain an advantage. Rivals might wastefully duplicate efforts. So if we only ban the Olympics we guarantees we will have faster runners - anybody believe that - anybody believe anybody in the Guardian does, because if they don't then, by definition, they know the argument is a lie being promoted for some political reason, presumably that the ruling classes do better out of having the patronage grants give 

Those that have don't have the resources and materials upfront might not get to play their hand in the game at all. So, by implication, let the ruling classes allocate the "resources"

I'm not saying all prizes should be abolished. But the fetish for setting up new prizes is a distraction to more substantial issues in the innovation system. Prizes are out-dated and the current fad represents little more than tinkering with the edges. Let's not kid ourselves about what prizes can do for modern innovation systems. no mention of a more "substantial" way of achieving results and it has already been proven that prizes are at least 33 times better at producing innovation than the  ruling class patronage which is all he recommends

Ohid Yaqub

First they ignore you, then they ridicule you, then they call for a debate while avoiding debate, then you win. Obviously the Guardian being the illiberal, censoring, totalitarian rag it is doesn't allow these comments up.

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Friday, June 28, 2013

10 Reasons Why LibDems Should Vote UKIP At The Next Election

I used to be a Liberal Democrat until I was expelled on a charge of having had letters published in newspapers supporting the classic economic liberal principles the party was founded on and also for saying we needed nuclear power to stop the lights going out.

I am now a member of UKIP and remain a classic liberal to my bones. As such I may be in a position to understand the position of most LibDem voters (who are not the same as party leaders and activists) and to say why, in the next UK election, LibDems across the country should give their votes to UKIP.

1 - The one thing all LibDems (& most of the rest of the electorate) are agreed on is that our current first past the post system is corrupt; that it produces results that disenfranchises most of those who vote for small parties; that it keeps unpopular LabCons in power and that by providing what economists call "high barriers" to entry to those with new ideas, has been partly responsible for a century of national decline.

Only UKIP agrees with this. For the first time in a century we have a real chance for an electoral breakthrough by electoral reformists. The UKIP and LibDems together are polling about 30% which exceeds what either of the Tweedledum/Tweedledee parties are likely to get.

Electoral reform is within reach if LibDem voters support UKIP candidates in constituencies the LDs aren't going to win. The fact that UKIP's vote is currently bigger may annoy many LD leaders but surely the principle of democratic & competent government is more important.

2 - Electoral Reform, however achieved, might be the only thing that can stop a LibDem meltdown.

3 - UKIP has the same democratic principles the LDs lay claim to. UKIP supports referenda as a major restraint of the political class both locally and nationally.

4 - The LibDems went into both the last election and the one before with manifesto promises of a referendum on the EU. Whatever they did after the election it is clear that true democracy demands that the people get a right to choose. Perhaps we would be on opposite sides in a referendum but at least, however it went, the boil would be lanced.

I think even our opponents would accept that this is a promise we will keep.

5 - UKIP supports the principles of economic liberalism, the individual being more important than the state and the rights of small nations not to be attacked by bigger neighbours (having opposed all our illegal wars) which were the founding principles of the Liberal movement and party.

6 - This would indeed finally "break the mold of British politics".

7 - UKIP has opposed all our recent illegal wars which have only been devisive, expensive and destructive with no benefit for Britain.

8 - Nobody ever joined UKIP to get into the easy road to power. We all did so because we actively want to reform and improve the country. In this, though we disagree with the LD party leadership, we are similar to the LDs.

9 - During the BBC coverage of the Council elections Simon Hughes the LibDem spokesman (there was of, of course, no UKIP spokesman, repeatedly claimed that though UKIP had got far more votes than the LibDems (we got 23% which put us, the Tories and Labour all within 6% points) the LibDems had got more seats under the first past the post system.

This "death bed sinning" must raise concern that UKIP is actually more reliable on this traditional commitment than your current party.

10 - When they look at our policies, which admittedly is not that easy to do if you rely on the BBC and other traditional, media many people who previously voted LibDem find that they actually like most of our policies such as cutting regulation, rolling back the nanny state, free trade, not allowing unlimited immigration, at least questioning the catastrophic global warming scare story, reducing rather than pushing up electricity prices and allowing the economic freedom that can get us growth at least matching the world-outside-the-EU average of 6%.

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Thursday, June 27, 2013

40th Anniversary of Limits to Growth "Environmentalist" Fraud and How the BBC LIes and Censors in the Fascist Cause

   Lets all celebrate the 40th anniversary of the Limits to Growth paper and the massive worldwide PR campaign launched to promote its tale of global catastrophe if we don't embrace Luddism:

 The authors of The Limits to Growth predicted that before 2013, the world would have run out of aluminum, copper, gold, lead, mercury, molybdenum, natural gas, oil, silver, tin, tungsten, and zinc. Oil and natural gas were to run out in 1990 and 1992, respectively; today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.

   From Next Big Future

   It is, of course, possible that some eco-fascist scare story will someday turn out to be more truthful but with the trend so far being hundreds of catastrophe stories proving to be untrue (I am open to and have previously asked for evidence from any Green of any significant scare story that turned out to be true) and none truthful, that the only possible honest default position must be that any Green is lying any time they speak.

   I have previously arithmetically calculated the BBC level of honesty by calculating the proportion of times the BBC broadcast UKIP spokespersons to Greens (less than 1 in 10) to the proportion of support shown in polls (8+ to 1 for UKIP) and multiplying them - 1/80th possibly honest or 98.7% totalitarian fascist.

   However I made no account for the sort of coverage. Since most interviews with UKIP contain (often start with) a variant of "some people say you are racist" - a question since it is entirely unspecific about both who and why, is designed to be essentially unanswerable.

  It strikes me that if the BBC equally started interviews with Green spokesmen by asking "some people say, with evidence, that the green movement has been responsible for more deaths than Hitler and Stalin combined" (the DDT ban alone has increased malaria deaths from 52,000 a year to 1 1/2 million annually for nearly 60 years) that would allow the BBC to claim to be balanced withing that 1.13%.

   [ Of course the same applies to interviews with the Labour/Conservative and "LibDem" parties where the question would be "some people have produced evidence that your party are guilty of illegal war, war crimes, mass murder, ethnic cleansing, genocide, the sexual enslavement of children and the dissection of thousands of living people to steal their body organs for western hospitals, selected and arrested because of their race.]

   That would certainly allow the BBC to claim not to be mathematically 100% corrupt and if I find it has ever happened I will let you know.   

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Wednesday, June 26, 2013

Nigel Farage Speaks in ThinkScotland on UKIP Scotland

   Nigel Farage has an article up at ThinkScotland

It was only a few months ago that Salmond and his fellow plastic Independence crew had to acknowledge the role of the EU on the future of Scotland at all when Mr Barroso brought into the independence debate the possibility of Scotland having to reapply to join the EU. The europhile SNP had assumed, at least publicly, that despite the original application to join the EU being done by the United Kingdom, his desire to break up the UK would not have any legal implications on international arrangements.

Barroso's statement was unpleasant news for the SNP which for years has suppressed debate on the EU and where Scotland's real future lies. And it's a debate which no one has dared to bring into the political mainstream and take up the arguments with Salmond and his colleagues. Real issues like excessive regulation and membership fees hindering economic recovery, immigration and the impact on public services or the greater role the EU are taking over defence policy.

Because the real significance of Scotland breaking away from England, Wales and Northern Ireland and reapplying to join the EU as an independent country would be the very great possibility of joining the Euro. It's the deal that all countries since 2004 have had to agree to: sign up to our club late in the day and you sign up to all of it. It's why Eastern European countries have given up their own monetary independence and joined the doomed project despite the cataclysmic effects it has had on other countries in the eurozone like Greece, Portugal and Cyprus. It was a legal obligation not a choice by an informed population which led Poland to give up the Zloty for a currency which is destined for disaster. 

   Read the whole thing here.

   With my natural modesty I have added this comment.

  "A "Yes" campaign problem is that all of the party grandees in it (UKIP have been openly excluded from the campaign) are committed to the EU. This means they dare not use many of the most unarguable arguments on Scottish "independence in Europe". Not only would we be stuck with a commitment to join the Euro our proportion of the remaining debate would be up for grabs; we would probably have to accept the Shengen Agreement on immigration (which in turn means border posts at Berwick); and the end of the social chapter opt outs which it has been calculated would cost 1.8 million jobs (proportionately that would be 150,000 jobs here).

 Because these arguments are verboten to the Yes campaign their opponents are not under any pressure to explain what the concomitant gains would be - if any can be identified."


Tuesday, June 25, 2013


Yesterday I went to the "Glasgow Skeptics" lecture on Bitcoins.

I have previously lamented the "Skeptics" absolute refusal to even consider scepticism on global warming but this was rather different.

Bitcoins are a computer generated online currency. New Bitcoins get created at a falling rate and will do so until there are 20 million of them. Currently there are 11 million with a total value of just over $1.1 billion. It is my opinion that they cannot currently be forged and that it will take several decades of the operation of Moore's law before it becomes theoretically possible and even then it will not be practical.

This is the strength of Bitcoins - they are a fiat currency backed by nothing but popular belief. However, unlike other fiat currencies they cannot be inflated away by government's "quantitative easing.". Since their value depends entirely on belief and not subject to the normal rule of economics, that incre4ased demand will increase supply, they are entirely vulnerable to speculative swings (this has already happened at least once).

Their success shows

(1) that there is immense demand for a currency that is not going to be inflated away by governments (or typically in the "skeptics" opinion, by banks)

(2) since this system of exchange can run automatically with virtually no running costs, banks charging for debit card transactions is pretty much pure profit. The extent of these charges is concealed by them being paid by merchants but any economist agrees that, in a competitive market, it doesn't matter whether transaction costs are paid by the buyer, in which case they are passed on, or by the seller. In either case they are eventually paid by the seller, but it is always politically more stealthy to make them seller charges. In Britain (& I assume in other countries where the banking industry has been able to lobby, it is illegal to charge extra for credit cards sales which means prices are marginally higher for everybody.

However it is clear from the Bitcoin system that the entire banking with credit cards system is money for old rope and will, in due course, be swept away by something of which I suspect Bitcoin is a harbinger. But possibly it will be Bitcoin itself - in which case, bearing in mind that world GDP is $70 trillion and there are 20 million, if they cornered a significant part of the market the stable value would rise to about $1 million each they can be bought and sold in infinitely divisible fractions).

Personally I think Bitcoins would be an excellent investment, despite the fact that they have no physical reality, for somebody with a few thousand they fancy risking. In effect what is happening is that early adopters are gaining the profits which, with credit cards, go to banks, but here go into fuelling demand and therefore the value of Bitcoins. The lecturer insisted that Bitcoins are mildly deflationary, in that they should continue to represent a fixed quantity of global wealth, but in fact they represent more a fixed amount of the wealth of users so that if usage increases manyfold so must their value.

Warning: If governments decide to crush Bitcoin - for example the US government making "possession" of them illegal as it did with gold in the 1930s - it would greatly reduce their usage and thus their market price and anybody who was in it for short term speculation would lose. Ah well. Even so I do not think anything short of the world's governments, perhaps through the G20, attacking it, would finish it off.

In questions I mentioned the African experience, mentioned by libertarian MP Douglas Carswell ----- of trading by mobile phones in which the trade is carried out in mobile phone credits. This is similar in effect though it is not a fiat currency, so long as they are backed by the phone company's promise to redeem them on demand, i.e. so long as the phone company is solvent.

It was interesting that the "Skeptics" gave space to this libertarian free market idea. Though it is not marketed as such. A number of people in the audience recognised how this undercuts big government's "democratic" right to inflate the currency, tax massively and restrict trade in such things as drugs and were suitably opposed. Perhaps there are quite a lot of people who, once they get beyond the political labels turn out to be old fashioned small government liberals after all

Also interesting that the lecturer Matthew Campbell-Sturgess is a young SNP councillor. Compare and contrast with the SNP MEP candidate Christopher Stevens who, at a different meeting, explained that the major division in British politics is not over EU membership or "independence" within it but over whether the future economy should consist of more government inspectors and regimenters, as he and the SNP wished and why they supported the EU, or fewer and more wealth creators as "right wing" libertarians like UKIP want. Clearly the division does not merely run through British society but through the somewhat schizophrenic SNP too.

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Monday, June 24, 2013

The UK Space Agency Must Be The Worst Space Agency In The World & A Zero Cost £10 Billion Alternative

   Recently I was talking to somebody who I won't name but is in a position to know who said:

"The UK Space Agency must be the worst Space Agency in the world"

and went on to justify it firstly with the example of Virgin Galactic's initially wishing to use a Scottish site for their suborbital northern (to see the Aurora Borealis) flights but had got no support or help in getting through the bureaucratic maze*.

    His second example is that the space agency themselves charge £6,500 for filling in a form.

    For these worse than useless roadblocks we are paying good money. Compare and contrast my previous submission to the government that we put Britain's space budget into an X-Prize Foundation which a subsequent FoI showed had never even been considered, let alone answered.

    Which incidentally brings me to a back of the envelope bootstrapping method of paying for a space and other technology prizes.

    Can we pay for government x-prizes out of printing more money.

    For money printing to be non-inflationary it cannot increase faster than the rate of economic growth.

   Currently space industries are worth £9 billion and growing at 10% a year. If X-Prizes (& getting rid of worse than useless regulatory parasitism) were only to double that this would mean an extra £900 million a year. Money in circulation is about 1.5 times annual GDP so the supply could be increased by about £1.4 billion a year. Putting that into the Foundation funds (or giving them permission to print money of the assessed increase in space industry GDP beyond the previous annual 10%) . I would first include transferring the current space budget of about £300 million given to ESA via our "space agency" to the X-prize fund.

   The beauty of this system is that it is self funding**. If there is no increase in space activity there will be no extra money available but equally if there is no increase in space activity in Britain nobody is going to win any of these prizes. If there is as much as I expect (US space industry is growing at 17% and I am sure this is not the upper limit) and the Foundation is able to offer prizes on the, very conservative, basis that they will not all be won before 5 years that would mean they could immediately offer £6,500 billion  of prizes [(£1500m + 300m)X5].

* to be fair the bureaucratic maze was mainly the responsibility of the Scottish government and they did nothing to facilitate Virgi8n either, thus Virgin ultimately went to Sweden.

** actually to be properly revenue neutral the total increase in taxes from this extra 7% or much more growth should also go to the X-Prize Foundation - that being about 37% of the increase in GDP which comes to about £230 million in the first year and rising by more than the same amount annually bringing the total in 5 years up to an absolute minimum of £10 billion [the original £6.5m + 230x(1 + 2 + 3 + 4 + 5)}


Sunday, June 23, 2013

A Dilemma For Free Marketeers, Why Is Austria So Successful - A Reply

Daniel Hannan recently did an interesting article in which, as a libertarian, he asked how Austria has managed a high standard of living while being economically relatively illiberal. If economics, at least the liberal version, is a science, or even liberal, the theory must be constantly tested against actuality and hannan is right to do so. It is a question I have asked and answered satisfactorily regarding the USSR (as discussed under) and less satisfactorily, with the cresting of the UK economy in the late Victorian era. This is the answer I have put on Hannan's blog but I think it worth repeating here.

I  know what the answer to this is. Professor Peter Cameron, professor of international energy law and policy at the University of Dundee, wrote,

"Energy is at the heart of modern life"
"In modern times the main driver of economic growth has been, and continues to be, energy".

Jerry Pournelle has said that "Economic freedom + cheap energy = growth" is the formula.

There is a sub-branch of economics known as energy economics which has repeatedly shown an almost 1:1 correlation between growth in electricity use and GDP (in China it has been almost exactly 10% for 3 decades). Since electricity transmission hadn't been discovered in Adam Smith's time he cannot be faulted for only knowing the first part of Pournelle's formula.

Checking Wikipedia shows that 70% of their electricity is hydro which, when available, has virtually zero running costs once built. Their installed capacity is shown as 14.2 GW as opposed to our roughly 50 GW. Their population is 8.47 million, 13% of our own.
If anything the surprising thing is that they are not better off and that can be explained by the lack on the economic freedom side of the equation.

I had, for a long time, worried about a similar but larger example.

During the 1930s the USSR managed 10% annual growth while the rest of the world was in Depression. The psychological effect of that on world politics cannot be overestimated since even supporters of capitalism became convinced that "planning" was the answer to everything. For example when the USA, scared by Sputnik, decided to go to the Moon, they did it by a massive government programme.

However when you learn that in that period the Soviet electricity capacity grew by a massive 23% each year their 10% growth shows that the Soviet command economy, even then, was greatly underperforming what a free market could have done.

Looking at the relative health of the French economy, backed by 85% cheap nuclear power we see a similar result. The US economy is similarly being pulled out of recession by shale gas.

    That unlimited cheap energy is available to us - either nuclear or shale gas - any time our political class are willing to allow it, is indisputable. On this I would point you to the admirable papers on energy production produced by Roger Helmer, UKIP's energy spokesman. With that we would be out of recession in weeks, perhaps days, and obviously will be as soon as UKIP is in power.


   So economic free market liberalism works but it is not the whole answer to economic success and may not even be most of it. Of course, by definition, a free market economy will allow energy production to be made on an economic basis, rather than by political fiat, which explains why the correlation between freedom and wealth creation remains normally so very close.

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