"They can pay more for their food" - Jay Rayner meets Marie-Antoinette

I'm going to leave aside accusations of vanity, self-promotion and smugness because we are all guilty of such vices. I'm going to focus instead on the vexed question of whether it is ever morally defensible to argue that governments should enact policies people should pay more for something as fundamental as the food we eat.

Here's the argument:

British consumers have become too used to food being sold too cheaply. In an age of austerity when many are struggling it is a tricky argument to make, but the fact remains. We need an agriculture sector in a position to invest in its base to help improve our productivity and therefore our self-sufficiency. The 10% of income (down from 20% in 1970) that we spend on food does not enable that. Many may find this unpalatable but the fact is this: unless we improve our self-sufficiency, we will be at the complete mercies of those international markets. Unless we pay a little more now, we risk paying vastly more later. This is an argument that farmers, retailers and the Government needs to engage with.

This is the core of an argument made by food writer, Jay Rayner, as a sort of cod justification for refusing to give the benefit of his knowledge and expertise to the UK Government. Now I know most people think Rayner's article is about the unfolding terrors of Brexit but it isn't, it's about how Rayner thinks the UK (note the UK not Europe or the EU) needs to be more self-sufficient in its production of food because lots of terrible things might happen if we're not - most of which, surprisingly, is about food prices:

...the UK sits with dwindling self-sufficiency, in a stormy world in which food has become one of the great economic battlegrounds. Added to that is the appalling folly of Brexit, forced through by a cabal of ideologues happy to trot out falsehoods about the sunny uplands of economic joy that leaving the European Union would bring.

Instead it has resulted in a devaluation of the pound, making imports more expensive and the exporting of our food more attractive.

If, as many fear, a bad deal is done for Britain resulting in huge tariffs and penalties on trade, food price inflation is going to be in double digits for years to come. That’s if we can get hold of food at all. The people who will suffer the most, of course, are those who already have the least. For them the buying of food will use up a massive proportion of their expendable income.

Now there are a few things here that do rather matter with the first being the presumption that a UK government would impose "huge tariffs and penalties" on trade in food. And, given that this would be necessary to have the policy he wants of greater self-sufficiency, why he has such a problem with such impositions? Or, to put the question a different way, how does Rayner propose to increase the proportion of UK food consumption produced in the UK? And wouldn't this be completely impossible if we remained a member of the EU?

To give Rayner his due, he refuses to wholly embrace the 'supermarkets are totally evil' line used by many of those supporting his mission of expensive food. Rayner also slaps down the urban growing fad:

They are interesting educationally. Allotments are good for mental wellbeing and general fitness. But the carbon footprint of the food produced tends to be appalling.

The problem is that, in criticising localism, Rayner undermines the basis for his argument on food production and self-sufficiency.

...do not be fooled by environmental arguments around localism. What matters most when judging environmental impact of food production is the full life cycle: you need to look at the carbon (and other inputs) not just of the trucks getting produce from field to fork, but in the farm buildings and machinery, the fertilisers and the workforce.

It's hard to find a more compelling argument for international free trade in agriculture than this one. A world where food is grown in the place most suited to its production rather in a less fertile location just across the road. If food miles aren't the problem (Rayner cites transport costs as 2% to 4% of total food cost) then what are the arguments for self-sufficiency at any level below the whole world?

It seems to me that Rayner, if he is to make his argument for remaining in the EU, has to recognise that the shared competence on agriculture needs to be viewed at the level of the whole union not individual member countries. And just so we're clear what this means:

It turns out that the EU is not self-sufficient in terms of all the nutrients normally locked in agricultural products and principally available for different usages: The respective self-sufficiency ratio is only 91 per cent.

I hate to make Rayner's pro-remain argument better than he does but being 91% self-sufficient in food is better than being less than 50% self-sufficient in food - and this is without any change at all to our current approach on food prices. Rayner makes a localised and protectionist argument (one that, incidentally couldn't be achieved if we stayed in the EU) focusing solely on UK food production rather than EU food production within a single market.

Rayner doesn't set out how his proposal to increase food prices, perhaps even to double those food prices will be achieved. It seems from his article that the model is essentially to dramatically reduce the area under production through environmental regulation and, therefore, to increase the costs to UK farmers. Obviously such a policy can only be achieved if two things are done: huge tariffs amounting to de facto import bans on foods that can only be produced expensively in the UK and the introduction of VAT on food so as to fund, in part, the subsidies necessary to sustain newly uneconomic farm businesses. And, to be blunt, no government is going to get away with imposing a huge tax on food, so the only way to deliver Rayner's policy is through preventing (or at best, severely restricting) imports of food. Fans of the corn laws will be delighted!

It shouldn't surprise us that Rayner doesn't get to the financial and economic logic of his argument (preferring instead horror stories about horsemeat and vague suggestions that the European Food Safety Agency, EFSA, regime would be scrapped) because it makes almost no sense at all. Not only does the logic of his argument about the EU tell us we are already more-or-less self-sufficient but also that doubling food prices has to involve a massive tax hike on food.

To return to where we started - is it morally justified to argue for government action to hugely increase food prices? For my part, I don't think it is an ethically defensible argument. Food is essential (and especially the basic nutrients Rayner considers when he talks of the 2007/8 food price spike) and government should prioritise policies that reduce prices such as relaxing planning rules to allow more efficient supermarkets. Rayner, like Tim Lang, the lefty food policy wonk of choice, fails entirely to see that the very people who lose under their policies are the poorest. And to suggest otherwise as Rayner does, is to propagate a terrible misrepresentation - the massive hike in prices his policies demands can only reduce the quality of life for millions of families in Britain. I'll be OK, Jay Rayner will be OK, but the poorest and most vulnerable in our society won't be OK.

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No Professor Lang, Brexit won't lead to food riots...

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Tim Lang, Emeritus Professor of Food Policy at City University thinks Brexit could lead to food riots:

But given that the WTO rules are “the lowest common denominator” and the Codex Alimentarius is determined in meetings that are “dominated by big business and lobbies [making] the EU look like the most democratic organisation in the world”, this is far from ideal. The result would be food riots, says professor Lang.

Yes folks, this eminent food 'expert' thinks there'll be food shortages, huge price hikes and general chaos because we'll be outside the CAP and subject to the 'common external tariff'. Here's a sample:

The immediate impact of the decision to quit the 28-member state bloc looks like rising food prices in a country that produces and grows less than 60% of the food it eats and is particularly reliant on imports from the EU for fruit and vegetables.

Speaking to FoodNavigator yesterday, Tim Lang predicted it could take five to 10 years for the UK to become food self-sufficient in food products, if that extreme scenario ever arose. And in the meantime? “People will pay more for food. The British people have voted to raise the food prices," he said simply.

Now, given that Prof. Lang and his pals have been agitating for more expensive food for ages, you'd have thought they'd have loved all this but let's take them at their word. Do they really think those Spanish tomato growers, Italian orange farmers and French wheat barons are suddenly going to whack up the price of the stuff they're selling into one of their biggest markets? Or - as Professor Lang seems to hint - stop selling to us entirely. For a Professor of Food Policy this seems incredibly ill-informed on the basics of trade.

There might be an impact on prices if the pound falls against the Euro. But set against that the UK having better access to non-EU markets in Latin America, the Middle East and Africa - all of which grow the same crops as those Spaniards, Italians and French farmers - and it might be that us having more choice will actually drive prices down for the fruit and vegetables Professor Lang is so bothered about.

We have no need at all - none - to become self-sufficient in food because leaving the EU increases the security of our food supplies by taking us outside the anti-trade restrictions of the CAP and other EU controls. That a Professor of Food Policy doesn't see this should worry us. But then it's Tim Lang and he's nearly always wrong.

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Jay Rayner, millionaire food snob, tells poor families their food is too cheap...

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It has become something of a trend - millionaire cultural lefties popping up to tell poor folk that they are paying too much for stuff. The other day it was Vivienne Westwood railing about capitalism while charging over a grand for a handbag. Now it's 'masterchef judge' Jay Rayner - the doyenne of Guardian-reading food snobs - who is telling the poor they should pay more for their dinner:

Families need to pay more for food and have become 'far too used to paying too little', Masterchef judge Jay Rayner told MPs today.

The food critic and author told a parliamentary committee that food was too cheap to support British farmers.

He said: 'We pay too little. We're far too used to paying too little. And the only way we have at our disposal, I think, to secure a robust food supply is by investing in British farming and that does mean consumers pay more and look for that label.'

Rayner even explained that food poverty was nothing to do with real poverty:

'Yes, we do need to pay more for food but if you focus on a thing called food poverty then you're not going to be looking at the bigger picture involving the whole population.'

So we're to have more expensive food because British farmers can't compete with farmers somewhere else in producing the cheap food that people want to buy. And Rayner - who has no qualifications on this matter besides having a famous mum and a cushy job being paid by newspapers and magazines to eat overpriced restaurant food - latches on the familiar set of supposed concerns - the size of the supermarkets, the concept of 'food security' and some sort of wibble about sustainability.

Food security is simply protectionism rebadged - we invent scary stories about how somehow we'll not be able to feed ourselves because of all that cheap food made somewhere else in the world and use those stories to justify trade barriers, protectionism and subsidy. Then, because the Asians and Africans who could produce all that fabulous cheap food don't due to protectionism, all Jay Rayner's pals on the Guardian and Channel 4 wangle trips to see the poor black people and to explain why evil western capitalism has condemned them to an eternal struggle against absolute poverty.

Let's be clear. Cheap food is a good thing. There is nothing at all that is wrong with you and me not having to pay as much to put food on the table. It is gross and immoral for rich people like Jay Rayner to say to poor people that they should have less food because they'd rather protect a few uneconomic farmers. Rayner has never had to make the choice between putting the heating on or having a meal - yet he wants to force that choice onto still more people. And Rayner isn't scratting on a Zambian farm hoping that the rains don't fail so he can feed his family - the other sort of uneconomic agriculture that the protectionism he espouses acts to sustain.

Rather than Rayner's snobbery and environmental protectionism, we should embrace the opportunity of cheap food - break down the barriers, encourage mass production and deliver nore people the wonderful benefits that come from cheap, abundent food in fantastic variety that we (mostly) enjoy in the UK. Above all can we stop saying - on clothes, on food, on energy - that making it more expensive is a good idea. It really, really isn't.

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A logical reponse to the obesity "epidemic"

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I know, I know - there is no obesity epidemic. But assuming for a second that the nannying fussbuckets and health fascists are right the cause is simple - food is too cheap.

...the authors say widespread availability of inexpensive food appears to have the strongest link to obesity. They write: “Americans are spending a smaller share of their income (or corresponding amount of effort) on food than any other society in history or anywhere else in the world, yet get more for it.” In the 1930s, Americans spent one-quarter of their disposable income on food. By the 1950s, that figure had dropped to one-fifth. The most recent data show the share of disposable income spent on food is now under one-tenth.

The figures won't be much different for the UK, perhaps a little higher. There is no doubt that, despite the efforts of the food producers to fix the system in their favour through protectionism, our food is as cheap as it has ever been. And we know that making things more expensive is a great way to reduce consumption - works for booze and fags, will work for food too. As Tim Worstall points out:

...if we really want to solve the obesity crisis (I don’t, it’s not one of the things that worries me but there are those out there) then we’re going to have to make food more expensive again. And that of course means taxing it. And taxing it viciously as well. Just to get back to the relative prices of the 1950s (when Americans were already markedly larger than the rest of the world) would imply a 100% tax on food, to get to the 30s would mean a 200% one.

Instead we get proposals for advertising bans, for stopping countline displays and for taxes on specific ingredients (sugar, fat, salt). Plus planning controls, hassling and hounding food retailers and the demonising of perfectly healthy fast food products.

Of course we don't need to do anything at all. But the tip-pot little fascists who think we should have their answer - make food more expensive. But they wouldn't dare would they!

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A reminder of the effect of protectionism...

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Amidst all the nannying fussbucketry about sugar, I stumbled on a consequence of making the evil white stuff more expensive:

In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. 

Bans, tariffs, price-fixes - all the things so beloved by the fussbuckets - are just a recipe for cheats and criminals to thrive.

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In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. - See more at: http://marginalrevolution.com/marginalrevolution/2014/01/is-the-sugar-quota-justified.html#sthash.FHa9wuS7.dpuf

Diana Carney - another eco-authoritarian arrives to lecture us

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The eco-folk love a bit of middle-class judgementalism:

While she admits she is tempted by low prices she argues people should be “paying more” and “consuming less” as current clothes production is causing a “trail of devastation” in the communities where cheap cotton is grown. 

Got that folks - you should be buying organic stuff certified by the woo-merchants at the Soil Association. And, into the bargain, destroying the jobs of a whole load of poor people in places like Bangladesh, Vietnam and Egypt.

I do so wish that millionaire pseudo-celebrities like Mrs Carney would stop offering this false solution to the rest of us - the solution that things should cost more money. By all means indulge in some sort of cod, frugality, revel in your right-on greeniness and force the rest of your family to live with your warped ideas - but can you refrain from thrusting this nonsense at the rest of us. And especially stop implying that your so-called morals - this green nonsense - are better than those of others who chose to shop at Primark.

And Mrs Carney should also bear in mind that she has a choice - loads of money makes that possible. For many people out there, cheap clothes are the only choice.



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So these posh lefties think food is too cheap?

Yes folks that's right - the favoured Sunday read of the left-wing establishment thinks you all should pay more for your food:

Here we come to the uncomfortable core of the problem. Price is the key factor in our behaviour with food and food may, simply, be too cheap. Certainly, in Britain it is cheaper than at any time in history: we spend less than 10% of household income on food and drink. In 1950, we spent around 25%. In the developing world, 50% or more of income is spent on food. Tellingly, Britain spends less than any other country in Europe. 

Now I think this is brilliant - and it could be better still if we'd only dump all the daft protectionism - but it seems the lefties don't - they want taxes to make food more expensive (accompanied by higher benefits and a 'living wage' so the poor can still afford to eat):

An alternative to voluntary change is to tax the food industry in just proportion to the damage it causes. Another idea gaining ground across Europe is for a sugar tax – the cheap processed foods and soft drinks that carry the largest profit margins (and which are a key cause of obesity) depend hugely on sugar for their appeal. Food price rises would result and the supermarkets' vast profits might have to take a hit. Those who would really suffer are the poor and their children and that is a challenge to be met fairly with a living wage, not by caps on benefits or food banks.

I would smile indulgently at this drivel but it makes me really angry that these self-righteous, middle-class lefties presume to believe that cheap food is a bad thing. It isn't, it is unquestionably a good thing. It means we can spend our money on other things - things a little further up Maslow's jolly old hierarchy. You know like art, music, holidays and antique-effect wooden furniture for our farmhouse kitchens. The sort of things that Observer editorialists take for granted.

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"Energy Stealth Tax Doubles EDF Price Rise" - the headline that wasn't!

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The renewable and social obligations placed on energy providers provide a masterclass example of stealth taxation. Today we're urged to be cross with the big energy providers, calls are made for enquiries (although this is a pretty standard Miliband response these days) and even for windfall taxes.

But here (courtesy of The Register) is an interesting little statement from EDF (emphasis is mine):

The company has seen a sharp increase in costs since the start of the year, with transmission and distribution charges rising by 9%, and the costs associated with the implementation of obligatory renewable, energy efficiency and social schemes increasing by more than 50%. The cost of buying energy has also risen by 4% for next year ... The cost of buying energy accounts for around 50% of a typical energy bill. The other half is made up of non-energy costs.

Now that's pretty clear although you won't hear Nicky Campbell running a phone in on how a government stealth tax - sold to us by Whitehall as not costing us a penny - is behind the ridiculous rise in domestic energy costs. Of that 11% rise, the lion's share is down to distribution costs and "renewables, energy efficiency and social" schemes.  As The Register comments:

This system of cranking up everyone's energy bill hits the less-well-off disproportionately hard: and it's also dishonest, as politicians and energy firms alike decline to tell you bluntly why your bills keep going up.

Just remember that, then, the next time you hear a politician stigmatised as a climate sceptic. A vote for that politician is a vote against this sort of vicious price rise, this sort of stealth tax targeted on ordinary folk who find their energy bills a significant cost - the sort of hit that most of us will find pretty painful, given the current economic climate.

Worse still, by tucking this information at the bottom of its statement, EDF are complicit in the fooling of the public. It should be the headline something like:

"Energy Stealth Tax doubles EDF Price Rise"

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Tim Farron - Communist

Supermarkets are evil, they are driving down the prices for suppliers forcing poor farmers to go out of business. This must be stopped!

But just a minute – how do we do this? After all those farmers already receive a subsidy from the Common Agricultural Programme to produce their sheep, beef or milk so the taxpayer is already (in theory) subsiding the price of these goods.

Apparently we need a regulator! Who – according to Tim Farron, President of the Liberal Democrats -  would:

Totally agree! A strong regulator would make sure consumers don't pay more & that farmers get a better price

So we create a system where the price to the supplier is fixed (or subject to controls to guarantee a minimum price which amounts to the same hill of beans) but the supermarket can’t pass that on to the consumer.

We would have a subsidised, loss-making farming business with state determined minimum prices and a grocery sector with state determined maximum prices. If that’s not a recipe for disaster, I don’t know what is!

Rather reminds me of the Soviet Union!

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Haggle! A comment on behavioural pricing.

When you buy some Euros or Dollars for your trip abroad, you probably do a little research. You check out on-line financial information aggregators, you’ll look at your own bank and maybe some well know high street finance brands. And you’ll pick the one offering the lowest rate and buy your currency.

It will never have crossed your mind to haggle. You simply take the price you’re offered – it’s the best rate after all! Well you should haggle and if you do the chances are you‘ll get a better rate.

However, as consumers we are trapped like rabbits in the headlights – we believe too often that the price we’re given is the price we’ll pay. Which means that the seller can play differential or discriminatory pricing games with us. And behavioural pricing is just the latest in a long line:

What if when you bought a new Mac book, the price was higher because your tweets constantly referenced your love and devotion for Apple? What if Orbitz used the fact that your Facebook Likes include “Party Rocking in Miami” to charge you more for a flight to Miami?

This is called online behavioral pricing. It’s a consumer’s worst nightmare as it uses the traces of your online identity to maximize prices on the products and services you want most. It’s also an ecommerce merchant’s dream.

Now I guess that some folk will see a problem with this practice – I can hear the calls for “price transparency” linked to cries that the government must act to stop innocent consumers getting ripped-off by wicked marketers playing with their “data”. And the response will look like this:

The Labour leader says that the Government must take a more positive approach to stop British consumers from being exploited by “predatory” companies.

In an interview with The Daily Telegraph, he says a tough new consumer watchdog should be created to limit pension fees, car parking charges and airline levies.

The kind government will take away that consumer “nightmare”. And, of course, we’ll all pay more. People who plan their travel well-ahead will pay higher rail fares because it’s not ‘fair’ that the latecomers pay more. You won’t be able to pay a premium rate to jump the queues at Alton Towers because some mums can’t (or won’t) pay that extra. Everywhere we look prices will be higher, choice will be poorer and all because we were suckered into believing we are being "ripped off".

The alternative is for us to learn how to haggle (unless like me you’re fortunate enough to be married to someone who gets a thrill out of a little haggling). Why should we take the price that Apple thinks we should pay? Right now they’re using the information available to them as a means of setting a price maximum – they’ve no interest in setting this below their price minimum. Therefore, we should set about finding out what that latter figure might be – they’ll sell the new Mac Book to us at that lower price for sure!

And when you’ve found that price, pick up the phone, speak to the merchant and say you’ll buy it for a little bit less! We don’t need Ed Miliband’s “tough new consumer watchdog”, we don’t need to be frightened away from on-line markets by scary “consumer’s worst nightmare” stories, we simply need to start with the idea that the price we’re given is the starting point not the end.

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That's what comes of fixing prices - shortages

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And it works for life-saving drugs too:

Health minister Simon Burns blamed dwindling stocks of potentially life-saving asthma, cancer and diabetes medication on companies selling to lucrative export markets.

Now I'm guessing that those exported drugs aren't being used to make pasta sauce or children's toys but are used for their life-saving purpose. So the number of people made better by the drugs hasn't changed, just that fewer of them are under the NHS.

That's what comes from fixing prices, Simon. For heaven's sake, you're Tory MP, you should know this stuff!

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The "Tesco Tax" is just a levy on food prices

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Up in Scotland, as part of the SNP's mission of nannying fussbucketry and to raise a few quid, they have dreamed up something that has been dubbed; The Tesco Tax:

The Scottish Spending Review 2011, published yesterday, says that the business rates paid by large retailers who sell tobacco and alcohol products will be increased by a supplement from 1 April 2012.

It said: "The estimated income raised from this supplement will contribute to the decisive shift in the spending review to preventative spend measures to be taken forward by local authorities and their partners in NHS and Scottish government."

Apparently this will raise £110 million over three years - which is really going to solve Scotland's financial problems! Along with minimum pricing, this represents another unwarranted, judgemental attack on the lifestyle preferences of ordinary Scots. And, worse still, it's a tax that wont just be paid by the drunken Rab C Nesbits but by teetotal, god-fearing Presbyterians as well.

By raising the cost of doing business you raise the prices that that business charges - the tax won't be paid by Tesco but by Tesco's customers. All of them not just those who smoke and drink.

That wasn't what Mr Swinney planned I'm sure!

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Dr Evan Harris is wrong about price competition - without it we'll have worse and more expensive healthcare

Source: Professor Mark J. Perry's Blog for Economics and Finance

Dear old Dr Evan Harris, former Liberal Democrat MP believes that competition in the provision of NHS services is fine just so long as it isn’t price competition:

The government seems to be unclear as to whether there will be price competition (an invention of the Labour government, it should be noted). It has said it will amend the bill to remove the word "maximum" before the word "tariff" that will be set by Monitor, the regulator of the new system-cum-market (a maximum implying the tariffs can be undercut). But the head of Monitor says he expects to see such competition as an essential part of the market. That is why I am calling on our conference to completely rule out price competition in the NHS, so that providers compete only on quality.

Now I’m pretty sure that Dr Harris is a clever bloke – after all he’s always banging on about decisions being “evidence-based” and linked to sound theory. The problem is that his grasp of some essential economic theory and evidence is sadly missing. So I thought I’d help him out a little – firstly by pointing out that cheap doesn’t mean low quality and that, without price competition, suppliers have no incentive to be efficient or for that matter to address issues of quality.

And Dr Harris there’s evidence too!

“The results indicated that while competition reduced price significantly, quality of service was maintained or even enhanced. The effect of competition turned out to be greater on prices than on quality, and the influence of ownership appeared to be negligible on both.” Domberger, Hall & Lee, The Economic Journal, 1995

Or:

Theory is clear that competition increases quality and improves consumer welfare when prices are regulated (for prices above marginal cost), although the impacts on social welfare are ambiguous. When firms set both price and quality, both the positive and normative impacts of competition are ambiguous. The body of empirical work in this area is growing rapidly. At present it consists entirely of work on hospital markets. The bulk of the empirical evidence for Medicare patients shows that quality is higher in more competitive markets. The empirical results for privately insured patients are mixed across studies. Gaynor, NBER, 2006

And there’s:

The paper has two important findings: First, higher managed care penetration increases the quality, when inappropriate utilization, wound infections and adverse/iatrogenic complications are used as quality indicators. For other complication categories, coefficient estimates are statistically insignificant. These findings do not support the straightforward view that increases in managed care penetration are associated with decreases in quality. Second, both higher hospital market share and market concentration are associated with lower quality of care. Hospital mergers have undesirable quality consequences.  Sari, Health Economics, 2002

There is nothing at all suggesting that intensive price competition reduces the quality of care – there are some valid questions about regulation of pricing but these should apply to the internal costing of procedures as much as they do to the external commissioning of services. In a piece – very critical of the US system – Michael Porter and Elizabeth Olmsted Teisberg said this:

In healthy competition, relentless improvements in processes and methods drive down costs. Product and service quality rise steadily. Innovation leads to new and better approaches, which diffuse widely and rapidly. Uncompetitive providers and restructured or go out of business. Value-adjusted prices fall, and the market expands. This is a trajectory common to all well-functioning industries – computers, mobile communications, banking, and many others.

Health care could not be more different. Costs are high and rising, despite efforts to reduce them, and these rising costs cannot be explained by improvements in quality. Quite the opposite: medical services are restricted or rationed, many patients receive care that lags currently accepted procedures or standards, and high rates of preventable medical error persist. There are wide and inexplicable differences in costs and quality among providers and across geographic areas.

Now we might take issue with banking as a well-functioning industry these days but the point made is valid – it is a failure of competition that creates the problems in our healthcare systems. And, as Porter & Teisberg point out, costs (and prices) are essential drivers of efficiency, innovation and quality. To remove “price competition” as Dr Harris wants is, in effect, to say that medical procedures can never get cheaper, that there are no benefits to wider society from being able, say, to conduct hernia operations to the same standard at half the price?

Dr Harris wants a system without an effective price mechanism – and the result of this will be that medicine (unlike most other technology-driven aspects of our life - as you can see from the image at the top of the page) will get ever more expensive resulting in more rationing, richer doctors and further frustration at the system's bureaucratic inability to respond to customer needs.

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