"How to View the World like an Economist"

Something in an article that was in City AM a year ago has been bugging me ever since.

Most of it is good stuff...

When a politician blithely commits to “making childcare higher quality”, you wonder how much any new regulation of the sector will push up prices, and hence make formal care less affordable...

When Jeremy Corbyn states that the existence of profits in certain industries means lower prices could be delivered under nationalisation, you consider whether public ownership is more likely to become captured by producer interests or suffer from worse profitability.

When governments continually tell us that HS2 will be “good for the economy” because the economic benefits exceed the costs, you consider whether other investments, such as road schemes in areas with bottlenecks, would generate even higher returns.

When someone calls for banning plastic bags for environmental reasons, you think about what the effects of paper bags are for the scale of landfill sites, or the health impact of repeat use of linen bags given hygiene risks.

Agreed to all that. But his first real life example is a very bad one:

Remember when the coalition government’s policy of “free” school meals for five to seven year-olds was announced in 2013?

Campaign groups rallied to praise the £600m commitment, claiming it would enhance educational attainment, based upon results from narrow pilot schemes. It was only economists who seemed to question whether this spending really obtained the best bang for the buck to increase attainment, or whether the money could be better used in other departments — or even, heaven forfend, be left with taxpayers.

Of course those lunches aren't "free", that's a nonsense. But the alternative is not 'leaving the money with taxpayers', it's making the self-same taxpayers make their kids a packed lunch or give them some lunch money for the school canteen.

In the grander scheme of things, funding basic* school lunches for all kids out of progressive taxes (income tax or LVT) ticks all my boxes:

1. It's like a Citizen's Income, non-means tested and mildly redistributive downwards. Vastly better than means-tested "free school meals" for a minority with all the stigma, cheating and administrative hassle.

2. Saves parents the hassle of sorting out a packed lunch or remembering to give their kids some lunch money, which they might or might not spend as intended (or have taken off them by school bullies).

3. It must work out much cheaper per meal if the school bulk-buys and everybody gets the same.

4. ... so it's not necessarily worse value for a better-off parent. They pay £5 extra tax and their kid gets a school dinner costing £2.50., but in the absence of school-lunches-for-all, they might end up paying £5 anyway (or spending a bit less than that but wasting ten or twenty minutes a day sorting it out). They've lost nothing and low-income parent is up £2.50.

5. It is good for solidarity between pupils, they all get the same. School lunches a bit crap? Every kid can moan about it equally, same as moaning about having to wear a school uniform. Best kind of quality control is, teachers sit in the same canteen and eat the same meals as the kids (they did that at my school).

6. It protects kids with low-income or lazy/forgetful parents from being humiliated by the lucky kids with posh lunch boxes/lots of lunch money.

7. At the margin, it helps educational attainment of kids with low-income or lazy/forgetful parents. It's difficult to concentrate when you are hungry, as the advert says. And has similar health benefits.

* The word "basic" is important here. Funding fancy school trips abroad for all would clearly be a total waste of money.