A Very British Dude

Moody's, Ed Balls & the Tories' Plan 'A'

2012-02-14T08:54:00.004Z

Let's be clear how little room for movement the Government has. The deficit is falling but remains at around 8% (down from well over 10%). Debt remains reasonable (by Europe's disastrous standards) at 70% of GDP or so. Just because other countries are worse, doesn't mean the UK can carry on spending however.

The evidence appears to be that any stimulus from deficit financed government spending stops when debt reaches 80% of GDP, and that debt burdens over 120% of GDP kill growth (look at Italy and Japan. So, that's a clear instruction to cut spending as fast as possible, because we will start breaching these limits next year? Well not so fast! There is evidence that cutting spending by more than 2% in real terms in any year tends to have people out on the streets chucking rocks, and this isn't good for wealth or happiness either.

The UK government is cutting spending in real terms (which when inflation is high means the cash spending is growing...) by about 2% across government.

Let's rule out the Labour plan to slow down the cuts. They will simply lead to higher debt in the long-term. At best this will be pointless. At worst, we could end up like Japan, where decades of "stimulus" have failed to produce growth and left the country with a debt burden in excess of 200% of GDP. Ed Balls' wittering on about "plan B" doesn't change the fact that his predecessor, One-eyed lunatic McDoom, wasted all the available "stimulus" ammunition while the going was good, leaving, as former Minister, Liam Byrne said "...No Money Left" for a Keynesian stimulus when the music stopped in 2007. Labour's "plan B" should be seen instead as merely the self-interested wailing of the public sector salariat, who had it good for a decade, and now the music's stopped, they're complaining.

But what about the right, for whom the spending cuts are not nearly fast enough? Well, because I would rather see the Government achieve its fiscal aims without widespread violence, thank you very much, I think 2% a year real-terms cuts are about right.

Does Labour's charge that "cuts kill growth" stack up? Yes it does, but this is a small truth, big error. In the short term, an enormous amount of public sector demand is removed and this is not instantly taken up by the private sector. However, freeing the resources, especially competent labour, will in time lead to faster growth as confidence, investment and hiring picks up. Even in the apocalyptic business environment of the last couple of years, private sector hiring has run at three times the job losses in the public sector. However, despite the observation that slowing "the cuts" might help GDP in the short term, it is not clear that any further stimulus is possible, so it is better that this necessary shift from public sector to private happens now, before it is forced upon us by the markets. It is better to have a few quarters of stagnant growth than the violent catastrophe which about to befall Greece, or the enormous disruption which will be forced on Italy or Spain.

Of course the UK can print its own money. So perhaps a better model is Japan, where Government spending was jacked up in response to a balance-sheet bust caused by over investment in property and other assets. JGB yields remain low, mainly as the country has spent most of the last couple of decades in a deflationary spiral. Stimulus spending has not worked, mainly because the bad debts have not been purged from Banks' balance sheets, and have acted as a mill-stone round the country's economy. Thankfully (yes, thanks in part to Gordon Brown) the Banks in the UK have aggressively written down their bad debts. That's why their losses were so enormous. The purge of bank bad debt has an analogue in the non-financial economy in the form of a recession, as assets and labour are reallocated. Endless "stimulus" is just bailing out the malinvestment rather than purging it.

At present, UK 10-year gilt yields are 1.9% or so. Moody's who've just put the UK on Negative outlook, still gives the UK a 70% chance of retaining its AAA credit rating. When S&P downgraded the USA, the markets ignored it, and pushed US treasuries to their lowest yield on record soon afterwards. On the other hand, the Markets ignored France's downgrade to AA, because the French had long traded as such. A yield in line with Germany's and the USA's is the mark of credit worthiness, not the mere opinion of a rating agency.

Furthermore, Moody's, for what it's worth (not very much...), explicitly supported the UK "austerity" program. Which rather leaves Ed Balls in a quandary. Yes, growth is what is needed, and to some extent, in the short-term, austerity hurts. But the austerity measures, by freeing resources and making them available to the dynamic part of the economy create the conditions necessary for growth in the future, so no serious economist or agency thinks more stimulus is desirable necessary or indeed will work in the UK. The Government deficit is 8% of GDP. That's as much stimulus as the country can take right now.

A "balance-sheet" recession always leads to slow growth afterwards as both public and private sector retrench. This sort-of-non-recovery was predicted, not least by me, in this blog. The good news is the Private sector de-leveraging is going well, and may even be complete. Both personal and corporate debt are at historically low levels. UK Banks are well capitalised, and there's a pool of surplus labour, not all of it the unemployable long-term unemployed. When confidence returns, there are all the conditions for a long boom. looking at the evidence and concluding that I can't see how the Government could do things much differently will lead to accusations of being a Coalition shill. Politicians can be right sometimes you know, and I think things will get better surprisingly quickly from here. And that's the most controversial thing a blogger can say. Moody's "negative outlook": whatever Ed Balls says, there's nothing to see there.

Yesterday's Sun

2012-02-13T18:23:00.004Z

A book called Yesterday's sun by Amanda Brooke turned up in my house for some reason. Having read the first 24 pages, filled with such eruptions of literary onanism as...

"...the tell-tale white buds of of spring sparkled against the night..."

I decided the book was an unreadable, cliche-ridden depiction of dreary people, about whom I felt nothing. The descriptions are flawed:

"...Her bed was a writhing mass of bed-linen.."

..."Writhing"? Is somebody still in it, or are there a lot of bed bugs? The story is melodramatic nonsense: she's been whisked into the future for some reason and seen herself dead, something she described as

...the tentacles of her living nightmare...

It's as if she's thrown a dart into a thesaurus for descriptions. Similes are sprayed onto the page with the care and attention of a man urinating after ten pints. Above all the dialogue is, frankly, unbelievable...

"...I hope you can see me; I hope you can hear me, sweetheart because I don't think I can go on if you'd completely left me." Tom's voice was a crackled whisper, and he closed his eyes tightly, suppressing the tears that had sprung to his eyes.

and later

..."Good morning, my light, my life" Tom chirped. "Good morning, my compass my anchor", replied Holly.

I've left skid marks on the U-bend with more literary merit than this story about the human equivalents of magnolia paint. The good news is I don't have to read it, nor do I have to measure what I say about it. I have read 24 pages so YOU don't have to. Nevertheless for all its faults, the book it raises some profound questions about the human condition: THIS gets published? Why? For whom?

Idealogical Certainty.

2012-02-12T13:38:00.003Z

The main problem with political debate is that the tribes are simply not interested in speaking to each other. The left think the right are only interested in the rich, and are basically self-interested. The right think the left are emotional children, assessing the motives behind policies (with cash inputs as a measurable proxy for morality) without being interested in the effects. Of course, most lefties fervently believe that the state can and should provide services and redistribute wealth, because they believe this will make the country happier and better to live in. The right believe that a smaller state, with a dynamic economy is a better way to achieve the same ends.

I suspect this represents a hankering amongst the politically interested for the ideological battles of the past. Tories want Cameron to be more aggressive, provoking a confrontation with the Unions, so that they can re fight the miners' strike. That he isn't picking fights with Europe, the Unions, and so forth leads to suspicions that he's "not a real Conservative". Labour for their part despised Blair for failing to reverse Thatcher's legacy, deriding him as not "real" Labour for essentially the same reasons as some Tories despise Cameron. The two sides are simply not interested in talking to each other.

The fact remains, whatever the rhetoric, Labour presided over a massive (and to my mind) catastrophic growth in the state from 2000 to 2010, and only the most rabid anti-Cameron Tory would suggest that the coalition isn't trying desperately to reverse that.

Frankly, I'm losing interest in debating with people on the Right who use the phrase "blue Labour" and with people on the left who mouth the same tired, tribal dogmas without even making the effort to engage with the ideas. In both cases, there is a refusal to look and be influenced by empirical evidence, with endless appeals to "common sense". On the left this is used to support the idea that cuts are "too far, too fast". On the right, it's in favour of populist authoritarianism and tax-cuts.

What more does a "Real" Tory (which usually, in practice means a UKIP frother) want from Cameron? Free schools not enough, they want compulsory selection at 11-plus and a Grammar in every town. Standing up to Europe by vetoing a treaty isn't enough, because there was a subsequent negotiation; they want withdrawal. Cutting the deficit as quickly as possible isn't enough, they want a tax-cut too, and hang the consequences.

Labour have got what they want from the Leadership, a combative head-banger ranting economic lunacy as Shadow-Chancellor, and a Union stooge as leader of Her Majesty's Loyal Opposition, and no interest in talking to the country. Unlike Labour, the Tories have people who ARE interested in talking to people other than the tribal base. The last thing we need is for a Conservative party to follow Labour's lead by being interested only in talking to itself, for that is the real route to oblivion.

While 'the cuts' are happening, I'm content this is a Tory government, even if the rhetoric is more conciliatory than the base would like. The 'state as proportion of GDP' is all that matters. For my point, being in broad agreement with a Government is unbelievably debilitating for a blogger.

The Coalition & Its Dwindling Band of Friends

2012-02-11T11:05:00.003Z

When even the Spectator (£) turns on a Conservative PM you'd think he's in trouble. Blogger, Prodicus speaks for many when he says he's on the verge of leaving the Conservative party, mainly because of a complete lack of faith in the abilities of David Cameron, whom he believes to be something other than a Conservative. This is because of the Euro-sort-of-veto, right?

No, not because of the vanishingly-few attractions of UKIP. I want us out but I am a realist and it's not the first item on today's agenda.

Clearly not. hose are my sentiments exactly. Why is it then?

I think David Cameron is too cowardly to lead the Conservative Party as a Conservative

I am not sure the problem is cowardice. Indeed the opposite is the problem. Cameron has battles with a deeply entrenched labour establishment, who is deeply hostile to 'the cuts', reform in Schools, the NHS, and the rest of the public sector where the Conservatives have initiated widespread and radical reforms. On Europe, the mandarinate will seek to water down any tough talk from a mere politician when thrashing out the detail in negotiation. The problem isn't cowardice, more a lack of strategic vision. I think of the NHS, Schools, Welfare, 'the Cuts' and Europe where the Government has battles with the establishment, Cameron has bitten of more than he can chew. Of these issues he can pick 2 or 3 and expect to win, otherwise he risks losing all of them.

He does not think like and does not know how to wear the armour of a national leader. He is ill at ease and reluctant and scuttles sideways when facing both domestic and foreign threats to the nation and its way of life.

I think people have forgotten just how dreadful in this regard Brown was. It's true, Cameron does not wear the armour quite as well as Tony Blair, but there have been few politicians more teflon-coated than his Tonyness. Cameron's not embarrassing to the UK in the great councils of the World in a way Brown, with his fawning infatuation with Barry O'Bama was.

He is the heir to the Grocer rather than to Margaret Thatcher.

For many Conservatives, any leader who isn't Saint Margaret of Thatcher will always be Pepsi rather than the real thing. But I am not sure we need a Thatcher right now.

The problem is that coalitions just don't work in Britain's political culture. The Liberal Democrat voters didn't really want power for their party, they just wanted to be able to say "Don't blame me, I voted Liberal" at dinner parties. But in order to differentiate themselves from the Tories, you've got Government ministers popping up saying higher rate pension tax-relief should be abolished and the 50p income tax rate shouldn't be. It's not until you read past the headline that this comes from Danny Alexander, chief Secretary to the Treasury, whereas the Chancellor is against these ideas. The same is true of Cameron's Quotas for women on PLC Boards. This is never going to become law. It's Cameron's attempt to reach out to non-conservative voters, not a serious policy proposal.

The most poisonous legacy of the Blair years was the extent that Government was enacted by headline. The difference between Labour and the Tories is that the latter are much, much worse at the media manipulation and so give the impression of a bunch of ferrets fighting in a sack. When you actually look at the legislation, however, you have radical pieces of legislation on Welfare, Schools or the NHS, which whilst savagely opposed by the establishment and bureaucracy in these industries, seem to me in each case to be broadly along the right lines. Millions will be taken out of income tax by the steady rise in the Threshold. This IS a tax-cut.

Above all, this Government inherited a poisonous legacy of criminally incompetent overspend and mismanagement from the last Government. Since they took power, despite chaos in Europe and an unlooked-for war in Libya, the British deficit has fallen from over 10% to around 8%, so the debt burden is still rising. However contrary to warnings, job creation in the Private sector has more than offset job losses in the public, since 2010 by a factor of around 3 times. It is true, it's unlikely that the deficit will be eliminated "within this parliament", and employment growth is not yet enough to reduce unemployment but does anyone, really, think Ed Balls' plan to spend until we're Italy and call it "neo-endogenous growth theory" was going to work better? 'The cuts' were always going to be disruptive at first. Economic chaos in Europe has seen the UK, thanks to the Governments commitment to deficit reduction (and 3 rounds of QE) the markets have kept the faith, seeing 10-year gilt yields fall to 1.8%.

I would like to see more supply-side reforms. I would like to see the end of the 50p rate. I would like to see less 'banker bashing'. I would have liked Cameron's veto to mean the EU did things differently. But while the disagreements between and within the parties of Government give the impression of chaos, the actual legislation affecting how we live appears to be vastly, infinitely better than the legislative diarrhoea of the last administration. I rather like the fact that we see disagreements in Government. It reassures me we live in democracy, compared to robotic non-entities mouthing identical soundbites which characterised the last Government.

Cameron is no Thatcher. Thatcher removed warships, which some saw as a green light to an Argentine invasion. Cameron's hinted about nuclear subs and sent the world's most capable air defence destroyer. Which is better? I think too many Tories (& Labour...) hanker for ideological certainties of the 1980's and forget just how ghastly Gordon Brown was.

I still think this could be a great government, and history will be kinder than the news if they're successful in any more than half of their agenda. I think Prodicus should keep the faith for a while longer.

"Out of Touch"?

2012-02-08T10:53:00.009Z

One of the common arguments thrown at me is that I am out of touch with "reality" and that all my economics comes "from a textbook" (which is odd, since all my economics has been learned on the job). Specifically, I can't know what the effect of unemployment means to the people to whom it happens. This is especially true when I argue against Labour protection. Of course to a leftie, all Tories are only in it for the benefit of "the rich" and the poor are simply a source of sustenance (as we eat their babies). This is an example of brute prejudice of the lefty, but it needs dealing with.

First up. Left wing "economics" usually puts motivation above effects. So you get a minimum wage which I believe destroys the life chances of the most vulnerable and traps people on benefits. Lefites, by supporting this policy hurt the poor, whom they claim to be helping. Then the left argues that anyone opposing this policy is "in league with fat-cat bosses " or "wanting to recreate the workhouse" or some such arrant nonsense. This crap usually comes from highly privileged lefties, often who've got significant private wealth, and a secure, professional job. They are almost always university educated, and wouldn't know a hard days labour if it smacked them in the face.

I am not of the working class. I am a public-school educated stockbroker. I would be the last to deny my privileged upbringing. My parents made enormous sacrifices for my education. But I did not take internships in offices when at university, I worked on Building sites as a hod-carrier (go on. Find me a harder job...), I mowed lawns for the council, I worked as a Courier and rickshaw driver in Edinburgh and I have worked in a factory. Lest I give the impression that I am a horny-handed son of Toil, the factory in question was owned by my father. This does not mean I got an easy ride, quite the opposite. It means the Foreman delighted in giving me the shittiest jobs, then telling dad about it, and if I didn't work harder than others, it reflected badly on him. Something to pick up at Chettles, a meat rendering plant where the air is thick and emetic? Guess who's going to be driving there, scraping the rotting residue of carcass off a motor, then doing the preparation when it gets back to the factory? I once spent 3 days inside a Boiler scraping soot off the inside before it could be serviced. I sweated black for a week. I know working people do this every day. But this means I do know the honest satisfaction in standing your round after a hard day's work. I am also a currently a non-commissioned Officer in the British Army. The Idea I have no idea about what the working class thinks, or that I exist in some "ivory tower", is ridiculous.

If there is one thing about what the working class thinks, it isn't what lefties think they should think. The contempt the actual working class is held in by the average Hampstead leftie is proportional only to the degree with which they romanticise the workers' struggle, of which they know nothing save that which comes from books written by other Hampstead lefties. The people who have the most extreme opinions of those living off the benefits system, for example are the benefits recipients' neighbours. The working class are almost universally economically protectionist, anti-immigration and socially extremely conservative. Lefties don't like this. They don't like this at all. The working class have never been forgiven for failing to rise up and destroy "capitalism".

So. My belief is that a booming economy is the best protection for a worker. That high taxes and high government spending slow growth and reduce the surplus which can be spent on working conditions. Minimum wages hurt the poorest most. Job protection reduces the number of jobs.

I don't hold these opinions because I am unaware of the suffering of unemployment or hard industrial working conditions. I know both from personal experience. I've been made redundant more times (3) than any of the lefites who accuse me of being "out of touch". I just got on with it, and always found another job. And this leads to an important thing to know about unemployment. It isn't a lump of people, out of work permanently. 10% of unemployed people find work every month, even in a recession. The unemployment number is rather the pool between two fast-flowing streams: people losing jobs, and people gaining them. People lose jobs at a relatively constant rate over the business cycle, it's job CREATION which fluctuates wildly. So, broadly, while the left focuses on protecting jobs, they ignore that policies to achieve this reduce job creation by making people riskier and more expensive to hire. I think this focus wrong.

I hold these opinions because I believe them to be the best way of delivering the results - full employment and high wages - we all want. There are no answers in economics, only trade-offs. So you want high minimum wages? You must accept unemployment. You want job protection? Then you must accept lower job creation. Is that a "price worth paying"? You can have high debt-financed public spending, but this tends to slow growth, reducing the pie to be shared, to the detriment of all. Suggesting that a recession has positive effects on productivity doesn't mean I think unemployment is a "price worth paying", merely a short-term inevitability. Generous, means tested benefits damage the incentive to work & save. So much left-wing rhetoric denies the existence of these trade-offs, believing passionately in a free economic lunch courtesy of high taxes on "the rich".

I wish lefties could stop using the ad-hominem argument of questioning the motives of the "right wing" and focus instead on the effects of policies and debating where the trade-offs should be. The problem for the left is that to acknowledge the existence of trade-offs would destroy the rhetorical defences they've built. Economics isn't a dry subject, only of interest "in theory". It is the study of the use of scarce resources, the effects of incentives in the real world. Denying economics exists, and denying the existence of trade-offs it studies makes debate very difficult.

Update: QED 1 QED 2

Bad Science

2012-02-08T08:30:00.001Z

Created by: Clinical Psychology

The Welfare Reform Bill

2012-02-05T13:00:00.005Z

The most acrimonious debates on Twitter are between myself, and a few like-minded libertarians, and a purple-twibbon army of disabled people, about the Welfare reform bill.

When asked what was his greatest political fear, Tony Blair once answered "the disabled". Sure enough when his administration attempted a similar set of reforms to those proposed at the moment by the Coalition, a passive-aggressive disabled mob chained themselves to railings all over the place and the reforms were defeated. Labour ran scared from an issue at which the leadership was at variance with the activist base, for whom "benefits cuts" are an anathema. The problem is that the Welfare system has become too cumbersome, too bureaucratic and as a result too generous to many, replete with perverse incentives preventing a class of permanent benefits recipients ever getting work, with marginal withdrawal rates in some cases over 100%.

At present the system doesn't do any of the things a decent benefits system should do. Any redistribution is effectively between the poor, as the low-waged are taxed to pay the benefits of their non-working neighbours. Their income is then topped up from the benefits system in a bizarre and bureaucratic abortion of tax-credits. This bureaucratic leviathan doesn't protect incentives to work, the very complexity of the system creating a fear, preventing people taking the low-paid, insecure jobs which are a necessary first step on the employment ladder. The poorest are trapped in a bureaucratic nightmare, and those with jobs are forced to pay through the nose for it.

Surely no-one denies that the system needs reform?

I have seen two mutually contradictory positions. First that these are the wrong reforms because they won't save the Government money. All reforms save less than they are supposed to. The other is that these are treasury-led reforms designed to take money from the neediest in society. Of course some people will lose out, most widely publicised being those Households of housing benefits recipients mainly in London who are in receipt of a total amount in excess of a benefits cap of £26,000. That's the point.

These people should do what cash-constrained working people have to do and move to a grottier part of town. No-one has a right to a £1m pad in St. Johns wood. Exempt from this benefits cap are, of course, the disabled. So far, so reasonable.

Next up seems to be the demise of Disability Living Allowance, a payment designed to help the disabled with increased living expenses. A wheelchair user's car is likely to be more expensive, everything else being equal. They may need a home expensively modified and so forth. The DWP estimated that this benefit is not subject to fraud, but this is questionable. Overpayment was equivalent to over 9% of expenditure, mainly because "customers'" conditions change over time. DLA's replacement with Personal Independence Payments or PIPs mainly changes the frequency of assessments, so "customers'" who get better, lose benefits more promptly. Yes, people will lose benefits they've come to rely on, but working people lose jobs from time to time. Again. I struggle to see how the changes are throwing disabled people under a bus.

The problem is that being signed off sick has become for some an income in perpetuity, absolving a person of ever seeking any work. It shouldn't always be. Some people who have become used to generous welfare payments may well have to do without. Again, that's the point.

Finally the Universal Credit aims to replace Housing benefit, tax credits and various income related benefits. A simpler system is necessary to remove the obscene marginal withdrawal/tax rates faced by many people moving from benefits and into work. Many people will face lower benefits receipts, but as they will also face lower tax rates thanks to a higher personal allowance, this increases the incentive to work, which is the ONLY way out of "poverty". (The scare "quotes" are to indicate relative measures of poverty, rather than absolute, which simply doesn't exist in the UK, except by choice). Some form of universal credit represented one of the two main reasons for supporting the Tories (along with the education reforms) at the last election.

Of course a number of people are going to face cuts to income, and are going to have to make choices. But these choices are not materially different from those faced by working people on low wages, who faced (and still face) over a decade of tax-rises. They are not going to see people "on the street, starving" as many of the more hyperbolic purple twibbon army regularly claim. Given the broad thrust of the reforms strike me as being in the right direction, unless anyone can point to people suffering more than a few more assessments or losing a bit of money and facing hard choices, I will continue to confront the hyperbole.

Disagreement isn't "bullying". Just because someone's in a wheelchair, doesn't mean they occupy the moral high ground.

Manufacturing Jobs Wibble.

2012-02-04T20:45:00.005Z

I was talking to a Farmer recently (until about 1750, any job which wasn't involved in agricultural production wasn't "real"). He was telling me about how his new Tractor (he had one of the four-tracked Leviathans that Richard Hammond chose in that episode of Top Gear) could plough. Basically (I'm relating a conversation that happened in a pub, late at night, the details are largely irrelevant to the point I'm making) the GPS could be set to have the furrows overlap within a few inches. The productivity gains mean that he can plough an extra field or two a day just from not ploughing the same bits twice by eliminating overlap. The Tractor is then hired out at profitable rates to other, smaller farmers. The same is true for Combine harvesters and the like. The relentless focus on efficiency drives productivity improvements, and has done since the industrial revolution.

A small cadre of highly skilled professionals do the jobs with enormous machines once done by vast armies of peasant labourers; which is what's happening to manufacturing. British industrial production is rising barring recessionary glitches, UK industrial production has kept rising for most of the last 100 years. We are still producing lots of things that can be dropped on a foot. It's just it's no longer done by the descendants of those peasants who left the land during the industrial revolution to seek work in factories. Those factories still exist, but they employ a small number of highly paid people to operate machines which do the riveting, welding, assembling and polishing. Each machine takes does the job of hundreds of people.

That's what happened in Agriculture, and is happening in Manufacturing. And THIS IS A GOOD THING. Because all those people not employed in riveting in Tyneside shipyards or Scything Lincolnshire corn fields are employed doing something else for someone else. All that productive labour has been freed, but we're still getting the food produced, in abundance the Lincolnshire harvestman would have thought impossible.

The majority of Western economies are now services. Even the Germans, who've a niche in Machine tools and Automobiles have only 21% of their economy in making things they can drop on their feet.

And this reflects another point. Manufactured products are getting cheaper, so to have material wealth unimaginable to our Lincolnshire harvestman requires far fewer hours of Labour to achieve. Thus cars, the most expensive manufactured products most of us buy, are getting cheaper relative to average earnings, decade by decade. A reliable runaround would have been beyond the means of a WW2 factory worker, but is available to a cleaning lady now. So the same car forms a smaller part of the economy. Having spent less on the car, we can spend more on clothes, shoes, music, computers, kitchen appliances etc, and in so doing provide jobs to people supplying those things. Above all we can pay for people do do things for us - cut our hair, serve us food in restaurants, mediate for us legally, invest our surplus production into other productive activities, heal our illnesses and so on.

And because more of our money goes into buying services than it does in buying manufactures, it stands to reason most of us will specialise in providing services.

The ultimate logic of Adam Smiths division of Labour is that people will, over time, supply our needs with fewer and fewer inputs as we get better at doing it. Thus an activity, agriculture, which occupied the lives and productive energy of 90% of the population 400 years ago, now only occupies 2%. 100 years ago, people made things. Now we make more, but use fewer people to do it, and instead provide services which so far can't be done by machine. This list is shrinking.

In time, just as in agriculture, high paying jobs will come from managing machines which produce with extreme efficiency, or by exploiting a niche where people pay an excess for a craft built object. So you can either have a farmer managing an expensive machine, or running an organic farm and charging a premium to people who want to know the name of the cow they're eating. You can get your clothes mass produced relatively cheaply, or you can pay through the nose for a Tailor on UK wages. You can have your car put together by machines in Nissan's famous Sunderland plant, or you can buy an Aston Martin, hand-built in Warwickshire.

So the next time you see someone opining of dear old blightly that "we don't make anything anymore", remind yourself that we do, it's just it takes fewer of us to do it. Then ignore everything else that person says, because they clearly know nothing.

Western unemployment is at a high, following a series of financial crises, but to blame this on the death of manufacturing is idiotic. There are structural, cultural and political reasons for excess unemployment, but trying to hold back the tide which has seen manufacturing shrink as a proportion of the economy is wrong, because the very process which sees people replaced by machines is the process by which we all get richer. We're simply falling down Maslow's hierarchy of needs. 400 years ago we banished famine, 100 years ago we banished material want. The developing nations, by simple dint of abandoning anti-market orthodoxies, followed us and are achieving in 10 years what took us 100. They are copying us. Chinese growth will slow when they have to innovate to grow. There's nothing remarkable about their growth, it's just what happens when you lose the dogmatic Marxist idiocy, take the choke hold off and let people get rich.

Globalisation, the search for efficiencies in production, and international trade has led to countless millions of people dragging themselves out of poverty by embracing the opportunities of trade. Korea and Japan joined the west on the technological frontier. China is catching up. As a result the 70m population of a small, damp, foggy Island of the North coast of Europe had a GDP in the same ball-park as a nation 14 times as populous just a few short years ago, but is now dwarfed by the Asian giant. This isn't a threat, nor is it evidence of Britain's "decline".

The next challenge is to banish stress and misery from our lives. I suspect this will be harder. The only caveat is that I have a great deal more faith in Adam Smith's "invisible hand" (a much maligned and misunderstood idea) than the idiotic ideas of politicians. Politicians still seem to think manufacturing jobs are special, which suggests they don't understand why we're rich. The only limitless resource is man's ingenuity. Markets aren't an ideology, they're simply what works in the absence of one, by deploying that one limitless resource to everyone's benefit.

Ground of Your Choosing: The Benefits Cap.

2012-01-24T08:38:00.005Z

In battle, a successful commander will draw the enemy onto ground of his choosing. At this, Tony Blair was a master. By drawing the Tories to fight on ground, like Europe or the NHS, where they were weak, they were made to seem out of touch. The result was three election victories. Indeed New Labour's vilest policy, the plan to lock innocent people in gaol for 42 days before telling them what they were supposed to have done, was merely an attempt to discomfit the Tories. Propose a policy so vile that the Tories would have to oppose it, and then say they're "weak on terrorism". Of course that was a policy so vile even the lobby-fodder of the Labour party couldn't wear it and the Labour government went down to it's first defeat.

Yesterday, Labour, Liberal and cross-bench peers inflicted another defeat on the Government, by supporting an amendment exempting child benefit from the proposed £26,000 benefits cap. Let's not forget that a tax-free income of £26,000 is equivalent to you or me earning £34,000. You can support a family on a salary of £34,000 so I suspect the Government is delighted.

Who are we talking about? Mainly this benefits cap will hit people living in hugely expensive areas, mainly in London, who have large families. The elephant in the room is Housing benefit, paid directly to Landlords and inflating rents for the rest of us. Obviously people will have to move out of Hampstead, Chelsea and St. John's Wood to somewhere grotty in zone 4.

So you've had to move? This is the world's smallest violin & it's playing just for you.

The other group of people are those with large families. I think lefties will be surprised at how people who'd love to have three or four children and who don't because they simply couldn't afford to have them, feel about people who've never worked, pumping out kids on the tax-payers' expense. Most people feel we need to end the subsidy for people who've never worked to breed people who'll never work. In any case, you can bring up plenty of kids on a salary of £34,000. You just might have to move to a cheaper part of the country. A family of eight children could potentially forgo income of £5933.20 a year, equivalent to £8725 pre-tax & NI. So in essence, the Labour & Lib-Dem Lords want to pay £42,000 a year to people who've decided to make you pay for something many working people have decided they couldn't afford. Good luck selling that.

Working people on this kind of income, £34,000 a year, are called "middle class" often in a sneering way, and are not helped in any way by the benefits system. Indeed because I EARNED less than this in several previous tax-years, 6 of them, during which I held down 2 jobs while building a business, my Fiancee was denied any benefits at all when she lost her job. So what if people are forced to move to grottier areas of town? Working people have to do this all the time, when their income falls. So what if their kids have to move schools? My friends in the Army have the same problem. There are plenty of Private soldiers in the army dodging bullets in Afghanistan who have families subsisting on less. There are people starting businesses earning nothing who are nonetheless excluded from the benefits system. Do you think these people feel any sympathy for someone paid more than many people earn to do nothing?

The idea that an income equivalent to a salary of £34,000 "will thrust families into poverty" is absolutely abhorrent to the people who are forced, by the threat of expropriation and violence, to pay for it, people who are sneered at as "middle class". I would not be surprised if the Government quietly persuaded enough of its supporters in the Lords to stay away from yesterday's vote, to ensure a right royal battle on ground on which it is absolutely certain of the public's support.

Good luck, lefties, trying to persuade anyone that an income equivalent £34,000 a year salary is going to thrust anyone into "poverty". I suspect the Government is absolutely delighted to have this in the news for a few more weeks. "Labour wants to pay its voters more than you earn".

Scotland & Northern Ireland

2012-01-23T11:30:00.004Z

The Language of the Protestant community in Northern Ireland is called Ullans or Ulster Scots. The plantation of Ulster, in what many view as the First British Empire, started under Britain's first King, James I, who was, before he ascended the English throne, known as James VI of Scotland. Earlier English plantations had been concentrated around Dublin, but he sent Scots to form "plantations" in northern Ireland, whose troubles since have been about ownership of Land. To this day, most towns in the province are overwhelmingly protestant, with the Catholics being more rural. What happened is perhaps not dissimilar to the Israeli settlements of the West Bank, something the Israeli government might like to ponder.

Culturally, Glasgow and Belfast share the footballing loyalties, sectarian troubles and culture. You can look across the Irish sea from the Giant's causeway in County Antrim in Ulster and see Islay and the Mull of Kintyre, a phallic and legally distinguished peninsula in Scotland.

Northern Ireland therefore is in a Union with England & Wales mainly because of the latter's union with Scotland. Shouldn't an Independent Scotland therefore get Ulster? (yes, I know the 6 counties are not the same as Ulster, but the word is often so used) Do the Northern Irish who wish to remain British, wish to remain in a Union with England, or Scotland? Shouldn't they get a say?

Ultimately unpicking a Union as close as that between Scotland and the Rest of the UK is going to be a constitutional and practical nightmare. Ultimately, whatever happens to Scotland, something like the Anglo Irish Agreement will mean that Scots or English can choose either Nationality at will.

Much of the Nationalist rhetoric, particularly about the Oil, where they think the maritime border should run east-west along the sea bed, rather than follow the line of a relatively straight border, is nonsense. As is their plan to annex the Scottish Regiments of the British Army. The idea that Scotland subsidises the rest of the UK is laughable. It is clear that Scotland would have been bankrupted by the financial crisis, in a manner worse than Ireland. As for the EU, Spain will veto Scotland's automatic membership, and she will have to apply in her own right, and be seen as another mouth to feed. Once these practicalities are made clear, the appeal of independence is reduced to an emotional one. Bannockburn was a long time ago, and we've been through a lot together since.

For these reasons, devo-max makes sense to me, and appears to be the favoured option of most Scots. I for one would LOVE to see Scotland standing on its own two feet. It might even provoke a round of healthy tax-competition to all our benefits. For at present Scotland has a version of the Dutch disease, where they farm subsidy from London, without having to earn anything themselves. The state therefore crowds out private industry, anyone with any drive or talent leaves, Scottish politics becomes that of the shit that's left behind, and ever more insanely socialist as a result. Tax-raising powers and fiscal independence would be the making of Scotland by skewering their pinko mindset and forcing them to pay for policies such as "free" prescriptions and tuition.

Ireland, who left the Union in the early 20th century still enjoys a "most-favoured nation" status and despite rankles at the top of government, Brits and Irishmen get on pretty well, and it's always been so. There were more Irishmen who died on the first day of the Somme than took part in the Easter rising in 1916. The Irish Rugby team, plays as All Ireland, completely (and magnificently) ignoring brute politics. Irishmen can vote in British elections, and serve in her army. Whatever happens to Scotland, we're never going to be totally independent of each other. Perhaps a loose federation of the Isles, including an independent Scotland, Wales and a United Ireland whose citizens are broadly able to choose who they want to belong to and where they want to live is where we will end up. In the meantime, Scotland cannot just wash her hands of the responsibilities she shares as a result of her membership of the United kingdom, and that includes the troubled province of Northern Ireland.

Ultimately though, I don't mind so long as my Scottish relatives are not made foreigners in any meaningful sense, and nationalist violence is restricted to that happening in February between 20-stone props at Lansdowne road, Murrayfield or Twickenham.

Offense-Taking redux.

2012-01-19T10:51:00.005Z

Apatosaurus excelsus, wearing display plumage.

At wednesday's Prime Ministers' Questions, Dennis Skinner, the Beast of Bolsover asked a question about how the Wicked PM invited a representative of ~~Hitler~~ ~~Satan~~ Rupert Murdoch "into the heart of Government". The prime minister responded by answering the question saying he'd love to give evidence to the Leveson inquiry, then added..

"...There's no need to go to the Natural History Museum to see a dinosaur, just come to the House of Commons at half-past-twelve..."

Skinner, who's himself been banned for his parliamentary insults to "the Boy George" Osborne's alleged use of Coke & Brasses (remarks he defended by saying "they were in the 'News of the World' [owned by one R. Murdoch's News Corp], you can look it up") merely shrugged. I may disagree deeply with Mr Skinner's politics, but he's a parliamentary bruiser, who can take the rough and tumble.

Paul Flynn, who thinks a firm handshake "assault" is not so robust, accusing the prime-minister of "ageism". You need to work pretty hard to find offence in calling the sine qua non of Old Labour a "dinoasuar", an epithet often used to describe those on both sides whose antediluvean politics are still fighting battles long lost and won. The insult is pretty mild, and describes the man's politics, not his age. As Paul Flynn, unfortunately an MP of Long standing well knows.

This offence-seeking needs to stop, and Paul Flynn (who thinks a British Jew can't be ambassador to Israel because of "divided loyalties") needs to man up or get out of politics.

Left Wing Boogeymen & The Labour Market.

2012-01-16T19:06:00.006Z

Youth unemployment started to rise under Labour, partially but not entirely as a result of minimum wage legislation. Also to blame are poor standards in schools, and a raft of tax employment legislation which cumulatively raised the cost of employing a young person without experience above that of the benefit to the employer of him doing so. Of course some young people are worth the risk, being hard-working, conscientious and eager to learn. The problem that employers face is getting rid of those who aren't is too expensive and as a result fewer young people are hired.

The main loser from this are the young people themselves. Without any experience between 18 & 21 to raise their marginal productivity above £6.08 an hour, they face a lifetime of being unemployable. Supporters of the minimum wage can point to the lower rates, £2.60 an hour for apprentices, £3.68 for 17-18 year-olds and £4.98 for 18-20 year-olds, but that doesn't cover the increase in employers' NI, the cost of PAYE, the difficulty of dismissing unsuitable workers. Hiring young, unproven people is just too risky.

The reason for the introduction of the minimum wage is that some employers, it was thought but not conclusively proved, exploited monopolistic power over immobile, unskilled labour and could drive wages below that available to do nothing on the welfare state. And this boogeyman reveals a fundamental feature of the Left's thinking about employment.

I often characterise socialism as the belief that a dead-end, unionised job in a factory is the best anyone (else) should hope for. And here, indeed, in the 19th century model, the mill-owners could and in many cases did drive down wages, using their power as monopolies or cartels to keep wage costs down. And in this environment, organisation to defend the interests of Labour against that of capital, makes sense. This is the left's intellectual hinterland. Minimum wages, employment rights and so forth make sense when each town had its factory, Luton hats, Northampton shoes, Birmingham bicycles or whatever, with a large supply of excesss labour coming off the land. It does NOT fit today's Labour market in the UK.

Employers who take on an apprentice are likely to lose him after a couple of years, as rival employers who have not invested in the costs of educating youngsters can afford to pay more. He may not like the job, and instead prefer IT sales or estate-agency and the chance of a company BMW. This is why there are so few apprenticeships: those who go through them become very employable and not just in the low-wage industry that creates many of them. They just don't fit the modern jobs market, but occupy a left-wing fantasy from a vanished age.

Private sector employers are not monopolistic actors in the Labour market. There is competition to keep and retain staff, even in this age of unemployment. People who have the skills (and here, we're often actually talking about the ability to speak clear English, turn up, on time, reasonably well presented and work hard) get a job, because employers are crying out for such people. And those who have never, thanks to a dearth of 'entry-level' jobs, been able to demonstrate these skills? Their CVs and job applications will be thrown in the bin for every job they apply for.

The left has used legislation suited to the 19th century caricature of the top-hatted mill-owner, holding a whip hand over his employees whom he regards as serfs, and applied it to a fluid, assortive labour market where the greatest power is held by the most employable, a little less by average employers and none whatsoever is held by unskilled labour. Perversely, by denying them any opportunity to ever demonstrate a basic work ethic, the unskilled rapidly become unemployable after their 21st birthday. Thus the minimum wage destroys the life-chances of those it is designed to help.

It is for this reason the left, and especially Labour, represents the employees of the last great monopolistic employers: the State. Substantially all nurses in the UK are employed indirectly or otherwise by the NHS. State and local-government bureaucrats remain unionised, because the skills they learn on these jobs are rarely directly transferable into the private sector. Labour market reforms which help the low-paid state worker deny jobs to those in the private.

Private sector employers in the UK who compete using unskilled labour to drive down costs get smashed by those doing the same thing in China or India. They're out of business. Instead, employers are of two types: hyper-local services such as hairdressing which cannot be outsourced, where wages form a function of the local economy's wealth - check out the price of a cut 'n blow-dry in Kensington (the cheapest I could find was £18) and Barnsley (where the most expensive I could find was £12.95). Or they are in a fight for the most productive staff, and pay sufficient to keep staff in that market place.

Thanks to the union demanded national pay bargaining, the state distorts the labour market. In high wage areas of London and the South East, the state pays nowhere near enough to keep its staff. The NHS is hugely reliant on agency nurses as a result. In the North East however the state is a very generous employer and effectively crowds out the private sector entirely.

Of course this suits the political parties. Labour represents the public sector in the North and the Celtic nations. The Tories represent those employed in the private sector down South. The minimum wage doesn't affect the remaining private sector employers much, but represents the bottom rung of the highly stratified state-employed pyramid. Both sets of MPs benefit from the safe seats it creates.

By denying the right of people to sell their labour at their marginal rate, no hope of advancement becomes available to the long-term unemployed. Of course reversing the minimum wage will not go very far in reversing the problem. Other costs - payroll taxes and employment legislation also have their place, as does an end to national pay bargaining in the state sector. Whatever changes are made now will only see their benefit in a decade or more, just as the youth unemployment rate hit the headlines about a decade after the policies which caused it. A decade is too long for blame to be correctly apportioned in a democracy.

Meanwhile 20% of our young people have no job, and will probably never get one. This will cost us all for the rest of their miserable, confused, oppressed, welfare subsidised and hopeless lives. All so two parties of political elites can form voting blocks - labour create the policy, and the Tories lack the intellectual & political courage to reverse it.

High Speed 2

2012-01-10T08:42:00.002Z

What is the point?

The problem is one of capacity on the railways, something that could be most easily solved by longer platforms and longer trains, not speed.

Indeed the evidence suggests that the speed INCREASES the economic dominance of London, and rather than increasing the supply of Jobs in the cities it serves, may see even more of the UK's economic output originate in London.

The economic benefits of shorter journey times are overstated, mainly because people can work on trains.

If HS1 is anything to go by, most people use the slow line, with only those on expenses using the high speed line. This is the market signalling how much value people put on a short journey time - they'll take it, but only if they're not paying for it. I can only add my own feelings on this: what matters is few changes. When you're on a train, you can relax with a book, or do some work. It doesn't really matter if the journey is 45 minutes or an hour and a half.

Of course commuters place a much higher value on time than the occasional business or leisure traveller. Which is why High Speed trains drain economic potential out of the regions: people can commute into London from farther away.

The money would be better spent upgrading existing track, rather than on a massive vanity project. But politicians like to cut ribbons on shiny new toys. A longer platform in Stevenage is more use, but less glamorous a photo-op.

The Iron Lady

2012-01-09T16:15:00.004Z

The Iron Lady has received it's share of criticism. The political left don't like the idea of Margaret Thatcher being portrayed without fangs and a cape. Their view of Thatcher is of a monster, cackling over the destruction of jobs, whilst tucking into a plate of working-class-baby stew. The right, on the other hand can't bear the thought of Saint Margaret of Thatcher (peace be upon her) being portrayed as a frail old woman with declining mental faculties.

This movie is NOT about Thatcher's political legacy, rather about her reminiscing and struggling to come to terms with the death of her Husband. It is a touching and poignant portrayal of an old Lady's slow descent into befuddlement. She is not however presented as a dotty old lady. The moments when she pulls herself together, and answers questions with clarity despite having apparently lost the plot a few moments earlier, is a quite stunning piece of acting. You get a feeling that Lady T may not have lost the inner steel which propelled her to no. 10. I will be absolutely staggered if There isn't a 'Best Actress' Oscar for the performance.

But as I am a political anorak, and this blog is mainly read by political anoraks, I'll deal with the politics. She is portrayed as firm, resolute and courageous, which will piss lefties off. The miner's strike (which is along with unemployment, represents the sum total of her time in office according the the Labour view of history) is glossed over, as were the preparations (stockpiling coal, undersea cables to France etc...) which were not mentioned. The Falklands conflict gets a more thorough treatment. Her dismissal of the 'Haig Shuttle' was believable. The controversy over the sinking of the General Belgrano was avoided, by the rare cinematographic technique of being factually correct.

However those looking for a Hagiography are likely to be disappointed. Resolution is positive quality when she was right, however, she was wrong (or at least hugely at odds with the public, which to a democratic politician is the same thing) over the poll tax. Here, her resolute stance appears neatly to the viewer as pig-headedness. The scene in which she delivers a savage dressing down of Geoffrey Howe in cabinet was brilliantly acted, and Streep's performance offered a hint of derangement. You can certainly see why her colleagues thought the time had come for her to go. Of course the issue that sent Howe out of the cabinet was her refusal to commit to a timetable for European Monetary Union. How's that decision worked out, Geoffrey?

Ultimately, though the film deals with loss, decline, grief and family. And here, I think the critics of the film have a point. These are intensely personal issues. Lady Thatcher and sir Dennis were extraordinarily close, and he was hugely important to her. Given that the main protagonist is still alive, perhaps this film could have decently waited for a few years, until after the great lady's state funeral.

The Offence Game

2012-01-08T10:29:00.005Z

Dianne Abbot suggested "white people" played divide and rule... Then David Cameron suggested Dealing with Ed Balls was like dealing with someone with Tourette's syndrome.

Leave aside the vast gulf in the responsibilities of these two characters, the reaction to the "gaffes" is the same. The people who were faux-indignantly jumping all over Abbot's tweet, were the next day defending Cameron's "off the cuff" remark. Those who were staunchly defending Abbot's anti-racism were opining that Cameron's remark was "offensive" and demonstrating his "arrogance".

Of course this is just a game, one I play from time to time. But this constant offence seeking is poisonous to discourse, by forcing politicians into a mode of speech wildly divorced from that used by you and me. If Abbot had said "the white establishment" rather than "white people", she'd be expressing an uncontroversial and widely held view about the tactics of colonialism. The 140 character form therefore, where truncation is necessary (whether or not she had sufficient characters left to use the longer expression, brevity is the soul of Twitter) leads problems expressing thoughts accurately. Embarrassing, and fun to hoist a Labour politician on her Race-mongering petard, but no-one's really offended.

Tourette's syndrome is widely used casually as a descriptor of an aggressive and foul-mouthed person. The combative Ed Balls certainly fits. I doubt this is genuinely offensive to anyone with Tourette's, outside the grievance industry. His remarks were no-doubt jumped on as enthusiastically as they were by the Twitter mob, in revenge for the Abbot storm a few days earlier.

Perhaps we'd have more respect for our political system, if we let our Politicians speak like the rest of us. Those who use twitter engage more intimately with members of the public than any politician in the pre-Internet age, and should be applauded. It's fun squealing "offence" to discomfit our lords and masters, but perhaps we don't want to scare them out of Twitter and off the Blogosphere.

Let's let our politicians speak freely. Maybe then they'll continue to let us...

Sin Taxes, Incentives & the "War on the Motorist".

2012-01-05T13:00:00.005Z

For 50 years, the roads have been designed exclusively for the car, to the exclusion of almost all other means of transport. Branch lines were axed on the rail-network and the rest fell into unionised disrepair, motorways were built, tramlines ripped up and buses (outside of London) were neglected as the choice of the underclass. Little thought was given to the bus, cycle or pedestrian in the design of roads, or if they were, it was about controlling the pedestrian with cages and detours, in order to keep the motorised traffic flowing. Town centres were wrapped in urban dual carriageway circulatory systems leading into and out of multi-storey car parks. Unfortunately, the experience of road-building is that any increase in capacity is rapidly filled, and despite the investment, the experience of the driver in most of the UK is pretty miserable.

As a result, any removal of road-space from the private motor car, for bus lanes, cycle lanes or other forms of public transport is enormously controversial, and seen as part of a "the war on the motorist", who feels over-taxed, and generally put-upon. Because racism is no-longer allowed, the most vituperative comments on Local papers' 'sPeAK YoU'RE bRaneS' boards are reserved for cyclists who are all red-light jumping, suicidal, pavement-riding, road-hogging Lycra Nazis who are in the way. Angry yet smug, they are the cause of all that is wrong on the roads.

Of course driving can be fun. The open road (ha!) or a race-track. And we've all experienced the joy of giving it the beans when given the opportunity. This is what people think driving SHOULD be like. It isn't.

Driving is NEVER like this...

Driving is uniquely stressful, especially in stop-start traffic. This is why cyclists are so hated. The unexpected flash past the window merely adds to the stress of the motorist in the urban queue who immagines actions to be far more dangerous than they actually are. The disconnect between how driving is, and how it should be, combined with the envy of the cyclist, as he makes progress, ignoring the red light (when safe, I do so to get out of your way...) and nipping in and out of the traffic, leads to these feelings of hate and rage. Of course, if you're sitting in traffic, you're part of the problem, not me...

Now my principal interest, as an occasional motorist myself, is to have smooth traffic flow and as stress-free a journey as possible. The problem comes at pinch points which set the capacity for an entire system. For example, the M4 (of Jeremy Clarkson's bus-lane fame) into London from Heathrow has its capacity set principally by the Hogarth Lane roundabout in Chiswick and a 2-lane overpass between junction 2 & 3. There's no point having a 3 lane black-top if it just pours vehicles over a bridge which will be backed up for 6 hours a day as a result. The thinking behind the bus-lane is that a significant chunk of that traffic will be doing one route: Heathrow to West London. A bus will take cars off the road, freeing capacity, for people who want to use a car, and presenting another option for those who haven't a car parked at Heathrow, and for whom the train or tube is inconvenient. It takes excess capacity off the road, leading to the pinch-point, meaning at peak hours, the traffic flows slower into the junction, leading to fewer tail-backs. Thanks to Clarkson, the bus lane is no more, and there are more delays as a result.

This is also the thinking behind variable speed limits when the road is clear - for example to ease the congestion at Junction 6 (spaghetti junction) of the M6 whose capacity is exceeded almost every day, you often see 50mph limits on the overhead gantries for 20 miles leading up to it. Of course everyone ignores variable speed limits and Junction 6 stops moving every day (Advice: the M6 Toll road between junction 4 & 11 is well worth £5. If this blog can teach you anything, never, unless you absolutely have to approach junction 6 of the M6. You will be there for hours...).

So here's the rub. Traffic engineers can look at a system and suggest that IF everyone does X, we can have capacity Y. But motorists don't like being told what to do, and rarely believe it's for their own good. The legacy of the hated Gatso camera (which I want to see removed), speed bumps (cyclists hate these at least as much as motorists), one-way systems, all designed to make traffic flow better, but end up making drivers even more stressed. And a stressed driver is an aggressive driver. And that makes no-one happy least of all, me on my bike.

From a recent twitter thread: "£8bn in spending on roads, but motorists pay £30bn in taxes." or variations thereof is an oft heard refrain. So let's look at this in more detail. Vehicle Excise Duty (a tax I've long argued should be abolished) raised £5.4bn and fuel duty raised £24bn. Fair enough. But this isn't a hypothecated fund for road building. It's more akin a usage fee for a scarce resource, in this case road space. It is also designed to cover the externalities of CO2 emissions (whatever you think of this, I'm not interested right now), noise, pollution, and congestion.

England (see comments) is the world's 3rd most densely populated country (ignoring micro-states) after Japan and the Netherlands. The greater south-east is the most densely populated area in the world. There just isn't the room for everyone to use their cars at the same time. So bear that thought in mind when reading the next few paragraphs. What this enormous £30bn tax bill represents is a colossal mis-pricing of an asset. Roads are far too expensive for 12 hours a day (9pm-6am). They are far, far too cheap between 7:30 and 9:30am or between 4:30 and 6:30pm. They're probably about right (given that they're full, but running smoothly) during the rest of the day.

So. You've a problem for 4 hours a day, across much of the south-east as everyone tries to get to the same places at the same time, by the same means of transport. You've got 3 options.

Build capacity. The problem is that if you build enough capacity, you get Milton Keynes or in it's extreme form, Los Angeles. Free Parking in LA has been a curse. A 2 bed semi in Milton Keynes costs £315k compared to £500k in 'war on the motorist' central, Cambridge. This differential despite the fact that Milton Keynes has better connections, and is an easier commute into London (the strongest correlator with house prices). People don't choose to live in a car-paradise, because cars though lovely to be in, impose enormous externalities on everyone around them - noise, pollution, danger - when they move faster than 20mph. The market has spoken. People like their car. They don't like other people's, and they will put up with restrictions on its use for quality of life.
Encourage alternatives, which means laying on buses, trains, trams and designing the roads so they aren't savagely hostile to all but the most aggressive and confident cyclist. The fact I am not in a car, is one less car in the queue up the hill to the roundabout. Motorists should recognise this and welcome it. The problem is cycling is uncomfortable to the weak (yes I do feel utter contempt for fatsos in boxes...), and buses are just nasty. So that in itself is not enough.
Discourage motorists at peak hours. This is the argument behind the congestion charge. I don't like road pricing mainly because of the surveillance aspect of it. I don't like 'the man' being able to track my movements. Instead I prefer the widespread use of parking charges as a proxy for road pricing. This isn't a "nudge", but an application of the principles of the market to road congestion. Councils encourage short-term parking for shopping, with nominal short-term ticket charges, rising sharply should you wish to park all day (which is often not possible at all in a council car park). Further more, councils charge an annual tax on office parking spaces -£600 in the last example, to discourage commuting and encourage the use of alternatives. Clever use of technology will allow motorists to pay when they leave for what they've used, rather than using penalties and traffic wardens, which just creates more stress.

On top of the externalities motorists impose on themselves, like congestion, cars impose externalities on everyone else when they move. (Don't even try to deny this. Would YOU want to live next to a main road...?) especially when they move faster than 20-30mph: These externalities which reduce the qualitiy of life for those around them are principally Noise, pollution and danger, which are reduced to almost nothing when the speed drops. This is the reason most residential streets are being closed off at one end to prevent "rat-running". The campaign for 20mph zones in urban areas isn't a war on the motorist, but an attempt to help people who live there, live with cars safely and without stress. Intelligent road design can achieve this without further stressing the motorist. The point is, where the road design is intelligent, the average motorist doesn't notice it. I do, because I am a road design bore.

So, motoring & parking charges are seen as "sin taxes" on what most people regard as a necessity. They aren't. Nor are speed limits below what you think "safe and reasonable" or traffic calming measures a politically motivated restriction on your freedom. They're mostly about demand management and safety. This is why the Tax Payers' alliance is wrong on 'Sin Taxes' which according to them "either work, or raise revenue. They can't do both". They can, of course, it's just a question of where any particular tax is on its laffer curve, something the TPA is fond of pointing out in other contexts. If a 5% rise in tax leads to a 2% drop in use, you have raised money AND had an effect. In any other context, a market-pricing system for use of a scarce resource would be lauded by the TPA, but not, it seems when applied to the motorist, which is bizarre. Because the TPA are firmly of the (correct) belief that market price-setting anywhere and always leads to more efficient use of a resource, and therefore greater wealth for all.

So. All this stuff I've been writing about these last few days isn't about a "war on the motorist", nor is it particularly about cycling. It's about a fair crack of the whip for all means of transport, which all have their place in a sophisticated, decentralised, efficient means of getting people to the right place at the right time. If all you have is a hammer, everything looks like a nail. The UK is too car-centric, and needs to invest in alternatives, mainly to make the car itself work better. A benefit of fewer cars in our town centres MIGHT be a more pleasant and relaxing environment for us all.

I mentioned three countries more densely populated than the UK - The Netherlands, Belgium and Japan. All have embraced the bicycle as a means of urban transport, and both invest heavily in public transport. They do this because in parts of the world where lots of people live together, there just isn't room for everyone to drive. Motorists know this, deep down, and fear the loss of their privileged position in the hierarchy on the road. That is why any comment which involves addressing the necessity to control traffic is dealt with in such an angry way. Humans are irrationally loss-averse, and blind to opportunities. Just as benefits recipients fear the changes to the benefits system more than is reasonable, the motorist fears any alternative to the car more than is reasonable.

Note, I am not suggesting YOU can't use YOUR car, merely suggesting that government has a role in providing safe alternatives, even if you're a libertarian. If you're a libertarian, you should be in favour of market pricing mechanisms. This isn't government promoting anything, nor is it isn't a war on the motorist. Can we really go on sitting in traffic for hours (when I say "we", I mean "you". I'm long-gone)? Wouldn't it be better if, on a sunny day, you weren't put off taking a bike to work for a change because of a perceived danger? It's about giving the options, not taking them away. Wouldn't it be nice if there was an incentive for your employer to allow you to work at home? Do we really ALL need to make the journey to work at the same time? Without a pricing mechanism which captures at least some of the externalites, you will not have the most efficient use of resources, and we're all poorer for it.

Finally, and much more broadly, we have the wrong basis for taxation. Why do we tax jobs, leading to fewer jobs; why tax profits, we want more; why not tax externalities instead? Pigovian taxes make more sense than income taxes because the tax can create a positive outcome in more efficient useage of resources. Wouldn't that make sense?

BBC complaint

2012-01-04T16:04:00.005Z

"Thinking Streets" was broadcast 3/1/12 21:00 and re-broadcast 15:30 4/1/12. I submitted the following comment.

In the opening vox-pop, two people openly said they would like to kill cyclists. I understand in the context of the program that this was to set up an idea that some think the roads are a "war zone", but I can think of no other class of people against whom such a threat would be broadcast on the BBC.

I was deliberately knocked off my bike by a road-rage driver, who fled the scene. Despite a positive ID, he was never prosecuted. These attitudes are common. Your broadcast gives the impression they are acceptable. This is irresponsible.

Otherwise the program was interesting and engaging, though I disagree with your charicterisation of shared space as being common in the Netherlands. It isn't. The Dutch seperate their traffic, with high quality, seperate cycle paths with 'shared space' in only a few small urban areas.

Let's see what happens.

"Provide Parking!"?

2012-01-03T12:33:00.003Z

The simple solution to the death of the high street touted by Internet bores* but barely mentioned by "TV retail Expert, Mary Portas", in her recent report is free parking. Portas focuses instead on silly "use-category" legislation and other red-tape, while suggesting the high street must adapt to an environment where Online becomes the dominant channel, perhaps by allowing retail to retreat to a "core" town-centre, allowing shops to be converted into homes on the edge of the CBD.

I have had many arguments online, but none more heated, vicious and personal than when trying to get car-owners to admit to the externalities caused by car ownership. Any attempt to make the motorist pay for these externalities (most of which, such as congestion, only affect other motorists), is seen as an evil attack by shadowy forces in the "war on the motorist" or a "nudge" and therefore an anathema to the "Libertarian". It isn't a nudge, but just an attempt to get a market solution (something libertarians are supposed to support) to the problem of insufficient capacity on the roads. Motorists just can't accept that even as expensive as it is now, the Car is ridiculously heavilly subsidised, and few if any externalites are charged at anything like their true cost. By far the most obvious and pressing is the issue of town-centre parking.

Why don't councils simply provide more parking spaces? Well land is costly, and motorists are unwilling to move more than about 200m (in practice it's often more like 50m) from their car. In fact, they want to park directly outside the shop, and they don't want to pay for it. Yet parking spaces are extraordinarily expensive: several tens of thousands per space at ground level, more above ground, and hundreds of thousands per space below. Put the demand for free parking another way: motorists want to enjoy exclusive access to a piece of town-centre land with hugely expensive, single use, physically ugly infrastructure, for "free". Of course, by "free" motorists mean they expect the retailer to pay for the pleasure of the motorists' custom by providing these facilities out of their profit margin.

This is why councils are keen on Park & Ride. Land is cheap on the edge of town and a shuttle bus is cheap to provide. Generally speaking, given the amount of time spent circulating to find a space, most motorists would be better off driving to a park and ride and taking the bus. The problem is motorists hate being more than 200m from their car. Time spent looking for a space is ignored. Time spent on the bus isn't (perhaps with good reason). Even if successful in the search for a space, you're still imposing costs on others. The externality of parking outside a shop is to be found in the prevention of someone else doing so, and in the increased congestion as that person then circulates to find another parking space.

I wonder whether a variable pricing solution has any merit. Basically parking spaces should be costed on the number of free spaces in the immediate environs. If there are lots of spaces free on the street, or on that section of car-park, the price falls. If there are few free spaces, if you want to park at the supermarket's front door, or take the last bay on a street for example, you pay much more. Set the algorithm, and let the punters decide. I would always park where it was cheapest. This could also be viewed as an efficient fat-tax as the obese always fight hardest for the most convenient spots for them to waddle fatly towards their doughnut emporium.

This is, of course a "nudge" and therefore unacceptable. Only providing what the motorist wants, free of charge (they pay "road tax" don't you know?) is acceptable. Of course a retailer, who has to pay rents on the shop and rates for all that "free" parking, passes it back onto the customer in the form of higher ticket prices on the goods he sells. In response the motorist enjoys shopping as a leisure activity, browses the goods, has a coffee, and then goes home and buys whatever it was he was looking for, online. Thus the Motorists' demand for free parking is contributing to the coming dominance of online retail.

The other reason that councils don't provide unlimited free parking is that were they to do so, life would be made unbearable by congestion, as everyone wants to use the facilities at the same time. Roads have limited capacity and cannot get the people who want to park to and from their spots sufficiently smoothly. There's a balance between road capacity and parking provision - there's no point increasing parking capacity beyond that of the roads to sustain it. That capacity is limited by pinch-points, which in urban areas are often medieval centres with narrow streets. no-one is suggesting turning Cambridge into Milton Keynes are they?

Larger big-box stores will continue to carry the cost of high-street locations, but accept they will be mere show-rooms for delivery or eventual online order. The Greengrocer, butcher & fishmonger were killed by the supermarket, who provide the same service, cheaper and more conveniently. The town-centre shop is going to be (broadly) killed by the website. Just as there are a few butchers, greengrocers and fishmongers left, catering to a niche of foodies who demand extremely high quality and value the personal touch, it seems likely that the retail industry will be dominated by out-of-town for those who demand to drive, relegating the High-Street to specialist shops, many of which will operate significant online businesses. Here, e-bay is the shopkeeper's friend, and the catchement area of the shop is expanded by the Internet. Ultimately, the High street will become a leisure and social destination dominated by specialist shops with wide catchement areas, often locaed in clusters, coffee, alcohol, food, and possibly entertainment and culture rather than retail. It will be up to imaginative town councils to find a way to keep the whole thing alive. Portas is right. Cutting the red-tape, expanding markets, and altering use rules to make them more flexible is a better solution than concreting over more of the countryside, or building more multi-storey car-parks.

Research suggests that retailers consistently over-estimate the importance of motorists and parking to their turnover, and underestimate the importance of users of other forms of transport. In particular, Motorists don't spend any more than other customers, but they prevent users of other forms of transport getting to the shop, which could generate higher traffic. The fact you can park a dozen bicycles outside a shop more than makes up for any lost revenue due to "anti-motorist" policies such as pedestrianisation or shared-space schemes. Users of public transport, Cyclists and pedestrians can also enjoy a drink with their retail-therapy, motorists can't.

The fact is the demise of Town-Centres as retail dominated spaces is absolutely inevitable unless people can be persuaded to get more than 200m from their car. If you value the high-street, as most people claim to do, you have to use it, and pay to park your car. (Or take a bicycle). Me? I'm not fussed. I like the Internet and never saw shopping as a leisure activity. I find 'poundland' which appears to be replacing Woolworths on in every town-centre depressing, but that's a mere statement of taste. Meh.

*I am aware of the crashing hypocrisy.

Predictions for 2012

2012-01-03T10:36:00.001Z

I didn't do one of these last year, so there's nothing to measure myself against. Here goes.

The Eurozone will survive, mostly intact. Only Greece may leave but I think this unlikely. Wishing the Euro's demise, does NOT make it more likely.
The Olympics will be a success, and the UK will benefit from a Feel-Good factor. We will come 6th in the medal table.
There will not be a General Election in the UK.
The Tories will consolidate a small poll lead.
Ed Miliband will continue to display utter uselessness, the result of my morning dump would make a more convincing leader of Her Majesty's loyal opposition. Well done, Labour, finding someone less credible than Gordon "one eyed fuck-wit" McDoom.
David Cameron's veto will not lead directly to the UK leaving the EU, and he will NOT offer a referendum, and will therefore be accused of "treachery" by the usual suspects for whom 'Europe' is the only issue.
The economy will surprise everyone by not collapsing (I'm not expecting a boom either)
FTSE will fall at first before closing the year close to 6,000.
Inflation will remain high, thanks to QE and the fact I suspect the BoE has a tacit 5% inflation target in order to monetise public and private debts.
Unemployment will peak (as usual, a couple of years after Labour leaves office...) before falling again.

So 2012 will be better than 2011, the squeeze will ease and we'll all start feeling a bit more optimistic again. The Government has the right ideas on the economy (broadly balance the books, then cut taxes, in that order).

The UK still has global influence, the rule of law, the world's 6th, 7th or 8th largest economy, the 16th richest per capita and defensible borders, semi-detached membership of the world's largest market, good relationships with the world's largest economy, direct links, via Hong Kong into the 2nd. We have a globe-bestriding financial sector, and we punch above our weight in sport, music & creative industries, have a strong manufacturing sector (yes, we do). There's still some fight left in old blighty yet, and I do wish people who consider themselves patriots would stop writing her off. This is not a bad place from which to be watching the crises.

Can you think of anywhere better?

This time of year...

2011-12-22T11:41:00.002Z

Christmas, winterval, yule, Hanuka, Saturnalia, whatever.

We should all be celebrating today. For today is the Solstice. The longest night and the beginning of winter, The days will get longer from now until the Summer solstice in June. All the festivals we celebrate around this time are lunarised bastardisations of our much more ancient solar festivals.

I'm not some neo-pagan, dressing up like a character from Lord of the Rings to perform some farcical ceremony at Stonehenge. But these festivals are based in something real, the seasons, which give a natural rhythm to our lives, and have always done. The light has shone through that same gap, at the same point every year for about 4,500 years. This natural rhythm, combined with a human need to mark the passage of time, is why Atheists celebrate Christmas: you don't need a God to tell you to celebrate the return of the sun.

Every Day Carry

2011-12-20T09:37:00.007Z

One of the blogs in my reader is the well-known "every-day carry" where people show how they carry all the gadgets and gizmos they might need day-to-day. There are some "loadouts" that are survivalists, bristling with military hardware, hand-guns and fighting knives which are absolutely absurd, usually carried by fat men with thick spectacles acting out walter mitty fantasies, and would be illegal in the UK. There are also some minimalist and stylish collections of fine leather goods and beautifully chosen tools. It's a good place to go and indulge my small leather goods fetish, or my desire for beautiful tools, like these William Henry Knives.

I find it absurd, for example that a decent multi-tool would be (sort of) illegal to carry in the UK. Most have blades which lock in place (far safer than a UK-legal slip-joint folder) and blades greater than the maximum 3". If you have an excuse to carry a multi-tool, then it's legal. So if I carry one, it lives in my Bicycle tool kit but I regard the fact that I might have to justify carrying something so self-evidently useful as a leatherman, as a gross intrusion.

Generally speaking, the EDC is a philosophy of preparedness, at all times, while keeping the weight & bulk down. This requires thought about the objects you carry. So should your pen double as a self-defence tool? Your key-chain a tool or light? Memory sticks? Do you need a knife AND a multitool? Notebook, pens, sunglasses. Can you carry stuff on your belt, without looking like a total twat? These are all important questions.

Here's what I carry with me every day, bearing in mind I'm a cycling stockbroker. It's heavy on pens and business cards and light on firearms.

Omega speedmaster reduced (the automatic version of the moonwatch).
Wallet, business card case and pen holder by Aspinals
Parker 51 fountain pen, pencil & Victorninox Tourist which live in the pen-holder.
Fisher space pen & extra-small moleskine notebook, carried in wallet.
Brass Zippo
and of course, a phone: HTC desire, in an ultra-slim leather case by Senna.

More often than not, the Kindle plus cover by Piel Frama will come with me when I leave the house. Especially if there's public transport involved. If I'm cycling, I will wear Oakley half-jackets, and will certainly carry a flash-light, in case I need to cycle after dark. In the bag, I carry a waterproof, high-visibility jacket & overshoes (if not carried, it WILL rain), a small first aid-kit (gauze, iodine mesh, tape, antiseptic spray, tweezers, Ibuprofen scisors and a space-blanket), spare lenses for the Glasses for different light conditions, spare batteries for the bike lights.

In the small saddle-bag there is always a CO2 pump, plus spare canister, inner tube, tyre patch, puncture repair kit, tyre levers, zip-ties, a cycling multi-tool with Allen keys and a chain-breaker. I also carry a spokey, spare nipples and a kevlar spoke, enough to get the bike home after almost any disaster. This lives permanently on the bike.

Finally I usually carry an electronic gizmo "life support system" in a small pencil case, which contains a multi-usb plug, leads, adaptors and a power-monkey, a spare battery for the phone, with which I can charge any of the electronics I carry from either a computer or plug.

Is there anything else I need? It seems like a lot, but the first picture fits in my pockets, the second takes up the smallest pouch on my courier bag, including the contents of the third picture. Generally speaking, I'm ready for most things that the day might throw at me.

Cycling Kit

2011-12-16T10:53:00.002Z

Since I've abandoned car ownership, I have given a lot of thought to cycling kit, as it is my main means of transport.

First of all the Bike itself. I ride a Condor Squadra. This is not the bike I would have chosen were I to buy it again as it is an out and out road bike, with no eyelets for luggage or room for mudguards or tyres bigger than 25mm, it's fine in the summer, but not so great in the winter. Carbon fibre, which is what the seat-stay is made from, isn't the right material for an everyday bike.

So what advice would I give to someone thinking of selling their car for a bike. First, bicycles are still seen mainly as a leisure activity in the UK and the bikes available reflect this. Road bikes have tight clearences, skinny tyres and close spaced gears. Mountain bikes have strong frames, knobbly tyres and extravagent suspension. You do NOT need suspension on roads, it's just weight. Both road and mountain are almost useless as an everyday commuting bike. You know why? Because they weren't designed for it. Road bikes gear ratios are too high for climbing if you're carrying anything at all, and knobbly mountain bike tyres and suspension make pedalling about 50% harder work than it needs be on most mountain bikes.

Buy a Dutch, Hybrid, Audax or touring bike, with clearances for big tyres for the winter and room for mudguards. Did I mention mud-guards? The Crud Road Racer IIs are excellent and make a road bike acceptable in winter, but a proper set of mud-guards are even better and certainly tougher. Most bikes in the UK are sold without mud-guards for aesthetic reasons. None of the bikes you see mountain-biking or racing on TV have them, so bikes with them look old fashioned. It is quite simple. With mud-guards and a decent coat, only the tops of your thighs get wet, in all but the most torrential downpour. Without mud-guards, you get soaked in seconds in the merest drizzle.

Frames should be steel or (if money is no object) titanium, not aluminium or carbon fibre. Why? Because steel and titanium are tough, and aluminium and carbon fibre are brittle and you're going to be lugging stuff over pot-holes. You wouldn't use a Ferrari every day, why would you use your Colnago?

Wheels. Any fewer than 36 holes on the rear is just stupid. Once more, Tour de France bikes have as few spokes as they can get away with for aerodynamic reasons. They have a mechanic who can and does true the wheels daily. These guys also weigh half what most of us weigh. You're buying a bike to use every day, and it's going to be lugging stuff over pot-holes. Leave the 28-spoke wheel for the weekend, on your carbon fibre road bike.

Gears. If you don't have a hill to climb, 3 or 5 speed hub gears will be fine. Otherwise derailleurs are popular everywhere for a reason. Although they require maintenance, the close ratios and index-shifting make much more efficient use of the 1/2 horsepower you have available. Hub gears are however, basically maintenance free. Beware road-bikes. There is a culture amongst freds of Big-Ring masochism. Because Miguel Indurain could climb on a big ring, everyone wants to. This hurts knees. Get gear ratios apropriate to the task and your level of fitness. Were money no object, for my every day bike I would use a Rolhoff Speedhub, but as it is, I have a 9speed Camagnolo cassette and a compact front.

Saddles: Padded saddles are NOT comfortable for any more than a mile. There's a reason why almost all round-the-world cyclists use the Brooks B17, a saddle which has been in constant production in the same factory in Birmingham since 1866. Because it's the most comfortable. Trust me on this one. £70 for a saddle, and you will never, ever want another. I use the Brooks team Pro and I love it. If you're sitting very upright and Comfort is your main consideration, try this, but really, if you're using the thing every day, buy a Brooks saddle there is no other choice.

You can spend anything from £400 to £4,000 on an every-day bike. At the bottom end, you'll get a reliable if heavy hybrid, and at the top end, you will have a hand-built steel or Titanium frame, measured for you with top-of-the range components. Remember the cardinal rule of cycling. Cheap, Light, Strong: Choose two. You get more benefit from tyres at the correct pressure and the saddle at the correct height (probably up a couple of inches) than an extra £1000 on the bike's cost. You're not racing, so don't buy a racing bike. You're not going off road, so you don't need knobbly tyres. You ARE going on roads which may be wet, so get mudguards. Mudguards make all the difference to winter cycling. They're even more important than the clothes.

Luggage is the other reason people give for not wishing to commute. Very few people need to carry more than a ruck-sack every day. Certainly two panniers and a ruck-sack will carry a week's shopping. And if you regularly take big loads, I reckon this will carry more than a small car. Kids? No problem. For day-to-day use, I've a courier bag, from Bagaboo in Hungary, which keeps everything dry, even in the most torrential downpour, and can take a week's shopping for one home from the supermarket. If you want a courier bag, I would highly recommend their Workhorse messenger, and they will even stitch your own design. Others swear by rucksacks. Most people who carry lots of stuff over a long distance, let the bike take the load with panniers, bar-bags and baskets. Trial and error, work with what you're comfortable with as there is no right answer.

What about clothes? Well the commuting cyclist is well catered for now. One extravagence is a pair of Rapha jeans which are wonderfully comfortable. Another is a merino wool habit. This means I don't have to dress up as a mobile billboard every day and can more or less cycle to work in normal day clothes. Merino resists odour, wicks sweat and keeps you warm or cool. Magic stuff. I have in the past kept suits in the office, and carried them with me. It's not a great problem having to change. If you're clean, you shouldn't need a shower if you're commuting less than 5 miles, especially if you take it steady. A pair of overshoes is a must, as is a waterproof, some of which are not eurofluro. Also look at Outlier and Velobici. It's not cheap, but think of it in terms of full tanks of petrol. Ah, that merino Jersey costs one tank of petrol... see. Easy to justify.

These days there is no reason why you shouldn't abandon your car entirely for all journeys of less than 5 miles. Try it. You might just start to like it.

Youth Unemployment....

2011-12-15T17:32:00.005Z

....Is an absolute disgrace.

Problem is Labour's mantra that this is an economic problem is belied by the fact that this has been rising since ~~they introduced the minimum wage~~ about 2000. In Spain 40% youth unemployment is indicative that most young people have half a job, before they eventually join the ranks of the protected insiders.

In Britain however, 20% youth unemployment means many of those 20% of young people won't get a job, now or ever. This is one of the broadest measure of Britains multi-generational welfare dependency. There's the Workless households, in which one in six children grow up; without a role model of a parent going to work every day, the majority of which are headed by a lone parent. At the top of the heap are the "problem families" which blight every poor neighbourhood.

The problems are circular. Increasingly feminised schools have little relevance to working class boys in particular. They bunk off, find they can't catch up if they ever have periods of motivation, get frustrated, bunk off some more, and leave school without any of the basic skills necessary to succeed, or any of the qualifications employers demand. These boys then go on to lead chaotic lives, without the hope of employment, fathering children they have little intention of bringing up. Who grow up in workless households, for whom school has no relevance.... and so on.

The problem isn't a lack of jobs (the number of employed immigrants gives the lie to that), a lack of skills, or even discrimination against the working class, one ludicrous CiF article (I can't find the link) suggested employers' demands for punctual, hard-working, well-presented, literate people with clear diction was 'discrimination'; instead it's a moral poverty.

There are vast armies of state employees, some 43 agencies by one estimate, focused on solving these problems. Income transfers ensure that the multi-generational welfare families are not cash poor. There are plenty of low-paid people on wages lower than that which can be achieved by farming the benefits system's (at one recent count) 73 different payments.

Chris Dillow will scoff at the idea that living on £51 per week unemployment benefit. But this number is a joke. Unemployment benefit: that's just pin-money, when housing benefit ensures there's a roof over your head, and income support & child benefit to ensure little Wayne, Lee and Kayleigh don't starve. A multi-generational moral vacuum has been created, where there are no consequences to catastrophic life choices. Few single mothers get sent to gaol unless they've killed someone, and there are no punishments short of that hold any fear.

The Problem families don't need another agency of troubleshooters to ensure they behave. They need a system of consequences. Beyond a certain point of catastrophic stupidity, petty criminality, and ignorance the state needs to cease its efforts to 'help'. Perhaps above a certain number of ASBOs and convictions, all benefits should be stopped, all children taken into care and the family evicted from state housing. The adults would be free to find a living without the help they've spat out all their lives.
Consequences for actions. That is all that is required. It may even filter down through the levels of uselessness, without the hard-core of trouble families, their neighbours' kids might find education in sink comprehensives improve. This might mean that the employers, who've been importing labour rather than employing illiterate British teenagers, might start making a dent in youth unemployment. If you build an incentive or two into the welfare state, in 20 years, Britain's underclass might actually start to shrink.

Cameron's Euro Gamble.

2011-12-09T14:03:00.006Z

We will find out over the next few days, but I suspect the conversation went something like:

France: "We want to impose a Tobin tax, Europe-wide"
The UK: "Um... sod off, you greasy little squit".
Germany: "We'd like to impose regulation on financial services designed to move transactions from London to Frankfurt"
The UK: "You two are shitting me, right".
France & Germany "No".
The UK: "Fine then, bugger off".

Everyone is claiming either victory, or that Cameron's made a terrible error. UKIP, because we're not getting a referendum that for some reason they think will solve everything, STILL call Cameron a Europhile. Labour think it's terrible that Britain is "isolated".

Actually I think the situation is broadly what the Conservative party AND the British people want: a 2 Teir Europe, with the UK the leading member of the small "never going to join the Euro" club. These will slide towards a Norwegian/Swiss position, while everyone else forges ahead with ~~a Franco-German empire~~ monetary and fiscal union.

So Cameron has shot UKIPs fox who will continue to frot themselves about a referendum which is no longer needed and will fade into irrelevance. Labour will find themselves arguing that Cameron SHOULDN'T have wielded his veto and should have instead bent over for whatever the Merkozy borg was suggesting. This demonstrates Ed Miliband's tactical and strategic ineptness, and may have cost him the poll lead.

I am not sure Cameron could or should have played it differently. But there are deeper and more lasting issues here, which may or may not cause problems further down the line. This is an epoch-making moment. It is the end of 500 years of consistent English (& 300 years of British) foreign policy towards the continent. Namely that if the dominant hegemonic power isn't England, no other power, or combination of powers should be able to rise to dominate the continent. As I mentioned before

Since the wars with Spain in the 1500s, when England stood at the head of an alliance of anti-Spanish nations culminating in the Armada of 1588. Next, through the Wars of religion Protestant England was happy to ally with anyone including Catholic powers keeping Spain down. France was (believe it or not, after strings of stunning military victories) next up in an attempt to become the dominant power in Europe, first under the Bourbon monarchy and later under Bonaparte. Comprehensive British victories at Trafalgar in 1805 and Waterloo (with a little help from ze Prussians) in 1815 put pay to Napoleon's ambitions in that regard. The Russians made an abortive bid but were seen off by a Anglo-French alliance in the Crimea and turned their imperial ambitions east. A long peace saw the Rise of Germany, and the brokering of an Entente Cordiale between France and the UK should Germany get uppity and start throwing its weight around. They took some stopping, and the help of the Americans but Germany was prevented from getting a massive European empire....

...1914-1918 and 1939-1945 were the same war, with a bit of time to let Fritz regroup. The hun may have been utterly defeated, but they have never abandoned the dream of European empire which has burned in the Teutonic heart since the unification of Germany under the Hohenzollerns in 1871. The hush-puppy may have replaced the jackboot but the Boche are still marching in step.

Well that nightmare is upon us. A unified Europe stares at us across the Channel and our only allies are Sweden, the Czech republic and Hungary to block the behemoth that is the Eurozone and the lackeys who STILL wish to join. Our influence in a club, which by treaty and Geography, still affects us deeply, is much, much less today than it was yesterday. The UK cannot outvote a EU17 voting at Merkozy's whim as a block. Euroskeptics, amongst whom I count myself, should not kid themselves that this decision is without cost.

Even if we leave the European Union, we still have to deal with that European behemoth, which will remain our biggest trading partner and closest neighbour, linked by money, blood, and habit. Unlike yesterday, we have no reins with which to control the monster which a federal German-dominated euro zone will become. It will rapidly become under French influence, more protectionist and inward-looking as our counterbalancing influence will wane. This isn't in Britain's interest.

Britain got what she wanted and may yet regret it.

The Darwin Economy

2011-12-05T12:39:00.003Z

Robert H. Frank, professor of Economics at Cornell university has written a very interesting book called the Darwin Economy. The central Idea is that Humans are prone to decision-making which is optimal for the individual, but damaging to the Group, in a manner similar to the evolutionary Arms race which sees Bull Elk producing enormous antlers every year. Such adornments are costly, not only in the resources of calcium and protein, but also in the difficulty of moving in forests with such ungainly headgear, leading to predation by wolves.

Thus spending on such display items as cars and houses is excessive and sub-optimal. Humans being status-conscious beings, we feel it necessary to keep up with the Joneses, leading to an arms-race of consumption cascading from the super rich all the way down to the very poor.

This is market failure, but not in the way the left thinks, as is explained at some length in the book. Instead Professor Frank suggests it is a failure in the basis of taxation. Why do we tax things that are good, like income or jobs which we need more of? Why not tax things like status consumption or use of scarce resources, in which the effect of the tax is beneficial (lower mileage driven, fewer resources consumed, less excessive status arms-race) over and above the tax raised?

This isn't to say that tax doesn't take out of the productive economy, of course it does. But that the blow would be softened if IN ADDITION to the tax raised, there was some compensating behaviour change which made some people a bit happier. No-one benefits from a payroll tax like National Insurance in the UK. Many people benefit from lower congestion as a result of high fuel duty, not least the people paying it who would otherwise find traffic much more problematic than they do now were taxes less than 65% of the cost of their fuel. Perhaps a brand-new BMW (which as everyone knows will immediately turn you into a sociopathic tail-gating arsehole) should be taxed at a higher rate than a more utiliarian vehicle?

It's an interesting idea, but is perhaps over-argued. I'm not sure I appreciate the endless repetition of the zero-regulation, zero-tax Libertarian caricature in the book, which has me screaming "STRAW MAN" in almost every chapter. Most libertarians, on this side of the pond at least, accept the need for some regulation, especially in competition. Zero tax isn't a realistic propostion either and I am convinced by the Rahm Curve, with a peak at around 20%. Many Libertarians (including this one) even accept the need for some redistribution of income, to compensate people for the extent to which people's station in life is defined by luck (a lot more than most people think). Finally, redistribution is an important guarantor of social cohesion, preventing, in final analysis, the rich ending up swinging from a gibbet.

Where the book is strongest is in its defence of free markets. Many leftists think "market failure" is the observation that the rich have more options than the poor. It isn't. I would urge my left-wing friends to read it simply to hear a cogent and well-thought out explanation of how markets benefit ESECIALLY the poor. It is also why cash transfers are better at increasing utility, especially for the poor, than "free" top-down administered services, all areas which had me nodding in agreement.

I am not wholly convinced that the steeply progressive consumption tax Professor Frank advocates, should be the proper basis for Government revenue, but it certainly got me thinking. Certainly a properly constructed negative income tax or citizens' basic income fulfils many of the benefits of the free market that Professor Frank supports, in that they give the poor agency in how they spend the resourses available to them, rather than ceding all that agency to well-meaning bureaucratic agencies. Where I disagree with Professor Frank is the extent to which status displays and positional goods (especially access to education) hurt the poor. The mansion-extension example which crops up though the book may lead to bigger houses further down the income distribution, but I am not convinced this is a wholly bad thing. Maybe amongst vulgar americans, where relative size is everything (over here, of course, we pay up for age, which is um... better or something). And the benefits felt by tradesmen who will build the mansion extension appears to be completely ignored.

Everyone engages in status displays amongst those either side of them, and by and large, aren't that fussed by the lives of the rich & famous with whom they're not competing, however much media bien pensants think they shoud be. A progressive handicap system to status displays, as proposed, won't really change that desire to compete in status display. To decry as fundamental a human desire as competition as "waste" seems like social engineering and I'm not convinced by Prof Frank's explanation. Even Guardianista's eschewal of status displays can become competitive, as parodied in Viz's Modern Parents. The evidence appears to be that the demographic most upset by high GINI coefficients appears to be relatively wealthy lefties who frot themselves into a state of deep mailaise over the statisitics. If there is one group of people for whom I have zero sympathy, it's Hampstead sociailists. I like much of Professor Frank's analysis, but I remain a flat-taxer.