A Very British Dude

What do the Eurosceptics actually want?

2013-05-16T09:02:00.000+01:00

The problem with the debate on the EU is that one side doesn't care, and the other has worked itself into an irrational frenzy. It's now poisoning the Tory party again, whose inability to address this issue rationally (though the press presenting any Tory mentioning 'yurp in the context of 'splits' doesn't help...) leaves the serious possibility of Prime-Minister Miliband. This and the return to power of Brownian lickspittle, Ed Balls is a much more clear and present threat to the UK than anything the EU might throw at us. The eurosceptic movement has been proven comprehensively right over the Euro. The UK dodged that bullet thanks to the likes of John Redwood and, it pains me to say, Gordon Brown. Now the sillier Eurosceptics are making demands that are simply impossible to meet.

What do the Eurosceptics want? Many seem to want an immediate, unilateral withdrawal, by repealing the Single European Act. To imagine this policy is without costs is ludicrous, not least for the million or so British citizens living outside Britain in the EU. Business would suddenly lose free access to the single market, and while access would almost certainly be granted along Norwegian or Swiss lines, it's hard to see the UK's negotiating position improved by such drastic action. It will also take time, probably years to sort out. In taking this drastic action, the UK would STILL be subject to the ECHR, over which UKIPpers work themselves into a tizzy. The European Court of Human Rights, set up by British and American lawyers after World War II, is not an EU institution, and it's convention has been incorporated into British law.

Yes, yes, yes. I want a bill of rights too, but this has little to do with the EU.

So, some sort of negotiated partial withdrawal, where the UK retains access to the Single Market, but withdraws from much of the decision-making process. As a net contributor, with a trade-deficit, a declared nuclear power, the 6-8th largest economy in the world, permanent member of the UN security council and one of only 3 countries able to deploy an expeditionary brigade, the UK will be able to negotiate generous terms for access to the single market. But the City, Britain's largest foreign currency earner, would lose out as much EU business would drift to Paris and Frankfurt. True, the city would be slightly freer to operate world-wide, but it would be slightly less attractive to potential partners. This is not bonkers, but is a large leap into the unknown, and has risks as well as benefits. We will lose whatever influence we have over the EU.

The sillier end of UKIP will counter "but we have no influence over the EU anyway". This is bollocks. The EU is as free-trade as it is because Britain and Germany together can gang up on France, rather like Waterloo. The idea that Britain has no influence in the EU is risible. The UKIPpers tend to forget that most of the UK doesn't agree with them, let alone Europe. Enlargement was a British desire, as is the single market. France much prefers protectionism. The EU negotiates strongly in favour of Global free-trade. It's hard to imagine that without British participation. The EU is a force for good, especially in South-Eastern Europe, where the carrot of EU membership is keeping nations once totalitarian hell-holes on the path to freedom and the Rule of Law. Britain has played a leading role in this. Of course the EU has costs: direct ones like fees and indirect ones like some silly and costly regulation. The cost/benefit analysis is, if you're being sensible, pretty close. It's not mad to want to leave, and I vacillate. I suspect I'll vote out, but let's see what Cameron comes up with first, eh?

The old rallying cry of the Eurosceptic movement was 'single market or quit'. The Eurozone is forging ahead with credit-crunch inspired ever-closer banking and fiscal union. This leaves the outs split into to camps: still want to join (really?) and never will join. The Euro has been shown to be a massive risk for small countries, and in truth, many EU members will never join. Britain as by far the largest of the 'outs' will be the leader. EU leaders are likely to give a fair amount of ground to Cameron in negotiation, as it's clear that unless they do, Britain will leave. They are getting what they want: ever closer union. It will cost them nothing to grant Britain a series of opt-outs while they're busy shoring up the foundations of their group. It seems to me that the UK may get from Europe what we've always wanted. To surrender our participation in the EU's decision-making while we negotiate it strikes me as idiotic.

The referendum is a distraction, and seen as such by the Electorate, to solving the immediate problems of the UK. Cameron has granted a referendum, legislated for in this parliament. He could do no more while in coalition with the Liberal Democrats. However having granted the wish that the dirty foreigners be pelted with turds, the sillier end of the Eurosceptic movement are now declaring Cameron to be a traitorous Europhile because he is not submitting to their (new) demand to kick the dirty foreigners in the nuts too.

Cameron's strategy is right. The Eurosceptics are not serving their country any more, now they've secured a referendum from one of the Main parties. To this end, UKIP sniggering that "Cameron can't win, therefore the promise is meaningless" is just another way of saying that UKIP are the main obstacle to their main declared end.

The Eurosceptic dog is now chasing its tail. If it's not careful, Prime Minister Miliband will ensure it's taken to the back garden and quietly drowned in 2015. If you want 'out', get behind the only referendum you'll ever be offered.

Where's the Outrage?

2013-05-14T10:26:00.002+01:00

It's a futile pass-time, but I like coming up with definitions of 'left-wing' and 'right wing'. For most people it's like the difference between pornography and art in that "I'll know it when I see it" but it's fun to deconstruct the mindset of the two tribes of politics.

There are many theories which try to put policy answers - Left-wing is statist for example but few argue the idea Fascists are other than right-wing collectivist totalitarians, while anarchists are mostly creatures of the left. Nazis and Communists are right and left-wing respectively. The former are dictators allied to the owners of capital, the latter to the means of production. The effect of both is big piles of corpses. Policy is unsatisfactory to define what they are: 'Left' or 'Right' is about a mindset.

Here's a thought: Where's your outrage directed? Are you outraged about policy on behalf of people you know or yourself? High taxes, too much ill-thought-through legislation? Do you campaign against roads cutting through YOUR back yard? Then you're probably right-wing. The left-wing get outraged about things that happen to OTHERS, specifically people they don't know. 'The Poor' whether here or in the third world and so forth. While the right are demanding/opposing a bypass in the local area, the left are outraged about Roads round someone else's town that cut through a site of environmental concern for example.

The problem with the right-wing world view is that it tends towards nimbyism and rather ignores social problems once they're put out of sight. The problem with the left-wing view is that it tends to see people as mute recipients of state charity, and tends to stick its nose where its not needed or wanted, to everyone's cost. It sees the problems of the prosperous majority as very small next to the problems of their clients, and ends up seeing the Bourgeoisie as a mere source of funds.

Both views are necessary to temper the excesses of the other. Without the right, the left over-legislates to solve perceived social problems, and in doing so, kills the golden goose of private business and wealth-creation. Left wing outrage, because it's on someone-else's behalf, is likely to be less accurately directed. As are the perceived solutions, which are often more about the left-winger's own prejudices. However, without the left, genuine social problems can be left to fester.

And there we have the glorious creative tension built into the combative two-party politics, which is being lost in the multi-party system which will gift power to party managers and consensus-seekers. Consensus is almost always sub-optimal. Without the tension created by competing outrage, "consensus" will end up being in effect "the man in Whitehall knows best" when all the evidence is clear that, in the long-run, he doesn't. Of course there are exceptions. Any left/right rule is bound to be simplistic, and riven with exceptions. But think about the things you're outraged about. How many of them directly affect you?

Cameron and 'The Right'. What more do they want?

2013-05-13T11:39:00.001+01:00

By 'The Right' I am referring to that spectrum of opinion which rebels over Gay Marriage and the EU and forms the Right of the Tory party and the Ex-Tory UKIP voters.

The Tory party is rather united over Europe: There are those who're suspicious of the edifice, but want, on balance to remain in, and those who favour withdrawal on our terms. Everyone's in favour of a referendum, after a re-negotiation. Afterall, re-negotiate or withdraw was the rallying cry of the Tory rebels.

"But cast-Iron Dave reneged last time" The promise was made in the context of a pre-ratification election. And you know it.

"I don't trust Cameron, he's a Europhile" See answer above. He's the most Eurosceptic PM the country's ever had.

"But he doesn't want to leave" No, and most people think the issue is pretty finely balanced. Whether we're in or not, the EU is our nearest, and biggest neighbour. You can be sceptical about the EU project without being obsessed by the idea that leaving the EU is the answer to all the UK's problems.

"He's not right-wing. There are no cuts" This is a simple lie. Even as the economy flat-lines Government spending has been falling in real terms. Headcount has been falling. If (and when) the growth comes the deficit will fall faster than anticipated from here. The left underestimate the necessity for cuts. The right underestimate how hard they are to put into effect. The truth is the coaltion's cutting far faster than Thatcher ever did.

"Lib-Lab-Con, they're all the same". Um No. The Rhetoric may be the same, but the policies are very different.

"I'm not homophobic, but why did Dave use so much political capital over Gay marriage?" Why did you make him use so much political capital over Gay Marriage. You may not be Homophobic, but you're doing a damn good job of pretending to be. I simply don't understand why the issue of Gay Marriage has split the Tory party assunder more completely than Europe, over which the Tory tribe is broadly united. WHY DO YOU CARE?

"Cameron can't win". Yes, he can. Thatcher was a lot further behind in the polls than Cameron is now at the equivalent point before the 1983 election. She too faced a useless Labour leader on the left of his party.

"But Cameron is no Thatcher". No, the Coalition's more radical (but with less radical rhetoric) than Thatcher's first term.

The question is "what more do the Right want from Cameron?"

The Opposition Comfort Zone

2013-05-08T17:11:00.000+01:00

In 1997, any Labour activist under 40 would not have had the experience of voting for a Labour government. The attitudes of opposition were deep-set and the party in the country was deeply unready for Government, however prepared Blair and Brown and the rest of the shower were.

In opposition, everything confirms your cognitive biases. Things that go wrong are your enemy's fault. It's easy to brush good news under the carpet. Focussing relentlessly on the negative that Government does, when your enemies are the government, feels good. Evidence, the easily available and memorable sort, confirms every prejudice you hold about the "wicked" Tories, and it's easy to go looking for more.

This is why Blair, who for all his myriad faults, was detested by his party and the broader left. He was comfortable with the compromises of Government. He was unable to deliver the re-nationalisation of industry the Labour movement craved and yearned for. But he was, despite the wailings of the idiot left of his party, a creature who increased state control. The Blair Government increased taxes, increased state spending and increased the scale and reach of the state. State workers were generously remunerated, and headcount exploded. Regulations were poured onto business like glue. Blair was a lefty, leading a left-wing government. It was just not as left wing as the activists wanted.

Can you see where I am going with this?

For Labour in 1997, read Conservatives in 2010. For Blair read Cameron. For Idiot left, read UKIP.

If you're on the right, ranting about how David Cameron is "no different to Tony Blair" and "it doesn't matter, they're all the same. We're governed by the EUSSR anyway" you sound just like a Labour activist ranting about "capitalism" in 1983, and just as electable.

The morons of the Tory right/UKIP borg: the mirror image of why Labour was unelectable in the 1980s.

Cameron's a good egg, cutting spending, taking on the Unions, standing up to Europe. Just not quite as much nor with the relish demanded by, the kind of activist who's gotten rather too comfortable with the idealogical certainties of opposition. Tories govern, practically and with the best long-term interests of the UK at heart. It's what we do. It's what Maggie Thatcher did (whatever the Tory right and Labour left say she did). We don't govern according to some idealogical play-book nor should we. State spending is growing in nominal, but not in real terms. Stop lying with statistics, and get behind the only man who can keep Ed Miliband out of Downing Street.

If you think that "doesn't matter", because they're "all the same", my contempt for you is absolute. The enemy is to Cameron's left, Gentlemen, not yours. Get back to your posts.

Why I unsubscribed from Labour's spam e-mails.

2013-05-07T11:23:00.000+01:00

I've been getting spam from Labour. I clicked on the 'Unsubscribe' button. They asked me why I wanted to no longer hear Labour's daily take on political events. Here's what I told 'em:

Because I think Labour are a bunch utter lackwits whom I wouldn't trust to run a bath. Ed Miliband has all the charisma of a rail replacement bus service to Stevenage. Ed Balls, Yvette Cooper's beard, is the bloke who was chief lickspittle to the man most directly responsible for the current parlous state of the country. Why would I be interested in the opinions on how to drive of the people who drove the bus into the fucking tree in the first place?

Vote Labour? I'd rather shit in my hands and clap.

Do everyone a favour and fuck off.

I haven't typed such satisfying invective in a while. It feels good. I wonder if they'll get the message....

"I Just Want to Feel Like Someone's On My Side"

2013-05-03T15:24:00.002+01:00

I asked some collegues, mainly conservative (small 'c') what they wanted. These are wealthy people who've been hit hard by the tax-rises of the coalition. They're thinking of voting UKIP. This is exactly the same rhetoric you get from the benefits recipient, like my Twitter correspondent Kaliya who tweets at @bendygirl and blogs at Benefit Scrounging Scum People, from the top 50%/45% payers to the benefits recipients, are simply fed up of paying the bills for others' failure.

The who the "others" who've "failed" are varies of course. But the fact is we all failed. We all got used to spending money we didn't have on houses that were too expensive. We all enjoyed benefits we'd not paid for, Government, the people, all thought the living standards we'd got used to in 2008 were real. Bankers bet that house-prices would keep going up, and regulators let 'em, because they believed it too. Egging all this on, were politicians, keen to spend the taxes of the Bankers' profits, and ride the goodwill an asset price-bubble created. We are now suffering the hangover from the party. Everyone's realised the party was on a 'school night', and they're scowling on the way to work.

Every class of people is having its living standards squeezed, apart from the super-rich who face no significant constraints even if there are fewer '0's at the end of the pay-cheque. Unfortunately for Cameron, he is super-rich. But other than them, we are "all in this together". The entire country is tightening its belt and grumbling, looking for someone to blame.

Which brings us to protest votes. Liberal Democrats are generally good at the Council stuff. They run a good ground campaign, follow up complaints well and therefore they're good at getting a local following. As a result they're harder to shift than herpes. Their main attraction outside the hyper-local is the ability their voters enjoyed to say "don't blame me, I voted Liberal Democrat" at dinner parties. Going into coalition meant these people need to vote for someone else.

Conservatives, as the natural party of Government struggle to win when people are pissed off. The Tories are in Government so when the economy's flat-lining it's always going to be a difficult sell. Furthermore, Tories in 2009, the last time these seats were up for grabs, swept the board. It's nearly mathematically impossible for them to go anywhere but down from then. With that in mind, the kicking the Tories got yesterday was natural, expected and nothing to panic about.

Labour barely did better than when they were in Government, during the biggest crash in history, while they were led by Jonah Gordon Fuckwit Brown McDoom. Ed Miliband is a hopeless liability. If the party was a horse, it would have a black curtain round it now and a vet would be striding towards it with a grim expression and a long-cased object.

Which brings us to UKIP. The fact that the protest votes are going to a party which, when it thinks about grown-up things like deficits seems to be in favour of "further and faster" cuts, and Tax-Cuts now should embolden Tories. The British People are sending a message. "We're pissed off. But we also know austerity's necessary" They are sending a message that they'd really rather no Romanians emigrate here. But mainly that they're pissed off.

The Tories can do one of two things. Panic and Guarantee a loss at the next election. Or knuckle down and still stand a chance of winning if, (and of course it remains a big 'if') the economy recovers in time. 8% behind in the polls, when most of the votes lost since the election have gone to a protest party which mainly aggrees with you is not so bad. There's no message the Conservatives should send that they aren't already doing.

Apart from Gay Marriage (which is UKIP's biggest driver of support), there's nothing the Tories aren't doing that UKIP want. There's a referendum promise on the EU, and possibly legislation this parliament. Immigration's being cut, Benefits are being capped, the public-sector's being cut, and markets are being introduced in the NHS and Education. This UKIP talk of "abandoning Conservative values" is nonsense. Unless you weight Gay Marriage very, very highly. And that's the thing. UKIP had a chance to be "libertarian" and they blew it by preferring (rightly, as it turned out) to hoover up angry, bigoted, gay-hating conservatives of whom there's a surprising number.

It's Gay Marriage (and it seems Gay Marriage alone) which broke Cameron from Tory England. Every other pro-gay measure from legalising homosexuality to legalising homosexuals serving in the military, to Civil Partnerships has faced red-faced harrumphing from the shires. They just didn't have a party back then. This will pass, as it always has. The UKIPasm will fade, probably starting from their high-water mark at next-years Euro elections. The red-faced saloon bar bore will start to drift back to the Conservative party, as the prospect of Miliband as prime-minister becomes closer.

UKIP want Conservatism but MORE! and FASTER! (But with FEWER GAYS). It's Labour who need to panic, not the Conservatives. They've lost the country.

"Race to the Bottom"

2013-05-01T12:44:00.001+01:00

The Coalition has sought to Abolish the Agricultural Wages Board. Labour oppose this, because they think the Countryside is still some Dickensian hell of near-slave labour, and that only State intervention prevents a "race-to-the-bottom" in wages. The phrase appears again in Labour shadow Education Minister Tristram Hunt's argument about British Skills shortages.

This phrase also underpins the arguments for the Minimum wage, which Labour introduced, and every other intervention into people's working lives. Of course the UK has been getting steadily richer over the past couple of centuries, with or without government intervention in wages and industrial conditions. Labour like to point to Laws being passed as the point at which things change. It's not like this of course. The law changes when it becomes acceptable and economically viable to do so. The law reflects change to society. It doesn't drive it.

The average British worker expects more than 12-hour factory drudgery for tuppence-ha'penny an hour, but in poorer parts of the world this represents a step up from subsistence agriculture, which is 14 hours of drudgery for no pay, with the ever present risk of starvation. He won't accept back-breaking labour in the fields, which is why we import Polish fruit-pickers and Chinese cockle-gatherers. The native Brit who once would have done these jobs is better off on welfare.

As countries become richer, they take some of the increase in productivity and spend it on better working conditions, wages and so forth. Some people - the kind who become North-sea divers for example, are willing to take on personal risk for a big pay-cheque. Others, those who become HMRC tax-clerks would sacrifice pay-cheque for a near-job-for-life. The difference between socialists is they think GOVERNMENT should decide who gets to decide their working conditions. But it's clear. The shortage is of skilled Labour.

Unfortunately, Labour cannot follow the logic. If the shortage is of skilled Labour, then skilled Labourers do not need protection. Employers will be competing in wages and working conditions to attract them. Far from being a "race to the bottom" it's inflationary. Government has decided that there should be a minimum wage, and for those whose labour isn't worth even that, a welfare state. And with that, you've protected people from "exploitation". It's now possible to survive in the UK while taking none of the Jobs on offer. This is true of every developed nation, and this limits employers power over people.

Labour seems to think Government is all that stands in the way of employers, who all carry whips and wear top-hats, driving down working conditions and pay. Nothing in economic history supports this view, though it's a comforting idea, if you see everything through scarlet-tinted spectacles and romanticise the Workers' "struggle". If you want decent working conditions for everyone, give them the tools and let them get on with it. People, making the best of what they've got will, over the generations, given peace and freedom, drive up living standards. Decent pay and standards will happen when everyone's rich enough to afford them. Conditions we now think acceptable will be shunned by our children. There is a case for minimum standards but it's weaker than most think. "Race to the Bottom" is a left-wing dog-whistle, which should alert you to the fact the speaker is an idiot.

Scrap the Agricultural Wages Board. It makes no difference. It's a relic of the bygone age. Like most of Labour's thinking.

KG51 FYH Driver Reported to the Police.

2013-04-25T13:57:00.001+01:00

This incident is an ongoing issue with the Police.

The sheer uselessness of the police never ceases to amaze. First they couldn't find an incident I reported just 3 days ago, because they'd "just yesterday changed the process by which they organise incidents" and couldn't find anything on their system.

Second the "process and collisions department", staffed by useless civilian pond-life have made it absolutely clear that "dangerous/careless driving" requires one to be actually hit before they will take action (but only when the complainant is a cyclist...) and that high-definition video doesn't constitute "evidence". I asked specifically that this incident not be referred to them, because I have absolutely no faith in their ability or desire to secure prosecutions in incidents which don't result in a collision.

The call handler simply ignored my requests.

And they wonder why people have no faith in them any more.

Update. Two traffic cops came round to discuss this. They were clear. If THEY had seen this incident, it would be clearly a case of careless driving and there would be a prosecution. Had the cyclist been a police officer, there would have been a prosecution. However current policies mean that helmet camera evidence isn't "evidence" according to Hertfordshire police's process and collisions department, nor can members of the public generate evidence. Which is ridiculous.

Both officers thought this was an appalling piece of driving, but like the white van thug who beat up a cyclist, their hands are tied by process. Thanks to the Government, now there's someone who can sort this out: the local Police and Crime Commissioner. I will also be writing to my MP and the Chief Constable.

Ultimately Roadsafe or something like it needs to be rolled out nationally. There needs to be a formal way of reporting unsafe driving. This will benefit everyone. Because the kind of ignorant turd who drives that fast and close to a cyclist is almost certainly the kind of ignorant turd who drives six-inches from your bumper on the motorway or thinks speeding in build-up areas is acceptable. He needs a stern word from dibble BEFORE he kills someone.

Twitter's first Flash-Crash

2013-04-24T10:49:00.005+01:00

Yesterday, some jolly trickster hacked into the Associated Press's twitter account (@AP) and tweeted

"Breaking: Two explosions in the White House and Barak Obama is injured"

Predictably the market collapsed 0.8%, before rallying on the news that it's a hoax.

It would be so easy to earn serious money, with almost no chance of getting caught. You need the password. You need to open a trading account for CFDs or Spread-Betting. You need to establish a pattern of trading. You need to have a situation where a $100 a tick position would be entirely normal. You need to open just such a position, shortly before your associate, working from an internet cafe elsewhere, logs into AP's Twitter and tweets the bogus bomb story.

The fact this happened shortly before the market close suggests the plan was to go long in the final seconds of trading, ensuring another big profit, when the markets open up today on news of the hoax getting around.

As it happened, the hoax was spotted quickly, and the Markets recovered before the close of play. Still, it would be quite possible to make hundreds of thousands of Dollars in a couple of minutes work. This post is of course, an elaborate double bluff.

"Of course I'd do no such thing. Look, I've written about it, yer 'onner."

Can anyone get me Reuters' twitter password?

The Hows and Whys of the End of the Commodity Super-Cycle

2013-04-18T10:21:00.001+01:00

Some of you may have heard me witter on about oil on Radio 3counties, 4 or most recently 5-live. On Tuesday morning, I managed imperfectly to explain how prices prevent shortages. Oil is actually a pretty good example.

I remember Oil at $14 a barrel back in the early noughties. The conversations I was having then were about the roof in the price due to Canadian tar sands, the world's largest hydrocarbon repository, which became economic to exploit at $40. The Oil Price, in response to shortages, and anticipated shortages caused by rapid Chinese growth, rose rapidly from 2002 or so. In the short run, the supply of oil is fixed. So, for a decade or so ever cheaper money was chasing a short-run fixed supply of oil. One of the effects of the "Greenspan put" was to raise oil prices. The Oil Price spiked in response to the financial crisis in 2008 to its high and has remained persistently over $100 since. Just as it seemed logical back in the 90's, following two decades of sub-$40 oil that this was indeed a ceiling through which Oil prices would not go; people though $100 looked like a floor below which the price wouldn't fall. In markets, the consensus is usually wrong.

This high price led to talk of the "end of the Oil economy". High prices became built in to people's thinking, just as low prices had for the decades before that. Soon, Oil executives started to give the go-ahead to projects in deep water or held in deep rocks which are costly and difficult to reach based on higher returns. The result of this is an increase in supply. North Dakota for example is benefiting from an Oil Boom due to rock-fracturing technology, better known for disrupting the Gas market. New technology was developed to extract oil cheaper and more efficiently from where it had been un-economic to extract previously.

This extra capacity in the Oil industry was matched by a focus by the consumer on demand. People started insulating their homes to use less heating fuel. Cars and Air-conditioners became more efficient. People are driving slower, as cars now show the point fuel consumption and people see how much more fuel they use at 85mph compared to 70mph. Remember how cars on motorways used to drive at 80-90mph in the fast lane, and now there are few people breaking the 70mph limit? Accidents have fallen. In the UK, petrol sales have fallen by over 20% from their peak in 2008 thanks to these effects.

So supply has risen in response to high prices, and use has fallen. What's going to happen to the price? You've got bankrupt oil states who are no longer beholden to OPEC, like Venezuela who will need to sell every drop they can produce if their economy isn't to collapse. So the fall in price may, in the short run lead to MORE production, as desperate producers try to meet forecasts based on higher prices creating a rapid fall in the price, even from here.

Industrial metals are showing the same story. There are no primary smelters of Iron in Europe because we've got all the Iron we need, and simply recycle existing metal. China will develop its car economy based on Aluminium chassis, not steel and will demand less steel than did Europe at the equivalent stage of development. Yet there are vast open-pit Iron-ore mines in Australia with robotic 400-ton trucks pulling ore that few will need. The price of Iron and steel are falling.

The writing was on the wall. The top of the market indicator for Metals is AIM-listed start-ups going after "rare-earth" elements in slag heaps. We had plenty of those. Obvious, really, in hindsight.

The point is that a price mechanism in a free market has worked to ensure that there was never a shortage of Oil or industrial metals. The price rose, capacity rose to take advantage of the high price, supply rose, consumption fell and eventually the price collapses. This is also why free-market systems don't have famines, as the same thing happens with food. And do you know who prevents famine? The speculator, and most especially the hoarder. As it's his store that keeps everyone alive. And also why anything a government provides, (Schools, Hospital beds, building permission for houses etc..) we will always be short of, because there is no demand/supply mechanism to allocate resources. There's no signal saying "invest here, not there" in a planned system.

So. Are the prices of Oil and Metals going to continue to fall? Yes. Probably. But the confidence interval on that statement is no more than 51%. Are we ever going to run out? No. Of that I am certain. Don't get me started on Gold-Bugs except to say

"Bwahahahahaha. Told you so"

having been wrong for, um, about a decade.

"The Crisis" was caused by Preventing Recessions.

2013-04-12T13:55:00.000+01:00

What's to blame for "the crisis"?

By "the Crisis" most people mean, when they ask that question, the recession and financial market crash which started in the USA in 2008 and spread like wild-fire round the world's financial systems, and is still smouldering in places like Cyprus and Slovakia to this day.

Most people blame "deregulation" by which they mean shouty, shirty men shouting down phones into screens. Poor regulation did play a part, but the financial markets weren't deregulated, and often the unregulated bits performed best. Certainly much of the 'deregulation' happened post Thatcher, where the (Ed Balls-designed) FSA focused on nit-picking about how quickly banks picked up the phone, thinking this was more important than Bank capital adequacy which the Bank of England used to focus on. This blaming of Capital markets is often just fear of that which is not understood.

Many blame "greed". It's comforting to have a deadly sin as one of the reasons for discomfort. But we're all "greedy". There's no blame in responding to incentives. Others blame "neo-liberal economics" because anything prefixed with "neo" becomes the devil's work. Of course it's Liberal economics which has brought the world's poor out of poverty in their billions over the last thirty years.

The real reason for the extent and depth of "the crisis" is the "Greenspan Put". A 'put' is a type of option which gives the right to sell at a given price, thus, for a premium, you can use them to insure an underlying asset. During the 1990's & 2000's, following the .com bust, interest rates were repeatedly cut. Every time the housing market wobbled, the markets fell, or GDP growth stalled, the interest rate was cut, aggressively.

The problem with this approach is that by 2007, when the wheel came off the economy, lowering interest rates was, to use a cliché, pushing on string.

So why did the wheel come off the economy in 2007? The reason is that there had been 16 years of uninterrupted growth beforehand. The problem Brown, who'd apparently abolished boom and bust, faced is that recessions are when growth happens. In the run-up to the .com crash, there was an enormous explosion of investment in Internet stocks. Shares would fly out of brokerages because the company announced they were opening a website. Companies in the new .com business were being valued on multiples of 'EBITDAM' (Earnings before interest, tax, depreciation, amortisation and .... marketing...). So sales less wages then? This was pure bubble stuff. And there was a massive over-investment in nonsense websites. The .com crash which came with the millenium hangover and lasted for 3 years however did NOT result in a recession. Why? because interest rates kept being pushed down, from 7% just before the bubble burst to under 4 in 2003.

As the mal-investment was shaken out of the lastminute.coms, and the share-bubble unwound, another was being stoked up in property and debt. One of the effects of lowering interest rates is an increase in the cost of debt securities. (you can argue about cause and effect...). Thus, it became more efficient as interest rates dropped with shares' Price to earnings ratios, to finance a company through debt rather then equity. This is called "gearing up". Meanwhile, governments responded to the booming property market by... relaxing controls on how much, and to whom banks could lend. "Getting people on the property ladder" became more important than bank capital adequacy. The laws and rules by which this was done on the two sides of the pond differed, but the effect was the same. Banks were actively encouraged to "innovatively" lend more to people backed by less, and less equity in the home, and less and less tier-one capital in the bank.

Risk compensation ruled the day: When banks were ruled by the Governor's eyebrow, and the Old Lady of Threadneedle street kept an eye on the balance sheet, banks were safer. In the days of Basel II captial regime, RBS thought it could get away with a Tier one capital ratio of 5%. Nowadays 10-15% is more normal. This was acceptable because "Value at Risk" was calculated with reference to volatility. As volatility falls, the acceptable level of capital needed fell, leaving the system ever more vulnerable to systemic shocks such as the absolutely unlikely event of .... property prices falling....

Banks, which had got used to their being bailed out by the state by means of an interst rate cut, effectively outsourced risk regulation to the regulatory authorities. Whatever the regulator said was OK was OK. The banks then got on with lending "innovatively" to people with products like 105%, self-certification mortgages. Politicians encouraged this. Homeowners are more likely to vote, and vote for the party they credit with their "investment" in housing.

So. One bubble replaced another in the property market. And property market eventually popped, taking the banks with it. This led to the bubble ending up in the last place it can: Sovereign debt which is now so expensive, it's paying a negative real yield.

Ultimately the reason for the crisis is that the USA and the UK did not have the recession which was needed in 2000. The mal-investment wasn't purged, just moved. For recessions aren't things to be avoided. They are inevitable and necessary. Like Eucalyptus needs the fire to germinate, recessions clear dying businesses and free the resources of capital and labour to new, more efficient, faster-growing businesses. The longer you prevent this process from happening, the more zombie companies you have lying around, able to service their debts, but holding onto Labour and capital which could be better used elsewhere. This has been Japan's curse for twenty years. It remains to be seen whether this round of monetary cocaine (abenomics) will work. Without a cleansing recession to clear the mal-investment out of the economy, mal-investment just builds up until it becomes an intolerable burden of companies doing things of limited use, propped up by the state and banks.

This is ultimately why planned economies fail. Mal-investment can be sustained by political will until the economy's making steel no-one needs in a gargantuan make-work scheme. This is the reason the USSR measured tractor production by ... weight.... Even in the worst free-market system, there's only so may places it can hide before the wheel comes off. The economic cycle is around 7-10 years. Even the Bible knew this. Mr Brown should have realised, as a son of Presbyterian preacher, he hadn't abolished the seven fat and seven fallow years (Genesis 41:30) but instead put off the day of reckoning. (Isiah 10:3). It certainly wasn't Margaret Thatcher's fault, however fervently lefties wish it. It wasn't only Gordon Brown's fault, however much I wish it. The crisis did start in America, but the main people to blame for the crisis, however are idiot regulators and central bankers, who followed Mr Greenspan's example.

A Better Basis for Taxation

2013-04-10T09:04:00.001+01:00

I don't like tax, but if we absolutely have to raise some taxes, it's better if it's raised in ways that have other benefits.

Fuel taxes reduce pollution and congestion. Tobacco taxation reduces smoking and so forth. Land value taxes increase the assortiveness of the property market. The added benefit is these taxes are extremely unpopular, which limits the amount Government can raise. Now... all we need to do is ban PAYE. Once everyone has to write a cheque for income tax and national insurance, it will be at least as unpopular as fuel duty.

Thatcher's Legacy

2013-04-09T10:26:00.001+01:00

I am a stockbroker. Many of my clients are plumbers and builders. Many "working class" (and proudly so) people earn far more than the "professionals" who serve them. Those who lack the wit to buy their own tools, van and hire a mate, and instead spend their wages in the pub or the bookies, have only themselves to blame. Before Thatcher, someone like me would only have seen a plumber when a pipe burst. Now, they're my clients.

The working class people, who bought, or whose parents bought their council house, and got on haven't changed as people. They remain the stout, hard working, decent people they always were. They've just got access to wealth which in previous generations was reserved for others.

Other generations have had means for people of the right talents to rise: Imperial service, industry, academia, politics or grammar schools provided means by which people from all backgrounds have risen to the top, and achieved comfortable stations in life. Britain has never been the snobby, closed society of myth. It's just we've never wanted to throw our Aristocrats out, but instead join them at table.

The "post war consensus" though really did for a while create closed, corporatist, sclerotic society, and Thatcher shattered it. 'Right to buy' was, for many, the Thatcher policy which broke the mould as it put capital, and lots of it in the hands of people who previously were merely tennant vassals of the state or employer. That policy, and the idea that big business can start out of the back of a van gave people the confidence to try to change their station in life. These two policies shattered the working-class block-vote for Labour, and showed them that most people don't want a hand out, but a hand up. The sense of belief in the country, and the talents of its people came from the top.

Labour in office spent 13 years spending taxes earned by Thatcher's children, rebuilding the client state she smashed, with disastrous results. Those who benefited from her reforms will never forget her. Those who were left behind will never forgive her. But don't pretend she was only for the rich. Because she made a lot of people of previously modest means very, very wealthy.

On the Budget Housing Stimulus

2013-03-22T11:40:00.002Z

The Government is planning to loan people significant money in order to find the deposit on a new-build house. Now. I think the major problem with the UK economy in the long-term is Britons' habit of seeing a house as an investment, assuming "bricks and mortar" can beat inflation in the long run. Of course, if the supply is held below the growth in the number of households, as it is in the UK, this will be true. The result of this endless house-price inflation is no-one can afford a house big enough for their family, unless they quit work early enough to get on the Council house waiting list.

Thus house-price inflation keeps the existing rich, rich as wealth is transferred from non-home-owners to home owners. It also helps Labour's client state, as they can never hope to afford to be free of the welfare state, thanks to the cost of putting a roof over your head.

The young, and those in the middle income brackets are forced to spend enormous percentages of their income on housing themselves. In response, houses have got smaller, people are more likely to share. In short, house-price inflation, like all other forms of inflation makes people poorer.

If you're on the Right, you might point to the massive subsidy at the bottom distorting the market, housing benefit, which mainly transfers taxpayers' money to private sector landlords. You might see cutting HB as a solution. If you're on the left, you won't see beyond Social Housing - basically demanding the council build more estates and manage them as a letting agent.

The real solution is to build more houses, so many in fact that house prices rise by less than inflation and keep doing this for a couple of decades. Unfortunately the two metrics on which a UK government is judged are unemployment and house-prices. Home-owners are vastly more likely to vote than renters, and are enormously exposed to this one metric. For this reason, and others all home-owners always vote against all development, anywhere, ever. So any politician who espouses the policies which will result in enough houses being built, will get voted out.

I am not sure subsidising lending to people with marginal deposits is the right way to go. But at least it's only for new-build. And the fact that there's no restrictions - aspiring private-sector landlords CAN apply for this funding (at least until they U-Turn on this) it might actually work to encourage a few more developments at the margin.

Of course what is really needed is a big easing of planning regulations, and a removal of the need for such huge percentages of new developments to be earmarked for Labour's client state to be provided at cost (for this is what social housing is) which is holding back so much development. Without social housing, building would be more profitable, which means more would be done, without waiting for the land value to rise due to scarcity.

This is being SOLD as a means to "stimulate" the housing market and help buyers with a deposit. What it actually is, is a subsidy for developers and banks who'll be able to lend at lower risk. I will result in a few more houses being built at the margin. It wouldn't be my way of doing it. But it isn't totally insane.

Leveson & Niemöller

2013-03-19T10:29:00.001Z

First they came for the Tabloids, and I said nothing because I read the Guardian on my iPad. Then they came for the Guardian, and I said nothing because I'd assumed it was going bust anyway. Then they came for the blogs, and I said nothing because bloggers are just hairy-handed self-abusers, aren't they? Then they came for Twitter, which I only use to post pictures of my food, (organic, nach...) so I'll probably be OK. Then I criticised the Government on Facebook, and there was no-one left to speak for me.

Peter Lilley yesterday said the new regulator has the potential to become an Orwellian ministry of truth, and the press should resist it. If you can't see how the regulator will have a chilling effect on investigative journalism of the sort that exposed the expenses scandal, you're a moron. Britain's chaotic, anarchic, brutal free press will either resist this regulator or be tamed to death. We will see fewer exposes of powerful people doing bad things, which often have dubious sources. Is this price worth it to prevent journalists listening to someone's voicemail.

It isn't the News of the World that killed Millie Dowler, and there's precious little evidence anyone from the paper even listened to her voicemail. The press is being regulated because of Labour's desire for revenge for this headline:

Because of cheap and chippy spite, we have sleepwalked into a regulated press. Blogs and websites with News-related content will be swept up in the legislation almost by accident, because when have judges ever left anyone out of regulation, even when it's parliament's clear intent (for now) to do so?

The victors of this: Politicians, who will face a less powerful press scrutinising their decisions. Celebrities will find their private lives a little more private. And because of this, fewer people will buy papers and the electorate will be less informed.. And the regulation of the Blogs, who have less resources than the once-mighty press-barons, will be easier, now the rubicon's already been crossed.

The left has long sought to tame the press. That they succeeded yesterday is not because the press were too powerful, but because they're now so weak. One of the Glories of our democracy was the savagery with which the press dealt with our lords and masters. Not any more.

An Example of What's Wrong with the Welfare State.

2013-03-17T18:52:00.002Z

In around 2004, or 2005, I found myself between jobs. This is what the welfare state is for. I applied for Job Seekers' Allowance and Housing Benefit, which I claimed for around 3 or 4 months, until I found another job.

If you believe the left, I'd be 'hypocritical' for ever subsequently arguing in favour of welfare reform, after using it, as Iain Duncan-Smith once did. I'm not. I support a welfare state, just not one as currently structured. A welfare state is vital. Decent out of work benefits reduce the risk of temporary unemployment, and therefore increase an assortiveness labour market. It reduce the power of bosses to hold down wages or make unreasonable demands. It reduces the risk of quitting a job for a new, better one, and thereby lose protections for time served. A functioning welfare state is vital to reduce the risk of entrepreneurial activity. A welfare state is vital therefore to a liquid, flexible labour market, which has been one of the successful things about the UK economy for the last 30 years.

Beveridge, the system's designer however saw that there must be an eye on the incentives, to ensure the evil of idleness be combated as well as the evil of want. The welfare state's cheerleaders in the Labour party appear to have forgotten this. Either that or they benefit from a large, permanent caste of welfare recipients who will never escape the trap. No-one wants to live on JSA. But no-one ever does. The problem is once you're on Incapacity benefit, income support, Housing Benefit and so forth, you'll never have to survive on JSA alone. This doesn't stop Left-wing apologists for the current welfare state arguing that it isn't over-generous, by citing the paltry amount of the most temporary of benefits.

Had I remained out of work for 6 months, I would have qualified for 6 month's "run on benefits" worth at the time, several thousand pounds. I was actually advised to delay starting a job for weeks, in order to qualify. I told the Advisor in robust Anglo-Saxon to go forth and multiply. But the trap, the temptation to take the easy money must be great, especially for those for whom employment does not represent significantly more money than the welfare payments they're turning down.

If you house people at public expense, in properties they could never afford by working, you trap them on benefits forever. Furthermore, housing benefit distorts behaviour in its recipients, who never have to plan to pay the rent. Landlords too, find themselves dealing with a stupid customer in the state, and make sure rents are the maximum the state will pay. This distorts the market all the way up from there, raising the cost of housing for all.

It is for this reason I find the Labour campaign about the "bedroom tax" abhorrent. Housing benefit needs reform. So too does every other benefit.

The hyperbole surrounding incapacity benefits from labour is likewise grotesque. Chris Mullins, Labour MP reported "scams" of people who are perfectly fit yet claiming disability benefits. John Hutton, another Labour MP, apparently told him of

"an ameteur football team, currently topping a local league, in which eight of the 11 players recently fielded were on Incapacity Benefit".

Yet when Iain Duncan Smith or anyone else broadly identified as "on the right", who has made extensive research into the subject, makes the same point, the left make an appalling din about the demonsisation of the poor.

The fact is, it is quite possible to claim extensive benefits, which ensure your bills are paid, and keep a roof over your head, and work cash-in-hand thereby enjoying an acceptable lifestyle in perpetuity. Everyone knows of someone like this. Go down your local pub, and you will find one. But the left seem wilfully blind to the phenomenon. For this reason, few countries allow long-term benefits. From the vicious Americans to the cuddly Swedes, almost everywhere has found if you aggressively time-limit benefits, people suddenly become more resourceful as minds get concentrated. Long-term unemployment falls.

IDS's plans revolve around simplifying and limiting benefits, to ensure no-one receives more than the median wage from the welfare state. This means some people in reciept of generous beneftits will get paid less. It means "the poorest" will suddenly find they have to move to a grottier part of town. You won't find much sympathy from the tax-payers who already live there. It means Housing Benefit will be paid to the tenant, not the landlord. This means some people with chaotic lives may find themselves evicted if they cannot manage their budget. You will find little sympathy amongst tax-payers living on value spaghetti and ketchup when the money runs out at the end of the month. It means disabled people have to prove they are disabled in order to continue to receive benefits. Some people will be judged fit to work, when they'd got used to the idea they'd got it made on the "sick". There will be little sympathy for shirkers who're found out. The coalition's plans would still leave the UK with one of the world's most generous welfare states, and which asks the fewest questions of its clients. Ideological and evil it is not.

The Labour party in parliament has been parading the sob-stories of the halt and lame, some of whom are genuine victims of bureaucratic bungling by ATOS or others. All bureaucracies make mistakes, and there will be teething troubles with any new system. But many of whom are simply people who've become entitled to a big house provided at public expense, even though they no longer need it, and who are complaining to a Labour MP, who finds their complaint politically appealing. Labour don't see, despite clear polling evidence, how the working public feel about their neighbours whom they're supporting. The left needs to stop shroud waving. Labour had 13 years in power, yet sidelined the one man, Frank Field, who seemed to want to get to grips with the thicket of benefits. The conclusion that the client state it created was simply too useful is difficult to ignore. IDS's plans aren't demonising the poor. Some people (not all, or even most but SOME) benefits recipients are "shirkers", which is in any case a word rarely if ever used by him.

It's too easy for the Labour to malign the intentions of their opponents. It has the effect, psychologically of preventing them examining their record in office. I, like IDS used the welfare state for its intended purpose. A bit of support between jobs. He's not a hypocrite, nor a monster. And nor am I.

Labour Plans for Capital Gains Tax

2013-03-05T10:38:00.002Z

One idiot, Ed Balls, has asked another idiot, Sir George Cox, for ideas to tackle "short-term" thinking in British business. Or maybe I'm being harsh to Sir George. Perhaps he's just realised there's good money in telling lefties what they want to hear, and in doing so removing corporate oversight by shareholders. The state, big banks and corporate "business leaders" in a massive conspiracy against the rest of us.

"Short-term thinking" is one of those problems which exists more in the fevered minds of left-wing politicians looking for something to justify state planning, than in reality. And how did that work out every time it's been tried? Even though state intervention in industrial planning is an idiotic idea, it has been successfully placed into the mouths of "almost three fifths" of "business leaders". Wow! Just over half of "business leaders" think we should think "longer term". I am frankly underwhelmed at the support of "business leaders".

There are problems in some businesses that are too focussed on the next half-yearly report. This is better than the US system where quarterly earnings are the norm. To my mind, 6-months gives shareholders the right level of detail to make decisions. Any company that feels their share price is too low can buy-back shares. Any company that thinks it's too high, can issue shares. And in practice this is what happens. And in any-case keeping your shareholders informed of expectations through trading updates and so forth means shareholders are likely to be pretty tolerant of short-term trading problems. The outlook statement is often a more significant driver of the shareprice than the numbers.

Some businesses fail. These problems are not problems caused by "speculation". Speculative share-buying is an issue looking for a problem. Lefties, like Ed Balls don't like the idea that someone can buy shares and sell them at a profit. Companies sometimes don't like the fact that shareholders can run from a company on a profits warning. Chief executives hate the fact they are overseen by thousands of unaccountable people. But good companies, with good products and high barriers to entry get bid up and trade on high multiples (which means their cost of capital is low) and bad companies who're likely to ask their owners (the shareholders) for more money, or who are likely to go bust trade on low multiples. This means the system is working. Speculators drive this process. They don't kill companies, they're the canary in the mine.

Speculators also create liquidity in the market. Liquid shares trade on higher multiples, meaning lower cost of capital, meaning more business investment. If you limit the speculative money, you make markets more illiquid, reduce the price of shares, and increase the cost of equity capital.

Debt interest comes out of profits BEFORE tax and shareholders' dividends AFTER tax, so built into the tax treatment of companies is a big tax advantage to debt finance. The beauty of equity finance is that the shares can go down, but the company can go on regardless. Debt can rapidly spiral out of control. Both sorts of finance have their place - I like to see an appropriate level of gearing - but capital gains have, in effect already been taxed at the corporation tax line. If a company has no immediate need for capital, it can ignore shareholders and the share-price. This is not true of debt finance.

So by increasing CGT, you will increase the level of debt carried by companies. You will make companies MORE focussed on short term results, because you can bet your bottom dollar your bank is NOT thinking long-term (and especially the state-owned ones). They are at the moment absolutely focussed on their bad-debt numbers and they will pull the plug on viable businesses long before the end. This is why debt-financed businesses are riskier than equity financed businesses and equity finance better than debt for speculative, risky or long-term projects. One miss of a target, the bank pulls your loan in. Shareholders cannot do this.

Lets look at some examples: Is RBS, a government owned and operated business, whose remuneration policies and semi-annual results are the stuff of breathless news reporting more likely to be thinking for the next headline than, say ITM power, who have spent a decade on primary science and innovation around the fuel cell and electrolyser, but who only started making commercial sales recently?

The proposal to tax capital gains between 50% and 10% depending upon how long they're held is just stupid, and will reduce the ability of ordinary people to buy into the likes of ITM power. The idea that long-term shareholders are somehow better than short-term shareholders is risible, and bears no scrutiny. Long term shareholders tied in by CGT rules will not be able to influence the company at all. Short-term shareholders vote on the company by buying and selling the stock. Liquid stocks are less volatile.

All this stupid, facile, imbecilic proposal will do is further increase debt finance over equity finance. Any influence small shareholders have will be lessened. This is just the state regulating for the benefit of big corporate bosses who prefer to deal with large institutional shareholders. This is just mindless corporatism that will worsen corporate governance, increase costs and decrease liquidity and therefore increase volatility of stock.

An aggressively tapered CGT regime will at a stroke make worse the problems it is meant to solve, and anyone thinking it's a good idea should be sedated and kept away from sharp objects. Of all the ideas to come out of the Labour party, this is the most obviously stupid for some time.

The Tories and Leadership.

2013-02-28T09:12:00.002Z

I think David Cameron's a good egg. I trust him and, by and large, I think he's got my back in the great councils of the world. Furthermore, I think the Coalition are making the big calls right, though I wish they were a bit more aggressive on deficit reduction and spending cuts, I understand the caution. Certainly increasing private-sector involvement in Hospitals and Schools is a policy I can get behind, and the changes to the Benefits system seem Reasonable. Gove's education policies are genuinely radical and will leave the education of British children vastly better than it was before, and (not un-related) the Teaching unions will be weakened.

Eastleigh votes today in a by-election, and if the Tories lose, it's in part because of Tory-inclined voters voting UKIP and in-part because Lib-Dems are harder to shift than Herpes when they get dug in, in the political trench-warfare of a 'Get-out-the-vote' campaign.

The problem is that the Tories look like Labour in the 80's. They are unwilling to consider the compromises of Government, preferring the masturbatory pleasure of idealogical purity, against which no leader stacks up. Witness Tory MP after Tory MP discomfiting the (mainly Tory) Government over taxes, Europe, and (absurdly) Gay Marriage. Contrast with the disciplined array of Labour drones asking co-ordinated questions about the "Bedroom tax". You could argue that this is a positive display of free-thinking from our legislature. Or you could argue it's adolescent posturing from people who owe their position to Cameron, who, it should be noted remains VASTLY more popular than his party.

But Tories from MPs down to Grass-roots don't want to be led, and seem to prefer opposition to Government. They're unwilling to compromise, unwilling to work for the common good, and will openly consider voting for a bunch of Poujadiste nincompoops who're prepared to stroke the innate prejudices of the Tory voter.

UKIP is the Tories Militant tendency. Until this is purged, and the Conservative party rediscover the discipline that used to be their secret weapon, the Tories will look leaderless, rudderless and frankly unelectable as they have between since 1990.

If you're broadly Tory-inclined, and you're thinking "Cameron's a traitor, I'll vote UKIP", he's not a traitor, you're just a cock. Do you WANT Ed Miliband to let his Union-funded myrmidons run the country with their hand up his bum? Do you WANT more state spending? Do you WANT to abandon the country to Ed Balls' economic head-bangery? Then fucking well grow up, hold your nose if necessary and vote Conservative, you dick-head.

The business of Government is compromise. Tories used to know this. Eventually the habit of Government will return to it's rightful place and the nation will be much happier as the people mastering the art of achieving the possible will not be the economic lunatics of the Labour party. But Labour, having abandoned idealogical purity looks like the practical party even as they lay waste the nation's finances. Labour are wrong of course, but effective because in politics appearance is everything.

Speeding and the Abuse of Statistics

2013-02-13T10:31:00.000Z

Yesterday, I attended a speed awareness course. I was caught at 35 in a 30 zone (in my defence I was decelerating and it was a genuine mistake). I was given the option of a £95 course instead of £60 and 3 points.

During the course, the instructor, a knowledgeable but catastrophically monotone former traffic cop asserted that the re offending rate for the speed course is better than that of the points and a fine. My inner stat geek started screaming: SELF-SELECTING SAMPLE. People offered the course have

not offended in the three years previously
been caught a small amount over the speed-limit
be prepared to spend extra to avoid points therefore probably wealthier
be willing to spend half a day taking the course.

All of these things suggest speed awareness courses are being given to people who already respect the rules of the road, and if the conversations with my fellow "delegates" (ffs) was representative, all were first-time offenders who reckoned their speeding was an error of judgement, not habitual. There were no "boy-racers", and the only person undermining the instructor was me, because I am a contrary bastard and I don't like the police and he didn't appear to know the law surrounding cyclists very well.

Above all, I feel genuine stress when I see people abusing statistics. This seems only obvious to me. Is it?

Abuse of stats is a problem: People working in a business where success is measured by stats: speed-camera partnerships and associated road-safety wallahs are a good example, will use statistics to "prove" whatever they do is working. Without the cold, hard measure of cash, the temptation to abuse stats is enormous. People look for information confirming their biases. In this case that the course an instructor delivers, works as intended suits the interests of the people who work for AA Drivetech. The record of speed cameras in saving lives almost dissapears for example when you consider reversion to the mean. Thus we have a deeply unpopular policy sold on the basis of safety, yet with the suspicion that it's about money.

As it happens, the I found the course is useful, and might even be useful to people who are more habitual speeders. I would not mind the course being COMPULSORY with a fine for more serious examples of speeding and repeat offending. Certainly I took away a few tips for safer driving from a bloke who knows what he's talking about. Commentary driving as a means to combat boredom and fatigue for example. But I think the focus on speed and speed alone means the dick-head tail-gater who can only be caught by rear-facing cameras in non-police cars, or the dick-head (probably the same) who passes fast and close to cyclists, or the person overtaking round a blind bend, are NOT caught by speed-cameras. The police need to stop thinking speed cameras are all that matters. And they need to accept evidence from people who aren't warranted officers.

This dick-head wasn't speeding. But he WAS driving like a cock. And people like that only get caught when they hit someone. Road deaths have fallen over the years. Mainly because children are no longer allowed anywhere near roads until they're in their mid-teens. Cyclists have all but disappeared and the car has become an armoured box so few die when they crash any more.

Now cyclists are returning to the roads, we need to realise that driver attitude - the aggression of the white-van tailgater the Audi driver who simply must get in front at all costs, is what needs to be tackled if the long-term decline in fatalities is to continue. We must also build infrastructure which allows people to take a vehicle which isn't a car in safety. Otherwise we've just chased the pedestrian and cyclist off the roads, and congratulated ourselves for increasing safety, and a nation of fat, sedentary, mollycoddled drivers. The driver has assumed he owned the road for too long. The roads must be taken from the driver and given back to people, whatever means of transport - shoe, bike, motorbike, horse or car, they choose for their journey.

My fellow delegates may have lacked the aggression of the true driving twat (those people aren't given the option of the course), but they did all share the assumption that the car is vital, and there is no other option. That too needs to change. Let's start building towns and cities around people, not cars. Finally we need to deal with driver behaviour that isn't simply speed. Unfortunately, both of those seem to require more work and flexibility than the police or local authorities possess.

The Third Sector.

2013-01-30T07:31:00.000Z

If you want evidence that the 'third sector', 'social enterprises' or whatever 'charities' are called this week are merely an arm of the state, check out their job advertisments like this one from Home Group Ltd

You will deliver outrageously brilliant customer experiences by developing great communities which are tailored to individual needs. Utilising customer insight, creating engagement opportunities and carrying out generic Housing Management activities you will work in partnership with our Customer Service Centre, local service providers, voluntary sector and statutory organisations to ensure our customers receive seamless Housing and Neighbourhood services

They are looking for what would be called a housing manager or rental agent in the private sector, where the wage would be £12,000 basic & £30,000 OTE (on target earnings). Basically in the private sector, you have to earn your pay. In the Third sector, you need to mouth public-sector bureaucratese and not rock the boat.

High Speed 2

2013-01-28T10:39:00.000Z

There are plenty of reasons why High Speed 1 made sense: The Channel Tunnel should be linked to London by an equivalent high-speed line if the rail is to compete with City-Paris-Orly air route. I of course remain devastated that the trains from Paris no longer arrive at Waterloo station, which used to be a calculated and wonderful middle-finger to any Frenchman visiting London. However the new St Pancras international station is quite magnificent and streets ahead of le Gare du Nord, and it's an easy change for me, as my London trains get into Kings Cross. This puts Paris closer for me than Leeds, Manchester, Edinburgh or even Birmingham. This sounds like an argument for HS2. It isn't

The reason HS2 is going to be given the go-ahead are not the same reasons why it might be a good idea.

HS2 aims to link the North of England with high-speed rail links, putting Birmingham 2 hours, not 3 from London. The argument goes that this will save business time and money, and help the regeneration of Northern shitholes. This is utter bollocks. The evidence from Lyon and Osaka is that provincial cities have the life sucked out of them by fast rail links to the capital, as it reduces the importance of regional offices of national companies. It's easier to do business in Birmingham with a London base. And unfortunately for Birmingham, the greater rewards of London mean that as it's easier to do business in London, at the Margin, jobs and capital will be further sucked from the provinces to the capital as a result of high speed rail.

It will end up moving the commuter belt farther out along the rail corridor, to the detriment of the local job and economy. So HS2 will suck jobs and capital out of Birmingham leaving empty industrial parks and office blocks surrounded by sterile commuter "communities".

HS2 will wreak this devastation at a cost vastly greater than increasing the capacity or extending the regular trains. Of course ministers and mandarins know this. So why is it going ahead?

Mandarins and Ministers are overconfident in their analysis (guesswork) and think they know better than experience of other countries.
Mandarins and Ministers are the kind of people who benefit from a shiny new train to and from London, as are the 'business leaders' who are also said to be in favour. They benefit, the cities don't.
Ministers need to do "something" about the economy and capital spending is seen as something. HS2 is therefore 'something', so it will get done.
High speed rail is shiny and high-tech, and Ministers like to be photgraphed next to shiny modern and expensive bits of engineering.

These are not good reasons to spend billions of taxpayer's money, especially when it makes the poor bits of the country poorer and the rich richer.

Growth is NOT going to end.

2013-01-22T13:58:00.000Z

In "Perfect Storm" the head of Research at Tullett Prebon, Dr Tim Morgan predicts the end of Western Growth arguing that the last 250 years were an anomaly of the industrial revolution, which is now over.

To summarise the argument, Morgan identifies four trends which will mean Growth is going to be anaemic or non existent for the long-term, all coming together in the perfect storm. These trends are 1) The benefits of the move away from human muscle as a primary source of power have been largely spent, and there are no further equivalent gains to be had. 2)We are at the end of a credit super-cycle which has been inflating a bubble for the last 30 years. 3) Policy-makers have been blind-sided by rubbish data, and 4) the west is vulnerable to globalisation.

He's not even half right.

Let's look at his trends in detail: First he suggests that the debt bubble is equivalent to the south-sea bubble or the Tulip-mania. The UK and US are enormously endebted. There was not just a vast increase in public debt, but also private debt too over the past 30 years.

Gordon Brown, for example, proclaimed an end to “boom and bust” and gloried in Britain’s “growth” despite the way in which debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money. Between 2001-02 and 2009-10, Britain added £5.40 of private and public debt for each £1 of ‘growth’... Asset managers have a very simple term to describe what happened to Britain under Brown – it was a collapse in returns on capital employed. No other major economy got it quite as wrong as Britain under Brown, but much the same was happening across the Western world...

While he is, of course right our economies are more indebted than ever before, the damage to the economy (or at least growth) from this has already happened. There was almost no private sector growth during the Labour years. Almost all the growth was due to immigration and increased public spending. Brown's "boom" was merely a public spending spree, masking a recession which was already happening. Much is made of the collapse of investment returns over the period. It's almost as if that huge increase in public debt sucked investment out of the private sector!

That process reversing would explain the no growth, but rather solid employment numbers that we've seen recently. Meanwhile the private and corporate sectors have been busily using the low interest rates to deleverage faster than at any time in history. The good news is the UK and USA are not going to go the way of Japan, because instead of committing to ever more "stimulus" we're all agreed on Austerity. Japanese debt now stands at 250% of GDP and they've enjoyed little growth in the last 20 years as a result. The Anglo-Saxon economies, in contrast have instead purged the bad debt from bank's balance-sheets (incompletely, but better than Japan in the 90's), refinanced, and hit the monetary nuclear button (Quantitative Easing) after 6 months, not 6 years.

Yes there's a 30-year asset bubble to unwind. That's not what drives real wealth. There is capital for innovative technology, so this isn't going to stop the long-term driver of growth: productivity. Yes, we're at the top of a 30-year bond bull-market driven by falling interest rates and falling risk appetites, and yes, interest rates will rise over the next few years. But the overall debt burden (including public, private and corporate) has already started to fall. Let's not forget the South-Sea bubble and Tulip Mania didn't derail western growth because the shape of balance sheets don't ultimately drive long-term growth. Technology does. There's no reason to suppose the credit crunch will do so in the long-run.

Next up, Dr Morgan channels the Socialist Workers' Party by suggesting globalisation is a disaster for the west because it's sucked "production" out of our economies. This is pure "manufacturing is special" wibble. Globalisation has, of course been a boon for Chinese wages, and as a result the phenomenon of offshoring jobs has run its course. Western manufactures now cost about the same, when the extra transport and extended supply-chain of Chinese manufacture is taken into account. Meanwhile, the Chinese, vastly wealthier than they were a decade ago thanks to offshoring, are now clamoring for Jaguars. We've created a market for the high-value manufacturing and services which never existed before. We in the west aren't producing less - the UK is a net exporter of cars for example - we just employ fewer people to make more.

The big problem with globalisation was that Western countries reduced their production without making corresponding reductions in their consumption...

Morgan makes the standard pessimist mistake. Making things we can drop on our feet with fewer people means those people not hammering metal in Birmingham car-plants can train to be lawyers, or web-designers instead. We get cars AND websites. We're richer. We don't need to cut our consumption, or at least not as much as Morgan thinks we do.

In the interface between these first two trends Morgan identifies, there is a glimmer of truth. Because much of the growth in the noughties was debt-financed and ephemeral, we simply weren't as rich as we thought we were in 2008. The recession is the process by which we cut our expenditure to meet our income. Great. The economy is healing itself, and has been doing so for the last four years.

Any economic historian could tell you that recoveries from balance-sheet recessions are always slow. The credit crunch was the mother of such, and so the slow growth subsequently is not exactly unexpected, however unwelcome. The enormous private and corporate deleveraging, combined with public sector Austerity should, if the Keyensians are right trigger a depression. The fact that growth is merely flat should be grounds for optimism.

Trend 3) is that the financial statistics used are a grand exercise in self-delusion.

The critical distortion here is clearly inflation, which feeds through into computations showing “growth” even when it is intuitively apparent (and evident on many other benchmarks) that, for a decade or more, the economy has, at best, stagnated, not just in the United States but across much of the Western world. Distorted inflation also tells wage-earners that they have become better off even though such statistics do not accord with their own perceptions. It is arguable, too, that real (inflation-free) interest rates were negative from as long ago as the mid-1990s, a trend which undoubtedly exacerbated an escalating tendency to live on debt.

I've long argued the current recession's seriousness is the direct result of Governments' efforts here in the UK and in the USA to use public debt to prevent a recession which should have happened in response to the .com crash in 2000. There has been little private sector growth in the UK from when Gordon Brown turned on the spending taps in 2000, to the crash of 2009. Furthermore, the use of CPI (which doesn't include house-price inflation in the inflation number) and failure to deal with the known problems with RPI, left were handy fictions in the public data. This probably massaged the true figures down, helpful to government, which stealthily cuts people's real incomes. There's more: open abuse of the disability benefits and education system was used to massage the unemployment numbers.

But you're not really surprised that I'm sympathetic to the idea Government and bureaucracy will indulge in self-serving self-delusion, are you? The good news is the Coalition has addressed some of these problems.

Because of this tendency for bureaucracy to indulge in self-serving lies, they pose the biggest risk to western growth. Increases in wealth are, as Morgan correctly observes, all about productivity growth. Where is productivity growth weakest? In the public sector which operates without competitive pressure. And which part of the economy has been growing the most for the last 15 years? That's right: the Public sector. It may take a decade of cuts and austerity for this trend to be reversed, but that's why I'm optimistic. Europe, the USA and UK have all made a start on trimming the burdens a much-derided but absolutely correct policy of Austerity. The EU is imposing Austerity on the nations with the biggest deficits, and the US fiscal headbangers of the Republican party are using the debt ceiling to impose a modicum of sanity on an unwilling president and the coalition is making cuts to services.

Shrinking public sector headcounts may be hurting GDP growth in the short term, but this is bringing the economy back from the debt-financed insanity. It may take a while, but unlike Japan, we seem to be willing to face the reality. Japan's experience shows clearly the party cannot be made indefinite.

It's the final trend: that the growth engine is winding down which is the weakest in the whole piece, yet forms the basis of the conclusion. Morgan suggests the growth which started with the industrial revolution is spent. He's wrong. The heat-engine: Steam and internal combustion power, hasn't even been fully deployed around the globe when a billion people are still using the ox-plough or digging stick. We've not deployed the technology of the 18th century to the world. There's still economic growth from crop-rotation, something which was cutting edge when Europe was recovering from the Black death.

Furthermore Morgan suggests there is no further equivalent growth to come. He's wrong. We're only just scratching the surface of what telephones for example can do for growth, let alone computers. Less than 10% of humanity has access to the internet, and that 10% hasn't yet worked out how to use pocket devices with access to all the world's knowledge available generate money.

The idea there's no growth to come is just laughable. The agricultural revolution and industrial revolution aren't even over. The telecoms revolution has barely started, and the information revolution is just a glint in the milkman's eye. There's two-centuries of growth for humanity right there. And that's before we start harnessing fusion power, driverless cars, abundant solar energy or whatever we come up with next.

Anyone who says "this time it's different" on the way up is wrong. The same is true on the way down.

The only unlimited resource is human ingenuity. That's why I'm an optimist, tempered by cynicism about Government's motives and competence. Simply by applying what we already know to those who don't, we can drag the billions currently in poverty out of it. Even better, when Governments facilitate rather than control the process, we can all get rich doing so. Globalisation isn't a zero-sum game. Innovation is happening. The credit super-cycle is being addressed (everywhere except Japan). The only thing I'll agree with Morgan, is that the public data is rubbish and so too was Gordon Brown.

The Economics of Online Dating, Poker & Bingo.

2013-01-22T10:38:00.001Z

One of the things that interests me about economics is how people make money out of new technology. The printing press was used at first for political pamphleteering one sheet arguments, easily produced and distributed; and Bibles in the vernacular. This led directly to the reformation and the subsequent two centruries of war, as the people, rather than just monks, debated how many angels could, in fact, dance on the head of a pin.

This power to distribute ideas, previously the preserve of an ecclesiastical and political elite, was enormously disruptive. The same is true of all other information distributive technologies - Radio and TV were at first controlled tightly by the powers that be, then regulation relaxed. People started hearing what they wanted - rock and pop rather than what the authorities wanted them to hear. The same is true with TV. ITV started the rot, and we're complete with the broadcast of 'Celebrity wedding planners'.

Finally we come to the internet. And the triumph of the medium over the message. The money is made by the owners of the forums, not the people producing the content. Other than that it's a free-for-all with a distinct winner-takes-all flavour. Why did Amazon win the battle of the online retailers? Probably more luck than judgement Why did Facebook beat MySpace? What happened to Friends re-united? Once dominance is established though, can we really predict how long it will last. Perhaps the cool kids are already migrating to Twitter. Perhaps the dominance of Facebook is already over. Who knows? The shares have certainly responded to Facebook's challenge to Google in search, so perhaps even Google's dominance there might be ephemeral.

I suspect the real losers of the internet will not be the established newspapers and retailers, whose online brands may well survive, and whose brand equity will be useful in maintaining market share in a 'goods unseen' environment. The real losers will be casinos, crippled by regulations which simply don't apply to online poker or bingo. Interesting the cost of doing business is probably the cost of acquiring players. You can tell this by the amount of advertising they do. Once scale is achieved, then payouts can improve, in a virtuous circle of scale vs. relatively fixed costs. Judging by the adverts for online Bingo in particular, I guess the barriers to entry are low.

The other joyous thing about the internet is that much of the stuff that makes money - online dating, gambling, networking, and advertising does so without much interference with regulations. They provides a beautiful resource for economists and sociologists to see what people actually do, rather than what the powers that be or enforced social norms want them to do. We can explore people's propensity to take risk - financial and otherwise - with huge volumes of anonymised data. We can see what people's mating preferences are as opposed to what they say they are. Possibly the greatest gift the internet will give is the data to better understand ourselves.

David Cameron and the Euro Head-Bangers.

2013-01-15T11:22:00.001Z

The press are talking up the prospect of a Tory Euro-split. The likes of serial rebel Douglas Carswell are regularly talked about as if they are the same as the Maastricht rebels, and they will do for Cameron as John Redwood did for Major. Common Market or Quit is their rallying cry.

If we were to withdraw from the Eurosystem, but remain part of the Single Market, we would have to conform to all manner of rules and regulations made by the Eurosystem. It is not just that we would have no say in making such rules (not that we have much say now). Nor is it just that many so-called Single Market rules – such as the 48-hour week – are actually social and employment law masquerading as Single Market measures. The real problem with retaining a residual requirement to conform to Single Market rules, after withdrawing from all the rest, is that UK firms would still have to conform to Single Market rules even if they have no intention of exporting to the Single Market at all.

But are they going to bring down another Tory Government?

I'm not sure. Carswell knows Cameron's not going to get a Common-market relationship in negotiation. He also knows he will almost certainly get an in-out referendum some time after the next election (assuming a Conservative victory...). Miliband has ruled out such a referendum. Carswell also knows he will be free to campaign for 'out'. Hence the long-running complaint that the media seem determined to run with a 'Tory split' story, when actually the party's rather united on the issue, and probably more so than Labour. Even Carswell talks with irritation about the endless 'Tory splits' questions he gets, when quite often he's actually supporting the Prime Minister.

Tory splits on Europe are largely tactical. There are a few who would take a hard line, a small number who would vote 'out' come what may. There are almost no federalists of the Michael Hestletine type left. Everyone else is sceptical, but not wanting to pull out now. Almost all, including Cameron, want to repatriate powers.

Most people in the country (if they care, which few do) want to repatriate powers too, but don't want to pull out. So the Tory party is in broad agreement with the country. This, however encourages the Tories to talk about Europe, as it's something they have in common (they think) with 'the man in the street'. The 'man in the street' however is thinking "I wish they'd shut up about Europe and sort the fucking economy out". To understand this better, read this by YouGov head, Peter Kellner on "Valence voters".

Suppose you feel that strongly about the role of the private sector in the NHS, either for or against. That is a positional view. But suppose you don’t mind that much either way, and all you want is prompt, high-quality care when you need it. In that case, yours is a valence view. Most politicians, activists and commentators are full of positional views. But millions of swing voters aren’t: they take a valence view of politics. They judge parties and politicians not on their manifestos but on their character.

What banging on about Europe tells voters about the Tories' character, even voters who agree with them on the issue, is that The Tories aren't interested in concerns of ordinary voters. Labour's positional issues at least have the virtue of not being completely irrelevant to the man in the street, even if the voters largely disagree. It matters not a jot that the voters take the "right wing view" positional view on Europe, what's crucial is they don't hold this view very strongly and aren't that interested. Endlessly demanding a referendum may be delivering what the voters say they want in response to that question, but To which the average voter actually asks "to what immediate problem is a referendum on Europe a solution?". Almost no-one (3-5% at most) outside the bubble of the politically engaged think a referendum on the EU is important enough to spontaneously offer it as a top-5 issue to pollsters.

The headbangers, by which I mean those who simply will not be appeased by anything other than an immediate referendum, now, in which Cameron backs 'out', have largely gone to UKIP. And good riddance. What's left is a small rump of people for whom Europe is a major issue but who can be persuaded to back a realistic strategy of renegotiation, if the referendum is credibly promised.

My problem is that any Euro debate has the potential to cost the Tories dear. The best thing Tories can do to prevent a Labour victory in 2015 is just simply shut up about Europe. Don't mention it. Keep schtumm. It is enough that the voters agree with us. We do not need pacts with UKIP to defend the right flank. We don't need to have a pre-election referendum. All the voters want right now is lower prices in the shops and a growing economy. Deliver that, get a landslide. Fail, get voted out. It is that simple. Europe appears to be a distraction, of interest only to the political class, reinforcing the view that the Tories in particular aren't interested in the concerns of ordinary people. Whatever your view, you must acknowledge that withdrawal from the EU would be a major issue for Government, which would distract them from other, more pressing questions.

Above all, the headbangers need to stop spouting self-serving myths, which aquire truthiness by constant repetition. What are you, Labour? Most of our law is not made in Europe. We are not swamped by eastern Europeans, who aren't "taking our jobs. The EU is not a plot by dastardly foreigners to circumvent our democracy, when all the important stuff affecting people day-to-day is dealt with by Westminster. Even if a measurable percentage of law is "made in Brussels", much of it is detailed trade regulation, necessary for a functioning common market, and of little interest to the man in the street. And in any case, in order to get to 50% of law "made in Brussels" you need to include every law which has any influence at all from EU law, even where the law is not changed because of 'Europe'. We are not "run by Europe" and to suggest we are is paranoid fantasy.

Contrary to both Federast and Head-banger myth, renegotiation of terms is possible, both Thatcher and Major showed this. The Eurozone is going to go off and do its own thing. Which leaves the 'outs', of whom Britain as the largest country, is the natural leader. Some of the outs are still publicly committed to joining the Euro, but in practice are probably having second thoughts. The UK does have influence - the EU would be much less free-trade oriented were it not for us. It's true the 'Common Market' relationship is not on offer, but significant repatriation of powers over employment law and so forth could be.The EU is reforming, and a UK renegotiation will accelerate this process. The UK is a creditor nation, with a strong economy and goodwill, especially in the countries of the East for our open policy to immigration which contrasts sharply with the attitude of France and Germany. Remaining in, but on looser terms is true to 500 years of British/English foreign policy.

And let me be quite clear. Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the Community...

Margaret Thatcher, Bruges, 1988.

If your view is "Withdraw now, or by Thursday week at the latest, or you're a Federast" this post is not for you. This one is, and you should bugger off to UKIP, pronto. If, however you have a realistic view of what Europe is for, and does with us; and think the UK can influence its European future, then have a little faith in Cameron. He's got it right so far.

Cameron's strategy is right. It is consistent with British interests and conservative ideals. It is pragmatic, intelligent and opportunistic. It is sceptical, but not obsessed by the European question. Like Thatcher, who secured the rebate, and Major who secured the opt-outs from the social chapter and Euro, Conservative prime-ministers have performed well in European negotiations. Cameron will be no different. In contrast Blair gave up the rebate and got nothing in return, and Brown scuttled off to Europe to sign the Treaty of Lisbon while no-one was looking. Conservative Prime ministers succeed in Europe despite the head-bangers, not because of them.

On BMI, Smoking and Physical Fitness

2013-01-11T14:10:00.004Z

Quite often amongst libertarians there's a 'drinkin' smokin' and ahm-a-gonna-continue-coz-you-ain't-gonna-stop-me attitude'. Because the BMA advises something, some libertarians willfully do the opposite.

I entirely understand the wish to blow the smoke of an unfiltered Senior Service into the face of any public-health busybodies I see. There's enormous glee for example in the reporting of the meta-study released recently which suggested the slightly overweight live longer than those in the "healthy" BMI range. This is something that I thought was long-known. The VERY underweight live the longest, as near-starvation prevents some damage caused by free-radicals in cells during metabolism. We all know what healthy people look like, but it's apparently just as healthy to carry a bit more weight as you age. The findings of the report are not surprising.

BMI was invented in the 19th century, when people were calorie constrained, cars hadn't been invented and everyone was skinny, worked in manual labour, and walked, rode, or cycled everywhere. "Normal" was different back then. However BMI's not a bad rule of thumb. Normal these days is a bit overweight, and certainly not doing the exercise or suffering the occasional bout of hunger for which nature designed us.

The key is muscle. If you're carrying muscle, and we carry a lot more of it than our great-grandparents, you're active, a bit of extra fat isn't a problem for your body to bear, but big muscles are heavy and so push you into "overweight" on the BMI. If you're built like a jockey's whip, you're completely sedentary and have an unhealthy lifestyle, you can have quite a high fat percentage and a low BMI as fatty tissue is less dense than muscle. Catwalk models have bad skin from make-up and a diet of cocaine, bulimic vomiting and fizzy white wine yet fall at or below the healthy range. Most professional Rugby Players, on the other hand are "obese" thanks to their large muscle mass. There's no doubt which looks more healthy (without makeup).

Make-up can be used to disguise an unhealthy lifestyle and unhealthy BMI.

I've never been a heavy smoker, but I have recently got into the habit of enjoying a cigarette or two in the evenings when I get home from work. I have for one reason or another been without a bicycle for much of the last few months. I've been drinking nearly every day and eating too much. I've not been taking exercise. I've got a bit fat. My BMI is 25.6. Very slightly over the border into overweight. And that's probably about right. Fat, but not dangerously so. It certainly doesn't help anyone who isn't a professional athlete to see the BMI and think "Overweight is good", because it isn't.

Just a week of running and swimming each evening, and giving up the cancer-sticks entirely and cutting down the booze, I feel great. The first run was horrible. The second wasn't much better. But on the third, I felt I'd cleared out some crap from the lungs and I enjoyed it. From previous bouts of fitness fanaticism I find at first you hate it. Then you start to enjoy it. Then you start to need it.

What interests me in the epidemiology is to what extent is the huge health penalty with which smoking is correlated to do with the harms of smoking itself, and how much is to do with the fact that people who smoke are also less likely to make healthy choices with exercise and food? It's my belief that for day to day well-being, being sedentary is worse than light smoking. If you take regular exercise, I suspect you can get away with a fag with your pint afterwards. But I'm not a doctor, nor am I a public health epidemiologist. I don't know.

Just because some nannying doctor tells you something is good or bad for you, doesn't mean he's wrong. Feeling hungover, lethargic and listless is not as good as feeling bright, cheerful and healthy. Pretty girls prefer men with toned muscles. You're better in the sack with those pretty girls (or even your significant other) if you take some exercise. Fit people suffer less depression and have higher self-reported happiness. You'll live longer and so generate more personal utility from the taxes you pay as you burden the NHS with your longer senescence. You sleep better after exercise, and are so more productive when you get up. Live fast, die young? Sod that. Live fast, die old, that's my motto.

I've just started an exercise regime. I'm not just happy about it, I'm smug about it too. Hate me.