Dear Mr Bank Manager
We are currently engaged in a management succession process to identify the best candidates to lead us for the next five years. This year we are very excited to have more candidates than ever.
1) 5 of the 7 candidates have no plans to repay any of the existing debt currently owed to you.
2) 4 of the 7 candidates have no plans to reduce the rate of additional borrowing we require over the next five years.
3) Of the 3 candidates who do have a plan to reduce additional borrowing requirements, 1 includes the current management who missed their prior target by 50%, 1 is the previous management who were at the helm when our current financial difficulties occurred, and the remaining candidate has no experience running this organisation and believes exiting our largest commercial partnership agreement will resolve all issues.
I am sure you will agree that we are in a really fortunate position to have so many candidates to choose from and are looking forward to a conclusion in May. That being said it is possible that we decide a clear outcome is not in our best interests and following the succession process we will leave all the candidates to negotiate the management team for themselves.
Thanks again for your continuing support,
The British People.
If you would like to comment on this post, please click 'comments' below.
Monday, 4 May 2015
Friday, 16 November 2012
Wednesday, 25 April 2012
Renegade Economist with Ann Pettifor
Wow! What an awesome talk this is. It's half an hour long but very well worth your time. Informative and interesting but most of all inspiring. What a woman Ann Pettifor is! And to think there are societies in this world who deny women equal rights and education.
If you would like to comment on this post, please click 'comments' below.
If you would like to comment on this post, please click 'comments' below.
Monday, 12 March 2012
The most astounding fact . . .
If you liked the last video, you might like this one also.
If you would like to comment on this post, please click 'comments' below.
If you would like to comment on this post, please click 'comments' below.
We Stopped Dreaming
The ideas behind this video are at the route of all our modern day economic problems. Simply, a lack of imagination. Of course the narrator, the excellent Neil deGrasse Tyson, comes at this issue from the perspective of space exploration, him being an astrophysicist, but he hits a nerve when he talks about 'the city of tomorrow'. How many of us can say that they work in industries which have a real vision of 'tomorrow' at their heart?
If you would like to comment on this post, please click 'comments' below.
If you would like to comment on this post, please click 'comments' below.
Saturday, 10 March 2012
Tuesday, 17 January 2012
Alain de Botton: Atheism 2.0
If you would like to comment on this post, please click 'comments' below.
Wednesday, 2 November 2011
Clarke & Dawe
Frank commentary on the current economic issues is often so hard to find. Thank goodness for this pair!
If you would like to comment on this post, please click 'comments' below.
If you would like to comment on this post, please click 'comments' below.
Monday, 26 September 2011
TED
If you haven't already come across it, TED is a wonderful selection of speeches and talks which are incredibly interesting. If you have some spare time and want to use your grey matter I strongly recommend heading over to the TED Youtube Channel to browse some of the videos, or even to their fantastic site.
My favourite talk today is this one below, which pleases me both by worshiping one of the greatest (or certainly most useful) thinkers of all time, Adam Smith, and also empirically proving how costly theocracy is for any given society. Both points of view I strongly endorse.
If you would like to comment on this post, please click 'comments' below.
My favourite talk today is this one below, which pleases me both by worshiping one of the greatest (or certainly most useful) thinkers of all time, Adam Smith, and also empirically proving how costly theocracy is for any given society. Both points of view I strongly endorse.
If you would like to comment on this post, please click 'comments' below.
Saturday, 3 September 2011
Housing, planning blah blah blah
Seeing as one of my 'hot topics' is the restrictions on new house building and the problems this creates, the current public debate on such matters meant I couldn't help a quick post.
Finally I am reading some articles which articulate my view. I have of course always supported more development on the grounds of creating growth, allowing young people to buy a home, and simply because not to develop more would mean to be static and in fact decline.
A couple of choice quotes from Phillip Collins in The Times yesterday give some perspective.
"Only 10% of this country is developed and close to half of that is accounted for by gardens. On this crazily crowded island we have built houses on only 1.1% of the land. Sheep and cows have more room to live in than we do. Roads are choking up 2.2% of land, taking up less space than reservoirs."
and on productivity "agriculture as an industry produces 0.5% of GDP. Not a huge return on 72% of the land mass"
I still think that our national obsession with protecting 'the green fields' is a collective form of nimby-ism. Phillip Collins also recounts a meeting he chaired on mobile phone masts, another nimby no no. At the meeting, which was packed out, he asked all those present with a mobile phone to hold it up, which of course was everyone. Before they could take their arms down he asked them to keep their arms up if they were in favour of new mobile phone masts, and of course they all fell. He says "they wanted to progress and yet also to conserve and they didn't want to choose between the two. Yet sometimes you have to."
This brings me nicely on to this article which really hits the nail on the head. Perhaps what we are actually suffering from is a great lack of imagination. People see buildings and roads they don't like the look of and oppose development thereafter. Wouldn't it be so much better if instead they accepted progress and focused on making new development as pleasing to others as it is useful it is to it's owners.
If you would like to comment on this post, please click 'comments' below.
Finally I am reading some articles which articulate my view. I have of course always supported more development on the grounds of creating growth, allowing young people to buy a home, and simply because not to develop more would mean to be static and in fact decline.
A couple of choice quotes from Phillip Collins in The Times yesterday give some perspective.
"Only 10% of this country is developed and close to half of that is accounted for by gardens. On this crazily crowded island we have built houses on only 1.1% of the land. Sheep and cows have more room to live in than we do. Roads are choking up 2.2% of land, taking up less space than reservoirs."
and on productivity "agriculture as an industry produces 0.5% of GDP. Not a huge return on 72% of the land mass"
I still think that our national obsession with protecting 'the green fields' is a collective form of nimby-ism. Phillip Collins also recounts a meeting he chaired on mobile phone masts, another nimby no no. At the meeting, which was packed out, he asked all those present with a mobile phone to hold it up, which of course was everyone. Before they could take their arms down he asked them to keep their arms up if they were in favour of new mobile phone masts, and of course they all fell. He says "they wanted to progress and yet also to conserve and they didn't want to choose between the two. Yet sometimes you have to."
This brings me nicely on to this article which really hits the nail on the head. Perhaps what we are actually suffering from is a great lack of imagination. People see buildings and roads they don't like the look of and oppose development thereafter. Wouldn't it be so much better if instead they accepted progress and focused on making new development as pleasing to others as it is useful it is to it's owners.
For the good of rural life, we must build houses in the English countryside
If you would like to comment on this post, please click 'comments' below.
Monday, 28 March 2011
War On Drugs
The War On Drugs is, in my opinion, one of the greatest policy failures in modern times. The fear and rhetoric thrown about in public by politicians and the media is preventing a sensible assessment on the subject and is costing lives.
In Mexico, a front line in the War On Drugs, 28,000 have been killed since 2006 in the fighting between Mexican Government security forces and the drug cartels. In this interview, President Calderon of Mexico lays the blame squarely with the Americans for the troubles in his country and has called for a debate on drug legalisation.
If your interested in the numbers of deaths caused by 'drugs' in the US relative to the murders in Mexico I have found some statistics of note.
In the USA 435,000 die from smoking related causes each year.
Alcohol kills about 85,000 in the USA each year.
Illegal drugs kill about 17,000 in the USA each year.
Prescription drugs kill about 32,000 each year in the USA each year.
The first thing to say, and possibly the most important, is that every single person who dies from 'drugs' has elected to do so. This cannot be said of the 28,000 dead in Mexico. It also says something that prescription drugs kill twice as many people in the USA each year than illegal drugs, and yet the prescription drugs don't cause a real war to be fought in a neighbouring country or the outrage in the US.
There are of course many elements to the debate on drugs, and more information and research would be hugely beneficial to the debate. But you've got to wonder, if these simple statistics don't provide enough evidence to for an open and fair debate on the subject, how bad has it got to get before they do?
If you would like to comment on this post, please click 'comments' below.
In Mexico, a front line in the War On Drugs, 28,000 have been killed since 2006 in the fighting between Mexican Government security forces and the drug cartels. In this interview, President Calderon of Mexico lays the blame squarely with the Americans for the troubles in his country and has called for a debate on drug legalisation.
If your interested in the numbers of deaths caused by 'drugs' in the US relative to the murders in Mexico I have found some statistics of note.
In the USA 435,000 die from smoking related causes each year.
Alcohol kills about 85,000 in the USA each year.
Illegal drugs kill about 17,000 in the USA each year.
Prescription drugs kill about 32,000 each year in the USA each year.
The first thing to say, and possibly the most important, is that every single person who dies from 'drugs' has elected to do so. This cannot be said of the 28,000 dead in Mexico. It also says something that prescription drugs kill twice as many people in the USA each year than illegal drugs, and yet the prescription drugs don't cause a real war to be fought in a neighbouring country or the outrage in the US.
There are of course many elements to the debate on drugs, and more information and research would be hugely beneficial to the debate. But you've got to wonder, if these simple statistics don't provide enough evidence to for an open and fair debate on the subject, how bad has it got to get before they do?
If you would like to comment on this post, please click 'comments' below.
Wednesday, 16 March 2011
OECD On Housing
Readers may have noticed that another regular topic of mine is the growing housing problem in the UK. I am not going to go into another 'rant' on this now, but simply wanted to convey my thanks to Stephanie Flanders of the BBC, a very insightful reporter, for her comments on this subject, and her blog today which highlighted the following comments from the OECD on the issue.
But the report reserves its sharpest language for the state of the UK housing market - and the planning regime. Here the OECD is preaching to the converted, at least at the Treasury. The rest of the government might have more doubts. Here's the summary:
Please refer to my previous posts on Nimby's and their harm for my thoughts on this subject.
If you would like to comment on this post, please click 'comments' below.
But the report reserves its sharpest language for the state of the UK housing market - and the planning regime. Here the OECD is preaching to the converted, at least at the Treasury. The rest of the government might have more doubts. Here's the summary:
Current land use planning policy is excessively restrictive, making supply unresponsive to demand and contributing to creating housing shortages and reducing affordability.... A reform to replace top-down building targets with incentives for local communities to allow development is underway, but the outcomes are somewhat uncertain. Housing taxation is regressive and encourages excessive demand for housing. More effective taxation could help contain demand and stabilise the housing market.I hope to discuss in a later blog how the government might seek to match the simple economic need for more houses and a freer panning regime with the very difficult local politics. As I suggested in my bulletin piece last night , business groups are excited by the prospect of root and branch reform in this area, but can't help being alarmed by the uncertainty that comes with it. They also want reassurance that the "localism" agenda isn't about to make the planning system even worse than it is now. That is one of many questions that Mr Osborne will need to answer next week.
Please refer to my previous posts on Nimby's and their harm for my thoughts on this subject.
If you would like to comment on this post, please click 'comments' below.
The Slippery Slope
I have been considering for the last two weeks my blog response to the Yes vote at the recent Welsh referendum. As you may know, and despite my general criticism of devolution the 'process', my primary concern in the run up to the vote was the one sidedness of the debate. That no political party or media organisation was against the proposition, seriously undermined the nature of the debate and thus the outcome of the vote itself.
Nonetheless since the result was announced, (Overall, 63.49% voted 'yes', and 36.51% voted 'no'. The overall turnout was 35.2%) it has been interesting to watch the political response. Particularly when keeping in mind the 'debate' held before the vote. As it happens Diane Banner, Secretary of the True Wales No Campaign, has written a letter in today's Western Mail which sums it up rather succinctly.
"Sir, I write on behalf of the True Wales Steering Committee to express a warm thank you to the almost 300,000 people who voted No in the referendum and to all those who campaigned to help us fight for the best in Wales.
In the space of just one week following the poll, the UK Government has announced a commission to consider income tax and borrowing powers for the Assembly, a Liberal peer has called for another 20 AMs, and Presiding Officer Dafydd Elis Thomas has argued for the abolition of the Wales Office and of our position at the UK Cabinet table. A Commons Committee has called for a review as to the merging of the Wales, Scotland and Northern Ireland Offices.
Despite Yes camp claims that the vote was merely a 'tidying up exercise' on law-making power, most politicians now herald it as a fundamental constitutional change. The momentum is now for a step-by-step process over time to the separation from the UK.
Nevertheless, we are determined to fight on to ensure that Wales maintains its position within the UK and to hold the Assembly politicians, with their significant new power, to their pledge to make 'no more excuses' for failure"
Certainly none of these developments were discussed before the vote, and the Yes camp, including politicians and the media, have now claimed a huge mandate on the back of a referendum vote where only one in five of the electorate supported their motion.
Wake up Wales, the later a proper debate is had, the further the 'process' of devolution will have progressed without your consent.
If you would like to comment on this post, please click 'comments' below.
Nonetheless since the result was announced, (Overall, 63.49% voted 'yes', and 36.51% voted 'no'. The overall turnout was 35.2%) it has been interesting to watch the political response. Particularly when keeping in mind the 'debate' held before the vote. As it happens Diane Banner, Secretary of the True Wales No Campaign, has written a letter in today's Western Mail which sums it up rather succinctly.
"Sir, I write on behalf of the True Wales Steering Committee to express a warm thank you to the almost 300,000 people who voted No in the referendum and to all those who campaigned to help us fight for the best in Wales.
In the space of just one week following the poll, the UK Government has announced a commission to consider income tax and borrowing powers for the Assembly, a Liberal peer has called for another 20 AMs, and Presiding Officer Dafydd Elis Thomas has argued for the abolition of the Wales Office and of our position at the UK Cabinet table. A Commons Committee has called for a review as to the merging of the Wales, Scotland and Northern Ireland Offices.
Despite Yes camp claims that the vote was merely a 'tidying up exercise' on law-making power, most politicians now herald it as a fundamental constitutional change. The momentum is now for a step-by-step process over time to the separation from the UK.
Nevertheless, we are determined to fight on to ensure that Wales maintains its position within the UK and to hold the Assembly politicians, with their significant new power, to their pledge to make 'no more excuses' for failure"
Certainly none of these developments were discussed before the vote, and the Yes camp, including politicians and the media, have now claimed a huge mandate on the back of a referendum vote where only one in five of the electorate supported their motion.
Wake up Wales, the later a proper debate is had, the further the 'process' of devolution will have progressed without your consent.
If you would like to comment on this post, please click 'comments' below.
Wednesday, 2 March 2011
Lost Generation
Stephanie Flanders, in a very interesting post, provides some more evidence of problems facing the young today. Most alarmingly, when considering who has benefited from an increase in employment in the UK of 218,000 over the course of 2010, she notes that "employment among the over-65s rose by 104,000. Put it another way, 3% of the workforce has hoovered up 48% of the new jobs".
Is that those Baby Boomers again?
If you would like to comment on this post, please click 'comments' below.
Is that those Baby Boomers again?
If you would like to comment on this post, please click 'comments' below.
Nimby News
As I have mentioned in previous blog posts, I am very concerned about the power of Nimby's to restrict the growth of urban development and all the problems it can cause.
In regard to my local area, I received a copy of the 17th February 'Echo Xtra' (ok, I am getting behind on some of my ranting!), which ran with the headline "Ruining our lives", a serious headline I think you'll agree. The article reports concern from residents in North Cardiff that the plans to include local sites in the Council's Local Development Plan risk their 'way of life'. The sites mentioned include the 'land north of the M4', which is basically a collection of low yielding fields alongside the motorway.
The plan proposes up to 1,200 residential units, a new primary school, local shopping, a park-and-ride facility, a 10-hectare business park and a country park. Which if you ask me sounds marvelous. New homes which will help struggling first time buyers, new public facilities, new employment opportunities, and of course all of the jobs which go with building it all in the first place.
However the article reports comments from a local resident including "new suburb" would "sandwich Rhiwbina within Cardiff", "This huge development wipes out green space" and "This is radically going to change the face of where we all live and doesn't serve anyone except the developers proposing it". Now I know that a newspaper can print pretty much any views (so long as they are not those of the editor), but this is a front page headline article and these views are just plain wrong! What's more, and getting to the point, there are no other views reported to balance this opinion.
Nimby's manage to make their voices heard in this way, and motivate political action as a result, that those who would benefit from the plans cannot. Every house proposed will be someones home, every person served by any of the new facilities, including a country park, will benefit from them, and anyone employed in building and servicing this new suburb will earn a living. Yet these people are as yet anonymous and thus cannot be asked to comment. Thankfully money talks as they say, and whilst the beneficiaries are not able to voice their concern, their demand, as represented by 'the developers', speaks for itself.
Nonetheless, the public complains to politicians on one hand about the lack of jobs, facilities or affordable housing, and on the other hand they complain if anything is proposed near them. Whats more, often the complaints regarding a lack of such goods is made on a national level to MP's, whilst the opposition is made to local representatives and councillors. As a result politicians from different authorities are pitted against each other to hammer out a solution or not. Is this really the best way to organise ourselves?
As a final example of what I mean, the article does quote comments from the local councillor, Jayne Cowen, including "I haven't had one person support the scheme", "at the end of the day, I feel strongly we need to support the residents". Of course she means the existing residents in her area, but no one is representing the residents of the proposed new development. That a shabby publication such as the 'Xtra' furthers this vocal imbalance by running the story without any thought for the beneficiaries only exacerbates the problem.
If you would like to comment on this post, please click 'comments' below.
In regard to my local area, I received a copy of the 17th February 'Echo Xtra' (ok, I am getting behind on some of my ranting!), which ran with the headline "Ruining our lives", a serious headline I think you'll agree. The article reports concern from residents in North Cardiff that the plans to include local sites in the Council's Local Development Plan risk their 'way of life'. The sites mentioned include the 'land north of the M4', which is basically a collection of low yielding fields alongside the motorway.
The plan proposes up to 1,200 residential units, a new primary school, local shopping, a park-and-ride facility, a 10-hectare business park and a country park. Which if you ask me sounds marvelous. New homes which will help struggling first time buyers, new public facilities, new employment opportunities, and of course all of the jobs which go with building it all in the first place.
However the article reports comments from a local resident including "new suburb" would "sandwich Rhiwbina within Cardiff", "This huge development wipes out green space" and "This is radically going to change the face of where we all live and doesn't serve anyone except the developers proposing it". Now I know that a newspaper can print pretty much any views (so long as they are not those of the editor), but this is a front page headline article and these views are just plain wrong! What's more, and getting to the point, there are no other views reported to balance this opinion.
Nimby's manage to make their voices heard in this way, and motivate political action as a result, that those who would benefit from the plans cannot. Every house proposed will be someones home, every person served by any of the new facilities, including a country park, will benefit from them, and anyone employed in building and servicing this new suburb will earn a living. Yet these people are as yet anonymous and thus cannot be asked to comment. Thankfully money talks as they say, and whilst the beneficiaries are not able to voice their concern, their demand, as represented by 'the developers', speaks for itself.
Nonetheless, the public complains to politicians on one hand about the lack of jobs, facilities or affordable housing, and on the other hand they complain if anything is proposed near them. Whats more, often the complaints regarding a lack of such goods is made on a national level to MP's, whilst the opposition is made to local representatives and councillors. As a result politicians from different authorities are pitted against each other to hammer out a solution or not. Is this really the best way to organise ourselves?
As a final example of what I mean, the article does quote comments from the local councillor, Jayne Cowen, including "I haven't had one person support the scheme", "at the end of the day, I feel strongly we need to support the residents". Of course she means the existing residents in her area, but no one is representing the residents of the proposed new development. That a shabby publication such as the 'Xtra' furthers this vocal imbalance by running the story without any thought for the beneficiaries only exacerbates the problem.
If you would like to comment on this post, please click 'comments' below.
Monday, 21 February 2011
To Have Or Have Not
Just a quick note on housing. I think I have mentioned on this blog before that housing, and its costs, is a growing social issue in the UK. It interests me because it is not debated as much as other issues of similar importance. Or at least those issues I deem to be of similar importance. It has been remarked for example, that unlike the press coverage regarding other domestic price increases, news of an increase in housing costs is greeted with cheer. Often the news of an increase in house prices is illustrated by the press with images of sunny days and riches. Rarely do I read any negative comment regarding house price increases.
I have more recently however, read numerous articles on how it is increasingly harder for younger people to get on the property ladder, but any solutions proposed are nearly always directed at 'The Banks' who are both an easy target and easily digestible for those who want their news in under 30 words. The true solution lies in plain and simple, supply and demand. Restrictions on planning and local campaigns against new builds limit supply to such an extent that prices rocket. I will come back to my more detailed suggestions for solving this problem at a later date. But to illustrate the problem at least, I came across a number of statistics today in the Q1 2011 Residential Property Focus by Savills Research which leapt of the page to me.
Yolanda Barnes, Head of Research, comments that "The coming decade could be seen as the beginning of a deep and permanent schism in housing between the equity haves and the equity have nots"
70% of the total value of UK housing stock is held as equity. Or conversely only 30% of the value of all the houses in the UK are mortgaged.
The UK housing stock was valued in 2000 as worth £2 trillion. In the past ten years it has more than doubled to £4.15 trillion today.
The over 45s hold around 83% of the equity held in housing, with the over 60s some 40%. By contrast the under 35s hold just 5%.
Just 5% of the properties, the ones over £500,000, account for 18% of the value of the stock.
The housing stock in both London and the South East is worth more than the total stock of Wales, the Midlands, and the whole of the North of England combined. Moreover the housing stock of London alone is worth more than combined value of the urban counties of the West Midlands, Greater Manchester, Merseyside, Tyne and Wear, South Yorkshire and West Yorkshire.
These stats taken alone are of course not the whole story, but some of the implications of what is going on in the market are quite striking. Residential property has doubled in price in the last ten years. That is a massive windfall to home owners, perhaps even epic. 83% of the equity in this incredible deal is held by the over 45s. Virtually none of this windfall, or appreciation, was or will be taxed. The average first time buyer now needs at least one years salary as a deposit for a house. It is also true almost everywhere, that renting £100,000 by mortgage, costs less (£5,000 @ 5%), than renting a property worth £100,000 (£6,000 @ £500p.m.), but only if you have equity.
There is a huge risk that by not confronting these issues, a whole generation of people, who are not fortunate enough to call on the 'Bank of Mum and Dad' for help with a deposit, will never own a property, and by that measure their children won't either.
If you would like to comment on this post, please click 'comments' below.
I have more recently however, read numerous articles on how it is increasingly harder for younger people to get on the property ladder, but any solutions proposed are nearly always directed at 'The Banks' who are both an easy target and easily digestible for those who want their news in under 30 words. The true solution lies in plain and simple, supply and demand. Restrictions on planning and local campaigns against new builds limit supply to such an extent that prices rocket. I will come back to my more detailed suggestions for solving this problem at a later date. But to illustrate the problem at least, I came across a number of statistics today in the Q1 2011 Residential Property Focus by Savills Research which leapt of the page to me.
Yolanda Barnes, Head of Research, comments that "The coming decade could be seen as the beginning of a deep and permanent schism in housing between the equity haves and the equity have nots"
70% of the total value of UK housing stock is held as equity. Or conversely only 30% of the value of all the houses in the UK are mortgaged.
The UK housing stock was valued in 2000 as worth £2 trillion. In the past ten years it has more than doubled to £4.15 trillion today.
The over 45s hold around 83% of the equity held in housing, with the over 60s some 40%. By contrast the under 35s hold just 5%.
Just 5% of the properties, the ones over £500,000, account for 18% of the value of the stock.
The housing stock in both London and the South East is worth more than the total stock of Wales, the Midlands, and the whole of the North of England combined. Moreover the housing stock of London alone is worth more than combined value of the urban counties of the West Midlands, Greater Manchester, Merseyside, Tyne and Wear, South Yorkshire and West Yorkshire.
These stats taken alone are of course not the whole story, but some of the implications of what is going on in the market are quite striking. Residential property has doubled in price in the last ten years. That is a massive windfall to home owners, perhaps even epic. 83% of the equity in this incredible deal is held by the over 45s. Virtually none of this windfall, or appreciation, was or will be taxed. The average first time buyer now needs at least one years salary as a deposit for a house. It is also true almost everywhere, that renting £100,000 by mortgage, costs less (£5,000 @ 5%), than renting a property worth £100,000 (£6,000 @ £500p.m.), but only if you have equity.
There is a huge risk that by not confronting these issues, a whole generation of people, who are not fortunate enough to call on the 'Bank of Mum and Dad' for help with a deposit, will never own a property, and by that measure their children won't either.
If you would like to comment on this post, please click 'comments' below.
Thursday, 17 February 2011
A sprinkling of Democracy
Ok, it's been a while since I wrote my last blog. I have decided that while I often read articles with which I agree, I don't want this blog to become Ant's News, repeating verbatim other peoples views. Also, when I find an article that articulates my views on any given topic, I often don't feel the need to then write about it. If someone has done the work for me then it is already out there for people to read. A problem however, is that I can overlook the big issues of the day which are well covered in the press and on the 'blogosphere'. So be it. Until someone kindly offers to employ me to articulate my viewpoint, this is a hobby and I shall stick to what ever takes my fancy.
Annoyingly, and a gripe of mine in itself, Welsh issues are not well covered in the broader media. This is not to say that I think Wales deserves special attention, far from it, but I worry that Welsh issues are not subject to the same rigorous level of scrutiny that national and international issues are subjected to. This could also be said of any region in the UK but as we have our own semi-legislature, semi-government, in the Welsh Assembly, we could be leaving the door open for semi-tyranny, or worse. As a more positive result however, it does provide me with a feast of issues where my views are not articulated elsewhere.
The Western Mail, a much flawed publication in my opinion but the only 'National Newspaper of Wales', has brought an interesting issue to my attention, and one that points exactly to my concern. A new law has been passed by the Assembly requiring ALL new homes built in Wales to be fitted with automatic fire sprinklers. Wow you say, I haven't heard of that. Well, I'd wager that even if you live in Wales your unlikely to have heard of, or been consulted on, this issue. The AM that introduced the idea, Labour AM Ann Jones, proudly states "Wales has just become the first country in the world to pass a law making sprinklers mandatory in all new homes". Knowing Wales reasonably well, such a bold statement causes me immediate pause because whilst we are a modern developed nation, we are not often the first in the world to do anything.
Firstly turning to the actual sprinkler issue, the paper states that the policy has the backing of Wales' three fire and rescue services and the National Fire Sprinkler Network, no surprises there. Supporters of the law claim "it could prevent up to 25 deaths a year and save the Welsh economy £128m at minimal cost to the building industry". I have not looked at the stats, and I state openly that my only source of information on this subject is a single article in what I have already said is a deeply flawed publication. But its all we've got!
Having said that, some thoughts have occurred to me. Up to 25 deaths a year. . . so we can safely say less than 25 houses a year. 25 houses at the average house price of £150,000 comes to £3.75m. There are of course other costs, the fire service, police, hospitals etc, but £128m?
Minimal cost to the building industry. . . of course the cost of installing the system will be passed on to the house buyer. Oh, and servicing the system, and dealing with any accidents when your mad uncle sets it off whilst playing twister at Christmas, and replacing it when it gets to old. Its a shame the public weren't asked to comment.
How much do these systems cost to install you ask? Each system is estimated to cost £5,000!!! Added help for all those first time buyers out there, who can't possibly afford to buy a house at the moment, save up an extra five grand while your at it!
I would also like to see the raw data for myself. My experience of home fires via the Welsh news is often that in most incidents where there are fatalities, there is inevitably more than one, meaning we are talking of even less actual incidents. They also often appear to occur more often in social housing. In terms of private dwellings I would guess we are talking about less than 5 incidents a year. Should the authorities decide its worth installing sprinklers in social housing, I bow to their expertise, but to mandate it on the rest of us seems over the top.
But what about the value of human lives Ant? In terms of the £128m figure we could for the sake of the exercise add in the victims future salaries as societies loss of productivity, but unless there is a rash of top earner home fires we are still a way off. I have not been callous enough to forget the 'human' loss. In terms of the non-quantifiable personal loss of losing a loved one, well, it simply can't be quantified. But what I will say is that fire prevention systems are available at your local DIY stores and if people value their loved ones safety enough to warrant it, they are free to fill their boots and improve their home fire safety. Given that I have never encountered such serious concern for fire safety, I assume I am right in thinking that the majority would believe this measure to be un-warranted.
This leads me back to my primary concern, is this process democratic? This law, like most the Assembly has the power to introduce, was required to be signed off by Westminster. The up coming referendum in Wales is precisely to end the requirement for UK Government sign off. Indeed the length of time it has taken to pass the sprinkler law is cited as an example of why this practice needs to be ended. I shudder to think what kind of 'debate' was had in Westminster, I mean if the Welsh are for it who are they to say no? But if they do support the measure, why are they not proposing it at a national level for the whole of the UK?
Ms Jones says that she does "not accept the idea that our laws are being packed off to London to be interfered with", again I'd love some details, sadly the Western Mail has none. Whilst the idea of the UK Government signing off Welsh issues seems a ludicrous state of affairs there is one upside. By 'packing our laws off to London' we have in effect a second chamber. At present the Welsh Assembly is a single chamber legislature, far from ideal and democratically unsound. By removing the need for national sign off, we are left with a potentially dangerous regional government, what is the Welsh for checks and balances anyway? What with the lack of consultation, media scrutiny, public awareness and with further reductions in the checks and balances of the current system proposed, this issue highlights the flaws in the current system.
As for the Welsh peoples enthusiasm for such a change and reduced oversight of government, we will have to wait and see. I could go on for days, literally days, on why devolution is a bad idea, but when our Assembly member's efforts are spent conjuring mad ideas such as our new sprinkler law I return to my opening comments, someone is already fighting this battle for me!
If you would like to comment on this post, please click 'comments' below.
Annoyingly, and a gripe of mine in itself, Welsh issues are not well covered in the broader media. This is not to say that I think Wales deserves special attention, far from it, but I worry that Welsh issues are not subject to the same rigorous level of scrutiny that national and international issues are subjected to. This could also be said of any region in the UK but as we have our own semi-legislature, semi-government, in the Welsh Assembly, we could be leaving the door open for semi-tyranny, or worse. As a more positive result however, it does provide me with a feast of issues where my views are not articulated elsewhere.
The Western Mail, a much flawed publication in my opinion but the only 'National Newspaper of Wales', has brought an interesting issue to my attention, and one that points exactly to my concern. A new law has been passed by the Assembly requiring ALL new homes built in Wales to be fitted with automatic fire sprinklers. Wow you say, I haven't heard of that. Well, I'd wager that even if you live in Wales your unlikely to have heard of, or been consulted on, this issue. The AM that introduced the idea, Labour AM Ann Jones, proudly states "Wales has just become the first country in the world to pass a law making sprinklers mandatory in all new homes". Knowing Wales reasonably well, such a bold statement causes me immediate pause because whilst we are a modern developed nation, we are not often the first in the world to do anything.
Firstly turning to the actual sprinkler issue, the paper states that the policy has the backing of Wales' three fire and rescue services and the National Fire Sprinkler Network, no surprises there. Supporters of the law claim "it could prevent up to 25 deaths a year and save the Welsh economy £128m at minimal cost to the building industry". I have not looked at the stats, and I state openly that my only source of information on this subject is a single article in what I have already said is a deeply flawed publication. But its all we've got!
Having said that, some thoughts have occurred to me. Up to 25 deaths a year. . . so we can safely say less than 25 houses a year. 25 houses at the average house price of £150,000 comes to £3.75m. There are of course other costs, the fire service, police, hospitals etc, but £128m?
Minimal cost to the building industry. . . of course the cost of installing the system will be passed on to the house buyer. Oh, and servicing the system, and dealing with any accidents when your mad uncle sets it off whilst playing twister at Christmas, and replacing it when it gets to old. Its a shame the public weren't asked to comment.
How much do these systems cost to install you ask? Each system is estimated to cost £5,000!!! Added help for all those first time buyers out there, who can't possibly afford to buy a house at the moment, save up an extra five grand while your at it!
I would also like to see the raw data for myself. My experience of home fires via the Welsh news is often that in most incidents where there are fatalities, there is inevitably more than one, meaning we are talking of even less actual incidents. They also often appear to occur more often in social housing. In terms of private dwellings I would guess we are talking about less than 5 incidents a year. Should the authorities decide its worth installing sprinklers in social housing, I bow to their expertise, but to mandate it on the rest of us seems over the top.
But what about the value of human lives Ant? In terms of the £128m figure we could for the sake of the exercise add in the victims future salaries as societies loss of productivity, but unless there is a rash of top earner home fires we are still a way off. I have not been callous enough to forget the 'human' loss. In terms of the non-quantifiable personal loss of losing a loved one, well, it simply can't be quantified. But what I will say is that fire prevention systems are available at your local DIY stores and if people value their loved ones safety enough to warrant it, they are free to fill their boots and improve their home fire safety. Given that I have never encountered such serious concern for fire safety, I assume I am right in thinking that the majority would believe this measure to be un-warranted.
This leads me back to my primary concern, is this process democratic? This law, like most the Assembly has the power to introduce, was required to be signed off by Westminster. The up coming referendum in Wales is precisely to end the requirement for UK Government sign off. Indeed the length of time it has taken to pass the sprinkler law is cited as an example of why this practice needs to be ended. I shudder to think what kind of 'debate' was had in Westminster, I mean if the Welsh are for it who are they to say no? But if they do support the measure, why are they not proposing it at a national level for the whole of the UK?
Ms Jones says that she does "not accept the idea that our laws are being packed off to London to be interfered with", again I'd love some details, sadly the Western Mail has none. Whilst the idea of the UK Government signing off Welsh issues seems a ludicrous state of affairs there is one upside. By 'packing our laws off to London' we have in effect a second chamber. At present the Welsh Assembly is a single chamber legislature, far from ideal and democratically unsound. By removing the need for national sign off, we are left with a potentially dangerous regional government, what is the Welsh for checks and balances anyway? What with the lack of consultation, media scrutiny, public awareness and with further reductions in the checks and balances of the current system proposed, this issue highlights the flaws in the current system.
As for the Welsh peoples enthusiasm for such a change and reduced oversight of government, we will have to wait and see. I could go on for days, literally days, on why devolution is a bad idea, but when our Assembly member's efforts are spent conjuring mad ideas such as our new sprinkler law I return to my opening comments, someone is already fighting this battle for me!
If you would like to comment on this post, please click 'comments' below.
Thursday, 3 February 2011
Thou Shalt Watch this Video
If you would like to comment on this post, please click 'comments' below.
Friday, 12 November 2010
Hayek vs. Keynes
Sometimes you just need to rap.
(please excuse the useless intro)
If you would like to comment on this post, please click 'comments' below.
(please excuse the useless intro)
If you would like to comment on this post, please click 'comments' below.
Tuesday, 2 November 2010
The Great Debate
Unless there are undiscovered WWII Veterans yet to be found on remote islands around the UK, there can't be anyone in Britain that hasn't heard at least some of The Great Debate currently raging about the government’s planned cuts and, more generally, deficit reduction. In fact, the debate is not simply confined to the shores of 'Blighty'. Interested people will have noticed that deficit reduction is a hot topic the world over, especially in the West.
I have yet to blog on the cuts in general, although I have passed comment on child benefit which forms a tiny part of the overall package of cuts currently proposed. This is for two reasons. The first being that there is so much existing commentary on this subject that anyone interested has not been short of material. The second is that this debate is not easy to summarise. There are so many facets, and so many differing opinions to this debate that trying to take on the whole subject in one go would likely result in a life's work, and for some academics it almost certainly will.
However, I recently received a request to do exactly that (a doff of my proverbial hat to the supportive individual who made it), and so with some trepidation I shall give it my best shot. Wish me luck! I will try my best to keep on point as the deficit reduction debate is full of wormholes which can lead one into a series of digressions, which I believe could leave the author experiencing a psychological break, or at the least a migraine.
To my mind, this debate is comprised of two main elements which, taken together, only serve to confuse. The first is primarily an economic question: what should be done about large government deficits? The second a more political debate: if reducing the deficit, what should be cut?
Turning to the first point (should the deficit be cut?), we must start with an admission. We are very much in uncharted territory in the current predicament; humans do not have a textbook for the current economic situation. There is no right answer. Modern economic history provides a number of examples of situations similar to ours, or involving some of the problems, but none that are good enough to definitively point the way. As Mark Twain said, history never repeats itself, it rhymes.
In the 1930s Keynes developed an economic understanding suitable for his times and not too dissimilar from our own, including lessons which have subsequently been accepted into general economic thought. More recently a more laissez-faire approach was developed revolving around the concept that 'the market is always right'. After the banking crisis of 2008 some were quick to proclaim that Capitalism was dead. However, whilst some of the modern laissez-faire thinking has been debunked, real lessons were also gleaned that will endure current criticism and go on to form accepted economic thought. The bases of these two schools of thought largely describe the two sides of this particular argument. The Keynesians who warn of deficit reduction too severely, or too quickly, and the Free Marketeers who support balanced budgets and deficit reduction. I fear even this is too simplistic a description but I'll run with it for now.
Economists in the US, the UK, and in Europe have been debating furiously for the last two years on the right course of action, and I'm afraid they are still debating even as I write. Often economic lessons are only understood some time after the fact, when sufficient data exists to resolve the debate either way. Nonetheless, we must move forward, and can't wait for economists to agree, if they ever will. The UK has decided to reduce the deficit, and as quickly as possible without tipping us back into recession. Deficit reduction was proposed by all political parties going into the recent election. Therefore, I think I can say with a reasonable amount of confidence that eliminating a government’s deficit is generally accepted to be a good thing. The question really is when do we cut? And how quickly?
For anyone still wondering why we need to cut at all, and whether this represents a significant reduction in the State, backed by ideological reasons or any other, the following chart showing both former and projected government expenditure illustrates in correct proportion the size of the problem.
(please note that the 'cost' of bailing out the banks is not included in these figures!)
As is evident, government expenditure from circa 2005 onwards experienced an almost unprecedented growth above trend. One should remember that this growth in budget was not really debated at the time. I suspect that had vast new government programmes been commissioned, the budget implications would have been raised, but in fact much of this additional spending was pumped into existing programmes in the form of better pay for civil servants, increased welfare payments, and significant capital expenditure. Some would say that existing programmes were historically underfunded which this chart also supports, but between 1997 and 2005 this shortfall was rectified.
The effects of this above trend growth are too numerous to detail but must include a contribution to the bubble which caused the crisis, a factor not often cited in media commentary. The government deficit is simply a result of a government spending every penny of its inflated tax returns, only to be left short when the real tax revenues are revealed after the crisis. In such a circumstance it seems only logical to suggest that the government is going to have to reduce its expenditure at some point to match its income.
The Conservatives believe that taking the pain as quickly as possible, without crippling the patient, is the best medicine. This certainly sounds like a reasonable position and given that we are now competing in a globalised marketplace there are advantages to a swift return to health. However, Keynes taught us that cutting government expenditure can be self defeating. No one knows if the Tory medicine will cripple the patient, only time will tell. But at present the economy seems to have taken the news without going into a nosedive. Of course the opposition argue that economic data can lag behind announcements, and that given the seriousness of the current problem, more caution would be wise. This sounds an equally reasonable point and only with hindsight will we know which approach would have been the better choice.
This leads me on nicely however to the second problem: if cutting expenditure, what is to be cut? We encounter here my main objection to the British voices currently calling for caution. To oppose a cut, one must believe the expenditure being cut is already useful. If you can't defend the expenditure, your only real position vis-à-vis stimulating the economy must be to agree but insist that the savings are reinvested in more useful government expenditure rather than reducing the deficit. I am still aghast that some have suggested that now is the wrong time to cut 'waste'!!! Is there ever a wrong time to cut waste? This sort of thinking is the worst example of our debate's two elements crossing and producing a twisted outcome, and an example of the confusion I warned of earlier.
If we are to reinvest savings in the quest for economic stimulus, Keynes comes into his element. Keynes found that capital expenditure had a multiplier effect on stimulating the economy and could help kick-start an ailing economy. For example, paying a doctor an increased salary does not stimulate the economy because any additional money paid to the doctor has to be taken from someone else in the form of taxes. However, paying a builder to construct a new motorway achieves the same zero sum wage transfer, but also provides society with a new road!
The Keynesians therefore should be arguing for reduced non-capital expenditure in favour of increased spending on new capital projects, such as new government buildings, transport infrastructure, and other public works. This is not where we find British opposition arguments, however. Amazingly we find arguments against cutting child benefit for the top 15% of income earners on the basis that it will undermine the economy, not a debate as to whether the top 15% should be getting benefits in the first place. That the left makes this argument is an added bizarre dimension, one that I believe can only be caused by the complexity of this issue.
Of the details of the cuts so far announced, of which there have been few, I have yet to hear many with which I disagree. Housing benefit limited to £400 per week, my mortgage is only £365 per month!, benefits removed from those who don't need them, a two year public sector pay freeze, raising the retirement age, a leaner armed forces, and a market for higher education. These all sound like reasonable ideas to me, whose merits would certainly be worthy of a discussion whether we needed to make cuts or not. I am disappointed by some of the capital projects cut - I mentioned that building new schools and infrastructure would have added benefits at a time like this. At least the government has acknowledged this by retaining some projects like the M25 expansion, and Crossrail, albeit they seem a little London-centric.
Until the opposition can argue how better they would spend the money to ensure a strong economy, it seems prudent at least to take the opportunity to seek out ineffective or wasteful government expenditure and to reduce the deficit, safe in the knowledge that we can always spend it if the economy starts to bomb. This is why the Tories have made such progress, their position whilst possibly not entirely correct, is not currently opposed by an equally credible argument. Cutting less quickly does nothing to stimulate the economy, it only reduces the pain in the short run. The government should be careful in this respect, however, and have plans ready for increasing expenditure if the pain becomes too acute.
If you take anything away from this blog, I hope it’s that when reading commentary on deficit reduction you can identify the two differing arguments: namely whether in economic terms the deficit should be cut or politically whether the cut in question is the correct use of government spending. The two are often confused with one another, and by clearly separating them we can see the inconsistencies in some popular arguments.
If you are interested in more information I can recommend Stephanie Flanders blog for the BBC which I think explains some of the numbers in more detail and a collection of her recent blogs explain this subject further.
If you would like to comment on this post, please click 'comments' below.
I have yet to blog on the cuts in general, although I have passed comment on child benefit which forms a tiny part of the overall package of cuts currently proposed. This is for two reasons. The first being that there is so much existing commentary on this subject that anyone interested has not been short of material. The second is that this debate is not easy to summarise. There are so many facets, and so many differing opinions to this debate that trying to take on the whole subject in one go would likely result in a life's work, and for some academics it almost certainly will.
However, I recently received a request to do exactly that (a doff of my proverbial hat to the supportive individual who made it), and so with some trepidation I shall give it my best shot. Wish me luck! I will try my best to keep on point as the deficit reduction debate is full of wormholes which can lead one into a series of digressions, which I believe could leave the author experiencing a psychological break, or at the least a migraine.
To my mind, this debate is comprised of two main elements which, taken together, only serve to confuse. The first is primarily an economic question: what should be done about large government deficits? The second a more political debate: if reducing the deficit, what should be cut?
Turning to the first point (should the deficit be cut?), we must start with an admission. We are very much in uncharted territory in the current predicament; humans do not have a textbook for the current economic situation. There is no right answer. Modern economic history provides a number of examples of situations similar to ours, or involving some of the problems, but none that are good enough to definitively point the way. As Mark Twain said, history never repeats itself, it rhymes.
In the 1930s Keynes developed an economic understanding suitable for his times and not too dissimilar from our own, including lessons which have subsequently been accepted into general economic thought. More recently a more laissez-faire approach was developed revolving around the concept that 'the market is always right'. After the banking crisis of 2008 some were quick to proclaim that Capitalism was dead. However, whilst some of the modern laissez-faire thinking has been debunked, real lessons were also gleaned that will endure current criticism and go on to form accepted economic thought. The bases of these two schools of thought largely describe the two sides of this particular argument. The Keynesians who warn of deficit reduction too severely, or too quickly, and the Free Marketeers who support balanced budgets and deficit reduction. I fear even this is too simplistic a description but I'll run with it for now.
Economists in the US, the UK, and in Europe have been debating furiously for the last two years on the right course of action, and I'm afraid they are still debating even as I write. Often economic lessons are only understood some time after the fact, when sufficient data exists to resolve the debate either way. Nonetheless, we must move forward, and can't wait for economists to agree, if they ever will. The UK has decided to reduce the deficit, and as quickly as possible without tipping us back into recession. Deficit reduction was proposed by all political parties going into the recent election. Therefore, I think I can say with a reasonable amount of confidence that eliminating a government’s deficit is generally accepted to be a good thing. The question really is when do we cut? And how quickly?
For anyone still wondering why we need to cut at all, and whether this represents a significant reduction in the State, backed by ideological reasons or any other, the following chart showing both former and projected government expenditure illustrates in correct proportion the size of the problem.
(please note that the 'cost' of bailing out the banks is not included in these figures!)
As is evident, government expenditure from circa 2005 onwards experienced an almost unprecedented growth above trend. One should remember that this growth in budget was not really debated at the time. I suspect that had vast new government programmes been commissioned, the budget implications would have been raised, but in fact much of this additional spending was pumped into existing programmes in the form of better pay for civil servants, increased welfare payments, and significant capital expenditure. Some would say that existing programmes were historically underfunded which this chart also supports, but between 1997 and 2005 this shortfall was rectified.
The effects of this above trend growth are too numerous to detail but must include a contribution to the bubble which caused the crisis, a factor not often cited in media commentary. The government deficit is simply a result of a government spending every penny of its inflated tax returns, only to be left short when the real tax revenues are revealed after the crisis. In such a circumstance it seems only logical to suggest that the government is going to have to reduce its expenditure at some point to match its income.
The Conservatives believe that taking the pain as quickly as possible, without crippling the patient, is the best medicine. This certainly sounds like a reasonable position and given that we are now competing in a globalised marketplace there are advantages to a swift return to health. However, Keynes taught us that cutting government expenditure can be self defeating. No one knows if the Tory medicine will cripple the patient, only time will tell. But at present the economy seems to have taken the news without going into a nosedive. Of course the opposition argue that economic data can lag behind announcements, and that given the seriousness of the current problem, more caution would be wise. This sounds an equally reasonable point and only with hindsight will we know which approach would have been the better choice.
This leads me on nicely however to the second problem: if cutting expenditure, what is to be cut? We encounter here my main objection to the British voices currently calling for caution. To oppose a cut, one must believe the expenditure being cut is already useful. If you can't defend the expenditure, your only real position vis-à-vis stimulating the economy must be to agree but insist that the savings are reinvested in more useful government expenditure rather than reducing the deficit. I am still aghast that some have suggested that now is the wrong time to cut 'waste'!!! Is there ever a wrong time to cut waste? This sort of thinking is the worst example of our debate's two elements crossing and producing a twisted outcome, and an example of the confusion I warned of earlier.
If we are to reinvest savings in the quest for economic stimulus, Keynes comes into his element. Keynes found that capital expenditure had a multiplier effect on stimulating the economy and could help kick-start an ailing economy. For example, paying a doctor an increased salary does not stimulate the economy because any additional money paid to the doctor has to be taken from someone else in the form of taxes. However, paying a builder to construct a new motorway achieves the same zero sum wage transfer, but also provides society with a new road!
The Keynesians therefore should be arguing for reduced non-capital expenditure in favour of increased spending on new capital projects, such as new government buildings, transport infrastructure, and other public works. This is not where we find British opposition arguments, however. Amazingly we find arguments against cutting child benefit for the top 15% of income earners on the basis that it will undermine the economy, not a debate as to whether the top 15% should be getting benefits in the first place. That the left makes this argument is an added bizarre dimension, one that I believe can only be caused by the complexity of this issue.
Of the details of the cuts so far announced, of which there have been few, I have yet to hear many with which I disagree. Housing benefit limited to £400 per week, my mortgage is only £365 per month!, benefits removed from those who don't need them, a two year public sector pay freeze, raising the retirement age, a leaner armed forces, and a market for higher education. These all sound like reasonable ideas to me, whose merits would certainly be worthy of a discussion whether we needed to make cuts or not. I am disappointed by some of the capital projects cut - I mentioned that building new schools and infrastructure would have added benefits at a time like this. At least the government has acknowledged this by retaining some projects like the M25 expansion, and Crossrail, albeit they seem a little London-centric.
Until the opposition can argue how better they would spend the money to ensure a strong economy, it seems prudent at least to take the opportunity to seek out ineffective or wasteful government expenditure and to reduce the deficit, safe in the knowledge that we can always spend it if the economy starts to bomb. This is why the Tories have made such progress, their position whilst possibly not entirely correct, is not currently opposed by an equally credible argument. Cutting less quickly does nothing to stimulate the economy, it only reduces the pain in the short run. The government should be careful in this respect, however, and have plans ready for increasing expenditure if the pain becomes too acute.
If you take anything away from this blog, I hope it’s that when reading commentary on deficit reduction you can identify the two differing arguments: namely whether in economic terms the deficit should be cut or politically whether the cut in question is the correct use of government spending. The two are often confused with one another, and by clearly separating them we can see the inconsistencies in some popular arguments.
If you are interested in more information I can recommend Stephanie Flanders blog for the BBC which I think explains some of the numbers in more detail and a collection of her recent blogs explain this subject further.
If you would like to comment on this post, please click 'comments' below.
Subscribe to:
Comments (Atom)