Wednesday, 30 May 2012

Alan Milburn, Tit.

Social Mobility, a 'Motherhood & Apple Pie' issue, but which boils down, in practice, to "what sort of school did you go to?" about which an astonishing amount of cant is spoken.

The Labour narrative is that a self-selecting caste of Public Schoolboys deny entry to the upper echelons of public and business life. Snobbery and the old-school tie represent impenetrable barriers to the working class, however talented". While Labour accept upward social mobility happens, it is a near totemic belief in the movement that the vicious class enemy must be watched, lest they slip back to their evil ways of only hiring the sons of people with whom they play Golf / Rugger /Polo / Bloodsports (delete according to taste).

The Tories think social mobility is due to either Grammar Schools or Thatcher's banking reforms.

There are intelligent views on social mobility, like Chris Dillow at Stumbling and Mumbling whose position on the subject can be characterised as Marxist High Tory is one worth reading.

For some reason only known to David Cameron, Alan Milburn was asked to prepare a report on Social Mobility which contains the absolutely astonishing idea that I should declare whether or not I received Free School Meals to a putative employer. the Company should then collect this information and transmit it to Government. Of couse you already disclose your education to your employer (you submitted a C.V. didn't you?) But Alan Milburn seems to think this should then be collected, for audit by some Government authority. OfSnob? OfPosh? To what end? A maximum number of public schoolboys? A public register of people called 'Rupert'? Quotas for same? "Naming and Shaming" for companies whose directors went to Charterhouse together?

I cannot see any sane policy which could possibly fall out from these data. So why collect the information? Just let people be. People fron similar backgrounds go into similar employment. The best predictor of what you do, is what your parents do. They're your role models and frame your idea of 'normal'. So this should not be seen as a problem, it's just people prefer the company of people like them and so people from similar backgrounds tend to make similar choices. Politicians need to understand some WANT to be soldiers, nurses or builders. And thank goodness, otherwise the bayonets won't be fixed, the patients tended or houses built. Not everyone WANTS to be a Lawyer, if they did, we'd be America. Stop putting people in little identity boxes so they can be counted. The very act of counting them will strengthen in-group bias by reinforcing trivial differences between individuals into impenetrable barriers. Stop collecting data whose only existence is so Government can homogenise society in its own image. Stop assuming that any difference in outcome between groups is down to prejudice. It might be down to choices. Stop telling people who don't want to be Lawyers that they're shit.

One of my political heroes, Sir John Cowperthwaite who ran Hong Kong banned officials from collecting economic data "lest some damn fool try to do something about it". Hong Kong was the Fastest Growing economy for the second half of the 20th Century. If you leave them alone, people tend to make better choices than Government.

Today's "Fuck-Off!" moment

Everyone who listens to BBC Radio 4's Today program will know what the "Fuck off!" moment is. It is that moment when a story ascends its own bowel in a display of utter political-class inanity. For me, it is generally the second profanity of the day (the first thing I check being Viz Magazine's App, the Daily Profanity whence the title of this blog post). This explusion usually occurs within the first few minutes of listening to the radio.

Today I was running into work, listening to 'Today' when this story nearly caused me to jump under the bus. It's one of those moments when you realise the political class is so far from understanding the concerns of the people that you feel we're doomed. The politicians neither understand the limits of their power, nor understand appropriate causes on which to deploy it.

All school children should take part in compulsory body image and self-esteem lessons, MPs have recommended.
It comes after an inquiry by the All Party Parliamentary Group on body image heard evidence that more than half of the public has a negative body image.
Fuck off. I yelled to the confusion of the dog-walking lady nearby, to whom I apologise. FUCK OFF! What possible good can "body image" lessons for do? The fat kids will still be fat, while the thin ones will be forced to sit in a lesson which they feel irrelevant to them, and will give them another reason to persecute fatty-fatty fat-fat sitting at the front. Fatty's mum will still be feeding him chips, while little organza is brought up on organic hummus. There's nothing that can be done by Government about the dice roll of family cooking practices.

If you're not happy with your body - 50% of us aren't, apparently - have a salad and go for a run. You know what to do, and it really isn't any of the Government's business. Apart from encouraging from a bit of PT in schools that is, but that's offputting to girls and discriminatory to the overweight, so playing fields have been sold off.

The bigger problem is that the kind of levers Government can pull simply aren't appropriate for the problem they're trying to solve. MPs should have seen the report they're discussing and concluded there's little, if anything they can do. Body-image classes are at best a useless waste of time and teaching resources, and at worst appallingly counterproductive.

Yet the politicians, egged on by Westminster-village busybodies in the think-tanks and "third-sector", dutifully reported on by the BBC go on creating these stupid, idiotic announcements, and the people feel harassed, over governed and patronised. Worse, the politicians have real problems to solve, and this niff-naff and trivia seems like fiddling while Rome burns.

Politicians: you want to know why you're held in utter contempt. Listen to your constituents listen to you on the radio. Work out what makes them say "just FUCK OFF!" out loud at the radio. You'll find it's things like this. What we eat & drink for example is simply none of your business. Go Away. Leave us alone. FUCK OFF.

Tuesday, 29 May 2012


So, the Coalition Government u-turned on the pasty tax and caravan tax, "costing" the Government £65m a year, or put another way, saving £1 per person per year in taxes. That's 1p every 4 days, for each of us. This is Front page news.

They clearly should have consulted on these measures, which while not of great import to many, in Cornwall, which has achieved protected status for the Cornish Pasty, or Hull where static caravans are made, these are big issues.

However, having taken the opprobrium for these measures, the Coalition, with its absolutely inept media management, has managed to bring an absurd story back to the headlines in a display of spectacular incompetence. It is staggering they managed to avoid a single headline about taking 2m low-waged out of tax. Little makes it into the press about the welfare or education reforms, which are going brilliantly. So brilliantly, they're being completely ignored. Meanwhile precisely none of the fear-mongering of the left about people's credit cards being swiped before operations as a result of the "privatisation" of the NHS have come to pass, and these are going well too. (Yes the doctors are screaming and shouting, but they did too well under the last Government, and should shut up, in case anyone learns how much they earn...).

The British government is cutting real spending by around 2% and the Government has cut the deficit by a quarter since it came in. YES, ignorant right-wing bores, we're borrowing more than ever. To point this out is to reveal that you don't understand the implications of the difference between 'debt' and 'deficit'. The Coalition is agreed on a steady de-leveraging of the economy. This deleveraging, public, private, corporate is the fastest in recorded history. And during this deleveraging, growth has been flat. Yes, ignorant left-wing bores, we could, possibly, have avoided the "double-dip" by spending more. Do you REALLY think that's in the best long-term interests of the UK to manipulate headlines using fiscal policy? Oh, and by the way, 7.5% deficit is "stimulus" in anyone's book, not "austerity". The cuts are not "too far too fast" and anyone who says it is clearly thinks a 10% deficit is sustainable, which marks you out as a window-licking moron with shit-for-brains.

Despite a rising workforce unemployment hasn't risen much. 300,000 or so jobs have been lost in the public sector, and nearly 700,000 jobs gained in the private. Indeed, much of the rise in unemployment can be put down to a change in the way it's calculated.

It is clear the UK's fiscal position is improving fast, and this will eventually feed into investment, when confidence returns. Then growth, real growth, not the debt-financed public-sector inflation of the Brown years will happen. (No-one was saying this at the time? I was). The UK, as Keynesians will tell you is operating below its capacity. Some argue that the Government should step in to fill this output gap with more borrowing. I think this is bonkers, as I've laid out before. Big deficits carry their own massive risks. Labour spent all the stimulus money to inflate the boom. Sorry.

On substantially all the big issues however, the Government's broadly right. Contrast with the last Labour government. Whilst they had the detail nailed down, their economic policy - running big deficits every year during a boom simultaneously with the biggest rise in taxation in peace-time history, taking spending from 37% of GDP in 2000 to over 50% in 2010, was insanely irresponsible. Yet for much of this, the one-eyed fuckwit in charge was described as the "Iron Chancellor". However, unless the government gets its act together on the the detail, there won't be a second term, and Labour will get the benefit of the policies listed above, just as Brown was able to spend the savings built up under Major and enjoy the fruits of Thatcher's reforms.

This "omnishambles" is Niff-Naff and Triva. And you're falling for it. Left and right - you believe the cuts are "savage" or they're not happening at all. The simple fact is we have a government intent on leaving the country better off, without thinking about their short-term popularity. For this, I admire them. But I despair, I really do, about their castrophic media management!

Friday, 25 May 2012

"A Price Worth Paying"

In Wednesday's Prime Minister's Questions, Ed Miliband led with the Beecroft report (anyone got a link to the final published report?) into employment law, focusing in on one phrase

"some people may be dismissed simply because their employer doesn't like them, but that is a price worth paying...".
Adrian Beecroft may be a successful entrepreneur and (as is spat through clenched teeth by Labour) venture capitalist, but he clearly has no comprehension of the resonance of that phrase within the Labour movement. After Margaret Thatcher said unemployment was a "price worth paying" to bring down inflation, this has been a standard debating tic you'll hear over and over whenever you talk economics with a lefty.

Watch miliminor in the commons on Wednesday. He's like a fifth form debater who thinks he's won because he's able to deploy his favourite sound-bite. Cameron deals with it well enough, but the Labour benches felt very smug and happy nonetheless - deploying "price worth paying" was like giving the pigs behind him their swill.

To me though, this line belies the immaturity at the heart of left-wing economics: a refusal to accept the existence of trade-offs. If you increase employment rights, you increase the risk and cost of hiring, therefore you increase unemployment. Taken to its extremes, you get Italy or Spain, where half the workers are generously protected insiders and everyone else is struggling to find any jobs at all. Any lever pulled by Government in the economy will have positive and negative effects. High public spending tends (the relationship appears to be small but certainly significant) to reduce growth over the long term. The higher the debt burden, the greater the effect on Growth, especially when it gets much above 100% of GDP. Is future stagnation a "price worth paying" for public spending now? Is inflation which lays waste living standards, a price worth paying for temporary full employment?

Taken to its extremes, you get the belief that if only the Government spent and borrowed more, we could avoid recessions entirely. However in open economies (like the UK is one of the most open) with high debt burdens (The UK's debt burden is about average for a developed nation - which is to say 'high') and a floating currency (like the UK) "stimulus" spending doesn't work very well. So this belief in "growth" or "austerity" as a binary choice is, of course, nonsense. Of course, every Government, anywhere and always would generate growth, if it could. You can keep inflating the balloon with debt, and eventually it goes 'POP!'. Of course, Labour likes to pretend that you can have your high spending and job protection along with (debt financed) growth. They just hope the 'POP!' happens on someone else's watch.

Adrian Beecroft is arguing for compensated no-fault dismissals, reducing the risk (and perhaps more importantly the PERCEIVED risk) of hiring, in order to stimulate the job market. At present, if you want to get rid of someone, you have to jump through a number of hoops with tribunals and so-on and as a result, borderline staff are dismissed at 11 months BEFORE they get any rights. Therefore they don't get a second chance. Because all this costs money, management time and so on, people, at the margin are not hired. I accept that at present, firing people is pretty easy, but it still requires cost, time and unpleasantness. Rather than paying for a tribunal and lawyer, wouldn't the person getting fired rather have the money spent compensating him?
a notice period of one week for every year of employment up to a maximum of twelve weeks together with a tax-free payment related to the employee’s salary, age and years of service, up to a maximum of £12,000. This process and level of compensation would be applied to Compensated No Fault Dismissal unless the employee’s contract of employment would give a higher payment in those circumstances. While the principle of matching the payment for redundancy (which is not the fault of the employee) might seem generous for dismissal for poor performance (which arguably is usually the fault of the employee), such generosity would reward loyalty and would make the proposal more acceptable to employees and unions.
Isn't that better than arguing the toss in a tribunal which the employee almost always loses? And imagine winning - you return to an job in which the employer has made it perfectly clear he doesn't want to be employing you.  Do you really want to work (especially in a small company) with someone who "simply doesn't like you"? Better all round if companies can employ whomsoever they want. "Fairness" involving some money up front (I would actually argue for more generous terms than the above) would be better than miserable, protected, unprofitable employment?

So what of the effect on the job market as a whole? The evidence suggests the rate of people losing their jobs is rather constant over the business cycle. It is the rate of hiring that affects unemployment rates, not the number of people getting fired. Anything to help people hire will help bring down unemployment. At the margin, especially in tough economic times, every little helps. The best job protection is a tight and dynamic labour market. No fault, compensated dismissal will reduce the risk, and perceived risk especially to small employers of hiring staff. No-one should pretend this is a magic bullet, but "Nasty" it is not.

So. The question I would ask Ed Miliband is "Is unemployment a "price worth paying" for job security?".

Tuesday, 22 May 2012

Facebook's IPO.

I called the Facebook IPO 'the greatest short in history'. Very simply the stock is priced at insane multiples. I don't care how fast something's growing. Facebook tradung is trading on 19 times turnover and 68 times 2011 earnings (following it's fall below the offer price to $34), down from just under 100 times in the heady, underwritten, first few minutes of trading in Facebook shares.

Laughing because he sold his stock at $38 AND kept control of the company.

It may know the social networks of about 1,000,000,000 people, but laws in the countries where the richest half live prevent Facebook exploiting that information in any meaningful ($) way. So Facebook is just another advertising platform, one which doesn't work very well on the bits of the market, mobile, which are growing fast; and nor can it drive revenue from office workers or anyone with an ad-blocker.

In 2011, Facebook generated $3.7bn of which 85% was advertising, and the vast majority of the rest was fees from Zynga, who are repsonsible for Farmville amongst others - (is that the one where someone throws a sheep at you?). It's not as if Facebook adverts are particularly effective. General Motors found themselves less than impressed about the click-through rate from Facebook ads and don't advertise there any longer. Neither is the fee revenue secure Zynga has been trying to move its games off the Facebook platform, in order to capture more of the revenue, so I can't see this as a stable revenue stream either.

Previous internet successes have been selling things - Amazon; providing games: zynga; taking a cut of other people selling things - Ebay; or providing a service - web hosting, consultancy etc and so the internet becomes just another channel, not a fundamental part of the business. Facebook is searching for the holy Grail of the internet - monetising eyeballs. The people who've been doing this with print - newspapers - for a couple of centuries have so far been unable to monetise eyeballs online. Only Google has managed this so far, and it has broadly done so unobtrusively by providing adverts WHEN PEOPLE ARE LOOKING FOR SOMETHING. If google can put the right ad under your nose in response to your search, Google has helped you find what you need. Facebook, on the other hand expects you to be interested in shampoo WHEN YOU'RE TALKING TO YOUR FRIENDS.

This simply ain't going to work, however many billions are connected, they are going to seek to ignore ads. Facebook may then try to make the ads more noticable, which in practice means manipulative and obtrusive. And those billions connected on Facebook may not stick around to be sold to when another social network comes along. It's true, teens spend 15% of their online time on Facebook. But most heavy Facebookers I know have already migrated to Twitter, which doesn't change its look every 5 minutes and doesn't bombard you with adverts. The net-natives are leaving. The cool kids will follow them. When the cool kids have gone, everyone else will eventually follow. Like they did with MySpace, Friends Reunited, Bebo and every other social network to come and go.

And the market, this time appears to have learned the lesson of the .com boom. Facebook is profitable, with growing revenue streams, and isn't without value. Because the company is so young and growing so fast, a high multiple is warranted. However The investment banks, it appears have got caught up in the hype, and looked at the potential, without pricing the risks. And because the decentralised decision-maker is better than the experts, the market is going to see that the underwriting investment banks lose a lot of money. Possibly even more than they earned in fees.

Google, by comparison is trading on 21 times 2011 earnings. Apply that multiple to Facebook which is growing faster, but has less security of eyeball, and lower ad-effictivenessand you have a shareprice of around $10-12. Apply extra caution about the corporate Governance which sees an untried 27-year old retain 57% of the voting rights. This would make Facebook a $20-odd bn company, not a $100bn one. Still big, but get real, people. Buy* facebook below $12 a share.

*This does not constitute financial advice, and you should seek advice from a professional advisor. Stocks & the income on them can go down, and may not be suitable for your needs. Past performance is not a guide to the future, yadayadayada. If you've read to the bottom of this disclaimer, you need to chill out & get a life and I recommmend you don't invest in stocks, but take a trip to Amsterdam where you can get laid for €30 and have a big fat doobie afterwards.

Monday, 21 May 2012

The Obsessions of the Tory Right

1) Gay Marriage. I understand the theological reasons for a christian to be against gay marriage: a few passages in the clearly confused & frustrated St Paul's epistles to Timothy. I am still not sure why anyone gives a shit about this. I like George Carlin's advice to people who disapprove of Gay Marriage: Don't marry a Gay. Don't give ammunition to Labour who will be credibly painting you as a homophobe.

2) Grammar Schools. Yes, I understand the destruction of the Grammar schools meant clever working class kids don't get a leg up now. However I am not sure sorting the sheep from the goats at 11 is fair or equitable. 'Free schools' will achieve most of the positive effects of Grammar schools, without condemning two thirds of the population to sub-standard secondary moderns. The people who shout loudest for Grammar schools are the people who assume their kids will get into Grammar schools, and can pay for private education if they don't. Instead of hankering after a system which is not coming back, get behind Gove's reforms.

3) Europe. According to the mythology, "Cast Iron Dave" is a paid up Europhile who deliberately reneged on a promise to hold a referendum. Of course that promise was clearly made in the context of an imminent election in 2008 BEFORE the Lisbon treaty was ratified. Any "Europhilia" can probably be put down to the presence of the Federast Liberal Democrats in Coalition, and unpicking a treaty is a whole order of magnitude more complicated, costly and time-consuming than saying "no" to one not yet ratified. Right now, with battles with the civil service and the deeply entrenched public sector salariat over Health & education reforms, 'the cuts' and decentralisation more generally, the last thing the Government needs is a Battle royale over Europe. I've no doubt we'll get a referendum some time, and I'll vote 'out'. But only a complete headbanger thinks to pull out of the EU is without cost, or a major priority right now. This gives Labour a chance to paint Tories as "split" on the issue.

The one thing these issues have in common is the impression they give the electorate: Narrow concerns, mainly of interest to political wonks, of little relevance to the issues facing people RIGHT NOW. Opinion polls suggest the electorate sort of agree, but put these issues very low down on the list of priorities. Going ON and ON about them turns people off, and will make a disastrous Labour government more likely.

It used to be that the Tory party's great asset was loyalty. No more. On the big stuff, Cameron's a decentralising, fiscally responsible conservative who's doing more to deliver reformed public services than any previous PM. So deep are the reforms in Welfare, Health and Education that entire Whitehall departments are in near-open revolt. Unfortunately, much of the Tory right would like to re fight the Maastricht negotiations and the Miner's strike (and if possible, the Falklands too). This is just stupid.

Like a heroin addict coming off the junk, 2% real terms cuts to public spending is about as much as an economy can bear. You want MORE & faster? Why, when the UK's debt position is manageable? You want to openly fight Europe FOR THE SAKE OF IT? You want to tell 2/3ds of the electorate their children are thick as mince? You want to let the Labour party call Tories "homophobes". You think UKIP's more than the provisional wing of the local Golf-Club committee, having a gin-soaked rant about immigrants? You're a fucking moron.

Yes. The UKIP manifesto is a wishlist of Tory masturbatory fantasies. Vote for them, you get Labour. Get behind the PM and deliver his radical agenda on Spending, Welfare, Health and Education - all of which is viciously opposed by Labour & it's myrmidons in the Public-sector unions, but will leave the country much better off. Because if you don't Miliminor and Continuity Gordon Brown will get a go to run the country on behalf of their union paymasters instead.

Friday, 18 May 2012

Greek Options

Plan 'A': Stay in the Euro, drop wages & prices for local produce, until Greeks are as productive as Germans. This will take a decade or two of grinding, unrelenting economic misery, during which anyone with any talent, ambition or ability will leave the country and everyone else will be scarred by the experience. Each year brings more "austerity" more riots and more chance of extremist politicians gaining power. Germans effectively run the Greek economy. I cannot see how this will not end up with bombs in the streets.

Plan 'B': Leave the Euro on a Friday evening, and by Monday morning, all bank deposits are in Drachma, which then falls by 50% against the Euro. Greece's principal export, sunshine, becomes cheap as drachma-denominated hotel-prices fall. Once-empty hotels become full of people looking for cheap sunshine. The pain and turmoil of the inevitable capital flight and economic chaos lasts 18 months to 2 years before the economy returns to growth, but may result in extremists getting power in the mean-time.

Either way, Greeks are much poorer and may end up with an unsavoury demagogue in charge. They were of course never rich, but just thought they were because they nicked the Germans' credit card for a while.

The same is true for Spain & Portugal, though their overspend is less egregious and their political culture an order of magnitude more mature than Greece's. The Spanish people in particular have been impressively stoic - they voted for austerity, and haven't so far chucked many rocks. They would, of course be better off leaving, but they may, just, be able to hang on in the Euro by the skin of their teeth. The public & political will appears to be there, for now.

Italy should go too, but as a founder member of the EU, there is probably just enough political will outside Italy to keep them in the club and as they're running a primary surplus, they've probably the financial ability to achieve plan 'A' without too much pain. It will of course be a decade before Italy grows again.

Or Plan 'C': the ECB can announce that all €zone bonds rank Pari Passu with Germany's. Everyone pays 4% but Germans' living standards fall steadily towards the Eurozone average as capital floods south, but the Eurozone holds together but with one economic government. The Germans will get control over the cash jar and European nations cease to be independent in any meaningful way. Good luck with those treaty negotiations!

Conclusion: Greece, and probably Spain & Portugal too will be picked off by the markets and be forced out of the Eurozone. Italy will probably stay in.

The Euro miserably failed its first stress-test, because idiot politicians thought they could defy economics and make water flow uphill by means of a resolution of the Council of Ministers. The single currency was a silly idea, badly implemented. It is a disaster which is going to cost the life chances of hundreds of millions of southern Europeans.

Be suspicious of a politician with a big idea. The safest thing to do with these creatures is shoot them on sight.

Thursday, 17 May 2012


Unemployment isn't a collection of people who've lost their jobs. It's better to think of it as the pool between two fast flowing streams. People losing their jobs, or enetering the Labour market when they leave education, return to work after illness, or maternity and so on are flowing in; and people finding work, or reaching retirement age are in the stream flowing out of the pool.

The evidence suggests that, contrary to traditonal left-wing rhetoric, the rate at which people enter the pool through job losses is rather constant over the business cycle. It is hiring that influences the rate of unemployment, not firing.

Traditionally, socialists are very keen on 'workers' rights'. These include mandatory periods of leave, pensions, notice and so on. They are very hostile to flexible temporary, part-time or insecure work. The problem few left-wingers acknowledge is that increasing labour rights increases the risk and cost of hiring to an employer. When a good or service gets more expensive, less is used, the same is true of Labour.

Much is made by the left of the rise of part-time work. There are a lot of people in part-time work who want full-time. There are a lot of Temps who want permanent jobs. At the margin, removing some of the more expensive employment rights, expecially making it easier and cheaper for firms to fire unsuitable workers, reduces the risk and cost of hiring and will reduce unemployment.

This is no magic bullet, but if it forms part of a deregulation of business ("deregulation" isn't a dirty word, and it didn't cause the crisis...) then that represents a "growth strategy" which might work, unlike the Labour's plan to spend until we're Italy.

Wednesday, 16 May 2012

Labour's EU referendum

Labour's policy Committee has suggested the party, which has already promised and voted against one, may back an 'in/out' referendum on the UK's EU membership.

Of course, no-one believes that Ed Miliband, grotty little snot-bucket that he is will ever be in a position to deliver on his promise, so the promise is free. Assuming the public buy the policy at face-value, a big assumption, then it may be clever politics.

It increases Pressure on David Cameron, whom the Euronutters in his own party think reneged on his promise on the Lisbon treaty. This is a stupid, mouth-breathing, sun-reading thing to believe, and to this end, any comment with the phrase "cast iron" in it will be deleted. Of course, both Labour and the Tory Euro-obsessives know the coalition partners, the Liberal Democrats are as completely in love with the EU as the Tory Right isn't. Miliband therefore hopes to split the coalition, force an election, and win while the polls are in his favour.

However. It is transparently obvious that no politician wants to deliver on this promise. Every major party has promised, then voted against an EU referendum, with the honourable, if profoundly stupid exception of some Tory backbenchers. (And NO. UKIP isn't a 'major party') The problem for both Miliband and the Tory Euro-obsessives is that the public simply don't care about the EU. When asked, It seems the mainstream Tory position: 'say no to everything, but stay in' appears to be the favoured policy, but this is not a strongly held conviction. The message, if any, the voters give to the politicians about 'Europe' is

"do what you will, just shut up about it, OK?"
Miliband is therefore hoping to open up the old Tory "split" on Europe, guessing that it won't cost him, and may even boost his polling, if his naked politicing isn't seen through. And the Tory Euro-nutters, egged on by the UKIP Gin & Jag brigade will charge blindly into the trap. Fuckwits.

Tuesday, 15 May 2012

What to do with your Euros...

So. You're a moderately wealthy Greek person. Do you keep your money in a Greek bank, in Greece or do you make sure all your Euro notes are printed in Germany, where your bank account is and open an offshore £/$ account?

The Euro, a poor idea, badly implemented.

That's right, you get your money as far away from Greece (and the risk of being told one day "you're now holding Drachma") as you can.

Now imagine you're Spanish, Portuguese, Irish or Italian. You have a bit more time, but the result is the same - any money you have gets out of the country if you've any sense.

No bail-out can replace the money flooding out of these countries. The people have lost faith in the Euro project, and as confidence is the only thing underpinning a fiat currency, the Euro has already failed its first test. Even strong German GDP numbers are evidence of the flood of money from the periphery to the core not the underlying strength of the German economic model. Germany rigged the system in its favour, and is now parasitically sucking money out of its empire, an Empire even the German people never wanted.

Is there anyone NOT shorting the Euro right now? I don't think even the most pessimistic Eurosceptic expected to be this right, this soon.

Now my standard prediciton is that political will can see the Euro hold together at great cost to the wealth and living standards of the people, particularly in the periphery. I am becomming less confident they can pull this off by the day and the rise of the Anti-Austerity left means even the Iron political belief in the project of "ever closer union" is waning.

So, to hedge the Euro's demise, buy* banknote printer De La Rue.. It's going to be a bumpy ride.

*Doesn't constitute financial advice, this may not be suitable for your circumstances. Past performance is not a guide to future performance. Stocks and the income from them can go down as well as up, seek advice from a professional advisor, yadayadayada.

Monday, 14 May 2012

Build Cycle Lanes, the Motorist Benefits.

Most conservatives/libertarians/UKIPpers are viscerally pro-car and anti-bike. To the likes of regular commenters Simon Jester or Patrick the use of the car is natural, and facilitating anything else is a dastardly plot to subvert his way of life. This is a perverse and willful misreading of my position. I will try to deal with the commonest arguments of the Gin & Jag set in this post.

I shall refer to the first sentence of my last post.

...most journeys of longer than a few miles, and for moving goods about the country, the motor vehicle is simply the best tool for the job.
Pro-bike is not anti-car. MOST JOURNEYS even in Holland, are undertaken by car. even In Amsterdam & Copenhagen, Bicycles account for less than half of journeys. Even in the most bike-friendly countries on the planet, the car remains well provided for by infrastructure, and a popular transport choice. It's just the bike is ALSO well provided for.

What's that next to this Dutch cycle lane? That's right, a dual carriageway.

The solution to congestion isn't as most Libertarian/Tory/UKIP Internet wallahs think, "more roads" because the problem isn't a lack of road space, it's the fact that everyone wants to get to the same places at the same time. The Problem is a lack of road-space at key points. For example the hanger lane underpass, or the Blackwall tunnel in London become choked beyond their capacity every single morning. If you build bigger roads to these spots, you make congestion worse, not better. This is what the M4 Bus Lane was all about.

A cursory search on Google Scholar will quickly put pay to the "build more roads" argument. This is from the first to pop up.
"Our decisions provoke unforeseen reactions. The result is policy resistance, the tendency for interventions to be defeated by the response of the system to the intervention itself... road building programs that create suburban sprawl and actually increase traffic congestion..."
So, barring a few pinch points such as the M25 around Heathrow, and by-passes which sensibly route through-traffic round town centres, more road-building is not the answer.

Then there's the money. Libertarians, UKIPpers and Tories regard themselves and economically literate, in contrast to Labour who think economics is about getting water to flow uphill. People who should know better, however lose all economic sense when discussing their favoured means of getting about. Just because one group is taxed, doesn't mean the money should be spent on them. If it were, income tax would largely go on well-tended grouse moors for the ultra rich who pay a significant chunk of it, the NHS's lung-cancer wards would be the envy of the world, and vomiting drunks would have their hair held back by liveried booze-tax-funded drunk-helpers every Saturday night. Instead the money is put into a pot and spent by the government as it sees fit.

Taxes levied on motorists are not therefore some sort of "road fund" for their exclusive use. They're more akin to rent. You don't live in a house for free; you pay for the capital cost as well as the running costs. You pay rent (or taxes) on the land. If the money spent on roads each year is the running cost of our road network, it's akin to utility bills. The rest of the tax motorists pay covers the cost of building the road network and financing it - 2,000 years of capital investment. You're also paying for the "externalities" of car use.

There's the word "externality" which brings libertarians out in hives because they think it's part of some ghastly plot to deprive them of their car. It isn't. It's about paying your way. Some externalities like Carbon are explicitly calculated, in the Stern review for example. And of course, we are paying several times more to drive a car than would be the case if that was the only externality in the price. There are other externalities too. Some are trivial: I don't like seeing fat people, and cars cause obesity for example. Some externalities however have real economic effects: Congestion is an externality imposed on other motorists with real economic costs. To ensure those costs are borne by those who value roads most, you pay through the nose to drive. This is why it works. Other externalities merely affect quality of life. Noise, danger, stress, particulates damaging to health and so on. To these I would add the social costs in atomisation and fragmentation of society facilitated by car-based urban sprawl.

People who in any other facet of life think markets are great at providing solutions to problems utterly reject them in transport. There should be a market between competing means of transport. However at present, all the investment goes to road and rail, nothing to any other potential means of getting from A-B, which might take some (SOME - not ALL, idiots) pressure off the road network at peak times. At the moment the market is grotesquely skewed in favour of the car, even where a bike would otherwise make sense, crappy infrastructure and subjective feelings of danger put people off using it. And it is this we need to address.

A bike on a commute is one fewer car in your way. Encourage cycling, and motorists benefit.

The externalites of urban sprawl, lack of local amenities, dead town centres, noise, pollution, social atomisation and social division which accompany the total domination of the car are uncosted but paid for in the "rent" you pay in taxes over and above the road budget. These bills could be reduced by better, bike and pedestrian friendly urban design. Some argue the externalities are more than covered by the current motorists' tax-burden. Others think not. But to deny the existence of externailites alltogether is anti-economics, a stupid rhetorical position normally occupied by the left.

The experience of the Netherlands is if you make a small (relative to the road budget) investment, over a long period of time in making the roads feel safe for cyclists, everyone (including motorists) benefits. Many People then DO choose the bike because it's quick, cheap, convenient and fun for SOME journeys. In Amsterdam just under half of journeys are by bike. And this benefits motorists in less congestion. Getting kids to cycle to school in particular frees parents from the chore of acting as a taxi service, and massively reduces congestion at rush hour. It also gives kids a bit of much needed freedom. Proper cycle lanes would mean fewer cyclist holding you up, a "problem" existing only in the fevered minds of anti-bike nut-cases, but oft cited none-the-less. More cyclists means more local shops as people get back in the habit of making short journeys instead of reaching for the car keys every time you leave the house, so you can get your paper and irn bru when you have a hangover on a Sunday morning without having to drive anywhere. It means your local pub is more likely to stay open, giving you a chance to gain that hangover in a social environment instead of tossing yourself off alone to the x-factor with a can of supermarket lager. It's no coincidence that towns and cities with the highest bicycle modal share feature regularly at the top of indices listing "livability" and happiness. Even in these, most people own, or have access to a car.

The point is a change in the build environment to favour the cyclist or pedestrian doesn't mean the car becomes obsolete. Rather it becomes one tool in a quiver for getting about, one chosen when the journey is long, when the weather is bad, when the load is heavy, or when you just don't feel like riding a bike that morning. Cyclists are drivers and drivers are cyclists, eliminating hostility. However, in the UK many people who wish to ride a bike are currently denied that opportunity, to the detriment of all by infrastructure entirely inappropriate for their needs.

Any comment which ultimately says "I need a car for some journeys, therefore you should use one for all" will be deleted, unanswered. Read the first paragraph of this post again before pressing submit.

To deny there are any problems caused by the total domination of the car of our built environment is perverse and willfully blind. To pretend there are no solutions is stupid and unbelievably ignorant and selfish. Even Jeremy Clarkson sees that a town with fewer cars is simply more pleasant to be in - that is he admits the benefits of car use are offset by costs largely borne by others. No-one wants to see the freedoms granted by the private car lost. But I do want to see a return of the freedoms it has taken away.

Thursday, 10 May 2012

The Great Car Economy.

I often get accused of being anti-car. I am not. For most journeys of longer than a few miles, and for moving goods about the country, the motor vehicle is simply the best tool for the job. I just accept the car is often not best tool for the job, and universal car use has a number of negative effects. This leaves an enormous number of journeys for which the car shouldn't be the first choice. My problem is that people are forced into cars, as other options have been, effectively, denied through short-sightedness and poor urban design.

Would you use this? More Rubbish Infrastructure here.

Margret Thatcher hailed in 1989, the "Great Car Economy", embarking on a grand scheme of road-building, which like so much the Tories do, brings out the crusties in vicious and bitter protest. A decade of Swampies living up trees led to the abandonment of "the biggest road-building scheme since the Romans".

More recently the claim is often made that petrol taxes "hurt the economy". Of course they do, but the question should be whether fuel duties hurt more, or less than other taxes. I argue they don't hurt any more than income taxes. The Conservative-led government faces protests by drivers who don't want to pay & feel there should be more roads, that road-building will be the key to stimulating the economy. This is one of the few areas of expenditure, along with the provision of free-parking, that the tax-payer's alliance can be relied upon to support. It ignores the costs of motoring.

Let's go through the hidden costs of "the Great Car Economy".

Cars make towns noisy and stressful. You can estimate the cost of this by looking at houses on main roads, which often cost 30-40% less than those in quiet cul-de-sacs less than a hundred yards away. There's an economic externality of car use, costed for you, right there.

Every 40 cars, roughly, represents £1,000,000 in capital expenditure. For much of the country, that's £2,500 per year, per car. For 95%of the time, this capital is sitting, unused in parking lots. Is this not a colossal waste of resources on a scale equivalent to the Great wall of China? Those parking lots are unsightly, and represent an enormous waste of potentially valuable land, which reduces the value of the area around it. This too is a waste of resources.

Cars facilitate harmful behaviour. People under-estimate how much a long commute makes them miserable, and over-estimate how much a big house makes them happy. People therefore live a sub-optimal distance from work, a long way from family and friends. People are less happy than they would otherwise be.

Cars have changed the built environment, brought about urban sprawl, which atomises society. Cars have driven other options - bicycles and walking out of the picture, by making them so unpleasant. It is simply not enjoyable to share space with tons of speeding metal. As a result, there are few 'local shops'. The car encourages big-box shopping, ripping the heart out of town centres.

Once you have spent 60% of an annual salary on a car, you tend to use it for every journey even ones where (once you've parked) would be quicker to walk. This leads to obesity and ill health. Driving, especially in heavy traffic, is stressful. Adrenaline and Cortisol, when not accompanied by exercise, is hard on the heart and encourages fat deposits. Even if you go to the gym, the damage done by stress hormones while driving is difficult to burn off.

The problem, ultimately is that overuse and over reliance on one transport technology has created a sub-optimal equilibrium. People cannot see beyond THEIR car and the need for it. Blinded by a set of cognitive biases and perverse incentives, the car is used for every journey. And of course, as we've organised society completely around it since the mid-70's, people feel they've no choice. They're probably right. At present, there is no alternative to having £30,000 worth of depreciating metal on your drive. Public transport is simply nasty, as I laid out in detail in this post, a while ago, and we now live too far from everything to consider any other solution.

Ultimately the conclusion is that more roads and more cars isn't the answer. Cars simply fill any extra space, and if you build "enough" space, you get Milton Keynes. We must do things more cleverly.
So, the experiment in the great motoring society has gone as far as it can go. Any further increases in the number or use of cars are likely to generate negative returns to human happiness. It is Government's role therefore to provide infrastructure to other alternatives: a network of cycle tracks and city infrastructure - not to exclude the car, but to provide an alternative, to both tribes' benefit. Motorists should remember the most tireless campaigners for smooth roads are cyclists for whom a pot-hole is not only a punctured tyre, but potentially a broken collar bone. The infrastructure can and should be built with all road-users in mind.
The solution to these problems, is to organise a system where there are fewer cars, used more intensively.

Technological change will help. Nevada has just issued a license for Google's automatous car. This will, in time, enable fleets of driver-free vehicles to act as taxis. It doesn't take much imagination to see this working very much more cheaply and efficiently than a situation where everyone has their own depreciating asset, though this is several years away. Fewer cars, not being driven by people, means a safer and less threatening road environment for other users. Although the total cost of hiring a self-driving car for each journey may in time become lower than owning a private car, the fact you're making a marginal decision for each journey, rather than the costs being concentrated in one enormous sunk cost of purchase, will tend to make people consider alternatives in a way they currently don't. Even if the volume of vehicular journeys increases, driverless cars will be more efficient users of fuel and road-space. They will also be safer.
People are simply not designed to drive. Our lizard-brains simply can't cope. The road environment and the cars on it have been made forgiving to the inadequacies of people driving cars, but it is something no-one can do successfully. Don't believe me? Ask the insurance industry. Racing drivers, those who ACTUALLY can control a car better than anyone else are not considered a good risk. People tend to compensate for extra safety features in their car or any extra skill, by taking more risks. The risks are most keenly felt by people without a ton and a half of steel wrapped around them.
In time, insurance costs will dictate that cars will not be allowed to be owner-driven on the public roads. At present, the only tool with which you can, by recklessness kill someone and escape gaol, is the car. This will change and machines will make better drivers than us.

I am not anti-car. I accept the benefits, and the necessity for widespread car ownership at present. It's just that it's used for over 90% of journeys. People don't walk to the pub anymore, neither do kids cycle to school. And the reason is that the car has changed towns - there are no local services in suburbs any more; ourselves - most of us are fat, and feel the need to change into special clothes to walk a mile; and the environment - the roads are simply too hostile to allow your kids to cycle to school.

If you can address the inappropriate journeys - in particular the school run, much of the congestion motorists currently suffer, would vanish. Kids SHOULD enjoy the independence of making their own way to school, as they do on the continent. This requires investment in infrastructure to separate the cyclist from the motorist. Many (not all, obviously) people would like to cycle to work, but feel it's too unsafe. Investment in infrastructure would take a few of these cars off the roads at peak times too. And if we can encourage delivery driving overnight though a fuel tax rebate, we can have smoothly running roads for everyone, all day.

Every cyclist commuting to work, is one fewer in other motorist's way. But the the entire national cycling infrastructure budget is less than that to widen 4 miles of the M25. Even footpaths are often sub-standard and blocked by (what else?) parked cars. Ultimately, those who want to walk and cycle shouldn't be put off by crappy infrastructure because the car enjoys 99.99% of the spending and an absurdly privileged place in society. If we can change this, then those who still want to drive will have a more enjoyable time too.

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