Sunday, August 30, 2009

James Murdoch: laughable hypocrisy

Murdoch Junior has declared war on the BBC. Shocker.

There is a fine old tactic in politics (and the Murdochs are politicians as much as businessmen): when planning something controversial, accuse your opponents of doing exactly that. Thus:

There is a land grab, pure and simple, going on - and in the interests of a free society it should be sternly resisted. The land grab is spear-headed by the BBC. The scale and scope of its current activities and future ambitions is chilling.
…operating alongside the BBC, without access to its content or cross-promotional power, is not a task for the faint hearted. You need deep pockets, sheer bloody-mindedness and an army of lawyers…
Dumping free, state-sponsored news on the market makes it incredibly difficult for journalism to flourish…
We seem to have decided as a society to let independence and plurality wither. To let the BBC throttle the news market and then get bigger to compensate.

Apart from the “state-sponsored” bit (with its comical insinuation that Gordon Brown is scripting the evening news), this is not far off a description of how News International operates.

Year after year, there is cross-subsidy from the profit-making Sun and News of the World to the loss-making Times and Sunday Times. Market forces would have killed the Times titles long ago, and/or forced their prices up much higher. The deep Murdoch pockets allow the dumping of the Times at an unnaturally low price, in a campaign to throttle the rest of the quality newspaper market.

Then Murdoch gives us this brief comedy routine:

Sixty years ago George Orwell published 1984. Its message is more relevant now than ever. As Orwell foretold, to let the state enjoy a near-monopoly of information is to guarantee manipulation and distortion.

The ZaNuLab Ministry of Truth has clearly been all too effective, for it has tricked the proles into trusting the BBC – and much more than commercial media.

A poll last year asked people which organisations they trusted the most out of the BBC, the NHS, the Church of England, the military, the media in general, the government and big companies. The BBC was ranked in the top two by 50% of people; the media in general by just 14%. And on which were trusted the least, the BBC was ranked in the top two by only 7%, while the media in general got 44%.

News International needs to do down the BBC not because it thinks a purer market would be good for Britain but because the Beeb shows it up – not so much commercially as morally.

Murdoch concludes:

Above all we must have genuine independence in news media. …independence is characterised by the absence of the apparatus of supervision and dependency. Independence of faction, industrial or political. Independence of subsidy, gift and patronage.

The only reliable, durable, and perpetual guarantor of independence is profit.

Laughable hypocrisy. The Murdoch media empire is intensely political, and the editorial lines of its news outlets across the world, along with its business and lobbying practices generally, seek to promote imperial expansion. It is an article of faith on the right that private enterprise is more efficient than publicly funded bodies. When it comes to eroding media diversity and independence, that is spot on.

Saturday, August 29, 2009

Hannan, Powell and the convenient constituent

NHS-hating, Enoch Powell-admiring Tory MEP Daniel Hannan’s latest piece on the Telegraph website is headlined ‘Down with collective responsibility’. He means this as a plea for more “heterodoxy within political parties”, but it could equally do as a summary of his attitude to public service provision.

As for Powell, Hannan and his supporters protest that he applauded Powellite views not on race and immigration but on “national democracy”, an “independent country”, free markets and small government.

But now Hannan has found another thing he admires about Powell: a “special kind of integrity” that allowed him to do people “the courtesy of addressing them as intelligent adults”.

This is an odd thing to say, for Powell was a master of one of the sneakier rhetorical tricks in the politician’s book: presenting your own ferociously held and deeply controversial views as though they are simply the down-to-earth remarks of decent, ordinary folk; you yourself find these views a little uncomfortable but see it as your civic duty to pass them on in a spirit of honesty; you even come, from being a humble and earnest messenger, to endorse these views out of respect for the sheer ordinariness and decency of these good people.

Thus the ‘rivers of blood’ speech opened with a supposed “conversation with a constituent, a middle-aged, quite ordinary working man”, which made Powell think: “I simply do not have the right to shrug my shoulders and think about something else.” And he went on to share one of “hundreds upon hundreds of letters” from “ordinary, decent, sensible people” that just so happened to support exactly the point he sought to make.

Many politicians like to cite supposed anecdotes or correspondence when it’s convenient; there’s no way to know whether these claims are true, and there’s a near certainty that even if true they are not representative. Above all, this tactic allows the politician to take half a step back from taking responsibility for their own ideology. It’s not an honest approach and it shouldn’t be lauded as such.

Friday, August 28, 2009

The rise of the cretinocracy

Edward Docx writes (subscribers-only) that when listening to the radio in the car – or, presumably, anywhere else – there are more and more phone calls, texts and emails from listeners being featured. So:

you must either endure the misery of 61m atrociously ill-informed opinions; or sit in a solitary silence that is filled only with a feverish internalised loathing for your fellow citizens.

And TV is no better:

All genres of television programme now contain an abysmal segment during which the presenter reads out a series of inane views from variously mad people with an inexplicable surplus of time and self-regard.

I half agree. (And yes, I spend more time than is strictly healthy publicising my own views here.)

While I’m glad to hear that the noxious ‘Big Brother’ is being decommissioned after a final series next year*, I can understand some of the appeal. A lot of us enjoy a good bit of freak-gawping. It’s why I find Radio 4’s ‘Any Questions?’ dreary but ‘Any Answers?’ a guilty pleasure.

* Although I fear that Channel 4 may be acting like the ruined old lush who promises ‘Just one more drink and then I’ll go’. I’d have more confidence in the decommissioning process if an independent body of inspectors could confirm that the programme has been permanently and verifiably put beyond use.

‘Any Questions?’ provides a panel of politicians or other public notables to pontificate on the matters of the day; ‘Any Answers?’ allows anyone possessed of a radio, a telephone and inadequate medication to rant on air. I find that a certain amount of indirect exposure to these undiagnosed lunatics can be amusing, although too much of course can lead to deep existential misery.

But Docx is right: most of the time, I want my media to feature intelligent, interesting, knowledgeable and sane people. The spasms of the cretinocracy should be safely confined to certain designated areas.

I presume that the trend toward quality-uncontrolled audience participation is one of those things that makes media people feel that they’re being more ‘relevant’, ‘accessible’, ‘interactive’, ‘responsive’ and ‘shit’.

Housing allowance cuts

If this is true… well, I just hope it isn’t.

Gordon Brown is facing a Labour revolt over plans to cut the benefits of the poorest families by up to £15 a week…
Proposals to be implemented next April, a month before a general election, could mean some people losing a fifth of their income. … At the moment 300,000 people on low incomes are allowed to keep up to £780 a year of their housing allowance if they find accommodation that costs less than the maximum benefit.
The Treasury says that the policy costs too much and that the ability to pocket any surplus should be scrapped from April 1. …
The [allowance] was introduced to give tenants greater control over their housing arrangements by paying the rent themselves, and the option to trade quality for extra cash.
The Government believes that abolishing the policy will save £160 million, but Labour MPs point out that the removal of competition means that landlords will raise rents to the allowance maximum. Landlords have been pressing for the change because they want rent to go directly to them.

Tuesday, August 25, 2009

MPs: it’s them or us

Hadleigh Roberts looks at the Tory plan to cut the number of MPs. He is, I’m very sorry to say, sceptical.

Now, we all know that MPs are basically a cross between terrorists, paedophiles, bogus asylum seekers and reality TV contestants, so obviously anything that reduces their number is a Good Thing.

Honourable members: They’re laughing because they’ve just burgled your house and scrawled ‘YOR MUMS A SLAGG’ on the walls. Under the new proposals, they will be made into glue.

But here are some other reasons to back this splendid policy:

  • Government ministers, of whatever party, are just too damned competent. Quite frankly, they’re showing the rest of us up. Cutting the number of MPs will shrink the pool of talent from which ministers are picked, thus lowering their average quality.

  • Legislation in this country is just far too good. How can we possibly have a thriving civil society when all our laws are so perfect that there’s nothing to protest against? Fewer MPs will mean less legislative scrutiny and thus shoddier bills passed.

  • The Commons exerts way too much control over the government, making it hard to get anything done without having to have ‘consultations’ and ‘compromises’ with elected representatives. Disgusting. Getting rid of some MPs will make them collectively less able to hold the executive to account, thus giving us the thrilling smack of firm government.

  • It’s much too easy to get to see your local MP when you have a problem that they might be able to help with. The casework they do, far more than the welfare state, serves to destroy our self-reliance and shackle our sense of enterprise. A cull of MPs will mean bigger constituencies and less time for each MP to spend on individual constituents, thus making us get on our bikes, pull our socks up and stand on our own two feet. Though not necessarily in that order.

House holed: The empty benches of the new slimline Commons will in fact be less of a waste of space than the feckless chancers that once sat there.

Taking God’s name in vain – the musical

I don’t know what Karen Armstrong is talking about. Which makes two of us:

One of the peculiar characteristics of the human mind is its ability to have ideas and experiences that exceed our conceptual grasp. We constantly push our thoughts to an extreme, so that our minds seem to elide naturally into an apprehension of transcendence.

As part of her ongoing campaign to convince us that religion is best defined by postmodern academics rather than by churchgoers, she tells us:

Because “God” is infinite, nobody can have the last word.

Very reasonably, Ophelia is unimpressed, demanding: “how does she know God is infinite?” and rolling her eyes at the scare-quotes.

But Armstrong may have a point here, in a way. If we take the quotes as meaning that she’s talking about the word ‘God’ rather than any putative being with that name or job title, then we can read her as claiming that because postmodern academics can use ‘God’ to mean anything at all, then we’ll never be able to get them to shut up.

Which is true enough.

But I suspect that’s she’s not trying to make this point. She’s actually using “God” to stand for “transcendence”, “divinity”, “inexpressible otherness” and “the sacred” – all terms that she also uses, to equally obscure effect. It’s as though she’s doing her damnedest to prove her claim that “Language has limits that we cannot cross.”

But my favourite passage in the article is this one:

Music has always been inseparable from religious expression, because, like religion at its best, music marks the “limits of reason”. Because a territory is defined by its extremities, it follows that music must be “definitively” rational.

I can only see five things wrong with this.

  1. Of course music is separable from religious expression: there’s plenty of irreligious music and plenty of unmusical religious expression. I refer you to the Taliban’s banning of music, to the ceiling of the Sistine Chapel, and to every deaf religious person who has ever lived.

  2. Music doesn’t mark the “limits of reason”: it has both rational and non-rational aspects, but by the same token you might as well say that music marks the limits of unreason, or that a cheese and wine party marks the limits of dairy produce.

  3. For the same reason, religion (at its best or otherwise) doesn’t mark the limits of reason either.

  4. The (less-than-inseparable) relationship between music and religious expression doesn’t hold “because” both have rational and non-rational aspects: plenty of other art forms also have these properties (dance, sculpture, poetry, stand-up comedy), as do non-art types of human activity (sport, parenting, conversation). No pair of these are especially related simply because of this commonality. Religion has used music (among many other methods of expression) because it’s very effective.

  5. A territory is delineated, not “defined”, by its extremities: Britain is mostly not coastline. A territory is defined by its extremities and what’s contained within them. Even a geometric figure as simple as a straight line is defined not by the two points at either end but by those points and the fact that there’s a line between them.

But, if we ignore these small cavils, I reckon it probably would follow that music must be “definitively” rational. Although I’m not sure what that would mean.

Monday, August 24, 2009

Almost everything is contemptibly dull

Rick says, in an aside: “I am, and always have been, a miserable sod with a near-pathological hatred of the general public.”

Well, I know the feeling. And when I read that, I remembered a sketch from the Channel 4 series ‘Spoons’ a few years back – which, it turns out, is on YouTube.

Now, I have nothing against barbecues as such, but otherwise I can really relate to this guy:

Saturday, August 22, 2009

Traditional values in a modern setting

I think the BBC website’s error 404 (page not found) logo is really rather lovely:

Friday, August 21, 2009

Why Megrahi had to be released

I would like to explain, for the benefit of angry Americans, the decision to free convicted mass murderer Abdelbaset Ali al-Megrahi on “compassionate grounds”.

Megrahi has terminal cancer, which is obviously not a good position for anyone to be in, but that’s not the reason. The reason is what would have happened to him as a cancer patient in the UK.

As every American knows, we have in our country something called the NHS (Nazi Health Service), which exists to consume taxpayers’ money, to destroy our freedoms and of course to inflict ever greater torment on the already ill.

Now, this may be good enough for us Brits – it’s our system, paid for by our taxes, run by our elected government and justified by our warped, sado-masochistic communist ideology – but any sensible foreign national on these shores will naturally be horrified at the prospect.

Which brings us to Megrahi. Now, unlike the USA, we don’t have an explicit outlawing of “cruel and unusual punishment”, but we do share the principle. And to force such monstrously awful medical ‘treatment’ on him would have torn that noble principle to shreds. Indeed, even giving him some painkillers would have first required him to get his 95-year-old mother flown over from Libya so that one of our Death Panels could ritually sacrifice her in front of a giant mural of Hitler and Stalin signing the Molotov-Ribbentrop Pact.

Surely nobody, however awful their crimes, deserves torture at the hands of socialised healthcare.

Obama’s mother-in-law accused of African witchcraft

What can you possibly say to this?

A wide opinion’s running in the parish that the Devil may be among us, and I would satisfy them that they are wrong.
– Arthur Miller, ‘The Crucible’

(Via Hattie Garlick.)

Afghans are racist and incapable of independent thought

So says Robert Fisk:

I doubt if anyone in Afghanistan voted yesterday because of the policies of their favourite candidate. They voted for whoever their ethnic leaders told them to vote for.

It’s not the first time he’s shown this attitude:

Then someone punched me in the back. Then young men broke my glasses, began smashing stones into my face and head. I couldn't see for the blood pouring down my forehead and swamping my eyes. And even then, I understood. I couldn't blame them for what they were doing. In fact, if I were the Afghan refugees of Kila Abdullah, close to the Afghan-Pakistan border, I would have done just the same to Robert Fisk. Or any other Westerner I could find.

Turning Japanese

Someone has written a program that translates English into Japanese and then back again, to peculiar effect. I’m not completely convinced that the translations are perfect, but I rather think that may be the point.

John Band used it on some song lyrics and asked people to guess the originals. I’ve had a go with proverbs, which I think are easier. And quite funny. See how many you can get:

  1. Two birds with one hand, the value of President Bush.
  2. The depth of the water is still running.
  3. You can see the king of your cat.
  4. Mind the need to shift the remaining.
  5. You need a true friend of a friend.
  6. Lack of good mileage?
  7. You can communicate your actions.
  8. After the wait, I want everyone to come.
  9. Parsnips are only words.
  10. Stupid angels fear to walk again.
  11. You need to drive the devil.
  12. Cold food is the best revenge.
  13. They have great difficulties.

Thursday, August 20, 2009

Minority report

Yesterday’s published minutes of the Bank of England’s last Monetary Policy Committee meeting give us a lesson in media studies and organisational dynamics.

When the Bank produced its inflation report last week, most media attention focused on the downbeat comments of Governor Mervyn King at the press conference. There was very little coverage of the fact that the MPC had actually raised its growth forecasts from those in the May report (from memory, I think the Indy and the FT each had someone smart and/or diligent enough to notice).

Anyway, the minutes of the MPC meeting at the start of the month now reveal that a minority of members – including King – had wanted a bigger extension to the quantitative easing stimulus programme, implying that they took a gloomier view of the economy’s prospects. This view, it seems clear, was reflected in King’s statements at the press conference to a greater degree than was the agreed MPC projection.

This tells us two things: when one person is in the privileged position of presenting the views of a group, be wary of their own views colouring what they say; and always read the small print, or at least question whether the people who are informing you have read the small print. The inflation report very clearly says, on page 7: “The projected distribution for GDP growth is somewhat stronger than in the May Report, reflecting the increased monetary stimulus. The probability of activity contracting for a further sustained period is judged to have fallen.”

Wednesday, August 19, 2009

A league table of their own

The Tories like to talk about giving citizens more information about public services so that change can be driven from below, rather than by ministerial diktat. But their policies don’t always manage to resist the top-down lure of we-know-best. So in a spirit of bipartisan helpfulness, I’d like to make a suggestion about this:

The Conservatives are proposing to give more weight in the exam league tables to "hard" A-level subjects, such as maths and science. Nick Gibb, the party's schools spokesman, said: "The disappearance of core academic subjects in many state schools is extremely worrying. We need to reverse this trend and ensure more children at least have the opportunity to take these subjects at A-level. That is why we are going to change league tables so they give more weight to the most valued subjects, more closely reflect the priorities of universities and employers and therefore prepare young people better for the future."

What puzzles me is how it will be decided (and by whom) what the “most valued subjects” are. The implication is that the government will decide. Poor show. Why not publish separate subject-based league tables and ignore the overall rating? There could even be a website that lets you input which subjects you’re interested in (chemistry, psychology and double maths, if you're me in 1993) and then produces ratings for local schools personalised to your needs.

Of course, this won’t get round the problems of overly narrow ‘teaching to the test’, of schools encouraging weaker candidates to drop out halfway through, and of the fact that raw exam scores reflect the quality of the intake rather than of the teaching, but these are pathologies endemic to the standard league tables. (On the third point, value-added and contextual value-added ratings are also produced, but these seem to be scorned as a leftist plot to do down ‘good’ schools, i.e. the schools that better-off parents send their kids to.)

Tuesday, August 18, 2009

Counting the unemployed

What with the huge deficit, I thought it’d be nice to save the government some money. The money I can save it is whatever it’s planning to spend on this:

The government has launched an investigation into the gap between the number of people out of work and those who are claiming unemployment benefit. It comes after data last month showed the jobless rate, under International Labour Organisation (ILO) rules, rose to 7.6% in the three months to May. At the same time, the rate of people claiming unemployment benefit in June was just 4.8%.

The Labour Force Survey interviews a large number of people to find out how many are looking for work. This ILO-backed method has consistently produced higher unemployment numbers than the claimant count of those receiving Jobseeker’s Allowance. Hardly surprising: it’s easy to say ‘yes’ in response to a survey, but harder to jump through the hoops required to qualify for JSA.

So, has the gap between the two sets of numbers changed over time? And in particular, has it changed very recently?

Yes and yes.

The graph below compares like with like: rolling three-month averages of the LFS and claimant count figures as a percentage of the working-age population. I’ve also included (measured on the right-hand scale) a comparison, dividing the claimant count by the LFS number to show what proportion of people who want work are actually signing on; the higher this proportion, the closer the two measures.

(Using calculations based on ONS data.)

As you’d expect, there’s an extremely strong correlation between the two measures of unemployment: they go up and down pretty much in tandem. But you may not have expected the almost equally strong correlation with the proportion of unemployed people who are signing on.

Certainly, some of the fall in this proportion that took place from 1994 to 2007 will have been due to various changes that tightened the eligibility criteria for JSA. And some of it will have been due to the relative erosion of the benefit’s value, making it less worth the effort of the bureaucracy for unemployed people who have some other means of temporary support.

But there has to be something else going on: how else to explain the rises in this proportion during the early 1990s and current recessions? (This recent change, please note, is the exact opposite of what the innumerate commentators have been fretting about. The problem that the government is investigating does not exist.)

I’d guess that when unemployment is high, people who are looking for work realise that it’s going to take longer to find it, and so they’re likelier to need the financial support that signing on can bring. But when the economy is strong and jobs plentiful, work is easier to find and so signing on for a little while is less important to people who aren’t in immediate danger of destitution.

Monday, August 17, 2009

‘Healthcare reform? Over my dead body!’

Now and again I think I understand US politics. The illusion never lasts long.

Maybe the best thing for Obama to do would be to explain that ‘socialised healthcare’ will stop Kenyans, Muslims and other undesirables from forging US birth certificates in private clinics so that they can then lie and cheat their way to the presidency.

Or another option would be to say that his reformed system will only cover registered Democrats.

Deficits and debt

Mark Pack and Neil Harding have very kindly responded to my post about the public finances.

In particular, Mark makes a fair critical point in response. I’d said: “To run a modest deficit year after year during a period of decent growth and high employment… is risky.” Mark replies:

There certainly is a symbolic value to whether the budget is in deficit or surplus, but what really matters is that in the good times you should be ensuring you are in a strong position to deal with bad times. … If you are running a small deficit, the combination of economic growth and inflation can mean that the overall debt burden is still coming down.

Absolutely right. If the extra debt we take on in a given year is outpaced by the growth in nominal GDP, then the debt burden as a share of GDP will fall.

In my defence, that’s not what’s happened in recent years. Borrowing has been a bit too high for it to be compatible with overall debt reduction: public sector net debt as a share of GDP has grown every year since 2001/02.

But the fact that, from then to 2007/08, debt grew by only 6.8% of GDP as compared with annual deficits summing to 15.8% of GDP, illustrates that growth does indeed reduce the debt burden of new borrowing.

G7 in recession

Hopi blogged about GDP data last week, after the news that France and Germany have had a quarter of positive growth.

Now that Japan has had the same, I thought I’d put up a graph of how the G7 countries have fared (data from here and here and here).

Praise Canada!

Saturday, August 15, 2009

MPs deserve to be paid handsomely. Oh wait, they are

Alan Duncan is half right. MPs are indeed treated, by the public and the media, like what the Telegraph tactfully paraphrases as “****”. This is unfair. They do an important and difficult job, and most of them put a hell of a lot of effort into it. They do this job knowing that their personal performance has fairly little bearing on their re-election prospects.

But he’s also half wrong. MPs’ remuneration is and will remain a damn sight more than “rations”. And this is atrocious:

No-one who has done anything in the outside world, or is capable of doing such a thing, will ever come into this place ever again, the way we are going.

It is a sad thing to assume that the only worthwhile achievements are ones that pay a lot of money. It’s another sad thing to assume that high achievers are only motivated by money. And it’s a third sad thing to assume that an MPs’ salary – £64,766 – isn’t an awful lot of money. It puts them comfortably into the top 10% of earners.

I have nothing against very rich people being MPs and ministers. What worries me is when we have MPs and ministers (and mayors) who realise neither how very rich they are nor, by implication, how comparatively hard up are low- or even middle-income households.

Maybe the only solution is to take the current dynamic of mood swings, distrust, loathing, fear and co-dependence between politicians, public and media to its logical conclusion. Very simply, we could bring back the ancient Celtic tradition of king-sacrifice. We put them into power, lavish them with adoration and treasure for seven years, and then all get together to ceremonially execute them.

It’s kinder and fairer then the current system (and ultimately cheaper – think of the savings on pensions). It would satisfy everyone: the egomaniac politicians get to be deified, pampered and then pass into legend; the media get to build up heroes only to brutally tear them down; and the public get to vent their anger before they get too sick of the same old faces, as well as having a nice day out.

Wednesday, August 12, 2009

Where the record deficit comes from

The public finances are in a mess. Here’s a history (and Budget 2009 projections) of public sector net borrowing:

To see how we got to this soaring deficit, we need to look at two periods: BC (Before Crunch) and AD (Anno Debiti, in the year of our debt).

1: Before Crunch

For the six years from 2002 to 2008, Gordon Brown ran annual deficits in the range of 2.2 to 3.3% of GDP (average 2.8%). Not huge numbers, and indeed this period followed three years of surplus and one of balance. Brown can also truly say that the deficit in every single year of his chancellorship was lower than in every single year from 1991 to 1996.

But to run a modest deficit year after year during a period of decent growth and high employment – as the period before was not – is risky. You can get away with it for a while, especially if you’ve previously paid down a good chunk of the national debt, but it’s risky to let it go on. The economy might run into trouble.

Why did we have these deficits?

The Treasury forecasts of GDP growth during 2002-08 were a little optimistic, but not hugely so, and forecasts of government spending tended to be pretty good; the problem arose on the revenue side.

This graph shows government revenues relative to GDP (thick black line) compared with a series of Brown’s Budget forecasts (dotted coloured lines):

Year after year, Brown predicted the Treasury’s income was about to rise to 40% of GDP and above; in reality, it never even reached 39%. If revenues had come in as forecast, there would have been pretty much no deficit at all over this period. But when it became clear that the money persistently wasn’t appearing as expected, Brown should have raised taxes and/or rethought his spending plans to deal with the emerging structural deficit.

A couple of other points about the BC period bear notice.

First, there was a boom in the taxes coming from housing and finance, as Budget 2009 explains:

In 2002-03, financial and housing sector receipts were equivalent to 3 per cent of GDP. By 2007-08, these receipts had increased to 4¼ per cent of GDP. The rise in housing and financial sector receipts from 2002-03 to 2007-08 accounted for half of the increase in total current receipts over this period.

These revenues were of course most welcome, but this situation left the public finances more vulnerable to a financial and housing market crash – should there be such a thing.

Second, while the Treasury generally judged GDP growth not too badly, it seems to have overestimated the economy’s trend rate of sustainable growth – the speed the economy can grow without risking inflation. Indeed, on the standard measures, inflation was impressively low. Asset prices, however, were quietly bubbling up.

Robert Chote of the Institute for Fiscal Studies argues that the Treasury mistakenly raised its estimate of the trend rate under Brown, and thus failed to notice a widening output gap. Giles Wilkes of the CentreForum think-tank takes a similar view, although he notes: “This analysis benefits from considerable hindsight.”

True enough: back BC, other organisations took a similar view. As the National Audit Office judged in 2006:

The Treasury’s revised underlying growth rate assumption… is below the range of external forecasts of the long-term growth rate. It is also at or below the average of external forecasters’ medium term growth projections. On this basis the revised assumption is reasonable and cautious.

So, a common error. Wilkes observes:

In this way the Treasury’s mistake was remarkably similar to that made by the financial sector as a whole: to disregard high levels of debt as a potential limit on future growth. Had the government been aware of this limit, it might have recognised that the economy had grown faster than its sustainable rate, and that it needed a smaller budget deficit to be assured of balance over the cycle.

2: Anno Debiti

Looking at the explosion in public borrowing that has followed the recession, many have concluded that the bulk of this rise is due to what a paper by the Policy Exchange think-tank calls a “second surge in spending”. This graph, showing the Budget 2008 projections of government spending and revenue compared with the 2009 projections, seems to bear that view out:

There’s a significant but not massive fall in revenue, while the rise in spending truly is massive.

However, that graph misses one key fact: because its figures are as percentages of GDP, it overlooks the collapse in GDP. My next graph controls for this, giving the actual amounts spent and received (in constant 2007/08 prices):

(Cash numbers from Budget reports adjusted by GDP deflator.)

Quite a different picture. The rise in spending relative to the 2008 projections, while sizeable, is far exceeded by the fall in tax revenues.

Why is there such an apparent surge in spending as a share of GDP? Why is this happening to a far greater extent than during previous recessions? The short answer, as Wilkes says, is: “This is the first serious recession since inflation was defeated.”

GDP growth figures are normally given in real terms, controlling for inflation. But when you calculate something (debt, spending) as a share of GDP, you divide by nominal GDP – the cash value of the economy, which can go up due to genuine growth or to mere inflation. Roughly speaking, if economic activity stagnates but the price of everything rises 2%, then you have zero real growth even while nominal GDP rises 2%. Likewise, if a recession is accompanied by high inflation, nominal GDP can rise even as the economy contracts.

From 1979 Q2 to 1981 Q2, real GDP dropped by 5.9%. But because of the high inflation of the time, nominal GDP rose by 29%. From 1990 Q2 to 1992 Q2, real GDP fell by 2.5% but nominal GDP rose by 9%. There was government borrowing during both recessions, but when worked out as a share of GDP (still nominally increasing), it didn’t end up looking that bad.

In this recession, where inflation is very low bordering on the negative, nominal GDP is taking its first sustained fall in living memory. The result is that the rise in spending, borrowing and overall national debt as a share of GDP is magnified.

We should not be wishing we had high inflation, though. While it’s true it would be making the new debt smaller relative to GDP, it would also be making it more expensive to pay. High inflation makes the bond markets demand higher interest rates on government debt. Wilkes again:

a government that borrows when real rates are 6 per cent, as they were during Margaret Thatcher’s administration, requires a very good reason for doing so.
Conditions are now very different. The bond market lets the government borrow at a real cost of 2 per cent or less. The public debt amassed during this recession might well leave a smaller interest burden than that paid by the Thatcher government. It is far more rational to allow the fiscal deficit to take the strain during a recession when real rates are 2 per cent than when they are three times that level.

He argues that “collapsing nominal GDP” means that, to keep spending and borrowing down as a share of GDP “would have required unprecedented fiscal austerity through the slump”, which would have “prolonged the period of falling GDP, ultimately making the debt problem worse”.

3: The future

So what to do once the recovery is underway? Inflating your way out of debt is short-sighted folly; growing your way out of debt is a better strategy. There’s no denying that tax rises and spending cuts will both be needed, but if these are too soon or too big then they’ll risk stifling the recovery. It’s a delicate balance and I don’t envy the people who’ll have to strike it. I fear, though, the view that treats zealous fiscal tightening as a symbol of toughness.

I’ve quoted Giles Wilkes’s paper a few times – I highly recommend it, as it’s strong on analysis, even-handed on criticism and lucidly written. Probably the best thing I’ve read about the public finances, although I like to think my charts are prettier than his. I’ll finish by noting his dissection of the national debt in 2012/13.

Wilkes breaks down the projected increase in the national debt into different categories. Based on his calculations, almost 90% of the extra debt (not counting whatever the financial rescue packages end up costing) is due to a loss of tax revenues and only 10% to higher spending. Of the 90%, about a quarter is down to the loss of “volatile ‘bubble’ revenues” (e.g. from housing and finance), on which the Treasury had become over-reliant, and the rest to lower taxes from the rest of the ailing economy.

Furthermore, while 54% of the total debt in 2012/13 will simply be debt that there would have been anyway without the recession, Wilkes judges that three-tenths of this will be due to the structural deficit: while its origins were definitely BC, it’s still there and still pushing up borrowing. So a bit over a quarter of the total debt, he reckons, will be due to bad government policy and the rest the ‘ordinary’ effects of the recession.

Monday, August 10, 2009


Huzzah! I’m FIT TO BE A BRIT! I’ve passed the British Citizenship Test! Or rather, I’ve passed the online mock questionnaire based on samples from it (hat tip to Don).

This means that:

  • I am officially BETTER than JOHNNY FOREIGNER.

  • I am officially BETTER than 86% of SO-CALLED BRITS, who FAILED, and who will surely soon be DEPORTED for TREASON.

While the actual test itself isn’t online, there is a guide to the topics. Flushed with success, I’ve had a stab at some of these too:

Q: Where have migrants come from in the past and why? What sort of work have they done?
A: Migrants have come from Overseas. They come here because Overseas is made of grease, disease and trickery, whereas Britain is made of beef, grit and pluck. They have taken our jobs.

Q: What is a CV?
A: A document whose contents purport to show your past successes but whose existence demonstrates your current failure.

Q: How is political debate reported? Are newspapers free to publish opinions or do they have to remain impartial?
A: Political debate is reported in the sports and showbiz pages. Newspapers are banned from printing facts but may publish as many opinions as they like, as long as those opinions are wrong.

Q: How many people in the UK own their own home?
A: It’s down to about 12 now. But those 12 are MPs, so they actually own 24 houses between them. Although some of those houses are for ducks.

Q: What do estate agents do? What do solicitors and surveyors do?
A: Nothing. Slowly.

Are YOU a good Britizen? Take the test. Or try Simon’s more practical alternative citizenship test.

Sunday, August 09, 2009

Tories demand honesty from selves over VAT

The Sunday Telegraph reports:

The Conservatives are studying plans to increase VAT to 20 per cent if they win power at the next election… The proposal… is being “very actively considered” at the highest level, according to senior shadow ministerial sources.

In response, Shadow Health Secretary Andrew Lansley said: “As far as I am aware we have absolutely no such plan and I know there have been no such senior level discussions.” Shadow Foreign Secretary William Hague added that there were "no plans in existence" to raise VAT.

However, the Conservatives have form on raising VAT after denying any such plans to do so.

Shadow Chancellor George Osborne immediately demanded he come clean about his own plans, accusing himself of “planning to deceive the British public”. He said that this report proved that the Tories “have a secret tax bombshell set to explode under the British people”.

And David Cameron angrily attacked what he described as his own “secret plan to increase VAT”, saying “it’s absolutely clear [I am] planning a VAT bombshell, a VAT bombshell to hit every family in the country”.

The hoo-hah follows a similar kerfuffle last November, when a Treasury document showed that Labour had looked at the option of raising VAT to 18.5%. On that occasion, the Conservatives were very understanding of the difference between considering (and rejecting) a proposal and forming (and concealing) a plan, and they gentlemanly made no lurid political hay at all.

Saturday, August 08, 2009

Fighting the seven signs of apparent profundity

Larry at the Barefoot Bum says:

the humanities (i.e. non-scientific, especially philosophical and political) intelligentsia lacks a serious ethical commitment to the ordinary, prosaic, factual truth.

The humanities have looked down their noses at the scientists for more than two millennia, going back to ancient Greece. It was the scientists who adopted a commitment to the factual truth by desperate practical necessity: you just can't do science at all unless you're confident in your colleagues' data.
Once you have a commitment to the factual truth, you undermine not only outright lies but also bullshit, i.e. assertions of truth with no factual basis. And without bullshit metaphysical, mystical and political, 95% of the professional humanities intelligentsia would be working at McDonalds. Contrawise, if you deprecate the need for factual truth to permit bullshit, it becomes just a solecism to lie about the facts. The facts are, after all, mostly irrelevant: the real meat is in the apparent profundity of the bullshit.

There’s a lot of truth there, although it’s worth remembering that a lot of these people, while disparaging science, also like to co-opt the appearance of its rigour in order to flavour their bullshit.

Right on cue, Bryan Appleyard reviews Robert Wright’s book The Evolution of God:

Wright’s case is that, from a purely materialistic perspective, [religion] is indeed good for us, and even that God exists, though perhaps both “God” and “exists” should be in inverted commas. …
Wright is an agnostic and treats God, for the most part, as a product of the human mind. But this does not make him any less real. …
…humans… require a different type of explanation from rocks. It may be natural selection or it may be some innate force in the universe. Either way, it is reasonable to associate this force with morality and God.
This is an entirely decent and persuasive argument against the intolerance of the atheists, in that it shows religion makes perfect sense, and getting irritated because you think it’s “untrue” is just silly. The religious share with scientists the intuition of underlying order and neither side is in a position to say the other is wrong.
…this is an important book in that it is a scientifically based corrective to the absurd rhetoric of militant atheism.

In the same sense that the jargon in cosmetics adverts is “scientifically based”?

Thursday, August 06, 2009

Joining the propertied (and indebted) classes

So, I’ve finally had an offer on a flat accepted, although not without a small bidding war. But the sack of imaginary cash I waved at them seemed to do the trick. Now of course I need to make that sack less imaginary and to find out whether this place is actually worth the money that I’m spending on finding out whether it’s worth the money… Welcome to Mortgage and Conveyancing Hell.

I feel a bit like this guy from XKCD:

They're wine descriptions, I swear...

...elegant, round and mouth-filling, balanced by crisp acidity for a long and memorable finish.

A gentle pneumatic press ensures the clearest possible juice.

Wednesday, August 05, 2009

An idle thought

Open candidate selections, a la Totnes Tories, seem to be a pretty popular way of opening politics up.

Open candidate selections are quite expensive for local parties to run.

People are very sceptical about state funding for political parties, because they don’t like the closed political class and they don’t want their money spent on a load of yah-boo-sucks billboard ads.

I wonder whether there might be some way of reconciling these facts.

Attitudes to public healthcare

Liam quotes Michael Prell, a US right-winger, on public healthcare:

You should manage your health. You should have the power to choose whichever option serves you best. The power over your health -- your very self -- should be in your hands. … What we desire is liberty. The freedom to choose. Domain over our own bodies. Ourselves.

Liam doesn’t share this view, but he does wonder about the dominant UK attitude to healthcare:

I know lots of people who have bigger houses than I do. Nicer clothes, better cars and more exotic holidays. … I also know some who do considerably worse on all these things. As a society we’re largely comfortable with those disparities. …
The reason for that comfort, it seems, is that on all these fronts some sort of acceptable minimum is in place. … We’re comfortable with the lottery of life provided nobody falls too far…
So why are British voters so distinctly uncomfortable with ‘safety-net’ provision in healthcare? Why can’t the focus of our debate be the adequacy of that minimum level to which everyone is entitled regardless of their means? Instead our debate (and the language we conduct it in) is focused on the ‘top end’ of healthcare provision and discussions around why everyone can’t have the best available treatment.

Two thoughts: first, I think we all do actually accept that resource constraints mean that the NHS can never provide the very best care to everyone. In fact, it falls a good way short of that. Yes, there’s political rhetoric that suggests perfectibility (as there is in most policy areas), but that’s hard to take seriously other than as a gesture towards ongoing improvement.

Second, Liam does have a point. Nigel Lawson wasn’t far wrong when he called the NHS Britain’s “national religion”. The thought of a ‘basic minimum’ level of healthcare makes us fearful of how low that might be in a way that the thought of having a basic minimum level of material possessions doesn’t.

The reason can actually be found in the quote from Prell: your health is about “your very self”, so poor healthcare is an existential threat while relative material poverty, however damaging, typically isn’t seen that way. It’s not about what we have, it’s about who we are, and I think that explains a lot of the resistance to treating healthcare as a commodity. The British public are likelier than Prell to favour the state over the market in this case.

Tuesday, August 04, 2009

Today, I am mostly…

…engaged in a bidding war via an estate agent with somebody who may or may not exist and whose intentions and resources are unknown.

The housing market is not a market at all but a series of bear traps. In a minefield. Made of quicksand.

Double-entry book-keeping

HSBC yesterday announced half-year profits of £2.98 billion. And Barclays yesterday announced half-year profits of £2.98 billion.

City analysts said that the identical numbers were no coincidence, as the two banks had quietly bought each other up during the financial panic last autumn, while everyone was distracted by the twitching corpse of Lehman Brothers, the brief possibility that Gordon Brown might not be so utterly detestably useless after all, and the horrific knowledge that George Bush was still actually President.

According to one City commentator, the two institutions are now in fact one institution, while also still being two, in a way that is impossible either to understand or to deny. “It’s a bit like the Holy Trinity, only without the other one.”

“This sort of thing is quite rare but perfectly sound in theory,” said a City observer. “If the two don’t just merge but simultaneously each buys the other in full, then you get a situation where HSBC owns everything that Barclays does, and in turn Barclays owns all of HSBC, and so on. It means that they get to count each other’s assets as their own as many times over as they like, and that any losses can be ignored as relating to their subsidiary and/or parent company.”

A City pundit added: “This kind of bold innovation will allow finance to rise like a phoenix made out cocaine from the ashes of the credit crunch caused by mortgage-backed securities, collateralised debt obligations, credit default swaps, Jews and special investment vehicles.”

(And on the subject of bank profits, I recommend The Daily Mash: “Furious fatcat taxpayer money bonus and angry meltdown shame greed, it emerged today. Barclay men show disgraced £3bn taxpayer jobless recession profit despite shame bonus and taxpayer meltdown crunch disaster. But as bank shame anger rose to fatcat, outraged tax money say bail-out meltdown pay for risky bonus shame greed fury.”)

Candid Cameron

Bravo to Alex Ross for digging out the following old quote from David Cameron:

After the recession of 1989 to 1992 we had to raise taxes because the budget deficit reached dangerous proportions. The alternative of slashing spending and cutting benefits would have been inhuman.

A nice contrast with his current policy.

Cameron wrote a series of columns for the Guardian as a backbencher between 2001 and 2003, and while I don’t think there’s anything truly outrageous in them – he’s no fool – there are some that suggest he has long had a cavalier attitude to politics, treating it as a bit of a game.

For instance, he mused about his own “opposition disease”, in which “part of you actually starts wanting things to get worse. …an enthusiastic Tory backbencher like me can hardly wait to switch on the Today programme every morning in order to listen to all the bad news.”

The there were his contributions to a Commons debate on foxhunting:

When John McFall (Dumbarton) gets to his feet I shout "go back to Scotland, you've already banned it." Interrupting Gerald Kaufman during one of his lengthy and over-precise questions to the minister, I heard myself baying "shut up, you pompous prat." I even found myself barracking our very own Ann Widdecombe. As she spoke eloquently about hounds pursuing foxes, I kept interrupting: "yes but what about your cats?"
It was pathetic. And not even particularly amusing.

That last line is a rather glib attempt to eat his cake and have it: first hurl abuse in Parliament, then brag about it in the paper, then pretend to tick yourself off for it. (And it’s fairly lame abuse, the tw*t.)

And there’s a fond reminiscence of his time as a stagehand in the Punch and Judy Show:

Over 11 years ago I was plucked from Conservative central office, sent to No 10 and told to help on John Major's question-time team. I had to scan the papers, work out the likely questions and think of killer facts and snappy one-liners.
Willing Conservative MPs were primed with helpful questions, hostile Labour members rebutted with points about tumbling unemployment figures or quotes from their militant past. It was better than working for a living.

Clearly, he’s grown up a bit since writing all this stuff. But he was 35 at the time, which you’d think ought to be old enough. Oh, and the unemployment figures consistently rose, not tumbled, during the period he mentions.