A Port in a Storm in a Teacup

I doubted people could be quite so dumb as to start blogging in their numbers (well at least half a dozen) about how Superstorm Sandy will be good for the American economy because it will 'create jobs in construction'.  But apparently this claim is being made.  This idiocy was addressed as far back as the 19th century with Bastiat's 'Broken Window Fallacy' - which is basically the misjudged rhetorical question; what would happen to glaziers if nobody ever broke windows? 

Just to illustrate how daft the claim that Superstorm Sandy will be good for the American economy because it will 'create jobs in construction' is, let me give you a few similarly fatuous statements, and you see if the logic holds up any more compellingly:

1) A tree landing on your house is good for your household economy because it will keep you busy in the evenings when you get home from work.

2) A pandemic is good for the country because it keeps those in the medical services busy.

3) A mass rise in unemployment is good for the economy because it keeps the Job Centres fully staffed.

4) A rise in crime is good for the country because it keeps the police busy in work.

Answers on a postcard to "I'm-an-ignorant-and-insensitve-buffoon.com"

Mourdock's Direct Line to God

Republican Senate candidate Richard Mourdock claims to know God’s mind on abortion - "I struggled with it myself for a long time, but I came to realize that life is that gift from God," Mourdock said. "And, I think, even when life begins in that horrible situation of rape, that it is something that God intended to happen."

On these grounds, Mourdock opposes abortion.  I presume, then, that he’ll be stating his opposition to any help from the medical services in the wake of Superstorm Sandy.  Presumably if pregnancy from rape is within Mourdock’s perceived sphere of God’s will, and Mourdock knows God thinks abortion is not the right kind of intervention after a disaster, then not intervening to help after Superstorm Sandy might be part of God’s will too.  Oh wait, I forgot, some disasters aren’t God’s will, but pregnancy is, so if a raped woman falls pregnant then the rape was not of God’s will but the pregnancy was, so no abortion can be permitted.

But I’m confused; if a lout sets fire to a house, can firefighters put it out, or must we leave it because fire is of God’s will?  What about fires in the living room that keep grandparents warm, or attempts to put the economy straight, or mobilisation of troops in war torn countries – and if so, in which countries does God want us to intervene, and which should we stay out of?

You see the absurdity; if, according to Mourdock, God wants the pregnancy but not the rape from which it occurred, then there must be a huge list of things in the world that occur, some of which God does want to occur and some He does not.  I presume the only way to know for sure on each case by case issue is to ask Mr. Mourdock.  What about if he’s unavailable when I want to know something important?  Maybe Pat Robertson will be free instead. 

The 'National Debt' Fallacy

The Government keeps telling us we are in financial crisis by alluding to our national debt.  When we are in recession the old issue of national debt seems to crop up every few days – most recently on BBC1's Question Time, and again by Obama and Romney in their Presidential debate.  All this carries over from last year when we had (from memory) a number of MPs and commentators using the national debt as a stick with which to claim their opponents do not understand the situation as well as they do (Dianne Abbott, Chris Huhne, Simon Hughes, Douglas Alexander, you know, the usual clan of economic illiterates).  The basic mess they make of the analysis is by asserting that the national debt drains the wealth of British people because of the accruing interest.  The second mistake they make is in thinking that money borrowed from Europe or China or America by the British Government makes us the taxpayer worse off than if we were borrowing it from the British Government.  It makes no difference – but I’ll come to that in a moment – let’s start with the first mistake; that the national debt drains the wealth of British people because of the accruing interest.  

The fact is that every single pound of interest British people pay on the national debt comes right back into the pockets of British taxpayers.  If a politician doesn’t understand that, he or she is not fit to commentate on the economy or obtain your vote.  Let’s make it simple; suppose the Government owes £100 and pays £3 a year in interest. The alternative to paying the specified interest is to raise current taxes by £100 and pay down the debt. If you do that, the taxpayers are going to have £100 less in assets, and will therefore, of course, earn less interest on their savings. That costs them (roughly) the same £3 a year.  That is to say, the damage was done back when the Government initially spent that £100 (point of note; if the £100 had been spent wisely, the damage might have been worth doing – but it might not have been).  Once that £100 has been spent, the taxpayers are out £3 a year forever, irrespective of whether the debt is ever paid off.

That’s why the Government’s interest payments come right back to the pockets of British taxpayers. The Government pays £3 a year as an alternative to taxing you £100 and paying down the debt. The choice to do that puts an extra £100 in your bank account, which earns you £3 a year. There’s the £3 a year coming right back in your pocket.  Another point of note for those worried about the debt accruing interest and the Government sending much of our money abroad: the money comes back to you regardless of whether the Government makes its interest payments to British people, Chinese or Indians.

Of course, you might choose not to save that £100 the national debt is saving you, which is fine, because presumably you’re spending it on something that you value more than an interest flow of £3 a year. Congratulations – you’re happy too.  Some might complain that they have no savings vehicle that will pay them the same rate as the Government’s paying on its debt. That’s where they’d be wrong – if they so wish they can save by buying Government bonds, which will acquire for them exactly the same rate the Government is paying on its debt.

I’m not saying national debt is good – it isn’t – it’s just not anything like the politicians tell you it is.  They do this to have power over the anxious taxpayer.  If the Government borrows an extra £10 billion pounds tomorrow in order to cut taxes by £10 billion pounds, it will have to make, say, an extra £300 million a year in interest payments (for which we the British taxpayer are collectively responsible) and at the same time, we’ll collectively earn an extra £300 million on our savings portfolios, so we break even.  This is economically neutral with regard to the taxpayer’s gains and losses, but the Government is dressing it up as a net loss, to convince you that this is a spectre for which the opposition party is responsible.  It’s only Government spending that leaves us worse off, not debt.

Now onto the mistake that says money borrowed from Europe or China or America by the British Government makes us the taxpayer worse off than if we were borrowing it from the British Government.  To see how absurd this is, I’ll give you an illustration.  Suppose the Government wants to buy military equipment for the armed services for £100 million.  They could pay for the equipment by raising our taxes, or they could borrow the money from, say, China.  If they tax us we pay now, if they borrow from China we pay in future taxes. It’s exactly as if George Osborne and the Treasury had collected your taxes and then lent them back to you, with a promise that they’ll be knocking on your door in a few years to collect the debt.  When the British Government borrows from the Chinese, it’s exactly as if British taxpayers had borrowed from the British Government.  Since the assets of the British Government are, ultimately, the assets of the British taxpayers, it is exactly as if the British taxpayers had borrowed from themselves.

The moment George Osborne and the Treasury borrows from the Chinese, your taxes are being lowered relative to what they would have to have been in the absence of the borrowing.  Let me make it even clearer;

Scenario 1: The British Government taxes you a one pound to pay for a pilot’s helmet, which you remove from your £100 savings account, leaving you £99. A year from now, your bank account has grown (at 10% interest for simplicity’s sake) to £108.90.  That is £99 + £9.90.

Scenario 2: Instead of taxing you, the British Government borrows that pound for a pilot’s helmet from the Chinese. This leaves £100 in your savings account, which grows to £110 a year from now. At that point, the Government taxes you £1.10 to pay off the Chinese, leaving £108.90 in your bank account.

Scenario 3: The British Government taxes you a pound for a pilot’s helmet, reducing your bank account to £99. Then it lends you the pound back at 10% interest, raising your bank balance to £100, which grows to £110 a year from now. At that point the Government demands repayment of its loan (the pound and 10% interest), so you hand over £1.10, leaving £108.90 in your bank account.

So you see, all three scenarios are exactly equivalent from the taxpayer’s point of view.  As far as the taxpayer goes, borrowing from China makes us no worse off than scenarios 1 and 3.  The Government is either lying to you when it says differently, or its ministers are representatives who don’t know what they’re talking about.  I think it is a bit of both – but the Government definitely lies about this because it wants you to think that there is a burden related to interest on past debt.  As I’ve just shown, there isn’t – because under the same principle as my 3 scenarios, it is obvious that interest payments on our past debts are not a burden to the taxpayer.  What the Government adds to your debt burden by avoiding raising taxes it also adds to your savings account.  Moreover, this is also why borrowed money is not an expenditure, it is a dividend.  When the British Government spends a pound on a pilot’s helmet that is expenditure; when it lends the money to Bob it is not the same kind of expenditure, because borrowed money doesn’t disappear in the same way that a pilot’s helmet disappears.  The money used to buy the pilot’s helmet is ready to be borrowed again so Betty can buy a fridge magnet or Jack can buy shoelaces. 

Lastly, and on a slightly different issue, to those who complain that our future generations will be worse off paying off our debt – no they won’t – the same thing I’ve said above applies to them as it does to us.  Besides, if you really feel bad about your future grandchildren, you can put some of your money in a trust fund for them and not spend it yourself.  But if you do so because you believe in charitable giving, you should consider that that’s the opposite of charity, because your grandchildren will be wealthier than you are.  Many people assume that we should try hard to pay off the national debt for the sake of our grandchildren.  The opposite is true; a national debt holds down our taxes at our grandchildren’s expense.  If you care about them – forget the national debt and add tax savings to their trust fund.

A Few Thoughts On The Presidential Debate

I've just been watching the first two Presidential debates, and jotting down a few back of the envelope notes in a rather hurried way trying to keep up. A few thoughts, at quick pace:

1) Romney: "If gas prices are up, our energy policy isn’t working".  Erm no, gas prices are part of an economic nexus far beyond the ambit of energy policies.  I hope Obama will agree that it is not the energy department's job to lower gas (or as we'd say in Britain 'petrol') prices?

2) Obama: “Natural gas isn’t just appearing; we’re encouraging it”. This is like Dan Quayle inventing the traffic flow. The Government does not produce natural gas.

3) Obama says he wants to build manufacturing jobs in America. Nice sentiment, but that's all it is really. It is not the President’s job to decide which sectors should thrive in which countries. And doesn't he realise that importing cheaper manufactured items from China and South America makes America richer?

4) Romney: "I have a five point plan that will create 12 million jobs".  That's disingenuous - it is not possible to predict with such precision that 12 million additional jobs will emerge.  But it sounds good to the electorate.  It's either a foolish statement or a dishonest one. 

5) Obama again with “We’re going to produce x cars and y cars”. Heck, if you want to be a manager of a car company, go to the job centre and get a job at a car company. If you want to be President of the US, stop trying to be an auto executive.

6) When Obama says that reducing Government debt is the Government’s  moral obligation to the next generation , he shows he doesn't understand what national debt means, or how by itself national debt is morally neutral.  Point of note; Obama makes a similar error moments later when he calls a £5 trillion tax cut a £5 trillion “cost”.  Bah, no it isn't! I probably will blog about this soon

7) There's a real inconsistency if one reads between the lines; Obama doesn't want to enforce morality, and he repudiates top down economics, but he wants to keep talking about the Government's plan to direct industry and manufacturing by saying who should trade with who, and which products are more desirable for the American economy.

8) Romney doesn’t do much better - he wants to cut tax rates to spur small business.  I understand the moral sentiment behind this - but it's flawed.  The reason most extant small businesses are small is because equivalent bigger businesses are better.  It is better to promote tax breaks for new (as yet unformed) businesses, subject to stringent business analyses. Future big businesses are probably unformed, not extant small businesses.

9) Obama claims to have “saved jobs” by keeping cheap Chinese tyres out of the United States. The part he left out is that Americans are paying more for tyres because of this.  Plus, the flaw he doesn't realise is that this has only saved jobs in the car industry.  Mr Texas factory owner has had to let people go because the products he used to sell to China are now not being bought due to Mr Tyre producer in China losing his exports to the United States.  The moderator doesn't help with his “How do you convince companies to bring manufacturing back to the US from China?” - it seems few understand basic economics.  If most of the American public don't either, and have been plainly led to believe China is bad for the American economy (it isn’t), then Presidential candidates might just be pandering to win the approval of the consensus.

10) Silly cock up here; Romney propounds views on the advantages of legal immigration, then opposes illegal immigration for spurious reasons, most of which amount to the same net benefit as legal immigration for the United States.

My final thought is this.  Despite the good oratory skills it's clear that there are many cracks in both candidates’ reasoning, which I’m sure would be noticed more if rhetoric was turned into policy.  Put it this way, given some of the absurdly illogical statements, I wouldn't pick either of them for my think tank or policy brainstorming group, which is hardly the sort of thing one wants to say about someone in charge of a world superpower.

As for the preferred choice, I have several reasons for favouring Obama, but perhaps the biggest is the simplest; I don't want a President who has such a narrow perspective on reality and such a dearth of imagination that he cannot see that Mormonism is a man-made cult.  Such a man shouldn’t be in charge of a nation like America.  I would wish Obama luck for his second term.   

Let’s Stop Being So Tentative And Uncourageous When It Comes To Islam

I don't find it difficult to become dissonant at Islam - so when I read two things in a week that astound and anger me, blogs like this just roll off the tongue (or keyboard). 

The first thing I read was that craven officials at Norwich City Council have issued a trading ban against stallholder Alan Clifford because his display contained a booklet criticising Islam (I read it and it seemed to me to be not an inflammatory booklet, just one that cast aspersions over Islam*).

Now I don't think I would have much in common with Alan Clifford - from what I've been told (from trusted sources, and from reading his material) he is a fundie, which means his Islam booklet really amounts to fundie vs. fundie.  But that aside, let's be clear, Norwich City Council's cowardly interjection is part of a disgraceful wider picture, and represents everything that is so timorous and spineless about the emerging politics in this country, and the willingness to concede too much ground to Islam.  Two key bits of information are that it was after a single complaint that Norwich City Council has decided to ban the outreach on Hay Hill, but also that it was cited by Norwich City Council as being for “equality reasons.”

 

“Although the police advised that no criminal offence had been committed, we have a duty under the Equality Act 2010 to foster good relations between people of all backgrounds and religions. By allowing premises owned by the Council to be used by an organisation publishing such material, we would be failing in that duty.”

This is absurdly ignorant – even though, in fairness to the Council, it is not their fault that the Equality Act 2010 and the Public Offence Act is so grossly restrictive and imprudent. I think this equality act has got a lot to answer for, because one kind of equality it clearly isn't accounting for is one of the most important ones - the equality we all should have in our right to freedom of expression.  One thing that diminishes “good relations between people of all backgrounds and religions.” is when people are limited by law in their ability to speak openly and freely about things, and when different concessions are made for different groups (which is what has been tacitly happening with Islam in recent times, and is likely to get worse). 

 

As I've said repeatedly, I think radical Islam is an extreme, patriarchal, repressive, backward and morally stultifying stain on humanity.  It is perhaps the worst human invention of all time - and one that appears to be gaining more and more impetus against political parties and governmental figures with no backbone.   Of course, you’re going to say that many Muslims don’t fit this description, and you’re right.  But that misses the point – it is the ‘religion’ that is all those these things – and the Muslims who are kind, intelligent, liberal, tolerant and progressive can be, and often are, all of those things in spite of Islam not because of Islam.  I would ask for anyone to defend my right to express that critique, just as I would defend any Muslim's right to speak openly about what he or she believes (as long as it is devoid of hate speech).

Here is what opponents of this view do not seem to understand.  Whenever we hear a voice or read an opinion which is vastly different from our own, or the common opinion, not only should we give that person the right to express themselves, we actually deny ourselves the right to hear or read the expression if we choose to seek refuge in the false security of consensus.  There are, I would say, three works which stand up as regards this particular subject.  John Milton's Areopagitica, Thomas Paine's Introduction To The Age Of Reason, and John Stuart Mill's Essay On Liberty.  The summarising central point of all the authors (if I may be so bold) is the following.  It is not just the right of the person that speaks to be heard, it is the right of everyone else to listen; and every time you silence somebody you make yourself a prisoner of your own actions because you deny yourself the right to hear something.  In other words, your own right to hear is as involved as the other person's is to have his or her view.  The freedom of speech is meaningless unless it means the freedom of the person who thinks differently.  We may not agree with everything we hear, but we do ourselves an injustice if we fail to hear the dissenting voices. 

The second thing I read was in James Delingpole's column in The Spectator, in which he talked of his niece's undisclosed "Middle-class state school in a pretty English cathedral city".  Apparently, despite being a school which is only 2% Muslim, the children are taught that whenever they say "Mohammed" they must suffix it with the "Peace Be Upon Him" phrase (PBUH).  Now I won't even get into to all the issues I have with the reverence of Mohammed, and what sort of character he strikes me as, but I will say how astounded I am that anybody outside of Islam would coerce or encourage British non-Muslims to utter words of reverence for a figure for whom they have not the slightest reverence.  This is just the case of more spineless cowardice - it must be, because, underneath, white middle class British non-Muslims do not have any such reverence for Mohammed or Islam, much less do they think he was a prophet. 

What on earth is wrong with so many people in Britain that they would succumb to the insidious dominance of Islamic thinking and give it a protective and exalted cultural niche that it does not merit?  Moreover, surely having people utter PBUH blithely is pretty meaningless - it only has meaning to those who utter it out of reverence; so even Muslims should wish that this kind of cultural ignorance and sycophancy is eradicated pretty quickly.   

Of course, it is important that we say all this with civility, consideration and good manners – and a lot of that seems to be absent in today’s society.  What we need is open and honest critiquing of things that have been given protection from analytical scrutiny for too long – but in a manner worthy of those aforementioned positive qualities that are so often scarce.  Instead what seems to be happening is that legislation is being put in place as an antidote to the pervading loss of respect and good manners. 

Remember, also, one of the best ways to show respect to a person is to be honest with them about what you think of their views and beliefs, and hope they would afford you the same in reciprocity.  The real spectre that needs to be faced is that instances like these almost certainly are the thin end of the wedge – there is worse to come as Governments slowly erode away freedom of expression and duck out of the challenge of facing up to a more open and diverse scrutiny of what people believe and how they came to believe these things.

* You can read Alan Clifford's Why Not Islam here? on his website.

A Shortcut to Moral Excellence



By and large, moral thinking can be summarised as the problem humans have in finding a system of thought that compresses all the multitude of possible scenarios into a more succinct rule of thumb that applies to everyone.  The best rule of thumb I know is the edict known as The Golden Rule.  When stripped of all the extraneous objections related to different tastes, and different levels of human ability, I think The Golden Rule remains the strongest moral principle we have considered.  "Do to others as you would want done to you" beautifully summarises the human heart, mind and emotions, and what it means to have consideration of others.  What’s so brilliant about it is that it is a succinctly compressed statement that acts as blueprint for just about every moral situation.

But although the Golden Rule is a great rule regarding how to treat others, the one thing it doesn’t do is tell us which of the many tastes, beliefs and practices are best.  Do to others as you would want done to you is a good rule of thumb, but it doesn’t tell us whether the abortion clinician has better views than the leader of the opposing anti-abortion group, or whether the man campaigning for heavier taxation of the rich is arguing more proficiently than the man who thinks the rich pay enough tax.  The Golden Rule only tells us that we should behave towards others as we want them to behave towards us.  



Thankfully, someone else has constructed a theory of what is better, by elaborating the Golden Rule to an economic principle.  The man’s name is John Harsanyi – a Hungarian Nobel prize winning economist who conceived the theory that ‘better’ means what is morally preferred when all self-interest is stripped away.  This means constructing moral principles based on a diverse society of people without your knowing how those principles will affect you.  If that sounds vaguely familiar to you, that’s probably because it is more widely known by what the philosopher John Rawls called a 'veil of ignorance' - meaning that the society we should choose optimally would be the one we'd choose for maximal fairness, equality and opportunity without knowing who we'd be in that society. This creates a template for moral propositions that avoid self-interest and work on the basis of probability. 

But it isn’t original to Rawls.  Rawls appropriated it for his theories of justice, but Harsanyi’s model is the original; it shows that most moral truths are true outside of the biases of the man who has stake in them.   He called his model ‘The Amnesia Principle’, and he wrote mathematical models to prove its efficacy*.  In practical everyday terms, it works like this; there may be a moral imperative to choose X over Y or Y over X, but the most lucid moral cogency comes from those who cannot remember whether they personally would benefit from X or Y. 

What Harsanyi’s ‘amnesia’ notion means is that moral optimisation is defined as the world you would hope to be born into without being able to remember which particular set of circumstances apply to you.  In other words, your basis for morality is constructed from conditions under which you have forgotten who you are in this society.  For example, under this principle, you would construct a fair immigration code without knowing whether you were an indigenous man or an immigrant; you would construct a fair 'abortion' maxim without knowing if you were an abortion clinician, a pregnant woman or a member of the anti-abortion group; and you would construct a fair tax rate without knowing if you were a high, medium or low earner. 

A moral precept or ethical rule about any situation has to be made with it bore in mind that those making the decisions could be affected by them negatively or positively once they find out where they fit into that society.  If you’re going to make moral systems, and you don’t know where you’ll fit into that society you are best making it as fair and proficient as you can.  It’s rather like the two hungry brothers who have a chocolate bar to share - their mother insists on ultimate fairness, so she lets the first boy cut the chocolate bar in half and then lets the second boy choose which piece he wants.  You can be sure as anything the first boy is going to try his hardest to cut it bang in the middle.  If he doesn’t, he feels the costs because his brother will leave him the smallest bit.

The idea behind the combination of the Golden Rule and Harsanyi’s Amnesia Principle is that those making the moral decisions without knowing how those decisions will affect them will try their hardest to get everything as good, accurate and fair as possible.  I think of moral reasoning as an application of our thinking used for fulfilling an overall purpose of progression. But what do we base the progression?  I think it is based on the something shared by all minds - the human conscience.  Even though we are flawed creatures, we still are able to conceive of a reality in which our failings are significantly lessened.  We do this because our minds are designed with a conscience that acts as an indicator of what is right and wrong, and how we can apply what is 'right' to an overall progression.

To use an analogy, I see the situation as being rather like piecing together a jigsaw.  The picture on the box is our shared goal of creating a supreme set of moral maxims that benefits humanity, and our jigsaw pieces are the individual ideas and experiences that we attain along the way.  Naturally each generation benefits from the work of the previous generation, with each succession of adding to the jigsaw producing a more complete picture for the next generation to work with. 

One way to object might be to say that everyone's final picture would be different, or that there may not be one definitive final picture for morality.  But that's to miss the analogy; the picture that equates to the shared goal of creating a supreme set of moral maxims is, in fact, the conscience - because it is the conscience that acts as the map of the territory.  And humans have more or less the same inherent conscience because we all have brains built in more or less the same way by natural selection.

You may ask, if we all have the same sort of idea about the moral picture that we ought to be trying to attain, why has it taken us so long to progress?  And why do we fail so miserably so much of the time?  The answer goes back to the very thing Harsanyi was trying to eradicate from his equation - the burden of self-interest.  While we can all see the picture we are trying to build piece by piece, our individual interest (and interest related to family and friends) outweighs our interest in the collective.  Under Harsanyi's principle combined with the Golden Rule this problem is no longer there, because moral reasoning becomes a matter of maximising the overall good through the picture of a society in which we'd all like to live.

* For further elaboration of the amnesia principle check out the very interesting work of Nobel prize winning economists William Vickrey and James Mirrlees, who took Harsanyi's principle and applied it to situations in which economic information is asymmetrical (like the moral hazard theory), and used the mathematics to determine the extent to which they should affect the optimal rate of policy making (which can be applied to a broad range of issues including moral situations, the economy, incentives, and various issues of prudent political practices).