Monday, 30 June 2014

If The Government Had Our Best Interests At Heart, They Would Make Most Of Us Pay For Our Health Care


Let me tell you something quite interesting - most Brits love our NHS; they think it is one of the best treasures in the world. So they probably would have been delighted to hear that, according to the latest report conducted by The Commonwealth Fund this week, our UK NHS is supposed to be the best in the world (with the US health care system being the worst). Although ‘best in the world’ is hardly a fair decoration when the data examined only consisted of data from 11 countries (New Zealand, Australia, France, Germany, Norway, Sweden, the Netherlands, Switzerland, Canada, Britain and the US).

If The Commonwealth Fund had broadened its research horizons as far as places like Uruguay and Singapore, it would have seen that the UK NHS is far from the best. Here’s why. Having 'free' healthcare is not the most efficient system for the people of nations that have it because such a system contains much more waste and inefficiency than if we all paid for our health. However, because we are not all responsible enough to pay for our health, it is probably true that we need an NHS presence to accompany a predominantly privatised health system.

That's the upshot - the majority of the NHS would be better if it was a privatised health industry (in previous ‘back of the envelope’ jottings I've reckoned on about an 80/20 market/State health care ratio). But as we know from public opinion, most people can't see this, which means most politicians are terrified to bring it up, instead preferring to gradually privatise health services in ways that go largely unnoticed, and at a pace that cushions the blow of gradual privatisation. Put it this way, in 50 years most of the UK health system won’t be run by the State, it will be a set of private entities operating within the purlieus of the market forces of supply and demand. 

In actual fact, the health service is a good analogy for the free market in general. The injection of market forces would diminish the inefficiency in the health sector, and also reward people who look after their health, while enabling the establishment to offer treatment to those worse off in society and those who can't afford treatment.

How would we pay for the health care for the neediest in society?
Here’s an idea for a system that would work, and shows why if the NHS were privatised the whole thing would be better. Instead of taking 12% National Insurance from our salaries to fund the NHS, the government lets every resident keep 11% of it, some of which goes towards a voluntary savings scheme to pay for our pensions should candidates wish to opt in, and we simply pay for health care out of their own money when it’s needed. Also, while people get to keep their 11%, the interest accrued on that money, or a percentage of it, is paid to the government as ancillary funds to help those aforementioned neediest people.

People are sensitive to losses, which means that, as a result, total spending on healthcare would drop significantly. Add to that the fact that privatised health would lead to increased competition and increased efficiency, and you’d see people much better off. In addition, consumers that currently overuse low-value healthcare services on account of not being charged for them would use them less and less, modifying their behaviour to match their price sensitivity.

Of course, most people don't choose when they're ill, or to what extent. But as we've seen, contrary to popular fears, at no point does a private health system mean that anyone who can't pay is penalised. This point is most crucial - the fervent aversion to privatised health is not to do with objection to the majority of people keeping their own money and spending it on health as they wish - it a fear that the poorest and neediest in society will miss out on free health care at the point of delivery. But having already established that that needn't be a problem, it is illogical to deny that for the majority of people the best thing a government could do to show that it has its citizens' well-being at the forefront of its endeavours would be to let us keep our National Insurance money make us pay for health care.

We need the 20-ish% of State-governed health and welfare, simply because even a good market system would be dreadful if it couldn't cater for the poorest and neediest in society, be they the unemployed, the mentally ill, the elderly, or children. But we don’t need it for the majority of people – they would be better off if it were privatised, as would those dependent on the State-funded health care services because they would not be competing with patients from private health services. Guess what the stats show? They show that under this system most Brits would be better off than under the present system. The ones who’d be worse off are those who use a lot of health care, but as they would be covered by the 20% State-run health services, there would be no problem for them either.

Moreover, once you dig deeper you find that the expected plethora of hidden costs associated with public sector management are there buried beneath the surface. The issue of funding the 20% public sector ratio of the UK's health service would be easily solved with the removal of the astronomical health sector waste that occurs because there’s no incentive to be prudent when spending other people’s money.

Research this week by the Adam Smith Institute reveals a few staggering facts, most prominently, that the total health budget exceeds £100 billion a year, and that management staff numbers increased by about 12% over the past five years, while the number of frontline staff increased by only 2%.

Without the profit motive that exists in private business, the NHS has no incentive to cut costs, or drive efficiency improvements. As far back as January I was endorsing the superlative health service in Singapore in a previous Blog post, and how its market basis is something from which the UK would benefit. It’s good to see that the Adam Smith Institute has done the same this week:

"Healthcare spending {in Singapore} is 68% market based.  Individuals control their own health savings account.  For low-income earners, this is topped up so they can afford their healthcare needs.  It also means people aren’t frivolous; they shop around, look for value.  Competition ensures that costs are driven down as healthcare providers fight for customers.  People also have catastrophic medical insurance so nobody is left to die because they couldn’t afford the surgery needed following a horrific accident. This market-based system maintains fairness - everyone has access to healthcare - drives efficiency and increases consumer choice.  Roughly, the UK could save about £50 billion by increasing efficiency to Singaporean levels."

I now want to expound on having the ability to opt in to a pension savings scheme, rather than making it mandatory – because if it were me, I’d tweak the Singaporian mandatory system a bit. Rather than enforcing a compulsory savings policy to cover you for your pension in later life, I’d extend the liberty a bit further and make that part optional. Under my system you'd have the option to invest in a pension scheme, but in a vibrant under-populated place like the UK, to make it compulsory would be somewhat inhibiting to some. Consider why. Rather than having an enforced pension saving scheme, you might wish to invest your money better than in a pension fund - like, say, in a property or two. Buying a property when you're young is almost certain to give you a better return on your investment than a pension investment. Or you might be someone whose earning potential will skyrocket in a decade or so. At the stage prior to your sharp increase in earnings it would be injudicious to save a few thousand a year then instead of later. Saving while you have less imposes a lower standard of living and a reduction in consumption at a time when you have less to spare. A government that cared most about our liberty and our well-being would offer us an opt-in saving scheme for our pensions, but not make it compulsory, as one size never fits all.

Of course, if you're a politician looking to get elected, then outwardly endorsing 80% privatisation of the NHS would be about as futile as walking into a singles night with unwashed greasy hair, a cold sore, a Lib Dem T-shirt and three kids on your arm, shouting "Who wants to go out with me?"

But there will come a time when the benefits of market forces and the profligacy of government-run services make favouring the former almost incontrovertibly judicious. Governments will eventually realise that this can work if we have a universal health system in which the State ensures affordability of services and care through an opt-in future savings scheme for all earners, State subsidies for children and non-earners, and cleverly regulated controls. Each citizen that accumulates funds through earnings will generate savings that are funded by replacing the antiquated National Insurance.  Already your incentive to not overuse is there because your use of the NHS comes at the expense of some of your savings.  All money not consumed on the NHS through your life will be added to your pension. Those who don't over-use the NHS can have larger pensions, and those that can't afford this are paid for by the immense net savings across the board. This also directly links your equity to your choice of lifestyle, and incentive to live longer. 

By then the future government will have developed a fairly straightforward means testing system that links taxation to revenue, overspend to insurance (and increased welfare for the most needy), and under spend to an equitable distribution used to fund those that can't pay (like children and non-earners), or those whose perennial bad health exceeds their mandatory savings.  This means people who act on the incentive to live healthily will be rewarded; people who are dependent on welfare and people who have serious health issues or bad luck with repeated health issues will be covered by the State's 20% stake in the UK health service, and people who had the propensity to misuse and show a disregard for the system will now have an incentive not to do so. Of course, the State's 20% stake doesn't have to be tied up in public sector health care - they could instead give people the money to spend privately in a place of their choosing.

Here's another reason why future governments will think the reformed system will improve the overall situation - currently everyone's health care is more or less paid for from your National Insurance contributions (along with unemployment benefit, disability allowances, and state pensions).  The trouble is, NI has become antiquated and not fit for purpose.  NI was originally introduced to provide cover for (primarily male) earners who endured tough economic times, by taking a slice of their wages to cover the cost of them and their family. But nowadays we have a much more diverse nation of workers, in addition to thousands of young people trapped in a cycle of benefits, Illiteracy, lack of education, lack of confidence, and ensnared by deprivation and feelings of hopelessness. Add to that the numerous people who are beset by problems associated with unhealthy eating, and excess use of drugs and alcohol, and it will be clear that things need to change. 

I don’t disagree that incentives are good in particular cases.  Most of us can agree that currently too much of our National Insurance money is going towards things like gastric bands for the morbidly obese, cosmetic surgery for the vain, and to a much greater extent, on people in the aforementioned social brackets (particularly high users of substances, cigarettes and alcohol).  But while it’s all very well focusing heavily on the kind of poor health that is self-caused – it is obvious that a lot of poor health occurs through no fault of our own. This point above all other points must be primary in the government’s thinking if this future reform is going to have any success. I say that because if the reform is actioned with the intention of not abandoning those in need, or refusing them help - it can endeavour to change the scenery over time, and link incentive with cost reduction, while still engendering an improved health service, where the NHS will still be free for everyone at the point of service, but that instead of NI, the government will be collecting the funds to pay for it more efficiently through an improved system of taxation. 

The upshot is, if a man's excessive drinking, smoking, drug-taking and unhealthy eating etc is paid for out of the pooled National Insurance, it gives him no incentive to act otherwise. To that end, this future reform could be successful, as long as the baby isn’t thrown out with the bathwater. And one further caveat; I said earlier that competition is usually good for efficiency, but with ill health and injuries this causes me some concern, because when you have small-scale competition for cherry-picked services in NHS, firms tend to opt for services that are easy to manage and readily profitable. Not only does this tendering process amount to increased bureaucracy, and excessive use of time and staff resources - it very often is awarded to poor quality low bidders whose profits are made by cheap resources, and under-trained and under-staffed units. This doesn't work so well for patients whose health is at stake, because injuries or illnesses that are complex and risky are in danger of being refused.

Anyway, we can go on and on addressing the particulars, but the upshot is, in general terms things have to change. The markets can do a lot to reduce inefficiency, but markets can't do everything - they involve people responding to the incentives that markets and free enterprise provide. The NHS no longer bears much resemblance to what it did in the fortes and fifties - and no matter how emotionally wedded to it we Brits are (it's all many of us have ever known in this country), in all likelihood it cannot be sustained except through its inevitable gradual privatisation.  

Saturday, 28 June 2014

Good, But Not Good Enough Yet

Here's an excellent (and brief) video from the economist Don Boudreaux that illustrates a point I've made before on this Blog about how humankind has undergone a progression-explosion since the emergence of capitalism, industry, science and technology in the past couple of hundred years. Boudreaux has a neat illustration - what he calls "The Hockey Stick of Human Prosperity"- so named because if you graphed the living standards and life expectancy of humankind over the last few millennia, they would mostly be flat until the exponential advances that occurred in the aforementioned progression-explosion in the past two hundred years.



 
 
 
MY COMMENT: I think it's important to emphasise just how good the hockey stick illustration is in conveying two important things - not just in conveying the benefits of becoming advanced at the point in human history at which the hockey stick's heel and toe curves upwards, but in conveying just how comparably bereft human beings were for so many centuries when they were without the things we take for granted. One can see the astonishing progression-explosion not just by how much we've reaped the benefits of capitalism, industry, science and technology in the past two centuries, but by the absence of these things in every century that pre-dated the industrial revolution.  
 
One caveat though. While all this is a very good indicator of just how much of a progression stasis there had been in the human story until the emergence of capitalism, industry, science and technology in the past couple of hundred years, one mustn't be short-sighted and forget that not everyone has had anything like the same kind of prosperity that we in the developed West have had. While every country is a lot better off than it was fifty or a hundred years ago, there is still lots to do to ensure that the world's neediest people get to share in the benefits of this progression-explosion as soon as possible.
 
 
 


Thursday, 26 June 2014

On Happiness


A friend of mine called Bhanumati asked about 'happiness' in a forum to which I contribute. I told her that I think happiness is paradoxical, in that pursuance of it in itself is futile, but pursuance of other things can bring about happiness. There's a famous quote by Kierkegaard in his terrific work 'Either/Or' - he says:

“Most men pursue pleasure with such breathless haste that they hurry past it”

Kierkegaard is reliably good on these matters. As you saw from my above response, I would actually take it further than Kierkegaard - things like happiness and pleasure are not really pursued for their own qualities - they are qualities that emanate from other pursuits. Usually it's quite ignoble to pursue these things in and of themselves, as their levels of enrichment should ideally act as by-products, not goals in themselves. For example, people who pursue money for the sake of having wealth or sexual activity for the sake of hedonistic pleasures miss the very quintessence of the delights that money and sexual activity bring in the pursuit of their better relations like honest hard-work and love with a beloved.

You can imagine, then, my shock when I found out that not only had UK Prime Minister David Cameron sought to assess the well-being of the nation as a thing in itself, he'd actually made it a project for the Office for National Statistics (ONS) to investigate with the intention of generating some political policies from the results. This investigation was conducted as part of David Cameron's 'happiness index' initiative to assess the well-being and happiness of the nation alongside economic data like GDP (in a future Blog I'll explain why GDP itself is a poor measure of standards). According to the results of David Cameron's happiness index, the average Brit rates their happiness as 7.4 out of 10. ONS programme director Glenn Everett thinks that this data can be used to generate good governmental policies. He said:

"By examining and analysing both objective statistics as well as subjective information, a more complete picture of national wellbeing can be formed. Understanding people's views of wellbeing is an important addition to existing official statistics and has potential uses in the policy making process and to aid other decision making"

Alas, both Glenn Everett and David Cameron do not understand where they are going wrong here. What they need to realise is that happiness is not amenable to blanket commentaries, and nor can it be broadly tended to with government policies. Suppose you were one of the several hundred thousand people who were asked questions in the survey like "how satisfied are you with your life nowadays?" and "how happy did you feel yesterday?" - the only possible metric you have to consider such questions is other people's happiness and satisfaction. You may believe that when answering a question about how happy you are, you are making comparisons based on other times in your life - and it's true, you are - but that doesn't change the fact that all your ideas and perceptions of happiness, satisfaction and well-being are constructed relative to how you see other people.

If the average Brit rates their happiness as 7.4, then how does that compare to the 7.4 variant in, say, Sweden or Sudan? Perhaps a personal rating of 9 in Sudan would only be equivalent to a 6 in Sweden. Sweden is a more prosperous country than Sudan – so maybe a Sudanese person's happiness is measured without knowing how happy they could be in a more prosperous country. Maybe in some cases the opposite is true - perhaps some Sudanese people see European modernisation as being full of unenviable plights (depression, addiction, binging, celebrity worship, lack of spirituality, etc). Maybe Swedes are more developed because they are less naturally content than Sudanese people. Who knows? The point is, nobody knows, because one's own personal interpretation of people’s reported happiness says almost nothing about actual happiness as a quantifiable state.

That a plighted Sudanese man might rate his own reported happiness as scoring higher than the average Swede or Brit will strike some people as strange - not because it should be assumed that the Sudanese man should be less happy, but because the criteria by which people measure their self-proclaimed happiness cannot be contained by any objective metric, irrespective of whether we are comparing nation to nation, or century to century. To show this, let's use two objective qualities as an illustration - height and weight. If you compared the average Brit today to the average Brit 100 years ago, you'd find that the average Brit today would be a few inches taller and quite a few pounds fatter than their century old counterpart. So asking a man today 'Are you tall?' or 'Are you fat?' doesn't tell you anything about historical trends or comparable data, nor would the answer given provide us with any clue about an objective identification without recourse to other statistics. A 5ft 9, 12 stone man probably would have answered 'yes' to both questions in 1914 and 'no' to both questions in 2014.

Similarly, people might on average be happier now, or they might have been happier in 1914, but simply asking 'Are you happy?' brings no light to the measure of happiness at all. This is because all self-proclaimed accounts of happiness, fatness or tallness depend on how you feel in comparison to others in your society. If happiness has increased, it won't show up in reports of happiness on the scale Glenn Everett and David Cameron are using, because our perceptions adapt to the changes in society. In other words, if we expect our happiness to increase, then our happiness rating won't necessarily change in value (because the value is measured against perception of our peers) but it will increase in absolute value, just as being in the median in height doesn't change your relative position, even if you are a few inches taller than someone in the median range in 1914.

Because we rate these things in comparison to others in our society, it means that if on average everyone in UK societies gradually gets happier (as they have fatter and taller) the members of the UK will rate happiness as unchanged. Despite these significant changes, most people when asked would tend towards a report that places them somewhere near the median. It isn't the number of people who class themselves as a 7.4 on the happiness scale that changes (same goes for fatness and tallness scales) it is the happiness levels of the 7.4 that changes.

That David Cameron asked the Office of National Statistics to construct a survey to measure people's happiness is absurd enough - but that he and Glenn Everett think the results have "potential uses in the policy making process and to aid other decision making" displays a puerile ignorance of the complexity and diversity of a nation's proclaimed happiness and well-being, and a foolish over-estimation of the State's power to introduce happiness-inducing policies for the nation's betterment.

That covered self-proclaimed reports of happiness. Now we can look at why happiness itself is so ambiguous. To see why, let's take just one component of happiness - the enjoyment of watching films. Suppose David Cameron, acting on his desire to make us all happy, decided to plough taxpayers' money into the film industry and give us lots more films to watch. Imagine the task he'd have working out into which areas the money should be spent. There is no national preference for films - some people like westerns most, some prefer comedies, some prefer action films, some prefer period dramas, and some prefer romances. Different people like different combinations of genres, and some people don't like films much at all. Further, the ranking of films as preferred by the individuals varies according to age, context and circumstance, so it does not match any actual ranking in the aggregate affections of the nation. On Saturday night I probably prefer a comedy; on Sunday afternoon I’m more partial to a western.

These are the reasons why there is no such thing as the nation’s favourite film, or the nation's most desirable man, or the nation's most favoured chocolate bar, because tastes are diverse and complex, and there is no 'one size fits all' measure that can be used politically. You know how futile it is to identify even just your own favourite film or your favourite chocolate bar. Just imagine the ultimate futility in trying to identify the appeal of the whole nation.

On top of that, what are bad things for some people are good things for others. Smoking, divorce and Rik Mayall are not things that make me happy. But for Tony, the Marlborough-smoking Bottom fan who has just escaped an unhappy marriage, smoking, divorce and Rik Mayall do make him happy. If David Cameron classifies smoking and divorce as bad things, and Rik Mayall as a good thing, his policy will be bad for Tony twice and me once.

Neither David Cameron, nor any politician, has the data or omniscience to construct policies to make the nation happier, nor any chance of even identifying happiness as an objectively quantifiable quality like weight or height - so it's a policy he should try to resist if it rears its head again in his future thinking.

* Picture courtesy of thenerderypublic.com

Monday, 23 June 2014

Austerity & The Confusion Over It


Apparently tens of thousands of people descended upon central London a few days ago to protest against the government’s austerity measures. The usual uninformed irritants were there – Russell Brand, Owen Jones, plus no doubt thousands of pumped-up socialists eager to confuse the merits of the free market with Fabian-esque paroxysms of top-down redistributionist hegemony. While their errors are usually embarrassing solecisms against sound economic theory, this time it’s even worse for them, as, thanks to Fraser Nelson’s data collation, their complaints are shown to be contrary to economic fact as well.

Not that they have ever let facts stand in the way of a good protest before, but one has to wonder quite why they are so myopic when it comes to the reality of the situation. Government spending is at an all time high, and taxation is hardly at the highest it has been either, so their initial premise needs some redressing. I think their confusion exists because the economic hard left have long ago stopped worrying about sound economic principles and empirical data – they just can’t help focusing on headline-grabbing malcontentment issues associated with inequality, foodbanks, zero hour contracts, welfare dependency, and various other cost of living issues, and scouring the nation looking to pour scorn on anything within the sphere of free enterprise.

That was a bit of hard cop. Now for a bit of soft cop. In all fairness to those demonstrating, there are many on the hard economic left who go about their business enshrouded in good intentions, and there are many on the hard economic right whose intentions are not good enough. Times are hard for many, and those who are prepared to stand up for the underdog and campaign for justice have at least a commendable heart, even if their reasoning is faulty. In actual fact, on the issues up for discussion here, the demonstrators have got their reasoning exactly backwards on both issues. They are advocating the very thing they should be opposing, and opposing the very thing they should be advocating.

I'll explain. Suppose that in the past few years your monthly spending has exceeded your monthly wages. Your partner suggests three ways in which you could be more fiscally responsible.

A} Cut down on your spending
B} Increase your earnings (either through more hours or higher wages)
C} Go to the cashpoint more often to ensure you’re never short of money

I’m sure no one needs telling why A and B are viable options, and why C is a ridiculous suggestion. But just in case there’s any doubt, the reason option C is ridiculous is that drawing out more of your finite supply of money is not going to help your fiscal irresponsibility if your spending already exceeds your earnings - it will, in fact, compound your irresponsibility.

Now replace you and your bank account with the government and the treasury's collection of taxes, and suppose that in the past few years your government’s spending has exceeded its income, or been irresponsibly spent. What could the government do?

A} Cut down on their spending
B} Increase our taxes

Option A is a viable option. Spending less money means working hard to find government waste or government non-necessities and cutting back on all the profligate expenditure it can. But this is the very thing that Owen Jones, Russell Brand and the other 50,000 people were arguing against. In times when fiscal irresponsibility has been levelled at the government, the demonstrators wanted more government spending, not less - the very opposite of the fiscal responsibility they claim to want to achieve.  

But what about option B? Option B is not a viable option, because increasing our taxes is not like earning more money. It is more like option C in the first scenario – it is like being in a state of fiscal irresponsibility yet going to the cashpoint more often to ensure you’re never short of money. The government’s money comes primarily from taxpayers – and they choose how they tax us. But there is a caveat that the left seem to be missing - the taxpayers are like the government’s cashpoint; whatever you take out this month leaves less for next month, and so on. Unlike in scenario 1 when cutting down on your spending or increasing your earnings is like adding to your monthly income, government's increased taxation is not like adding to their monthly income, it is like paying a visit to the cashpoint.

Yet despite this, option B is the one Owen Jones, Russell Brand and the other 50,000 people were arguing for. They have their reasoning completely backwards in both cases - they should be advocating A and opposing B, not the other way round. Instead they are arguing that cutting spending (profligacy?) is detrimental and that an extra few billion pounds in tax hikes can change government spending from fiscally irresponsible to fiscally responsible. That's as silly as saying that buying a £300 packet of toilet rolls can be fiscally responsible as long as you go to the cashpoint and draw out the money there. Taxing more does not make a government fiscally responsible - the only thing that makes a government fiscally responsible is spending less, by cutting out all the waste and non-necessities from its expenditure.

I hope now you can see that the enumeration is crystal clear. You as a worker can increase your income by working more or spending less, amounting to lower depletion of your assets. The government also cannot increase its taxation without a lower depletion of its assets. Whatever they don’t tax is either spent or it is saved. If it is spent (freely) then there is a net economic gain because both buyer and seller partake in a mutually beneficial transaction. And if it is saved then it is available for banks to use (savings are basically us lending banks our money for a small return of interest), and it is still available for taxation when it exchanges hands next time. Similarly, if you don’t spend that £300 on those toilet rolls, then the money either stays in your bank gaining you interest, and being available for banks to invest, or it is spent on one of those mutually beneficial transactions to which I just alluded.

Unless the demonstrators get the basics right, they will not be listened to. Instead of congesting parliament square and making lots of waffling reverberations, they'd be better off reasoning things through properly, and then putting pressure on the government to cut much of its waste and inefficient spending. The trouble is, a lot of that waste and inefficient spending comes in the shape of things the left historically supports - so don't hold your breath there either.

Wednesday, 18 June 2014

Small Business Subsidy Medicine is Poison


My teenage neighbour knows that good GCSE grades are better than bad ones. She has an idea that will help all students at exam time. Introduce a minimum grade level of C, so that no student, however bad, can be sullied with D, E and F grades as they enter the job market.

Only joking. My teenage neighbour is not that foolish. Apparently, though, if you replace GCSE grades with business protocols then some party leaders are that foolish. Green Party leader Natalie Bennett is particularly big on small business subsidies, as I've often heard her mention on TV. Ed Miliband feels the same – he’s all for propping up small businesses with tax breaks and surreptitious subsidies. In fact, a good rule of thumb is that if an idea is foolishly inimical to personal freedom and the success of market forces, Ed Miliband is pretty sure to support it.

Most teenagers could work out that misleading students, parents, exam boards and prospective employers about pupils' scholastic abilities won't help anyone in the long run, because artificially altering GCSE grades to Cs and above gives a distorted picture of academic ability and employability.

Why can't party leaders on the left do the same when the case is small business subsidies? The answer, I suspect, is simple: competing parties are not primarily interested in logic, they are interested in securing votes - in this case, the votes of people that think too lazily to realise that small business subsidies are no better than GCSE grade subsidies - as both distort the market in which they operate.

Here's some advice for such politicians. Small business subsidies amount to the government taking taxpayers money and giving it to businesses that may or may not be viable enough to survive in a competitive market dictated by supply and demand. If taxpayers wouldn't voluntarily spend their money in these businesses then they are being artificially propped up against the majority of people's will. If taxpayers would voluntarily spend their money in these businesses then no subsidies are needed. The success of a business is not measured by the State's ability to prop it up, it is measured by whether it generates enough profit in a supply and demand market.

If demand for Jean's Knitwear falls, then prices may fall to increase demand. If Jean’s Knitwear can no longer generate a profit to live, the signals are there that her business is inefficient or that her products are low in demand. Prices in a free market are the signals that make what is being supplied adjust to the demand of those supplies. Alas, prices no longer provide this signal when politicians interfere with subsidies or controls - they stop prices exhibiting changes in the supply or demand for goods and services.

It's easy to see why small business subsidies are popular with voters. They make any party that endorses them seem caring, and mindful of struggling companies, as well as giving the impression of being supporters of the underdog against the often maligned multi-national corporations. In fact, I'd wager that most of the public like the sound of small business subsidies - so public support for them is a bit like pushing on an open electoral door. But like most things that sound too good to be true, the medicine is poison, because nothing comes for free.

The visible benefits are obvious - the beneficiaries are small businesses. But the losers are taxpayers who are having their money spent in places in which they wouldn't do so voluntarily. But more than that, the other losers - the invisible losers - are those missing out on opportunities to enter the market. Thanks to subsidies, Jean's Knitwear may now be staying afloat - but as well as taxpayer costs, the cost of such subsidies is the forgone opportunities for other suppliers of goods and services trying to enter the market or stay afloat on their own merit. It's a shame when small businesses go under. But you cannot fix the problem by distorting price signals and forcing taxpayers to support them as if they were successful businesses. Only an idiot would do that; well...that is, an idiot, or someone who saw a popularity-winning policy and flaunted it to secure votes.

Regretfully, this isn’t just a problem of the left anymore: there aren't currently any serious mainstream parties that endorse the sentiments of personal freedom and the full qualities of free market capitalism. Even Lord Saatchi, who is pro-market freedom, and is certainly no idiot, proffered a proposal this week to abolish corporation tax only to small businesses - which, as I argue in this Blog doesn't take it far enough. Be warned; expect competing parties to try to secure votes in the run up to next year's election by seducing would-be voters with all kinds of attractive offers for small businesses - offers that would be paid for by your money. Don't be fooled by any of it, though - the medicine is poison.     




* Photos courtesy of bbc.co.uk

Monday, 16 June 2014

Think Like A Freak: Two Things Worth Sharing


I've been reading Steven D Levitt and Stephen J Dubner's latest book Think Like A Freak - the third offering in the 'freak' trilogy, after the bestselling Freakonomics and its sequel Superfreakonomics. Unlike the first two books, which contained plenty of interesting conclusions from original and daring research, this third offering isn't up to as much, in my opinion. The indication is that they've taken this thematic about as far as they can, and have instead resorted to derivative material, and propensities for stating the obvious.

They appear to believe they are teaching the reader how to "think outside the box", but in reality I suspect the kind of people who'd be attracted to a book like this would be the kind of people who already know how to think outside the box . That said, there are a couple of interesting sections that I think are worth sharing.

1) Nigerian e-mail scams.
You know those emails that tell you a huge sum of money needs to be transferred out of Nigeria (it's pretty much always Nigeria) and that you will get a few million quid if you hand over your bank details. Virtually nobody falls for this, and the fact that it's always Nigeria should compound the alarm bells even more. Why, then, do scammers carry on using Nigeria, when it is so well known that the word 'Nigeria' in a bank transaction email request signals to almost everyone that it is a con? I had predicted the answer before Levitt and Dubner shared it later in the chapter, but it's a quite interesting example of thinking like an economist.

Here's the rationale. Scammers still insist on specifying Nigeria, because sending out millions of emails is pretty much costless, so having the majority of people ignore them doesn't really matter. What would cost the scammers, though, is spending time and money setting up a phony exchange with people who realise halfway through that they are being conned and pull out.

By choosing Nigeria, the scammers are basically saying this: if you're one of the few gullible people left in the world who hasn't been apprised of the Nigeria scam and are likely to fall for it, you will be of those for whom the uniformity of the 'Nigeria' email won't be alarming and prohibitive. With the simplicity of using Nigeria each time, the scammers save having to waste time with all the false positives, and they will continue to catch in their net the few gullible fish still in the sea.

2) Behind the scenes with David Cameron
In this chapter the authors recount an ill-fated interaction they had with David Cameron shortly before he was elected Prime Minister. They explained to Cameron that when you don’t charge people directly for things like health care, they will consume too much of it, which inevitably skews the incentives of both the providers and the consumers (a point I've made in a previous blog).

Levitt and Dubner conveyed the following illustration to David Cameron to highlight the absurdity of free health care with no disincentives:

"What if every Briton were also entitled to a free, unlimited supply of transportation? That is, what if everyone were allowed to go down to the car dealership whenever they wanted and pick out any new model free of charge, and drive it home?"

At this point, the authors tell us, Cameron, who had been all ears up until then, became less enamoured with them. "The smile did not leave David Cameron's face, but it did leave his eyes.” they tell us. Levitt and Dubner took that as evidence that even intelligent would-be Prime Ministers will ignore evidence or good argument if there is the slightest hint that they’ll be unpopular.

It’s certainly true that this does happen frequently in politics, and perhaps this was one of those times (although bear in mind Cameron wasn’t Prime Minister at the time so wouldn’t have been in a position to do much anyway). But it’s equally likely that Mr Cameron responded incredulously because their illustration was a poor one.

Unlike the food analogy I gave in the 2013 blog post to which I linked above, the ‘buying a car’ analogy doesn’t work at all, because the analogy to over-consumption and bodily neglect isn’t there in car buying. People don’t choose what kind of operation they want in the way that they choose the kind of car they want. Skewing the incentives in the NHS and not making people incentivised is a problem, but the NHS problems are not a comparable analogy to nationalised car purchases.

Whether Cameron changed his tone because the analogy was poor, or whether he changed his tone because he knows he’s as guilty as the rest of politicians when it comes to ignoring evidence or good argument if there is the slightest hint that they’ll be unpopular, only he knows.

Anyway, if you like the sound of the above, you could do worse than giving Levitt and Dubner's latest book a look. Maybe (hopefully) one day they’ll be putting Amazon links to my books on their Blog. I promise to try very hard not to resort to derivative material and propensities for stating the obvious. J

* Photo courtesy of Freakonomics blog

Friday, 13 June 2014

Why Don't Sell-Out Concert Tickets Cost More?


Here's a riddle to consider - why don't concert promoters charge more for concert tickets? Here's the thing; concert tickets for artists like U2, Coldplay, The Rolling Stones, Kate Bush, etc are snapped up in a matter of moments*. On the exact minute of the sale start time, eager buyers will be by the phone hitting 'redial' or on the Internet hitting 'refresh' desperately trying to get through and purchase tickets. Concert tickets are sold out in double-quick time with many disappointed fans losing out, which means demand is astronomically higher than supply.
 
In ordinary circumstances, prices would match that demand. Take the recent announcement that Kate Bush is doing some live shows for the first time since 1979 - that is literally a once in a lifetime chance for many fans, yet ticket prices will not reflect that at all. Whatever price they go on sale for could easily be quintupled, so why aren't concert promoters, managers, venue facilitators and ticket agencies hiking up the prices when they know that they'd still sell out?
 
I don't know for sure what the answer is, but I have a few ideas. Clearly, promoters, managers, venue facilitators and ticket agencies want to make as much money as possible, but that doesn't' mean it will necessarily be reflected in higher ticket prices. Hiking up ticket prices would constitute a short-term gain, but I'm supposing it would involve a concomitant long-term disadvantage, although I'm not sure what.
 
Perhaps the artists and associate colleagues don't want to incur negative publicity by giving the impression that they'll rip off fans.
 
No, that doesn't satisfy - the term 'rip off' usually occurs when there are captive buyers under monopoly power, or when buyers pay for things that are not worth the money. Highly sought after, rare concert performances do not fit either one of those descriptions. Plus, an artist that can generate such high price sales for tickets undoubtedly has lots of good publicity as a result.
 
Perhaps prices are kept artificially low in order to ensure that really keen fans attend those concerts.
 
It's possibly a factor. Lowering the price creates a demand overload, which means it is very hard to acquire tickets, which means most of the people who successfully bought tickets had to be very dedicated in order to get them. But that doesn't wholly satisfy either. There are other events (theatre shows, cinema releases, comedy acts, plays, and so forth) that sell out really quickly too - in fact, in the case of theatres performances the most expensive seats at the front usually sell out first. Incidentally, if you attend the theatre after having bought one of the less expensive seats and find that there are spare unsold seats in the most expensive section you are not allowed go and sit in them, even after the interval when it's clear that no one is turning up to obtain them.
 
Besides, don't be fooled into thinking that paying over the odds is not commonplace - you do it all the time, particularly when demand is high and supply is finite. When the new phone or tablet or gizmo comes out, prices are extraordinarily high until demand lessens and there is a price drop. Consumers are used to thinking of expected prices in terms of reasonable or ordinary prices, and lower prices in terms of discounted prices. The truth is, that's only one lens of perspective - you can just as easily think of the discounted price as the reasonable or ordinary price and the initial expected price as being unreasonably high to capitalise on demand. When you see a DVD or a piece of jewellery or a shirt at a discounted price of 70% off, you can be glad that you're paying only 30% of what you would have paid when it first came into retail, but you could equally be bothered by how much profit the store was making when demand was higher.
 
But maybe it really is the case that the kind of artists who can sell-out that quickly are the ones who can instil enough control to see that fans pay a reasonable price.
 
It could well be true in many cases. The world of capitalism has a lot of 'Winner-takes-all' success stories which contributes to the rich getting rich phenomenon. I don't see why that wouldn't be the case in the music industry too. I'd wager that the wealth gulf between the top music sellers and those on the periphery is more stratified than at any time in the past five decades.
 
But the magnanimity of The Rolling Stones or Kate Bush doesn't extend right throughout the market, because if prices are artificially low then often goods are not procured by those that want them the most. In an ideal market, prices and wages should adjust to ensure the equality or balance of supply and demand. But this doesn't always happen - sometimes it's harder or more trouble to adjust prices than to leave them as they are, and sometimes sellers are slow to realise the increase in demand.
 
But generally an efficient market matches supply to demand with price equilibrium to match. So when prices of goods with fixed supply don’t rise quickly enough to meet demand, those most in demand do not end up paying the highest prices. Some people don't like it when this happens - pejoratively referring to it as price gouging, but it often isn't a bad thing. If centre court tickets for an Andy Murray vs. Rafael Nadal Wimbledon final were the same price as a second round match on court seven between two unknowns it would not be a good thing for consumers overall. If diamonds were the same price per gram as coal it would not reflect the scarcity of diamonds, just as if the Wimbledon final was the same ticket price as earlier matches it would not reflect the demand, or the scarcity or the love of tennis that aficionados have. So, while fan-consideration might be a factor, it doesn't wholly solve the issue for me.
 
If anyone has any possible suggestions please give me a shout.

EDIT TO ADD:
One thing is clear; that there is such a highly competitive secondary market for popular concerts tells us quite clearly that when put on sale originally the tickets are being sold well below their actual market value. The secondary market of tickets could be quite easily discontinued by selling these very limited supply of tickets at the market rate through an auctioning process, which would naturally permit re-sale of these tickets if they became surplus to requirement. Evidently, though, sellers clearly do not like the idea of die hard fans paying very high amounts of see artists they love, so they keep prices artificially low.

For big names like The Rolling Stones and U2, concerts are a secondary form of income behind album sales (CDs or downloads) so the concert ethos is seen as a kind of added saleable treat, and there is selection pressure not to unilaterally raise the price bar. Possibly radically new ideas for the good (or the bad, but thought to be for the good) are not implemented because while they would work in a multilateral scenario, no one wants to start the ball rolling unilaterally because if others didn't follow suit they would disadvantage themselves or possibly even danger themselves.

Given that touring usually promotes a new album plus makes artists money in sold merchandise, it is quite understandable why ticket sales are profitable but not excessive. There is generally no need for concert sales to be that excessive, even if they could be sold for more: the big names don't need to make huge profits on ticket sales, and the smaller names are doing smaller gigs so wouldn't charge as much anyway, and have to remain competitive if they don't have the luxury of guaranteed big album sales like The Rolling Stones and U2.

One other factor in rock concert ticket pricing is that a lot of artists (most actually) are from working class/lower middle class backgrounds, so it probably feels right to the artists to not be ramping up prices that only well off people can afford. For many of these bands their working class roots have been important in their songwriting and in their fanbase.
 
 

* I don't mean that this applies to all artists, of course - only the biggest names. I went to a Metronomy gig a few weeks ago, which was about 3/4 full. If the ticket prices were doubled I'd wager that the numbers would have dropped by somewhere between a third and a half.

** Photo courtesy of www.getmein.com

Tuesday, 10 June 2014

Black Holes & The Human Multi-Lens Perceptions Of Reality


An interesting paper from Cambridge physicist Laura Mersini-Houghton featured on BBC2's Newnsight last night, in which she hypothesised that, contrary to scientific consensus, black holes may not exist after all. If she turns out to be right, it wouldn't surprise me much – my multi-lens of reality theory predicts that difficult counterintuitive things like black holes, infinities and singularities are examples of us being locked into limited physical perceptions by virtue of our being physical agents.

We cannot know how the science of the future will change our thinking, but we must also consider our differing perceptions of how things like black holes confound our intuition. Consider this strange peculiarity about nature: if I'm observing a black hole and a cat falls into the black hole I will see it approach the black hole's event horizon where it gets incinerated by the Hawking radiation (particles emitted as a result of the effects of quantum mechanics). But if at the same time you fall into the black hole along with the cat, you would observe the cat cross the horizon safely before encountering the singularity at the core of the black hole. 

Interestingly both your story and mine would be true respectively, but depending on the perception, we appear to have a condition under which the cat is both incinerated outside of the horizon and unincinerated inside the black hole. There would not be two simultaneous cats because as far as we know the laws of physics do not allow for information to be duplicated in that way. 

This must be an issue for the mind in that it is under the illusion that we can describe events both inside and outside the horizon simultaneously - but in actual fact, no mind can observe both at once. This means that the physical regime can only be apprehended if descriptions are restricted to the view of one single observer. Given that it is possible that there are extra dimensions (as in String Theory) that we may never interface with, and a general queerness to quantum physics that will likely always leave one aspect of a wave/particle duality 'uncertain', it may well be true that these things are mere shadows of a reality we will never fully apprehend.

The black hole has thus far been one of several phenomena in nature that indicates this. The black hole example shows the difference in perspectives; for a man entering the black hole there will be a contraction of length and an expansion of time. But while this will be noticed by an outside observer, it will not be noticed from his own local perspective because the standards with which he would ordinarily do the measuring would have altered too; that is, the standards of measuring contractions have contracted as well, and the standard of measuring time has expanded to make the expansion of time indecipherable. The logical corollary is that crossing the horizon will seem like normal time to him, unless he can register outside of his local perspective, in which case he would decipher the changes. 

Understanding that humans perceive reality through many different lenses gives us a better insight into just how much we can refine our understanding of reality. In considering, say, the transition from Newtonian physics to Einsteinian physics, or Euclidian geometry to Riemannian geometry, we make a useful inference about reality and the relationship humans have with it. What we realise is that reality isn't singularly Newtonian, Einsteinian, Euclidian or Riemannian, because the physics or geometry under examination is contingent upon the perceptual lens of the beholder. In other words, how reality is at any one time depends on the particular lens of reality of the person doing the perceiving.

In a similar sense, if you imagine something like a rock; once you zoom in on its deeper constituent parts, you will not find anything like what imagination has always supposed it to be. A hard rock, when probed further would reveal the deep mysteries of matter and sub-atomic energy - a whirling mass of particles and waves, consisting of a vast nexus of space, in which very small particles (electrons) move around the nucleus, and are bound to it by electric forces. That is to say, despite the rock’s appearance in front of our own naked eyes, everything appearing solid consists almost entirely of empty space. It is the exceptionally small particles dashing at stupendous speeds around the nucleus of the atom that gives atoms their solid appearance. 

My multi-lens of reality theory holds that just about every part of our reality that we interface with through perception or conception is made up of analogies, metaphors and symbolic expressions, and that the physical perceptions of reality are only one facet of reality – inextricable to minds like ours due to our being physical beings. Once we begin to trim away at the things that appear to warrant claims for having a necessary existence, I find we can even trim away the physical reality around which we employ our empirical considerations.  My gut feeling is that after all the trimming is done, the only things we’re going to find left in our qualification for necessary existence are God and mathematics. I will submit that all the rest is, in a certain sense, fiction – but not just any old fiction – it is a fictional interpretation that is for now a precursory disquisition to a dénouement that we are at present only tapping into.  As has been said before – it is an echo of a reality we have not yet heard in full. 

This can bring about a new perspective to our empirical endeavours – it is a new perspective where fiction and fact intersect in an embrace.  So, science is a fictional reality in the same qualitative sense that poetry, literature, theology and art are fictional realities.  But, as indicated, by ‘fictional’ I do not mean ‘non-factual’, I mean fictional in the sense that science is only one branch on a huge tree of human conceptions that involve objects that are real to the human mind in ways that they are not real in the reality ‘out there’ beyond the mind.  In other words, all the objects we convey in reductionist science (rocks, sand, water, atoms, protons, etc) are as they are because they are projected onto our minds.  If our mental conceptions are a tool box full of tools, science is one kind of creative tool for understanding reality, and mathematics is another, poetry another, and theology another, and so forth (often with overlap between them). 

This is what I mean when I say that our reality is largely made up of analogies, metaphors and symbolic expressions. Just as physical objects like trees, rocks and buildings are made up of smaller component parts - once we get down to the full reality of those smaller component parts, we find they are made up of, or only describable with, numbers (or more accurately, what those numbers represent).  This is evidenced by the fact that if we don't describe them with numbers and concomitant equations, we are forced to revert back to the macroscopic world of metaphor and analogy to describe them - particles, waves, forces, position, momentum, etc. Physical reality is in the eye of the beholder, it's just that humans are one kind of beholder. Any sense of the physical is bound up in the fact that we evolved in the realm of the physical mechanism of natural selection, so our neural network is implicitly physical, which makes our engagement with reality implicitly and explicitly physical.  It is due to this human-centred limitation that external reality to us is almost entirely expressed in terms of the metaphorical, analogical and symbolical.

Given the foregoing, we can see why Laura Mersini-Houghton’s hypothesis that black holes don’t exist after all is possibly more than an example of changing perceptions. If we accept, say, quantum physics as a synthesis of propositions that align themselves to a central conception, we find, as indicated above, that even that leaves us with an epistemological hiatus, and we then have to resort to macroscopic metaphors (particles, waves, position, momentum, states of possibility) to explain what our quantum concepts mean. That’s the best clue we have that we are locked in a macroscopic lens of reality in which physical interpretations are the only game in town when it comes to empirical investigations, but not the only game in town in realities outside of human physical conceptions.

 
* Photo courtesy of greenpacks.org

Monday, 9 June 2014

Untune That String, And, Hark, What Discord Follows


On the Trojan Horse issue of Islamic radicalisation in schools, there has apparently been lots of apologising going on: Education Secretary Michael Gove has apologised to David Cameron, so has Home Secretary Theresa May - and they've probably apologised to each other too - having the wherewithal not to fake harmony by having a pint together in front of all the cameras (as Nick Clegg and Vince Cable did).

Conservative MPs’ spat aside, issues surrounding Islamic extremism in schools should be well within the government’s capability – but there are hidden difficulties that don’t make it into the papers, due to a taboo. Here’s why. Let’s mention something that the majority of us know to be true, but that most people keep as a private, unexpressed thought. The underlying truth to the situation is that most people aren't credulous enough to be taken in by the manifestly fictitous teachings of Islam found in the Qur’an.

Unless you’re one of the following – a) A child in a Muslim home, b) Someone who has been brought up in a country in which Islam has predominance, or c) Miriam Francois-Cerrah, the likelihood is, you understand that the Qur’an, and its consequent religious movement known as Islam, is a man-made falsehood, and that all good qualities Muslims have are had in spite of the Qur’an and Islam, not because of it. .

In the UK, we are currently having a problem with Islamic radicalisation in schools, which hasn’t been helped by our Education Secretary's desire to open up the curriculum to the point of it being beyond reasonable scrutiny. In an ideal world in which everyone felt free to speak honestly, the solution would be simple - come down hard on the situation and ban Islamic influence in schools. Aside from a few exceptions, religious belief should be a predominantly private affair - it should not influence politics, policy, nor the formal education of children, save for impartial religious education studies, of course – which is the very place to learn about Islam and all the other religions.

But we don’t live in that world, because in the case of Islam, the government is not free to act as it wishes – and I don’t just mean because of the lost votes – I mean because to be a politician means you have to avoid a public fear of Islam. Consider some alternatives - if there were schools being driven by an ethos of young earth creationism or scientology or astrology or alchemy, the government would be quick to discontinue their influence. Islam has no real qualitative distinction over young earth creationism or scientology or astrology or alchemy - it is equally man-made, it is just more ubiquitous and more strident, and brings with it a social threat of violence that the others do not.

When it comes to the falsity of the teachings, there is little to choose between them all. But because Islam is more ubiquitous, strident and sanguinary, no politician dares to tackle it with anything like the force with which it should be tackled.


Now comes the ‘to be fair’ part. To be fair to politicians, they are somewhat handcuffed and gagged here. The reason they aren’t more candid is perfectly understandable. In an ideal world we'd bring about the termination of all Islamic influence in schools, and come down much harder on places in which Islamic radicalisation is going on. But doing so would not be very wise, because coming down hard on extremism has spillover effects - it creates a tension and a bifurcation - and when that happens people who wouldn't otherwise have reached their tipping point find themselves forcing to choose, which will only increase the number of extremists in the world, create social tension, and make ordinary citizens more vulnerable to terrorism. Or to use a famous Shakespeare line:

Take but degree away, untune that string,
And, hark, what discord follows!
Each thing meets
In mere oppugnancy

If doing nothing is one extreme, and the EDL are the opposite extreme, politicians know that they have to strike a very delicate balance between the two, lest they untune the string and wreak more discord on the British public.

* Photos courtesy of bbc.co.uk

Saturday, 7 June 2014

Next Year Is Likely To Be Memorable For The Wrong Reason....



Some elections are predictable (The Conservatives' triumph in 1983 and Labour's in 1997 are two cases in point), whereas others are unpredictable (The Conservatives' narrow victory in 1992, and the last election that produced the Con-Lib coalition are two cases in point). Next year's election in 2015 is more like the former than the latter - it seems likely that Labour will win the most seats (and I say that with a huge frown). The only thing in the balance is whether they obtain a majority or not.

 
The reason Labour will win is not much to do with any of their political qualities. In fact, I've argued before that this is perhaps the worst bunch of party politicians I've ever seen in this country - Ed Miliband, Ed Balls, Douglas Alexander, Tristam Hunt, Chuka Umunna, Caroline Flint, Sadiq Khan, Emily Thornberry and Margarat Curran, to name just some of the worst of the frontbenchers. Others like Yvette Cooper, Rachel Reeves, Vernon Coaker, Liz Kendall and Jon Cruddas aren't quite such insufferable characters, but by association they still carry around the same stench of counterfactual party politics.  
 
The only possible way the party could be worse right now is if Diane Abbott had won her leadership campaign in 2010. In fact, consigning Abbott to the backbenches is about the only credible thing this current bunch of leftist buffoons have done since their shadow cabinet inception.
 
Some may argue that the 1970s Labour party was worse than this bunch - but I don't tend to agree; they had more of an excuse back then in that the economic left was nowhere near as discredited as it is now.
 
If the worst bunch of party politicians I've ever seen can be succesful in obtaining enough seats for government, one ought to ask how on earth such a thing can happen. My perception of the political landscape is that the conditions that have led to Labour's imminent success are principally down to a three factors, and that's aside from the constituency border biases that favour Labour.  
 
Firstly, the Conservatives are far less popular than Labour with ethnic minority voters - and with the mass influx of immigration in the past 20 years, there are more Labour voters in that demographic (the cynic in me suggests that that's why Labour weren't too upset at underestimating the rate of immigration by a huge number). In 2001, one in ten voters were ethnic minority voters. By 2050, it is forecasted that ethnic minority voters will constitute one in five of the population. With many ethnic minority voters spreading into what used to be Tory safe seats, it is a change that the Conservatives are probably going to have trouble coping with.
 
Secondly, UKIP is attracting lots of Tories who are fed up with the way Cameron's party has leant so far to the left. For good or ill, issues such as immigration, the EU and same-sex marriage have divided the right, and UKIP's rhetoric is just the sort of music to which the far right Tories have pledged their allegiance. To put it bluntly, UKIP is the Conservative Party that many Tories used to vote for. Just as the slightly more right-leaning SDP handed Thatcher two substantive majorities in the eighties by splitting the left, the Tory defectors to UKIP look likely to hand victory to Ed Miliband's Labour Party in 2015.
 
Thirdly, and in the converse to the last observation, the Left are assembling a pretty unified body of opposition at the moment. Don't misunderstand, it's a ramshackle of half-truths and falsehoods, but it's a pretty unified ramshackle for those that have been duped by it. With the death of some of the hard left fringe groups, and with the disenchanted Liberal Democrats decamping to Labour, Ed Miliband's party has been reaping the benefits.
 
So not only will next year probably see in power the lowest standard of politicians in living memory - it will be yet another, but even more extreme example, of how you don't need to do well in politics, you only need to do less-bad than those in opposition to you, or in Labour's case, be a receptacle for other parties' disenchanted voters.
 
* Photo courtesy of the BBC

 
 
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