It's About Time The 'Eat The Bankers' Myth Was Put To Bed

I don't know how many more times we have to keep hearing that the financial crisis was caused by bankers' reckless greed, and that the only recourse is to ramp up regulation in the financial industry. It is not untrue that greed played a part in the crisis, but it certainly is untrue that more regulation is the solution. The solution is, in fact, less regulation - and it was in no small part due to the fraught regulation in the first place that the bankers were encouraged to be so recklessly greedy. To explain why, let me offer you an analogy.

Suppose you have built up a successful ice cream shop over the past 20 years. Now you want to have a six month holiday and employ someone to run your shop for you for while you're away (let's call him Brian). How could you best pay Brian to ensure he keeps your shop profitable? You could pay him an hourly rate, say £8 per hour. But if he gets paid irrespective of sales he may slack off and lose some of your shop's vital customer service. Alternatively you could pay him by offering him a proportion of all the ice creams sold. This is more likely to make him work harder to increase your profits, but remember he's only there for six months so there's no guarantee that paying him in proportion to the goods he sells will give you long term profitability. For example, in trying to sell as much as he can short-term to maximise his earnings he may bulk-buy from a lower quality supplier, or he may neglect to do the weekly paperwork, or he may sell artificially low by over-working the ice cream generator even though it diminishes its functional life-span long term.

There are many things that would maximise Brian's profits short-term but be detrimental to the business long term. The best kind of Brian to employ would be a Brian whose desire to do what's best for your business correlates with what's best for him too. In other words, the best employees are those whose interests are closely matched to those of the employer.

In the financial industry this is an especially vital part of banking. Most of our politicians (in America and Europe) think that the financial crisis of 2008 confirmed once and for all that politicians need to regulate the heck out the banking industry. The regularly confused Owen Jones reminded us just last week that it was the greed of the bankers that wrecked our economy, and that more regulation is the only recourse.

Alas he fails to understand how the banking industry is driven by innovation of incentivising employees, rather like how the manufacturing industry is driven by innovation of new saleable products. The banking industry is complex, and risks are hard to decipher in prospect, which means that experimentation in competitive advantage is what drives money-making in banking. Over-regulation hinders this, which then goes on to create less stable banking. A key example of this is in State-guaranteed bail outs, which, as you might expect, increases risk instead of diminishing it. Of just under 30 banks that have failed in recent times, almost all of them were bailed out by governments. A banking industry that is guaranteed against failure by the government is going to increase risk not diminish it. If I go to a casino with the knowledge that I get to keep my winnings but a billionaire friend will reimburse me for all my losses, I'm going to be a pretty bold gambler that night.

The same is true with many bankers. If they perform well, there is not much of an upper ceiling regarding how much equity can grow for the shareholders. Losses on the other hand amount to only the cost of the shares. Shareholders interested in share prices are not averse to this kind of risk-taking. What quells risk-taking is creditor action in the form of risk premiums, which are charges for borrowing. It is because of government guarantees that creditors can lend to banks with artificially low risks, which, as you can imagine, distorts the market signals that would ordinarily keep bankers' behaviour in check. The huge irony that all the banker-blamers don't get is that distorting risk premium processes is, in effect, a State-funded subsidy on precarious risk-taking.

The other way that regulation is supposed to help is in quelling the detrimental outcomes associated with narrow short-term visions. Regulation mostly fails here too, largely due to the fact that senior bankers don't, in fact, have very narrow, short-term visions to begin with. A significant proportion of bankers' bonuses are commensurate with the share prices of the bank (they are paid either in shares or in cash), where those share prices are determined by forecasted profits. If a banker undertakes disproportionately risky deals to obtain short-term profits then the forecasts will likely predict much bigger losses in the future, which means share prices will immediately drop. Hence, managers paid in shares cannot afford to risk the narrow vision.

The banking risks that brought about the financial crisis were down to excessive gambling because the credit markets and stock markets didn't factor in those risks. Had this failure not happened banks would have seen a rise in the cost of capital and a drop in share prices much sooner, giving the natural incentive for bankers to reduce the risk voluntarily to maximise their variable pay. 

To see why the regulatory proposals will increase recklessness not decrease it, imagine we did go down the injudicious path of awarding variable pay when profitable ventures are completed instead of at the point of making them. It's pretty clear why that won't help things. Consider corporate lenders A and B who each lend out £1 million to 2 identical clients on a 4 year plan. With government regulations, any bonuses A and B procure on the deal should be deferred until the 4 year period is up, subject to the loans being fully paid off. If A's client defaults within that time period then most politicians think A should receive no variable pay. Here's the problem; how on earth can this improve A's decision-making? At the time of lending, the known risks presented by the 2 clients were factored in to the deal. It is a combination of varying factors way beyond the lender’s foresight that client 1 turns out to be one of the few that ends up defaulting. The risk is taken at the point of the loan, not at any time thereafter - so it is ludicrous to try to improve initial analyses by basing variable pay on unforeseeable future circumstances.

Such a proposal does not adjust risks, it adjusts unforeseen consequences - hence it is imprudent to evaluate financial restitution based on such factors, because it increases bankers' incentives to heighten risks. If they have to wait for the culmination of repayment you'll see a huge increase in risky deals because a great proportion of loan deals are low probability of high loss, so lenders might as well make more deals, particularly as the cost of huge losses won't be incurred by bankers' themselves but by bail-outs. The way to incentivise bankers to calculate the risk more diligently when making loans is to have them bear the cost of that risk at the time of making the decision by imposing a banker's insurance premium for the risk that that decision engenders (this is how banks insure using buffers for capital, where a premium for every loan can still be weighed).

Suppose the lender was paid variable pay equal to 10% of his contribution, where "contribution" means the interest margin he earns from the loan minus the premium charged to insure against the risk of the loan defaulting - the banker will have an incentive to only make the loan if the interest margin is greater than the cost of the risk-insurance. The bankers' role would be to calculate these loans using a risk analysis, and make the ones that seem economically viable, enjoying their bonuses on the profits, and bearing the costs on the losses. If you underestimate the risks then the insurance premiums will be too small, and there will be excessive lending - but this issue isn't solved by changing variable pay and bonuses, it is solved by improving the calibration of risks in the first place.

The impression created by many politicians and social commentators alike is that high-paid, big-gambling bank managers are the real failure of corporate governance. They are not - it is the other way around - it is low-paid, risk-averse bank managers that are failing the system. Firstly, managers tend to take fewer risks than shareholders (despite most people thinking the reverse is true), as most shareholders have diversity in stocks that are not correlated with each other, so all the eggs are not in one corporate basket. Managers on the other hand more often have all their managerial eggs in the basket of the company for whom they work, so if their company fails they'll lose their salary plus any company shares they own.

In a healthy system then, big bonuses, therefore, have the positive effect of increasing appetite for risk - which is a good thing because if risks pay off then appreciation of equity increases hugely, whereas if the risks don't pay off, the most the shareholders can lose is the value of the shares they bought (in other words, a few eggs in their basket). That is why shareholders benefit from risk, and why they want managers whose appetite for risk is voracious (the best way to achieve this is if when it comes to shares owned in companies managers have diverse portfolios). 

There are brakes in place to stop the risk culture going out of control and becoming a culture of recklessness, but they are not government regulatory brakes. What stops (or should stop) companies engaging in crazy lending is that a company's creditors (either a single investor or another company) have a claim on the services of the company taking risks, by providing something (a property or service) under the contractual agreement. As creditors don't share in the company's profits they don't gain from their company's risks - which is reflected in the risk premium agreed by the first and second parties (it is the increasing cost of borrowing that places constraints on corporate leverage and other risky ventures).

A mother would be foolish if she kept buying her young son lots of cakes and chocolate and then complained that he’d got fat. But if a boy wants lots of sugar he cannot be blamed for accepting his mother’s sweet subsidies. Similarly, a company's executive who rejects government subsidies does something irresponsible because he drives down the value of his company's shares. Given that a government's guarantee of bank deposits severely reduces the risk premium that banks must pay on their debt capital, it is clear that these kinds of bail-outs are unadvisable, and bad for the general public, who as taxpayers benefit much better when markets are left alone. When the government acts as a creditor they won't often demand higher interest rates commensurate with risk-taking, which is why it is better when non-government creditors incentivise against foolish risk-taking by reining in recklessness.

As I said earlier, government guarantees basically amount to a state-subsidised risk encouragement, by removing or depleting the standard market risk-taking discipline that creditors charge. Consider that bankers were not regulated 100 years ago, yet banks were still full of profit-seekers. Bankers will only make deals they think are profitable. But if depositors no longer benefit to the same extent by bankers' felicity, their incentive to look for prudence is diminished. When the government guarantees the losses of depositors, the depositors no longer have to monitor carefully whether the bank is a prudent lender. But as well, in such a culture, depositors are primed to favour riskier bankers, because higher risks increase the chances of higher rates of interest for their depositors in successes, whereas they only increase the chances of a government (i.e. taxpayers) bail out in failures. The government are the ones laying down a cushion for recklessness

On bonuses

One more final point, the bonus culture is not the financial bogey that so many people seem to think it is. If a bank can get away with apportioning some of the salaries in the form of bonuses, it is better than paying inflated salaries. That is to say, it would be a good idea to scrap bankers' salaries and get them to work on a bonus-only culture relative to their success. This is not alien to many bankers anyway; a great many have variable pay in shares, or in a bank bonus, contingent on the share price. These are reliable indicators because share prices are a good measure of a bank's performance - but the system probably needs tweaking to give greater incentive against failure.

Ask yourself this: which bankers are most likely to be attracted to such a pay structure? Fairly evidently it is bankers with the greatest ability to make lots of money for their bank. It is for that reason that the system of bankers selling their talents for pay-based rewards would work best. It's best for talented bankers with financial nous and business acumen, it's good for shareholders, and it's good for the economy too, as I explain in this blog post with the following analogy:

"Consider a car boot sale as an analogy. With car boot sales sellers pay a few pounds for a pitch because they expect to make more than the pitch fee in items sold. A car boot sale with a £5 pitch fee is pretty standard in the UK. If all prospective car boot sale sellers in the UK were suddenly hit with a mandatory £15 sellers' fee you'd find people with lower quality items would be less inclined to bother buying a pitch. Those with lots of quality goods might still be tempted, though, because they would have confidence that their net sales would exceed the £15 pitch cost. Charging a pitch fee, be it £5, £10, £15 or whatever is a great way to organise a car boot sale, because the fee, and the effort to drive down and set up, attracts only sellers who think they have enough quality items to sell and return a profit.

Imagine what would happen if, instead of charging for a pitch, car boot organisers started to pay people to set up stalls. There'd be recklessness, as sellers would turn up in their droves, pitching lower quality items safe in the knowledge that they'll make a bit of money anyway. Now apply that to bankers pitching for their own successes. Just as you don't need to pay car boot sellers with lots of quality goods to sell, you don't need to pay bankers with lots of business acumen and financial nous inflated salaries to perform well. To get them to make good decisions, you only need to give them share-based or bonus-based incentives to do what they do best, because their own wealth is tied up in their success. The banking system would be much better if bankers' bonuses were more, not less, and their salaries capped at zero - because increased bankers' bonuses would mean increased revenue for the bank as a result of prudent investments, or increased revenue for the bank as a result of overseeing a profitable merger for which they receive a percentage of the bank's often very large fee."

Quick Thought On The Alton Towers Crash

Just listening to some chatter on Radio 2 about the ride that crashed at Alton Towers yesterday, with some guy suggesting that this accident will put off future customers from using theme parks. It might, but it should not. Crashes are extremely rare, and while unfortunate for those injured, they are anomalous breaks from normalcy that are likely to bring about extra checks and increased stringency in theme parks in the foreseeable future, and probably revised working protocols too. Far from this accident being a rational disincentive, the reality is that the foreseeable future is likely to be the safest time to take your family to a theme park. 

The other thing that came to my mind is that theme park rides are supposed to be about thrill-seeking - so all those who remain unaware that they are not now in more danger of crashing are presumably going to be going on rides in the near future with the spectre of crashing in the back of their minds, which presumably for some people will increase the thrill.

 

Ladder-Climbing Needn't Be A Zero Sum Game

You've probably heard of the term "Keeping up with the Joneses" which is all about living up to the statuses others have attained, or in many cases acquiring a better status than others. Robert Frank, one of the most popular economists in America, has written a book called Choosing the Right Pond in which his central thesis is that ladder-climbing is a zero sum game, because if Tom acquires a better social status than Dick, Dick has acquired a worse social status than Tom, meaning on aggregate there is no gain.

While I agree that being obsessed with prestige is bad for people, to me it's obvious that Robert Frank is wrong (and uncharacteristically off form) in his assumption that ladder-climbing is a zero sum game - it need not be. That is to say, for every win there doesn't have to be a concomitant loss. Tom can acquire a better ladder position than Dick while at the same time seeing Dick acquire a better ladder position than him. The reason why is clear when we see ladder-climbing for what it really ought to be (and often is), not as a world full of people climbing the same ladder, but as a world full of people each with their own ladder and lots of climbing potential. Now, sadly, it is certainly true that people are often overly competitive in trying to obtain prestige - but they are the ones for whom status is an unhealthy thing, because they are more worried about their relative position in a sphere of rivalry and one-upmanship than they are getting to the top of their own ladder of potential.

Once we break away from metaphors and see how this happens in everyday life you'll know exactly what I mean. Suppose we randomly picked seven people from Trafalgar Square this lunchtime - Mary, Hristo, John, Hank, Gabriella, Ahmed and Debra. Each of them values their own skills, talents, interests and achievements, but they also realise that they are in a group in which every member has different skills, talents, interests and achievements, and that no one in the group is particularly worse off because of that.

Hank is a big muscular American doorman. Physically he is the strongest, toughest, and is top of the ladder on machismo. Ahmed is nowhere near as physically tough, but being a theoretical physicist he is top of the ladder when it comes to analytical thinking. Debra isn't as tough as Hank or as analytically smart as Ahmed, but being a teacher she is top of the ladder when it comes motivation, patience and tutelage. Hristo is a painter and decorator, which means he is the expert if you need your living room renovated. Gabriella is a dancer, and is queen in her ballet shoes. John is unemployed, but there are several things at which John excels that the other six do not. No one can touch John on his skateboard, or on the running track. If all seven were having a 400 metre race, John would win hands down.

Everyone in the group has different skills and talents, but here is the other important thing; their individuality means that their skills and talents need not come at the cost of anyone else's skills and talents. Gabriella can be queen of the ballet without having that status in the least bit ruined by the fact that John would trounce her in a race, or that Hristo can artex a ceiling to a higher level.

Clearly, as long as folk are not so terribly insecure that they constantly need validation and reinforcement by being seen as better than others or of a higher social standing, everyone can thrive by being the best that they can be. That is to say, what should matter is doing the best you can do in an absolute sense, not in a sense that's relative to other people's achievements.

You are going to find yourself in many situations where you are top of the ladder in a particular context, but low down on the ladder in other contexts. In one group you'll know the most about history and be looked upon to speak the most wisdom. In another group you'll be the one who can best inspire confidence in people's ability to mentor. In some groups you'll be the best at DIY, in other groups you'd best to delegate these responsibilities to someone better suited.

Here’s the other important thing that stops it becoming a zero sum game. In a group in which literary insight is highly valued, people will value literary insight if you can provide it. But people who don't have any literary interest do not lose any status in the literary circles by being unapprised of Thomas Hardy, James Joyce and Jane Austen. Similarly, people who value having the right 'look' in fashion or sporting prowess or the rarest collection of fine art are going to have kudos in some groups, but their accomplishments will be of little interest to those unaffected by such a milieu, because people outside that milieu wouldn't confer status or prestige on anyone because of fashion, sporting ability or collectable art.

Clearly then, status is not zero sum - there can be multiple winners. Chris wins if he gets to the top of his field in piano playing. But his status imposes no cost on me if I want to get to the top of my field in theological prose. The only people who get despondent about other people's relative success are those who are competing for the same ground - and that's a despondency they can avoid by becoming more rounded people..

How To Be More Efficient At Tasks

A famous rule of thumb by Cyril Northcote Parkinson known as 'Parkinson's Law' says that: "Work expands so as to fill the time available for its completion". So if you have five hours to complete a fairly straightforward office task, the chances are you'll take longer, procrastinate more, and be more susceptible to distractions than if you only had ninety minutes in which to complete the same task. This is fairly obviously demonstrable in pretty much every office of every public sector organisation, where almost nobody makes the most efficient use of the time available to them. Of course, Parkinson's Law plays out in many areas of life too. If you have the whole day to write a 2,000 word essay or sort through your old clothes you are bound to take longer to do those tasks that if you only had an hour.

The main problem with the public sector is that the money being spent is not its own, it is taxpayers' money. Just as you're going to be less efficient with a superfluity of time, you're also going to be less efficient with money that's handed to you from the general public. When people's own money is not at stake they are less discerning about how it is spent - and time is money - so less efficient with their time too. Just as services like energy, water, steel, air travel, buses and railways can only become more efficient when rescued from the improficiencies of State control and given over to the price signals of the free market of supply and demand, with similar measure the services the State still provides can only become more bureaucratic and less efficient as they continue to expand their legislative protocols and their levels of middle management.

This is because a variation of Parkinson's Law applies to bureaucracies too - the more they expand and the more people there are involved in that expansion, the more they will make unnecessary, overly-complex and duplicated tasks for each other. Organisations are usually pyramid-like in their structure, with every departmental level in the public sector needing to operate in the best way to secure more public finances and, ultimately, justify their own roles in the organisation. In the private sector, however, there isn't the luxury of the reliable flow of taxpayers' money trickling down from central government - an organisation's efficacy rests on being an economically viable operation in the competitive market of supply and demand, where inefficiencies are far more rigorously weeded out, and where the dead wood of extraneous employees will be rendered expendable due to what the continuation of their roles will cost the shareholders whose profits and losses are conditioned by maximal efficiency.

* Incidentally, if you grabbed a round balloon and pressed on it at the top and bottom it would lose much of its height and gain lots in width. In the UK the State is doing something similar; it is getting shorter in the sense that comparably few of our goods and services are now public services (comparably - i.e. compared to, say, the 1950s), as the free market continues to gather more and more momentum and give greater exhibition to its efficiency; but it is getting wider in the sense that it continues to become more and more bureaucratic as well as smothering our liberty with more and more legislation and snooping into our daily lives.

Making Supermarkets Hand Over All Unsold Food Doesn't Seem Like The Answer To Me

It's Bank Holiday Monday, I was just about to cook some lunch before going out, and then right now this article just landed in my inbox - it's a campaign for David Cameron to make supermarkets hand over all unsold food to charities.

This is as a result of what's happening in France, where a group of French MPs have tabled a draft law to make it compulsory for supermarkets to hand over to charity all unsold food still fit for consumption.

It's a noble idea, surely? I mean, if there is one thing the State can be good for it is in gently nudging socially desirable preferences in the right direction, right? I can go along with that: I do actually want much more to be done for good causes, and a nudge that compels big supermarket corporations to do more for charities is no bad thing in principle, and full of good intentions.

However, in practice this is problematical, because when you legally compel businesses to behave a certain way over and above what they are in business for you then impose extra costs on them, such as extra labour and extra resources to collect, store and administer the goods - and those costs end up filtrating into other areas of society. Such enforcement will have spillover costs that are, at present, invisible to the government officials enforcing this.

Will the governments that enforce this law contribute towards all these extra costs, plus the additional costs of refrigeration for both the charities and the supermarkets? But perhaps even more disconcerting is the likelihood that with this potentially oppressive legislation the State then has the power to penalise shops who don't give their quota to charity, meaning threats of fines will affect supermarkets' buying habits (buying artificially low, keeping stocks at a minimum to avoid wastage, etc) which then has a knock on effect of lower prices, which hurts employees, manufactures, delivery drivers, and maybe even farmers too.

It may even be the case that in not enforcing a supermarket food-donation system that will only increase the supply of free food we avoid creating an unhelpful dependency food welfare, rather like how in not giving money to beggars we do more good for them in the long run.

All that said, it is easy to see why such a campaign is growing in popularity (over 100,000 signatures at the time of writing) - tonnes of perfectly edible food is literally being thrown out on a weekly basis across the country, and this needs to change. I once heard a manager of a supermarket say that the main reason they didn't give thrown out food to the homeless is that they were afraid of being sued in the event of someone getting ill. Would a government that passed this food-donation law allow an 'eat at your own risk' mandate to stand for those consuming the leftover food? I seriously doubt it. It's all very well politicians having these noble ideas, but so often they aren't thought through properly, and I suspect here is another fine example of that.

There definitely is a square hole problem of food shortage in this country, and a square peg solution of lots of thrown away food in supermarkets available to be consumed, but I'm not sure this proposed government law is the solution. What we need is more innovation in getting people to give generously, more awareness raised, and more government-led investment that can help the poorest and vulnerable in society get back on their feet and find work.  

On The 'Gay Cake' Ruling

We read this week that a judge has ruled that a Christian-run bakery discriminated against a gay customer by refusing to make a cake with a pro-gay marriage slogan. I’m uncomfortable with this particular legislation. Some people have been claiming that such a ruling is a victory for anti-discrimination proponents. The irony seems lost on them – that there is still discrimination going on – it’s just that in this case the discrimination is against the Christian couple running the cake shop.

The Christian couple’s view on homosexuality isn't one I personally share, but within reason I defend their right to choose to run their business according to their own religious beliefs and values, and in this case the State should do like-wise.

Disapproving customers are free to walk away and shop elsewhere. They are even free to share their disapproval on social media and encourage others to join them in shopping elsewhere. Such responses are powerful in business, because they put pressure on socially undesirable behaviour, and they penalise socially undesirable business owners with lost custom, diminished profits, and in extreme cases, bankruptcy.

Any law that makes it illegal to run a business according to your religious beliefs is a law that infringes on the liberties of the business owners in a way that is, in my view, socially undesirable. Saying that, however, doesn’t mean I think all anti-discrimination laws are undesirable - far from it. They just need to be applied more prudently.

As always, society involves tension between a) accommodating people's right to hold views and beliefs, and b) protecting others from unwanted discrimination. It is socially desirable for a racist café owner who wants to put a 'No Blacks' sign on his door to have black people's rights to not be discriminated against preferred over his right to display his repugnant views. But at the other end of the spectrum it is also socially desirable for another café owner to be allowed to discriminate against under 65s by offering a pensioner discount on Wednesdays and Thursdays. In this case the opposite applies - we prefer the café owner's right to introduce pensioner discounts over any societal claims that under 65s are being discriminated against.

The question the cake shop case elicits is where on that spectrum do religious views sit? Personally I think people's religious views should not be legislated against in business as to do so would be to encroach on their freedoms in ways that people in society ought to repudiate. It's quite clear to me that if the choice is between a) forcing a businessperson to make/sell a good they do not wish to, or b) compelling a dissatisfied customer to use another business, it's a no-brainer that society should prefer the latter.

Perhaps a different case will highlight this with even greater rigor. Imagine a t-shirt printing stall run by a Muslim. Along comes a bunch of EDL louts on a stag party wishing to have this Muslim gentleman print ten t-shirts depicting Mohammed drunk on lager. Would you really want to live in a society that forces the t-shirt printer to make these t-shirts for the stag party? I could spend all day thinking of similar examples, and they would all contain the same wisdom: that a society that forces people to act against their religious beliefs for the good of not offending their customers is a pretty dodgy society, and one in which most of us shouldn't want to live.

A quick comment on protected characteristics

You will see from the Equality and Human Rights Commission’s protected charcteristics page that it is forbidden to discriminate against anyone based on their race, sexuality, religion, sex, gender state, disability, age, marriage or civil partnership, or pregnancy and maternity.

The problem with this protected characteristics page is that it fails to compare like for like. A good protected characteristics list would be one based on criteria beyond the individual’s control. So for example, I can’t control my skin colour, and my skin colour has no bearing on whether I can do a job or not, so it’s understandable that discrimination on grounds of skin colour is both socially undesirable and illegal. For that reason, it would be right and proper to bring before the law a café owner who put up a sign saying “No Blacks”.

Religion, on the other hand, is a different matter. Religious belief is not something beyond our control. We choose our religious views (even if they’ve been thrust upon us from childhood), and therefore what we believe says something about what kind of person we are. If I had to choose between two people to hire, and there was nothing to choose between them apart from one was a scientologist and one wasn’t, I’d happily discriminate against the scientologist, because in my hiring criteria a candidate's failure to see that scientology is a racket could be a black mark against their potential.

For that reason it's easy to favour a law that prohibits discrimination on skin colour but at the same time repudiate a law that disallows religious discrimination. It's also worth pointing out for the record that the Christian couple running the bakery weren't actually refusing to serve someone on the pretext of their being gay - they were simply refusing to make a product that expressed something they found to be contrary to their own beliefs. A law that effectively wants to commandeer their bodies and cake-making facilities is to me far more repugnant than the offence these Christian bakers are supposed to have committed.

All that said, this is only a short blog post in which I couldn't possibly give the subject the full range of considerations it warrants.

One final point - the market does a very good job of weeding out socially undesirable discrimination

Suppose there are two countries - one with a large majority black population and a minority white population, and one with a large majority white population and a minority black population. What would be the effects of discrimination against blacks in each country? Real history will tell us the answer, because those two situations describe two real countries; the first being South Africa and the second being America.

Under South African apartheid the minority whites were prejudiced against the majority blacks, which comes at an economic cost because it restricts your business and your labour. Suppose racist Jim opened up a shop in South Africa in the 1960s but won't serve any of the majority blacks - he obviously shoots himself in the foot because his restricts his trade options to a minority few and excludes the majority of potential customers.

Now suppose racist Tom opened up a shop in America in the 1960s but won't serve any of the minority blacks - his discrimination hurts him, but not as much as it hurts Jim, because Tom is restricting his trade by less than Jim, as whites make up the majority in America in the 1960s.

In short, in a free market it pays not to unfairly discriminate, because whether on large scale or a small one you're going to limit your potential custom. The more socially undesirable your discrimination, or the more people your discrimination negatively impacts, the worse it will be for you. It is no coincidence that the time at which humans started to trade was also the time that we started to become more civilised and improved our methods of co-existence. To be able to trade in any age, and in particular, the modern age, you need to be able to think of others; firstly, by coming up with something (goods, services, entertainment) that others want; and secondly, by being honest, ethical, friendly, and developing a good reputation for your business. Far from being a vortex of selfish, uncaring and unethical behaviour, free markets necessitate qualities that make trade conducive, with your success dependent (in most cases) on your being a reputable person who welcomes all and treats everyone well.

Cameron's Counter-Extremism Plan Is Not A Good One

In the papers today we read about David Cameron's new plans for counter-extremism:

"The Prime minister will announce a counter-terrorism bill including plans to restrict harmful actions of those seeking to radicalise young people. The policies include disruption orders to prevent extremists airing their views in public or radicalising young people, new powers to close premises such as mosques where extremists are seeking to build influence, and extra immigration restrictions for those thought to be preaching extremist views."

No no no, this is a terrible idea. While I'm all for coming down hard on Islamic extremism, this legislation will unleash an unwanted genie from the bottle - not just because it encroaches on people's free speech, but primarily because it involves backward reasoning that will probably make the problem it is trying to solve even worse.

Here's why. Generally speaking, you’re likely to reduce speeding by introducing speed cameras; you’re likely to reduce street crime by introducing CCTV; and you’re likely to reduce the chances of being burgled by getting a burglar alarm. What you are not likely to reduce by legislating against Islamic radicalisation is Islamic radicalisation - you are only likely to take it into even more secretive, private and harder to detect places.

The most dangerous Muslim fundamentalists are obsessed with the total and unchallengeable absoluteness of Islam - they are not going to let something comparably trivial like British legislation curb their ambitions - they will only be more likely to attempt to propagate their dangerous and fanatical influence from the subtle underbelly of society, underneath the radar of the authorities.

It's not that the idea of restricting pernicious radicalisation and dangerous extremism is an unworthy one, it's simply that it will make things worse - it will make many more young Muslims feel averse to the British establishment and increase their chances of being ripe for extremism, and it will remove many fundamentalist activities from where they can be observably checked.

The law is an effective deterrent only by preventing easily preventable activities. Islamic fundamentalism is not an easily preventable activity because its exponents consider it to be more valid than human laws. The best way to reduce the damaging effects of radical Islamic fundamentalism is not to prevent extremists from airing their views in public or repudiate the 'passive tolerance' we've come to enjoy - it is to leave untouched the liberty of free expression, and lock up those who end up committing criminal activities in the name of religious extremism.

Even that doesn't wholly get to the crux of the issue though - which is that words like 'extremism' and 'radicalisation' are nigh-on impossible to legislate against in any sense of hoping for pre-emption, because they are not objectively measurable states - they are subjective and part of a broad spectrum of viewpoint and behaviour. That simple truth gives us another reason why it's much better to afford people the freedom to believe and express whatever they want, and enforce the law when their freedom of belief and expression turns into a criminal activity that harms individuals in the society in which they live.

A Few Post-Election Thoughts

After returning from holiday I was as surprised as everyone else to see the Tories had won a majority against all expectations. Surprised, but very glad, because had Ed Miliband ended up as Prime Minister it would have been the most ill-judged and unjust outcome in recent political memory. Thankfully the public were even less persuaded by the direction he had taken Labour than pretty much every pollster and social commentator had accounted for.

Make no mistake about it, I very much doubt Labour's heavy loss was to do with Miliband's character (outside of the policies he seems like an okay guy), nor his ridiculous 8ft 6in slab of limestone stunt, nor his shameful and pathetic attempt to buy Muslim votes with his 'Islamophobia' promise. No, the party's disastrous result was pretty much entirely based on his abject failure of a social experiment to take the Labour party back to the old Labour of the socialist-economic left which hasn't won an election since 1974, and has long since been thoroughly and comprehensively discredited intellectually. This suggests that even a large section of the politically uninformed demographic are not so credulous as to fall for the kind of guff that Ed Miliband was trying to sell them.

Be reminded that the only time Labour has got anywhere in the general election since the notoriously inept days of the early seventies has been through Tony Blair's rebranded Thatcherite New Labour, from which Ed Miliband had thoroughly departed (in favour of his father's Marxist views) and to which his brother David had fervently gravitated. For reasons I explain here, I doubt this is the end of the Labour party, but it probably will take another rebranded Blair-esque shift before they can ever hope to get close to seeing any power again. It was telling that even in his resignation speech Ed Miliband was still championing the policies while lamenting the public's failure to connect with them. No Ed, it really was the policies that cost your party so much - and that you still can't see it even after such a palpable rejection of them is indicative of the extent of the delusion that underpinned your campaign.

When the results were in, it was good to see that brains were victorious over the metro-left's hideously anachronistic, meretricious, self-righteous envy that abhors success, innovation and wealth creation. Given the ineptitudes of the opposition parties, I'm glad that David Cameron and his Cabinet get to finish off the second half of the job they started, even though they are far from perfect themselves.

Lastly, if David Cameron keeps his promise of an EU referendum it will be a great chance to finally unyoke ourselves from the stuffy, bureaucratic socialist busybodies in Brussels and Strasbourg - an opportunity I'm pretty sure that the British people will, sadly, refuse to take when it is offered to them.

Why It's OK Not To Vote

I'm always bemused when I hear people say "You are morally compelled to vote: people died for your right to vote, and it is outrageous if you choose not to use it". They also say things like "You've no right to moan about the politicians in power if you abstain from voting". They are popular opinions, but like many popular opinions I think they are wrong.

On the first one - even if we ignore the fact that the odds are astronomically stacked against your vote making any difference whatsoever, the majority of people who died for our liberties and freedoms didn't die for our right to vote, they died for our right to the privilege of choice and autonomy, of which both voting and abstention are constituent parts.

And on the second one - not only do your freedom of choice and autonomy give you every right to praise or bemoan to your heart's content, the fundamental truth here is that if you have no political parties you would support then the ability to vote means little when the variety of options on offer fundamentally depart from what you want to be on offer. For the people to whom that applies I see no reason to expect them to be any less vocal - one may even expect them to be the most vociferous critics of all.

Here's an illustration to show what I mean. Suppose a friend of yours has been sentenced to death in a State that allows it, and yet you are against capital punishment. Someone asks you to vote on how your friend is put to death: electric chair, lethal injection, hanging, a bullet to the head, or being starved to death slowly.

Given that I am opposed to the death penalty I want to campaign against my friend being put to death at all. If you tell me I'm morally impelled to vote on how my friend dies, I'd certainly say that the lethal injection option is a less bad option than being starved to death slowly, but my vote is only an adjunct to what I feel is a bigger issue about the inhumanity of capital punishment.

Similarly, in politics my vote for the Conservatives, UKIP, the Lib Dems, Labour, or whoever would only be an adjunct to what I feel is a bigger issue - that I'm a Christian libertarian that isn't being represented by any of the parties for whom I can vote. Thus, my vote would only be a vote for the least bad party - but when you combine that with the fact that that vote is almost certainly going to make no difference to the outcome, then not voting becomes a perfectly rational thing to do.

You're probably very accustomed to how the party political system has manifested itself over the last century or so, and you're so used to the kind of choices you're being asked to make that perhaps you don't know what it's like for those of us for whom the choices in front of us are so many miles away from what we'd support. A fact you may know is that dinosaurs were actually alive on earth for over twice the length of time than the time between their extinction and now. By a similar measure, the ideal party I'd like to see in government is probably about twice as far from the Conservative Party (the most electable party by a country mile) as the Conservative Party is from, say, a far left party like the Green Party. If you can understand where I'm coming from there, you should have no trouble understanding why, as things stand, I just don't see voting in the same way that you do.

Even if you can't swallow all that - and I'd be at a loss to understand why ever not - then at the very least you should respect my right and decision not to vote, just as I respect your right and decision to vote or not vote as you see fit.

Miliband's Islamophobia: A Shameful & Dangerous Act of Political Opportunism

In what is a squalid and somewhat pathetic attempt to win votes off Muslims in this tight election, Ed Miliband's credibility and integrity has sunk to even further depths as he promises to outlaw Islamophobia:

"We are going to make Islamophobia an aggravated crime. We are going to make sure it is marked on people's records with the police to make sure they root out Islamophobia as a hate crime."

Everything….and I mean absolutely everything is wrong with this idea. I'll pick just my top four reasons why.

1) It's a dystopian example of thought crime; the very epitome of an Orwellian nightmare. Phobia literally means a fear of something. If you have claustrophobia you are afraid of confined spaces. If you have arachnophobia you have a fear of spiders. If you have a fear of Islam you have a fear of its growing socio-political influence in society, and of the way people anxiously pander to it, and of the extent to which its extremities stultify minds, and of the spectre of increased radicalisation that leads to hate speech and sometimes murder and terrorism (all very understandable fears, I'm sure we'd all agree). Of course we should be wholly tolerant and kind towards moderate Muslims, but far from wanting to criminalise this anti-extremist phobia, we should actively encourage it, and come down even harder on those Muslim leaders radicalising young people.

2) It's a contemptible infringement of our civil liberties and our freedom of speech. To outlaw the ability to criticise, mock, ridicule, campaign against and intellectually challenge Islam is to rob us of vital tools for enquiry and progression, and will at the same time create an even greater culture of trepidation whereby people are forever afraid to speak openly for fear of being criminalised.

3) It's ambiguous to the point of being useless. How the heck is this ridiculous legislation even going to be properly enforced anyway? The boundary line between what constitutes the Miliband version of Islamophobia is blurry. Am I an Islamophobe if I write a blog saying that I don't think the Qur'an is anything other than an inept man-made creation? Will I be outside the orbit of the Islamophobia law if I demonstrate outside a Mosque known to be radicalising young Muslims, or if I tell the police about a Muslim grooming operating above a local kebab shop (that's hypothetical by the way - I know of no such place in my city)? In terms of the law, Islamophobia is so ambiguous it is nigh-on impossible that it could be enforced with any consistency or in a way that doesn't stifle our free expression and genuine concerns about the darker elements of Islam. This leads me nicely onto point 4 - perhaps the most frightening prospect of them all.

4) It empowers the very people we actually want to disempower. Even aside from the very serious problem of making people reluctant to speak out against radical Islamist preaching in mosques, extremism in schools and hate speech in public places, the law will only help the despicable child-sex gangs that groom, entrap, rape and exploit young British girls. The majority of these offenders are Muslims of Pakistani origin (recall infamous cases in Doncaster, Rotherham, Manchester, Blackpool, Oldham, Derby, Newcastle, Rochdale, Bradford and Oxford as horrible cases in point). The reason so many of these young girls were subjected to the perverted exploits of the organised Muslim gangs for so long is because numerous agencies and authorities (including the police) were cravenly fearful of being labelled racist or prejudiced if they enforced the law against these perpetrators.

The truth is, this proposed law is highly irresponsible and gravely hazardous, as it comes with the danger of creating a greater freedom for already dangerous Muslims and potentially dangerous Muslims, and also the danger of creating a culture of trepidation and spinelessness for most other UK citizens.

When looking up the number of places (mentioned above) in which Muslim gangs have been responsible for child-sex grooming, I also happened to find this interesting piece of information from the Henry Jackson Society - "British Muslims could have the decisive vote in a quarter of constituencies, analysis shows. In 159 of the 632 seats, the number of Muslims is greater than the margin of victory in 2010. And this is true among almost half the 193 marginal seats."

So as well as the highly irresponsible and gravely dangerous nature of the law, this information about how important the Muslim vote could be gives clear exhibition to how Miliband's agenda-driven, Muslim-pandering proposition is a most shameful example of how this aspiring Prime Minister will put his own party political aspirations ahead of what's good for the country (namely some of society's most vulnerable people) by prostrating himself towards Mecca to further his own political gains.

Why We Should Not 'Agree To Disagree' About Facts and Truths

In preparation for seeing why it's irrational to agree to disagree about facts and truths, consider the following scenario. Suppose Jack & Jill have a disagreement. Jack explains his view, so does Jill. They both still disagree. So Jack takes another turn at convincing Jill. Jill retorts and still disagrees. Jack now has to consider something new. Jill has heard Jack's reasons for holding his view, and an argument against her response, yet she still disagrees.  The difference between their initial positions and now is that they have had one round of questioning, so each holds their initial belief, plus the extra strength of that position in withstanding their opponent's objection.

This process goes on and on through several rounds, with each getting more confident about their position, because they know that the view they have has now faced the gamut of multiple counter contentions. After several more rounds of debate, Jack and Jill should each hold onto their view with even greater confidence.

Have you spotted something funny about that scenario? The above scenario I described shouldn't happen at all. If both Jack and Jill are honestly open to changing their mind, consistent with the facts, you should not see two people stubbornly and emotively arguing their position and becoming even more strongly wedded to defending their own position and undermining that of their opponent as each round passes. What you should see as the rounds of analysis progress is that one of them should become less and less confident that they are right, and the other one should become more and more confident that they are right, with the natural end being agreement.

Suppose both Jack and Jill start with a conviction value of 10. Every time there is a round of analysis where one person's view is undermined, the conviction value should increase for one person and decrease for the other. Suppose for simplicity's sake there are 10 rounds of this kind, and suppose that the debate is whether evolution happened, meaning Jill the evolution supporter is right, and Jack the evolution-denier is wrong. Here's what you should see:

Start: Jack 10 - Jill 10

Round 1: Jack 9 - Jill 11
Round 2: Jack 8 - Jill 12
Round 3: Jack 7 - Jill 13
Round 4: Jack 6 - Jill 14
Round 5: Jack 5 - Jill 15
Round 6: Jack 4 - Jill 16
Round 7: Jack 3 - Jill 17
Round 8: Jack 2 - Jill 18
Round 9: Jack 1 - Jill 19
Round 10: Jack 0 - Jill 20

Naturally, this rarely happens, but if both were honest truth-seekers and fact-finders, that outcome is what we should expect. When it comes to facts and truths, then, it is irrational to agree to disagree. The person we have to thank for this is Nobel Prize winning mathematician Robert Aumann.

When it comes to truths and facts (not subjective things, obviously) Aumann's Agreement Theorem shows that it is nigh-on impossible for two honest, rigorous and diligent truth-seekers and fact-finders to agree to disagree (see my blog post on it here). In addition, computer scientist Scott Aaronson's mathematical paper showed that these two honest, rigorous and diligent truth-seekers and fact-finders can be expected to reach an agreement in pretty quick time.

That's all very well, but this doesn't mean people will suddenly start agreeing, does it?

No. Let's be clear, the agreement theorem isn't saying that everyone will agree - it is showing that people can (and should) in principle converge on an agreement as long as they honestly wish to get to the truth.  That is to say, the reason humans disagree so much is not primarily down to lack of availability of data or methods of assimilating that data (although it can be), it is down to factors inhibiting that person's honest, rigorous search for the truth.

But we wouldn't want to stifle diversity and uniqueness of thought, though right?

It depends on what kind of diversity and uniqueness of thought you mean. Hitler was quite diverse and unique, but it's good that his aims were stifled (albeit too late for many people's survival). The upshot is, Aumann's theorem is a beautiful and elegant contribution to humankind that when considered properly has the potential to be very enriching. The diversity and uniqueness of thought that the theorem can encourage people to help discontinue is stuff that's unhelpful to the human race, either by being factually wrong, or immoral, or retarding progress.  

Take the morality one as the most obvious example. Is diversity and uniqueness good in moral situations? Sometimes yes, but often no. Applying Bayesian thinking to issues of ethics, you'd find that if you gathered in a hall the most diverse people in terms of their ethics there would be a lot of views you'd find pretty repugnant. Diversity in one sense is great, but alas not always in all senses. Under the terms of being factually wrong, or immoral, or retarding progress, the human race prospers far more when diverse elements - that is, the elements that are factually wrong, immoral or an impediment to press - are weeded out. That's not to deny, of course, that there are numerous ways that diversity of thinking, culture, imagination, creativity, passions, tastes, experiences and talents enrich the world.

Oh I see, a lot of it is about pre-empting thin end of the wedges?

It's important. There is a lot of deception, manipulation and propaganda out there, which evidently engenders a reservoir of lazy thinking in society, which has the knock on effect of causing lots of unnecessary disagreement, disharmony, resentment and, when left to fester, extremist conflict that can lead to horribly brutality. The Agreement Theorem encourages us to try to cut it out at source.

Is there a danger, though, that this realisation will make us want to be right all the time?

I actually find it incredible how often people are so unenthusiastic about getting things right. I think we are so blessed to have the faculty of language, the multiplicity of words, and the most advanced cognition we know about in the universe (of all the created things, I mean). Besides, just about everyone wants to think they're right - they just differ on the particulars.

For example, meet Jeremy: he works in the lab to improve our understanding of cancer in order to help ameliorate its pernicious effects on people; he believes in driving on the correct side of the road consistent with the highway laws; his view is that people should be faithful to their partner; he is passionate about ending animal cruelty, and he thinks people should be respectful of their neighbourhood and not drop litter anywhere except in a bin.

Upon hearing those things, you don't immediately think it's such a shame that Jeremy thinks he's right about those things, and regrettable that he would like it if more people thought like he did. Presumably most people reading this have no problems with those examples of claiming to be right: it is very important to do all we can to diminish the effects of cancer, and end animal cruelty. Infidelity is hugely damaging; litter makes the streets look messy; and there would be catastrophe if people decided to drive on whichever side of the road they fancied.

The point is, it's easy to support unanimous concurrence on things like cancer treatment and keeping our streets tidy, but it's also fairly easy to support unanimous concurrence when it comes to all matters of fact and truth. Yet one meets people who are less comfortable with this: they do not like it when social commentators express views they think are correct and when they lament because more people don't agree with them. But like cancer treatment and keeping our streets tidy, facts and truths are enriching to human progress - in fact, it's only because of facts and truths that we even know that cancer treatment and keeping our streets tidy are preferable to the alternatives.

So to any charge us social commentators face that "You want everyone to agree with you all the time" - well yes, of course we do, because we value fact-finding and truth-seeking as being hugely beneficial to the human race, so why would we want it any other way? But more to the point - be under no illusion - you are the same as us - you believe that the things you think are objectively true and morally right are things others should believe too - it's just that you think the facts and truths we propound belong in a different category to the ones you propound. In all sorts of ways you value the unanimity of concurrence as much as we do - it's just that we think there are a lot more things about which we should agree if people can only train themselves to override their cognitive biases and emotional skews.

* Note: The issue of what qualifies as a fact and as truth is not unimportant, but we'll save that for another day, as the essential drift remains, and at no cost to the principles this blog post is endorsing.

 

EDIT TO ADD: As a response to the response, it's worth pointing out that some of the issues mentioned, such as what constitutes truth, what qualifies as a fact, what can reasonably be posited as consensual, and how to deal with complex analyses and intractable considerations, are all able to be dealt with by Aumann's theorem.

When dealing with questions about whether something can justifiably be called a fact, or when tackling a complex area of consideration that may or may not have a justifiable consensus, the agreement theorem still does its work, because the process by which we should agree on facts or truths is the same process by which we should agree on the above issues I just mentioned.

For example (as one person mentioned economics), economics does deal with a very dynamic set of data points, but there are plenty of routes by which two people can arrive at an agreement, even if that agreement involves concurrence on degrees of intractability and open-endedness. Here are a few examples. The law of diminishing marginal utility will indicate that when it comes to consumption of a banana, the first unit of consumption (the first banana you eat) yields more utility (is more beneficial and enjoyable) than the tenth banana. It's quite reasonable to agree that by the ninth banana one might be quite sick of them. Extrapolating from the law of diminishing marginal utility, it would be easy to agree that paying a second cleaner to clean your apartment an hour after the first cleaner has cleaned it is a poor use of resources.

Another example, the Laffer curve measures the relationship between how much a government taxes us and the resultant government income. Two people who disagree on the optimum level of taxation for the fifth quintile could easily come much closer to agreement if they both carefully analysed the evidence. Another example, we expect increasing returns to have a positive effect on productivity when there is increased growth in output. Two opposing politicians could argue all day about the best way to achieve this, whereas two economists (without a political agenda) would likely agree quite quickly.

Last example, when there is elasticity in the final product demand, wages will likely increase, which consequently knocks on to affect the quantity and level of the demand. Again, two politicians may argue about this all day, whereas two unbiased economists would have no trouble understanding that this is because under those conditions the wage elasticity of demand for that category of labour will be high.

The upshot is, whatever the area, be it economics, science, faith, psychology, politics or philosophy, Aumann's Agreement Theorem doesn't just bring to bear the routes by which we can agree on facts and truths, it also factors in all of the anomalies (complexity, intractability, human failings, different levels of intelligence, asymmetry of information, etc) that need to be redressed or overridden. So irrespective of anything that can militate against agreement, Aumann's model gives exhibition to the pathways by which people 'can' agree as long as the enquiry is honest and rigorous.

My Articles for The London Institute for Contemporary Christianity

What Price Free Speech? - 22/2/15)

Imagining A Better World - (18/3/15)

Agents Of Love And Grace - (9/4/15)
Lovelocked - (5/6/15)
Real Freedom - (14/8/2015)

 

 

My Articles For The Adam Smith Institute

 

Why Emissions Tests Are So Exhausting - (15/1/15)

Restating The Case For Freedom of Speech - (20/1/15)

A Plain Pack of Lies - (22/1/15)

The Green Spectre - (6/2/15)

Pay As You Protest? - (3/3/15)

The Dark History of The Minimum Wage - (17/3/15)

Miliband's Zero Hours Contracts Catastrophe - (7/4/15)

The Myth Of Owing Future Generations - (14/4/2015

Don't Campaign Against Tax Havens: They Are Good For Us - (21/4/2015)

Discrimination and the free market: hardly a piece of cake - (22/5/2015)

Markets Make Us Greener - (29/9/2015)

 

Protecting Home Industry Is Not A Steel - 21/10/2015)

  

Stephen Hawking & The Electorate's Crazy Cycle

Today we read in The Independent that Stephen Hawking, the so-called finest mind in the universe, is backing Ed Miliband's Labour party in the election. I don't think Hawking is the finest mind in the universe. He is certainly excellent in his specialised field, and I thought A Brief History of Time was superb - but outside of that field I think he frequently shows himself to be pretty mediocre, particularly on the subject of God and philosophy, and, it would appear from today's endorsement, economics and politics too. If I were to take a stab at how the finest mind in the universe (whoever that is) would view the up-coming election it'd be something like this.

Frivolous Fred has a spending problem. He can't stop wasting the household budget on things they don't really need. His spending got so out of control that he went on a borrowing spree so he could be even more profligate. Thankfully his wife Wise Wendy is much more prudent. She decides to impose austerity cuts on Frivolous Fred in order to get their finances back under control.

In real life Frivolous Fred is Labour under Gordon Brown and Wise Wendy is the current Conservatives, who were shrewd enough to realise that the right balance of austerity cuts, along with relying more heavily on the private sector, had a better chance of turning round the economy than Labour's perpetual plan of high taxation, high borrowing and high spending. Why isn't this simple piece of wisdom more widely understood? 

Here's a suggested reason. The crazy thing about voters is that they easily have their attention swayed by political cycles that bring about change, which means it is fairly inevitable that if you've had a left-centre government for a while a right-centre one will be voted in pretty soon, and so on as the cycle goes. After 13 years of New Labour, the Tories got back in again, albeit in coalition with the not always comfortable bedfellows the Liberal Democrats.

The last five years have been quite good in terms of an economic recovery - not great, but not bad, and certainly astronomically better than things would have been with a government like Miliband's Labour that thought increased borrowing and increased spending was the answer.

But after a fairly successful Conservative/Lib Dem period in government, where the response to the financial crisis was to look to the free market and private job creation as the answer, what then happens is that the opposition party seems to be able to pull the wool over much of the electorate's eyes by promising to redistribute much of the wealth that has been created. Stephen Hawking's comment hints at this too when he says "The city needs a Labour government to get the kind of investment we need again"

It's quite easy to see what is happening with this kind of thinking. When standards have improved, employment has risen and inflation has been fairly well managed, instead of voting for a party that is likely to continue with this growth, many people vote for the opposition party that promises to increase taxes, increase spending and have greater inference in the free market (through things like minimum wage increases and rent controls, and a cap on NHS profits).

And that's the crazy pattern of voting cycles: very often an opposition left-centre party that builds its pre-election promises on redistributing the wealth the right-centred party helped create appeals to the average voter more than keeping power in the hands of the right-centre party that helped create the wealth they want to redistribute.

Then, after they get elected and the promises soon turn out to inimical to increased growth, the electorate loses its amnesia and remembers the party that helped the economy grow. Consequently, instead of the kind of steady growth we'd see with the continuation of a party that looks to the free market and private job creation as the answer, we get a staccato rhythm, where periods of growth are punctuated by periods of inertia – otherwise known as Tories in/Labour out, Labour in/Tories out cycle. Now, sadly, it looks to be Labour's turn again.

Hmmm.... Pondering What To Listen To Next

I'm starting a new musical phase in my life. I own approximately 1500 CDs, and they belong roughly in two categories.

Category 1: Those that I know are good because I've played them lots and like them very much.

Category 2: Those that I know are good because I have played them a few times, but nothing like as much as Category 1 CDs.

Every time I go into the office in which I write, I have a choice. I can put on a safe CD from category 1 (bands or artists I know I really like) or I can try something less familiar. Like most of us at times, being susceptible to hyperbolic discounting and periodically allowing the id to get its way over the superego, usually I tend to opt for a category 1 CD, particularly as when I'm reading or writing it's good to have background music that I can enjoy without having to give it my full attention.

 

However, recently I've given more concern to the fact that among those 1500 CDs are lots of potentially good Category 2 albums that I've listened to less frequently, and that was so long ago that I hardly know them at all.

So, with that in mind, I decided to look through them and jot down Category 2 bands or artists to which I'd like to give more listening time, and actually do now plan to do so. Falling into this category are the following:

Allman Bros, Tori Amos, Badly Drawn Boy, Jackson Browne, Jeff Beck, Buffalo Springfield, Ben Folds Five, The Band, Cocteau Twins, Credence Clearwater Revival, Elvis Costello, Cream, Crowded House, The Cure, Divine Comedy, Dave Matthews Band, Depeche Mode, Fairport Convention, Flaming Lips, Garbage, Goldfrapp, PJ Harvey, Jethro Tull, Jefferson Airplane, The Kinks, Kings of Leon, Moody Blues, Mogwai, The Mission, Mercury Rev, Randy Newman, The Pixies, Pulp, Prefab Sprout, Prince, Liz Phair, Iggy and the Stooges, Primal Scream, Roxy Music, Lou Reed, Red Hot Chilli Peppers, Rush, Todd Rundgren, Santana, Sisters of Mercy, St Etienne, Spirit, Patti Smith, Bruce Springsteen, Sly & The Family Stone, Sonic Youth, Stephen Stills, Paul Simon (solo stuff), Traffic, Teenage Fanclub, Talking Heads, Van Halen, Tom Waits, Wilco, World Party.

If anyone is a particularly passionate fan of any of the above, and feels like championing their case for my listening pleasure, I'll be glad to hear from you. And if you don't wish to, that's perfectly fine too - I still love you lots.