Geography Is The Present Day Racism

A lot of people in the UK think that white people should be given UK jobs ahead of black people.  They complain when black people get jobs ahead of white people - and they get taken in by the false propaganda that exclaims black people coming into the country to work is bad for the economy (it isn't).  All that I just said is true, apart from two small details; I said 'white' instead of 'British' and 'black' instead of 'non-British'. I said it because, even today, many people who believe it is wrong to discriminate on the basis of race (a man made concept*) are surprisingly quite happy to discriminate on the basis of geography (another man-made concept). When we look back at some of the shameful acts and beliefs in history (such as stoning, witch-hunts, slavery), we are usually appalled that our ancestors behaved so reprehensibly, and with such ignorance.  Similarly, most of us are appalled at the relative recency of our homophobia and racism.  The underlying point is, I don't see why we should be less appalled at discriminating against someone based on their geography than discriminating against someone based on their race – both strike me as equally absurd, unkind and unjustified.   Furthermore, I feel fairly certain that future generations will have culturally evolved to find discrimination based on geography as reprehensible and ignorant as we of today find discrimination based on race. 

Despite the above, it is incredible how frequently people complain about 'migrants stealing our jobs', and how often they insist that 'British money should be spent in Britain'.  I don't see why a young, unskilled man from Newcastle or Liverpool or London with not much willingness to work should take precedence in the employment market over a young man from Poland or Nigeria who has the right skills, and is willing to work.  And I don't see why a family in Cambodia with not enough food and drinking water should be any less of a concern for us than a family in Newcastle or Liverpool or London living in impoverished conditions - in fact, it seems obvious to me that those in Cambodia (and other countries much poorer than ours) should be more of a concern, because they are the people in the world that need the most help. 

You may be the sort of person who thinks that £7 million of British taxpayers' money spent on a dual carriageway in Norfolk should take precedence over £7 million spent on digging wells to provide drinking water for dying people in Cambodia.  Your logic might be that British people are paying their taxes, so it should thus stand to reason that that money should be spent on British needs.  I don't think that's a good way to think, because if you recall Harsanyi's model, which tests these moral issues most honestly and prudently – his model would show that it's better to stop people dying than it is to improve their journey times on roads. 

But even if I grant you that British taxpayers’ money should be spent on British things, that still doesn’t advance the argument that’s it is ok to discriminate in favour of British people in the employment market, because the taxpayers are not paying wages, employers are (at least they are in the majority of cases we are talking about), and employers are free to employ whoever they want.  A correlative point – and one which many do not get – is that if an employer has found 100 non-British workers who are willing to work for £3 per hour less than his 100 British workers, the nation is better off (as is the global economy), because before the non-British workers began to do the jobs, there were 100 potential workers each being overpaid by £3 per hour.  In a 40 hour week that amounts to a net overpayment of £12,000. 

Ok, I’d guess some people aren’t convinced that paying people £3 per hour less is a good thing.  That’s because they’re not thinking with a proper economic model – they’re probably thinking in emotive terms like ‘minimum wage’ and ‘cheap labour’, and they probably have it drummed into them that high wages means a good economy.  This is wrong on two counts; firstly, it is erroneous to think of a £3 per hour drop as being a net loss – it is no such thing.  It’s a loss if you only think of the cost and ignore the benefit, which amounts to saying, don’t just focus on the employee who is losing £3 per hour, focus too on the employer who just gained £3 per hour.  There is no net loss to the economy, because the employee’s loss is balanced out by the employer’s gain.  And in fact, those higher wage demands that are insisted upon to ‘protect British workers’, actually end up putting the prices of goods and services up even more for everyone else, which amounts to an overall net loss.

But there’s another reason; finding someone who will do the job for less is a good thing for the economy in a similar way to how improving technology is good for the economy (and in most cases it’s a good thing for the person doing the work too – because having accepted the lower wage job, one presumes he did so because the terms offered were an improvement on his situation prior to accepting it).  In fact, not only is finding someone who will do the job for less a good thing for the economy in a similar way to how improving technology is a good thing for the economy - they are more or less the same thing.  Here’s why. 

Suppose you have a car factory in Manchester, and on the staff team you have 3 innovative engineers; Tom, who designs a machine that assembles the engine valves 25% quicker than the current machine; Dick, who synthesises two compounds that vastly improves the engine oil’s ability to clean the engine; and Harry, whose newly constructed equipment can make seatbelt holders at £2.60 per item cheaper than the current equipment.  I think you’ll agree that those three advances have improved the car factory in Manchester.  And having agreed, it stands to reason that if you want to be consistent you are compelled to agree that finding cheaper ways to employ people is also good for the economy, because it’s the same thing.

When we outsource the work attached to call centres, medical data analysis, computer software design, electrical engineering, and so forth, we are doing something very similar to Tom, Dick and Harry’s improvements in the car factory in Manchester.  That’s the wisdom that it seems too many people miss; new business and trading links across the world are good for the world as a whole, just as new technological innovations are good for the world as a whole.  Hopefully in our lifetime we will get to live in a world in which we see the end of discrimination against total strangers because they happen to live in another humanly constructed geographical border.  Economics favours it, and so does human kindness and decency.

* Generally speaking, there is more genetic diversity between a man in Nigeria and a man in Kenya than there is between a man in Nigeria and a man in Belgium, Holland or Spain.  This alone shows the absurdity and man-made wickedness of racism.

If You Only Remember One Thing About Government Policies....

Government policies are always making headlines – and the current ones doing the rounds are the recent Conservative Budget, and attached to that, The NHS reforms and the radical shake up of the Welfare system.  Government policies are sold to the public as courses of action that endeavour to improve a certain situation for the country.  But anyone who knows what goes on behind the political scenes knows that Ministers cover up their inability to measure policies properly by cherry-picking a few sound-bytes that show the benefits of a policy, and then by presenting them to the electorate (through the media) as though they are unequivocal vehicles for good. 

Not only do many Ministers have a poor understanding of what makes a good or bad policy, they actually leave those policy presentations in the hands of eloquent civil servants, who can carefully write the policy for the Minister in words that overstate the benefits, and omit the costs.  In fact, if you’re really proficient at creating spin you can even make some of the costs sound like benefits.  That is how the Government machine of duplicity works.

I don’t say that all policies are bad – but that’s not the point.  A Government’s principal concern is to stay electable – and to stay electable they have to create a lot of distortions to hide A) their incompetence, and B) the fact that most problems in the country can’t be rectified by Government policy.

To be fair to any Government, neither A nor B is their fault.  They can’t help it if most problems in the country are beyond the Government policy power – and, in fact, one might add that too many of the electorate must share some blame for this, as they continually fall for the delusion that Government policy power makes any real difference, which as a consequence elicits in Ministers the need to appease this demand by claiming they can change things.  To put it into context; the extent to which I blame the electorate for the Government’s duplicity is similar to the extent to which I blame the voracious appetite of the tabloid readers for the kind of crap the tabloids produce.  It is a relationship of toxic co-dependency.

As for the Minsters’ incompetence, well, again, to be fair to them, it takes a lot of brains to work out good polices from bad, and tap into the zeitgeist and assess the best way forward in multiple areas – and I don’t see why anyone would expect a Minister to have the skills to do this.  Ministers aren’t in Government long, and often they come straight into their Ministerial department for only a brief amount of time, with no training, little life experience, and no expertise in the Ministerial area for which they are responsible.

Now, here’s the one thing about policy making you’d be advised to remember.  You cannot demonstrate that a course of action will improve a certain situation for the country by listing its benefits (which is basically what a Government’s policy announcement is).  Any MP can think up a policy that has benefits; but if you want to claim that that policy will improve a certain situation for the country, you have to argue that its benefits outweigh its costs (I’ve never seen an MP even acknowledge that this is the essential part, let alone make a case along those lines). 

Not only should you insist that an MP explains that he has thought through how the policy’s benefits outweigh its costs, you should insist he shows you that he actually knows what it means for a course of action to be a benefit in the first place.  Every policy ever created has multiple benefits in some areas and multiple costs in other areas.  If a policy is to be worth implementing, then not only must the benefits outweigh the costs - those benefits must be shown to reach the standard where the benefits are worth having over the costs.  By now your MP is probably looking at you with an expression of utter confusion – as you’ve probably already lost him. 

Is a policy with 10 benefits in areas A,B, and C, and 6 costs in D,E,F and G more preferable that a policy with 4 benefits in areas A,B,C,D,E and F, and 12 costs in G and H.  How do you know, when you don’t know the full impact of any individual A-H ramifications?  Is a policy that delivers £2 billion to the poorer families at the expense of £5 billion tax increases for high and middle earners good for the country as a whole?  If so, why?  And if not, how much would the £2 billion need to increase, or perhaps the £5 billion need to fall, to make it a policy where the benefits outweigh its costs? 

A farmer who wants to know if a chicken is good for providing eggs can only find out by calibrating that chicken’s output relative to other chickens.  He can’t find out by comparing it to how much milk his cow provides.  That kind of understanding is what makes a skilled policy maker, and why I’d rather have much larger constituencies, many fewer MPs, and a much higher calibre of intellectualism in my candidates.  An MP who sells the nation a policy by only listing its benefits is merely playing the spin game – and sadly, we see far too much of this.

Probability, And The Search For Love

How’s your life, generally? The reason I ask is that I get the feeling humans have a habit of overestimating the value and quality of important things in life. I think this is especially true when lots of options are on the table, and people only choose infrequently. If you only buy one book per year, then you've chosen that particular book over all the other available options, so I would guess that you've overestimated the quality of that book, and that you'll probably enjoy it less than you thought. If you buy and read three books per week, you'll find lots of disappointing books but lots of pleasant surprises too - so the chances of overestimating the quality of one book diminishes. 

If you only had one holiday abroad last year, the chances are you overestimated the quality of that holiday. You had thousands of possible locations, and you chose that particular one, which, again, means it is likely the destination you opted for after weighing up all the possible destinations is the one you most overestimated.  Conversely, if you went on a one week holiday every fortnight, you'd find your general overestimations would lessen.  

Continuing that logic, and in reference to the last Blog on Iraq, I assume that those who were most keen to mobilise our troops in Iraq were those who most overestimated the success we'd have. We don't invade many countries, so when it comes to the ones we do invade it's likely that we've done so because we've underestimated the number or lives that would be lost, inflated our chances of success, and overestimated the net value our invasion would bring.

How does this kind of analysis reward us in considering the search for a beloved? Well, assuming that the beloved you’ve chosen came about after proper consideration of many alternatives, it is likely to be the case that you chose him or her because you thought they would bring to your life the qualities and values you were hoping to have. So, the chances are that for many people their relationships are not living up to their expectations. Following the same logic as above, if you chose one person to be your beloved amongst many alternatives, the chances are your beloved is the one in whom you’ve put the highest hopes, which probably means he or she is the person in your life that you’ve most overestimated.

Of course, that doesn’t always apply – some people get together with low hopes and end up being pleasantly surprised, while some settle for less than their optimum choice because of low confidence or impatience, and others decide that the payoff of a relationship is worth cutting short the lengthier search for their ideal partner.

But generally, I fancy that big expectations tend to dwarf how those expectations play out in reality – and logic would follow that this is true of relationships. It’s important to understand what is being said here – this doesn’t mean they are bad, or that they are not worth having, or that they are not often wonderful, or even that you’re consciously aware of how those expectations are dwarfed - after all, we humans are good at suppressing the overall disappointments and making the best out of our life situations. What’s being said is merely that most people overestimate more than they realise.

So, in the knowledge of the tendency to overestimate, how best should single people search for a beloved? First, we must recognise that finding love is a matter of probability. When you were single, or if you are single, and hoping to settle down, you have, in theory, the option of every single person of the opposite sex out there. You want to know at which point in the dating game you should settle down, how you know who the best one with whom to settle down is, and how many people you will need to date to increase your chances of finding a really good beloved.

Here’s another way of asking the question; say you’ve got plenty of money, and you’ve had a Mercedes for the past seven years and you found it to be reliable and good to drive. Should you buy a newer Mercedes or should you try other cars? That all depends on a variety of things; how many times you plan to have new cars, whether you want to stick to what you know is good and reliable or whether you want to try other cars. You may buy a BMW or a Lexus and find you regret not sticking with the Mercedes, but then again you may find that the BMW is better all round and that you wish you’d have tried it sooner.

The car analogy is a good illustration for intrinsic choice and preference, but it is only a one way illustration, because car buyers care a lot more about the car enjoyment than sellers do – sellers largely only care about whether you’ve paid for the car. Given that relationships are a two-way thing, a better analogy would be to consider a landlord and tenant.  A tenant wants to find the optimum place to rent, and the landlord wants to find the best person to whom he can rent his property.  I think this is a good analogy for the probabilistic nature of finding a beloved.

Suppose you are looking to rent a place to live in the centre of London as you begin a new job. Your criteria for the optimum place is as follows; the most decent property available, as close to the centre as possible, in the nicest area, and within your price range. In looking for that place, you know you have no chance of viewing all the available properties in London, so you are shown around a few, and at some point after assessing what is available you are going to have to decide. You know that in deciding the chances are you haven’t got the best property in that sample space.  Had you have kept looking for longer it is likely that a more preferable property would come up. That would be a potential benefit, but all risks have potential costs too – and you may end up regretting not taking the place that initially met much of your criteria.

So, at the end of the search, in finding a place you like that meets your needs, you want to sign all the paperwork to ensure that your living arrangements are legally bound in a contract. Now, of course, the landlord has a stake too – he owns the property, he’s advertised it, shown a few people around, and he wants to ensure he gets the best and most reliable tenant. He also knows that you probably are not the best tenant in the sample space, but he too has to weigh up costs and benefits. If he takes a liking to you, he may well decide to enter into a landlord/tenant contract with you, rather than see it sit empty for weeks, or risk renting it to greasy Gary who plays in a rock band, has lots of parties, and might wreck the place.

The parallels should be evident; the search for a beloved is like this – you are looking for a contract of romance with someone – a tacit contract in which you invest yourself into the life and future of a beloved, and he or she, you. Like the landlord and tenant, you both know that your prospective beloved is probably not the best person you could ever meet – there are others out there who will give you more chemistry, pleasure, mental stimulation, laughs, fulfilment, security and happiness. But you may never meet them – and in holding on in the hope of meeting that ‘ideal‘ person you might strike gold, or you might end up wishing you’d taken up the offer of Peter or Jenny with whom you went on those few dates. Moreover, those who look for the maximally good partner (sometimes called ‘the ideal husband/wife) may be setting themselves up for disappointment. A maximally good partner for you is likely to be a maximally good partner for many others too, so you might have to work hard to keep yourself happy and secure in such a relationship.

You may also suspect that the contemporary age seems like it presents different challenges to the past. The causes behind the vast number of modern day break-ups and levels of compatibility are diverse and complex – and too lengthy for this Blog post. But the fact that contemporary people in the UK treat it more probabilistically is, I think, a contributory factor. Here’s a simple picture; a man is in the probability game searching for a beloved. He thinks he has a world full of girls from which to choose – so he tends to opt for the best-looking, funniest, smartest, nicest girl he thinks he can get. His search space is all about probability and diminishing returns. If these are the main goals he has then there can rarely be much security (particularly in this country’s post-cultural revolution paradigm) because he may well find a new best-looking, funniest, smartest, nicest girl – one who trumps the last one (this applies to the girl in her search too). But the laws of probability suggest even when they are in a relationship that throughout anyone’s life they will continually meet people who score more highly on their proprietary rating system – so the probability of the relationship surviving diminishes – hence the perennial insecurities one sees all over the place.

I can tell you one thing for certain; even when you do commit yourself to one beloved, you are going to continually meet other people who are better looking, wittier, more intelligent, kinder, more generous hearted and more emotionally astute than your partner. But if one adopts the grass is greener approach then it is going to be a lot tougher, because you will continually be making comparisons and coming home discontent.  This is a prescription for uncertainty and discontentment – and I think one of the big battles humans face is in learning to treasure the intrinsic rewards in isolation from the allure of outside temptations. To constantly imagine better alternatives will do you no good, because every step of your life will show you better alternatives somewhere outside of your relationship. 

There is, though, you’ll recall, something about love that puts it on a step above searching for a place to rent. However long you live in the place of your choice, you will never get so emotionally attached to a property that other, better properties should not be embraced. That is to say, a better property doesn’t stop being better just because you happen to be in a contract situation whereby you’re renting one to which you are less suited or less likely to be happy. Love, on the other hand, when it is the real thing, is different, because you can, and are expected to, get so emotionally attached to a beloved that other, intrinsically more suitable partners, are not embraced romantically.

This is the power of love, and the ability it has to unite two people against a backdrop of other (many better) alternatives. What stops those alternatives seeming like genuine alternatives is that feeling love for a beloved is a more powerful presence in one’s life than any rational justifications towards alternatives. In love, we find that better isn’t a more attractive alternative – better is the love currently being enjoyed against the alternatives. That’s probably what Pascal had in mind when he said – “The heart has its reasons, of which reason knows nothing”. He was, after all, a mathematician, and consequently very proficient at understanding probability.



Iraq Ten Years On; Success or Failure?

It is ten years since the Iraq war began - and as you’d expect, we’ve heard lots this week from political and social commentators arguing for and against the success of the war.  Add to that the fact that we’re still stuck in a quagmire in Afghanistan, and facing lots more unrest in the Middle East, and in parts of Africa, and in North Korea too, and you’ll see the question of success or failure regarding our military mobilisation looms large.

The issue largely boils down to two questions; were the Government members’ intentions wise in the first place, and was what they did a success?  I’ve seen just about everyone asking those questions, but I’ve seen no one come up with what I think are the right answers.

In the case of Iraq, the answer to the question of success is, we just don’t know yet.  Lots of people argue for and against, but the reality is, it’s just far too early to tell.  The reason being; the variables are so diverse and complex that it’s going to take a notable pendulum shift for the outcome to be revealed, and we haven’t had that yet.  There have been big changes in Iraq – but those changes have made things better for many of its citizens and worse for many others.  That’s why when you hear from people who actually live in Iraq (people who have lived there throughout the entire passage of time), you’ll find they are divided in opinion, with a great many more feeling unsure. 

I personally think that with the benefit of longer term considerations and the luxury of lengthier retrospective analysis we will begin to see that the removal of the sadistic dictator Saddam Hussein was one of the catalysts for improvement for the Iraqi citizens– but only more time will give a real indication of this.  It might be the case that the people who most benefit from the invasion haven’t even been born yet –but that is how history must be viewed.  Viewing it any other way is usually (although not always) hasty and frivolous, because when it comes to the planting of fruit trees, at the national level most epoch-changing events take a long time for the fruit to be visible.

Now, regarding the question of whether the Government members’ intentions were wise in the first place – from what I can gather from the continuous rhetoric of Bush and Blair, and more recently, David Cameron, I’d say no, they were misjudged.  The reason for their misjudgement appears to me to rest on not understanding how to achieve their aims – which have always been civil liberty for the citizens under the priority of democracy.  What they should have focused on is economic freedom – that is a much more reliable tool for emancipation. 

Now liberty and democracy are nice things to have – but compared to economic freedom they fall short when it comes to helping people out of quagmires.  India is the world’s largest democracy, and there are plenty of civil liberties there, but it is stricken with some of the worst poverty in the world.  Honk Kong’s institutions are much less democratic than those of India, but it is one of the world’s wealthiest and most prosperous countries.  Singapore is politically repressive when compared to some of the freer democracies, but it is more economically prosperous than many of them.  So a nation’s civil liberty and democracy aren’t always good indicators.

When the likes of Bush, Blair and Cameron talk about ‘nation building’ they only seem to mean things like “Giving the citizens of Iraq and Afghanistan the ability to vote”.  I’d like to think differently of them, but whenever I see them talking of the success of Iraq, they usually measure it by the fact that its citizens are now voting in free elections.  This success won’t last long if that is the only true measure, because free elections in quagmires are only likely to disenchant once the novelty wears off.  However, free elections in countries with economic freedom are elections worth having. 

While it is true that political freedom and per capita income are closely linked, we’ve seen above that it is not true in all cases – and even in the high end cases, the economic freedom is much more of a prominent factor than political freedom. When you live in a country with free trade, healthy imports/exports, high employment, sensible and equitable Government spending, the repeal of artificial price controls, more moderate marginal tax rates, and monetary policy stability, you find you usually have a nation with a good legal system, cultural plurality, reasonably proficient welfare systems (these things are usually only reasonably proficient), lower tariffs, human rights, property rights, family rights, freer citizens, and a greater sense of care and regard for your global community. 

The fact is that very little the West has done in Iraq and Afghanistan has made this scenario conducive.  At best they have helped nudge in more democratic systems which may or may not last, but which hopefully will in the future lead to the things I mentioned.  Sadly, they’ve taken a slow route by getting their priorities wrong.  Their ‘nation-building’ ideology was misjudged; they should have worked out how to nudge in economy-building rather than nation-building (where nation-building = democracy building), because the only way to build a nation properly is to have its citizens economically free and prosperous.  In almost all cases, citizens with an economically free and prosperous country to uphold won’t need military intervention from the outside, because they will care enough about, and have enough invested in, that country to work very hard to see to it that individual rights, equal opportunities, jurisprudence, civil law and order, cultural and religious plurality, and democratic feeling will prevail. 

The Potentially Unsolvable Enigma of Life & Love

What is life?

I wrote a thought experiment a while back, which still gives me cause to ponder sometimes. Think of the notion of removing atoms one by one in the physical world, and imagine we have a method of physically doing so with ultimate computational precision and high speed capacity.

If I reduce bit by bit a plane or a car or a microwave to a random aggregation of atoms and then reassemble them exactly as they were, then I would have a fully working plane or a car or a microwave, because neither of these systems is biologically alive. But if I did the same to an insect, a bird or a human (at several trillion atoms at a time), there would come a point when its being 'alive' would cease.

If I reassembled those atoms exactly as they were I would never reconstitute life, because once a thing dies it cannot be brought back to life. At least that is our current understanding of biological systems. But do we believe this only because of our limitations in reassembling the atomic or sub-atomic structure back to full constitution?

In other words, if, when a young bird died by hitting a tree, I had the apparatus to reassemble its structure into the exact atomic form before it flew into the tree, would it be alive as it was before? I think the idea of life as being explicable in terms of matter, information and computation is interesting, because it leads to the question of whether it can be reconstituted with the ability to reassemble matter, or whether there is some law in nature that would preclude this.

What is love?

I also had a similar thought about love in a book on love I work on from time to time.  In the distant future when technology is much more advanced than now - suppose neuroscientists John and Jill work together for 20 years as friends, and in that time they completely map the neuroscientific definitions of love after studying hundreds of couples in love.  At the end of this, with regard to brain states that map feelings and emotions, they find 'love' is entirely reducible to physical neuroscientific descriptions. 

John and Jill have dedicated their lives to this work, and as a consequence, they have never been in love themselves.  Now if one day John and Jill experience a series of events which culminate in their falling in love with each other, they will have experienced something other than the aforementioned feelings and emotions reducible to physical neuroscientific descriptions. 

John and Jill have a complete scientific definition of love in the physical sense, but having now fallen in love with each other they have now experienced something new about love, which causes us to question whether love is more than the physical, as they already have a complete physical description.  Could that suggest that, if what they are experiencing is not amenable to the same physical neuroscientific activity as before, this means love isn't entirely reducible to the physical?  

I'm not sure, but I suspect it doesn't undermine the physical - I would think it simply means that love is still physical, but that the distinction between the conceptual first person perspective is a different (and much more intractable) object of study than the third person physical neuroscientific descriptions that define love from the perspective of the neurological observer, rather than the person experiencing the love.  In other words, when John maps love in his studies of other couples, he is mapping a complete third person physiological description, but not a first personal conceptual description, which is an entirely different lens of physical perspective.

When falling in love on that special day, John may experience some kind of inner 'circuit board of experience' sensation, where lights that had never lit up before, suddenly do so with new connectivity - which makes sense, given that friendship is the natural precursor to love (something he had for 20 years with Jill). 

But on top of that, there is further intractability, because love from the first person perspective isn't a singular fait accompli 'circuit board of experience' sensation - it is a journey of discovery with a beloved over time, in which each learns and grows with the other, and where each conflates that learning and growth with the newness of fresh experiences, changing social climates, and the evolving intellects, emotional wisdom and knowledge of each party.

This suggests that even John and Jill's initial completely mapped physical neuroscientific description of third person love is incomplete, as love is dynamically evolving, not statically reducible to any present tense conjunctions.  So I conclude that love probably is entirely physical, it's just that the 'entirely physical' nature of anything mental is a hugely intractable object of study, not just because there is empirical discontinuity between the first person concepts and the third person neuroscientific mapping, but also because the mind is on the whole probably too complex to reveal all its topographical secrets. 

A Brilliant Twist On The Blame Game

Every now and then you'll hear an idea that’s so brilliant, succinct and logical you'll wish you'd have thought of it yourself.  Brilliant ideas like the one I’m now going to tell you about are somewhat paradoxical, because their brilliance usually amounts to an observation that can greatly enrich and inform a large number of people, yet on the other hand one wonders why such an idea wasn’t more obvious before.  The idea I want to tell you about is one I learned in my teens when I was studying economics; it’s called the Coase theorem – and it was conceived by Nobel Prize winner Ronald Coase in 1960.  It is an observation about what economists call ‘externalities’, which are instances of costs imposed on others in an involuntary manner. 

Here’s a typical example – factories used to escape the costs of their own pollution until they began to feel those costs via liability rules, punitive taxes and fines.  The law works this way too – by incentives.  If you cause £100 worth of damage (or the societal equivalent thereof) then you pay £100 worth of restitution (sometimes more, sometimes less), either with a fine, or community service, or a prison sentence.  If a crime that causes society £25 worth of damage suddenly had a punishment worth £1 million (say a life sentence in prison) you’d see a drastic reduction in £25 crimes.  That is the nature of incentives. 

Externalities are based on incentives too, as was most famously written about by English economist Arthur Cecil Pigou with his standard textbook examples of nineteenth century trains that threw off sparks that frequently ignited the crops on neighbouring farms, and of rabbits that would frequently eat the neighbouring lettuce farmers’ goods.  Quite naturally, or so Pigou (and just about everyone else) thought, the railroad owners and farmers with rabbits had to feel the effects of their actions, so recompense was owed to the farmers with the ignited crops and the diminished lettuce supplies.  However, things change when the Coase theorem is brought to bear on the situation.  This is what Ronald Coase theorised:

"Where there are complete competitive markets with no transactions costs, an efficient set of inputs and outputs to and from production-optimal distribution will be selected, regardless of how property rights are divided."

In other words, the Coase theorem asserts that when rights are involved, parties naturally gravitate toward the most efficient and mutually beneficial outcome, with no prior blame or discrimination being automatically assumed.  This dramatically changes the situations above, because Coase was smart enough to enquire as to why the railroad owners and farmers with rabbits were the ones causing inconvenience – why not the farmers with the ignited crops and the diminished lettuce supplies?  When you think about it, it’s obvious; if your trains set fire to my crops then you have imposed a cost on me, but at the same time I have imposed a cost on you by having my crops near your railroad (which may be in the optimal location for transporting commuters from A to B).  Moreover, I may very well use the train myself.  Your rabbits are annoying me by eating my lettuce, but equally my lettuce is annoying you because it is causing your rabbits to eat them, which incurs the cost you are forced to pay me as compensation.  Your nearby power plant burns fossil fuels and pollutes the air I breathe, but you shouldn’t bear all the pollution costs because you supply electricity to many of the places whose products I buy. 

This logic by Coase is so brilliant and simple you’d think it would have been obvious long ago – but it astounded economists of the sixties with its simplicity and scope for wider insight.  Remember Coase isn’t looking to play the blame game; he is looking for an efficient set of inputs and outputs, regardless of how property rights are divided.  In the case of the railroad and the fires he is looking for a solution that benefits both, not who should reimburse who.  If the farmer plants his crops at an optimal distance from the railtrack then both may enjoy the most efficient outcome.  The town has crops and train journeys, and no one is paying financial restitution or looking for ways to sue.  Similarly the rabbit farmer can keep his rabbits in cages or secure ring-fences, the lettuce farmer could grow other things the rabbits won’t eat, or they could split the costs and build an impenetrable fence between their farms. 

How did so many economists and people in litigation miss the simple elegance of the Coase theorem for so long?  I suspect it was because people are perennially too quick to play the blame game – if something happens it must be someone’s fault.  The railroad/crops example shows a new way of looking at the situation; yes, if there were no railroad tracks there would be no crop fires, but equally if there were no crops that were so close to the tracks there would be no crop fires either.  Apply that brilliant twist to the blame game to your everyday social interactions and the chances are you’ll begin to see the world through a new lens.

Ed Miliband: Incompetent & Honest or Clever & Dishonest?

Sometimes I just sit open-mouthed at what political groups come out with - the ideas are so bad that one must conclude that either they are hopelessly incompetent, dreadfully dishonest, or a bit of both.  Some of what we've seen recently can only lead me to believe that they don't have much of a clue about economics, or that they do know their stuff, but they think the general public is utterly clueless about these issues.  Or maybe, just maybe, Ed Miliband has worked out a way to be clever with this one, particularly when one considers that the issue up for discussion here was one of the key factors in Labour doing so poorly in the last election. 

Ed Miliband's 10p proposal is among the many examples of flawed thinking - it is one of those policies that treats the tax system as though it is one singular part, rather than a complex whole (Denis Healey and Gordon Brown anyone?).  Almost any blanket tax initiative is going to be costly somewhere, because in a nation of varying work situations, while some will benefit, others won’t so much.  It’s a bit like a doctor giving everyone viagra in a population where only some people are impotent.  That’s ok if everyone has enough, but when those that need it are short because those that have it needlessly take up supplies, it shows the doctor’s idea to be impotent (pun intended).

Here’s why the viagra analogy is telling; many people on low incomes are not particularly poor – a significant proportion of them are part of a two-income team, with them being the low earner behind a relatively high earner.  Thus it is much more prudent to increase the benefits of the single income low earners, and not simply reinstall a blanket 10p lower rate of income tax, because many ‘beneficiaries’ are having money that the poorer people need more. . 

This is basic GCSE economics – so don’t you think it’s odd that Labour is trying to grab the attention with this obviously ineffectual policy?  I can think of three reasons why Mr Miliband might be trying this:

1) Ed Miliband hasn’t given enough thought to how taxes operate best

2) Ed Miliband has given thought to how taxes operate best, but thinks the lower earning voters are economically illiterate enough to believe they are being targeted favourably

3) Ed Miliband realises that in reinstating something Gordon Brown abolished, he might be able to symbolically distance himself from the much criticised Labour Government that held office for so long in recent years, and brand his current party as being more in touch with the old leftist brands of yesteryear.

None of these seem commendable – but then again, despite deserving the opprobrium of the masses (which is what I hope will happen), one might argue that Ed Miliband is only doing what opposition leaders have to do these days to win elections; criticise the current Government and make their policies seem flawed; announce headline-grabbing policies that sound progressive to those looking for an economic carrot; and distance their party from the legacy of the past failures.  If he genuinely thinks he’s got a good tax policy here, then I suspect he’s probably being incompetent and honest.  If he knows he hasn’t then he’s probably being clever and dishonest.  Were he to increase the benefits of the single income low earners, ditch blanket tax proposals, and employ an intelligent case by case analysis that ensures tax breaks go to those that need it most - he would be doing something both clever and honest.  

Why The Judicial System Is Flawed

The jury in the trial of Vicky Pryce has been discharged at Southwark Crown Court after failing to reach a majority verdict regarding whether she was coerced by the odious former Liberal Democrat MP Chris Huhne into accepting his speeding penalty points.  This has elicited a hugely overblown response about whether juries are, on the whole, fit for purpose.  This topic was brought up on last week’s Question Time, where the likes of Peter Hitchens and Michael Heseltine, among others, debated this issue.  The trouble is, they focused only on the things that probably aren’t making juries unfit for purpose (age, employment, academic qualifications), and ignored the things that do make them less fit than they should be. The most important thing about jurisprudence is justice.  Justice occurs when innocent people are acquitted and guilty people are convicted.  Anyone hoping for justice hopes that the system in place is most conducive to that outcome. 

I think there are primarily two things wrong with the judicial system – which means that if you were to find yourself on trial for a crime you didn’t commit, your hopes for a just outcome, in which the decisions made by the jury are consistent with the true facts surrounding the trial, would not be matched by the present system as well as could be expected. Were you to be an innocent person on trial, or a victim of crime sitting in the court hoping the person that offended against you was found guilty, you’d want everything about the system to bring about the highest probability that the right decisions are made.  Here’s why you don’t have that at the moment.

The first, and, I think, most important, it is unbelievably inefficient to shield the jury members from knowledge of relevant information, because it impairs their ability to judge the case with optimum effectiveness.  This issue should be redressed immediately – it is the biggest thing wrong with jurisprudence.  What I find ironic is that the argument against giving the jury all the background information (that such knowledge will potentially bias the jury) is precisely the reason they should be doing it, because any reasonable person should want all relevant information to be brought to bear in the courtroom.  At the very least, jurors should have the chance to decide whether this background information is relevant or not. 

If a man has been accused of threatening a neighbour with a shotgun, I’d want the jury to know whether he has a history of similar behaviour, what sort of person he is, what sort of record his lawyer has, and information of that kind.  The concept of shielding inquirers from information is alien to every other formal evidence-based system; the work of scientists, political groups, police officers and building surveyors would suffer immeasurably if they had part of their investigative data withheld from them, so why on earth should we do it in a court of law when justice and people’s futures are at stake?  At election time in politics we want the electorate to be as well informed as possible; in the biology lab we want the researchers to be apprised of as much information as possible.  It is truly unsatisfactory to expect (and wish for) members of the jury trying to get justice in the courts to remain ignorant of the important details, when many of those details are so relevant to the probability of the defendant’s guilt or innocence..

The compromised admissibility of evidence hinders in every way – and with some irony, the reason people give in support of it is an inversion of understanding the very thing we are trying to enhance – decisions based on explicit and accurate information.  Just like in science and police investigations, the information being omitted is important in building a clear probability perspective of the situation.  A man on trial accused of threatening behaviour with a shotgun is much more likely to be guilty if he has previously threatened 3 other people with a shot gun.  Yet the courts would rather you didn’t know this if you’re on that jury – which means the courts must favour a serial shotgun offender having a greater chance of being acquitted.  Apparently if you’re the sort of person who thinks this way it is frowned upon by the courts, because they don’t want juries to come into the courtroom with any biases.  I presume the courts must think that the police arrest civilians in a completely random fashion.

The second fault is less severe, but still an example of something that not is ideal – it’s to do with the configuration of the jury group.  The 12 jury members would be more efficient if they were made up of 3 groups of 4 rather than one group of 12.  The reason being, you want the conformity levels to be at a minimum – and there is a lot more conformity with one large group.  In a group of 12 you’ll almost always find a few more prominent members are able to influence the less prominent and less confident members.  In three groups of 4 this would diminish greatly, and each member would by and large be less pliable and more confident and competent in his or her involvement.  So, if you’re innocent, on trial, and desperate that the decisions made by the jury are consistent with the true facts, you’d be much better off with three groups of 4 than one group of 12.

So a trial in which the lawyers and the three groups of 4 jury members know all the background information is, I think, a much more efficient system than the one we currently have.  Only when we’ve sorted those two issues out should we start discussing comparably trivial issues like the age, employment and academic qualifications of jury members.  To focus on those and ignore the other two big flaws is a bit like turning up to a large house on fire and trying to retrieve all the furniture instead of trying to rescue the people trapped inside.

Thou Shalt Not Inherit

There's been a lot making the headlines recently about our (largely incompetent) coalition Government's proposals for stealthily getting more out of the taxpayer.  The dishes of the day are currently centred on inheritance tax and mansion tax, as well as gimmicky taxes like fizzy drinks tax, fatty food tax, booze tax and all that malarkey (a subject which deserves a Blog of its own one day). I emailed my local MP to ask her to speak on behalf of the coalition, and was told:

"It is not true to suggest the inheritance tax amounts to double taxation. The wealth in most houses has never been taxed because it is largely in the form of unrealised capital gains."

Who is feeding MPs this kind of nonsense?  It's simply not true. The wealth in most houses has already been taxed at least once, because taxation occurred when the money was earned to pay for the house. You can't even begin to grasp what's wrong with the Government's reasoning until you understand this simple example.  Jack earns £100, makes some fruitful investments, and leaves £100 million in unrealised capital gains tax to his progeny.  If Jack paid 50% income tax on that £100, then he invests only 50% as much, earns 50% as much, and leaves his progeny only half as much as he would have done with no taxation.  This is simple economics - taxing Jack 50% on his £100 pounds eventually costs his progeny £50 million pounds.

You see, when I probed my MP about her error, she emailed with a confused response -

"If I understand you correctly, Mr. Knight, you’re saying that if a multi-millionaire died tomorrow and left his gains to his family, they shouldn’t have to pay inheritance taxes because he already paid a few thousand on the original income?"

Here's the problem - I'm not arguing against a few thousand, I'm explaining that the taxation already amounts to a lot more than a few thousand. My MP is failing to grasp that a “few thousand” paid many years ago is the equivalent to far more than a few thousand today. If Jack has a converter machine that magically makes several thousand pounds from 1987 into several million present day pounds, then taxing him several thousand pounds in 1987 is the equivalent of taxing him a few million pounds in the present day. So it’s quite misleading to say he’s only paid a few thousand in taxes - his net contribution is much more.  Moreover, here is another damaging consequence of these kinds of taxes - savers and investors will be deterred from saving and investing, which is contrary to the ethos of the present Government.  Not all will be deterred, but some will, and those will be important players in the economy.  

The real problem with this issue is one that I haven't seen any politician addressing.  Although, I understand why - MPs are elected with mostly no prior knowledge of the kind of economic thinking needed to tackle these issues, so it's hardly surprising they (and their advisors) don't.  They may know economists who could advise on this, but I doubt they’d listen because good economic advice is often contrary to the Government's aim – which is to get as much money as possible without obtaining it at the cost of being found out and unelected. 

Here's how the situation should be looked at. The argument isn’t about how much to tax, or about who should pay those taxes - it is primarily about the most efficient way to raise those taxes. Taxing earnings once at a higher rate is more efficient than taxing it twice later at two lower rates because the latter distorts the desire to save*, it makes people circumspect about investing, and it encourages people to over-consume in the here and now.  Remember, savings now is consumption in the future.

A similar level of stability is required in the consumers’ market if the economy is to achieve the right balance in encouraging sensible consuming and mobility.  That is why consumption goods are taxed at the same rate, not different rates.  Try to imagine the kind of consumers’ world we'd live in if different products were taxed at different rates. If you tax two different goods at two different rates, you'd have a new budget line with a slope that differs from the present one. Call the optimum point X. If you tax the goods at the same rate and hold Government revenue at a fixed rate, meaning you get a new budget line with the same slope as the original, also going through point X. To avoid the crossing of these indifference curves, the optimum along this new budget line must sit on a higher indifference curve than X (you can draw the diagram yourself), which is why consumers are better off with an equal taxation consumer policy**.

Returning to efficiency – the consideration of efficiency is important.  The notion that it is more “efficient” to tax earnings than to tax investment income is ridiculous if it means mega-rich people can earn hundreds of millions on their investments and pay too little tax or no taxes at all.  That's an argument in favour of taxing investment income and labour income as two wings of the same bird that lays the golden egg.  As you can gather, either way causes problems.  At one extreme, earnings that brought the investments on which taxes are already paid (a house in an investment, don't forget) are being taxed again via the route of inheritance.  At the other extreme, a man can switch income to investment and avoid paying tax on income. Here's how that's done. Suppose there is a business that earns £100,000 per year after paying all expenses except income. The business operator could pay himself a salary of £100,000 and the business would record zero earnings, or he could pay himself zero earnings and the business would earn £100,000, which he could then distribute surreptitiously to himself as “investment income.”  Under those conditions, investment income is not double-taxed when compared with labour income.

Even if capital gains taxes were capped at 1%, income subject to those taxes would be taxed at a higher rate than off the peg compensation. That’s because capital gains taxes (as well as other taxes on capital income) are surcharge taxes, assessed on top of the tax on compensation. An illustration will explain why.  Jenny and Jack each work a day and earn £1. Jenny spends her £1 right away. Jack invests his £1, waits for it to double, and then spends the resulting £2. Let’s see how the tax code affects them. First add a wage tax - Jenny and Jack each work a day, earn £1, pay 50p tax and have 50p left over. Jenny spends her 50p right away. Jack invests his 50p, waits for it to double, and then spends the resulting £1.

What does the wage tax cost Jenny? Answer: 50% of her consumption (which is down from £1 to 50p). What does it cost Jack? Answer: 50% of his consumption (which is down from £2 to £1). In the absence of a capital gains tax, Jenny and Jack are both being taxed at the same rate.  Now add a capital gains tax, let’s say 10% - Jenny and Jack each work a day, earn £1, pay 50p tax and have 50p left over. Jenny spends her 50p right away. Jack invests his 50p, waits for it to double, pays a 5p capital gains tax, and is left with 95p to spend. What does the tax code cost Jenny? Answer: 50% of her consumption (which is down from £1 to 50p). What does the tax code cost Jack? Answer: 52.5% of his consumption (which is down from £2 to 95p).

So there you have it: A 50% wage tax, together with a 10% capital gains tax, is equivalent to a 52.5% tax on Jack’s income. In fact, you could have achieved exactly the same result by taxing Jack at a 52.5% rate in the first place: He earns £1, you take 52.5% of it, he invests the remaining 47.5p, waits for it to double, and spends the resulting 95p.

Why is this so hard for so many supposedly intelligent people running our country to understand? Just like the above observation, people tend to look for a wealthy businessman with £1 million capital gain on his investment, and they forget that were it not for wage taxes, he would have invested twice as much and earned a £2 million capital gain. In that sense, the capital gain is taxed in advance.  Who you want taxed the most is one thing – but there’s no room for rational debate about the impact of the tax code, which is a matter of simple arithmetic.  The arithmetic shows quite clearly that anyone who pays taxes on capital income is effectively paying at a higher total tax rate than anyone who doesn’t.

To be fair, it is awkward suggesting that people who inherit wealth should have the right to lifetime tax-free income, but it's also disingenuous to suggest that people are inheriting this money tax free - they are not.  If you inherit £500,000 from your relative - what is being forgot is that your relative paid tax on that £500,000 (let's say 50% for simplicity's sake). As a consequence you inherited £500,000 instead of £1 million, which means you are already paying £500,000 income tax before your capital gains even begins to be taxed.

I must end by saying, when Mr Pomsonby-Smythe leaves his £10 million fortune to his layabout son who has never worked a day in his life, I, as a caring member of society, am quite comfortable with a system that sees over £4.5 million of that money given to the Government and spent on things like health, schools, transport and social services for the elderly.  But on the other side of the coin, I dislike the sense of entitlement that Governments feel they have on people's equity, because that equity is the leftovers of a sum that has already been taxed by the Government. 

A further issue is that everyone worth, say, £500,000 is not in the same position.  In London you can find someone worth half a million who has four children to send to university, high value council tax, and generally high expenditure, and you can find someone else worth half a million who dosses about all day wasting it on drugs, booze and yuppie parties. That's why I think we shouldn't have a blanket threshold - we should assess each situation on a case by case basis.  Yes, that will require extra resources for those actuarial studies, but I have an easy way to pay for it – we can do so by drastically reducing the number of MPs and the number of local councillors who are ornaments for every district and county council in the land - that is just pure waste through and through.  I think there are at least 250 MPs too many, and 50-60% too many local councillors, all of which are sucking expenses funds out of central services and every district and county council.  Let’s drastically reduce those, and spend the money on being more resourceful with taxation.  There - problem solved.

* Incorporating a tax for consumption tax on top of a tax for earnings is equivalent to raising the tax for earnings, whereas incorporating a tax for capital gains tax or a tax for inheritance on top of a tax for earnings is not equivalent to raising the tax for earnings, since it brings about a disincentive to save.

** Point of note, though, this model relies on indifference curves and therefore applies only to consumption goods, not capital gains, income tax or other non-consumer taxes.

Freakonomics Exhumed: Making Decisions By Tossing A Coin

As many of you who've had the pleasure will know, there is an excellent book by Steven D. Levitt and Stephen J. Dubner called Freakonomics, in which the authors apply economic theory and research to many fascinating social situations.  This is the sort of book that will show, for example, how legalisation of abortion in America went on to reduce crime rates 15-20 years henceforward in the States in which it happened, due to the fact that the future criminals were being aborted instead of being born.

I noticed on the Freakonomics webpage that they are now having fun with social science by researching how people get on when they flip a coin to decide on a course of action.  Whether it's deciding to move house, switch jobs, ask a girl out, change cities, ask for a divorce, go to a concert, or take up a sport or hobby, they want to know how it will turn out for you if you made the decision by flipping a coin instead of carefully thinking it through.

When reading Freakonomics a few years ago, I seem to recall Levitt and Dubner showing that companies that hire big reputation consultants and sports teams that hire prestigious coaches get from their investments no better results than those of a random coin toss.  I guess their current coin-toss research will eventually reach fruition by giving us some indication whether or not our carefully thought out choices work out better for us than those made by the random walk of coin tossing. 

Recording whether our strategic and so-called 'well thought out' decisions return a better than 50/50 payout could turn out to be valuable, or at the very least edifying. One note of caution though - it won't be entirely random, because although one could make a lot of life decisions using a random walk model, the decisions one chooses to submit to the random walk model mostly aren't random.   Whether the protagonist flips a coin to decide whether to shout at his neighbour, as opposed to, say, flipping a coin to decide whether to buy her some flowers or lend her a copy of Freakonomics is nothing like as random as coin tossing.  

My other issue with the experiment is that in a great many cases I don't think there is a reliable way to know what constitutes a good outcome.  Good compared to what?  In such an experiment the good is being weighed against the weight of the other alternative - but one can never know how that would have turned out.  Say Mrs Jones from London flips a coin, and on landing a tails decides to go to America for her holiday instead of Canada.  She has no way of knowing whether the results of the coin toss turned out better or worse, because she doesn't have the Canada trip with which to make the comparison.  Most of your life decisions may have turned out better or worse if you'd have picked an alternative decision, but in most cases you can't know whether the grass is greener on the other side or whether it's better the devil you know, irrespective of whether you decided by coin flip or careful consideration.

I do, however, agree with the authors that many of the results of our so-called 'well thought out' decisions are, in fact, just as random as the toss of a coin (this has been shown to be true in sports, management, consultancy and the stock exchange, to name but four examples).

Hopefully, though, you won't flip a coin to decide whether or not to carrying on reading my blog - otherwise my readership might shrink by 50%.

Shrinking The 'God Of The Gaps' To Zero

When it comes to issues poured into the ‘God of the gaps’ melting pot - faith, reason, evidence, science – why is it that so many people get it wrong?  As any inveterate viewers of the BBC's Sunday morning show The Big Questions will know, it is easy to become perpetually frustrated by the poor intellectual calibre of the contributors to the debate.  But this problem extends much further.  Those contributors are only doing on a small scale what those who influence them are doing on a much wider scale.  Too many people just seem so unable to grasp a few simple notions related to knowledge, faith and gaps.  How foolish to say that science is now providing us with, or pointing us towards, knowledge that we once thought was supernatural, as if that is a point against the supernatural.  It isn’t – it is only a point against the error of not paying enough attention to the fact that scientific progress will inevitably bring fresh knowledge and understanding*.  It is obvious that a person who tries to introduce God or the supernatural into an investigation that can (and probably will) be explained in the future by science is acting foolishly and irresponsibly.  The trouble is, most theists do realise this, so the many atheists’ continual allusion to this fault only shows them to be very incapable of seeing the wider landscape.

Here’s how the landscape should be viewed, irrespective of whether you’re a theist, agnostic or an atheist.  The natural world of chemistry and biology provides no means by which one can justifiably claim with any authority that God or the supernatural exists.  Every time someone points to a good or positive part of reality and says that’s good reason to believe in God, one can switch it around and point to a cruel or negative part of reality and say that’s good reason to not believe.  Things won’t improve until people start to realise that nuanced empirical investigation gives no general indicator of God or the supernatural, much less a fait accompli justification for belief or unbelief.  That is why it comes down to personal faith – and why the poets like Blake, Eliot, Tennyson, Donne, Herbert and Rossetti express sentiments that are beautifully suggestive rather than empirically compelling. 

But what is faith?  First I’ll tell you what it isn’t – it isn’t the silly caricature many atheists make it out to be when they say it is opposed to reason or evidence – that’s just buffoonery.  Faith is the position whereby one looks at the whole of nature and trusts that God is the Creator.  If you want to see the real gravitas of faith, it is utterly erroneous to look at nature and ask if there is any evidence for God from within that natural perspective, because all you’re doing is assessing the situation by treating God as though He shows Himself only through radical breaks in normalcy. 

 

When you hear people talking about the knowledge they have, you should realise that they are commenting on lots of links in a chain of observed instances of cause and effect.  One may easily justify believing A because of B, and B because of C, and so on, but at some point we reach a terminus where justification for that chain of beliefs halts and no further connectivity is retained.  The most logical thing to conclude is that the terminus is reached with the origins of the universe.  With our current understanding, the big bang is an obvious epistemological place at which one can plant one’s flag of ignorance in the ground.  Our epistemological trail stops dead at physics, leaving us only mathematics and our ability to imagine what, if anything, lies beyond physics (and maybe even beyond mathematics too).  Either you can find faith or not, but don’t get drawn into the world of crass distortions – it will only make you look incompetent.

To intelligent theists and atheists there should be no ‘gaps’ at all – because faith isn’t like looking for water in the Atlantic ocean, it is about trusting that the whole story is part of a grand narrative.  For me, there are no gaps – because I never tried to erroneously fill them with supernatural explanations in the first place – I was always happy to let science take care of the physical parts of reality, and at the same time have faith that that physical reality is part of a grander cosmic narrative over which God has ultimate control.