Austerity & The Confusion Over It

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

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

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

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

A} Cut down on your spending

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

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

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

A} Cut down on their spending

B} Increase our taxes

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

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

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

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

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

Small Business Subsidy Medicine is Poison

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

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

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

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

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

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

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

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

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

Think Like A Freak: Two Things Worth Sharing

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

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

1) Nigerian e-mail scams.

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

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

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

2) Behind the scenes with David Cameron

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

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

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

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

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

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

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

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

* Photo courtesy of Freakonomics blog

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

Here's a riddle to consider - why don't concert promoters charge more for concert tickets? Here's the thing; concert tickets for artists like U2, Coldplay, The Rolling Stones, Kate Bush, etc are snapped up in a matter of moments*. On the exact minute of the sale start time, eager buyers will be by the phone hitting 'redial' or on the Internet hitting 'refresh' desperately trying to get through and purchase tickets. Concert tickets are sold out in double-quick time with many disappointed fans losing out, which means demand is astronomically higher than supply.

 

In ordinary circumstances, prices would match that demand. Take the recent announcement that Kate Bush is doing some live shows for the first time since 1979 - that is literally a once in a lifetime chance for many fans, yet ticket prices will not reflect that at all. Whatever price they go on sale for could easily be quintupled, so why aren't concert promoters, managers, venue facilitators and ticket agencies hiking up the prices when they know that they'd still sell out?

 

I have a few ideas. Clearly, promoters, managers, venue facilitators and ticket agencies want to make as much money as possible, but that doesn't' mean it will necessarily be reflected in higher ticket prices. Hiking up ticket prices would constitute a short-term gain, but I'm supposing it would involve a concomitant long-term disadvantage, although I'm not sure what.

 

Perhaps the artists and associate colleagues don't want to incur negative publicity by giving the impression that they'll rip off fans.

 

No, that doesn't satisfy - the term 'rip off' usually occurs when there are captive buyers under monopoly power, or when buyers pay for things that are not worth the money. Highly sought after, rare concert performances do not fit either one of those descriptions. Plus, an artist that can generate such high price sales for tickets undoubtedly has lots of good publicity as a result.

 

Perhaps prices are kept artificially low in order to ensure that really keen fans attend those concerts.

 

It's possibly a factor. Lowering the price creates a demand overload, which means it is very hard to acquire tickets, which means most of the people who successfully bought tickets had to be very dedicated in order to get them. But that doesn't wholly satisfy either. There are other events (theatre shows, cinema releases, comedy acts, plays, and so forth) that sell out really quickly too - in fact, in the case of theatres performances the most expensive seats at the front usually sell out first. Incidentally, if you attend the theatre after having bought one of the less expensive seats and find that there are spare unsold seats in the most expensive section you are not allowed go and sit in them, even after the interval when it's clear that no one is turning up to obtain them.

 

Besides, don't be fooled into thinking that paying over the odds is not commonplace - you do it all the time, particularly when demand is high and supply is finite. When the new phone or tablet or gizmo comes out, prices are extraordinarily high until demand lessens and there is a price drop. Consumers are used to thinking of expected prices in terms of reasonable or ordinary prices, and lower prices in terms of discounted prices. The truth is, that's only one lens of perspective - you can just as easily think of the discounted price as the reasonable or ordinary price and the initial expected price as being unreasonably high to capitalise on demand. When you see a DVD or a piece of jewellery or a shirt at a discounted price of 70% off, you can be glad that you're paying only 30% of what you would have paid when it first came into retail, but you could equally be bothered by how much profit the store was making when demand was higher.

 

But maybe it really is the case that the kind of artists who can sell-out that quickly are the ones who can instil enough control to see that fans pay a reasonable price.

 

It could well be true in many cases. The world of capitalism has a lot of 'Winner-takes-all' success stories which contributes to the rich getting rich phenomenon. I don't see why that wouldn't be the case in the music industry too. I'd wager that the wealth gulf between the top music sellers and those on the periphery is more stratified than at any time in the past five decades.

 

But the magnanimity of The Rolling Stones or Kate Bush doesn't extend right throughout the market, because if prices are artificially low then often goods are not procured by those that want them the most. In an ideal market, prices and wages should adjust to ensure the equality or balance of supply and demand. But this doesn't always happen - sometimes it's harder or more trouble to adjust prices than to leave them as they are, and sometimes sellers are slow to realise the increase in demand.

 

But generally an efficient market matches supply to demand with price equilibrium to match. So when prices of goods with fixed supply don’t rise quickly enough to meet demand, those most in demand do not end up paying the highest prices. Some people don't like it when this happens - pejoratively referring to it as price gouging, but it often isn't a bad thing. If centre court tickets for an Andy Murray vs. Rafael Nadal Wimbledon final were the same price as a second round match on court seven between two unknowns it would not be a good thing for consumers overall. If diamonds were the same price per gram as coal it would not reflect the scarcity of diamonds, just as if the Wimbledon final was the same ticket price as earlier matches it would not reflect the demand, or the scarcity or the love of tennis that aficionados have. So, while fan-consideration might be a factor, it doesn't wholly solve the issue for me.

 

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

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

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

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

  

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

** Photo courtesy of www.getmein.com

Black Holes & The Human Multi-Lens Perceptions Of Reality

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

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

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

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

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

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

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

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

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

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

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

 

Untune That String, And, Hark, What Discord Follows

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

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

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

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

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

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

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

Take but degree away, untune that string,

And, hark, what discord follows!

Each thing meets

In mere oppugnancy

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

* Photos courtesy of bbc.co.uk

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

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

 

The reason Labour will win is not much to do with any of their political qualities. In fact, I've argued before that this is perhaps the worst bunch of party politicians I've ever seen in this country - Ed Miliband, Ed Balls, Douglas Alexander, Tristam Hunt, Chuka Umunna, Caroline Flint, Sadiq Khan, Emily Thornberry and Margarat Curran, to name just some of the worst of the frontbenchers. Others like Yvette Cooper, Rachel Reeves, Vernon Coaker, Liz Kendall and Jon Cruddas aren't quite such insufferable characters, but by association they still carry around the same stench of counterfactual party politics.  

 

The only possible way the party could be worse right now is if Diane Abbott had won her leadership campaign in 2010. In fact, consigning Abbott to the backbenches is about the only credible thing this current bunch of leftist buffoons have done since their shadow cabinet inception.

 

Some may argue that the 1970s Labour party was worse than this bunch - but I don't tend to agree; they had more of an excuse back then in that the economic left was nowhere near as discredited as it is now.

 

If the worst bunch of party politicians I've ever seen can be succesful in obtaining enough seats for government, one ought to ask how on earth such a thing can happen. My perception of the political landscape is that the conditions that have led to Labour's imminent success are principally down to a three factors, and that's aside from the constituency border biases that favour Labour.  

 

Firstly, the Conservatives are far less popular than Labour with ethnic minority voters - and with the mass influx of immigration in the past 20 years, there are more Labour voters in that demographic (the cynic in me suggests that that's why Labour weren't too upset at underestimating the rate of immigration by a huge number). In 2001, one in ten voters were ethnic minority voters. By 2050, it is forecasted that ethnic minority voters will constitute one in five of the population. With many ethnic minority voters spreading into what used to be Tory safe seats, it is a change that the Conservatives are probably going to have trouble coping with.

 

Secondly, UKIP is attracting lots of Tories who are fed up with the way Cameron's party has leant so far to the left. For good or ill, issues such as immigration, the EU and same-sex marriage have divided the right, and UKIP's rhetoric is just the sort of music to which the far right Tories have pledged their allegiance. To put it bluntly, UKIP is the Conservative Party that many Tories used to vote for. Just as the slightly more right-leaning SDP handed Thatcher two substantive majorities in the eighties by splitting the left, the Tory defectors to UKIP look likely to hand victory to Ed Miliband's Labour Party in 2015.

 

Thirdly, and in the converse to the last observation, the Left are assembling a pretty unified body of opposition at the moment. Don't misunderstand, it's a ramshackle of half-truths and falsehoods, but it's a pretty unified ramshackle for those that have been duped by it. With the death of some of the hard left fringe groups, and with the disenchanted Liberal Democrats decamping to Labour, Ed Miliband's party has been reaping the benefits.

 

So not only will next year probably see in power the lowest standard of politicians in living memory - it will be yet another, but even more extreme example, of how you don't need to do well in politics, you only need to do less-bad than those in opposition to you, or in Labour's case, be a receptacle for other parties' disenchanted voters.

 

 

 

The Absudity Of The 'UK Overcrowdedness' Myth

It is ridiculous to claim that the UK is overcrowded, as many people are eager to claim in this current political climate. Crowded cities are popular because people like to live in them.  They like crowds because crowds have more people, and more people bring greater benefits to society.

Consider it from the perspective of what your being born brings to the world by way of benefits to others. Apart from all the obvious benefits you bring to your closest family, consider all the other good things you bring to the people in your city; you contribute skills, you work and earn money, you are a friend to many, a caring neighbour, a parent, a lover, you think up new ideas, you bring a unique perspective based on a unique experience of the world, you bring help and support in people's tough situations, and conversation, and with that comes anecdotes, wisdom, retrospective prudence, humour, and many more things. The reason why your existence is a blessing to others in your city is the same reason why increased population has made the world more prosperous; you have brought much more into the world than you have drained from it*.  

Regarding overcrowdedness, the upshot is, rural areas are quieter because fewer people like to live in them - and house prices are very expensive in Central London and Manhattan because more people want to live there.  Its simple logic - the reason London has 8.6 million people and rural towns have only a few thousand is because more people prefer to live in London than they do rural towns. The reason being, not only is there is a greater abundance of the aforementioned benefits in more populous areas, there are also better career prospects, higher salaries, better nightlife, greater choices of restaurants, a richer choice of entertainment, more tourist attractions, better public transport, greater diversity of people – the list goes on. 

So what I wonder is this: of all its citizens, who is statistically more likely to complain that the UK is over-crowded – people in crowded places or people in non-crowded places having a perception that other busier places are overcrowded? If it’s the former then they would do well to read this Blog post because it should show them that they don’t know how good they have it. If it’s the latter then I don’t get their complaint because life is not overcrowded for them in their rural provenances.

In terms of probability, the highest number of complainers will most likely come from a highly populated area, which probably explains why to them the UK feels overcrowded. Most people who pontificate on overcrowding are likely to be pontificating from a vantage point of high population density. The people with the highest probability of feeling an intense population density are those who live in the densely populated areas. For example, if city x has 7 million people and a village y has 1000 people, and only x and y exist, there is only a 1 in 7000 probability that you don't live in city x.

Let's get one thing straight, though - the UK is not overcrowded. The mistake people are making is that they are trying to average population density of people instead of averaging over square miles. You can't get a proper picture of the UK's people to area ratio by counting how densely populated a populated area is - the only way is to assess how densely populated the average square mile would be when considering each square mile as a weighted average of total population and total area. A tube station in the rush hour can be overcrowded; so can a concert venue without proper door control - but take a trip around the UK by plane and look down, and for the most part you won't see crowds of people, you'll see fields and woodlands.

The rate of urban areas in relation to square miles is vanishingly small - there is potential for literally millions more people living in the UK. Of course, just like all sensible immigration policies, a nation must ensure it has the schools, hospitals, roads, etc to support more people, but given the myriad qualities and benefits one distils from living in places like London, that ought to be something that's greatly encouraged.

It certainly is the case that in some areas of the UK the infrastructure hasn't quite kept up with population demand, but once you accept the general maxim that more people means more cultural and social benefits, it's easy to see that inadequate facilities does not mean the nation is overcrowded, it simply means that the UK infrastructure has not progressed conterminously to facilitate the social and cultural benefits that come with an increased diversity of people.

* For a much more comprehensive analysis of this, see my blog post Why The World Is Not Overpopulated. 

Why Jesus Was Probably Not A Socialist

A lot of people claim that Jesus was a socialist. They justify this by talking about His instructions to give away wealth and follow Him, and alluding to our being commanded to do our bit for the poor by giving charitably.  As well, we find in Timothy's first letter that "the love of money is a root of all kinds of evil". And let's be reminded that although we have Jesus' call to ‘Give back to Caesar what is Caesar’s, and to God what is God’s’, there is clearly no repudiation of State as a mechanism for governance.

So it's all pretty clear, right? Jesus endorses a system in which the means of production and distribution are owned by the State, but where the common welfare for everyone is to be achieved through the establishment of a socialist redistributive system.  

People who think this way must be reading a different Bible to me. They think it's obvious that Jesus would have rejected capitalism and been a staunch proponent of socialism. It may be obvious to Christians and atheists alike. Nevertheless, it isn't true.

While I hold the view that scripture is too low-resolution to distil any explicit political or economic framework applicable to the modern age - if people would take Christ's teachings as He instructed, and not as they want them to be, they would see more of an endorsement of laissez-faire monetary exchanges and voluntary giving than they would a heavy State-controlled command economy.

Clearly God sees a world full of suffering, and calls for us to work hard to earn the money* to be charitable, influential, and campaigners for social justice. But by its very definition, being generous means giving away something of your own accord. It doesn't mean being forced to give away something over which you have no control. If I draw out a quarter of my month's earnings and give it to WaterAid, I have been generous - but I have been generous because I wanted to do my bit to help out some desperate people. If, however, the government taxes me with the threat of imprisonment and gives the money to WaterAid on my behalf then I have not been generous, because I had no say in the matter.

Charitable foreign aid donations obtained from taxpayers' money are something to endorse, but foreign aid is not the same as voluntary giving, because foreign aid involves the government giving away other people's money, not their own. If the UK actually was full of Christian charity then it'd be full of people giving of their own accord.

I remember a couple of years ago when David Cameron was defending the governmental increase in the foreign aid budget because 'Britons are generous people'. I'm all for greatly increasing the foreign aid budget and helping the world's neediest more than we currently do, but David Cameron had his reasoning backwards there. The governmental increase in the foreign aid budget must have been necessary because too many Britons are not that generous of their own volition. Giving to the world's neediest of your own accord is more generous than the government giving to them on your behalf after taxing it from you. If Britons were increasingly generous people it would lessen the need for governmental foreign aid, not increase it.

Compulsory aid transference through enforced taxation subverts God's desire that people are generous of their volition. If the government is having to take our money and give to the poor then that's every suggestion that we are not being Christian enough in our generosity, and that others are having to be generous on our behalf. Given that the market of supply and demand and the efficiency of price theory have been proven to be the primary vehicles that will enable us to earn the money with which to be generous, I'm confident that God, being omniscient, supports things that yield to logic and empirical evidence.

EDIT TO ADD: At the risk of this article getting misrepresented, I want to reiterate what I said above - that the Bible is too low-resolution for water-tight contemporary political theory, so we must not speak beyond our station. But as the book of Proverbs (and John for that matter) evinces - accounts of truth are favourable with God. Moreover, Jesus being God means He isn't confined to the past - He is an active personality in the current age too, so cares deeply about how we do things.

Empirical evidence is one of those qualities. Empirical evidence shows that the Smithian invisible hand acts as a social mechanism that channels collective objectives toward meeting the needs of the people that make up a society, by ensuring competition between buyers and suppliers, which channels the profit motive of individuals into providing products that society desires at prices which are rarely above cost.

This is what makes laissez-faire economic philosophy (with light regulation) so compelling - it is that markets automatically channel self-interest toward socially desirable ends. Where there is still poverty and need, it is not because of the markets, it is because they haven't been able to partake in the qualities the market facilitates. Or to use a simple illustration I often use:

A) Inequality occurs not because trade is bad but because some cannot participate in trade.

B) Hunger occurs not because food is bad but because some cannot participate in eating food.

Finally, on Christians in the political arena - in the wake of the recent elections, I've been hugely disappointed by the Christian parties trying to gain some political ground. Instead of seeing refreshing calls to do more for the poor, engender social justice, and generally promote kindness and tolerance, we've seen only prejudice and passive-aggressive spiritual intimidation - which means a whole lot of 'my way or the wrong way' proclamations. No wonder they remain outside of the periphery of mainstream politics.

* You'll note the parable of the talents in Matthew 25:14-27

** Photo courtesy of http://danieljmitchell.wordpress.com/2013/10/27/libertarian-jesus

The Badly Needed Ripples That UKIP Has Caused In British Politics

Well, as you've probably read now, after the European Election UKIP has the most MEPs and has taken over 27% of the votes.

A lot of people seem genuinely shocked that a party so rife with scandal could accumulate such a large percentage of the votes. I don't find it at all surprising that UKIP members kept cropping up in scandal (it happens to the other parties to, but they are not so well publicised). The UKIP members that call themselves a party aren't really a party in the traditional sense - they are a collection of people who've become disenchanted with the parties they used to support. Nigel Farage is a dejected Tory who can't bear to see the Conservatives become so left wing on issues like economics, Europe, immigration and homosexuality.

Whatever else we can say about the results, one thing ought to be crystal clear now for the other two main parties (I say two because hopefully the ramshackled Lib Dems will fall off the political radar in the coming years) - their tactic of insulting, trivialising and pretty much dismissing UKIP's sound-bytes has not only been a mistake, it has been rather dishonourable too.

A few weeks ago I wrote this…

As you've probably gathered, I can't help but think that the way many people are simply writing off UKIP as a bunch of bigoted racists with nothing worth hearing is an exaggeration too far. There' s disagreement, and rational arguments in opposition, which are all fair game - but as for lobbing an egg on Nigel Farage's head, and sending bricks and faeces through the post, well I'm afraid that's ignoble, and to be guilty of sinking to a level way below the party they're supposed to be repudiating.

Let's be clear, I'm not affiliated to any political party - but what should be evidently clear by now is that what's making UKIP popular relates to issues that the other main parties have not been, and are still not, satisfactorily addressing. I don't want to get into those issues now, but suffice to say that if UKIP can obtain over 4,350,000 votes in a 34% turn out, then crass dismissals of them amounts to, at the very least, crass dismissals of the issues the main parties are not addressing, and one might also say crass dismissals of the current concerns of an awful lot of people in the UK - like the efficacy of the current EU set-up, and like our ability to control immigration in ways that mutually benefits all concerned

Looking to next year, I still don't imagine UKIP will obtain any seats at the 2015 General Election (the first past the post system disadvantages them there), although they might be able to pick up one or two if they focus all their attentions on the small minority of potentially winnable constituencies. And it is astonishing to me that this current Labour party - probably the worst bunch of political buffoons since the Labour party of the late seventies, or maybe even ever - looks set to get the most votes in next year's election (either obtaining a majority, or at the least acquiring the most votes).

Of course, this is more to do with disenchanted voters floating away from other parties (primarily the Lib Dems) than it is anything they've done of their own merit. But if it turns out that way then David Cameron will surely look back and realise that his biggest mistake was in not re-claiming the territory lost to the best parts of UKIP - most notably the libertarian values of free-enterprise and global trade, small State regulation, and standing up to the charmless, un-democratic bureaucrats in the European Union, many of whose laws are stultifying, economically inefficient and nannified. Here's a prime example of what I mean; the EU's dreadful tariffs on non-EU agriculture dampens the price signals of agriculture and creates trade barriers that hurt much poorer non-EU countries like those in Africa. The result is not only an unnecessary disadvantage for those who desperately need more traded, it is a wasteful misallocation of agricultural adaptation as it effectively subsidies EU farming against those whose goods are more cost-efficient.

For all its ills, what UKIP has done successfully is focus on a few of those few key issues on which David Cameron will regret not doing better in the last four years. The Conservatives, the Lib Dems and Labour have too often behaved like petulant children, throwing slurs at a party they should have instead pre-empted, on issues they should have addressed more intelligently and perspicaciously.

As someone with no party affiliation, I'm glad to see the political scenery changing in the way it currently is. As things stand UKIP are doing just well enough to give greater illumination to the way the smug, sententious, out of touch muttonhead politicians (and the prostrating media) need to do an awful lot better.

And now that they have shown their popularity and forced the Con-Lib-Labs to address some of these issues, it exposes all the more the likelihood that the main parties, and their sycophantically loyal media hucksters, never really believed UKIP were racist, they just employed those tactics as a slur to dissuade voters from putting UKIP in a position they (as it turned out, justifiably) feared they would obtain.   

As things stand, UKIP have lobbed in a bus-sized boulder into the stagnant lake of British politics, while at the same time remaining far away from having any direct influence in Parliamentary policies. It's probably going to turn out that, in the long run, that'll be a good thing for the political landscape in the UK, particularly if, as looks likely, the ugly racist, xenophobic BNP thugs disappear into oblivion, and the Lib Dems become a tiny fringe party again that does much of its good work at the hands of their many decent local councillors.

* Photo courtesy of The Independent.

Vince Cable's Bubble Muddle

This week Vince Cable claimed that increased property prices justifies capital gains tax because rent profits that come from investment make price rises unsustainable. Vince Cable and his Lib Dem cronies want to tax capital gains on people making lots of money from property rental.

Regrettably, Vince Cable is so focused on the mote of capital gains in the far distance that he’s failing to see the beam of regulation right in front of him. Here’s what he’s missing. Under normal market conditions investment in property should bring prices down, not up. If renting property is hugely profitable then investors will look to build more property in order to generate more profits. If lots of investors do this then housing supplies will increase, demand will lessen, and prices will be brought down. Vince Cable should ask himself what it is that is preventing this normal market chain of events. The answer, he'd find, is the huge restrictions placed on where (and how) property can be built.

The supposed ‘wisdom’ coming from Westminster is as follows: meddle in the markets to interrupt a natural flow that would increase supply and bring down prices, and then impose a capital gains tax on people who are beneficiaries of the short housing supply, disincentivising investment in property investment.

This is all preposterous and harmful to the UK, and yet another example of why the State should not try to dictate the industries we pursue. According to Paul Chesire's research on price differentials from the LSE, we find:

"Relative to other prices, house prices have gone up five-fold since 1955. In less than 20 years the price of houses has doubled relative to incomes; since 1997 lower quartile house prices have increased 80% relative to lower quartile earnings – even despite the crash of 2007-09”.

The logical corollary, then, according to natural market forces, is that demand for housing is high. If demand is high and supplies scarce enough to cause a drastic shortage, the obvious solution is to deregulate some of the green land prohibitions and allow the natural forces of the market to bring supplies closer to demand.

So we should just expand cities like London by keep building more houses on green land?

I didn't say yes or no to that – I merely pointed out that it's a bit rich politicians complaining about a housing shortage when it's the artificial restrictions by councils on the supply of land that creates the shortage. The economic answer is that we should expand cities like London where demand calls for it, and preserve green areas where demand calls for that.

That’s all very well, but even if they start to lift some of the restrictions we still have the problem of lots of foreigners buying our houses in London and leaving them sitting empty while UK folk struggle to find housing.

Careful now, that sounds very xenophobic, as well as being factually inaccurate.

Xenophobic and factually inaccurate?

Yes, there are no foreigners 'buying our houses' - we (whoever we is supposed to be) don't own those houses, so they are not ours to buy or sell. Any property sold to foreigners is sold willingly by the owner of that property. To adopt an aversion to that based on the principle that the buyers are foreigners smacks of xenophobia.

One of the few good things a government can do is ensure that its public spending makes the country a better place. Keeping more up to speed on the social housing need is a good place to start. And for the private market, diminish the housing shortage by lifting land regulations, which will the enable the building of more private homes in a market that badly needs them.

** Point of note: this article by the LSE’s Paul Cheshire contains the following finding: “Most privately owned Greenbelt land is intensively farmed with limited rights of access and has no amenity value at all. Recent studies have shown that its value is captured only by those who own houses within it, and that intensively farmed land has a negative environmental value.”