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Tuesday, 31 January 2012

Mass Hesteria

Some random thoughts about Stephen Hester (in a couple of years, we'll all be saying "who?"):

David Cameron & co have claimed that their hands are tied due to contracts signed by the previous government. This is peculiar. I don't recall Andrew Lansley saying that he couldn't reform/gut the NHS because Nye Bevan had committed all subsequent governments to cherish it. Indeed, what would be the point of electing anyone if they are powerless to change previous policy and reverse decisions?

To be fair, the Blair/Brown government were guilty of a similar canard, specifically in the form of PFI contracts. I'd like to believe this is simple weaseliness, but I'm worried it shows that the modern political class consider a commercial contract to be paramount, sacrosanct even. That's fundamentally anti-democratic.

RBS was bailed out by the state because its collapse might have led to a general financial panic and, according to Alistair Darling, cashpoints shutting down. Given that it presented such a threat to the nation, you might see the task of putting it back on an even keel as a national emergency.

So, why didn't the government simply ask for a volunteer from the banking community to take the helm as a civic duty, with no expectation of reward beyond a grateful nation's thanks (and probably a life peerage). Given that he was already a multi-millionaire, you'd have thought Hester would not have needed financial inducement. Perhaps patriotism is not a currency in which The City deals.

A major plank of the defence of Hester's bonus (and, by extension, CEO bonuses elsewhere) has been the claim that RBS is a complex organisation that only a handful of highly specialised (and highly paid) businessmen would be capable of managing.

One could point out that UK banks were only made truly complex in recent times, starting in the 90s with the "big is better" mergers (to ensure global scope), deregulation (allowing combos of investment, commercial banking and stockbroking), increased dependence on technology and automated trading (quants etc), and the diffusion of risk through derivatives.

Not only was much of this increase in complexity self-interested, but it served to increase the internal opacity of the banks to the point where senior management were incapable of properly managing risk. Fred Goodwin proved that he didn't really know what was going on. Why should we believe that Stephen Hester knows better? He may now be focusing on areas that Goodwin neglected, but that could simply mean he is ignoring other, newer issues. The one is no more omniscient than the other.

The truth is that complexity (in the sense used here) is just a factor of business organisation and is mitigated through management. The higher up the management tree you are, the greater the structural mitigation. Complexity itself is not an adequate reason for a bonus. Implementing better management to further mitigate complexity would be grounds for a bonus.

In other words, "Stephen Hester deserves a bonus because he has made RBS less complex" has more merit than "Stephen Hester deserves a bonus because RBS is complex".

Monday, 30 January 2012

I nose it, Alex, I nose it

At half-time yesterday, I said to the missus: "Don't worry, we'll win 3-2 and Thierry will score the winner". Two out of three right is pretty good going, even if I do say so myself (and proceed to pat myself on the back, buy myself a drink, and plant a big sloppy kiss on the nearest bit of exposed flesh).

Every football match is a game of two halves (well, except for the Situationist three-sided game, which naturally has three halves), but this was an example of why the phrase, "It's a game of two periods of 45 minutes or slightly longer each", was first coined.

Words must have been said at half-time. As Arsene is notorious for rarely losing his rag (peeved and withering are more his style), there are suggestions that RVP may have let rip, however I suspect the motivational fireworks may have been limited to Pat Rice noting: "You do know their manager is Alex McLeish, don't you?"

I saw McLeish in a pub just off Oxford Street a while back, a few months before the Wembley Carling Cup debacle. You don't get the impression that he is physically imposing when viewed on TV or on the touchline, but in the confines of a low-ceilinged pub it's clear why he was known as a player as Big Eck. He's not Peter Crouch tall, but he does stand out. Mind you, that may be partly down to his beacon-like head.

Naturally, he has decided to deflect attention from Villa's failings on the day ("Two nil, and you fucked it up", was the accurate view of the Emirates crowd) by demanding that RVP be arraigned for an elbow to nose collision. I didn't notice it live (Cuellar didn't go down), and the TV replay was inconclusive in terms of intent. What was priceless was McLeish's comments: "Look at my nose, it is a result of elbows all my career", followed by "I don't like to point the finger at players".

Having seen him in the pub, I can confidently confirm that his red nose, like his mentor Ferguson's, has more than one cause. I am happy to point that finger.

Saturday, 28 January 2012

Work less for a better pension

Yesterday's post was too big. I ended up combining three days worth of musings on different topics, linked by the lump of labour fallacy. The common thread was the future of work: who should work and how long should they work for?

Today I came across a paper that points out that the lump of labour fallacy is itself a "counterfeit", being a straw man that is usually wheeled out to invalidate claims that reductions in working hours or work-sharing are beneficial for labour, even when such claims are not being made.

Marginally reducing hours, but not increasing headcount, seems to lead to improvements in productivity so that output levels are maintained. This makes intuitive sense. No one works at a constant rate, even on a production line. Small, probably unconscious, adjustments in work speed and the frequency and duration of breaks can easily accommodate a marginal variation in total hours.

Work-sharing also appears to boost productivity, to a degree that more than covers increased overheads due to fixed (per employee) costs. However, there is a timing problem with the introduction of work-sharing, namely that the higher fixed costs are incurred immediately while the boost to productivity takes a few weeks or months to arrive, due to reorganisation, training and other lag factors.

One way of avoiding this is to recycle productivity gains into reduced hours, i.e. by gradually reducing the working week in line with improved productivity. This would be on a results basis, i.e. the reduction would follow the gain.

In reality, such gains are dissolved into profit, which is then divided up in the usual way. As we know, employees have tended to lose out relative to company managers and owners. In other words, the current working week represents a subsidy to capital, which is why it hasn't fundamentally changed for a century despite technological improvements.

Correction. For many professions, the length of the working week has actually increased. Ironically, much of this is the result of technological improvement, e.g. remote access and BlackBerrys, combined with a cultural norm that values presenteeism and macho striving (lunch is for wimps). The sociological gulf between the work poor and the time poor is a popular trope, particularly among the latter.

The remorseless logic of capitalism is to reduce labour costs to zero, as this maximises profit. The externality of impoverished consumers (i.e. no one to buy your products) is trumped by the short-term gain for those businesses that are ahead of the curve.

A productivity remittance does not necessarily have to be made in shorter working hours. If the difference between increases in productivity and actual wage increases had been remitted to employees in mandatory pension contributions over the last 30 years, then we wouldn't have a pensions crisis today. We might even have avoided raising the state pension age.

Friday, 27 January 2012

Checking for lumps

The 'lump of labour fallacy' is the erroneous belief that there is a fixed amount of work in the economy. This leads to a variety of claims: that a reduction in hours worked will free up more jobs; that if immigrants take jobs this must mean an equivalent number of natives lose them; and that automation means a reduction in labour (aka the Luddite fallacy).

This is believed to be a fallacy because the amount of work is not fixed. The economy is not a closed system (or "box economy"), so the specific change in hours, workers or automation may trigger other, countervailing changes, not to mention the simultaneous impact of other factors.

The specific claims made are dismissed on the grounds that: reduced hours often leads to increased productivity (same output in less time), which negates the need to increase labour capacity; immigration means more customers as well as workers, i.e. the size of the economy expands leading to more jobs overall; and technological substitution leads to workers moving to higher skill roles.

However, at a certain point, the lump of labour fallacy will turn out to be true. For example, marginal reductions in hours worked may not impact on job numbers, but larger reductions surely do, e.g. a job-share produces 2 jobs from 1.

So the lump of labour is a fallacy. Or is it? Consider ...

1) The gender distribution of jobs


Over the last 50 years, more and more women have entered the jobs market. In parallel with this, there has been a slow but steady increase in the percentage of men who are economically inactive (i.e. neither employed nor seeking work).

The numbers will be muddied by the impact of changes in work patterns (part-time and temporary) and the fluctuation in the rate of structural unemployment (between 1 and 3 million since the 1980s), but there appears to be a clear thread through the last 90 years: the number of people economically active, as a proportion of the population, has stayed broadly the same (just over 60%, according to England & Wales Census data), but it has become more evenly distributed by gender.

On the face of it, this would appear to support the lump of labour fallacy in relative terms, if not in absolute terms - i.e. the total economically active population has increased with general population growth, but as a proportion it has stayed pretty constant. 



In theory, an increase in women in jobs has meant an expansion in the economy and therefore greater demand overall, which should have led to a higher percentage of the economically active, however this has been offset by a tendency for male inactivity to increase. The loss of jobs by men is partly explained by the disproportionate impact of structural unemployment in the 80s (i.e. the collapse of heavy industry) and job polarisation in the 90s (see #3 below), though it's worth noting that the census data shows a steady decline since 1931 (they skipped the anomalous year of 1941 for obvious reasons).

The inference is that the relative decline in male employment and the increase in female employment is merely coincidental. The implication of the long-term data is that there may be a natural limit to the rate of economic activity.

There is also evidence that stagnation in median male earnings may have compensated for the increase in female participation, hence limiting growth. In other words, more working women may have served merely to maintain existing levels of consumption.

One oddity of the recent discussion about median wage stagnation is the finding that this started in the US in the 70s but didn't appear in the UK until the last decade. In fact, it looks like the better performance of female wages in the UK (relative to per capita GDP) from the 70s masked a comparable slowdown in UK male wage growth over the period, which then began to flatline after 2000. (See the graphs on page 19 of the Resolution Foundation's 2011 study Growth Without Gain?)

2) The impact on jobs of retirement

The increase in the UK state pension age has largely been discussed in terms of the imposition on the individual, i.e. working longer for the same. What has occasioned less comment is the impact that this, and the expectation of more people working beyond the state pension age, will have on employment.

The consensus view is that "there is no evidence that reducing the employment of older persons provides more job opportunities for younger persons" (see a 2011 UK government paper and an earlier 2009 US study.) However, most studies have focused on correlations in employment rates between young and old in the context of early retirement, i.e. would encouraging older employees to "free up slots" reduce youth unemployment.

There are fewer studies that look at the reverse, i.e. whether delaying retirement reduces hiring opportunities, largely because increasing the retirement age has only come onto the agenda recently. A study of the impact of a raised retirement age for women in Portugal in 1993, looking at specific firms, came to the conclusion that: "the new law had the effect of decreasing hirings by about one worker for each older worker retained in the firm."

There's an element of "no shit, Sherlock" to this. If an older worker defers retirement by 1 year, that means the resulting vacancy (let's assume the role is still needed) will be deferred by a year as well. During the period of transition to the new retirement age there must be a large number of such deferrals. As many of these would otherwise have created vacancies, there must therefore be a reduction in the total number of potential vacancies, adjusted for other factors, created during the transition.

The lump of labour fallacy, i.e. the explanation as to why it is wrong, would suggest that pushing the retirement age out creates a cohort who add further consumption to the economy and thus increase labour, but this assumes that people in their early 60s spend at a relatively high rate and then severely reduce their expenditure immediately upon retirement. Anecdotal evidence (I can't find anything better) suggests this isn't so. People reduce their expenditure well in advance of retirement, driven as much by lower need (kids gone) as by the looming carriage clock. It would be interesting to find some real data on this.

What this implies is that the change in the state pension age will result in a relative drop in vacancies during the transition years. These are absolute losses, i.e. there is no compensating above-trend increase in vacancies after the transition, so all other things being equal, this represents a net increase in unemployment.

Will this be significant? About 800,000 people turn 65 in 2012, which reflects the post-war baby boom in the late 1940s. Let's assume about 50% are in employment. People who retire early will probably still retire early, and it is expected that the abolition of the default retirement age will result in many extending their working life, so let's discount it by a further 50%. This still leaves us with a potential addition of 200,000 to unemployment, ceteris paribus.

The average retirement age is now increasing, partly due to poorer pensions and partly due to people electing to work beyond the state pension age. This will increase the working population, however it will probably be offset by fewer school leavers due to the falling birthrate since the 90s. In fact, while the working population may increase in absolute terms, it may decline as a percentage of the total population due to increasing longevity.


3) The change in the type of work

Technological changes since the 1970s have led to "polarisation", reducing the number of jobs in the middle income range (i.e. median pay). High skill jobs have grown, as have low skill jobs. The former implies a greater emphasis on creative and technical roles, the latter on personal services that can't easily be automated or offshored (e.g. care).

The increase in high skill jobs has been held up as a good thing, on the assumption that we are gradually upskilling as a nation and doing more technical/professional jobs in the "knowledge economy." This has been offered as an upside in tandem with the downside of the export of productive roles (particularly in heavy industry and manufacturing) as a consequence of globalisation.

I suspect that much of this increase isn't actually in high-skilled creative and technical roles, but is actually more "management". The ratio of managers to managed in business is roughly 1:10. I think this is understated as it doesn't include part-time managers (e.g. team leaders) plus "management support" staff who are effectively extensions of the formal management tier.

The ratio of officers to other ranks in the military is about 1:6. I suspect the true management ratio in business is not far off that, perhaps 1:8. While they're not run in quite the same way, (most) businesses employ the same basic command and control paradigm as the military.

It can be argued that today we have many more people who manage "things" rather than people, hence we need more managers, but that is often just a matter of job title status. A database manager is really just a skilled machine operative.

My personal experience of IT is that many so-called IT professionals know little or nothing about the subject. They have either mastered some arcane knowledge (i.e. they are an advanced user of a specific software package) or they are a business generalist (project managers, business analysts etc.) It was interesting to note how many refugees from banking in 2008 admitted they had never fully understood what they were doing (I'm currently reading David Kynaston's City of London: The History, which reveals that this attitude has been common among younger employees for almost two centuries).

Disciplines with professional qualifications, like accountancy, are no better. Most accountants don't do accountancy (it's not really that complicated and software does most of it for you). The qualification is usually a passport to a more general business role, i.e. a species of "management".

Professional qualifications, and the payment necessary to secure them, have always been an entry fee for access to high-pay jobs, as much as they have been about engineered scarcity or maintaining standards.

As wage inequality has grown, we have seen an increase in both the entry fee and entrant desperation for high-end careers. The minor furore over internships is an example of this: high-value roles being auctioned at charity events for £000s, and the well-off subsidising their kids to work a year or more for no pay.

What I think the increase in management, professional and technical staff is hiding is not grade inflation but "outdoor relief" for the middle classes (the phrase originates with John Bright, condemning the use of the Foreign Office to create jobs for aristocrats in the 19th century).

Conclusion

We are surrounded by robots, they just don't look like Robby from Forbidden Planet. That said, there are still plenty of jobs that could be automated. In other words, we are in the middle of a transition.

We seem to be managing this transition by creating more overhead roles - i.e. the productivity gains of automation are subsidising management and professional jobs that we had hitherto not felt the need for.

You don't have to believe we will reach a post-scarcity state to foresee a situation in which the majority of genuine production in the economy is automated. Most of us will then either be doing pseudo-productive jobs (i.e. disguised consumption), or we will have become artists who rarely sell a work.

It might be argued that modern capitalism would not stand for such a degree of inefficiency and waste, however another way of viewing it is that there is plenty of loot for all and we do need to circulate wealth to consumers in order to keep the show on the road. This is as good a way as any.

It was a popular trope last year to compare corporate looters with the rioters in London and elsewhere. This focus on the extremes conveniently ignored the degree of institutional looting undertaken by the silent majority in management.

It looks to me as if there is a natural (or preferred) rate of economic activity and that we will adapt organisations and roles to maintain it. In other words, we act as if there is a fixed lump of labour.

Structural unemployment (wrong skills, wrong place, wrong time) is less a failure to adapt productive labour and more a failure to adopt pseudo-productive work. Not every ex-miner can become a CSR administrator.


Monday, 23 January 2012

Sub Par Mea Culpa

I would normally leave the Emirates after a 2-1 defeat to Manure feeling mighty depressed. That I didn't on this occasion is probably due to my more realistic expectations for the season: we're not going to win the league.

After a first half in which we were very nervous (poor passing, tentative tackling, hoofed clearances), I thought we were lucky to reach half-time only 1 goal down. The Mancs had played well enough to be 2 or 3 up, damn them.

Of course, all teams miss chances, which we proceeded to prove in spectacular fashion when first van Persie and then Rosicky passed up near open goals early in the second half. We deserved the equaliser for our spririted fightback, but we were obviously flying on a wing and prayer.

Both our full-backs were having poor games, in part because Carrick was allowed enough time in the middle of the park to launch long balls to their wingers. Ramsey and Rosicky weren't closing him down quickly enough. Arguably, van Persie should have dropped deeper and compressed their lines.

Wenger has come in for much criticism for his substitution of The Ox, both at the time and subsequently, but it seemed a reasonable call to me. The youngster was great in attack but he left Djourou (and then Yennaris) badly exposed, and it's likely he was running out of gas. Theo was left on, I think, because he offered his full-back more cover.

I'd personally have gambled in leaving the The Ox on, at least for another 10 minutes, perhaps bringing Benayoun on into the middle and pushing Rosicky out wide.

It looked like Wenger was going to make a double sub of Park and Arshavin just before the equaliser. Presumably the idea was to chase the game by getting Park to push on Carrick, which is largely what he did when he finally got on the pitch.

Putting the Russian on instead of Benayoun or Miquel looked ambitious. We should perhaps have tried to hold out for a draw. I'd have been happy with that in the circumstances. Few fans seem to have noticed that Wenger subbed one attacker with another, or that he pushed Mertesacker up for the last 10 minutes. He was trying to win the game, not lose it.

Arshavin was adjudged to be responsible by many for Manure's winner, but the real error was Vermaelen drifting into the centre instead of coming out to double-up on Valencia. An echo of his error for their first goal. He instinctively positions himself as a centre-back, and why not.

Our fundamental problem remains a lack of full-backs due to injury. This makes us vulnerable down the flanks, but it also limits our ability to create 2-on-1 situations in attack, a key feature when playing 4-5-1.

One thing that did occur to me while watching the TV highlights later is the unfairness of asking a manager to justify a substitution. If he gets it right, particularly if the sub scores an 89th minute winner, he is congratulated for his tactical masterstroke. This ignores the fact that what the substitution achieved may not have been what the manager intended, i.e. he may have benefited from luck more than judgement.

Conversely, if the sub concedes a goal, the accusation thrown at the manager is essentially "you did that!" Both attitudes assume far more control on the part of the manager than is credible. Given that stress is the result of expectation exceeding control of outcome, you can see why managers react peevishly when asked to justify their action.

The response among Arsenal fans has been over the top. As usual, all you can hear is the shouting. The Gooner even suggests this is evidence of "the onset of senility." If he had tried to send on Pat Rice, maybe.

Saturday, 21 January 2012

We'll not see her like again (ouch)

Etta James is dead, but she leaves us I'd Rather Go Blind, which is the perfect combination of brilliant song, brilliant singer, and killer title. What more do you want?

Friday, 20 January 2012

Every man for himself

My eye was caught this morning by Polly Toynbee's assertion that "the paradox of thrift is just too paradoxical for the public."

I don't think people generally struggle with Keynes's insight once it is explained to them. (Of course, I'm talking about the "vulgar" explanation, rather than the more technical one concerning the relationship of savings and investment, zzzz...)

If we all cut back on spending and start paying off our debts at the same time, then there will be less spending overall. This will lead to cuts in production and lower sales, which will lead in turn to layoffs. This means even fewer people with money in their pocket to spend and more people fearful of further layoffs who try to build up their savings.

There, that was painless. Most people even get the rider that savings will increase despite near-zero interest rates and that surplus cash will be hoarded by businesses, leading to such phenomena as low gilt yields.

Toynbee's problem stems, I think, from the misconception that Keynes's formulation is a paradox (he never called it one - the term was applied later by others) and therefore puzzling.

From the perspective of the individual, it is perfectly rational to cut spending and pay down debt as this delivers a realisable benefit. The size of this benefit ultimately outweighs our guilt about the wider consequences - i.e. we are acting selfishly. We assuage that guilt (to a degree) by believing/hoping that not everyone else will be as selfish (or as smart) as we are.

In the extreme case (the classic interpretation of Adam Smith's "invisible hand"), the individual may even congratulate himself that he is morally in the right: "By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it." Now that is a paradox (if true).

I think most people understand the paradox of thrift. The problem is that we are more like Captain Schettino than Sidney Carton. It is this "unreliability" that underlies Keynes's further insight that when we, the private sector, take fright, government must step in to boost aggregate demand.

This brings us to the area of public understanding where it would be fair to say most people really are uninformed, namely the scale of personal and business debt relative to public debt. When we concentrate on our own debts, and the public discourse focuses on government debt, it is easy to see the former as tractable and the latter as intractable.

Thursday, 19 January 2012

Colony? Isn't that a bowel operation?

David Cameron's recent claim that the Argentinian attitude to the Falkland Islanders is colonial has predictably prompted bemused reaction in Buenos Aires and elsewhere, but little comment in the UK.

The key point is that we support the Falkland islanders' right to self-determination. I would argue that what the Argentinians have said recently is far more like colonialism, as these people want to remain British and the Argentinians want them to do something else.
The implication is that being coerced by a foreign power is the definition of colonialism. This is an idea forged in the American Revolution and maintained by the Irish throughout the 19th century (not to mention nationalist movements elsewhere in Europe). However, this ignores the older definition of a colony that goes back to the Greeks.

The Falklands is a British colony (i.e. a "plantation" of settlers) in the South Atlantic. The fact that the islanders wish to remain British doesn't stop it being a colony.

The problem is that "the colonies" came to mean something else (a third meaning) in the 19th century: the invasion and systematic commercial exploitation of foreign countries, which occured mainly in Africa and Asia.

The result is that we find it difficult to use the word "colony" in its original sense, hence such clumsy formulations as "British overseas territories."

Oddly, one of the few places the word "colony" is still used in its original sense is in Sci-Fi. Of course, if we ever set up a self-sustaining presence on another planet we may decide to call it a "Terran trans-space adminsitrative unit."

Those pesky kids

There has been an undertow of Edmund Burke running through a lot of commentary later. Roger Scruton mentioned this explicitly in an interview about his new book on Green Philosophy.
My main argument is that environmental destruction comes when people externalise their costs and pass them on to future generations. ... Edmund Burke deserves credit for having first put this on the political agenda. He made the interesting observation that human beings protect the unborn, while they revere the dead. Someone's made a sacrifice on your behalf, so you must pass that on by making a sacrifice of your own. That's a crucial observation he makes against the French Revolution
What Burke said, in his Reflections on the Revolution in France, was:
The state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, calico or tobacco, or some other such low concern ... it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and all moral natures, each in their appointed place
This notion, that generations have an inviolable obligation to each other, is deeply conservative, indeed reactionary, as is made clear by such language as "fixed compact" and "appointed place." The present must act subject to both the wishes of the past (i.e. tradition) and the future (an organic extension of that tradition.) While the past is famously mutable, it isn't the ideal tabula rasa that the future presents. Our children are thus taken hostage and the message they deliver comes from the hostage-takers.

The idea has reappeared in two distinct guises amongst conservative thinkers in recent years. First, we have the meme of intergenerational theft, given currency by David Willetts' The Pinch. Second, we have the ruling belief that we have to pay down public debt through austerity because otherwise we create an immoral burden for our children. In yesterday's Guardian, Simon Jenkins expands this trope to become a pessimistic view of the ill discipline of democratic politics (another Burkean theme): "Democracy ... simply votes to saddle its children with debt."

There have been pale echoes of this in Ed Milliband's comments on the "British promise", though this is more a nostalgic lament for progress thwarted than an attempt to dictate to the present in the name of the future (Hobsbawms' The Forward March of Labour Halted also comes to mind, strangely).

The original counterblast to Burke came from Tom Paine:
Neither has any generation a property in the generations which are to follow. The parliament or the people of 1688, or of any other period, has no more right to dispose of the people of the present day, or to bind or to control them in any shape whatever, than the parliament or the people of the present day have to dispose of, bind or control those who are to live a hundred or a thousand years hence. Every generation is, and must be, competent to all the purposes which its occasions require. It is the living, and not the dead, that are to be accommodated.
The modern spin, on the iniquity of debt and consequent burdening of our children (and the related nonsensical analogy of a national economy with a household), is dealt with by many, such as Dean Baker and Paul Krugman.
People think of debt’s role in the economy as if it were the same as what debt means for an individual: there’s a lot of money you have to pay to someone else. But that’s all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.

That’s not to say that high debt can’t cause problems — it certainly can. But these are problems of distribution and incentives, not the burden of debt as is commonly understood. And as Dean says, talking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children, which is a very different kettle of fish.
So the next time someone tells you the pain of austerity must be borne for the sake of the kiddies, you know you're dealing with a hostage-taker.

Wednesday, 18 January 2012

Words fail me

The news that some cinema-goers in Liverpool were offered refunds because they didn't realise The Artist was a silent film has me in two minds.

Is this merely another tiresome plant by some self-proclaimed marketing guru (whom I've just helped by mentioning the film, dammit), or might it be a brilliant example of dem scousers refined sense of humour, la.

Of course, it might just be an attempt (by the Telegraph) to paint the inhabitants of Liverpool as yahoos. You wouldn't get anyone in Notting Hill making such a crass error.

Tuesday, 17 January 2012

Back to Front

The Guardian had a somewhat surreal air about it this morning, following the decision to scrap the separate sports section most days and revert to ye olde back pages. My youngest, who has never known such a thing, pointed out that he now couldn't read the sports section while I read the main section. I pointed out that I was bigger than him so I didn't care.

The real surreal (sounds like a cool band) was not so much the change in the medium as the bizarre content. On the back page (which I do read first) was the news that Arsenal are trying to sign Robin Van Persie's 5-year old son (why don't they just kidnap him?) What was even less credible was RVP's claim that the nipper sometimes beat him at golf and was able to ask for specific clubs (as in "the five iron" rather than "da big wun.")

The front page kept the nonsense going with the news that flippy-floppy Cameron (played by Hugh Grant, presumably) now thinks a yacht for some billionairess in West London would be a good idea, so long as it is funded by the private sector. Well that's all right then.

I've got a better idea. A jubilee in biblical tradition was a time for forgiving debts. Why don't we turn this around. The Queen has only been paying tax since 1993, which means she avoided/evaded it for 41 years of her reign.

I've seen an estimate that her private income (mainly profit from the Duchy of Lancaster Estate), which is distinct from her official income as head of state, was about £7.3M in 2001. Allowing for historic inflation, let us assume an average income between 1952 and 1992 of £3M p.a., and an average top tax rate of 60%. This gives us £73.8M of unpaid tax, not including interest (pretty generous of us), which is uncannily close to the boatyard's estimate: £60M yesterday, £80M today (the increase presumably represents private sector fees).

In the circumstances, I think the least the Queen could do is pony up the cost of the yacht. If she needs any more persuading, we could point out that she avoided £20M in death duties when her mother died.


Monday, 16 January 2012

This, children, is what we called an el-pee

2012 will the 30th anniversary of the first commercial CD, though for most of my generation it's nearer 20 years since it irrevocably changed our music buying habits.

For many of us, this pivotal moment coincided with the arrival of toddlers. They had a tendency to scratch record needles with their grubby fingers, not to mention tread on casually strewn vinyl, so it also marked the point at which the turntable and record collection started to move from the sphere of the everyday to the peripheral zone where things-that-must-not-be-touched reside. A cargo cult in your own living room.

As I didn't convert my records to CDs, I've continued to use the "phono", as the amp still charmingly refers to it, occasionally since then, but it's only in the last year that I've started to appreciate the treat that time has wrought, namely the ability to listen afresh to music that never made it to my MP3 player.

Of late I have been immersing myself in both My Bloody Valentine's LPs, "Isn't Anything" and "Loveless", plus Laurie Anderson's "Big Science." I'm beginning to eye Echo and the Bunnymen's first 3 albums avidly.

Let's not scupper that yacht before we build it

Keen to take my mind off Arsenal's disappointing display against Swansea, I notice that Michael Gove is suggesting that we buy the Queen a new yacht, which will apparently cost around £60 Million (we could buy a whole team of full-backs for that sort of moolah). I'm not sure why he thinks this would be an appropriate diamond jubilee present (unless he has in mind a diamond-encrusted dinghy in the manner of Damian Hirst), but I don't think we should dismiss it out of hand.

Of course he may not be serious. This could just be a stalking horse to secure his plan B, money to provide a memento for every schoolkid (perhaps a Dinky yacht care of the dinky minister), in which case we might assume he leaked the letter. Or perhaps this is an attempt to portray the Tories as crass and insensitive (it could work), in which case we might assume that Nick Clegg, one of the addressees, leaked it (his rush to comment today has a whiff of cordite about it).

Elsewhere, the Deputy PM is raising the ideological bar with his call for a "John Lewis economy", which he equates with employee shareownership, even quoting John Stuart Mill to make sure all the Lib Dems wake up and take notice.

This has provoked some calls of hypocrisy, given his associated criticism of bankers' bonuses, on the grounds that bonuses and profit-share are much the same beast. This claim is not true. Bonuses are deducted pre-profit while dividends are post-profit, giving rise to the agency problem - i.e. executives looting a business to the detriment of its owners. What this ad hominen criticism distracts from is the consistent failure of attempts to extend shareownership, to deliver the "shareowning democracy" that was envisioned under Thatcher and is now the centrepiece of Clegg's pitch.

In the UK, only 15% of the population (about 20% of adults) own shares directly, i.e. in the form of equities or shares in mutual funds. Despite the privatisation programme of the 80s/90s, this only represents 10% of total UK market capitalisation.
Given that most individuals hold very small numbers of shares, and that shares in mutuals do not confer voting rights in the end companies, the extent of democracy is limited to say the least.

Clegg's solution is a "right to request" shares, implying a statutory obligation for all PLCs to at least consider implementing an employee shareownership scheme. This will not materially change share ownership. Share options granted to UK employees per annum seem to be around £5 Million, which is about 0.25% of market capitalisation. I can't find stats on the total share of employee schemes by value, but I doubt it will be more than 1 or 2%. As the employee has to pony up the cash (albeit with tax benefits), it's unlikely this figure will increase much.

A right to request is not a right of any substance - the employer can presumably turn down the request without penalty, as is the case with similar rights in respect of flexible working. Clegg's speech is thus mere waffle.

Meanwhile, the real business is elsewhere with George Osborne announcing the government's intention to make the City of London the global centre of trade in the Renminbi, China's currency. While the Tories are ideologically opposed to picking winners in industry, they have no trouble doing so in financial services and even acting as touts for the City. Osborne's speech in Hong Kong is also noticeable for the tacit admission that the whole rebalancing/march-of-the-makers thing is dead - we're back chasing the services dragon again.

This is a shame. Apparently, we could pump £60 Million into the economy and create new manufacturing jobs on Clydeside by building a yacht (come on, they wouldn't dare award the tender to a shipyard in Hamburg).

What's more, we could fund it mutually, at £1 per head of the population, which would mean everyone would get a share certificate to hang on their wall, including those excited schoolkids. Then we could lease it to the Queen, the proceeds providing a dividend. Of course, a majority of the shareholders might decide that Brenda wasn't the best customer (we'd surely get more out of a Russian oligarch or a Gulf sheikh), but that's democracy for you.

Sunday, 15 January 2012

Joining the Poundzone

One of the more amusing features of this week's phoney war over the Scottish referendum is the speculation over what would happen to the Scots currency in the event of independence.

Many unionists, as we must now learn to call them (something that Labour MPs from the green side of Glasgow must find rather odd), have been quick to point out that the continued use of Sterling would be the equivalent of joining the Euro. In today's Observer Alistair Darling notes:

If Scotland kept the pound it would be in a common currency with a foreign country (England), whose central bank (the Bank of England) would set its interest rates and do so not in Scotland's interest but in the interests of England, Wales and Northern Ireland.
This is a tad disingenuous as the BoE does not have a track record of setting rates with regard to what will work best in Cardiff or Leeds, let alone Belfast. What matters are primarily the needs of the City of London (Cameron made this priority clear in Brussels), followed closely by the impact on mortgage holders in the South East.

The major natural border on the island of Great Britain, which matches the mental horizon of the Bank and the government, does not run between Carlisle and Berwick, but between the Severn and The Wash.

The real issue here is not one of currency but of the power to levy taxes and set expenditure. It is perfectly feasible to devolve these within a single currency, as shown by the USA and other federal states. The danger of "devo max" (which incidentally sounds like a best of compilation by the Ohio art-rockers) is that the logic would apply equally to Wales or Northern England. This may be why Cameron & co are keen to bury that option.

Should the Scots decide they need their own currency, they should follow the example of the Irish (pre-Euro) and just come up with something that sounds vaguely familiar, like the Punt. Perhaps they could call it the Panda, in honour of their new national beast.

Friday, 13 January 2012

Titi and Time Dilation

One of the oddities you notice as a football fan is the extent to which space-time is warped within the bowl of the stadium.

When Thierry Henry came on as sub in last Monday's game against Leeds, I could sense everyone on and off the pitch mentally assessing his ability to put one foot in front of the other without falling over. When he (finally) started a light canter, the entire crowd seemed to catch its breath, worried perhaps that his hips were about to pop.

He's bald, he's got a proper beard, he must be ancient. I was sure he was older than me, and probably not much fitter, though the official data reveals that he's young enough to be my son, assuming I'd started breeding at 17.

When the magical moment came and he was through on goal, I was genuinely confused as to whether it was he or I who was about to have a heart attack.

I had a not dissimilar experience, over an extended period of time, when watching Steve Bould. Despite repeatedly checking the biographical stats in the players' yearbook, I couldn't reconcile what I could see on the pitch (a prematurely balding bloke with Clint Eastwood's range of facial emotion) with the fact that he was two years younger than me.

Clearly time passes much more quickly on the pitch than in the stands, despite the heroic efforts of various opposition keepers to slow it down. What's not clear is whether this is due to the greater velocity of the players or the greater gravitational mass of the crowd. Hmmm.

Territorial Pissings

The video of US marines urinating on Afghan corpses was deemed "too shocking" to be shown on the BBC news last night, which raises the question as to what exactly is shocking about it. Is it the ritual humiliation of dead enemies (we can assume they were combatants, or at least victims, rather than random corpses discovered while taking a stroll), or is it pissing in public?

The desecration of enemy corpses has being going on since prehistory and it would be naive to believe that it is going to stop any time soon. That said, such rituals clearly change over time to reflect prevailing norms. We no longer stick our enemies' decapitated heads on pikes, positioned over the gates of the city, instead we organise decorous parades (it's interesting to note that the last victory parade in London, for the Falklands War in 1982, marched into the City via Moorgate).

Pissing on a corpse is pretty trivial in historic terms. Though it qualifies as a war crime, it hardly compares with cutting off genitals, ears, noses or scalps. Indeed, one can argue it is less effective as a deliberate humiliation than pissing on your enemies while they are still alive.

So why the shock? Perhaps because these particular marines have broken through the veil and thus undermined our carefully constructed delusion that Afghanistan is a mission of pacification, in the same way that Abu Ghraib and other abuses undermined our belief that we were liberating the Iraqi people. It is for this (i.e. letting the cat out of the bag) that they will be punished.

Perhaps also there is embarrassment at the sexual overtones of the act. The reference to "golden showers" and the porn-style mise-en-scene (multiple, laughing men standing around prostrate victims with their cocks out). Despite this queasy, modern tang, there is also a sense of something more ancient and rank here. These could have been Macedonians from the army of Alexander.

There is an excellent cartoon on the subject by Steve Bell in today's Guardian, essentially a piss-take on the famous raising of the Stars and Stripes by US Marines at Iwo Jima in WW2. This is resonant precisely because Bell is treating the act, albeit ironically, as a ritual of victory.

Thursday, 12 January 2012

New Readers Start Here

I've decided to start a blog. I don't need a justification, so don't expect one. In fact, considering the random stream of drivel, puns and outrageous slurs heading your way, don't expect an apology either.

You'll be pleased to know I devoted a little over 5 minutes to the tricky subject of choosing a name. I was surprised it hadn't already been taken (thinks: perhaps it really is naff). As I am an Arsenal fan, and as I like what no one these days calls popular music, I thought I'd combine the two. Actually, while I do like Elbow, I'm more of a Sonic Youth kinda guy, so I did toy with Arsonic, but then I spolit it by trying to cram something about old lace in as well. This made me think of Paper Lace, at which point I saw the error of my ways.

If you want the truth, I was inspired by Dr. Dilligaff. I'm particularly impressed by the otherwise exiguous nature of his site (less is the new more), and the excellent proof that the best things on the Web do not require DHTML. I haven't had such fun "viewing source" for a long time.