Markets are in general not administered systems like some computer programme, but the interactions of attempts by many buyers and sellers, each pursuing their own objects, which may be monetary but need not be. They are spontaneous, as when some kind of object suddenly becomes desirable, such as fashion from a previous period. Some potential buyers want to possess them and potential sellers have them and want to sell.
The left has tried to abolish markets, believing that their functions could be achieved by planners, or control them.
The main two functions of markets are:
1) A Rationing function - deciding who should be able to have what that is available for disposal. The presence of a price, even if fixed by authority, is a sign to potential buyers of the terms on which the object may be obtained. In the absence of markets and prices the allocation would have to be by diktat and government choice, - literally rationing.
2) A Signaling function - movements in prices indicating relative changes in demand and supply are signs to make more available or less available or make more or less be desired by buyers.
Both functions are important in a free society. They are vital in a society which is subject to change in production or in desired consumption. Otherwise there would be regular shortages, (as in Soviet Russia when there were long queues and empty shelves, except for those party members who could purchase in special shops), or surpluses ( when free consumers decided they did not like the goods being offered at the fixed price.)
3) So perhaps there is a third function - to reflect and adjust for changes in a dynamic economy.
The problem is that although many would subscribe to these principles, politicians are always tempted to believe that they can suspend the market or out-perform the market by administration.
Thus price controls, fixing a maximum price below the "natural level", and leaving some buyers unsatisfied, or a minimum above the "natural price", leaving some suppliers unable to find buyers. The Government may also make trading more difficult by imposing transaction costs on top of "production" costs - HIPS, stamp duty on houses, etc., by stipulating quality standards, or by preventing market adjustments.
An example of the last named is the case of intervention t0 keep in existence a firm which is going bankrupt because it is not valued by the market. In the name of job preservation, or in the bank cases savings preservation keeping deposits inviolate. No only could this encourage further reckless behaviour in the future, it is also stopping the transfer of resources in the present. (The physical and human resources are not lost in business failure, but adjustment may be costly to some, and they have votes.)
We are suffering a credit crunch because President Clinton in the middle 1990s demanded an expansion of mortgage provision in those areas where purchasers were higher risk, and we have seen the result, and because Bush, Greenspan and Brown pushed interest rates down and encouraged the accumulation of debt. For political or ideological reasons the self -correcting mechanism of the market was suppressed.
Monday, 29 September 2008
Saturday, 27 September 2008
The age of irresponsibility
Our Prime Minister has left himself wide open to cries of "hypocrite" by trying to somehow exonerate himself from the shambles we are suffering and claiming that he knows the way forward.
I was suggesting yesterday that though the archbishops' shortsightedness led them to accuse short sellers as somehow the only villains in the piece, there are others more "guilty" of greed of failure to act properly. This list includes the mortgage sellers, the banks and the regulatory authorities.
Having looked at the subject, I had assumed that Bush/Greenspan were the guilty parties in the USA and Brown later in the UK. It seems that the laxity in the USA went back to an act in 1977 which tried to promote house ownership by poor people. This act was reinforced by a further one in 1995, under the Clinton Presidency no less, were mortgage lenders were under pressure to offer mortgages in areas where few citizens stood much chance of repaying. Bush was merely the end of a line, and inheriting problems from his predecessors. So why did his advisers not warn him, or was he merely won over by Greenspan's policy of driving down interest rates to stave off recession?
The Conservatives in the UK had passed legislation in the late 1980s which paved the way for the blurring of distinctions between traditional banks and building societies. This was part of a revolution in liberalisation. Competition brought benefits to house buyers. All was well so long as there was supervision of the various bodies. To be fair the situation had thus become much more complicated.
So what went wrong in the UK, which did not have the legislation to twist arms of mortgage lenders? The answer is Gordon Brown, who fudged a a tripartite system, - Treasury, Bank of England and Financial Services Authority, where responsibilities were not clear - as was seen in the early days of the Northern Rock difficulties just a year ago. The system failed in its first major test, and we had the spectacle of depositors lining up outside bank offices to withdraw their deposits. Did any of the three controllers actually advise Northern Rock that their business plan of borrowing short and lending long was risky?
Gordon Brown also presided over vast creations of debt and credit, which raised asset prices and gave a false sense of security. Many households, like the Government itself, had no reserves because they had been spending more than their incomes. When a downturn came, however caused, the bubble was going to burst. Brown's contribution was to press interest rate levels down, and to spend what he could not afford by borrowing. The fact that he spent vast sums in worthwhile projects such as health and education might be an excuse, but as it was generally done without reform it was highly irresponsible.
We are now paying the price of Brown's clumsiness, impatience and an unwillingness to listen to warnings from with the UK and from outside organisations. He was very much part of the age of irresponsibility. He has the Blair attitude which said, "Let's draw a line under..", that is "I'm not admitting I was wrong, but let's forget the past."
I was suggesting yesterday that though the archbishops' shortsightedness led them to accuse short sellers as somehow the only villains in the piece, there are others more "guilty" of greed of failure to act properly. This list includes the mortgage sellers, the banks and the regulatory authorities.
Having looked at the subject, I had assumed that Bush/Greenspan were the guilty parties in the USA and Brown later in the UK. It seems that the laxity in the USA went back to an act in 1977 which tried to promote house ownership by poor people. This act was reinforced by a further one in 1995, under the Clinton Presidency no less, were mortgage lenders were under pressure to offer mortgages in areas where few citizens stood much chance of repaying. Bush was merely the end of a line, and inheriting problems from his predecessors. So why did his advisers not warn him, or was he merely won over by Greenspan's policy of driving down interest rates to stave off recession?
The Conservatives in the UK had passed legislation in the late 1980s which paved the way for the blurring of distinctions between traditional banks and building societies. This was part of a revolution in liberalisation. Competition brought benefits to house buyers. All was well so long as there was supervision of the various bodies. To be fair the situation had thus become much more complicated.
So what went wrong in the UK, which did not have the legislation to twist arms of mortgage lenders? The answer is Gordon Brown, who fudged a a tripartite system, - Treasury, Bank of England and Financial Services Authority, where responsibilities were not clear - as was seen in the early days of the Northern Rock difficulties just a year ago. The system failed in its first major test, and we had the spectacle of depositors lining up outside bank offices to withdraw their deposits. Did any of the three controllers actually advise Northern Rock that their business plan of borrowing short and lending long was risky?
Gordon Brown also presided over vast creations of debt and credit, which raised asset prices and gave a false sense of security. Many households, like the Government itself, had no reserves because they had been spending more than their incomes. When a downturn came, however caused, the bubble was going to burst. Brown's contribution was to press interest rate levels down, and to spend what he could not afford by borrowing. The fact that he spent vast sums in worthwhile projects such as health and education might be an excuse, but as it was generally done without reform it was highly irresponsible.
We are now paying the price of Brown's clumsiness, impatience and an unwillingness to listen to warnings from with the UK and from outside organisations. He was very much part of the age of irresponsibility. He has the Blair attitude which said, "Let's draw a line under..", that is "I'm not admitting I was wrong, but let's forget the past."
Friday, 26 September 2008
Your aim is too narrow, your grace
The two archbishops recently have stepped outside their area of expertise in order to aim at certain speculators, - those who sell short.
Doubtless short sellers are motivated by personal self-interest, but they also perform a function in market adjustments. If the shares are overvalued, that is represent a sum much larger than balance sheet assets, then normally the share price will tend to fall, or the company would seem to offer a prospective lender or share investor a misleading picture of the company. (This is particularly true if the company is concealing disadvantageous off- balance sheet items. Bottler Brown has rightly condemned this, but of course in the national accounts he himself has indulged in this in order to conceal the extent of his borrowings and liabilities.)
Short sellers would be ill advised to buy if they have strong suspicion that an adjustment in share price downwards will occur. They could gamble and make a profit, but only if the market agrees with their judgement on value. Or are the two clerics concerned not so much about the market mechanism, but rather more about the sums involved? This is a different argument.
The whole economic situation is also about misselling mortgage loans to people who would not be able to repay, because of the size of their debts and their incomes. These mortgage providers are also to be condemned. They should also be condemned for their parcelling up these doubtful mortgages into huge bundles to sell to unwary and greedy banks. Thus we have two more groups whose greed got the better of them.
Everything could have been better if the big players, Governments, had not been greedy for power. They pursued policies to avoid downturn (USA) or have a spending spree (UK), with interest rates low and looking kindly on their own borrowing and on the borrowing and debt positions of the public. People borrowed, encouraged by the higher values of assets, especially their houses. The percentage rate of income saved went down from about 9% in the Thatcher period to even under 1%. The people, like the UK Government, has no reserve to fall back if things turned unpleasant.
Fraser Nelson, in his message on the Coffee House blog yesterday, lists 4 occasions between September 2004 and September 2006, when the IMF or the Federal Reserve Board warned about the growth of indebtedness. The warnings went unheeded, or at least unacknowledged, as the pace of indebtedness continued.
The two archbishops were right to remind us that greed can lead to great problems, but it could be argued that they fell into a familiar trap in talking about an area they know little about, - the operation of financial markets, of condemning easy targets. They should made their accusations against those much more guilty, - those who lent to borrowers unlikely to be able to repay, bankers who did not trouble to ask about bundles of potentially bad debts, and Governments who were determined to counteract deflationary pressures (Greenspan) or deliver on social policies (Brown) with insufficient thought about what their policies might lead to in the future.
Doubtless short sellers are motivated by personal self-interest, but they also perform a function in market adjustments. If the shares are overvalued, that is represent a sum much larger than balance sheet assets, then normally the share price will tend to fall, or the company would seem to offer a prospective lender or share investor a misleading picture of the company. (This is particularly true if the company is concealing disadvantageous off- balance sheet items. Bottler Brown has rightly condemned this, but of course in the national accounts he himself has indulged in this in order to conceal the extent of his borrowings and liabilities.)
Short sellers would be ill advised to buy if they have strong suspicion that an adjustment in share price downwards will occur. They could gamble and make a profit, but only if the market agrees with their judgement on value. Or are the two clerics concerned not so much about the market mechanism, but rather more about the sums involved? This is a different argument.
The whole economic situation is also about misselling mortgage loans to people who would not be able to repay, because of the size of their debts and their incomes. These mortgage providers are also to be condemned. They should also be condemned for their parcelling up these doubtful mortgages into huge bundles to sell to unwary and greedy banks. Thus we have two more groups whose greed got the better of them.
Everything could have been better if the big players, Governments, had not been greedy for power. They pursued policies to avoid downturn (USA) or have a spending spree (UK), with interest rates low and looking kindly on their own borrowing and on the borrowing and debt positions of the public. People borrowed, encouraged by the higher values of assets, especially their houses. The percentage rate of income saved went down from about 9% in the Thatcher period to even under 1%. The people, like the UK Government, has no reserve to fall back if things turned unpleasant.
Fraser Nelson, in his message on the Coffee House blog yesterday, lists 4 occasions between September 2004 and September 2006, when the IMF or the Federal Reserve Board warned about the growth of indebtedness. The warnings went unheeded, or at least unacknowledged, as the pace of indebtedness continued.
The two archbishops were right to remind us that greed can lead to great problems, but it could be argued that they fell into a familiar trap in talking about an area they know little about, - the operation of financial markets, of condemning easy targets. They should made their accusations against those much more guilty, - those who lent to borrowers unlikely to be able to repay, bankers who did not trouble to ask about bundles of potentially bad debts, and Governments who were determined to counteract deflationary pressures (Greenspan) or deliver on social policies (Brown) with insufficient thought about what their policies might lead to in the future.
Thursday, 25 September 2008
We are all localists now?
This week Direct Democracy have published another volume, this one by Douglas Carswell and Daniel Hannan is entitled "Plan - Twelve Months to Renew Britain". I have ordered my copy and eagerly await its arrival.
It is in the "localist" tradition - the belief that all political decisions should be devolved to the lowest possible level consistent with efficient decision making. (A consequential belief is that if this were followed there would be a revival in democracy - that people would take note of what is happening locally, feel that their vote matters and turn out to vote without any dubious machinery such as proxy, postal or on-line voting. At present the turnout is often very small - hence all the attempts to persuade people to vote at all.)
I hope that a large proportion of Conservatives would subscribe to the principle of localism. Cartainly many of the leaders do, and Direct Democracy is an influential pressure group.
Clegg in his address to the LibDem Conference also claimed to be a localist. This may be true, but if so he is confused because he also argues for greater powers to the European Union, which is very remote and has a large democratic deficit.
NULabour, of course, tries to have it both ways, very much a centrist party with national targets and doing much of their ruling through quangos, as well as transferring powers away from local control to quangos. They keep up a pretence of local decision making by offering token referendums which are unlikely to have any effect on decisions in London.
I hope that Carswell and Hannan have proposed wholesale butchery with the quangos, those deeply wasteful, crony-stuffed, bodies who achieve little in many cases. I hope, too, that they have made proposals to repatriate powers from Brussels, which is productive only in heaping further and further negative restrictions on this country, - the playing field has been more than levelled, it is totally restrictive.
So let us have local financing, preferably by a sales tax replacing council tax, and local accountability, the people who are most affected being able to "eliminate" under-performing and wasteful public servants. The result, if transparency is encouraged rather than hindered, should be more efficient use of resources and greater correspondence with local wishes.
If their book is as good as their usual writings, then we shall have good proposals to consider, as well as a more eloquent exposition of the concept of localism than is here.
It is in the "localist" tradition - the belief that all political decisions should be devolved to the lowest possible level consistent with efficient decision making. (A consequential belief is that if this were followed there would be a revival in democracy - that people would take note of what is happening locally, feel that their vote matters and turn out to vote without any dubious machinery such as proxy, postal or on-line voting. At present the turnout is often very small - hence all the attempts to persuade people to vote at all.)
I hope that a large proportion of Conservatives would subscribe to the principle of localism. Cartainly many of the leaders do, and Direct Democracy is an influential pressure group.
Clegg in his address to the LibDem Conference also claimed to be a localist. This may be true, but if so he is confused because he also argues for greater powers to the European Union, which is very remote and has a large democratic deficit.
NULabour, of course, tries to have it both ways, very much a centrist party with national targets and doing much of their ruling through quangos, as well as transferring powers away from local control to quangos. They keep up a pretence of local decision making by offering token referendums which are unlikely to have any effect on decisions in London.
I hope that Carswell and Hannan have proposed wholesale butchery with the quangos, those deeply wasteful, crony-stuffed, bodies who achieve little in many cases. I hope, too, that they have made proposals to repatriate powers from Brussels, which is productive only in heaping further and further negative restrictions on this country, - the playing field has been more than levelled, it is totally restrictive.
So let us have local financing, preferably by a sales tax replacing council tax, and local accountability, the people who are most affected being able to "eliminate" under-performing and wasteful public servants. The result, if transparency is encouraged rather than hindered, should be more efficient use of resources and greater correspondence with local wishes.
If their book is as good as their usual writings, then we shall have good proposals to consider, as well as a more eloquent exposition of the concept of localism than is here.
Wednesday, 24 September 2008
Tighten the controls?
After the collapse of Enron the US authorities were determined to avert anthing of the same nature again. They passed the Sarbanes Oxley Act, with extra regulation to prevent it happening. The result was to reduce the efficiency of financial markets, and a further result was the move to London, which seemed a less troublesome centre.
Ironically banking impropriety still persisted in the USA, and led to sub-prime mortgage selling and derivatives to get rid of the risk.
So is the solution to tighten regulations and controls still further? This is what those on the left have screamed and Brown seems to be promising. (Don't worry, bankers, his promises never lead to anything except constant repetition!) He has recognised, however, that from the ease with which banking "moved" from the USA to London there will have to be cross world identical controls or banks will "move" again.
Anything which ossifies and prevents innovation, in banking and elsewhere, is usually bad in terms of costs and also in promoting still further ways of avoiding the controls. The supervisory and regulatory costs should not be underestimated, and neither should the costs of compliance and avoidance.
Is there another way?
If Governments did not intervene with great resources, as Greenspan did in the USA to stave off contraction by reducing interest rates almost to zero and Brown did implicitly in the UK by going for bust on tick, there would be less selling of houses to people who could not afford them and no artificial boom in house prices. Intervention has to take a major part of the blame for our present situation. Those who took great risks were merely responding.
What this is saying is that if the economy overheats then pumping money in will delay but not remove the correction which will come into many markets. It is not market failure alone or at all which has prompted this crisis, but governments who try to manipulate markets. The result is bigger failures and a loss of confidence in which banks fear to lend to banks! You need not be a monetarist to appreciate that pumping huge amounts of liquidity into an economy and keeping interest rates down will lead to a problem unless you are in the depths of recession.
If banks and others are likely to behave rashly, because they can expect a bail-out by Government, then there is an alternative to tying them up with endless red tape and standing over them like some Victorian headmaster. This is to use the law, - to make those guilty pay a price for hazarding their business. It will require the open publication of accounts, - no "off balance sheet items" - Brown is right, it's a pity that he does not practice what he preaches. It should encourage shareholder democracy. It will involve the prosecution or denunciation of the guilty. Above all, it will mean that some firms must be allowed to fail.
It will also require that such regulation as we already have is fully applied, and that regulators and monitors actually do their work. Whether the complicated tripartite system which Brown brought in, with overlapping and confusion between Treasury, Bank of England and Financial Services Authority, is fit for purpose, may be a legitimate question. It was surprising that those monitoring Northern Rock did not seem to see the vulnerability of the business plan of lending long term and borrowing short when times became difficult.
There will always be those who for political and ideological reasons wish to control and takeover. They should be resisted. So too should the government hubris which thinks it can permanently resist the pent up forces of the market. Finally if there is to be regulation, it must be firmly applied, if necessary with the full force of the law.
Ironically banking impropriety still persisted in the USA, and led to sub-prime mortgage selling and derivatives to get rid of the risk.
So is the solution to tighten regulations and controls still further? This is what those on the left have screamed and Brown seems to be promising. (Don't worry, bankers, his promises never lead to anything except constant repetition!) He has recognised, however, that from the ease with which banking "moved" from the USA to London there will have to be cross world identical controls or banks will "move" again.
Anything which ossifies and prevents innovation, in banking and elsewhere, is usually bad in terms of costs and also in promoting still further ways of avoiding the controls. The supervisory and regulatory costs should not be underestimated, and neither should the costs of compliance and avoidance.
Is there another way?
If Governments did not intervene with great resources, as Greenspan did in the USA to stave off contraction by reducing interest rates almost to zero and Brown did implicitly in the UK by going for bust on tick, there would be less selling of houses to people who could not afford them and no artificial boom in house prices. Intervention has to take a major part of the blame for our present situation. Those who took great risks were merely responding.
What this is saying is that if the economy overheats then pumping money in will delay but not remove the correction which will come into many markets. It is not market failure alone or at all which has prompted this crisis, but governments who try to manipulate markets. The result is bigger failures and a loss of confidence in which banks fear to lend to banks! You need not be a monetarist to appreciate that pumping huge amounts of liquidity into an economy and keeping interest rates down will lead to a problem unless you are in the depths of recession.
If banks and others are likely to behave rashly, because they can expect a bail-out by Government, then there is an alternative to tying them up with endless red tape and standing over them like some Victorian headmaster. This is to use the law, - to make those guilty pay a price for hazarding their business. It will require the open publication of accounts, - no "off balance sheet items" - Brown is right, it's a pity that he does not practice what he preaches. It should encourage shareholder democracy. It will involve the prosecution or denunciation of the guilty. Above all, it will mean that some firms must be allowed to fail.
It will also require that such regulation as we already have is fully applied, and that regulators and monitors actually do their work. Whether the complicated tripartite system which Brown brought in, with overlapping and confusion between Treasury, Bank of England and Financial Services Authority, is fit for purpose, may be a legitimate question. It was surprising that those monitoring Northern Rock did not seem to see the vulnerability of the business plan of lending long term and borrowing short when times became difficult.
There will always be those who for political and ideological reasons wish to control and takeover. They should be resisted. So too should the government hubris which thinks it can permanently resist the pent up forces of the market. Finally if there is to be regulation, it must be firmly applied, if necessary with the full force of the law.
Monday, 22 September 2008
...something for nothing...
Siren voices have been calling for windfall taxes again - we can get some more money for good purposes by taking it from "them", this time from the energy companies. So far the Government seems to have resisted them, and instead has leaned on the companies to give energy saving grants to older and poorer people, although these "leanings" are virtually the same as windfall taxes in their effects on the companies. (Of course, as has been pointed out a one-off temporary fuel price subsidy would not be as good as the permanent provision of insulation, which would reduce the energy cost of the consumer for years to come.)
There are always unforeseeable effects of windfall taxes, but enough is clear to make the idea seem worrying.
"They" are in fact us. If we are not wealthy and rely on shares in energy companies for our income or for the pension funds which provide our pensions, then we may be be taking from the poor to give to the poor in some measure.
Even if we control "them" with regulation, then they will certainly react to the imposition by reducing costs and/or investment even if they can't put prices up. The long term could thus be threatened.
One of the problem with windfall taxes is that they are "after the event", that is retrospective, plans were made in their absence and throw company plans into confusion, with companies affected differently because they are in different business phases.
Why hit "them" alone? Why not overpaid footballers who receive huge signing on fees and shares of transfer proceeds because they change club unexpectedly. Why not artists whose work suddenly becomes popular, or authors, or inventors? In fact why not all "sudden" incomes? We know why - it would discourage enterprise and risk taking. So if it is done it cannot be done on a regular basis.
If you tax away some windfall gains, will you compensate the tax payers in days of windfall losses, or pay back the taxes taken?
It is a short term policy with unpredictable long term consequences, and it is one that is selective and attacks "them" only.
There are always unforeseeable effects of windfall taxes, but enough is clear to make the idea seem worrying.
"They" are in fact us. If we are not wealthy and rely on shares in energy companies for our income or for the pension funds which provide our pensions, then we may be be taking from the poor to give to the poor in some measure.
Even if we control "them" with regulation, then they will certainly react to the imposition by reducing costs and/or investment even if they can't put prices up. The long term could thus be threatened.
One of the problem with windfall taxes is that they are "after the event", that is retrospective, plans were made in their absence and throw company plans into confusion, with companies affected differently because they are in different business phases.
Why hit "them" alone? Why not overpaid footballers who receive huge signing on fees and shares of transfer proceeds because they change club unexpectedly. Why not artists whose work suddenly becomes popular, or authors, or inventors? In fact why not all "sudden" incomes? We know why - it would discourage enterprise and risk taking. So if it is done it cannot be done on a regular basis.
If you tax away some windfall gains, will you compensate the tax payers in days of windfall losses, or pay back the taxes taken?
It is a short term policy with unpredictable long term consequences, and it is one that is selective and attacks "them" only.
...they never would be missed...
Over the week-end two more more emerged, although they had been expected.
One was a quango. For some time it has been apparent that the Standards Board, a product of Prescott lack of thinking, has been a terrible waste of time. Worse, - it has seen considerable injustice - vendettas by controlling groups against nuisance councillors, gagging councillors who have worked hardion an issue, councillors who had uncovered inconvenient hidden truths, and so on.
Now comes some evidence that the Board also spends millions of pounds wastefully in pursuing cases that were the product of spite or ignorance. On the "Dizzy Thinks" website the poster has calculated that between 2004 and 2008 the Board spent over £21 million in investigating 2,937 complaints. The vast majority, or 2,344 were found to be spurious or baseless. So if spending were roughly the same on all cases on the average, something like £16 million was spent on these spurious ones.
The second case also involves the ridiculous. Over the week end The Sunday Telegraph reported
that a secret Government report into HIPs (Home Information Packs) had been withheld. HIPs which cost a house seller about £600 have been condemned by buyers as generally useless. This finding was produced by the commissioned research.
It seems that estate agents condemn the reports, and buyers largely mistrust them and ignore them. Apart from all the committee time in drawing up the bills to put an act on the statute book, and nearly a million pounds in advertising the scheme, the result is a scheme which nobody wants and which nobody finds useful.
So why does the Government persevere? Well there is a "nice little earner", - a £200 fine for everybody who tries to sell a house without having assembled the pack, and there is an army of assessors trying to make a living from it. The largest single reason that Government pride is at stake when they are erecting a flimsy veneer of competence. The word "Sorry", and "We made a mistake" do not exist in the vocabulary of this Government, unless they are apologising for something done by Britons at least 150 years before.
One was a quango. For some time it has been apparent that the Standards Board, a product of Prescott lack of thinking, has been a terrible waste of time. Worse, - it has seen considerable injustice - vendettas by controlling groups against nuisance councillors, gagging councillors who have worked hardion an issue, councillors who had uncovered inconvenient hidden truths, and so on.
Now comes some evidence that the Board also spends millions of pounds wastefully in pursuing cases that were the product of spite or ignorance. On the "Dizzy Thinks" website the poster has calculated that between 2004 and 2008 the Board spent over £21 million in investigating 2,937 complaints. The vast majority, or 2,344 were found to be spurious or baseless. So if spending were roughly the same on all cases on the average, something like £16 million was spent on these spurious ones.
The second case also involves the ridiculous. Over the week end The Sunday Telegraph reported
that a secret Government report into HIPs (Home Information Packs) had been withheld. HIPs which cost a house seller about £600 have been condemned by buyers as generally useless. This finding was produced by the commissioned research.
It seems that estate agents condemn the reports, and buyers largely mistrust them and ignore them. Apart from all the committee time in drawing up the bills to put an act on the statute book, and nearly a million pounds in advertising the scheme, the result is a scheme which nobody wants and which nobody finds useful.
So why does the Government persevere? Well there is a "nice little earner", - a £200 fine for everybody who tries to sell a house without having assembled the pack, and there is an army of assessors trying to make a living from it. The largest single reason that Government pride is at stake when they are erecting a flimsy veneer of competence. The word "Sorry", and "We made a mistake" do not exist in the vocabulary of this Government, unless they are apologising for something done by Britons at least 150 years before.
Saturday, 20 September 2008
The new religion?
Religion has a reputation for being dogmatic and inflexible, and even persecuting those who do not subscribe tho their doctrines. There are two partly connected groups who are betraying some of this tolerance in extreme measures.
The first is the scientific lobby which attacks "creationism" with something of a so-called religious fervour. Here creationism means the belief that God created the universe in six days/periods, with all creatures fully developed, as recorded by the book of Genesis. Perhaps I have been guilty of over simplification of this tenet held by some Christians.
Recently the witch hunting resulted in the removal from office in the Royal Society of a scientist who did no more than say that if in science lessons a student raised the subject of creationism it would be appropriate to discuss the subject briefly in class. The vehemence with which certain scientists attack any "unorthodox" teaching suggests that they are motivated by more than open discussion of science. The dismissed officer does not subscribe to the "heresy" and was merely advocating that it be discussed when and if it arose.
My understanding of Karl Popper and others is that any scientific finding cannot be proved, and but only held "pro tem", in other words all scientific findings have a certain provisionality about them, that as yet no investigation has succeeded in dis-confirming the theory. It might be expected, then, that scientists would have a little more tolerance and humility. Of course as Kuhn has suggested (apparent) attacks on the existing paradigm are likely to evoke violent reaction on the part of those who have lived with and defend it.
So far suspected apostates have not been burned at the stake, but some who have dared to utter the word "Creationism" have been the subject of some vituperation.
The same fate has befallen those who have dared to challenge another area of science, namely global warming. Until recently there did seem to be a rise in global temperatures, and evidence which has be used to bolster the cause and include mankind and carbon as the cause has often been sought and then "adjusted".
The point I am making here is not that the theory is wrong, - most of us are not in a position to analyse the evidence or see where it has been misused. For the moment we could adopt the position that warming is occuring and that mankind is the cause.
The point here is that for some people, scientists and non-scientists alike, "global warning denial" is about on a par with "holocaust denial" of "creationism advocacy". It is true to say that global warming, if true and if likely to proceed at the rate claimed from forecasting models, is an imminent potential danger which must be taken seriously.
Those who question global warming and its cause have come under attack, even if or because of evidence they offer which the zealots seem to ignore. Christopher Booker and others regularly produce evidence which is awkward for the theory.
Both causes show certain traits of totalitarian control which occurred under Communism, - condemning those who sincerely think differently, perhaps even thinking of them as in need of treatment or behaviour modification, and certainly trying to suppress what opponents say.
There is no meeting of minds, a complete absence of calm discussion, merely the attempt to dominate people who do not share the received faith. In both the anti-creationist condemnation of deviants and in the shouting down of those less convinced about global warming, there is the intolerance of the bigot. The bigot seeks to use whatever pressure he can find to force people to share his own conviction.
The first is the scientific lobby which attacks "creationism" with something of a so-called religious fervour. Here creationism means the belief that God created the universe in six days/periods, with all creatures fully developed, as recorded by the book of Genesis. Perhaps I have been guilty of over simplification of this tenet held by some Christians.
Recently the witch hunting resulted in the removal from office in the Royal Society of a scientist who did no more than say that if in science lessons a student raised the subject of creationism it would be appropriate to discuss the subject briefly in class. The vehemence with which certain scientists attack any "unorthodox" teaching suggests that they are motivated by more than open discussion of science. The dismissed officer does not subscribe to the "heresy" and was merely advocating that it be discussed when and if it arose.
My understanding of Karl Popper and others is that any scientific finding cannot be proved, and but only held "pro tem", in other words all scientific findings have a certain provisionality about them, that as yet no investigation has succeeded in dis-confirming the theory. It might be expected, then, that scientists would have a little more tolerance and humility. Of course as Kuhn has suggested (apparent) attacks on the existing paradigm are likely to evoke violent reaction on the part of those who have lived with and defend it.
So far suspected apostates have not been burned at the stake, but some who have dared to utter the word "Creationism" have been the subject of some vituperation.
The same fate has befallen those who have dared to challenge another area of science, namely global warming. Until recently there did seem to be a rise in global temperatures, and evidence which has be used to bolster the cause and include mankind and carbon as the cause has often been sought and then "adjusted".
The point I am making here is not that the theory is wrong, - most of us are not in a position to analyse the evidence or see where it has been misused. For the moment we could adopt the position that warming is occuring and that mankind is the cause.
The point here is that for some people, scientists and non-scientists alike, "global warning denial" is about on a par with "holocaust denial" of "creationism advocacy". It is true to say that global warming, if true and if likely to proceed at the rate claimed from forecasting models, is an imminent potential danger which must be taken seriously.
Those who question global warming and its cause have come under attack, even if or because of evidence they offer which the zealots seem to ignore. Christopher Booker and others regularly produce evidence which is awkward for the theory.
Both causes show certain traits of totalitarian control which occurred under Communism, - condemning those who sincerely think differently, perhaps even thinking of them as in need of treatment or behaviour modification, and certainly trying to suppress what opponents say.
There is no meeting of minds, a complete absence of calm discussion, merely the attempt to dominate people who do not share the received faith. In both the anti-creationist condemnation of deviants and in the shouting down of those less convinced about global warming, there is the intolerance of the bigot. The bigot seeks to use whatever pressure he can find to force people to share his own conviction.
Friday, 19 September 2008
Helping the poorest
Clegg the convulsive, in his party leader's speech this week, claimed that his party is the fairest. I presume he didn't mean blondest.
Give credit to all the parties for being aware of the huge problems faced by the poorest members of our society, especially from leaping energy prices and soaring food prices.
All parties agree that tax allowances start at too low a figure. Being taxed on incomes as little as £6,000 means that someone on minimum wage level, or over £200 for a full week, will pay tax on something like £5,000 of their income. This cannot be right. Most people feel that the tax allowances ought to be raised to at least £11,000.
Differences between the parties appear here. Clegg proposes to sting the rich for much more, in order to raise the tax threshold. Gordon Brown suggests more emphasis on the tax credit system, which is not attractive in view of the administration costs and the frequent mistakes they make. We have yet to hear from the Conservatives, on short term and immediate help, but so far they have made proposals for long term change, involving time limited benefits and help for people to get back into the labour force, the way pioneered by Wisconsin.
There is a further problem for people on low incomes. Calculations were recently made by one of the professional (i.e not a political party) bodies. It pointed out that a couple with one child and with total income of £100 per week, if able to double their income to £200 per week would increase their income by merely £5 per week. The reason is that the Government would extract tax and reduce benefits.
This is an example of the so-called poverty trap, a major discouragement for some poeple to look for work. Taxes are too vicious and/or benefits too generous. It was in a (futile) attempt to deal with this that Gordon Brown brought in the expensive and over-complicated "Working Tax credit".
In the end, however the problem is to be solved, some more money must be found to lift the low income groups out of poverty, either higher benefits and pensions or lower taxes, or both. The trouble is that for the foreseeable future the Government will be short of money, and cannot afford to do this.
The Clegg solution is at least simple (- in appearance). Taxes on people above a certain level should be increased. They are few and do not carry many votes, so their preferences need not be considered. In order to gain sufficient financial resources "the rich" would have to extend down to the not very rich level, and some could decamp and prefer another tax regime overseas.
What effect this might have on incentives to work is difficult to know. It would certainly take a few years to cause many to look for work. Many are unfit or unqualified and have their lifestyle established. In any case job vacancies will tend to dry up in the (near) recession.
It is unlikely that the Brown or Conservative proposals would encourage many back to work quickly, but in so far as they succeed there will obviously be more tax taken in and less benfit paid out, so the Government would have some resources with which to finance higher benefits and pensions.
Give credit to all the parties for being aware of the huge problems faced by the poorest members of our society, especially from leaping energy prices and soaring food prices.
All parties agree that tax allowances start at too low a figure. Being taxed on incomes as little as £6,000 means that someone on minimum wage level, or over £200 for a full week, will pay tax on something like £5,000 of their income. This cannot be right. Most people feel that the tax allowances ought to be raised to at least £11,000.
Differences between the parties appear here. Clegg proposes to sting the rich for much more, in order to raise the tax threshold. Gordon Brown suggests more emphasis on the tax credit system, which is not attractive in view of the administration costs and the frequent mistakes they make. We have yet to hear from the Conservatives, on short term and immediate help, but so far they have made proposals for long term change, involving time limited benefits and help for people to get back into the labour force, the way pioneered by Wisconsin.
There is a further problem for people on low incomes. Calculations were recently made by one of the professional (i.e not a political party) bodies. It pointed out that a couple with one child and with total income of £100 per week, if able to double their income to £200 per week would increase their income by merely £5 per week. The reason is that the Government would extract tax and reduce benefits.
This is an example of the so-called poverty trap, a major discouragement for some poeple to look for work. Taxes are too vicious and/or benefits too generous. It was in a (futile) attempt to deal with this that Gordon Brown brought in the expensive and over-complicated "Working Tax credit".
In the end, however the problem is to be solved, some more money must be found to lift the low income groups out of poverty, either higher benefits and pensions or lower taxes, or both. The trouble is that for the foreseeable future the Government will be short of money, and cannot afford to do this.
The Clegg solution is at least simple (- in appearance). Taxes on people above a certain level should be increased. They are few and do not carry many votes, so their preferences need not be considered. In order to gain sufficient financial resources "the rich" would have to extend down to the not very rich level, and some could decamp and prefer another tax regime overseas.
What effect this might have on incentives to work is difficult to know. It would certainly take a few years to cause many to look for work. Many are unfit or unqualified and have their lifestyle established. In any case job vacancies will tend to dry up in the (near) recession.
It is unlikely that the Brown or Conservative proposals would encourage many back to work quickly, but in so far as they succeed there will obviously be more tax taken in and less benfit paid out, so the Government would have some resources with which to finance higher benefits and pensions.
Thursday, 18 September 2008
A (re)move too far!
In a proposal which would indicate the ultimate statehood of the European Union, the European Parliament this week adopted an EU proposal that would allow citizens to be extradited automatically to another EU country having been convicted in a foreign court in their absence.
This is apparently a refinement to the controversial European Arrest Warrant system, whereby Britons could suddenly find themselves arrested and deported and imprisoned without even knowing with that they had been charged. (There is a condition that the foreign Government must inform the citizen of the impending trial, but he or she does not have to be told in person.)There would be no need to present prima facie evidence in this country. The trial could have concluded, and British courts would be powerless to protect us.
The impetus is not onlyto further the objective of "Europe" as a nation, among many others which have concerned us over the years. It is also in part a response to the growing security threat posed by international terrorism.
There are some countries which to some agree permit trial in absentia, but Britain will have been added to that number.
Worse still, the range of 32 crimes which could be encompassed would not only include very serious crimes such as rape or murder, but also even "crimes" such as "xenophobia" which is not recognised as a crime in the UK, and probably in the future if not not now "holocaust denial".
Shadow Home Secretary Dominic Grieve, has described the proposal as being "incompatible with the principles of British justice." Jack Straw has given backing to it as a way of improving mutual trust among the 27 EU countries.
A number of criminal bar associations and other bodies have registered objections as removing the fundamental rights of the accused, - to hear what he is accused of, to enter a defence and to be represented by a counsel of his choice. There is also anxiety that Greece will make most use of the provision, and other states where justice systems are widely regarded as corrupt.
It is not into law yet. National Governments have to give final approval later this year. As Jack Straw has given the sorry mess his seal of approval, don't hold your breath in hope!
This is apparently a refinement to the controversial European Arrest Warrant system, whereby Britons could suddenly find themselves arrested and deported and imprisoned without even knowing with that they had been charged. (There is a condition that the foreign Government must inform the citizen of the impending trial, but he or she does not have to be told in person.)There would be no need to present prima facie evidence in this country. The trial could have concluded, and British courts would be powerless to protect us.
The impetus is not onlyto further the objective of "Europe" as a nation, among many others which have concerned us over the years. It is also in part a response to the growing security threat posed by international terrorism.
There are some countries which to some agree permit trial in absentia, but Britain will have been added to that number.
Worse still, the range of 32 crimes which could be encompassed would not only include very serious crimes such as rape or murder, but also even "crimes" such as "xenophobia" which is not recognised as a crime in the UK, and probably in the future if not not now "holocaust denial".
Shadow Home Secretary Dominic Grieve, has described the proposal as being "incompatible with the principles of British justice." Jack Straw has given backing to it as a way of improving mutual trust among the 27 EU countries.
A number of criminal bar associations and other bodies have registered objections as removing the fundamental rights of the accused, - to hear what he is accused of, to enter a defence and to be represented by a counsel of his choice. There is also anxiety that Greece will make most use of the provision, and other states where justice systems are widely regarded as corrupt.
It is not into law yet. National Governments have to give final approval later this year. As Jack Straw has given the sorry mess his seal of approval, don't hold your breath in hope!
They have too much time on their hands
The European Union declares war on small garages!
They are about to scrap a rule which allows thousands of small garages to carry out repairs and servicing. At the moment manufacturers are obliged to provide parts and computer codes to independent garages. The change is due to happen in 2010, and as many as 20 million motorists could be affected here.
Of course, the manufacturers could continue to supply the computer codes, but I wouldn't bet on it. Expect small garages to close fairly rapidly. They could continue to supply parts to DIY mechanics, but why should they?
The likely consequences are not difficult to imagine. Already hourly charges in the (main) dealers are approaching twice what they are in small independents, something like £95 as against £56. It is difficult to see the higher figure being reduced, especially if the dealers have to fetch more customers, or provide more courtesy cars, and if they have accept greater overheads as they extend the number of dealerships.
Make no mistake, if small independent garages are removed, repairs and servicing will be remote and more expensive.
Manufacturers must be rubbing their hands in anticipation, and their bankers with them. It is difficult to disagree with the statement that monopoly is everywhere likely to be be wasteful, costly and detrimental to the people. If competition is removed, the monopolist can have a field day. Of course Governments could always appoint "Offmot" to regulate and control, but this, too, is expensive.
They are about to scrap a rule which allows thousands of small garages to carry out repairs and servicing. At the moment manufacturers are obliged to provide parts and computer codes to independent garages. The change is due to happen in 2010, and as many as 20 million motorists could be affected here.
Of course, the manufacturers could continue to supply the computer codes, but I wouldn't bet on it. Expect small garages to close fairly rapidly. They could continue to supply parts to DIY mechanics, but why should they?
The likely consequences are not difficult to imagine. Already hourly charges in the (main) dealers are approaching twice what they are in small independents, something like £95 as against £56. It is difficult to see the higher figure being reduced, especially if the dealers have to fetch more customers, or provide more courtesy cars, and if they have accept greater overheads as they extend the number of dealerships.
Make no mistake, if small independent garages are removed, repairs and servicing will be remote and more expensive.
Manufacturers must be rubbing their hands in anticipation, and their bankers with them. It is difficult to disagree with the statement that monopoly is everywhere likely to be be wasteful, costly and detrimental to the people. If competition is removed, the monopolist can have a field day. Of course Governments could always appoint "Offmot" to regulate and control, but this, too, is expensive.
Legally bound
Companies in this country have begun to dribble away to other jurisdictions, especially to Ireland. The explanation usually given is that corporation taxes are lower there.
This is true, - our tax rates are not competitive, and we stand to lose more, although some by nature of their local involvement may be reluctant. or may be too small to consider it.
Smaller companies probably suffer from a further problem which is less difficult for larger companies , which probably have their own "in house" legal section. I refer, of course, to what is commonly known as "re-tape" - regulation imposed by force of legal "red" ribbon.
A week ago it was revealed that when Tolley's Tax Handbook for 2008 was published, company tax law has doubled in the 10 years since Nulabour came to power. This year it has 10,134 pages, in four volumes compared to the 4,998 pages in two volumes in 1997. It was kept from 10,900 pages in five volumes only because the publisher changed the page layout and crammed more words on each page.
This is the bible which not only grows with new laws but also by many ammendments to existing and previous editions. Someone will have the unenviable task of reading everything and considering the implications of new laws and amendments. I am sure that some sort of summary of changes will have been made, but everything has also to be looked at in context.
It is not difficult to see why especially smaller firms find this whole business of getting informed and complying with new and changed regulations very expensive.
The book is about the tax law under which firms must operate. There are other areas - Health and Safety, for instance, with separate "libraries" demanding compliance. Add all this regulation up and there is a very strong disincentive for incorporation, despite its other attractions, to enable smaller enterprises to expand, and a strong incentive to re-locate elsewhere.
Whether the intention is to increase their tax-take or to micro-control, the effect is to drive firms elsewhere and make it more difficult for small firms to grow.
What a Government!
This is true, - our tax rates are not competitive, and we stand to lose more, although some by nature of their local involvement may be reluctant. or may be too small to consider it.
Smaller companies probably suffer from a further problem which is less difficult for larger companies , which probably have their own "in house" legal section. I refer, of course, to what is commonly known as "re-tape" - regulation imposed by force of legal "red" ribbon.
A week ago it was revealed that when Tolley's Tax Handbook for 2008 was published, company tax law has doubled in the 10 years since Nulabour came to power. This year it has 10,134 pages, in four volumes compared to the 4,998 pages in two volumes in 1997. It was kept from 10,900 pages in five volumes only because the publisher changed the page layout and crammed more words on each page.
This is the bible which not only grows with new laws but also by many ammendments to existing and previous editions. Someone will have the unenviable task of reading everything and considering the implications of new laws and amendments. I am sure that some sort of summary of changes will have been made, but everything has also to be looked at in context.
It is not difficult to see why especially smaller firms find this whole business of getting informed and complying with new and changed regulations very expensive.
The book is about the tax law under which firms must operate. There are other areas - Health and Safety, for instance, with separate "libraries" demanding compliance. Add all this regulation up and there is a very strong disincentive for incorporation, despite its other attractions, to enable smaller enterprises to expand, and a strong incentive to re-locate elsewhere.
Whether the intention is to increase their tax-take or to micro-control, the effect is to drive firms elsewhere and make it more difficult for small firms to grow.
What a Government!
Wednesday, 17 September 2008
The cost of remaining here
A few days ago I posted a message about the red tape costs of a company in the UK, in respect of compliance on tax law (-this was mistakenly posted on our news board, I'm sorry).
I have now become aware of the finding of KPMG in their annual comparison of corporation taxes, which was published recently. It gives further reasons why companies which are able to are beginning to leave the UK, this time not to avoid costly red tape but to find lower company taxes.
In most countries in the world corporation taxes are continuing to fall. These are the result of the analysis for 2008:
1) In 109 countries analysed the average corporation tax rate is 26% (In the UK it is 28%)
2) In OECD countries it is 27% (down 11% in the past 12 years.) (In the UK it is 28%)
3) In the EU the average rate is 23%, down from 38% in 1996. (In the UK it is 28%)
With many EU countries, therefore, the UK is at a competitive disadvantage. In particular, the rate in Ireland is 12.5%, less than half what it is the UK. Little wonder that companies are beginning to slip across the Irish Sea!
Companies which decide to locate or relocate elsewhere are not being unreasonable. They are merely making the most of their resources in the light of prevailing business conditions. Location is one of a variety of factors they must consider. When you add legal complexity and other costly compliance costs, the U.K. must have significant advantages in other areas to attract and hold companies here.
I have now become aware of the finding of KPMG in their annual comparison of corporation taxes, which was published recently. It gives further reasons why companies which are able to are beginning to leave the UK, this time not to avoid costly red tape but to find lower company taxes.
In most countries in the world corporation taxes are continuing to fall. These are the result of the analysis for 2008:
1) In 109 countries analysed the average corporation tax rate is 26% (In the UK it is 28%)
2) In OECD countries it is 27% (down 11% in the past 12 years.) (In the UK it is 28%)
3) In the EU the average rate is 23%, down from 38% in 1996. (In the UK it is 28%)
With many EU countries, therefore, the UK is at a competitive disadvantage. In particular, the rate in Ireland is 12.5%, less than half what it is the UK. Little wonder that companies are beginning to slip across the Irish Sea!
Companies which decide to locate or relocate elsewhere are not being unreasonable. They are merely making the most of their resources in the light of prevailing business conditions. Location is one of a variety of factors they must consider. When you add legal complexity and other costly compliance costs, the U.K. must have significant advantages in other areas to attract and hold companies here.
Tuesday, 16 September 2008
Has the law lost all objectivity?
Last week in Maidstone Crown Court six intrepid climate change protesters who climbed to the top of the chimney at Kingsnorth power station, but also did damage costed at £30,000, were cleared of causing the damage.
Their defence was based on a clause in the law which can excuse damage if it is the result of action to prevent a greater evil. So, for instance, if you broke into property and did considerable damage because you could prevent imminent danger to many people or to other property, you could expect to be cleared.
The difficulty comes when your assessment may not be shared by others, as in the case where women broke into an establishment and did much damage to aircraft, or when animal rights protesters damage laboratories or wound scientists out of their convictions.
In Maidstone, the defenders produced experts who claimed that the connection between coal-fired power stations and global warming is demonstrable and could never be altered. (Such connections are denied by many - see the writings of Christopher Booker.)
The conclusion seems to be that motivation is everything, and the legal escape clause offers an excuse if you can persuade judge or jury that your motives were of the highest and would make your action serve a greater good.
If this principle had been applied in previous generations the trade union movement could have been much more violent and destructive, the suffragettes would not have been imprisoned and military discipline could have been much harsher.
But the whole legal process would have had a strong streak of anarchy and inconsistency, the rule of law would have become no more than a tendency to law. In a word common life would have become impossible, and a jungle.
Their defence was based on a clause in the law which can excuse damage if it is the result of action to prevent a greater evil. So, for instance, if you broke into property and did considerable damage because you could prevent imminent danger to many people or to other property, you could expect to be cleared.
The difficulty comes when your assessment may not be shared by others, as in the case where women broke into an establishment and did much damage to aircraft, or when animal rights protesters damage laboratories or wound scientists out of their convictions.
In Maidstone, the defenders produced experts who claimed that the connection between coal-fired power stations and global warming is demonstrable and could never be altered. (Such connections are denied by many - see the writings of Christopher Booker.)
The conclusion seems to be that motivation is everything, and the legal escape clause offers an excuse if you can persuade judge or jury that your motives were of the highest and would make your action serve a greater good.
If this principle had been applied in previous generations the trade union movement could have been much more violent and destructive, the suffragettes would not have been imprisoned and military discipline could have been much harsher.
But the whole legal process would have had a strong streak of anarchy and inconsistency, the rule of law would have become no more than a tendency to law. In a word common life would have become impossible, and a jungle.
Not me Gov....
Douglas Carswell, M.P., today on his website accuses Big Government of making the credit crunch which is now causing so much havoc.
He is surely right, that they have made a great contribution to the problem. In the USA at times the Federal Reserve Bank pushed interest rates down, to almost zero at times. This was for the best of motives, - to stave off economic recession, but it also had the effect of hindering the "market" from making necessary corrections. A consequence was an expansion of borrowing and a reduction in saving. Many people have learned to live on credit and have risked more than they could repay in their borrowing.
In the UK Chancellor Brown also presided over an unsustainable expansion of credit, by the Government and by too many citizens. Here, too, staff sizes became swollen and inefficient practices tolerated. If there was to be a downturn many companies and individuals would pay a price for their profligacy.
Normally an overheating economy will succumb to problems like inflation, he proudly boasted that he had conquered this. He had done nothing like this, rather he had been saved by the Chinese "miracle" which reduced the prices of manufactured goods and largely neutralised tendencies for prices to rise elsewhere in the economy. But "white good" price reductions were merely holding a lid on inflationary effects, and once the former began to tail off there would inflationary pressures added to credit problems.
The other effect that "growth without inflation" had was to raise confidence very high. Gordon was the magician, a ten year miracle worker, or so he said. Once confidence goes, of course, everything collapses like a pack of cards. The cold light of day disperses the rosy hue. Now, even though they have money, the banks have fear about lending.
Douglas Carswell is right, big Government is largely responsible for the the mess. The message must be conveyed to those with siren voices who are calling for significant cuts in interest rates. There is no painless adjustment in the housing market or elsewhere, and doing an Alan Greenspan in rate reductions will do little while confidence is low, and may even exacerbate adjustments.
The other guilty party is the greedy fat-cat bankers, who responded to the apparently benign economic conditions by making risky investments and taking great risks. Their defence is, I suppose, that it was the actions of the Governments which encouraged their "gambling" and over stretching. If so, their guilt is secondary!
Nulabour seems to be arguing that we must persevere with Ditherer Brown because he alone can deal with the mess. As it was largely his policies that made us so vulnerable in the first place, this seems to defy logic. It's like putting a convicted burglar in charge of all security systems!
He is surely right, that they have made a great contribution to the problem. In the USA at times the Federal Reserve Bank pushed interest rates down, to almost zero at times. This was for the best of motives, - to stave off economic recession, but it also had the effect of hindering the "market" from making necessary corrections. A consequence was an expansion of borrowing and a reduction in saving. Many people have learned to live on credit and have risked more than they could repay in their borrowing.
In the UK Chancellor Brown also presided over an unsustainable expansion of credit, by the Government and by too many citizens. Here, too, staff sizes became swollen and inefficient practices tolerated. If there was to be a downturn many companies and individuals would pay a price for their profligacy.
Normally an overheating economy will succumb to problems like inflation, he proudly boasted that he had conquered this. He had done nothing like this, rather he had been saved by the Chinese "miracle" which reduced the prices of manufactured goods and largely neutralised tendencies for prices to rise elsewhere in the economy. But "white good" price reductions were merely holding a lid on inflationary effects, and once the former began to tail off there would inflationary pressures added to credit problems.
The other effect that "growth without inflation" had was to raise confidence very high. Gordon was the magician, a ten year miracle worker, or so he said. Once confidence goes, of course, everything collapses like a pack of cards. The cold light of day disperses the rosy hue. Now, even though they have money, the banks have fear about lending.
Douglas Carswell is right, big Government is largely responsible for the the mess. The message must be conveyed to those with siren voices who are calling for significant cuts in interest rates. There is no painless adjustment in the housing market or elsewhere, and doing an Alan Greenspan in rate reductions will do little while confidence is low, and may even exacerbate adjustments.
The other guilty party is the greedy fat-cat bankers, who responded to the apparently benign economic conditions by making risky investments and taking great risks. Their defence is, I suppose, that it was the actions of the Governments which encouraged their "gambling" and over stretching. If so, their guilt is secondary!
Nulabour seems to be arguing that we must persevere with Ditherer Brown because he alone can deal with the mess. As it was largely his policies that made us so vulnerable in the first place, this seems to defy logic. It's like putting a convicted burglar in charge of all security systems!
Saturday, 13 September 2008
More cotton wool
The Times reports today on some detective work by MP Greg Hands.
Greg, by using the powers of the Freedom of Information Act, has uncovered the fact that local councils throughout the country are engaged in removing, or recessing into the ground, thousands of tombstones.
In the last three years in London alone 9,463 headstones and memorials have been moved in this way. The cost runs into millions of pounds.
The reason given by Greg is the concern on the part of the Health and Safety Executive that grave diggers or the general public could be harmed by falling stones. They have leaned on local councils to put arrangements in place.
Our guardians, who do not trust us to make safe decisions and assume that we will act recklessly, have exceeded themselves on this occasion. They are responsible for spending the money, - the Times includes the estimate of £15 nationally for moving 76,000 stones, on something with a very low risk. Would it not be more effective to do the other thing, -they enjoy regulation as well, to require local grave trusts to do regular inspections?
It is true that stones do occasionally collapse, and people may have been injured, but there are surely bigger risks elsewhere where the money could be more wisely spent.
Greg Hands himself suggests that people are 4,000 times more likely to be injured by a bendy bus than by a headstone in a graveyard. The conclusion is obvious as to where the money should be spent.
Greg, by using the powers of the Freedom of Information Act, has uncovered the fact that local councils throughout the country are engaged in removing, or recessing into the ground, thousands of tombstones.
In the last three years in London alone 9,463 headstones and memorials have been moved in this way. The cost runs into millions of pounds.
The reason given by Greg is the concern on the part of the Health and Safety Executive that grave diggers or the general public could be harmed by falling stones. They have leaned on local councils to put arrangements in place.
Our guardians, who do not trust us to make safe decisions and assume that we will act recklessly, have exceeded themselves on this occasion. They are responsible for spending the money, - the Times includes the estimate of £15 nationally for moving 76,000 stones, on something with a very low risk. Would it not be more effective to do the other thing, -they enjoy regulation as well, to require local grave trusts to do regular inspections?
It is true that stones do occasionally collapse, and people may have been injured, but there are surely bigger risks elsewhere where the money could be more wisely spent.
Greg Hands himself suggests that people are 4,000 times more likely to be injured by a bendy bus than by a headstone in a graveyard. The conclusion is obvious as to where the money should be spent.
Thursday, 4 September 2008
Where next, in the womb?
The ever-extending tentacles of Government targets and control is now reaching nursery schools, playgroups and registered child-minders.
All children are to be given a good start in their education, in fact all are to "have the same start" in the "nappy curriculum" laid down. This will affect children as young as three, if their parents make use of such pre-school activities.
The object is laudable - that all children should master a wide range of writing, counting and problem solving skills before they leave reception class at primary school. This will include ability to write in sentences, using punctuation.
This will include no less than 69 targets to be met for each child. Oh dear, - it is not difficult to see child minders and nursery teachers feeling that the burden has at last reached them. On top of all the requirements of teaching and childcare will be the form filling and administration.
That primary education is failing is obvious, and has been for many years. Wasn't it Prime Minister Callaghan who determined to do something about it. The Tories tried, and Blairites had endless policy changes, - a tradition now taken up by the Brownites.
Why is it necessary? People of my generation remember going to school aged five with some ability in reading and writing, to be taught in very large classes (- I remember aged 7 being in a class of 45 in a room so crowded that present day fire regulations would all have been broken.) Yet there was virtually universal literacy, even among those of apparently less academic ability.
Two things were different.Firstly, our parents had time to introduce us to the wonder of books, and help us to spot words and spell. Present day parents, both working if there are two, lack the time and energy. Secondly television didn't exist or had limited hours, and there were no video recorders or DVD players to keep children quiet. We played outside in ways now thought risky, and indoors we developed a love of reading.
The problem, as in the broken society, is parents who are not entirely literate themselves and who lack the time and energy to help their children in this area. Parents with a greater vision already read with their children and support what schools are doing for them.
This is surely where the Government should start. Children of parents like mine will tick all the 69 boxes easily, but there will be others who because of circumstances will fail in this parental duty. The Government's bureaucratic, top-down imposition runs the risk of failing both groups.
Perhaps it is parents who need to pass, and be helped to pass, the 69 tests!
All children are to be given a good start in their education, in fact all are to "have the same start" in the "nappy curriculum" laid down. This will affect children as young as three, if their parents make use of such pre-school activities.
The object is laudable - that all children should master a wide range of writing, counting and problem solving skills before they leave reception class at primary school. This will include ability to write in sentences, using punctuation.
This will include no less than 69 targets to be met for each child. Oh dear, - it is not difficult to see child minders and nursery teachers feeling that the burden has at last reached them. On top of all the requirements of teaching and childcare will be the form filling and administration.
That primary education is failing is obvious, and has been for many years. Wasn't it Prime Minister Callaghan who determined to do something about it. The Tories tried, and Blairites had endless policy changes, - a tradition now taken up by the Brownites.
Why is it necessary? People of my generation remember going to school aged five with some ability in reading and writing, to be taught in very large classes (- I remember aged 7 being in a class of 45 in a room so crowded that present day fire regulations would all have been broken.) Yet there was virtually universal literacy, even among those of apparently less academic ability.
Two things were different.Firstly, our parents had time to introduce us to the wonder of books, and help us to spot words and spell. Present day parents, both working if there are two, lack the time and energy. Secondly television didn't exist or had limited hours, and there were no video recorders or DVD players to keep children quiet. We played outside in ways now thought risky, and indoors we developed a love of reading.
The problem, as in the broken society, is parents who are not entirely literate themselves and who lack the time and energy to help their children in this area. Parents with a greater vision already read with their children and support what schools are doing for them.
This is surely where the Government should start. Children of parents like mine will tick all the 69 boxes easily, but there will be others who because of circumstances will fail in this parental duty. The Government's bureaucratic, top-down imposition runs the risk of failing both groups.
Perhaps it is parents who need to pass, and be helped to pass, the 69 tests!
Wednesday, 3 September 2008
Are they serious?
Gordon Brown, fresh from his near appearance at the Olympic games, reiterated his promise that we shall do everything well in the 2012 Olympics, including in performance by our athletes. He will not be in power by then, we hope, but he claims that his government will set things up for success.
Do you believe him?
This from a Government which declared in its manifesto in 1997 that it would end the selling off of school playing fields. It claims that just 192 have been sold since, but independent estimates say the figure is nearer 2,000. Even Government departments admit that developers have built on 1,331 smaller fields since 2001.
This was the Government which raided "lottery funds" to supplement general Government spending, and reduced the possibility for culture or sport to enjoy finance. It is not easy to determine how much more money has been lost to the causes intended by the Lottery, but it runs into billions of pounds.
This is the Government which, with its left wing fellow travellers, discouraged competitive sport, presumably on the grounds that it did not like some to be labelled "losers". They seem to have undergone a late conversion, perhaps in an effort to repair their shattered reputation. Spending on sport, or any other good cause, to promote the reputation of the Government, will not succeed, unless it is done with the whole-hearted totalitarianism which used to be shown in Soviet Russia and its satellites.
Generally in this country community faciltities for sport are poorer than in most other European countries. In France there is one 50 metre swimming pool for every 650,000 people, but in Britain it is one for every 2.5 million. There is still a chronic shortage of gym facilities.
Even though recently money has been spent on our elite athletes, with the result that we achieved more medals in China, little has been done to improve community sports facilitities to produce athletes in the future. In the 1970s there were 298 community pools with diving boards. Now there are 84 for the whole of Britain. In Britain there are four fewer cycling tracks than there were in 1997!
The Government was quick to claim credit for medals won in Beijing, when in fact it was doing little more than using the Lottery money belatedly more in the way intended. But its view is very short-sighted, - a few successes to gain political credit.
Conscious of the spiralling Olympic construction and other costs, the Government has said that no cost overrun will be permitted. If costs exceed target in some areas, then savings must be found elsewhere. Their new-found enthusiasm for medals is only skin deep.
Do you believe him?
This from a Government which declared in its manifesto in 1997 that it would end the selling off of school playing fields. It claims that just 192 have been sold since, but independent estimates say the figure is nearer 2,000. Even Government departments admit that developers have built on 1,331 smaller fields since 2001.
This was the Government which raided "lottery funds" to supplement general Government spending, and reduced the possibility for culture or sport to enjoy finance. It is not easy to determine how much more money has been lost to the causes intended by the Lottery, but it runs into billions of pounds.
This is the Government which, with its left wing fellow travellers, discouraged competitive sport, presumably on the grounds that it did not like some to be labelled "losers". They seem to have undergone a late conversion, perhaps in an effort to repair their shattered reputation. Spending on sport, or any other good cause, to promote the reputation of the Government, will not succeed, unless it is done with the whole-hearted totalitarianism which used to be shown in Soviet Russia and its satellites.
Generally in this country community faciltities for sport are poorer than in most other European countries. In France there is one 50 metre swimming pool for every 650,000 people, but in Britain it is one for every 2.5 million. There is still a chronic shortage of gym facilities.
Even though recently money has been spent on our elite athletes, with the result that we achieved more medals in China, little has been done to improve community sports facilitities to produce athletes in the future. In the 1970s there were 298 community pools with diving boards. Now there are 84 for the whole of Britain. In Britain there are four fewer cycling tracks than there were in 1997!
The Government was quick to claim credit for medals won in Beijing, when in fact it was doing little more than using the Lottery money belatedly more in the way intended. But its view is very short-sighted, - a few successes to gain political credit.
Conscious of the spiralling Olympic construction and other costs, the Government has said that no cost overrun will be permitted. If costs exceed target in some areas, then savings must be found elsewhere. Their new-found enthusiasm for medals is only skin deep.
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