My devoted reader(s) will have noticed a recurrent theme in my more serious posts, which is the idea of intellectual honesty.  It seems to me that partisans of a particular view point too often assume that 100% of the evidence is on their side, and that there is nothing to be said for any contrary view.  Any evidence suggesting that their view is wrong must be weak or fiddled.  This is known as confirmation bias or, less technically, wishful thinking.  Let’s look at some examples:

• Those who believe in God and religion say that religion is a force for good, encouraging magnificent art, charitable activity and good behaviour. Those who do not believe in God believe that religion is the cause of much evil in the world: child abuse, conflict, AIDS, wealth and income inequality.  Now, the problem is that both these arguments ignore the quest for truth. Either God exists or he doesn’t: the effects of religion are a different issue. It is logically possible for religion to help people behave well even if there is no God; or for organised religion to support evil even if there is one.  To take an example: I am quite sure there is no God, but my mother got great consolation from her Christian faith when coping with family tragedies, like the death of my brother.
• Those who are opposed to fluoridation of water do so on the grounds that compulsory medication of a population is unethical (a philosophical viewpoint) and fluoride is a damaging chemical that causes a wide range of illnesses (a scientific assertion). Again, these two views are independent.  It is entirely possible to believe that fluoride is harmless (or even beneficial) to health, but that it is wrong to deliver it to people on what is effectively a compulsory basis.  But the antis do not seem content to have this simple (and, it seems to me, wholly arguable) view: they feel the need to ally themselves with a lot of conspiracy theory
• People who advocate low taxes because they like small government (and, being rich, don’t want to help the poor) say that high taxes are a disincentive to effort, and reducing taxes will boost the economy and might even increase the amount of taxation received. Those who look for a more egalitarian solution say there is no evidence that low taxes help the economy or that its benefits trickle down to the poor. But nobody says we should help the poor even if it slows our growth rate, even though there are a few rich men (Warren Buffett a shining example) who say that it wouldn’t hurt the economy if they paid more tax. But it’s an entirely logical view, based on the idea that extra wealth for the very rich yields less satisfaction and benefit than a smaller amount of wealth delivered to the poor. (Pedants may wish to look up marginal utility justification of progressive tax.).
• The arguments about capital punishment, again, have moral and factual aspects. Many people (including myself) find it morally repugnant for the state to put people to death. Others feel that some crimes deserve the ultimate sanction.  These are ethical arguments, and are not susceptible to evidential support.  You either believe it’s right or wrong.  But there are also some factual questions which bear on the debate: how many errors are made in executions, for example, or whether capital punishment deters offenders.  Again, one can logically mix these views.  I could say, for example, that even if hanging does deter offenders, it is still ethically wrong.  A pro-capital punishment person could say that execution should be retained, even if it deters no-one.  But what in practice happens is that people believe the factual evidence supports their moral stance.  Look, for example, at the way that the two camps assess the numbers of innocent people wrongly executed.  The pros say it’s a trifling number, the antis say there are many.
  The same argument is made about torture.  Those who oppose it on moral grounds say it does not yield useful information: under extreme pain, people will say anything.  They add that the reputational damage to western democracies increases the number of terrorists.  Those who feel it is OK to torture people justify it by saying that it is necessary to save innocent lives.  Again, it is entirely logically possible to say you are against torture, even if it works.  But how many people do ?

Where is all this going ?  It is to say that we should suspect the views (and integrity) of people who find that every piece of evidence supports their belief.  Paul Krugman, the Nobel winning economist who is a hero of mine, recently used his op-ed column in the New York Times to criticise a piece of evidence that suggested inequality contributes to the slump – even though he wished he could prove the opposite .  That doesn’t make me trust him less: it makes me trust him more.

Yeah, pretty dull title.  But I wanted to reflect on the casualties of the prevalent idea that our major economic problem is managing a large government debt, when in fact the problem is lack of growth and jobs.  In Britain, employment has not collapsed as one would expect in a recession. If official count is to be believed, there are 500,000 more people in jobs than at the depth of the recession.

Whether this is entirely welcome news is another matter.  If we really need half a million more people to produce the same amount of goods and services as we did five years ago, then there has been a dramatic fall in productivity.  One of the (few) arguments for economic downturns is that it shakes out inefficient producers, leaving the market to the Darwinian survivor companies more suited to the modern world.  But perhaps we link jobs to output too readily. Let me explain where my eccentric logic leads me.

It is conventional to consider the costs of unemployment as predominantly economic.  First of all, someone who is not working loses the income that their family needs to meet their needs: they usually suffer a dramatic fall in living standards.  This is reflected nationally.  Losing your job means you do not contribute to the total of goods and services that we call the Gross Domestic Product (GDP).  As a result, high unemployment makes us a poorer country.  It’s also widely recognised that an unemployed person will be a burden on the national exchequer, because they pay no income tax (alert – they pay plenty of other taxes like VAT) and receive welfare benefits.  This causes the national budget to go into deficit in recessions.

However, the debate generally ends there, when there is much more to be said.  Being unemployed is usually a miserable experience, because you lose a sense of identity.  When you meet someone at a party or a pub or an internet date, the first question tends to be “what do you do ?”.  Any answer that does not feature paid employment (“I knit a lot”, “I look after the kids”, I’m very busy in a community group”)  marks you down.  You only have to look at English surnames – Mason, Taylor, Forester, Fletcher, Smith – to know how much occupation defines meaning.

But it isn’t just  some flaky sense of identity that is lost, though that will make people feel valueless and without dignity.  Unemployment has real and enduring effects on well-being.  The New York Times reports a paper by the economists Daniel Sullivan and Till von Wachter which estimates a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss, if they previously had been consistently employed. This higher mortality rate implies that a male worker displaced in midcareer can expect to live about one and a half years less than a worker who keeps his job.

Joblessness is also associated with serious illness. Studies have found strong links between unemployment and cancer, with unemployed men facing a 25 percent higher risk of dying of the disease, though we don’t quite know why. Similarly higher risks have been found for heart disease and psychiatric problems.  And in general, every 3 percent increase in unemployment is associated with an almost 5 percent increase in suicides and self-inflicted injuries, according to the WHO.

The physical and psychological consequences of unemployment are significant enough to affect family members. The economists Kerwin Charles and Melvin Stephens recently found an 18 percent increase in the probability of divorce following a husband’s job loss and 13 percent after a wife’s. Unemployment of parents also has a negative impact on achievement of their children. In the long run, children whose fathers lose a job when they are kids have reduced earnings as adults — about 9 percent lower annually than children whose fathers do not experience unemployment.  And you don’t even have to be jobless to be damaged by recession.  Lisa Kahn from Yale University showed that graduates who leave college in an economic downturn find that their lifetime earnings – not just when they graduate, all their working lives – are lower than those who entered the workforce in more prosperous days.

The idea that people who suffer unemployment are ‘shirkers’ who prefer to stay in bed rather than take up available jobs was always laughable.  Who would volunteer for a higher risk of divorce, poorer kids, earlier death and more cancer ?  But when you get an appreciation of the real costs, you get angry rather than resigned at those who peddle that poisonous view.

A couple of final points.  Firstly, this is affecting young people much worse than those who are sheltering in the workforce. “If this is a terrible time to be young in America, with its 17% unemployment rate amongst those under 25, it’s a nightmare in Italy (28%), Ireland (30%) or Spain, where it’s 43%” (Krugman).  And, point two, all this is avoidable.  We have known since the publication of Keynes’ General Theory in 1936 what causes slumps and how we can cure systemic unemployment; and thoughtful and determined policy measures can deal with other sorts – as it affects the disabled, unskilled or young .  And even if we didn’t, we could find better things for people to do than ask people to sit in front of the Jeremy Kyle Show and be the butt of George Osborne’s insults.

Footnote: “Anyone who is willing to work and is serious about it will certainly find a job.  Only you must not go to the man who tells you this, for he has no job to offer and doesn’t know anyone who knows of a vacancy.  This is exactly the reason he gives you such generous advice, out of brotherly love, and to demonstrate how little he knows of the world.” (Treasure of the Sierra Madre, B. Traven, 1927)

 

 

(A half-finished article, but worth a read)

My recent intemperate rant against John Lennon’s “Imagine” and its rejection of a world of possessions leads me on to another topic, which is the utopian desire that is sometime expressed to say “wouldn’t it be wonderful if we could live without money ?”.  The answer is actually a firm “No, it would be bloody awful”.

This is not to defend unbridled capitalism, bankers’ bonuses, wealth inequalities or all of the other annoyances of a wicked world.  It is simply to say that money is one of the great inventions of humanity.  To my mind, it’s up there with the wheel and dental anaesthetic.  Let’s be clear what we are talking about: money is defined as whatever is generally accepted in payment for goods and services, or in settlement of debt.  So diamonds aren’t money, and neither are old masters or fine wine or stocks and shares.  But the invisible material that’s in your bank account (there is much more money in bank accounts than in coins or notes) is money, because it is acceptable to transfer it to pay for stuff.

Why do we have it ?  Well, kids studying Economics have to learn the three functions of money:

First, it’s a medium of exchange.  You could barter to get your daily needs but, brother, would that be a drag.  To start with, you’d have to establish a mutual coincidence of wants.  If I wanted bread, I’d need not only to find a baker – I’d have to lay hands on one who wanted an economics lesson, and wanted it right now.  And every other day for the next fifteen years or so.  Now, Waitrose is a cultured place, and I am sure the thirst for adult education is as likely to be there as anywhere, but there is another problem, that I would have to give a loaf sized lesson – not too long or short.  And an economics lesson may be portable (PowerPoint projectors are pretty light these days) but other products people may want to barter are not portable.  Bricks ?  RSJs ?  Batteries ?

And don’t even think about how to live a life of barter in retirement …

Secondly, money is a unit of account.  It can tell you how much a house or T-shirt or bag of chips is worth in relation to each other of another house, shirt or bag of chips.  Money is like a metre or a litre, and this is essential when (e.g.) doing a set of accounts or understanding if you can afford something.

Thirdly, money is a store of value.  You can do your job today, get paid, and not spend the resulting wealth until you want to.  Obviously there have been times in history when money has not performed this function well – under hyperinflation.  We used to use the German inflation of 1922 as the acme – 28,000% a month, but the new champion is in Africa.  In 2008, Zimbabwe’s inflation reached 7 billion per cent.  This is, however, not normal.  Keeping long term savings in cash is not a great idea, but these days you won’t be devastated to hold your wages for a week or so.

Any society needs enough money to keep transactions going.  Too little, and people start hanging on to cash, causing a decline in economic activity.  Too much, and you’re likely to have inflation as prices rise.  The general equation is this: PV = MT, where P = the price level, V = the velocity of money (how quickly it is turned over from person to person), M =  the quantity of money and T is the amount of transactions (i.e. the volume goods and service we buy).  This equation started with Irving Fisher, an American economist, and is known as the Quantity Theory of Money.  It is sometimes claimed that any increase in money supply will cause inflation, but you can see from the equation above that a rise in M could result in more T (i.e. it could encourage output and trade) or a lower V (i.e. we could keep bigger balances).  What actually happens is, as I think you know, a matter of controversy.

There have been some amusing articles about the effects of a squeeze on currency.  One looked at a system in which New York professional couples started a system of baby-sitting tokens.  Briefly, when there was a shortage of tokens, people started to use them more sparingly and the whole system clogged up: only an issue of new tokens allowed folk to go out again.  The Open University once published a study of the use of cigarettes as money amongst prisoners (an economist in the RAF got shot down and had nothing better to do in a POW camp).  Same deal as the baby sitters – when the Red Cross parcels arrived, the price of rare stuff like warm blankets in terms of cigarettes rose.

The lamentable affair of the Minister who got his wife to lie so she would attract his penalty points for a speeding offence came to its sorry end yesterday, as the guilty parties were each sentenced to eight months in gaol.  We have learned a number of things from this business:

• Whereas working class people commit crimes, middle class people just make terrible mistakes.
• Newspaper journalists will always protect their sources, unless there’s a tasty story involving lesbian sex involved, in which case, whey-hay, it’s open season.
• A judge can describe a woman as “controlling, manipulative and devious”, even though he would never use these words for a controlling, manipulative and devious man. (Other female only adjectives include “bossy”).
• Broadsheet newspapers will not consider the worth of jailing people who are no danger to the public and who will not re-offend, until it affects someone they know.
• Smug policemen will appear at press calls on the court-room steps to read a sententious statement about how good is preferable to evil, and how their hard work will put offenders bang to rights, even if they took no part in the detection of the crime at all.

The offence was only discovered when the Huhne/Pryce marriage broke up, and Vicky Pryce told all to a Sunday Times journalist to get back at her errant husband.  This reminds me of when I was a college Principal, and my Finance Committee Chairman attended a training event about audit which revealed that more wrong-doing was revealed by jilted lovers than by trained accountants.  “What’s your advice, then, Brian ?” I asked.  “Well, I suppose you’d better put yourself around a bit” he replied.

A week or so ago I tuned in to listen to Aung San Suu Kyi, the Burmese democratic activist, as she gave her choices for Desert Island Discs.  Her life in opposition to the appalling military dictatorship of her homeland is utterly admirable, but I know from talking to friends that the programme was more than a bit disappointing, really, giving some evidence for the old cliché about ‘never meet your heroes’.  There was no recognition of the contribution of the kids and husband she left behind in England to carry on without her, rather too much (including a record) about her father, and pretty evasive answer to a question about her refusal to condemn violence against Myanmar’s Muslim minority. “Had I done so it would have been divisive” was, I think, the answer.  Well, if only Churchill had been as wise in 1940.

And – I know this shouldn’t matter – what a boring choice of music.  Dvorak’s New World Symphony, for goodness sake – if I wanted to hear that again I could look at a Hovis advert or ring my local call centre and listen between messages telling me that my call is important to them.  Pachalbal’s Canon (also featured in TV adverts from Coca-Cola to Pantene) also made an appearance.  We also got Tom Jones and the Green, Green Grass of Home.  Now, an earlier blog (Sep 22^nd 2012) revealed my admiration for Mr. Jones’ vocal talents, but this song is actually not about going back to your roots, but about the night before an execution.   And then – I think I could see it coming, but the horror, the horror was undiminished – John Lennon’s “Imagine”.   To be fair, Dr. Suu Kyi is not the only castaway to select this dirge, as a millionaire tax exile yearns for a world without possessions.  25 people from Billy Connolly to Neil Kinnock, Raymond Blanc to Natalie Wood have been happy to place it amongst the only eight pieces of music they would ever hear, for the rest of their lives.  But, dear me, dear me.

I suppose what one can say is that it is good for someone not to pretend a profundity or love of music that isn’t there.  Sometimes you can listen to Desert Island Discs, or similar programmes asking celebrities for favourite books, music or films, and feel a whiff of over-preparation as some dunderhead sobs at the thought of a life without Beethoven’s Late Quartets or the unabridged Don Quixote.   And we were warned: Dr Suu Kyi confessed on release from house arrest to loving Dave Lee Travis’s BBC World Service music show.

 

The conversation with my former school friends that I reported earlier showed a great deal of disagreement.  A good number – I guess a majority – could not believe that the rising GCSE and “A” level grades could be the result of improving practice, which was my theory.  I didn’t say that kids were getting better at physics or economics, just that they are getting better at achieving high grades in physics or economics exams, for a number of reasons.

The analogy I used was climbing Everest.  I said that just because more people can climb Everest these days doesn’t mean the mountain is any lower.  This caused particular spluttering.  One guy decided it was time to inform me that the reason people find it easier to climb Everest was due to better equipment and training. Which, I think, was exactly my point.  Another correspondent told me it stretched credulity to think that results could improve every year for thirty years.  I then made the mistake of pointing out a number of areas where results have improved consistently.  The number of road deaths in the UK, for example, which have fallen from 7,900 in 1966 to 1,900 last year – itself, about half the number of deaths in 1926.  We know also that survival rates from many forms of illness have risen. In the 1960s, the survival rate for childhood leukaemia was less than 10%: it’s now around 90%.  Why is it so hard to think that clever and hard-working people don’t get better at doing things ?  It would stretch my credulity (itself a pretty elastic material) if teachers got no better at doing something after thirty years practice.

So I thought I’d consider what has got better.  Obviously, athletic performance is one.  Hicham El Garrouj – 1500m in 3’26” –  is much faster than Sebastian Coe, who was faster than Emil Zatopek, who was faster than Paavo Nurmi (3’52” in 1924).  Does that make him a better athlete than the others ?  Hmm, depends on definition. I don’t think the worst of Nurmi, or believe he would be lapped by the modern generation.  My favourite game is cricket.  The very first limited overs final in England was won by Sussex, who scored 168 runs from 60 overs – not even 3 runs an over.  India scored at 5.7 runs an over to win the last World Cup.

But many other things have improved – like cars.  I gave my dad a book about family cars of the 1950s: it revealed his proud Standard Vanguard went from 0-60 in 22.2 seconds, and obtained 25 miles per gallon. Today, the cheapest Ford Focus goes from 0-69 in 12 seconds and gets 58 mpg.  This could be replicated in a thousand other technical areas.  The good old days were not that good if you wanted to drive from Leeds to London without breaking down.

One thread was to ask about the politics of the ‘things can only get worse’ debate on examinations.  The consensus was that it wasn’t political at all, yet in the distant past it would have been.  A central part of Conservative belief in the past was that progress was an illusion.  Generally, right wingers support reform only as long as it took place 100 years ago – see child labour, Irish freedom, slave emancipation, votes for women and so on.  Nowadays, though, we have a strand of neo-liberalism, believing that a particular kind of change – namely to institute profit-based market solutions to all areas of life – will yield great social improvement.  This is in fact a form of utopianism, and probably just as dopey as William Morris’s idea.  Well, rather more.  And it has been tried before, in the mid 19^th century, as you will find from Karl Polanyi’s masterpiece, The Great Transformation. And what a cock-up that was.