Paul Krugman writes in today’s New York Times about a Republican proposal to end food stamps, because (yep, you’ve guessed it) they interfere with people’s sense of initiative and personal responsibility.  In the UK, the government is preparing to privatise the legal system, to ‘liberate’ the courts and make them a private enterprise.  The chairman of the Conservative Party tells us that a crackdown on welfare benefits has led to  ‘nearly a million’ people leaving sickness benefit.  The real figure turns out to be 19,700.

It was only last week that a senior Conservative described many members of his party as “mad, swivel-eyed loons”.  It seems that activists who should have gone to Specsavers are not hard to find, on either side of the Atlantic.

1. The Prime Minister will pledge that all the guilty would be brought to justice.
2. The Guardian will worry about Martianphobia, and point out that destroying the White House was an untypical act by a basically friendly group of people. We should not judge the many by the actions of a few.
3. The Daily Mail will ask what the security services knew about the Martians beforehand – and did they try to recruit them ?
4. A retired general will write to the Times blaming defence cuts
5. George Galloway will say we deserve to be attacked because of all the unprovoked and aggressive Martian probes we have sent to their planet.
6. A soft-spoken vicar will weave it in to Radio 4’s Thought For The Day, saying that the victims are in our thoughts and prayers, but indicating that we are all, in a very real sense, Martians.
7. The Iranians will ask them to Tehran for talks.
8. An internet group will say it is all a set-up job by the American government. Or the Jews. Or it was created in a film studio and really didn’t happen at all.
9. The Daily Express will claim they were driving a battered Fiat Uno in a Paris underpass
10. The Sun (via Tracey, 19, from Doncaster) will blame the Human Rights Act
11. UKIP, conscious that another planet is abroad somewhere, but unclear exactly where, will blame the EU for the lax immigration control that let the Martians in.

On my recent holiday I had a crap internet connection. Unable to play Drawsome with distant friends, or watch the Test Match, I settled in to what people always used to do on their holidays, which was read a good book.  My habit was to take a stock of books on holiday – some thrillers or factual books to have on the beach or in the garden (or whilst sheltering from the rain), plus a great book that I know I would be forced to read when all the easy stuff gave out.  That’s how I got into Joseph Conrad, and one day will help me into Dickens.

The good book this time was the collection of Christopher Hitchens’ essays, called “Arguably”.  I got it in hardback form as a Christmas gift, and as there are 107 longish essays, it’s a pretty weighty tome in gravitational as well as intellectual terms.  You couldn’t read it in bed. Arnold Schwarzenegger might have the biceps for the job, but this collection is, I suspect, not his line of country. But you don’t need it in bed, for there is no thriller plot to keep up with, and an essay can be taken at a sitting.  I really enjoyed Hitchens’ style and attitude and rationality.  Clive James is the only other current author who I think shows such unforced intelligence, whose references lead you on to other delights and lead you to challenge your own views.  Hitchens was, I know, controversial, with his robust atheism and his support for the Iraq war, but I don’t think I would have been locked in my armchair for quite so long with a Guardian or Telegraph editorialist with a pre-packed suite of views.

Anyway, it’s out in paperback and Kindle now so you can read and make your own mind up.  One essay I particularly liked – on Dr Johnson – drew attention to the way that expressions and names often end up denoting things that are not at all what was originally meant.  King Canute is now a term used to describe an arrogant bureaucrat who imagines he can stand against natural forces or unconquerable social trends.  But King Canute was exactly the opposite – he asked to be taken to the beach to show that even a powerful monarch could not stand against the unstoppable.  Hitchens gives other examples – such as Romeo.  This name is now used to describe a promiscuous womanizer, whereas the Shakespearean character was actually a one-girl guy, faithful unto death.

Taking expressions and arguments the wrong way is pretty common in public discourse, and I have a small collection of politicians who have been traduced.  Some have not, of course.  Look at Margaret Thatcher’s view that “there is no such thing as society”, and it is pretty close to what people think it is.  But others are not.  When Harold Macmillan said “you’ve never had it so good” (well, actually, “most of our people have never had it so good”) it was not a complacent appeal to selfishness.  The text of his speech is hard to find, even in these internet days, but his statement that people were better off than ever before – which was true – was followed by a warning that this state of affairs would not continue unless the country could become more competitive, and address the problem of inflation.  I don’t believe when Harold Wilson said devaluation will not affect “the pound in your pocket” he wanted people to believe that changing the exchange rate would have no impact on import prices: he was, after all, a brilliant Oxbridge don before entering Parliament.  I think he was trying to reassure people who might worry that they would suffer an internal devaluation, as had happened in France or Germany.  Donald Rumsfeld’s famous quotation about the difference between known unknowns and unknown unknowns may be filed under ‘dumbest quotations of the Bush era’, but it has always struck me as a pretty sensible distinction.  When John Major said of restrictive monetary policy “if it isn’t hurting, it isn’t working”, well, he was right, wasn’t he ?  How do you squeeze inflation out of the system without people spending less and banks lending less ?  There are even people now who look back on Gordon Brown’s gaffe about saving the world, and conclude that – given his leading role in the financial rescues of 2008 onwards – he wasn’t too far from the truth.  Other alleged Prime Ministerial blunders are simply based on misreporting.  Trivial example – Tony Blair never claimed to have seen Jackie Milburn playing for Newcastle United – which doesn’t stop it being regularly used to prove what a liar he was, even though the misunderstanding was cleared up in 2008.

Where is all this going ?  Nowhere, really, except to underline my usual message that you should not believe commonplace truths without a careful look at the evidence, and that, until we got to the current bunch, politicians were generally a sensible lot trying to do the best for their country.  And that mental activity is possible without the internet.  And that one sign of a really powerful book is all the hares it sets running in your head, all the examples and ideas it sparks, bringing the reader a small distance towards the judgements and resources of a great writer.  Which I reckon Christopher Hitchens was.

First piece of evidence.  Yesterday a father tweeted that his daughter had had a difficult time getting through New York’s JFK airport because she has a forename that sounds a bit Muslim.  Responders blamed ‘profiling’.  Second piece of evidence. On Friday I was at Dinard Airport in France, sharing a flight back to the UK with forty well-behaved school-kids, chaperoned by school staff and parents, and all wearing matching bright blue baseball caps proclaiming “St Teresa’s RC Primary School”.  As they boarded the plane, the ticket and passport of each child – none of them, remember, over the age of 11 – was individually scrutinized.  I guess officials were trying to avoid any charge of discrimination.

Irrational discrimination by bureaucrats and state officials can be a problem.  I have worked in south London, and talked to black colleagues for whom being pulled over and searched by police was an endless annoyance.  One guy gave up his new BMW and selected an older second hand model just to avoid the aggravation.  But the word discrimination does not mean being nasty to minorities: it means making choices between one category and another.  There is nothing wrong with discrimination in its place.  We discriminate when we choose clothes that fit against those that don’t, products of good quality rather than tat, companions who are clever and kind rather than rude dullards.  We discriminate when we pass learner drivers who are safe on the road and fail those who aren’t.  What is wrong is unreasoning, unevidenced discrimination – appointing candidates to vacancies at work because they are like you, hassling people in the street because they are not.

Which brings us back to the airport.  Travel would be greatly improved if we did not need security checks at airports.  But we do need them, because there are plenty of cases of people trying to destroy airplanes to make a political point.  Currently, the main threat is from young adults with an Islamic background.  Are we allowed to say this ?  If this is the case, then security services should ‘profile’ – if that means, looking more carefully at those who are in the risk category.  What we have at the moment is a system with some farcical elements, in which security staff sometimes select pensioners with elasticated fawn trousers for extra searches, or demand the passport of an 8 year old, just to show they are not being discriminatory.

There is much discussion at the moment about the tax dodging of international companies.  I particularly liked the US Senate’s view of Apple’s arrangements, that they had reached corporate nirvana, in that their profits were off-shored to no country at all.  They didn’t even pay Irish or Cayman tax.  Some of the business bigwigs who were called in front of UK or US legislators threw up smokescreens – see Amazon’s pretence that most of its work is done in Luxemburg, or Google’s insistence that none of its UK employees actually closed a sale.  The worst excuse is to say “we pay a lot of tax – just look at what our employees pay out of their incomes”.  Yes, mate, their incomes, not yours.  Perhaps the Google chief executive could be asked to say whether he would like to live in a country where the government only has 2.4% of the national income to pay for teachers and police, roads and welfare: because that’s the proportion of their income that they pay.  In the UK, they pay .2% – that’s right, one fifth of one per cent.  Government with those resources would not be able to pay police to protect Mr. Schmidt from protestors as he leaves the House of Commons, or an ambulance to carry him to hospital.  Or a road for the ambulance to travel on.  Or a hospital at the end of his bumpy journey.  I am sure this is not the world he would, in his more rational moments, desire.  What he wants would be a well organised and provided society, in which someone else pays for public services.

However, this is not the end of the matter.  I’m only surprised that no Chief Executive has had the honesty to say “we pay only the taxes we have to – what do you do ?”.  Because you can argue that the main failure here is by government to secure a leak-proof tax system.  I can’t dodge tax; hell, I can’t even dodge paying for a parking meter or public toilet.  How come these buggers can avoid almost anything ?  If the argument is that they will always have smart lawyers who can find their way round and through a tax code that is thicker than War and Peace (actually three times thicker); well, pick a simple tax.  Turnover tax would work.  Just get on and do it, rather than (Cameron style) sending stiffly worded letters out: as Caitlin Moran tweeted, “yeah, that should do the trick”.

But spare the moral outrage.  Here’s a malicious thought that came to me.  Pensioners in the UK get a number of benefits, no matter what their income is.  I have a pension more than twice the national average family income, but get free bus travel, subsidised fuel costs and (in time) free TV.  There has been a suggestion that people should send these benefits back to the taxman, or simply not claim them: to which the rejoinder is “no, you change the system” (and also, given the number of pensioners who vote “don’t you dare change the system !”).  In what way is a rich pensioner refusing to send back excessive benefits they can claim different from a Chief Executive refusing to pay corporate taxes they can avoid ?

I only ask.

Football managers’ clip boards and jotting pads	Or absence thereof.  Why don’t they have them ?  Men on £3m a year running multi-million enterprises on, literally, the back of an envelope.  Oh, and the black arm-bands that footballers wear in tribute to a recent death or tragedy: why are they always gaffer tape ?
The Archers	Too ghastly even to analyse.  I suppose it helps some people get through the day, but then, so does cocaine and train-spotting.
Radio traffic bulletins	A national radio programme, covering a potential audience of 60 millions, is interrupted by news of one way traffic in a bridge in Drummacgillycuddy that will affect maybe thirty people.  Incidents occurring in more populous areas are, in my experience, cleared up before they are announced on air: so it you are advised to ‘avoid the southbound A1”, you can be pretty sure it will be the quickest way to go.  Notice also that there are rarely announcements of public transport disruption, unless there is a strike in London, in which case it’s headline news.  Yet cancelling a train from Sheffield or Manchester to London will affect several hundred people, unlike a bridge in Drummamacgillycuddy.
Smart cars	Once I booked a car with  German rental company, selecting “VW Polo” as the preferred size (i.e. the cheapest).  The rental clerk was delighted that she had managed to get us a Smart car.  Have you seen them ?  There was not enough space for two suitcases – even if you used the back seat.  How can a car company charge more for a car which is smaller than any competitor ?
Rugby players with shaven heads	I know rugby.  I’ve played rugby for twenty years – and in the front row, where the dark arts are at work.  Believe me, it’s a game where your head needs all the padding it can get.  I think I get the idea of the shaven head – conceals baldness (er, not) and makes you look savage.  But looking fierce only works if you are fierce, which people find out pretty quick, and one thing that doesn’t contribute is the length of your hair.
TV quiz competitors clapping themselves	When did that start ?  What does it mean ?  Look how delighted I am I have shown myself not to be a total idiot ?
PFI	Loses money – claims of austerity people to want to ease burdens on children – hah !
Flashing electronic signs around football  pitches	Is this the only entertainment industry that wants to divert attention from what it is doing (apart from magicians maybe) ?
Fortune favours the brave	Er, no it doesn’t
Historical dramas	Why do 1930 dramas (e.g. Poirot) always take place in 1930s houses ?  Did Victorian villas not exist in the 1930s ?  And why are the cars always so clean ?
Police interviews in TV dramas	Police seem content to interview one suspect in front of another.  They interview people walking down the street, or standing in doorways.  Suspects have the confidence to say “Are we done ? I have another appointment” and march out of the room. Is any of this remotely plausible ?

 

 

• Bill Nighy – an actor that makes Roger Moore look like Gielgud, but scrubs up well in a fitted suit.  Clever to sell him as the thinking women’s crumpet.
• Gambling on line I guess the idea was this: if people are willing to buy pension schemes from the big banks, then why not get them to do something that is even more certain to lose money, and dress it up as if it is grown-up fun and danger.  Like swimming with sharks.  Which it basically is.
• BMW 1 series – a car that isn’t as good as a Ford Focus, costs £4,000 more once the extras are counted, and the bloke who designed the front never met the guy who designed the back. Prestige badge ? Hmm.
• Benjamin Disraeli obstructed attempts to resolve the Irish problem, and got in the way of fair votes until he thought he could gain from it. He voted for taxes on food imports.  Buttered up Queen Victoria to sell imperialism (so Michael Gove loves him).  Compared with Gladstone, the most vertically challenged of opportunistic pigmies.  But the guy wore cute suits, so he remains a historians’ favourite.
• Withnail and I Two boorish twits go round the country offending people and getting drunk.  Add some dialogue that might get a small laugh in an undergraduate pub night, then market it as subtle and surreal.
• Local news bulletins This region has the population and wealth of many sovereign states.  It has magnificent scenery and faces extraordinary social and economic challenges.  But I think if we cut the budget, take away the talented people, and rely on second hand PR handouts, we can create local programming that is so boring no one will want to watch
• Keyless ignition To what problem was this a solution ? People are always losing their keys – at home.  At work.  In their handbags.  But they didn’t lose them in their car, because there used to be an ignition slot that they have to put the key in to make the car start.  Now we can get around this by allowing the car to start when there’s a key vaguely around somewhere – the driver’s pocket, the glove compartment, a child’s stomach.  This at last means there is no part of their life in which people cannot lose their key.
• Cushions It is absurd to spend more money to make a sofa that is already expensive less comfortable, with padding that digs in to your back and stops you sitting upright. But every home has them.  Even bloody mine.
• Ed Balls Deeply involved with Gordon Brown’s worst excesses. Annoyed colleagues, and still does so.  No fresh ideas about the slump (No, Ed, taxing bonuses may be fun but it is not a long term economic strategy).  Can’t best Osborne in an argument, despite the fact that Osborne is hopelessly wrong and failing drastically. What is he for ?
• Second hands on watches Not useful because no-one in a job where seconds matter would use ‘em. But they do have amusing effects when people mistake the time after looking quickly at their watch.  They also make the design less elegant, and add cost.  But – in the age of competition and choice – you can’t buy a bloody watch without one.

 

“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists” – Joan Robinson

People of my generation will remember a very early article about Simon and Garfunkel in which an American journalist, introducing the singers to an unknowing public, starts by saying “the title makes them sound like attorneys, but they aren’t”.   Well, here are two other mid-European names that sound like attorneys, but aren’t – Reinhart and Rogoff.  And they have been making big news on the economic front, but almost nowhere else, for the past six weeks or so.  Before you switch off, or whatever else it is that people do when reading a blog, here’s my take on why every voting citizen should know about them, and avoid being deceived.

In 2010, two economists called Carmen Reinhart and Kenneth Rogoff released a paper, “Growth in a Time of Debt.”   Their most influential claim was that rising levels of government debt are associated with much weaker rates of economic growth, indeed negative ones.  The “main result is that…median growth rates for countries with public debt over 90 percent of GDP are roughly one percent lower than otherwise; average (mean) growth rates are several percent lower.”  Countries with debt-to-GDP ratios above 90 percent have a slightly negative average growth rate, in fact.  They understood why governments had not initiated deep cuts as the recession first hit, but told us that “ the sooner politicians reconcile themselves to accepting adjustment, the lower the risks of truly paralysing debt problems down the road. … Countries that have not laid the ground work for adjustment will regret it.”  Later in 2010, Rogoff wrote another article in the Financial Times in which he reiterated: “The risks of rising debt, while apparently far off, cannot be lightly dismissed”, and added, “in this environment, measures to gradually stabilise debt burdens—to restore normality—surely make sense.”

This paper has been one of the most cited stats in the public debate during the Great Recession.  Right wing politicians on both sides of the Atlantic have used it to justify their austerity policies.  The American congressman and Vice Presidential nominee Paul Ryan’s published budget proposals – called Path to Prosperity – quoting their study as finding “conclusive empirical evidence that [debt] exceeding 90 percent of the economy has a significant negative effect on economic growth.”   In February 2010, George Osborne, the soon-to-be Chancellor of the Exchequer, cited the authors several times by name in a key speech laying out his policy proposals and calling for big cuts in government spending.   Here are some excerpts:

So while private sector debt was the cause of this crisis, public sector debt is likely to be the cause of the next one. As Ken Rogoff himself puts it, “there’s no question that the most significant vulnerability as we emerge from recession is the soaring government debt. It’s very likely that will trigger the next crisis as governments have been stretched so wide.”

The latest research suggests that once debt reaches more than about 90% of GDP the risks of a large negative impact on long term growth become highly significant. If off-balance sheet liabilities such as public sector pensions are included we are already well beyond that. And even on official internationally comparable measures of debt, we are forecast to break through 90% of GDP in just two years time…

To entrench economic stability for the long term, we need fundamental reform of our fiscal policy framework….As I have made clear, our aim will be to eliminate the bulk of the structural current budget deficit over a Parliament.

The Washington Post editorial board took it as an economic consensus view, stating that “debt-to-GDP could keep rising — and stick dangerously near the 90 percent mark that economists regard as a threat to sustainable economic growth”.  There were some dissenting voices at the time – mostly from people saying the relation between debt and slow growth was the other way round, and that when that economies get into trouble government deficits rise as tax receipts fall and welfare funding rises.  A correlation is not a causation: umbrella sales rise in rainy weather, but they don’t cause it.  Josh Bivens and John Irons made this case at the Economic Policy Institute, and economist Arindrajit Dube found significant evidence that reverse causation is the culprit.  But those dissidents were the normal Keynesian numpties like Paul Krugman, with his bloody Nobel Prize, so who needs to listen to them.  The paper remained very influential, and lay behind the European and British deficit reduction policies, and the Republican opposition to any reflation by the Obama administration.  After all, as a New Yorker article pointed out, ninety per cent wasn’t just any old figure. “With large budget deficits and debt-to-G.D.P. ratios in the range of sixty to eighty per cent, many advanced countries, including the United States and Britain, were fast approaching the threshold of doom, or so it seemed. If you took Reinhart and Rogoff’s findings at face value, as many people did, it was hard to argue with the Hooveresque logic of, say, Osborne”.

And then …

Thomas Herndon, a Ph.D. student at Amherst College in Massachusetts was given an assignment as part of his course, which was to run through the statistical background to the R&R paper.  He wasn’t the first to try, but others had been refused access to the R&R workings.  He was, however, given access to the famous spreadsheet.  And he found an extraordinary range of errors and omissions that make then work extremely suspect.  For a start, there was a cock-up in the simple construction of the Excel spreadsheet.  He asked his girlfriend to check, and she thought he was right.  Then he checked with his professors, and they thought he was right too.  They (Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts at Amherst) then published their findings in a paper called “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,”.  They find that three main issues stand out, and I am indebted to an article by Mike Konczal that explains it for the layman.   First, Reinhart and Rogoff selectively exclude years of high debt and average growth. Second, they use a debatable method to weight the countries. Third, there also appears to be a coding error that excludes high-debt and average-growth countries.  The deeply suspicious factor involved here is that all three of these errors cause the study to move in favour of their result, and without them you don’t get their controversial result.  Let’s investigate further:

Selective Exclusions. Reinhart-Rogoff use 1946-2009 as their period, with the main difference among countries being their starting year. In their data set, there are 110 years of data available for countries that have a debt/GDP over 90 percent, but they only use 96 of those years. The paper didn’t disclose which years they excluded or why.

Herndon-Ash-Pollin find that they exclude Australia (1946-1950), New Zealand (1946-1949), and Canada (1946-1950).  Now, as Stephen Colbert magnificently said on his TV show, if ignoring New Zealand, Australia and Canada were an offence, most Americans would be on death row.  However, when studying international data, this has consequences, as these countries have high-debt and solid growth. Canada had debt-to-GDP over 90 percent during this period and 3 percent growth. New Zealand had a debt/GDP over 90 percent from 1946-1951. If you use the average growth rate across all those years it is 2.58 percent. If you only use the last year, as Reinhart-Rogoff does, it has a growth rate of -7.6 percent. That’s a big difference, especially considering how they weigh the countries.

Unconventional Weighting. Reinhart-Rogoff divides country years into debt-to-GDP buckets. They then take the average real growth for each country within the buckets. So the growth rate of the 19 years that the U.K. is above 90 percent debt-to-GDP are averaged into one number. These country numbers are then averaged, equally by country, to calculate the average real GDP growth weight.  In case that didn’t make sense, let’s look at an example. The U.K. had 19 post-war years (1946-1964) with above 90 percent debt-to-GDP with an average 2.4 percent growth rate.  New Zealand has one year in their sample above 90 percent debt-to-GDP with a growth rate of -7.6. These two numbers, 2.4 and -7.6 percent, are given equal weight in the final calculation, as they average the countries equally. Even though there are 19 times as many data points for the U.K.  It’s like finding the average height of your family and a leading basketball team by taking one figure from the Chicago Bulls and five from you.  Once this error is taken out, the results disappear.  Jonathan Portes tried to find them.  “In an effort to reconnect myself with the facts, I consulted Rogoff and Reinhart’s own database. Among G7 countries, their statement is false for the UK, US, Canada, France and Italy. They do not have data for Germany or Japan for the World War 2 peak. More importantly, the way that these very high debts were reduced was primarily by growth, not by rapid fiscal consolidation at a time of weak private demand”.  Oh, and Reinhart-Rogoff don’t discuss their methodology, either the fact that they are weighing this way or the justification for it, in their paper.

Coding Error. As Herndon-Ash-Pollin puts it: “A coding error in the RR working spreadsheet entirely excludes five countries, Australia, Austria, Belgium, Canada, and Denmark, from the analysis. [Reinhart-Rogoff] averaged cells in lines 30 to 44 instead of lines 30 to 49…This spreadsheet error…is responsible for a -0.3 percentage-point error in RR’s published average real GDP growth in the highest public debt/GDP category.” Belgium, in particular, has 26 years with debt-to-GDP above 90 percent, with an average growth rate of 2.6 percent (though this is only counted as one total point due to the weighting above).

Being a bit of a doubting Thomas on this, Mike Konczal said “I couldn’t believe unless I touched the digital Excel wound myself. One of the authors was able to show me that, and here it is”.  You can see the Excel blue-box for formulas missing some data:

This error is needed to get the results they published, and it would go a long way to explaining why it has been impossible for others to replicate these results. If this error turns out to be an actual mistake Reinhart-Rogoff made, well, all I can hope is that future historians note that one of the core empirical points providing the intellectual foundation for the global move to austerity in the early 2010s was based on someone accidentally not updating a row formula in Excel.  And how can a paper by two authors – eminent people with graduate students to help them with their workings – let an error like this slip in ?

So what do Herndon-Ash-Pollin, the analysts from Amherst, conclude? They find “the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90 percent is actually 2.2 percent, not -0.1 percent as [Reinhart-Rogoff claim].” Going further into the data, they are unable to find a breakpoint where growth falls quickly and significantly.  It was all tosh.

There is actually another learned article that the austerians lean on, one that says that economies will expand if you contract government spending – not Reinhart/Rogoff this time, but Alesina/Ardagna on expansionary austerity.   They claimed

Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions.

This has also proved to be total rubbish – even the IMF has disowned it.  So shall we wait to see whether the officials of the European Central Bank, or HM Treasury, or the serious people in the US Republican Party will now change policies as the backing to their ideas has proved to be simply wrong.  The answer is no, because those people are not interested in engendering a recovery in a way that corresponds with best knowledge.  If they were, they would be working out how to put in place public spending and tax cuts that will boos the economy.  They are interested in shrinking the size of the state and taking entitlements away from poor people.  That is also what lies behind the extraordinary idea that people are unemployed as a result of a lifestyle choice.  The recession, an event caused by the misbehaviour and miscalculations of rich people, is being used by the same sad unprincipled bunch, to increase their power and reduce their obligations.  And they will seize on any gimcrack piece of academic nonsense to back them in their task, and will not change when that research is shown to be wrong.  As the great Krugman said, “the really guilty parties here are all the people who seized on a disputed research result, knowing nothing about the research, because it said what they wanted to hear”.

 

Here’s a thing.  I was preparing a long piece about the current NHS reforms, exploring whether the government’s changes are really the end of the NHS ‘as we know it’ or whether they are an administrative rearrangement that stands a decent chance of improving the service.  I drafted a letter to the press after some madmen advocated marketising our health service, as follows:

Mr Brancher’s argument (Times March 7) that competitive markets are a good way to deliver health care has been rejected by almost all economists who have considered the matter, including Nobel laureates like Kenneth Arrow and Paul Krugman.   A market approach needs an informed consumer: but we don’t have the knowledge to distinguish between medical treatments.  There are, in economist argot, huge asymmetries of information between consumer and producer.  A market would be unable to stop over-treatment from profit seeking hospitals and doctors.  Unlike consumer good purchases, costs would be uncertain.  A market would be unable to deal with the rich and healthy opting out, and insurers would discriminate, leaving the sick, poor and old with inferior care.  Administrative costs would climb to American levels.  The most recent authoritative study concluded that “in cost-effective terms, i.e. economic input versus clinical output, the USA healthcare system was one of the least cost-effective in reducing mortality rates whereas the UK was one of the most cost effective over the period”.

The US citizen spends twice as much as the UK on a health care system that depends on the competitive market, and dies younger.  What madness is it that leads us down that path ?

A friend living in Israel was not so sure.  He replied:

Well, we have a competitive health service here in Israel. The four big competitors are Clalit (General), Leumi (National), Meuhedet (United) and Macabbi (Macabbi).  A citizen is more or less obliged to belong to one of them.  If a member wants to change service, its a no-fuss, almost no charge, no embarrassment procedure. The general public are by and large well-informed and have strong views on all aspects of the service. There are service hospitals, government hospitals and private hospitals and clinics of all sorts, and dentists and what not.

Some notable exceptions. Skin doctors, for example, seem to be in very short supply.)  I get my pills  and equipment at a very subsidised cost.  Elective surgery (yuch – twice) and first rate treatment.

All aspects of the services are obsessively covered in the press. I’d say that by and large the public have access to useful knowledge.  My access to my doctor(s) is almost unlimited and quick.  I’m not saying that its perfect. But the system is not bad at all and has done me and mine very well indeed for a moderate cost over 35 years.  I’m covered for trips abroad at a very reasonable cost.  Given a choice of seeking treatment in the UK, the USA or Israel, I’ll take Israel every time.  Before you make a blanket condemnation, take a look at Israel’s competitive medical services.

Which all leads one to ask – what do we mean by a national health service ?  To me, it covers four essential elements.  Firstly, treatment should cover everyone in the population.  Secondly, it should be free – or nearly so – at the point of use.  Thirdly, the quality of treatment should be comparable wherever you live.  Fourthly, it should be substantially taxpayer funded.  I responded in these terms when the twitterocracy was bemoaning the end of the NHS because of competitive tendering for some services.  I don’t think that a health service can only fulfill my criteria if I is a centrally run nationalised industry: I had my knee seen to by a private contractor a year or so ago, and it was a quick, quality service.  On the other hand, I do not think that we must accept on trust any market driven neo-liberal rip-off that directs funds to the private sector.

The reason I am suspicious is that this is the first government I have ever lived under that I thought was a rip-off.  I’ve lived in the UK since 1945, so have endured/enjoyed Tory Prime Ministers from Churchill to Cameron, with many stops in between.  I have not agreed with them, but in the past I have felt that even right wing governments were genuinely, if mistakenly, taking measures that they felt were best for the economy and for UK citizens.  It now seems that measures are taken simply to enrich friends of the government.  George Osborn is happy to take an emergency flight to save the City of London  from EU regulations, in a way he would never do about (e.g.) workers’ rights or manufacturing investment.  Bank bonuses seem sacrosanct at a time when my daughters – nurses in tough jobs – have had no pay rise for three years.  So NHS changes from the present lot should be worrying.  There is a disturbingly large number of MPs and peers who will profit personally from  the NHS commissioning changes.  I think that should actually be illegal – to me, it’s more offensive that making a profit on a second home in London.

Which – here is the personal touch that all good bloggers and columnists have to include – leads me to my recent experience.  I woke up two nights ago with agonizing back pain, and started vomiting.  This went on all night, and I was too sick to keep down any analgesic.  It was awful: my wife got some pills from the pharmacy that improved things a bit but finally I gave in and range the NHS direct line on 111.  There have been some adverse reports on this service recently, but they were OK for me.  They collected the essential info and got a doctor to call me back.  He made a swift analysis, and arranged for me to be seen at the out-of-hours GP centre at Northern General Hospital inside an hour.  The treatment there was prompt and (seems to me) accurate – renal colic, basically kidney stones.  I got the drugs I needed and good advice, and it was all free.

Samuel Pepys had bladder stone, and opted for an operation without anaesthetic.  Having had a dose of how stones make you feel for just hours, I can understand his choice.  He recovered well – you can get the details in Claire Tomalin’s wonderful biography – probably because he was the first patient of the day, and so had clean sheets and instruments.  Nevertheless, for the rest of his life he celebrated the anniversary of the operation with a banquet with friends.

Bizarre controversy about Keynes’ remark that “in the long run we are all dead”.  The historian Niall Ferguson told a recent conference that Keynes said this because he was gay, had no children, and was indifferent to the future.  He has since apologised for the remark, and not just because it suggests gay people don’t care about the future but because of the inaccuracy about Keynes.  Keynes was part of the Bloomsbury set, and had homosexual affairs when he was young.  However, he later married the Russian ballerina Lydia Lopkova, and had a long and loving marriage during which his wife suffered a miscarriage.

However, this isn’t the point.  Keynes famous remark did emphatically not mean “let’s do irresponsible things now because we won’t be around when their consequences hit”.  He said it because he was despairing of conventional economists in the 20s and 30s who said that a market economy was self-correcting, and the slump would naturally come to an end sooner or later.  Let’s look at the full sentence:

The long run is a misleading guide to current affairs. In the long run we are all dead.  Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again. (Tract on Monetary Reform 1923)

Life, John Lennon once remarked, is what happens when you’re making other plans.  The economy is, similarly, made up of a series of short term periods affected by one-off events – an oil shock, a bad winter, the end of the cold war, US mortgage problems, an election, a bank failure in Austria or Cyprus.  Keynes was surely right to be exasperated by idea that it was helpful – let alone a sign of great economic wisdom – to say that all will be well in the end.

Why does this matter, apart from defending the reputation of a great man who worked himself to death for our country ?  Because the current crop of right wingers who are doing nothing to bring prosperity and employment back to our economy are saying that all will be well in the end, despite the fact that we have a slower recovery from the slump than happened in the 1930s. And their ostensible reason for inactivity is that it would be irresponsible to raise the finance needed for economic revival.  Echoes of debates that were settled in the 1920s and 30s: bizarre is the right word.