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.

I’ve been hanging back a bit on the topic of Margaret Thatcher’s death for a couple of reasons.  One is the straightforward John Donne idea that anyone’s death diminishes us – ask not for whom the bell tolls and all that.  My wife and I attended a friend’s sixtieth birthday party a few years ago, and one part of the evening included a group gleefully singing how happy they would be when Maggie Thatcher dies.  We are both Labour Party members, worked in the public sector in the north of England and saw the damage, were passed by convoys of police during the miners’ strike, and opposed Thatcherism and all its doings, but we both felt a bit sour about the show.  The other reason for my hesitance is my unwillingness to be drawn into the two major camps. Camp one – the Joan of Arc tendency – claims that Margaret Thatcher saved the country from becoming an economic basket-case, in thrall to trade union demagogues and foreign governments.  The Sunday Times printed an extraordinary cover to its Thatcher Tribute, with the lady dressed as a medieval knight (eerily similar to a Nazi Hitler poster).  Some rich men astonishingly suggested a minute’s silence at national sporting events.  Camp Two – Margaret Thatcher was a vicious class warrior who closed down manufacturing and mining, and whose policies were aimed at the destruction of the welfare state and the transfer of money from poor to rich.  I suppose the posh word for my view of Thatcher is that it is ‘nuanced’: you may feel ‘confused’ is closer to the mark, but then, you would.  And one reason to write is to find out what you think.

And I’m not sure I believe either.  Here goes:

• I think it’s a mistake to regard Thatcher’s economic policies as having saved Britain. Economic growth was actually slower after she came to power than before.  To some extent that reflects something that happened the world over, as the era of cheap energy came to an end, but it is still something that the Times, Express, Telegraph, Mail (and even the BBC) have not acknowledged.  Even those who presented a balanced view said she saved the economy at the expense of society; well, er, up to a point, because …
• … we must not forget the enormous bonus of North Sea Oil which came ashore just as she took power. I remember attending a campaign meeting in 1979, where Shirley Williams – then Labour Education Minister – predicted that whoever won the election would be in power for fifteen years, because of the oil wealth.  At its peak, oil was supplying 16% of government revenues, and that (and the coming of floating exchange rates) meant an end to the exchange rate/balance of payments crises that had dominated 1960s politics.
• But oil wealth is a double edged sword. It provides government tax income – funding a reduction in income tax at the top from 83% to 40%, and at the lower rate from 35% to 20%.  Maybe it would have been better for the government to keep its hands on the money, Norway style, to build up investments for the future, but then, we could have done that ourselves with our tax breaks, couldn’t we ?  We could have bought shares and bonds, rather than Japanese and German cars.  The down side of oil wealth is that it keeps your exchange rate higher than it would have been, making it harder for other industries to compete with cheaper foreign imports and raising the price of our exports.  At least part of the decline of manufacturing for which she is blamed was due to this.
• The decline of manufacturing was replicated in other countries (such as the USA – see the Rust Belt). Given the rise of the Asian manufacturing superpowers, maybe this wasn’t a bad thing.  Did we really want to be competing with low cost Chinese manufactures in the 2000s ?  Wasn’t finance and services the sensible way to go ?  I think the main criticism of Thatcher’s government – and others, before and after – was that there was insufficient consistent support for the high tech, high skill industries that would have been part of a balanced economy.  Technical education was neglected then attacked (academic education was better funded throughout), university science ignored then cut, and government support for technology was patchy.
• The relation with the trade unions is an area where the Thatcher government plainly and decisively broke with a post-war consensus where unions were regarded as a significant national interest. They were routinely consulted and involved in economic policy, because it was felt that they represented the working people, or at least could cause trouble if they were not involved in such discussions.  I think this is things should be – if employers are consulted, why not worker organisations.The problem came in a couple of areas.  One was the ability of some unions to threaten, and even deliver, strike action without ballots – as seen most acutely by Scargill’s NUM death-throe.  This was generally done in order to support the power of the union bureaucracy – to make employers obey the wishes of shop stewards and regional/local officials.  This power-play – and I speak as a former chief executive but also a former union secretary and known leftie – became tiresome and worked against the members’ real interests.  I arrived at a college known for its militancy.  On one occasion it looked like being the only college on strike in the whole country (the members had, of course, been told that everyone else was on strike and they had to support them).   On another, I asked why the strike was being called and what I had to do to prevent it: I was told “it’s not as simple as that”.  This all led to the second problem, of unions being blind to the needs of the efficient running of the business.  Hence the end of the British-owned car industry. (However, please note that Vauxhall had far, far, fewer strikes than Ford – maybe good management has something to do with rank-and-file militancy).

  Something had to be done to restore the balance.  Those with long memories will recall “In Place Of Strife”, proposals from Barbara Castle when she was Secretary of State for Employment under Harold Wilson’s government.  The unions, in cahoots with James Callaghan, torpedoed this modest reform.  More fools them – they got ‘reform’ a decade later, doubled in spades.  Conservatives often acknowledge that the way to maintain something (monarchy, marriage, House of Lords etc) is to accept modest changes.  Pity that the 1970 trade union leaders couldn’t see that.

• Privatisation was a major change. I can remember writing an economics textbook in the 1970s that had a chapter on the management of the nationalised industries.  The change has been adopted internationally, partly because of the pro-capitalist ideology that everything is better done by the private sector, partly because sell-offs give governments lots of cash, and partly because it takes worries of their back.  Ministers can take a lofty tone when questioned about water wastage or electricity bills now – they will not lose their job if it doesn’t work well.  And, to be fair, politicians are not trained to run major businesses, and some businesses are nothing to do with government. I remember arguing with a Labour MP who was fighting to keep British Airways in the public sector: asking why should taxpayers subsidise those who want to do business or take holidays abroad ?   It was not a popular line in the Labour Party of the 70s.  Thatcher may not have made the trains run on time, but she made changes that got you a phone on time.  Whether governments have yet mastered the business of managing businesses – remember that the train companies charge more than British Rail ever did, and get bigger government subsidies – is a matter for debate.  After the 2008 crash and the revelations about tax evasion, we are beginning to understand that government need to be on the side of the people, not the corporate world, and it is a slow dawning realization.
• It’s now a long enough distance to say that Thatcher seems to have been an unpleasant person. She was denied a research post at ICI because the interviewers were worried she was too over bearing.  A retired journalist friend remembers her as Secretary of State for Education replying to a reasonable question “I didn’t come here to answer stupid questions from stupid people like you”.  (The question was to ask why she was the first Secretary of State to be booed by a teacher conference.)  Cabinet colleagues speak of her habit of humiliating people who disagreed with her.  Right wing papers discovered some former colleagues with stories of her kindness are there, but they were mighty thin on the ground.  Let’s not forget that she did not retire graciously: she was fired because of policy errors (Poll Tax anyone ?), because her colleagues couldn’t face working with her any more, and because she was very unpopular with the public.

So, what’s the verdict ?  She was a competent and hardworking Prime Minister with a right wing agenda, saved for a second term by a quirk of history – the Falklands War – and for a third term by a quirk of geology – North Sea Oil.  I hope we never get her on our bank-notes, and don’t think we will.  There was hostility and delight at her passing in some places, but many young people has little idea who she was, and the main reaction was indifference. A tweeter said it all, really: that for most of the length of her funeral procession, the crowds stood one deep.

The reason for the lack of postings for the last week or so is that I have been on holiday in the USA.  I’ll do some reflections on the experience – which was really enjoyable – as the jet lag wears off.  Let’s start with the US view of England.

We stayed in B&B and travelled on public transport, so had the opportunity to talk to quite a few Americans.  Admittedly, they weren’t typical – they were middle income people on holiday, and we weren’t in New York or California.  But it was extraordinary to note how the view of England has remained almost completely unchanged over the years.  People just loved Downton Abbey – a well made period drama, sure, but basically a soap opera in frock coats.  We were asked about the Queen – even a drunk in a New Orleans bar wanted to talk about the Queen.  Prince Charles came up, as did the recent royal wedding.  One woman asked over breakfast if the British still argued about how best to make tea – did we warm the pot ?  Did we put milk in first or last ?  Two couples mentioned the Cotswolds as the first place that came to mind from their trip to England, another Canterbury Cathedral.

Tony Blair got a lot of criticism for trying to present a more modern view of Britain – the press called the campaign Cool Britannia and then used the very term they had invented to attack it.  Maybe asking Oasis to No.10 wasn’t an essential component of the campaign, but the general thrust was surely right.  It would stun many Americans if you pointed out that the UK had invented the jet engine, discovered antibiotic drugs, introduced DNA testing, ran the first programmable computer, opened the first nuclear power station, wrote the language that powers the internet.  We have more than our share of Nobel prizes, Olympic medals and No.1 pop hits.  I think it is actually damaging to think of our country as a permanent museum, in which morris dancing troupes jigged around Tudor cottages.  I don’t ask tourists to prioritise the inner city or industrial wastelands, but there must be a way of politely modernizing the outsiders’ view of the country.

Here’s a suggestion.  Why not ask Arizonans if they still ride horses to corral their cattle ? Or Californians if they use a shallow dish to pan for gold ?  Or maybe see if Chicagoans know a good source of bootleg liquor ?  The questions sound ridiculous, but they are actually more up to date than much of the view of Britain that we faced across the morning waffles.

What I wrote in summer 1975

When I was a young further education teacher, I belonged to “Further Left”, a socialist group centred around a quarterly magazine of that title.  We weren’t boggle eyed extremists – had a few MPs on our advisory board, plus that dangerous radical Jack Straw, and one of our assistant editors has become a Lord.  In 1975 the big political campaign was around the Common Market Referendum, and I was a member of the “No” campaign.  Whether I would be for the next referendum is doubtful: there may be slimier things than sharing a stage with Nigel Farage, but I’m struggling to think of them.  I remember writing an article expressing the economic case for staying out, and I found it today when burrowing through some old personal records.  It included this extract on a single currency:

“ … monetary unions tend to create areas with lower incomes and higher unemployment than the average.  The reason is simple.  All countries have different rates of productivity change and inflation, and generally they can adjust by devaluation.  If this policy is forbidden because of membership of a monetary union, the only alternative is deflation: that is, unemployment and short-time.  It is a mistake to believe that economic theory demands large currency areas.  In fact it seems to commend smaller ones in order that changes in prices and productivity may be accompanied by gentle devaluation rather than unemployment and stagnation.

“The polite story now going the rounds is that the EEC has shelved its plans for monetary union.  We must realise that this is not true.  The momentum was  lost in the early seventies, but is being picked up again.  The Paris Summit of last December affirmed that in this area the Community’s will “has not weakened, and objective has not changed”.  Indeed, the Belgian Prime Minister was asked to go away and come back with a report on the matter: he will deliver his wisdom after the UK referendum …”

So, Gordon Brown did us a favour staying out of the Eurozone.  Yes, I know people who say “told you so” are pretty unattractive, but … “told you so”.

Footnote from 2025: saying there are two ways to cope with different internatioal efficiencies and prices – deflation or devauation – was true in the sensible world of 2013.  Trump reminds us there is a third option, which is tariffs and import restrictions.  The argument against that relies on Economics 101 international trade theory and comparitive advantage.  Too tedious to go into now, but in the early 19th century, J S Mill and David Ricardo showed how things are best made in places that can produce them efficiently, and nations benefit from specialisation and trade even if they do everything, or nothing, better than their competitors.

I promised some more reflections on my American holiday, and I need to clear them out of my head before I can get on with curing the economy and being the last blogger in the west to give my views about Margaret Thatcher.  It was a terrific holiday – five days in Chicago, the overnight City of New Orleans train to New Orleans, five days there with friends drinking cocktails and cheering Easter parades, then a few days in French Louisiana talking, eating and visiting Cajun.  The Americans we met were, without exception, charming and positive, even the beggars and car-hire clerks.  They were also (might be the folk we met) more socially progressive than Fox News might suggest.  So I wouldn’t like the comments below to be thought of as hostile, but I hope American friends will feel that critical is OK.  The remarks that follows are pretty disconnected, but here goes:

• I reckon there are about five days of tourist interest in any major city, and after that you feel that you’ve got the idea. Major art galleries, superb buildings, restaurants, bars and cafes, scenic walks and parks, a museum or two, they’re all great but then you’ve got to a point where you need contacts and networks to go to the next stage.  That’s why it is so wonderful to be shown around by locals, where you can get into the districts and activities that make a place magical.  I’ve had that in Jerusalem, Paris and Vienna, and a friend with exceptional local knowledge in Lisbon.  The difference is marked.  In the absence of native friends, I have rarely felt that I needed to stay another few days in any great city, and there are only a few – Budapest, Florence, New Orleans, Lisbon – where I’ve wanted to go back.  A couple – Rome, Prague – I’ve actually felt at a bit of a loose end on the final day: what a Philistine !
• Why do airlines say “We hope you’ve enjoyed flying with us’ ? Enjoy ?  En-bloody-joy ?  Any long haul air trip is at best a minor ordeal, with crying babies, barely edible food, arthritic knees and the guy in front reclining his chair for eight continuous hours.  There have been times when I have had really good service – Emirates Airbus 380 to India was very well done – and my wife has the charm to get the odd upgrade that allows sleep and glassware and metal cutlery.  But basically, air travel is a necessary evil, and after the first couple of trips, it is not something to justify the word ‘enjoy’ in the way that a meal, or a concert or a warm day by the sea do. And remember the hassle of baggage weight, of security, finding the terminal, returning your hire car miles away, or turning up two hours before the flight and all the attendant crap.  For neither of our transatlantic flights were we able to sit in the seats we thought we had booked before Christmas.   Sometimes, the term ‘cattle class’ is flattering; I await the first mutiny of passengers.
• Driving around Louisiana we were struck by the vast number of churches, an endless supply of religiosity, often supported by posters and neon signs. Every small settlement would have two, or three, or four churches, often the best building in town and sometimes the worst.  I recognise the atypical strength of faith in the USA compared with other advanced countries, but perhaps being a neighbourhood religious leader is a way of making a good living, particularly in a society where tithing is not uncommon.
• The American habit of tipping – where 15% is considered the basic and more is expected for good service – is unique in my experience. In the UK we think that 10% has to be earned, and that is high compared to, say, France, where loose change is the norm: yet there are tales of American waiters chasing guests down the road to insist on a bigger tip.  Parties of six or more routinely get 18% added to the bill, often on top of an unstated local sales tax that makes the meal 30% more costly than anticipated.  Where did the tip culture come from in the USA ?  I guess it is the way that waiters and bar staff get a livable wage – which makes you wonder why their employers don’t pay them enough out of the company proceeds.  After all, the USA is no longer a cheap place to dine or (try the wine, for heaven’s sake) drink.  Am I being a cynic in seeing this as a way of transferring a business expense – adequate wages – from the owner to the customer ?
• We enjoyed visiting southern plantations indeed, that was one reason we went back to New Orleans.  The history is fascinating, the buildings elegant, and many of the plantations know the background of the owners and their families for two hundred years or more.  The plantations we went to – in the lower Mississippi between New Orleans and Baton Rouge – were devoted to sugar rather than cotton, but that crop created great wealth for the owners. It seemed to us, however, that slavery formed a very minor part of the narrative.  Individual stories of the owners were told, but none of the slaves apart from lists that showed their sex, age and skills.  The only anecdote about splitting slave families was told to show how the owner’s wife had stepped in to prevent it.  Most of the slave huts had been demolished, with a few kept to show visitors after they had been to the big house.  No-one wants any nation to live in an endless froth of guilt – least of all the British, as we shall see in a moment – but much more could have been made of the origins, trade and lives of the slaves.  The fact that one middle-aged American lady asked the tour guide “And did the slaves dine with the family in the evening ?” indicates that there is something of an educational task there.
• For example: we visited Natchez, a town founded on the steamboat traffic that docked under a protecting Mississippi bluff, and the neat streets and historic houses were interesting enough. The visitor centre was well laid out but seemed to present the Civil War as a tragic intervention into a colourful and romantic local way of life, rather than a bloody struggle for justice.  This was reflected in the way that the civil rights struggle of the 1960s was totally absent.  Have a look at the Wikipedia entry, which speaks of all-white juries acquitting plainly guilty murderers, of the first promoted black worker being killed by a car bomb, of Natchez as the centre of the KKK, of a progressive local lawyer being all but ruined when he stood up for local black residents, all in living memory.  Where does the myopia come from ?  Is it because the municipality feels that visitors will be kept away by an acknowledgement of the brutal past ?  If so, they are wrong: tourists would be attracted by an approach which celebrated the courage and achievements of the local people who fought for the right.
• Interesting fact. Those who owned more than 25 slaves were excused from military service in the American Civil War, because they had an important task at home.  Like the Orthodox Jews in Israel, like the rich in Vietnam, when it comes to dying for the cause, we are not ‘all in it together’.
• The British shame I hinted at above was our role in expelling the French Canadians from Nova Scotia in 1755, driving them from land that was peacefully and well farmed. The Acadians became the Cajuns, and they celebrate a wonderful local culture, rich in music, craft skills, food, language: but about a third of them are estimated to have died in the forced expulsion, which was justified by little more than a suspicion that they would not be totally loyal to the British crown in the French Wars of the period.  This episode is unlikely to appear as one of our imperial glories in Michael Gove’s new history curriculum. Longfellow wrote an epic poem around Evangeline, an Acadian young woman separated from her love by the expulsion: we saw the oak in Martinville where she finally found her man again.  We visited a lovely reconstruction of an Acadian village, complete with smithy, church (RC of course) and school house.  One memorial has a wall giving the names of those who survived the journey and came to Louisiana – and the host of our B&B was a descendant of one such.
• American localities seem to regard signage as an option. It took us 30 minutes to find the train from Chicago O’Hare Airport to the city.  Traffic signage involves simply the number of the road – very rarely showing the name of the next significant settlement.  Luckily our hire car (yes, we did drive a Chevy to the levee) had a compass reading on the rear view mirror, so we could have some idea we were following Highway 61 north and not south.  Road surfaces were awful – the car hire folk from Enterprise (who were great) attributed this to being a poor state but when petrol is sold at a third of European prices, surely a few cents of fuel tax would provide the resources for the road system a modern country should expect.
• Town centres generally seem pretty down on their luck. Outside of the main cities, we saw plenty of empty shops and closing businesses, even in pretty and distinctive towns like St. Martinville.  Don’t know whether this is due to the recession, like the Chicago beggars mentioned in an earlier post, or (more likely) due to the omnipresent strip malls that follow the arterial routes out of town.
• American beer is improving greatly. I remember as a student being offered the omnipresent light lager – Budweiser, Coors and so forth.  Now local microbreweries across the States offer drinkable, tasty beers: ‘amber ales’ are on offer – similar to British bitter or light ales, and drinkable with meals as well as over the bar.  Goose Island in Chicago was very drinkable indeed, as was Abita Amber in New Orleans.  It’s a trend recently noticed by the BBC, and one that might offer the advantage of reducing the massive US production of ice cubes.  Has anyone calculated the energy that goes into filing every available glass with ice ?

Just to repeat – overall a fascinating and friendly experience, and we’ll certainly be back.  You just have to remember you’re in a foreign country !

I’m still working on the Thatcher assessment.  I know it’s overdue, but the dog ate my homework.  In the meantime, can we sniff around one of the clichés that has filled out papers recently – that the reason Thatcher was unpopular was that “people hate change”.  This trotted out whenever some government department or mega-corporation decides on a new way to reduce services or screw their workforce.

People do not hate change.  Many changes they like a lot.  I like the fact that dentistry no longer hurts, that I can get raspberries in February, that cars don’t break down and that clothing can be washed without shrinking or running.  I like the way people can have sex without getting pregnant, or if they want to get pregnant, they get help to enable them to do so.  I like the way that road casualties have fallen by three quarters, that cancer survival rates are constantly rising, that gay friends don’t have to worry about blackmail or physical assault.  Change is just great.

What I may react against is cancelling a convenient bus service, or taking a government service centre miles away from its clients.  I can be heard to gruntle as train fares go up again, or as a perfectly serviceable public industry is sold to some Tory jack-the-lad.  When I worked in colleges, I may have raised an eyebrow when the funding system was changed for the eighth time (back to what it was the second time), or the inspection regime changed for the fifth time. I can restrain my pleasure when my road is dug up for two months to create designated parking spaces for cars in the exact same spot where they park peacefully at the moment.

Let’s cut to the chase.  What I dislike is not change, but things getting worse.  And I think that is what ministers and chief executives and PR spinners know, under their skin, when they smile through a firestorm of public opposition to their latest idiocy.  Problem is, we now live in a society where a firestorm of opposition is felt by those in charge to indicate that changes are dynamic and desirable. Politicians have moved from saying that some tough decisions are justified to a position where no decision is justified unless it is tough.

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.