July 2012

Explaining one of Polly\’s numbers

So, I asked her, where does this come from?

in the past decade the average bonus for FTSE 350 directors rose by 187% while share prices declined by 71%.

And I am told that it is here.

In the past
10 years, the average annual bonus for
FTSE 350 directors went up by 187 per
cent and the average year-end share price
declined by 71 per cent.

Hmm, so, did the FTSE 350 decline by 71%? No, it didn\’t.

So, a reasonable assumption would be that the share price of those early components of the FTSE 350 declined by 71%.

Given that the FTSE 350 is based upon market valuation (number of shares times price) we would therefore assume that at least some of such companies would fall out of the FTSE 350 to be replaced by others newly more valuable.

Hmm. But the calculation of the bonuses is based upon those currently in hte FTSE350. That is, the companies whose value did not shrink by 71% and thus fall out of the index to be replaced by those who pay higher bonuses.

Sounds like an argument in favour of bonuses to me really.





Anyone want to back Polly up here?

The late 70s saw the most equal time in British history, but since then the rich have got richer and the poor poorer.

Does anyone at all want to try and back up that assertion? That the poor in Britain are now, by any absolute standard that you want to use, poorer than the poor were in late 1970s Britain?


in the past decade the average bonus for FTSE 350 directors rose by 187% while share prices declined by 71%.

Did share prices decline by that much? Can\’t recall that they were three times higher than they are now. Not that I pay much attention to share prices mind.

This ain\’t neoliberalism Mr. Monbiot

Neoliberals claim that we are best served by maximising market freedom and minimising the role of the state. The free market, left to its own devices, will deliver efficiency, choice and prosperity. The role of government should be confined to defence, protecting property, preventing monopolies and removing barriers to business. All other tasks would be better discharged by private enterprise.

And as a neoliberal I know these things.

What you\’ve described there is one form of libertarianism: not the same thing at all.

A neoliberal will readily admit that governments should do many more things than just those four.

We\’re entirely happy with the existence of a welfare state for example: just perhaps not the one we\’ve got. State involvement in education and health care is just lovely jubbly. Although we might argue that financing is the important role, not direct provision. We argue that there are indeed externalities which need to be corrected for: the ASI was a long term supporter of the London congestion charge for example. Currently argues for road pricing.

Climate change is an externality: I argue one that needs correcting for. It\’s true that I argue for an alteration to the market to solve it, via a carbon tax, rather than detailed regulation. But note that I\’ve not said that government has nothing to do with this.

Nor would I argue against subsidy to (if not, in some cases, direct provision of) public goods.

Neoliberalism differs from modern lefty type liberalism in only two important ways.

Firstly, we believe that the number of things that government is competent to deal with is rather smaller than lefty liberals seem to believe. We do thus argue that government should try to solve fewer problems: not because they\’re not problems but because we see them as not being solvable by the Man in Whitehall.

Secondly, we believe that market mechanisms (no, not markets unadorned, but market mechanisms as suitably tweaked) are often the best way to solve those problems that are amenable to a solution.

In short, you\’ve set up a strawman there and they are famously easy to fulminate agaionst. As you do.


There are better legal minds around here than mine but:

But they will also ask for a writ of habeas corpus freeing him from custody.

The common law procedure developed in medieval times and is Latin for “you may have the body”.

Umm, doesn\’t it mean \”we have the body\” or perhaps \”here is the body\”?

The basic idea being that if someone is languishing in some Baron\’s dungeon then the King\’s courts they (or, I think, anyone else?) can demand that they are presented in the King\’s courts to determine whether said Baron (or anyone else) has the right to detain them?

Going back some the point being that the body itself had to be presented at the hearing so that it could be freed if that\’s what was going to happen?

BTW, on this Qatada thing, this specific case, my view is as always. He may be a bad \’un, I have no idea. But he gets tried and treated the same way you and I do. As far as the law is concerned you\’re not a bad \’un until you\’ve been tried and proved to be so. And yes, there are exceptions to this. Flight risk is a reason for denying bail as is the risk of witness nobbling. And there are times, like when we\’re at war, when we have internment which is, essentially, the withdrawal of the protections of habeas corpus.

But we haven\’t declared that last. Qatada hasn\’t been convicted of anything in our courts. He\’s not a flight risk, quite the opposite. And as we\’re not trying to charge him with anything there are no witnesses to nobble.

And we just don\’t do preventive detention for the quite obvious reason that we\’re a free country of free people.

And yes, he\’s a scumbag: and as Larry Flynt pointed out, if the law will protect scumbags then it will protect you and me.

Free Abu Qatada!

Ebola in Uganda

Ebola is one of the most feared infectious diseases in the world and there is no specific treatment or vaccine. But despite being extremely virulent the disease is containable because it kills its victims faster than it can spread to new ones.

Not entirely and wholly true.

Yes, it does kill people quickly and thus a pandemic is most, most, unlikely. But it doesn\’t infect and then immediately people are dead. There is time for further infections to occur.

What seems to have been the limiting factor in earlier outbreaks was that they were in very rural areas. We really don\’t know what will happen if it ever turns up in a crowded urban area.

Officials from Uganda’s health ministry only confirmed that the disease was Ebola at the weekend, by which point it had reached the capital.

But we might be about to find out.

All the country\’s biggest milk supplier have reversed price cuts following protests by angry farmers. Sigh

It\’s only going to delay the inevitable.

\”The united coalition group together with united dairy farmers, supported by the media and general public, have taken us up the first step towards a sustainable dairy industry, for the future of the next generation of dairy farmers.\”

Already the number of dairy farmers in the UK has gone down from 34,570 in 1996 to 14,500 today.

Dairy farming is becoming more efficient. We therefore need fewer dairy farmers. Propping them up through price fixing does not change this basic point. Those who can become more efficient will continue to do so: so the pressure on the price will continue.

Thus instead of a constant trickle of people leaving the industry (or perhaps more importantly, not entering it) we\’ll end up with a violent shake out at some point. Maybe not next year, perhaps not even this coming decade. But it will happen.

Is gradual change so much worse than violent such?

How about that: Still racists in Mississippi

Charles and Te\’Andrea Wilson had set the date and mailed invitations but, the day before their wedding, the pastor of the predominantly white First Baptist Church of Crystal Springs said the ceremony would not go ahead.

The pastor told them a small number of church members had virulently opposed holding the event at the church, and he faced being sacked if he went ahead with it.

The difference between now and 50, 60 years ago is that it was a vociferous minority who objected, not the overwhelming majority who simply thought that that\’s the way things are and should be.

Things ain\’t perfect anywhere as a quick look around our own society will show. But they have largely got better if not yet achieved nirvana.


Planning laws could be watered down again in a desperate Treasury move to rescue the UK economy from recession.

Not that it\’s likely to happen soon nor be very radical when it does.

I\’ll agree that supply side changes are unlikely to have much short term effect on the growth rate of the economy. But they matter hugely in the long term and there\’s no time better to attack the privileges of those protected by supply restrictions than when everything is shite anyway.

Well that explains David Puttnam then

I sincerely believe the same is true right now. My favourite newspaper columnist, Tom Friedman of the New York Times,

We can therefore safely dismiss anything at all Puttnam says about anything other than camera angles.

Friedman performs much the same function that Willy and Polly do here: forming the butt end of the compass.

Yer What Willie?

Ever since the early 1960s, successive governments had tried to create a high investment, high innovation economy in which the quid pro quo was an acceptance by a strong trade union movement of wage restraint via incomes policies.

Healey believed passionately in this model – it is what happens in Scandinavia and Germany.

I think you\’ll find that such \”wage restraint\” comes from voluntary agreements by the workers and the unions, not by dictat from Whitehall. Quite a difference there really, no?

And does anyone at all think that such a model is viable with Bob Crow and Mark Serwotka running major British unions?


The insignificance of tax evasion

I know this will get blown up into some massive number but think for a moment:

British clients of an HSBC-owned private Swiss bank that is the focus of a major HM Revenue & Customs investigation are alleged to have evaded tax by an amount likely to exceed £200m, the Observer has learned.

Note that this is not the sum for one year. I\’ll assume, just because it\’s necessary to assume something, it\’s for a decade. £20 million a year then as against what, £500 billion the government takes?


It may well be illegal, naughty, immoral and all the rest. But it\’s not a significant number.

Dodgy number but informative

Between 2000 and 2010, public spending as a share of output rose by a whopping 14 per cent (to more than 50 per cent of gross domestic product) – most of it before the 2008 recession. And that doesn’t include the bank bail-outs.

There are two ways that this can happen: spending rises or GDP falls. We\’ve had both of course which is what makes it a slightly dodgy number.

But it is still informative.

We could, for example, point to all those lefties who insist that the previous growth was somehow \”unreal\” as it was built on finance and borrowing, not making \”real\” things in manufacturing. We could even agree with them and then explain that the fall in GDP is just that unreal growth being exposed. So we\’re poorer than we all thought we were and thus have to spend less.

But that would be mere political quibbling which isn\’t something we do here, preferring instead the deeper truths.

One of which is where I think we come to Brown\’s great mistake. And somthing that is going to be the basis of my next project (to which you will be able to contribute! Yay! Sharpen those credit cards now!).

While I don\’t think that the Nordic model is the desirable society it\’s obvious that many do. OK, that\’s a difference of opinion, of underlying prejudices and nothing to do with economics. I think it\’s also obvious that what Brown was trying to do was to take us closer to that model: that explains his maniacal increases in public spending. But what he, Polly, most of the \”social democrats\” in the UK miss is that there are two pieces to what makes those societies work.

If you strip out the high tax high public spending part of the Nordic model you find that underneath they\’re actually much closer to a classically liberal economy than we are. Sure, there\’s a whacking great social saftey net and so on: but there\’s at least one paper out there (by Scott Sumner) insisting that by every other measure Denmark is the most economically free nation of all (well, OK, advanced/industrialised).

Both Obama and Tony Crossland have at times made the point that we can allow the market, capitalism, to produce the wealth which we then use to build that better, high tax high spend, society. But what they\’ve missed is, Crossland more than Obama, is that depsite there being a great deal of ruin in a nation you do have to be very careful about how you weigh upon that market/capitalism if it is to produce the growth to pay for your schemes.

Brown (and Blair) rather missed this point.

There are other ways of approching the same point: take the \”European\” method of dealing with labour rights/employment. There isn\’t one: there are at least four models. Anglo Saxon, Southern, Nordic and Germanic. Different mixtures of training, employee rights, social support etc etc. That southern one, that emphasises the rights of the current employee to keep that employment near no matter what, seems the worst of them. The Nordic, which like the Anglo Saxon has very few such rights seems better: the Nordic also offering high unemployment pay, lots of retraining etc also seeming better.

The point really being that there\’s more than one part to the model that makes these various societies work or not work. And just taking one part (high taxes! Lots of government spending!) and ignoring the others does not for a great polity make.

Which is, as I say, I think the mistake Brown made. It\’s also I think the mistake various of the more unthinking Tories (a reasonably large group) also make. Slashing welfare might be useful, even necessary, but it\’s not sufficient. There\’s more to a low tax small state viable solution than just that. Just as there\’s a lot more to a viable high tax large state solution than just tax and spend.

Just a little note about Ritchie\’s bonds thing

You know how Murphy continually tells us that the stock market really doesn\’t do it? That everyone should be investing in bonds, not shares?

The pulling power of dividends is constantly highlighted by Barclays in its Equity Gilt Study published every spring. Its latest survey showed that £100 invested in shares in 1899 would today be worth £22,239 in real terms with dividends reinvested, compared with just £160 without.

Now that\’s an extreme number of course. But it does show the mind gargling stupidity of Murph\’s caclulations. For, as you will recall, he looked at stock market returns excluding dividends.

Currently, the risk free long term return on bonds is negative. That on shares (which are of course not risk free) is positive.

Murhp says that to save for your retirement you should be buying bonds. Indeed, the government should force you to.

Ho hum….

No Ms. Orr, No

Raw materials and basic services need to be valued more, manufacturing skill needs to be valued more and, oddly, \”things\” need to be valued more.

You don\’t get to determine what value is nor what is valued nor how.

We\’ve got this market thing you see? Which, at root, is simply all of us, all 7 billion of us, placing upon what other people produce the value that we think it has. Each of us individually exercises our judgement, measures the additional utility that a good or service brings us and the market aggregates those into a system of prices: the values.

And that\’s it I\’m afraid. There is no great secret.

But it matters what teachers are trained in

Usual nonsense from someone inside the cartel about relaxing the entrance rules to the cartel:

The news today that the education secretary is to remove the requirement for academies to employ qualified teachers sent a shudder down my spine. For a teacher like me, who has taught for more than 20 years in various comprehensives and has spent a great deal of time, quite a bit of it my own time, being \”trained\”, I know that pupils get a raw deal if they are taught by an untrained teacher.

Firstly, a properly trained teacher is fully conversant with the various theories about how children learn; he or she understands that you can\’t just stand at the front and bark orders, that you need to engage children in \”active\” learning where they are doing things that assist with their learning. A well-trained teacher knows how to assess their pupils lesson by lesson, and use their assessments to shape further lessons, building upon a child\’s strengths and tackling their weaknesses.

I know I wouldn\’t be nearly as effective as a teacher had I not been trained.

No one at all is suggesting that teachers should not be trained.

The argument is over whether a teacher needs to have a post-graduate course (even a degree at all) in trendy arguments about \”how children learn\” or they need 6 weeks of standing in front of a class and being told what they\’re doing wrong.

I can quite easily find you a current teacher who would say that the 6 weeks or so of classroom practice helped a great deal more than the year of academia (Hallo Shuggy!).

It probably would be a good idea if someone teaching Further Maths A Level had a Maths Degree….or something close to that level of education in the subject. The idea that someone needs a post-graduate degree in order to oversee the finger painting in Year One is rather harder to support.

Bravo! Bravo!

The ASI addresses the Olympics.

The outcome of this approach to the Olympics is that my religious zeal for London 2012 is roughly the same as everyone else\’s religious zeal for other, lesser-known athletic competitions; namely, it is non-existent. This is a far more reasonable and mature approach than that which has been adopted by the British government. Our \”heroes,\” lest we forget, engage in individual competition all the time, none of which the media seems to call heroic — for example, on a biennial basis in the European Athletic Championships (2006, Gothenburg; 2010, Barcelona; and 2012, most recently, in Helsinki). But (1) nobody apart from track and field buffs talk about the hero-rockstar-legends who changed the course of history in Gothenburg and (2) no multi-billion-pound infrastructure investments were made in Helsinki anytime recently.

This is because (1) none of us were paying any attention when they were running in circles in Gothenburg and (2) it was a track and field meet, for Christ\’s sake, not first contact with an alien civilization. It is perfectly possible to hold a track and field meet without spending a dime: you just set a time and a date for everyone to turn up, say \”go,\” and time how long it takes them to go from A to B. Winner gets a ribbon. Piece of cake.

D\’ye think Paris might still be interested?