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Saturday, 28 February 2015

Arrogance versus folly

Ed Milliband has produced the first seriously silly proposal of the election campaign from a major party, ignoring the bloody experience if the Libdems in government. He is trying to buy the student vote by cutting fees in universities in England from £9K a year to £6K. Thus the debt on fees from a three year degree falls from £27,000 to £18,000. As students interviewed on TV olast evening said, add to this the debt from maintenance over the same three years and you face a total of some £50,000 at the present fee rate and £41,000 in Ed's Wonderworld. Big Deal! Ed tried to mitigate this by pointing out that the poorest students can get maintenance grants and universally bursaries, that somewhat reduce the maintenance burden. But someone aged 21with an indifferent degree in an oversupplied subject from a less-fashionable university - with no underpinning from the Bank of Mum and Dad - will face a difficult world with a debt of around £30K and the prospect of earning around £21K annually if they can get jobs at all. A notional reduction in the debt that lower-paid graduates may never have called-in is a very bad joke to the person who is expected to vote Labour to secure this huge benefit.

Meanwhile the ineffable rubber-faced Gideon at the Treasury gloats at Britain's "world beating" rate of economic growth. Any country can record a growth in turnover if more people are employed on minimum wages to sell more imported goods on credit. But it all hastens the day when the material despoliation of the economy becomes so severe that sources of credit are sealed off and the ruin that has been wrought on the people becomes fully evident. That arrogance is much more dangerous than Ed's sheer silliness.

Sunday, 22 February 2015

Greece cannot lose.

Very few informed Europeans can be ignorant of the fact that the Greek Finance Minister is a game theorist who has pushed the art to its limit in classes and in academic journals worldwide. He knows what game he is playing.

Most of the uninformed subjects of the eurorats of Brussels have accepted the proposition that the issue with Greece is one of financial probity: it is said that Greece has been even more profligate than Ireland or Italy since it joined the Euro, and needs to stick to its undertakings to bring its finances into line with the demands of the EU, the ECB and the IMF.

Not many people outside the UK and Russia want to admit that the European Union is in every element of its being a political structure. It has massive economic ramifications, but they are, and always have been, subject to the political imperative of ever-closer union. While the originators of the project were clear that their underlying motive was to remove the possibility of internecine war from the European continent; it is no longer anything like so clear-cut as to what Union - let alone 'ever-closer union' - is meant to achieve.

The common currency, the euro, was purely a political venture. Again, it had economic implications that have far exceeded the prognostications with which it was ushered into existence; but the fact that it was an adjunct to the political process was never challenged seriously. Thus in declaring that the participating states had sufficiently 'converged' in their economic plans and data that they were fit to share a common currency the political judgement transcended the economic in all cases. It was common gossip that Italy and the Iberian countries, Ireland, Greece and Cyprus had window-dressed [i.e. had optimistically massaged] their data, with the EU further airbrushing the picture: these were seen as trivia in the achievement of the greater objective.

With that as the basis on which the whole structure rests, political fudge is available to maintain the appearance of the structure; at least for the purblind pursuers of the tarnished 'ideal'. Greece will make further promises, almost on schedule by the middle of this week. Funds will be released. Conditions will be promulgated that nobody can expect genuinely to be fulfilled. Austerity in Greece will be eased: but not by enough to maintain the fickle electorate's faith in the new government. So the European Union will stagger on into another decade where the central accounts of the Commission will not properly be audited and ever-more-egregious fantasy declarations of the Commission will be respected to some extent in various of the member states.

Friday, 20 February 2015

The Bishops and the Gas Bill

The bishops of the Church of England have gently pointed out that there is a great gulf between the 'political class' and their supposed constituents, and that this may be greater than ever.

When most politicians were from the landed classes they necessarily mixed every day with dozens of servants, from whom they would receive many home truths. In the glory days of the Labour Party almost all of those who became MPs had been hands-on workers and often long-serving trade union officials: the minority of intellectuals in the party were constantly reminded that their constituents were honest sons and daughters of toil, and even when they became ministers this lesson was constantly reinforced. Almost all of this has gone: few Tories ride every day, few Labour MPs live permanently in terraced houses exposed to neighbourly contact [though a few have - rarely occupied - such properties as part of their propaganda facade]. The politicians who have waxed comfortably over the past couple of decades are more remote from 'hard-working families' than any who have gone before them.

The Scots have found their own solution to the problem; and how that works out in the next parliament will be fascinating. I think the English and Welsh can consider that exception remote from their own options; though it will influence what is possible very considerably. My acquaintance are almost uniformly of the view that UKIP will take votes but not seats, but that may be enough to upset the statistical predictors. The next government will be Conservative or Labour and its members will be no less isolated from the mass of those whom they purport to serve,

My little book, Rottenomics: Replacing Economics, is available on Amazon [and will shortly be on Kindle]. Its opening paragraphs make exactly the same point as the Bishops make, with an important difference. I go on to say that a major factor in the alienation of politicians from people is the politicians' adherence to absurd economic propositions. This has superbly been illustrated this week.

The Competition and Markets Commission has been considering household energy bills, and has found that millions of people have 'lost' hundreds of pounds by not shopping around and switching their supplier, The clever Economics graduates who now work for sectoral regulators as 'regulatory economists' have a mission to compel the participants in markets to behave as their textbooks say participants in the economy should behave, thus to create an 'efficient market'. Most consumers take the view that they pay for regulators to control the market and ensure that suppliers treat customers fairly: so why should people spend many hours trying to understand deliberately obfuscatory billing and pricing systems, then venture into an alien world of websites in search of a supposedly better deal. They have to take the site and the information that it gives to them as being entirely objective and personally relevant. Millions lack the confidence to go down that route, and hundreds of thousands do not have the competence to do so. And why should they bother, if there is a regulator? Is it the task of the regulator to ensure that fair [lowest possible] prices are charged, or - as now seems to be the case - is it their role to force hard-working householders and deserving pensioners to jump through hoops so that their behaviour conforms to a nineteenth-century fantasy about 'competition'? I know what most people would prefer. That is their choice: so why not facilitate it rather than frustrate it?

Tuesday, 17 February 2015

Saving my Bacon?

Over the past week or so I have been both excited and seriously embarrassed.

For a considerable time I have been preparing to set out my views on the rottenness of academic Economics and its need for reformation; and I planned to call the short book BLEAKONOMICS.

In the run-up to publication, I 'googled' that word - and found that someone had already produced their text [on the recent 'economic crisis'] under that title. So I fell back on the alternative, ROTTONOMICS. That was published on-line yesterday by Amazon; the Kindle version is due to follow soon.

I welcome any comment or advice, however critical and negative

The only similarity to my title I can now find on Google is Rotten Comics; which [in my view] is a reasonable description of advanced economic theory as it emanates from academe.

I shall return to normal bloggery shortly.

Friday, 6 February 2015

Pathetic Politicians

Most of the leading members of the British political class have studied Economics.

This does not help them to do their job even adequately. The theory that they have been taught has been the basis on which misconstrued and ruinous policies have been pursued in the UK for longer than their lifetimes.

Take the most obvious item of economic data, which is presented as the touchstone of Cameron's and [even more so] of Gideon Osborne's asserted 'success' in office: the claim that 'economic growth' is good for the country. The growth consists of both consumers and the government borrowing money to fund purchases of imports. Sales of imports have grown, and more people  have been employed distributing and selling imports to each other, wearing imported clothing and eating imported food. Millions of them wash in water that is delivered to them by foreign-owned companies who can export any profits the supplier can make. The water is heated by foreign-owned gas and electricity supplies. A huge proportion of the branded goods that they buy - of familiar things like HP sauce and Sarson's vinegar - are foreign owned; so the net profit of those sales is allocable according the the interests of foreign firms. It has been reported as quite a coup for the government's propaganda war on 'tax evasion' that Starbucks [brilliantly branded, horrible coffee] has finally admitted to the attainment of a tiny profit on the turnover of their UK outlets which can be taxed before the bulk of the actual profit is allocated via Luxembourg to the greater expansion and profit of the firm outside the UK.

A rigorous examination of the British economy produces hundreds of thousands of incidents of expanding turnover taking net profits out of the UK; and fewer and fewer examples of profits flowing the other way, year on year, as the government welcomes 'investment' in the form of alien takeover of yet more British firms. This has been an alarming process.

The only positive way in which an economy can grow is by both indigenous and foreign investors putting their capital into activities in the country concerned, and then continually reinvesting the bulk of the profits that accrue to successful activity in further development of productive potential in the country, Britain has been growing negatively - by selling its profit-generating assets - for the past three generations. As a result, a majority of the population have become, in the true sense, paupers: people whose livelihood depends on state handouts as state pensioners, benefit recipients or as members of households that receive some sort of income supplement. And, of course, more and more of the handouts are borrowed by the government, in defiance of what the government wants to happen.

No member of the political class has confessed to this reality as they shape up for a fatuous battle of slogans in the coming election. Most people would love to be members of really 'hard-working families' whose work generates profits and investment for the British economy: but none of the buffoons offers them the means of achieving that simple objective.

This is the national tragedy..

Monday, 2 February 2015


This is a very important week for me.

I am to publish my little book - Bleakonomics - in which I suggest that the confection of normative propositions known as Economics has become lethal whenever its practitioners are allowed to drive public policy.

Having made that assertion as baldly as possible, I then set out what remains as the basis of a rational and defensible description of the contemporary economy. Much of the public policy that should be followed is directly derived from the science of Political Economy, as it stood in 1870 before it was swept aside by the new [and essentially fantastic] Economics.

The greatest gap in both the Political Economy that was taught in Cambridge during the tenure of the Chair there by Henry Fawcett and the Economics that was set out by his successor, Alfred Marshall, was a failure to recognise the crucial role of intellectual property of all kinds as a factor of prime significance in the system. It remains a glaring gap in Economics to this day; though various half-cock nostrums have been thrown at the matter by the few who have allowed it to trouble them.

I will report on progress with this, as well as commenting on economic events egenerally in the coming period.