Saturday, November 25, 2006


I seem to have picked up some kind of stomach/head flu. It is making me feel absolutely awful and I'm not sure if I'm particularly coherent. As such, I won't return to blogging till I feel a bit better.

Friday, November 24, 2006

Ten Things I Would Never Do

I appear to have been tagged by the inimitable Gracchi with this meme.

Here we go:

1. Make out Guy Fawkes to be some kind of folk hero.

2. Watch South Park Episode 1010 - Miss Teacher Bangs a Student without laughing. "I hope you've learned kids, that if you don't go with Christ, you could wind up like that splattered bitch down on the pavement." - Cartman a.k.a. the Dawg

3. Let the Egyptians steal my canal.

4. Get what is so great about Boyz N The Hood.

5. Write as well as H. L. Mencken.

6. Bring a knife to a gunfight.

7. Join the UKIP.

8. Fight in the war room.

9. Try to industrialise through import substitution tariffs.

10. Enjoy food that has been "smoked".

I'll tag Alykhan Velshi, DK, Mr. Eugenides, A Very British Dude, the Adam Smith Institute, This Scepter'd Isle, The Serf... and then I've run out of inspiration.

More on Greg Clarke: Why inequality isn't necessarily a bad thing

If Greg Clarke wants the Conservatives to replace a concern for absolute poverty with a concern for relative poverty, which is largely a measure of inequality, it is worth considering whether or not a rise in inequality is necessarily a bad thing. Clearly it could be, there may be a diminishing marginal utility to wealth or increasing inequality could mean people becoming poorer in real terms.

However, the growth in inequality since the 1980s has taken place largely thanks to a growth in the earnings premium on skills and education (as Clark notes in his report - this opens a Word document). This is still the pattern internationally now as Becker notes in this, brilliant, post from a few months back. He goes on to describe how the increased rates of return on human capital (education and skills) are a part of rising productivity and, while they will produce rising inequality in the short term in the long term they create a greater incentive to education which the public will respond to. The final result is people doing more interesting work for more money.

Greg Clark acknowledges that one of the causes of rising inequality is a decline in demand for unskilled work. However, while in the short term this causes hardship in the medium to long term a reduction in the numbers in unskilled work is emphatically a good thing; skilled work is better. The end of the coal mines was a temporary tragedy for those put out of work but, in the long run, mining coal is no fun and Britons no longer having to do such a job is a good thing.

Of course, as Becker notes, this can break down if people aren't able to respond to a fall in unskilled or low skilled work by gaining skills but the key is to attack the real disease in the education system (school vouchers maybe) rather than responding to the symptoms by providing hand outs which may be necessary but don't attack the causes of inequality or poverty. However, it is important to note that in Britain the system would appear not to be entirely broken. We have seen a lot more people going to university and a decline (if a slow one) in inequality in recent years. Are we not, therefore, better off for the incentives that the growth and end of subsidies in the eighties produced?

A rise in inequality, if the source is a rising return to education, is a cause for hope rather than fear; our caravan wasn't falling apart but moving forward.

Iain Dale attempts to defend Greg Clarke

Iain Dale thinks the right wing response to Greg Clark is overblown but I think he rather misses the point when he says:

"I am not someone who believes that everybody must be equal. Like Boris Johnson in today's Telegraph, I believe that society needs winners and losers. Winners must be rewarded, but society cannot function properly if we forget about the losers. But I actually regard it as a triumph of our society that we can even talk in terms of losers being people who earn 40% of the media wage.

As Pascal says in the comments to the previous post... "Maybe I am confused, but doesn't the concept of relative poverty means that there ALWAYS will be poverty, no matter how much you raise the lower incomes? At least not until everybody earns the same amount."

I don't think even Polly Toynbee is suggesting the latter, but Pascal's point is a valid one, and perhaps one which Greg Clark ought to address. I don't know what the media wage is in Liechtenstein, but I suspect that under the current definition of 'relative poverty' a large number of very wealthy people would be caught in the poverty trap there. We Conservatives must not be defined by the language of the left and if Greg Clark made an error, it was possibly falling into that trap."

This is exactly what Toynbee and Clark are suggesting. In fact, more than that, they're suggesting 60% of the median wage for the cut off. This isn't Greg Clark falling into some linguistic trap. Look at the graph in his full report (this opens a Word document): that is based on the 60% of the median figure when other thresholds are available in the same DWP data series(I checked - this opens an Excel file).

While, as I acknowledged, there might need to be some adjustment of the absolute standard over time relative poverty does mean something distinct; that people are in poverty if below a certain portion of the median income. Clark is trying to convert the Conservatives to the view that inequality is poverty; that if everyone's income doubled poverty would not fall. Iain should be careful who he defends.

Thursday, November 23, 2006

Any ideas?

This blog's description/subtitle "Thoughts on UK and international politics and economics from an LSE Economic Historian" was always a bit bland and only useful as a claim to some intellectual substance. Now I am, for the moment at least, not at the LSE it is innaccurate as well as bland. Can any of my readers suggest a new description? Suggestions via the comments or e-mail would be very welcome.

Mark Danner on the Iraq War

If you can stomach an account of what went wrong in Iraq you are unlikely to do better than Danner's review of three books chronicling the conception, planning and execution of the war. I supported going to war, without ever using the crutch of WMD, and my ideological starting point is clearly deeply conservative. However, I am feeling increasingly confirmed in my view that, regardless of the many flaws of the Democrats, the Republican administration has been such a disaster they needed to be punished at the congressional elections and that this will go down in history as one of the most disastrous US administrations.

Via the American Scene.

Wednesday, November 22, 2006

But... people like Churchill...

Good post from one of this blog's good friends, Gracchi over at Westminster Wisdom, about how Churchill was actually a pioneer of attempts by the Conservative Party to attack poverty, switched parties over the rise of protectionism which increased the price of bread and was a "strong [partisan] of national compulsory insurance for all classes for all purposes from the cradle to the grave" (at the time still a novel cause).

I think Gracchi is correct that this is an attempt by Clark to identify with emotional Polly over the old patrician Churchill but I would add that it seems desperately misguided. Whereas distancing yourself from the deeply divisive Thatcher and associating yourself with cuddly Mandela clearly puts you on the popular side of the fence Churchill has a massive hold on the popular imagination as not just a good but a great Briton. When someone is placed first on a list of the Greatest Britons (followed by Brunel with the emotive, caring Diana in third) they make a poor candidate for old Tory bogeyman.

Cameron may want to come across fuzzy when the comparison is with the decidedly unfuzzy, cold public personas of a Tebbit or a Thatcher but this time the comparison is with a man the British idolize as a personification of their favourite aspect of their national character; the phlegmatic courage which beat the Nazis. Emphasising how different you are from a man remembered so fondly is a deeply bad idea.

To test how bad an idea I propose the following survey, if YouGov would be so kind:

Q. If there were an election tomorrow, with both these hypothetical parties standing for election, would you vote for a) The Conservative Party with Winston Churchill as leader or b) The Conservative Party with Polly Toynbee as leader?

If a) wins by less than 30% consider me shocked.

Relative vs. Absolute Poverty

Greg Clark is pushing relative over absolute poverty and calling it the Toynbee agenda for conservatives. I think he may have oversimplified his analysis and wound up making the case for a definition of poverty quite different to the agenda of Adam Smith and other conservative fighters of poverty.

Consider two scenarios:

  1. Someone £1 below the median income picks up £5 that the Duke of Westminster has dropped in the street and pockets it.
  2. There is a depression in which the incomes of every section of society fall by 10% over a year.

Under the relative measure of poverty the former would be a rise in poverty and the latter would not. Adam Smith's measure, based on a changing basket of necessities, would come to the opposite conclusion.

Relative poverty works on the Marxist (in the intellectual sense - not Communist) assumption that envy, class hatred, is at the root of why we dislike poverty; that we dislike it because some are so much more rich than others who are poor. I would have hoped that a conservative, by contrast, dislikes poverty because it leaves some unable to form a part of our, one, nation. While this may change with average real income that change is not necessarily proportional.

Other factors besides median income may affect the basket of goods required to appear in society. Surely one reason the Ancient Greeks didn't have linen shirts in their basket of necessities to avoid poverty is also a reason that the Olympics in 2012 cannot involve as much as nudity as those in ancient times; Greece is a much warmer place than Britain. As such, British people would always have had the price of a greater quantity of clothing in their basket of necessities to avoid poverty. There will be other differences between time and place in what is needed to avoid poverty which are not a linear function of median income.

Further complicating the calculation is that prices do not change in a linear fashion across the economy. There is strong evidence that goods which the poor spend more of their income on (manufactures and food) are seeing much less inflation (thanks to currency manipulation and new capacity in the Far East among other things) than those the rich spend income on (education and other services). It could well be that a diminishing proportion of median income is needed to escape poverty in terms of the bundle of goods needed to get by in society (in the kind of society people in poverty want to be a part of; think Stevenage) and this again could confuse relative poverty numbers.

Clark is right to note that it makes some sense for the absolute poverty line to move over time. That would seem a decent representation of human progress and to represent changing cultural standards. This might want to be reflected by acknowledging that we see poverty as an absolute basket of goods and setting that basket explicitly, calculating its price for our poverty calculation and adjusting it over time.

However, the concept of relative poverty is rooted not in the thinking of conservative heroes like Smith or Disraeli but in that of class warriors like Toynbee and Marx whose views conservatives are right to reject.

Power from nuclear fusion comes a step closer...

This offers the possibility of something remarkable; the holy grail; energy no longer a scarce resource. It may take a hundred years but for the price of well under 10% of what the NHS spends in a year it sounds like a bet worth placing to me.

The LSE's "racist" professor

Around a week ago at the LSE the story of the supposedly racist article written by a professor in the methodology department, Satoshi Kanazawa, surfaced in a big way. Essentially the article argues that national IQ is the biggest determinant of health citing, among other observations, that Ethiopia has the lowest national IQ and the lowest life expectancy. While there have been criticisms of the methodology in this paper, these criticisms centre upon the difficulties with comparing international IQs, which are entirely legitimate and I'm not sure about this new work as I have reservations about just how much intelligence is a result of genetics (the intelligentsia have always bred less but haven't died out) the main criticism within the LSE Student's Union appears to be a crude Reductio ad Hitlerum. I quote from the LSE Student Newspaper, the Beaver (this is not online):

"Such a view is dangerous firstly because it bears close resemblance to eugenic and racialist theories of the past, which have been used to legitimize racist regimes from that of the Nazis as well as to supporting and supplementing acts of genocide."

Apologies for the Beaver's grammar but I think the point is clear. It isn't about whether this work is wrong; it's dangerous. Unfortunately, the same could clearly be said about a host of important work such as the theory of evolution, the music of Wagner or the enlightenment itself. All of these were part of the intellectual facade of the Nazis.

Mr. Kanazawa has an enviable CV which is clearly based on a desire to open to scrutiny popular assumptions; to be the Steven Levitt of psychology. A desire to challenge intellectual taboos is quite different to the David Irving desire to use spurious research to substantiate his own political racism and is an attitude entirely appropriate for an LSE academic. Many of the other results of Kanazawa's research are equally controversial: This paper, the title of which begins "First, Kill all the Economists", about the importance of gender distinction for management clearly gets at the zero group differences liberal assumption but does so with intellectual coherence and good humour. This extract provides a wonderful example which is explained later in the piece:

"Perhaps no other recent event in the corporate world underscores the failure of the microeconomics and the need for evolutionary psychology more sharply than what happened to the American supermarket chain Safeway (which is unrelated to the British supermarket chain of the same name and similar logo, which has recently been acquired by the rival chain Morrisons). In January 1998, Safeway started implementing what it called the ‘superior customer service policy,’ which required all Safeway employees to look customers in the eye and smile (Liedtke, 2000; Pate, 2001; Ream, 2000). If the customer paid by check or credit card, cashiers were required quickly to scan the customer’s last name and thank them by their last name, as in ‘Thank you, Mr. so-and-so, for shopping at Safeway,’ while looking at them in the eye and smiling.

I suspect Safeway’s ‘superior customer service policy’ was invented by some management consultant with an MBA from a leading business school. True to the microeconomic model of the singular and unitary actor dominant in business schools, the Safeway’s policy makes no distinction between the sexes. In the policy, there are no men and women, only employees and customers. It requires both male and female employees to greet both male and female customers in the identical, ‘friendly’ manner.

As it turns out, the policy worked very well roughly three-quarters of the time, between a male employee and a male customer, between a male employee and a female customer, and between a female employee and a female customer. However, the policy backfired when the employee was female and the customer was male. When the female
employee gazed deeply into his eye, smiled and thanked him by his name, the male customer ‘naturally’ assumed that she was attracted to him, and started harassing her by following her around on and off work. Eventually, five female employees had to file a Federal sex discrimination charge against Safeway to force it to stop this policy, which the supermarket chain did when it reached an out-of-court settlement."

Fortunately, the LSE's position is far more enlightened than that of the Beaver and some members of the Student's Union:

"People may agree or disagree with [Kanazawa's] findings and are at liberty to voice their opinions. The School does not take an institutional view on the work of individual academics."

Academic freedom isn't dead yet.

Satoshi Kanazawa may or may not be wrong but his reseach agenda is an entirely legitimate one that should not be censored or condemned to protect the sensitivities of self appointed moral crusaders who really need to grow up.

Tuesday, November 21, 2006

The economy holding up well

The FTSE is up: oil prices have rallied to strengthen the oil companies and other companies are showing robust results, manufacturers are seeing a rise in orders.

All this still looks fragile to me. Manufacturing orders are only rising slowly back to their summer levels and the FTSE is still highly dependent upon strong performances in the rest of the world; an international cold might still give us a fever. I expect this good news will be used to justify a rise in interest rates some time soon but hopefully that rise will be modest. The manufacturers, in particular, look vulnerable.

A few reasons not to leave the EU

I feel the need to undermine the right wing blogosphere's dominant paradigm. The idea, as expressed by a certain peer this evening on 18DoughtyStreet, that there is no case for not leaving the EU relies on a number of misconceptions.

First, the descriptions of vast amounts that the EU costs us are based upon it hurting free trade. This relies first on the EU, which would be our largest trading partner by some margin, not putting tariffs against us because it wouldn't be in their interests (as they sell more to us than we sell to them) but a eurosceptic arguing on the basis of the European Union's strict rationality and an enlightened French trade policy cannot be convincing. Second, it relies on predictions that we could secure a more liberal trade policy from the United States as they really love us as good little War on Terror buddies. Anyone who knows much about American political history or culture can tell you they're unreliable free traders at best. Look at the Joint Strike Fighter Project where they are holding up the release of basic information to us.

Finally, it relies on the idea that we would be unilateral free traders; this sounds credible initially but we are a fallible political culture like every other and if, for example, farmers started to commit suicide under the pressure of losing the CAP are the euronihilists really confident a tariff couldn't pass? It's not like our immigration policy can really be defended as a triumph of rationality. Leaving the EU could increase the freeness of our trade but on the balance of probabilities a sensible assessment has to be that it would make our trade less free.

The second argument that the euronihilists rely upon and which does not stand up to scrutiny is that the EU cannot be reformed. "We've been trying for decades" is usually the response to anyone claiming the EU can be improved. The problem is that things have changed and our past record of failure might not imply failure in the future. We joined the EU in a position of weakness as a declining power and moribund economy after the basic terms of engagement in the EU had already been set. Since then our agenda for the EU as primarily a free trade area has been boosted by our conscious effort to secure enlargement that makes a deep political union ever more difficult. The rejection of the constitution before it even came to us is an early sign that the integration train has been derailed.

Finally, the euronihilist case relies upon the argument that nothing significant and positive has been achieved by the EU. Enlargement is, again, the reason this argument does not hold. Just as the Marshall Plan created economic incentives to a liberal economic development and softened the blow of adopting such a system the European Union did the same for creating relatively stable political societies and would appear to have played an important role in the remarkable success story of Eastern Europe over the last decade and a half. This is a remarkable, significant and positive achievement of the European Union.

There are serious problems with the EU: The CAP is truly disgusting, there is massive corruption and a growing burden of regulation. However, the EU has achieved something remarkable for Eastern Europe, is a force for more free trade and can be improved.

Monday, November 20, 2006

The dichotomy Segolene Royal really shouldn't be offering us

Segolene Royal (apologies for the lack of acutes etc. but I'm far too nationalistic to take the time to insert them) has won her party's candidacy for the French presidency. As a result she is free to declare a European policy she had been keeping under wraps to prevent splits within a party divided over its attitude to Europe.

Her spokesman has told the Telegraph that Britain would be asked to sign up to a new treaty which would include "increased protectionism, an EU foreign ministry, convergence on tax rates and moves to create a European army" and if we refused she would push ahead hoping that Germany, Spain and Italy would all come on board. Apparently we have to choose between this new treaty and continuing to lead an "'ultra-Atlanticist' bloc within the EU".

Okay, so she expects us to choose sacrificing our independence in foreign policy; the hallmark of an independent state if ever there was one. To accept losing our ability to set our own tax rates; at the moment not such a bad thing but in the long run I'd rather not be tied to the dismal Franco-German statist norm. To participate in adding significantly to the protectionism that makes both Third World and First World poorer (surely they can't do this bit without us in a Customs Union?) just to pander to French delusion. To abandon the British army to the ignominy of being inseperable from the substandard continental militaries.

She expects us to choose that nightmare over continuing to support, in the United States, an ally on the right side, if somewhat lacking in competence recently, of the important geo-political confrontations of our time? When are the French going to realise that we don't share their preening vanity and have the confidence to be a junior partner in an alliance without a constant puffing of our collective ego?

Sunday, November 19, 2006

Every ethnicity has them...

...racist lunatics. As a supposedly literate man he must know the comparison his talk of a "solution" to "the problem" of white people invites.


Have been judging at the Cambridge IV this weekend. It was a well run tournament but I still dislike open motions.