Political blindspots

It’s not too much of a simplification to say that modern American conservatives believe the national government to be ignorant, bumbling, and corrupt when it meddles in the U.S. economy, but sagacious, sure-footed, and righteous when it meddles in foreign-government affairs.

Nor are the boundaries of acceptable simplification breached by saying that modern American “liberals” believe the national government to be sagacious, sure-footed, and righteous when it meddles in the U.S. economy, but ignorant, bumbling, and corrupt when it meddles in foreign-government affairs.

I think that quote from The Freeman works quite well in British politics too (although “conservative” doesn’t necessarily map to “Conservative” and “liberal” doesn’t necessarily mean “Liberal [Democrat]” – it’s more a broad left/right thing).

For my part I’m definitely too gung-ho with foreign interventions and very sceptical of domestic government action. The argument that “Something Must Be Done” never works on me in a domestic context, because I usually think that government action, however well meaning, tends to pervert incentives and have unintended consequences. I need to carry that attitude over to my view on foreign gubbins.

If you want I could bury them in a grave and no-one would find them

Where are you?

How do you know where you are?

If you awoke suddenly in an unfamiliar place with no idea how you got there, you would try and orient yourself in relation to the things you see around you. Conversely, if you have been on a journey it is easy to know where you are because you know where you have come from, how far you have gone and in what direction.

I think this is why teenagers and young people (that makes me sound really old…) can be very conformist. When you are a teenager, especially pre-16, your life hasn’t yet resembled a journey, certainly not one where you have had any options. And so to find out where you are – to find out who you are – the only thing you have to go on is the landmarks of the people around you. And it’s easier to know where you are if you are closer to landmarks, hence the sometimes ruthless and unpleasant conformity of being a teenager and the ostracism of those who are different.

As time passes, your life more and more resembles a journey – you have moved onwards emotionally, socially, intellectually. This makes it easier to know where you are because you have the reference points of the journey you have made. You no longer need to rely so much on the landmarks around you. Hence the greater tendency for independent bloody-mindedness and a liberating don’t-give-a-toss-about-keeping-up-a-facade of older people.

What are things worth?

This anecdote from House Price Crash:

At court today waiting outside patiently for a hearing to begin. Heard a wide boy type bleating about his property to his brief. Apparently it has been valued at £240k, been on the market for 2 years and only had one offer at £178k.

So, presumably two or more years ago someone with no intention of buying said house told him that it was “worth” £240k. More recently, someone who actually did want to buy the house concluded that they would be willing to pay £178k.

Things don’t have an inherent value, they are “worth” precisely what someone is willing to pay for them. If you want to sell something, what you paid to buy it or make it is irrelevant – you will only sell it for what a buyer is willing to pay for it.

Daylight

One thing I really don’t miss about having a proper job is the lack of daylight and fresh air. Even if you are sat near a window, the ambience in most offices is of artificial light and stuffy air.

If you were given the task of constructing an environment that prevented people working efficiently but wasn’t actually damaging to them, it would be like most offices: lack of proper daylight (except when the sun hits your screen and you can’t see a thing); lack of fresh air (air conditioning is not fresh air); and inexplicable temperatures that are either too hot or too cold about which nothing can be done.

If you went further and began to construct people’s working lives around being unproductive, you would probably: insist that they all work at set hours irrespective of when they were most productive; insist they all came into a central location, possibly miles from their home, that is just like the place described above; make them responsible for things they can’t control but give them no responsibility for what they can control.

Sound familiar?

Greek debt, and what it means to make a loan

The Greek “bail-out” of last year has and has not worked, depending on how you look at it. Stephanie Flanders:

Everyone says that heightened talk of a Greek default is proof that last year’s bail-out has “failed”. But you could make a strong case for the opposite.

In reality, all that the Greek support programme last year was ever going to do was buy time. And that is exactly what it has done. It just hasn’t bought quite as much as governments hoped.

If the case for calling it a success rests on the problem having been punted a year in to the future, but that extra year hasn’t enabled Greece to solve the problem, I’d call it a failure. If you have a large debt, and you decide to borrow extra money to buy a car to allow you to take a better-paying job you have been offered which allows you to start repaying more quickly – that is a success. Transferring your credit card balance to another provider is not.

Flanders also goes on to say:

For some, these new dynamics shift the balance in favour of facing up to the reality of an involuntary restructuring or Greek default. Officials should stop fighting it, on this view, and instead focus on limiting the collateral damage, by recapitalising the banks that will be hardest hit (notably the Greek, French and German).

I’m not sure what “recapitalising” banks actually means, but it always seems to involve banks being protected from their own mistakes, a luxury granted to few other industries.

In practice, banks aren’t that different to other businesses. When a bank makes a £1 million loan (buying bonds amounts to making a loan), it has used £1 million in money to buy a £1 million pound asset. Yes, when you loan money to someone or something that loan is an asset, because it generates an income in the form of interest payments. It is a liability to the person/thing taking out the loan. So slightly counter-intuitively the more loans you make the more assets you have.

So when a bank makes a loan it is buying an asset in the expectation that it will generate an income and profit. This is exactly the same as a manufacturing business buying £1 million pounds worth of equipment to increase production. The expectation is that the purchase will generate income and profit in the shape of producing more goods to sell.

But if a manufacturer makes an asset purchase that back-fires they are not bailed out, and a good thing too. Why should banks be any different? The argument is that banks are too big and too systemic to fail, in the sense that the failure of a bank will have a lot of repercussions beyond them.

But banks have got too big because for years there has been an implicit and explicit understanding that they would be bailed out in the event of problems. If you run a business knowing that any failures will be compensated for, you will take too many risks. Banking is also an industry with high barriers to entry, so new competitors don’t tend to come along, making the incumbents even more safe and complacent about risk.

And what about the systemic risks? I wonder how much that is simply to do with the sheer size of banks and the loans they make. A manufacturing business that goes bust might also take down suppliers and customers so they too carry systemic risks; but a multi-million pound manufacturer will of course have less impact than a multi-billion pound bank.

Does Vince Cable know what “business-like” means?

After the recent elections and referendum, Vince Cable:

has attacked the Lib Dems’ Tory coalition partners as “ruthless, calculating and very tribal” but insisted their alliance would continue

presumably because they had the temerity to campaign, you know, for the results they wanted.

But he also said:

We’ll continue the coalition in a business-like way.

Vince  Cable actually has some business experience, as Chief Economist for Shell (although that was only for a couple of years and it seems the rest of his experience was in politics, but that’s better than a lot of politicians). But it sounds like he has no conception of what “business-like” actually means.

For his information, a business-like relationship tends not to include public attacks on the character of your business partners.

I wonder if he thinks that business-like simply means unfriendly, or worse. Thing is, for the most part that is not how businesses behave. A business can have suppliers, partners, and clients. Suppliers are providing you with goods or services that you require and presumably can’t or won’t provide internally, and these goods/services are presumably critical for your business or you wouldn’t be paying for them. Ditto partners, you are working together for mutual advantage. And clients of course pay your bills, so you need them on side too.

Of course, some businesses are rubbish at these things. Promises are broken, people don’t communicate well. But this usually augurs the end of the business relationship, as the customer decides to stop buying your products or a business lets a supplier go because they are not working well together.

The other kind of business relationship is of course competitors, and here there may be little or no incentive to get on. In practice though, people will tend to know other people in their industry who work for competitors, and there will be industry groups and conferences and so on that serve to keep things cordial.

Perhaps Vince thinks that the LibDems and Conservatives are competitors, and that is the business relationship he is referring to. They usually are, but in the Coalition they are business partners, not competitors.

TEDx Brum?

I went to a rather exciting meeting earlier this week, to discuss the possibility of a TEDx event in Birmingham. It’ll hopefully be called TEDxBrum (The folks in Birmingham, Alabama, bagged TEDxBirmingham) and has a provisional date of late February 2012.

Watch this space or get in touch if you are interested.

Shock: grown-up thinks grown-ups should make their own decisions

Norman Baker, a Lib Dem transport minister, has provoked outrage by saying that he doesn’t wear a bike helmet when cycling, and points to evidence that cars tend to drive more carefully near cyclists that aren’t wearing helmets.

Firstly, apologies for using the “provoked outrage” phrase beloved of newspaper headline writers. Saying Norman Baker provoked outrage implies he is somehow at fault. In these instances, “outrage” is usually the fault of the outraged – the jumped-up, thin-skinned campaigner who can’t tolerate others disagreeing with them; rather than the outrager, so to speak.

Second, I tend to agree with Norman Baker’s assessment of the risk, and I totally agree with his assertion that he has the right to wear or not wear a helmet as he damn well pleases.

Helmet’s aren’t the be-all and end-all of road safety when riding a bike. I would suggest that the following are much more important:

• Be visible, really visible. High-viz in the winter, and lights around dawn and dusk, not just night-time proper.
• Be predictable, really predictable. Traffic rules are mainly there to make people’s actions predictable. If we can predict the actions of others, we are less likely to crash into them. So even if you can safely break the rules, don’t. If you break traffic rules, it means is that the traffic around you now has no idea about what you will do next, and this is a dangerous position to be in.
• Don’t be an idiot. Seriously, you’d think the way some people cycle that there was no other traffic around. It’s only a matter of time for them…
• Assume other people aren’t looking. The road where I’ve had the most near misses (two) is where it’s a one-way but the cycle lane goes in the opposite direction. This means that cars pulling on to the road look down hill, because this is where the cars are coming from, but not up hill, where the cyclists come from.

Helmet’s help if (a) you get knocked off your bike and (b) you hit your head. The safest thing to do is minimise the risk of (a) happening in the first place.

Selly Park Cricket Club

My long-awaited (by me) cricket debut for Selly Park Cricket Club is hopefully almost here. Technically it’s not my cricketing debut as I have played twice before, once for my Dad’s 60th birthday match and once as an 11th hour call-up to make up the numbers. On neither occasion did I excel (or score a run, or take a catch, or bowl).

I umpired last weekend which is actually a really good way of getting up close to a game and seeing how it works in the real world rather than on TV. I had two appeals for LBW and gave them both out straight away, and was really hoping for an appeal that I could turn down so I don’t get a reputation as a trigger-happy umpire.

Also, the new Selly Park CC blog is here, it’s a bit content-light at the moment but that will change as the season progresses. We currently have two teams and would like to get enough players to field a third.