Economics?

An article in the Economist had me amused, this paragraph in particular made me chuckle:

“A further reason to welcome them is that in many developed countries, as well as in China, falling birth rates have started to cause working populations to shrink and the number of elderly people to rise steeply, with ominous consequences for economies in general and pensions in particular. More working women could help offset the decline in the labour force.“

Methinks the economists have missed something in their calculations: more women working = even lower birth rates = more anxiety about a shrinking working population in another generation’s time… how’s that going to work? Short-termist thinking wins again!

People get upset when it is pointed out that the "Benefit Mums" are having more children than anyone else, so not only is there a falling birth rate overall, but fewer potential workers are being born. The problem being that the child typically, follows the pattern of life set by the parent, so a parent who lives on benefit and has never seriously considered getting into gainful employment is likely to produce a new generation of benefit dependents ...

What’s really needed is for maternity policies for working mothers to be better than for those who are on benefits. Yes, I do recognise that there are 'costs' and 'burdens on business' here, but sensible policies would actually reduce the impact, not increase it People generally complain about supplementing working parents (“they choose to have kids!”) while forgetting that the resultant sprogs will pay into everyone’s pensions – if they see their parents often enough to learn some kind of work ethic from them. As more and more couples are forced to work full-time and commute further and further, they have less and less influence over their childrens’ values.

As usual, the economists have studied the "bottom line" and reached a conclusion, but I think, in doing so, they've completely missed the larger picture. There's an elephant in the room here, and, probably because they're stood with their backs to it admiring the view from the window - they can't see it.

National Credit Ratings ...

Does anyone else wonder about the politics behind the "Ratings" made by these Rating Agencies - all of them, I note, based in the US. Down rating Greece I can understand, but there is a serious side effect to this which I suspect most people miss. When a nation's credit rating falls, the interest its creditors charge for their loans to the national Treasury go up.

The rating is lowered because the country is struggling to pay its debts - so the bankers charge them more money on the loans, making it more difficult to pay. This is what is called Loan Sharking in the world inhabited by the individual. My bank refuses me credit, so I'm forced to go to a Loan Shark to get the money I need for some (Hopefully seriously important) expense I must meet and not just another luxury splurge. From the bank I might have had to pay a loan interest rate of - say - 10%, but the loan shark charges 30% per month. So my thousand pound loan will now cost me 3,600 plus the original 1,000 if I pay it back inside twelve months instead of a smaller 1,100 at the bank. Doesn't sound like much, until you ask the question, why was my rating low to begin with. Simple, I already had a number of large debts, so I had a poor credit rating, which in turns means I was already paying off a large amount of interest each month and now the Loan Shark doubles it ...

There is this thought about these National Ratings running through my head, that suggests the change may have both a political and a profit motive. First, all Western currencies are under pressure at the moment, and all for similar reasons, hand-outs exceed tax revenue, so they've borrowed to the hilt to meet their expenses. All ten of the nations now hit with lower ratings are in the €urozone, so this hits the €uro, driving its value down and presumably driving others up. That is further exacerbated by the down grading of the "Rescue Package" set up to underpin some of the economies now down graded. Who benefits? As the saying is, "Follow the money." Standard and Poor's are based in the US, managed by bankers in the US. Devaluing the €uro improves the value of the US$ without having to do much more than change a few numbers and letters in the international banking network of computers feeding the markets. That's the political aspect.

There is a more serious financial one. All these countries now face an increase in interest charges against their loans. Who wins on that one? Ah, the lenders of course, who also happen to be the same people who set up companies like Standard and Poor's in the first place. So now the countries face not only swinging loan redemption payments, but some pretty swinging increases in interest payments as well. If the austerity measures weren't hurting the populations of those countries before, watch them bite now!

As the spokesman for Standard and Poor's said, no one outside their organisation could possibly understand the manner in which they make the calculations which result in the ratings, but he then added that they were "100% accurate, no, make that 150%."

Is it just me, or does the spokesman really not understand that you cannot have 150% of anything? If he doesn't understand that small fact, how much reliance can we place on his "calculations?"

Responding to Josephus ...

Josephus is right when he says I might wish to comment, I certainly do. Let me begin by saying that he is in a far better position to know the politics and the drivers which may or may not lead people in Scotland to vote "Yay" or "Nay" on this issue. I would also say that I think both nations will be the poorer for the break should Scotland decide to "go it alone." That said, I am of the camp that believes that Scotland is unlikely to survive as an "independent" economy. Denmark is a different case, one which possesses extensive overseas terrotories and assets, a fact often not visible in the UK. It is often forgotten that Greenland, the Faroes (and if you want to split hairs, the Shetlands) are Danish dependencies and the oil and gas fields off Greenland are huge. The country also possesses fields in the North Sea.

Contrary to the media misinformation, the Maritime Border between the England and Scotland does comply with international treaties and the fields lying to the East and South of it are in the English part. The revenues from these fields have been shared across the UK, but a division would see Scotland entitled only to those fields that lie in the Northern and Western areas.

Removing the RN and the RAF from Scotland (Faslane, Rosyth and Pitreavie) would remove between 15,000 and 18,000 jobs, but that is not the whole picture. At present several major warships are being built in Scottish Yards. These would also close and be moved and we can be certain that the Defence Establishment is already planning for this. As to how many jobs would be lost with those closures I can only guess.

Then there is the banking crisis, with the Royal Bank of Scotland (RBS) and Bank of Scotland (BoS or now HBOS), having been forced on English Banks to save them. Westminster owns shares in the part nationalised Banks Blair (a Scotsman posing as MP for an English constituency and Brown, a Scottish MP and Chancellor of the Exchequer responsible for the fiscal mess the UK economy is now in!) which raises the question of who would continue to bail out these banks? Tam Dalyel's "West Lothian Question" was one reason successive goverments refused to address the question of an Edinburgh Parliament. The mess Blair and his people created in tinkering with a Constitution they patently failed to understand at all, has raised some very tricky questions and is likely to result in some very acrymonious exhanges at the very least.

Josephus asks, why should Cameron demand the right to set the timetable, and as I understand it, the question, for this referendum ? I would answer that Mr Salmand does not have, under the current dispensation, the authority to refuse it. He is seeking to hold it on a date which is emotionally charged and favours his cause. In this he is trying to hold the rest of the UK to ransom. As Scotland is currently a part of the political and economic union that is the "United Kingdom" it is, whether it likes it or not, subject on constitutional matters, defence, economy and foreign affairs, subject to Westminster and not an independent entity in its own right.

Ironically, the demands from Scotland for independence are raising a reaction in England, one Blair could have avoided if he had not been intent on dividing England up into "Regions" which would have guaranteed a Labour control of large parts of it. Giving England a Parliament to deal with purely English matters, not controlled by Labour's Welsh and Scottish duplicates (Both nations now having their own "local" government) which allows some 75 Scottish MPs and around 30 Welsh ones to vote on law affecting England only has caused enormous resentment. So the West Lothian Question has now come home to bite.

Cromwell did enormous damage to relationships between England and Scotland and between England and Ireland as Josephus correctly points out. Ironic therefore that Blair, a Scot, thought he was the greatest Parliamentarian. One wonders exactly what he meant - or did he not know the real history? He was certainly ignorant of almost everything else of our history. As Josephus has said, it was a long time ago, but it is remembered. What is not remembered is the reason Scotland had to beg for Union in the first place. The "Darian Adventure" and one or two other "speculative ventures" embarked on with their Treasury had bankrupted the nation and the price England placed on bailing them out was Union. Blair and Co broke that Union, despite all the warnings, and now Cameron must deal with the result.

Alex Salmand may want to hang on for 2014 but I suspect he may not be allowed to. I am also suspicious of his motives. Josephus advances the idea that it is the 700th anniversary of the Bruce's victory over Edward II's army, but I suspect its so he can see who is in power after the next UK election, perhaps also seeking to run a campaign in conjunction with new elections for the Scottish Parliament.

As I said at the outset, I cannot see anything good for either nation in this. According to the financial papers I have read recently inward investment into Scotland is now stalling and a number of others are exploring what moving or relocation would involve. A large percentage of the Scottish Budget comes from Westminster with a higher per capita "tax spend allocation" in Scotland than in England, Wales or Northern Ireland, much of that is not raised in Scotland and will not be "made up" from the speculated "oil and gas revenue"  the public think they will get by redrawing borders, primarily since the borders will not change.

We will have to wait and see.

Welcome Josephus ...

The Gray Monk and Mausi are joined at the Scriptorium by Josephus, a former colleague and friend of the Monk. Look out for posts from him in the future, the Monk can assure readers they will be extremely informative and interesting.

The Monk is away ...

The Monk is in the UK for the next couple of days, so posting may be a little on the "light" side unless he can get connected ...

He's teaching on a course, in case anyone is interested and returns home on Friday evening.

So, now you know ...

NHS Reforms ...

Right, I'll be straight up and honest. I'm not a fan of the NHS in its present form. It is, at best, the result of a series of ideological ambitions, with which I do have some sympathy, and a whole slew of compromises which have had to be made at various times to bring or keep people on board, to satisfy some vested interests and of course, the political meddlers who simply can't keep their noses out of things. Largely speaking, it works. It delivers health care and it does so reasonably well for the most part, though, here and there, it is a lottery when it comes to certain treatments and medications.

One of the reasons I do believe it needs root and branch reform is not because I want to see it broken up and privatised. What I want is less political interference, less spent on the massive administration and plethora of clerical posts that all detract from the delivery of medical care in one way or another, and far, far less central direction of the manner in which a doctor treats a patient.

The taxpayer puts in an enormous amount of money to the NHS, yet the hospitals are in a shocking state, cleaning being one "service" "contracted out" according to the bureaucrats to "free medical staff to deal with medical matters." And there lies the problem. The opinion of the medical staff - and often their wishes - are ignored by the "managers" who actually run the hospitals. As I have said many times, "management" is a function of every job, task and profession, and no one can "manage" a professional function if they are, themselves, not members of that profession.

All of that said, The Postulant has provided me with a very thought provoking article. It is on a blog called "A Better NHS" - something even I would wish to see. In a series of questions and answers regarding the current government's draft legislation for reform, the writer provides some very interesting and valuable arguments. Despite what I said in my opening paragraphs, I do believe this article is correct. The NHS can be improved, but David Cameron's plans are not the right way to do so. While this may satisfy the Treasury and its ambitions to sell off every service the government provides, and will certainly make the shareholders and the Boards of various companies such as Capita dance for joy, it probably won't make a better NHS.

Information disinformation ...

Something said by a friend recently about the "Connected Generation" (Generation Z in education/social classifications) having an attention span of no more than 140 characters in reading length, got me thinking. A little digging around how some of the great myths of the late 20th early 21st Century have spread and become the new "truths" suggests that it is down to the use (or abuse) of modern electronic media to a large degree and to the lack of desire to check facts among a large part of the receiving population on the other.

The "tl;dr" (Too long; didn't read - for those not used to "txt spk") response kicks in as soon as someone does want to check facts and discovers that the reality is a lot more complex than the 'abridged' version they found on Twitter, FaceBook or one of the many newspaper feeds. The "big" story in the news here in Germany is the Bundes President's private financial arrangements. Listening to the various self-righteous politicians, media spokesmen and others you would think that having taken out a private loan from a friend to buy a house was a hanging offence. Yes, he shouldn't have gone that route, but there seems to have been 'lost' in the reporting of it, the fact that he needed a quick decision and the bank was dragging its feet. OK, there are other questions, such as holidays with friends and some arguments with various Media heads which also emerged, but again, we seem to hear only the self-righteous versions from those now squealing about how they were "abused" in this. There is always a great deal of filtering in any reportage in the Media, but when you add in the "secret" agenda of the reporter and the bias of the agency he/she works for, you get a very selective presentation of the facts.

Freedom of the information supply via the media is a vital part of any democracy, but so is accuracy of reporting and that flows across to all other information streams. Vast amounts of "disinformation" and blatant untruth is now swirling around the internet. Very few of those reading it on a daily basis actually check the veracity of it. I'm glad to say that The Postulant is one who regularly uses Snopes (and I have to thank her for pointing me at it) to verify material she gets forwarded to her. I wish others were as careful.

Sadly the disinformation-information becomes the new truth is also affecting academic circles. I have recently read several books which identify the origins of some of the anti-religion propaganda as 19th Century sources. When these are examined, they turn out to be "spin" - quite a bit of it refuted at the time, but which, because it is quoted by Bertrand Russel, Aldous Huxley or some other "thinker" of the 20th Century is now "fact" - yet a lot of this is pure invention. One particular example that annoys me is the statement that "the church" taught that the world was flat. This turns out to be based on a statement made by a "scientist" from the early 19th Century who based his assumption on his interpretation of the Mappa Mundi. The "Mappa" - a popular 14th -15th Century representation of the "Spiritual" connections of the places of pilgrimage and special holiness, was based on the known lands of the people making the map and placed Jerusalem at its centre - for the obvious reason that it is the heart of Christianity. Officially the church has always followed the Ptolemaic and Aristotelian understanding of the world as a sphere - the question for Europe was always what lay over the ocean in terms of lands and peoples. Columbus' journey ad route were chosen because his talking to fishermen who regularly ventured beyond the horizon, suggested that it might lead to the "East" from which Europe was cut off by the Muslim Empires in Turkey and Persia.

John Cabot set out from Bristol in the "Mathew" (A replica of his ship is to be seen and visited in the port there) armed with maps and information from the fishermen who regularly fished the Grand Banks and sometimes over wintered in Nova Scotia and the American East Coast. But all of this is swept aside by the repetition of the late Victorian anti-church factions who invented the flat earth story to promote their own "superior" reasoning.

Sadly the modern media and the speed of "information" transfer simply aids these and other myths in their spread and acceptance as "truth" by those to gullible or to ignorant to seek further and check.

Ah well, this post has already reached far beyond the limits of tl;dr ...