Saturday, July 31, 2010
When I consider how my light is spent,
Ere half my days, in this dark world and wide,
And that one talent which is death to hide,
Lodged with me useless, though my soul more bent
To serve therewith my maker, and present
My true account, lest he returning chide,
Doth God exact day-labour, light denied?
I fondly ask; but Patience to prevent
That murmur, soon replies, God doth not need
Either man's work or his own gifts, who best
Bear his mild yoke, they serve him best, his state
Is kingly. Thousands at his bidding speed
And post o'er land and ocean without rest:
They also serve who only stand and wait.
When I consider how my light is spent,
Heat half of the amount of my day, in the darkness of the world, width,
This is a talent to conceal the death,
Useless to me, though my soul more inclined to
To meet this related to my manufacturer, now
My true account, lest he come back to blame,
Is God on the date of the labor, light denied?
I affectionately asked, but patience to prevent
This murmur, soon replies, God need not do
Both men's work or his own gifts, who is the most
Bear his mild yoke, they are the best for him, his country
Is benevolent. Thousands at his bidding speed
And after your land and ocean without rest:
They also become the only ones who stand and wait
Not bad, really!
Tuesday, July 27, 2010
In the comments section of my previous piece on the Broad Oak Blog,"Arthurian" picks up on a remark I made regarding the mindset of some it's-all-going-to-end-ers. I respond:
What I'm thinking re the bit you quoted is that there is a self-aggrandizing tendency to think that the end of the world is nigh, which kind of ties in with one's own mortality and somehow makes the latter more meaningful, e.g. when I was a teenager we'd write poems about the threat of nuclear war.
Take James Kunstler: very sparkly prose style, but through it you sense a relish in contemplating the end of the corrupt old order, which will be replaced by an energy-efficient, sunny, bike-riding, low-food-miles happyocratic New World. In its way it's the sort of fantasy promoted by Communists to justify the awful things we must regrettably do before we get there, only here it's simply inevitable and we don't have to do anything to make it happen, so no guilt.
Fact is, when the money system broke down in Germany in 1923 and Hungary in 1946, the history books don't conclude their accounts with the sentence "As a result, everybody starved to death". The worst things that happened in Germany were what people decided to do about the collapse, in particular to look for a strong leader - ah yes, what we all need.
So ignoring the Doomsdayists and the Bright New Worlders, we should look at the social and political ramifications of what is undoubtedly major financial change. Growing inequality, increasing unemployment, and a State more determined to keep tabs on the populace. Money meltdown has been prevented, but civil liberties and the democratic system are definitely threatened. We've all (or most of us) been a lot poorer materially before now, but our birthright (even in the UK) is the expectation of liberty and the rights and intrinsic, inalienable worth of the individual.
The US has an advantage in that this eighteenth-century vision of man and society was preserved, crystallised, installed in the Constitution, and there'll be a hell of a ripping sound if someone tries to tear it out. The UK's constitution is much more liable to change and so while the biggest noise comes from America, the biggest loss may be ours - if we don't fight for the Rights of Man.
As a financial adviser (while there is much of a financial system left), I try to defend the little wealth of my clients - property rights are part of the R of M - but as I say, at the end it's not really about money. Once a basic minimum has been achieved, the material aspects of life are less important than the social.
What good would all the money in the world be, if you were the last human being on earth? That's a question I'd like to ask the 1% who own 40% of everything. I suspect many of them are gripped by a kind of madness.
Monday, July 26, 2010
The present crisis is as much psychological as fiscal. That's not to say that it's not real - psychological stress can result in behaviour that is very real and destructive. But talk of financial limits ignores the fact that the limits are elastic.
I'm reading Simon Schama's Book "Citizens", which is about the French Revolution. He points out (p.65):
"Not only do we now know that the British per capita tax burden was three times heavier than in France, but by 1782, the percentage of public revenue consumed to service Britain's debt - on the order of 70 percent - was also considerably greater than the French equivalent."
The UK's GDP is now an estimated £1,410 billion, of which about half runs through the government's fingers. On average the interest rate on government debt is 4.3% (until we have to renew loans) and last year the forecast was that the debt would rise to some 100% of GDP. So long as we can carry on rolling over the debt, the main thing is to be able to afford the interest, which on this showing would look like being about 10% of government revenues.
Returning to Schama, he says (p.79) that in 1788 the French government debt servicing was close to 50% of its revenues - still well below what Pitt had to deal with in 1782. But in France, there was mounting resistance from the tax-farmers and foreign creditors, and the high rates the government was going to have to pay to attract additional capital triggered the crisis - which had implications for rich tax rebels that they hadn't expected. Oo-er.
We've had much worse public debt before now, even in the 20th century - see the graph below. It's not "can't pay" that will determine the course of events here, but "won't pay".
One thing that's different, and isn't shown here, is the additional component of private debt. Unlike government borrowing, private loans are usually expected to be paid-off, so the cost of debt servicing for the private individual is much higher. And if a lot of this debt is tied up in property that is gradually reducing in value, so that the debt may eventually outweigh the asset, the consumer-voter will be building up a head of resentful steam. Then there is the debt accumulated by companies and the financial sector. It all adds up: the graph below (from this site) compares the US and UK economies in terms of the total burden of debt-to-GDP:
Another difference is that the crisis is now global. The US and the UK are in serious difficulty, but so are many European countries and the European banking system that has tried to hold them up; and the increasingly productive East has become dependent on the profligate West.
Historically, says Schama, the pre-Revolutionary French government would partially default on its borrowing (e.g. the 1720s, and in 1770), as well as raise more taxes and find more lenders. Now, we seem to be trying hard to avoid default (perhaps because once it started in one place, there'd be so many following suit); taxation of various kinds is already taking well over 40% of our income, in return for a creaking system of benefits and services; and where are the lenders who will take on so much global debt? And if they do, at what price?
Yet international finance is so murky, anything could happen. Towards the end of Andrew Rawnsley's book on New Labour, "The End of the Party", he says (pp. 626-7) that at last year's G20 summit "it was reliably estimated that more than $10 trillion of private wealth was concealed in paradis fiscaux [tax havens]". I don't think it's all invested in BP shares. Maybe it's waiting for governments to come to heel; to co-operate with each other in some glum global deflation that will further enrich the "oofy", as P.G. Wodehouse would term them.
In a splendidly furious recent rant, American writer Joe Bageant said:
"If we decide to believe the money economy still exists, and that debt is indeed wealth, then we damned sure know where to go looking for the wealth. Globally, forty percent of it is in the paws of the wealthiest one percent. Nearly all of that one percent are connected to the largest and richest corporations. Just before the economy blew out, these elites held slightly less than $80 trillion. After the blowout/bailout, their combined investment wealth was estimated at a little over $83 trillion. To give some idea, this is four years of the gross output of all the human beings on earth. It is only logical that these elites say the only way to revive the economy, which to them consists entirely of the money economy, is to continue to borrow money from them."
Or as humorist J. B. Morton (aka the Daily Express' "Beachcomber") put it in his “A Dictionary For Today”, long ago:
“WORLD-PEACE: A state of affairs which would make it possible for the international moneylenders to get even more power than they possess at present.”
It's there to be taken from us: for except among the very poorest, there is so much wealth we still have, such a high standard of living. In the early 80s, businessmen strode into our insurance office with mobile phones the size of bricks tucked proudly under their arms; now, the primary-age children of the underclass have iPhones that my fingers are too fat to operate.
Underneath the polemic of many of the doomsters who now write on the Internet is, I think, a hope that in some way disaster or revolution will save us, because they cannot see us deliberately planning and achieving a better state of affairs. I think this is a dangerous line for the imagination to take: we might find we'd burned what we thought was the Phoenix, but were unable to resurrect it.
But change of some kind is certainly on the way, and in the course of it we must remember to hold onto the things that really matter, especially civil liberties and the democratic form of government. Perhaps the biggest mistake is for us to think that money is the main issue.
Saturday, July 24, 2010
Let's start with an absolutely magnificent rant by Joe Bageant, whose fireball sermon takes as its text the principle that "at ground zero of human species economics [...] the only currency is the calorie" - here he is.
I came upon that link from a comment on this blog, which foresees a new feudalism that begins by victimising the poor and goes on to terrorise the middle class. Again, as we slide into accepting permanent structural unemployment, I begin to doubt the continuance of democracy as I grew up knowing it. On the way, this post tells me things about mainstream Eng Lit icon poet and preacher John Donne that I almost wish it hadn't. And bloggers should take note of the fate of protesters against the Outland-style Virginia Company: "For making “base and detracting” statements against the governor, the Company managers ordered one servant to have his arms broken, his tongue pierced with an awl, and finally to be beaten by a gauntlet of 40 men before being banished from the settlement. For complaining that the Company’s system of justice was unfair, a man named Thomas Hatch was whipped, placed in the pillory, had an ear cut off, and sentenced to an additional seven years of servitude." Read the whole post here.
And in its turn, that came from the sidebar of Jesse, an investment / economics commentator who has been turning (or progressively revealing himself to be) more radical over the last year. His archly-named section "Matières à Réflexion" contains much that is indeed worthy of reflection.
More than once I have quietly challenged James Higham on his "Them" conspiracy theory, but that was to see if he really could prove the links. Perhaps such proof is impossible, just as (thanks to the careful exclusion of fussily minuting civil servants) it is impossible to know exactly what was said by whom at Tony Blair's sofa-style inner Cabinet meetings. Coming from the financial angle, all I can say is that there seems to be growing unease at what many feel to be a crooked manipulation of the entire economic system for the benefit of a rich and powerful elite - to the point where the system may break down altogether. Which, to quote the now tarnished Johne Donne, "makes me end, where I begun": do read Bageant - I think the drink and drugs have merely fuelled his oratory, rather than turned his brain.
Monday, July 19, 2010
UPDATE (3 p.m.): BBC News has caught up with this story:
"Building societies are likely to welcome the move as it removes a strand of competition from the market... NS&I, which is backed by the government, works under rules that state that it must not dominate the savings and investments market." So when artificially low interest rates rob the saver, the government must follow suit.
"It has withdrawn both products from the market for new customers and has not set a date for when they might be offered again." I can't remember when this last happened - if it ever did.
Sunday, July 18, 2010
This leather-armchair contemplation of other people's difficulties in abstract, aggregated terms tempts me into unfair comparisons with Ebenezer Scrooge, Dives and Lazarus, or the savage philosopher-tyrants of the East in the twentieth century. But it would be more charitable of me to ascribe his views to limited imagination, rather than hard-heartedness. Let him be, in his Flint ivory tower (or would that be the pleasanter purlieus of Washington?), while the State of Michigan slides into insolvency . Economics is only a dismal science for others.
Saturday, July 17, 2010
M’learned friend has opened a can of worms. Those who would welcome liberalisation should first read, in a fair-minded way, the experiences and views of the former Birmingham prison doctor Anthony Daniels, aka the Spectator’s “Theodore Dalrymple.” (See his 1997 City Journal article here: http://www.city-journal.org/html/7_2_a1.html)
Readers may also wish to consider the different reasons for taking drugs. Some in the more successful and privileged levels of society may take them as a pleasure trip to stave off boredom, or to alleviate stress and mental overstimulation as they continue to pursue wealth and fame. A proportion will be caught in the toils of addiction, but their network of friends and their financial resources often (though not always) help cut them free.
Lower down, drugs licit and otherwise are a form of medication against unrelenting misery, even if that misery is carpeted and centrally heated. And they are a trap, just as much as the benefits system. They destroy initiative and ambition. This gestalt of hopeless idleness and fuddled fecklessness is then passed on to another generation, with the addition of negligent and abusive parenting. My teaching assistant also works in the evenings at a chemist, and told me yesterday how she was struck that practically everyone in Quinton (west Birmingham) was on a drug she didn’t recognise, so she Googled it up and discovered it was an antidepressant.
When I was at school, the futurologist’s choice was Huxley’s Brave New World or Orwell’s 1984. We now have a miserable coalition of both. Speaking of coalitions, there is a most unfortunate agreement between a government wanting to save money and so eyeing the allegedly unwinnable war on drugs, and a social elite (including members of the government) who grew up with drugs-for-fun and don’t see why anybody should be allowed to prevent one doing as one wishes. This glosses over the obligation to set an example to the less fortunate and to succour them. Much of the libertarian philosophy I read today seems to be a clever gloss on callous selfishness.
[Charon then directs me to a podcast interview with an American judge who also thinks the war is lost.]
OK, have now skimmed the transcript (for which, thanks). Now let’s have a look at some of these worms wriggling out of the can:
Racism: yes, a lot of non-whites in jail. Connect that to justice being like the Ritz. Also (maybe) more usage at the desperate end, and less ability to stay out of sight of the cops – no haciendas to fall apart on. And please consider what I have heard black colleagues in the looked after child system say more than once: the whites permit the plague of drugs, because it keeps the blacks down.
Judge Kane compares the “unwinnable” war on drugs to Prohibition. I understand that by and large, Prohibition worked. It was repealed after the Great Crash because the government needed a way to raise more revenue.
Legalisation means pure drugs, clean needles – point taken, so to speak. But I expect customers also got clean straw during the Gin Epidemic. “If it is available like an aspirin, then there is no market for it.” May I ‘umbly draw His Honor’s attention to the aforesaid epidemic.
Prisons are overcrowded: build more. This freeing of offenders for reasons of accommodation is part of the feedback system that tells the offender that the law has no teeth and will only gum you gently after the 150th offence. A firm – and class-blind – approach would send the message very quickly. I read not so long ago about a magistrate in a Scottish court (in the 60s?) who warned publicly that carrying a knife would be punished as severely as possible; the next offender got 10 years; knife crime ceased abruptly, immediately and for the remainder of the magistrate’s time on the Bench.
Prisons are expensive: not so much as crime. Cost of a year at Her Majesty’s pleasure £30k, savings in costs of crime £300k I have read recently. Perhaps a proportion of insurance premiums should be hypothecated to the prison system so the connexion might be made more explicit.
Legalisation means “no need to rob”. So how come liquor store robberies?
The war on drugs is unwinnable in the same sense that the war on murder, robbery etc are unwinnable. What you don’t see in advance is what will happen when the restraints are off; but we have historical precedent to teach us. The judge speaks of a steady 1.7% addiction rate to heroin and opium, but forgets (a) that there are now many other drugs available and (b) that in a far wealthier and more leisured society legalisation and ready supply could spread use and multiply addicts much, much faster.
Doubtless I’ll be told how pernicious tobacco and alcohol are; I agree, and I am also in favour of increasing restriction on both. The former shortened both my parent’s lives by some 20 years, I believe; and I recall when the latter was available from pub, offies and vintners, but not from supermarkets, garages, post offices etc and often at all hours. I recall one of my looked after children went home to celebrate his father’s release from prison; the poor sap of an adult drank everything in the house and then went out and got caught stealing a bottle of vodka from his local shop. Back in the jug agane.
I think the real driver in all this handwringing declamation of failure is the reluctance of the authorities to prosecute famous people as they will in cases of tax evasion.
Now, Charon will you read Daniels for me?
The case continues.