How will we stay rich?

Not many of us feel rich, but that's partly to do with who we have around us. Compared to most of the world, we are hugely well-off.

Let's make the comparison a little fairer. What matters is not only how much money we have, but what we can buy with it locally: this is known as "purchasing power parity" (PPP). So, here is a graph of the GDP per person (in PPP terms) of the most populous nations on Earth; I also include bars for the European Union and the world average (click to enlarge):

The vertical axis is in multiples of world average GDP: 11,800 US dollars. You see that the USA is four times as wealthy, Germany and the UK three times, and even Italy and Spain are doing terribly well, for now. Until recently, Greece (not shown) wasn't far behind Italy.

My question is, what's keeping us there?

If these countries were a series of locks on a canal, and all the gates were opened at the same time, you'd expect a lot of turbulence and then a settling-down to a uniform level throughout. We have world trade, so why shouldn't national wealth average out across the globe?

It is perfectly possible for neighbouring countries to have extreme disparities in per capita income - here's the two Koreas, separated only by a demilitarized zone around the 38th parallel:

Clearly the economic divide here is largely owing to very different economic and political systems. North Korea may not really be a threat to the world, but it's certainly a threat to its own unfortunate citizens, 150,000 of whom are kept in labour camps in scarcely believable misery. So yes, that inequality can be maintained given sufficient vigour and brutality on behalf of its rulers, who must continue to oppress because they have a tiger by the tail and a moment's weakness will finish them.

At $1,800 per capita, North Korea is far from the poorest country, according to the CIA World Factbook: Bangladesh, Kenya, Zambia and 30 other nations (mostly African) have less, bottoming out with the Congo at $300 (i.e. spending power about 82 cents a day).

But what, other than military dictatorships and civil and international war, accounts for some countries' failure to rise, and what prevents our own standard of living from falling?

Do we work harder?
Are we cleverer?
Are we - will we remain - better educated?
Do we have better and wiser rulers? Do they rule in the nation's interest?
Do we have special knowledge that nobody else can duplicate?
Is our basis of industrial skills thriving?
Are we using our human resources - our talented people - to best effect, in the best sectors of the economy?
Is it easy for our enterprising people to start up and run businesses?
Can we trust our money, and our banks?
Can we live forever off our patents - will they always be ours, and their validity accepted everywhere?
Are we blessed with inexhaustible natural resources?
Are we militarily strong enough to dictate terms of trade and hold everyone else down?

Not enough "yes" answers to the above, I fear.

How will we stay rich?

Not many of us feel rich, but that's partly to do with who we have around us. Compared to most of the world, we are hugely well-off.

Let's make the comparison a little fairer. What matters is not only how much money we have, but what we can buy with it locally: this is known as "purchasing power parity" (PPP). So, here is a graph of the GDP per person (in PPP terms) of the most populous nations on Earth; I also include bars for the European Union and the world average (click to enlarge):

The vertical axis is in multiples of world average GDP: 11,800 US dollars. You see that the USA is four times as wealthy, Germany and the UK three times, and even Italy and Spain are doing terribly well, for now. Until recently, Greece (not shown) wasn't far behind Italy.

My question is, what's keeping us there?

If these countries were a series of locks on a canal, and all the gates were opened at the same time, you'd expect a lot of turbulence and then a settling-down to a uniform level throughout. We have world trade, so why shouldn't national wealth average out across the globe?

It is perfectly possible for neighbouring countries to have extreme disparities in per capita income - here's the two Koreas, separated only by a demilitarized zone around the 38th parallel:

Clearly the economic divide here is largely owing to very different economic and political systems. North Korea may not really be a threat to the world, but it's certainly a threat to its own unfortunate citizens, 150,000 of whom are kept in labour camps in scarcely believable misery. So yes, that inequality can be maintained given sufficient vigour and brutality on behalf of its rulers, who must continue to oppress because they have a tiger by the tail and a moment's weakness will finish them.

At $1,800 per capita, North Korea is far from the poorest country, according to the CIA World Factbook: Bangladesh, Kenya, Zambia and 30 other nations (mostly African) have less, bottoming out with the Congo at $300 (i.e. spending power about 82 cents a day).

But what, other than military dictatorships and civil and international war, accounts for some countries' failure to rise, and what prevents our own standard of living from falling?

Do we work harder?
Are we cleverer?
Are we - will we remain - better educated?
Do we have better and wiser rulers? Do they rule in the nation's interest?
Do we have special knowledge that nobody else can duplicate?
Is our basis of industrial skills thriving?
Are we using our human resources - our talented people - to best effect, in the best sectors of the economy?
Is it easy for our enterprising people to start up and run businesses?
Can we trust our money, and our banks?
Can we live forever off our patents - will they always be ours, and their validity accepted everywhere?
Are we blessed with inexhaustible natural resources?
Are we militarily strong enough to dictate terms of trade and hold everyone else down?

Not enough "yes" answers to the above, I fear.

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

News from tomorrow

201*

The Eid Agreement has been successfully concluded, thanks to the crucial intermediation of a former United States Senate leader.

202*

Mr Abu Hamza has been appointed Deputy First Minister for Wales and Mr Abu Qatada has been elected President of the Al-Qaeda Party. Although Al-Qaeda retains a policy of abstentionism towards the Westminster Parliament, it receives allowances for staff and takes up offices in the House of Commons.

The security service reforms proposed by a former senior Conservative politician have now been implemented. The police Oath of Service no longer includes a pledge of loyalty to the Monarch, and the intelligence services are now required to recruit a proportion of their employees from violent subversive domestic political factions.

203*

In his memoirs, Mr Cameron pays extensive tribute to Hamza and Qatada, saying they were "supreme masters of the distinction between tactics and strategy" and were "an extraordinary couple".

The former Prime Minister continued: "Whether you like them or not, and no matter how strongly you disapprove of their past actions, they had courage in abundance."

Anders Breivik: the view from the street

In legal terms, it would seem that the case of Anders Breivik is as uncontentious as it is possible to be. Politically, the picture is more confused and misleading.

Guilt

He intended to kill, and did kill. Under English law, that defines murder.

Insanity plea

As I understand it, you can have a personality disorder and still not be mad. That is, you can be answerable for your actions, even if they proceed from abnormal motives. Breivik's meticulous planning and prolonged rehearsal demonstrate his ability to control and order his behaviour.

Breivik  does not consider himself insane, any more than John Bellingham did. The excuse he is using, that of self-defence, is arrant garbage but a defendant can try any argument he likes in a court of law. What is more debatable is the decision by news media to let him use the court as a global public address system, but I'll come to that in a moment.


Sentence

Reportedly, he wished to do more than he had done, and would do it again. On that basis, and given the unavailability of a death sentence, he should be imprisoned for the term of his natural life as (a) a punishment for his crimes, (b) a warning to others and (c) a safeguard for society.

Reportage and implicit political agenda

So, why the nightly TV reporting of his case?

It could be simply because the case is sensational.

Or (and it may not be so) it could be because it's a useful stick with which to beat the Right. If the latter, the message is, he did these terrible things because he is a racist, therefore anyone who opposes unrestricted immigration etc should be tarred with Breivik's brush.

Counter

The Right could answer, this simply shows the importance of what are supposedly traditional family values. Breivik is the child of divorced, f*ckabout parents. Their failure to serve their child's development, in preference to servicing their own pleasures, led ultimately to the terrible events in Oslo and Utoya. As John Lennon said of Hitler, what if he'd been told he was loved, all his life? As a part-time teacher of special needs children, this has resonance for me.

Gut feeling

We shouldn't be getting this blow-by-blow coverage. Even the BBC news pointed out tonight that some Norwegian newspapers have chosen not to feature it on their front pages.

It was a crime, he should be punished, and discussion of tangential matters should not be stifled.

Spanish credit now 10th worst globally; UK and USA recovering?

According to CMA Datavision's Q1 report on the sovereign credit insurance market, out today, Spain has just entered the top 10 most risky countries, with a 32% chance of default within five years. Far worse is Portugal, with a 60% 5-year default risk (beaten only by Cyprus, which is a new inclusion in CMA's tables).

More surprising is the market's favourable assessment of the USA, which has recovered its insurance-implied AAA rating, and the UK, now listed as the 6th least risky country. It would seem that the credit insurance traders have bought the good news stories, in the face of continuing pessimism from a number of other economic commentators.

Norway, last quarter the only nation to have an implied AAA rating, retains pride of place, followed by the USA, Switzerland and Sweden with their newly reinstated triple-A grades.

Is the market's optimism at the top end justified, or mistakenly short-sighted?

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Spanish credit now 10th worst globally; UK and USA recovering?

According to CMA Datavision's Q1 report on the sovereign credit insurance market, out today, Spain has just entered the top 10 most risky countries, with a 32% chance of default within five years. Far worse is Portugal, with a 60% 5-year default risk (beaten only by Cyprus, which is a new inclusion in CMA's tables).

More surprising is the market's favourable assessment of the USA, which has recovered its insurance-implied AAA rating, and the UK, now listed as the 6th least risky country. It would seem that the credit insurance traders have bought the good news stories, in the face of continuing pessimism from a number of other economic commentators.

Norway, last quarter the only nation to have an implied AAA rating, retains pride of place, followed by the USA, Switzerland and Sweden with their newly reinstated triple-A grades.

Is the market's optimism at the top end justified, or mistakenly short-sighted?

INVESTMENT DISCLOSURE: None. Still in cash (and index-linked National Savings Certificates), and missing all those day-trading opportunities.

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content.

Voting reform and campaign contributions: a modest proposal

In the UK, political parties are discussing restrictions on campaign contributions. There is also concern at the declining numbers of people bothering to vote at all - a trend particularly noticeable among those aged under 40.

I suggest we:

(a) ban all financial contributions to political parties
(b) do not fund the parties from public monies
(c) remove the Inheritance Tax exemption for legacies to parties
(d) impose a duty on all mainstream media - including newspapers and political journals - to report without bias on all political matters - and make it work better than the BBC does
(e) change the pattern of General Elections - instead of a big hoo-ha once every five years, often influenced unduly by events shortly prior to Polling Day, let us have every year a ballot in one-fifth of all constituencies
(f) ban all political advertising - let each party and each prospective MP give a clear explanation of their plans and promises, on one common website. The entries should remain up for inspection for at least 5 years, so that voters can check the record before voting again
(g) institute a system of Swiss-style policy referenda, whereby if enough people sign the petition, the proposal must be put to people's vote. In Switzerland the minimum is 100,000 requests, proportionately in the UK it would be around 800,000
(h) recognise the present franchise is failing, but rather than coerce or bull***t the young into voting, embrace the reality and switch from one-person-one-vote to one-pound-one-vote. Each elector gets to vote only in the constituency where they live, but can buy as many votes as they wish - credit or debit card machines could easily be installed in voting booths. Let it be a tax on political enthusiasm - all proceeds to HMG

Any more ideas for plain-packaging the political system?