Saturday, January 29, 2011
By taking them out of the State's hands!The British-political news this week has mostly been dominated by the government's proposals to sell off parts of the nationally-owned forests. The figures provided are only estimates, but the amount to be sold off is about 18% of the total State-owned estate (src), and sales may be less than that if the Government opts to franchise running of the forest, so retaining ownership but selling the right to profit from the forests for a period of time. It is by no means vast tracts of the countryside about which we are talking here.Indeed, the figure is even lower when you consider that some two-thirds of the forested land in the UK is already in private hands (src). In short, the Government is proposing to change to private management about an eighth to a tenth of the total woodland area of the country. Suppose that every fear of the campaigners came true relating to this twelve percent: even so, it would hardly denude the nation of its tree cover.But those worries are ill-founded. Consider that if private owners were to despoil and destroy their woodlands, the State would not own a mere one-third of the nation's woodlands, but that the private woodlands would have shrunk markedly, causing the State to own considerably more than that.Forests can be managed responsibly by private individuals and companies: the continued existence of privately-owned forests proves this. As with the sale of British Aerospace, there are a few issues which need to be ironed out: then, it was national security; now it is access and replanting. Moreover, it is not being proposed and most of us would not support selling some of the most ancient woodlands which have an iconic, cultural status. Changing their ownership and management from the public sector would be far more tricky and not necessarily obviously a good idea. But the State has no business running or even owning ordinary, run-of-the-mill forested areas. The forests will be safer taken out of its hands.
Monday, January 24, 2011
At the Independent website, Sean O'Grady analyses a column in today's Mirror written by the man who would be Chancellor: Ed Balls (link). Most of it is pretty good once you get past the horrendous typos, but at least one sentence needs picking out as perilously unreliable.
If we do it monetarily, by seeing rates rise, then the biggest losers tend to be the richest – big mortgage holders usually.This cannot be the whole story. For sure, the richest will have fixed assets purchased through secured credit. But on the other hand, they are often less exposed to interest rates as they are able to fix their rates for longer: secured credit, you see, is better than unsecured credit. So I would suggest that there are two other groups, who suffer negative effects and whom it is more worth considering here than the property-rich.The first is the other end of the wealth distribution. The richest may have more debts, but as a rule on more favourable terms. The absolute poorest are in negative territory in balance sheet terms, and on the worst terms imaginable. Rising interest rates will hurt the poorest very hard. I would not like to speculate about the relative impact, but I would not so lightly dismiss the fact that there are a lot of people who are over-extended after the easy credit of the last decade. One may object that to a great extent it is their own fault, and I would be inclined to agree; but if we are going to do a distributional impact analysis, let us at least do it properly.The second group is businesses, especially the small businesses about whom it is so often said that the banks will not lend to them. Rising interest rates will make such lending even less likely. And while business owners will suffer, so also will labour, through squeezed wages and frozen recruitment. Indeed, the Bank of England suggests that the share of profits between capital and labour is about 70-30 in favour of labour: if this is anything like a close estimate of the marginal rate of profits sharing, then labour will bear the majority of the pain in any interest rate hike. So higher interest rates (probably) hurt workers rather more than business owners. (And when was the last time a trade union pointed this out?)Actually, neither of these stories is entirely right. Higher interest rates are not an alloyed good or bad: they would slow inflation down at the same time as slowing down the economy. The interest rate decision is a trade-off, and this is why I am not convinced that a price-guiding authority like the Bank of England is a good idea. But since we have one, let us at least acknowledge that their job is rather difficult instead of having a Shadow Chancellor who is set on undermining their role by ignoring interest rates whatever the cost.
Monday, January 17, 2011
Proposals by the European Commission to ban execution-only services will drive up costs and limit choice, a trade body has warned. (src)The distinction is between advisory brokerage, where people buying stocks and shares do so through an advisor (perhaps an IFA or a bank) which offers them advice on how to allocate their money and sometimes even manages the funds directly, and execution-only service, where the punter makes their own mind up, does their own research and takes on their own risks. Clearly the latter is cheaper, but it is also in many regards more responsible: that's no slight on IFAs or their clients, but an observation that taking hold of your own pension pot or ISA can be a liberating thing. I should declare an interest, as it is the model I follow for my own investments.To be clear, this is not another 'straight bananas' Euromyth: there is a consultation document out there which contains this proposal. There is, though, a bit of politics. Some commentators suggest, and with good reason, that the rather bare presentation of this option as an alternative to a somewhat saner, if still fairly onerous, form of regulation is the Commission's way of setting out its preference with a nuclear option in full view in case the financial services industry does not comply. This sounds like a classic government strong-arm on the consultation, but nevertheless the Commission is probably, currently, less convinced about an outright ban on execution-only than it appears.Nevertheless, execution-only needs to be defended, not least because some people will spy an opportunity to increase the monies which the financial services industry can manage. Although it is not a large part of the market by weight of money, it will account for many investors and particularly, many poorer investors. If we want a world where people take responsibility for their own financial arrangements, we need to have cheap ways for poorer people to access the most effective forms of saving and investment. An advisory service is beyond the reach of many people, and the FSA seems hellbent on making it more expensive yet.Positively, some people with lower personal net worth find that they are entirely able to investigate and decide on the various options which the markets present them with, and invest their own money. Speaking from experience, I would say that they can even find they enjoy the process of research, analysis, assessment, making their own decision and bearing the consequences. Cutting them out of the markets because they do not go through government-approved channels (nor pay for the privilege) is a regressive step.
Wednesday, January 12, 2011
MP Eric Illsley is under pressure to stand down after admitting he fraudulently claimed more than £14,000 in parliamentary expenses. … If Illsley receives a prison term of 12 months or more he will be disqualified from being an MP under the Representation of the People Act 1981. (src)I await the sentence with interest. My own choice is really very simple: twelve months and a day. Even if the day is formally unnecessary (and the BBC's journalists appear uncertain on that point), it will make him wear the fact of having pleaded guilty without resigning.However, it does seem wrong that a judge, and not the electorate, should hold the power of calling a by-election. In Barnsley Central, of course, it will simply be a chance for the voters to install their next Labour MP, but all the same a proper recall mechanism is needed so that MPs can be held to account by their electorates, and not simply by judges. The government's recall proposals go a little way in the right direction, but even they leave much to be desired.
Tuesday, January 11, 2011
There is a Telegraph article about Google Goggles, which does OCR on a variety of different things, and has been programmed automatically to solve Su Doku puzzles. The opening sentence:
The days of Sudoku could be numbered, thanks to Google. (src)Well, yes, I think Su Doku's days were always numbered…(I'm waiting for a Google app which can do OCR and automatically solve cryptic crosswords. That'll take proper artificial intelligence.)
Monday, January 10, 2011
It's common to hear pundits saying that the Tories didn't say enough about the structural deficit before the banking crisis. And perhaps that is true. But it is certainly not true that they said nothing, as a few of their sterner critics allege. The following article from the BBC News website in 2006 makes that abundantly clear:
Monday, January 03, 2011
It's a common enough mistake among left-wingers. Life is too short to acquaint yourself with all the various factions in the Tory party, I know. But it really isn't too difficult to get this one right. I would say that it is entry-level political analysis, given that the main movers and shakers have been so important in recent British political history. Owen at The Third Estate writes, of the prospects for a Tory-Orange Book Lib Dem merger,
So where would all the disillusioned Thatcherites go? (src)He suggests UKIP, but of course this is the wrong answer. The correct answer, for Thatcherites, is that they would have to go nowhere. They could stay, quite cheerfully, in a Tory party which had taken on board characters like Clegg, Alexander, Laws and Browne.The clue, if you need one, is in Mrs. Thatcher's appropriation of Prof. Hayek and her approbation of Mr. Gladstone, and in the fact that Michael Portillo and Alan Duncan are arch-Thatcherites. Does anyone seriously think that either of them would be significantly perturbed by David Laws or Jeremy Browne joining the Tories? A figure like John Redwood may disagree with them on social matters, but the Redwoods of this world care very little for social policy anyway.No, the people who would really be put out are the populist, illiberal, Taliban tendency. The Cornerstone Group is a congregating point for the 'nasty party' species of Tory, although the group is mixed with some who are less objectionable (e.g., the aforementioned former Secretary of State for Wales). Nevertheless, if you think of Philip and David TC Davies, Nadine Dorries and Philip Hollobone, you won't go far wrong. You know, the sort of Tory who thinks that bringing back hanging is far too liberal a policy or that our policy on Europe should be open nuclear warfare. They are the ones who would find their position difficult to sustain. And who would mourn their departure?