Madsen Pirie

According to Ernst and Young, the top ten phrases used by potential fraudsters in e-mails are Cover up, Write off, Illegal, Failed investment, Nobody will find out, Grey area, They owe it to me, Do not volunteer information, Not ethical, and Off the books.  Procedures developed by the FBI enable mail to be scanned looking for the “red flag” markers that something is amiss.

This is good stuff, and sets me looking for similar markers to indicate that fraudulent government is afoot.  I think “People often don’t know what’s best for them” is a prime candidate, and “Government has a moral responsibility to act” is a surefire giveaway. I am happy to receive other suggestions of phrases that warn us of impending mischief…

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Some people in Argentina burned a British flag in the streets in response to the Sun’s advertisement telling them to lay off the Falkland Islands.  In Northeast Pakistan an American flag was burned in response to a drone strike that killed a Taliban commander.  Occasionally in the Gaza strip we see them burning American or Israeli flags in reaction to some incident.

I wonder how many local shops there are in places like these that do good business selling such flags? I cannot imagine that in tribal areas of Pakistan there is a vigorous demand for stars and stripes flags, or that there is a flourishing trade in Israeli flags in Gaza. Yet always they manage to find one to burn in the streets. It makes good television to accompany the story. I wonder if the journalists themselves obligingly provide a flag for the locals to burn, then record the dramatic pictures of them doing so? It seems more plausible than the supposition that local shops regularly stock such items. Next time you see footage of a flag burning incident, it might be worth asking where the flag came from, and if the whole incident was manufactured to make good television.

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The notion that banks should go into schools to teach children about finance has been met by the usual howls of outrage from those in the business of claiming that all banks are wicked, but in fact it’s a very good idea. Children need to know about how mortgages work, what an annual percentage rate (APR) is all about, and what saving up toward a pension involves. This kind of knowledge is a useful life skill.

I have strong memories of the time our Geography teacher, ‘Sam’ Osborn, took time out to teach us all about hire purchase, an early form of credit sale. He taught us how to calculate the total amount we would have to pay for an item bought this way, and we were all shocked to discover that it more than doubled the cost in most cases. No doubt it stiffened our resolve to save up for things instead of enjoying them immediately on high-priced credit. Yes, by all means let us teach children how finance works. It will probably make them into savvier customers.

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The UK Labour Party has announced plans to help the long term unemployed back into work,

The party has pledged £1bn to enable employers to meet the cost of hiring the 130,000 people who have been out of work for more than two-years…. Under Labour’s plan, the long-term unemployed would be offered 25 hours of work a week at the national minimum wage for six months.

The cost of this will be met, they say, by limiting tax relief on pensions for those earning in excess of £150,000 a year. It would be spent on subsidies for placements in the private and voluntary sector.

This whole approach falls into the ‘push’ category of policies, as opposed to ‘pull.’ The thinking is that government has to fund jobs itself, rather than making it easier for jobs to be created by demand. An alternative approach would reduce taxes on small and new firms, and free them from many of the regulations that are part of the hidden costs of employing people. The jobs thus created would be real ones supported by market needs, rather than those which exist only because government is funding them. There are some cases, and this is one, where government should not be entering the ground with money in hand, but clearing the ground and making space for others to move into.

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Asked his most significant numbers of 2012, Robert Peston, BBC Business Editor chose the numbers 80:20. Here is his reasoning:

“My statistic of the year was given to me by Jean Claude Trichet, the former president of the European Central Bank. He told me about the 80:20 ratio for Europe and the 20:80 ratio for the United States. What does that mean? It means that in Europe, roughly speaking, banks provide 80% of the finance needed by businesses and households. Whereas in the States banks provide only 20% of the finance required by businesses and households.”

This goes a long way to explaining the continuing crisis in the eurozone. When European banks are in trouble, the finance for businesses is in short supply. Since only 20 percent of the equivalent funding in the US comes from banks, the problem is far less acute. This means a shortage of capital in Europe and a recession more difficult to climb out of, but nothing like the same problem in the States. The result will see much faster growth in the US than in Europe, and international investors must be looking to a swifter and more certain recovery there.

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The New Year programmes which reviewed the year were mildly interesting, reminding us of the Olympics and the floods. I found it more interesting when they reviewed the celebrities who had died during the year. The one thing that struck me was how transient a thing is fame.  Many of these people had achieved success and celebrity when they were young. Now when they died, in some cases decades afterwards, it brought them back briefly to our attention.

The sportspeople seemed to fare worst, in that it was quite a struggle to recall them after all this time. Sporting fame comes young and is soon eclipsed by the next bright star’s achievements.  Television comedians are also soon forgotten (with the noted exception of Morcambe and Wise) because fashions in humour change, and much of it reflects its own time.

Singers fared rather better if some of their songs were still extant. Davy Jones of the Monkees was remembered because people still play “Day Dream Believer” on karaoke nights, and Whitney Houston left us the classic “I Will Always Love You.”  But the movie stars did less well in memory because while a screen performance endures, out attention turns to later ones.  It is significant that when people are asked to vote on the best ten movies of all time, there is quite a high proportion of recent ones.  The message which came over the review of the year was perhaps that celebrity and fame, which seem so big in their day, are soon gone. All glory is fleeting.

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There’s a real corker of a New Year prophecy by Ambrose Evans-Pritchard in the first Daily Telegraph of 2013.  It is basically about the consequences of nominal GDP targeting by so many countries, and the effects their policies have on each other and the rest of the world.

He predicts strong rallies in the US and China, that gold will pass $2,000 an ounce, and the euro at $1.44.  He thinks investors will get out of corporate bonds and into equities and bullion. The bad news is for France, Italy, Spain and the eurozone countries in general.  Euroland growth will lag 3 points behind that of the US, continuing into 2014, with unemployment rising in many of its member states.  His biggest sting comes at the end:

“This is the year when it will become clear to many that Europe is in far deeper trouble than supposed; that it risks tipping into irretrievable decline; that it is wasting its precious youth at the worst moment, as the aging crunch nears, when it should have none to spare; that it is resorting to ever more coercive measures and autocratic methods; and all to save a currency that is the elemental cause of the disaster in the first place, and should morally be broken into its democratically-controlled parts.”

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Predictions have a habit of bouncing back to bite you.  2012 began with weather forecasters telling us that the UK faced a year of drought and that it would take months of continuous rain to restore water tables.  There were even early hosepipe bans, but the year finished as the wettest on record.

Bearing this in mind I make two predictions.  The first is that the Nobel Peace Prize will be awarded to an undeserving candidate whom the awards committee approve of politically.  In the spirit of recent previous winners such as Al Gore, Barack Obama and the European Union, it will go to someone in favour with fashionable people who lean to the left.

My second prediction is that the UK will continue its retreat from closer European Union.  As the members of the Eurozone seek closer ties with each other, which was always a logical consequence of the single currency, the UK will be seen as an impediment to progress.  There will be increasing talk of Britain acquiring some kind of associate membership of the EU, with access to its single market, but no longer required to accept government by the European Commission, the European Parliament, or the European Courts.  If it is part of the price they must pay for political union, the other EU members will allow Britain to go its separate way.  By the close of 2013, this will be so overwhelmingly popular with the British public that it will seem inevitable.

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Will self writes in the BBC magazine that we should end “our national obsession with food.”  He bewails the fact that the nation has become a “foodie paradise” and looks fondly back to the days when you might find just a fish and chip shop, an Indian and a Chinese eaterie on the high street. Now those same streets and our supermarket shelves offer us the food of the world. If Will Self were to spend a fortnight eating food from the 1950s and 1960s, he might reconsider his somewhat perverse criticism of the way food has changed since then.

Of the many cultural changes I have lived through, this has been one of the most welcome.  British food had the dubious pleasure of being among the world’s worst. We had no taste, and we didn’t know how to cook.  I remember advising my Hillsdale students, “when the waiter brings a plate with a lettuce leaf, two tasteless halves of a tomato and two slices of processed cheese, don’t sit waiting for the main course; that is the main course.”  Burgers in Britain were a kind of stewed meat loaf; vegetables had the life boiled out of them (or came out of tins); meat was overlooked to leatheriness, and we thought wine was a sickly sweet sherry brought out for celebrations. Ah yes, I remember it well, but I doubt if Will Self does.

Food is one of the things that has become better, and the change has improved the quality of our lives. We have learned that meals are not a refueling stop but an aesthetic experience, something to savour and delight in.  From celebrity chefs we have learned how to cook, and how to choose fine ingredients.  As a nation we have become better at many things in the past half-century, and food is one of the important ones. Bon appetit.

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Writing on the ASI blog, Tim Worstall has revisited our 2007 publication, Land Economy by Mischa Balen.  At the heart of it is an intriguing idea.  The aim is to solve the housing shortage in Britain, together with the blight that monoculture farming has visited on the UK countryside.  The proposed solution calls for converting 3 percent of farmland in England and Wales to development in such a way that 90 percent of it is turned into woodland with lakes and small streams, and only 10 percent to houses and infrastructure.

This would create nearly 130,000 hectares of new woodland, together with 950,000 new homes.  Crucially, none of the new homes need by overlooked by existing countryside properties.  It would see the vast prairie-style fields of wheat and rapeseed replaced by natural woods serving as a habitat for small mammals and birds.  Amongst and between that woodland would be the new housing and supporting infrastructure.  The proposal was to do this over a ten-year period, redressing both a housing shortage and an environmental problem at the same time.  And as Tim reminds us, it could be done without public money, and we could start now.  Since this would provide private sector building employment and reduce public spending on housing benefit, 2013 might be a good year in which to push this proposal for all it is worth.

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