Pondering on democracy

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On the surface of it, democracy appears to be a fair, agreeable way to run a country. But is it really as wonderful as it’s made out to be? The first thing to be contested with democracy is that it is as good as two wolves and a sheep voting on what to have for dinner. Perhaps from a utilitarian perspective, this would still be an idyllic system, but for lots of us (particularly the sheep) this is far from ideal.

It is, however, the nature of democracy, to be flawed on other levels. It is bound to be governed by short-term agendas. When a government comes into power, they have one term to impress the citizens. Any long-term policy will go unnoticed by the population. Similarly, governments will not have to suffer the long-term consequences of short-term policies. In fact, it is their opposition that is likely to suffer the consequences. Such a dynamic clearly does not operate in the interests of the country.

On this basis, it could be argued that government terms should be far longer than they are, arguably 20 or 30 years, so that they can implement, and see through long-term sustainable policy; although imagine the state of this country if the present lot remained in power for another ten years. Short of his ideal anarcho-capitalist state, Hans-Hermann Hoppe has argued that a monarchy would be better than what we have now: “Assuming no more than self-interest, the ruler tries to maximize his total wealth, i.e., the present value of his estate and his current income. He would not want to increase current income at the expense of a more than proportional drop in the present value of his assets." Indeed, a prosperous and secure society will raise the value of the king’s estate, so it is very much in his interest; but who is to say that the monarch would be so rational?

Unfortunately, every system of government tried has its flaws. I am quite undecided as to what is the best system. What I would argue is that to limit the flaws of any system in place, particularly those of democracy,  the power of the government ought to be kept at a minimum level. The less power the government has, the less propensity there is for them to make erroneous decisions.

Charity, private schools and the public benefit

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It's entirely possible to argue with a straight face that private schools damage the nation. I may disagree with you, think your contention that everyone should be forced into the failing State sector absurd, but that would be my opinion, not an objective fact thrown up by the universe to frustrate you.

However, if we were to try and discuss the costs and benefits of there being a private school sector, we would at least agree that parents paying more money to have their children educated, money over and above the taxes they have already paid the State to educate their children, is a public benefit. No? Saving the State billions which it can spend upon other things is indeed a public benefit? Sure, maybe it's one we might need to offset against other things, but it is a benefit?

Not, apparently, if you are the Charities Commission:

David Lyscom, the chief executive of the Independent Schools Council, has tried, without success, to convince Leather that billions of pounds of taxpayers’ money that is saved by schools educating children privately is a “public benefit" in itself.

However, this is not the worst of what the Commission is no doing as it looks at the charitable status of all those private schools. This is:

The commission have not told us what the test we have to pass is.

When a bureaucracy will not tell you what the law is, when they insist that everything is simply to be left to their discretion, then we have left the rule of law far behind. Indeed, I would argue that in this situation we have left the governance methods of a civilised society far behind.

Apologies for my fundamentalism in such matters but just as I'm sure there are both costs and benefits to having a private school system (and on net, benefits) there are also costs and benefits to having a Charities Commission. If such Commission is going to start using Kafka as an operations manual then, on net, we'd be better off without it. Abolish it and force Dame Suzi Leather to work for a living for a change.

New Labour score an F

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Every year the marking, administration and validity of the SATs examinations seem to turn into a greater fiasco than the previous. This year thousands of papers will be sent back to the examiners due to sloppy marking. There are reports of students losing marks for spelling despite having no mistakes, and examiners taking marks off for undotted ’i’s whilst ignoring similar mistake on other candidates' papers.

The debate regarding the SATs is an ongoing saga in New Labour’s education policy and the lgonger it goes on, the more damaging it will be to young people. The validity of the grading system has been brought into question and people have naturally lost confidence in it. In time the system will become obsolete - how can teachers and schools authorities continue use the results of SATs to rate students and make important decisions on their futures if they cannot be certain the results are accurate?

We need to encourage more choice and diversity within our public examination system, rather than top-down control from the government who have their eyes set on headline statistics, and not the education of young people. A greater degree of privatization and autonomy would allow students to pick examination boards that had the best reputations for accuracy and exams that were tailored to their needs. In turn, employers would seek staff with qualifications from the most reputable and challenging exam boards.

This lack of confidence in our current qualifications system is already being seen with a growing number of candidates and schools opting to take the International Baccalaureate as opposed to the A-Level, which is all-too-often viewed as a ‘dumbed down’ or grade-inflated qualification. Clearly Labour are yet to fulfil their pledge on "education, education, education" – and they won’t as long continue to meddle in the system.

Measuring inequality

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It's almost impossible to open a newspaper these days without being reminded that inequality has grown in recent decades. The reactions to the stated rise do vary, that is true: from it being an unfortunate side effect of growth or globalisation in general to proof positive that we'll all be murdered in our beds when the rabble realise how badly they're being treated.

Will Wilkinson at Cato has a paper out which covers much of the extended conversation and I think's he's right in that inequality simply hasn't grown as much as some say:

To put if more breezily, if cheap stuff gets better faster than expensive stuff, the gap between cheap and expensive stuff narrows, which in turn narrows the gap in the quality of life between rich and poor.

There's a great deal to this: as he says, there's a difference between an expensive car and a cheap one but that gap is as nothing to the one between having a car and using Shank's Pony. Or between an expensive fridge, a cheap one and none.

It's very definitely true that income inequality has risen in recent decades: but much much harder to insist that consumption inequality has done. As an example, there are certainly differences in diet between the rich and the poor in the UK: but it's only in the last 50 years or so that all, of whatever station in life, are financially able to eat a full and balanced diet. We no longer have the height inequality we did (reflecting again nutrition, where the rich were substantially taller than the poor), nor the health care inequality and while education is rightly a bone of contention we've certainly advanced from the medieval idea that only the male rich or the clergy might be literate or numerate.

What makes this oversight from certain on the left so puzzling is that they are exactly the people who have been telling us for years that there is much more to life than simply grabbing for the filthy lucre. That health, enjoyment, leisure are also important, perhaps more so than money. Anyone with an adult and rounded view of life would have to agree with that sentiment, that there's more to it all than simply pilng up the pounds. Which makes it all the more puzzling that there is so much vituperation over inequality rising in that most trivial of things, mere cash, while all the other historically extant inequalites have been shrinking.

Unions need to look forward

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On Friday 12,000 postal workers from the Communication Workers Union (CWU) took part in strike action across the country over a row about jobs, pay and services. The Royal Mail claims this has not affected the mail service, but even if that rings true, there are clearly long-term issues coming to the surface.

The Royal Mail has been massively damaged by the rise of modern technologies that they cannot compete with. Since firms and individuals can now send and receive emails within seconds, the delivery of letters has started to become obsolete. Internet technology has produced an information highway with unprecedented capacities. The Royal Mail has failed to advance and keep up with modern communication. Unless they take action to modernise, they will be reduced to delivering Christmas cards and junk mail. The unions are acting as a massive barrier to any modernisation, failing to see that cuts need to be made if the Royal Mail is going to survive.

As we are currently in a period of rising unemployment, it makes sense that the greatest job losses in the economy should come from the most inefficient sectors. The interference of the unions in the efficiency of the postal service means the Royal Mail will remain stuck in this rut until it fails. A privatization of the service would allow cost-cutting and a readjustment to suit the modern technological age.

This is a clear example of union interference resulting in a loss for society and the economy. They cannot hope to seek immunity from the current recession; if they continue to throw their weight around, the fall will be all the harder in the long run.

Falling food prices

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One of the things that bugs me about the all too sterile political debate at times is when we're told that inequality is returing to levels not seen since the 1920s. No, not just that this point is marched out with the rhetorical equivalent of pursed lips and a "Well, what are you going to do about it?" look, but the way in which the other half of the point is never made, not even mentioned: what's happened to the absolute numbers, not just the relative ones?

As an example of the way in which life has become vastly better for all, have a look at Mark Perry's figures for food as a percentage of household disposable incomes over the decades. Since the 1920s the number has fallen from 25% to just under 10%: seriously, housholds used to spend a quarter of their net income on food, now they spend under a tenth. Yes, the food is better, choice is greater and incomes are vastly higher as well, but isn't that a stunning advance in human welfare?

That in less than a century the food needed to keep body and soul together declined in price, as a portion of income, so much?

There's also a technical point that needs to be made about US poverty figures. To remind you, the US measures poverty entirely differently from every other nation: they took the necessary food budget in the early 1960s, tripled it and said that this was the poverty level (everyone else is using 60% of median houshold income) and they've simply updated it for inflation ever since.

What they haven't done is update it for the changes in portions of spending on different goods and services. We can thus say that the position of the US poor, those on or below this poverty level (which, just to remind everyone again, is before the impact of poverty alleviation measures, everyone else counts after whatever we do to reduce poverty), is rather better than the simple stated figures suggest. For food has declined massively in price and thus that inflation adjusted standard goes further than it used to.

 

Housing: Aspirations and the reality

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Amongst the most serious losers of the ongoing recession have been the UK house-builders. Demand for new houses, despite historically very low interest rates, has plunged. Bullish targets for new UK house-build volumes, such as the Government’s 240,000 new homes per year by 2016 and 300,000 by 2020, have been replaced by unremitting gloom. After all, last year, just 160,000 new houses were built in England, probably around 30% less than actually required.

This pessimism has been reflected in the dramatic decline in the share prices of leading house-builders, most notably, Taylor Wimpey and Barratt Developments. Several house-builders have taken heavy write-downs of their land-banks. Whilst the recession has been a key factor for the decline in new house-building, it has been the disinclination of the banks to lend that has been crucial: the easy lending terms of the past in the housing market have been severely cut back.

No longer do such controversial offers, as Northern Rock’s 125% Togther mortgage, power the market. Instead, leading banks – two of whom, RBS and Lloyds, have received some £37 billion of new equity from the Government – now expect sizeable down-payments for any mortgage deal.

But, out of this gloom for the housing market, there is some evidence that the bottom has now been reached. Persimmon, the UK’s leading house-builder, confirmed in its trading statement of July 7th that sales volumes in recent months have exceeded those during 2008. The Company also indicated that, whilst prices were still declining overall, there was price stability in some UK regions.

The house-builders recognize that any recovery is likely to take time, especially since interest rates are expected to rise over the next 18 months. Some, though, believe that the worst may now be past. However, any recovery in house-building volumes will be way below the Government’s aspirations set out during the boom years.