Club Troppo

Warren Buffett when asked to sum up the basic point of life went for this formulation.

The purpose of life is to be loved by as many people as possible among those you want to have love you.

Remarkably similar to Adam Smith’s formulation actually – that what we crave most is deserved approbation.

I was reminded of this reading this story of Vicki Shackleton who is one of those saints in our community – what other word can one use – who are true to that Christian saying:

For I was hungry, and you fed me. I was thirsty, and you gave me drink. I was a stranger, and you welcomed me. I was naked, and you clothed me. I was sick, and you visited me. I was in prison, and you came to me.

Vicki made it her business to take in the troubled and abused children of the world, and to house them and help them.  Of course if you were successful it would give you an incredible rush of satisfaction. In any event, why we don’t give these people our highest honours, instead of handing out AOs and ACs to those who have usually done a very good job of looking after themselves is a mystery to me.

Anyway, the story is one of those ’2 of us’ interviews in the Good Weekend.  Vicki helped save the life of Erica Morgan whose Mum was schizophrenic and who’s Dad died when Erica was very young.  Erica is doing fine.  And what does she want to do?  Reciprocate:

Erica now lives with Craig. He’s a beautiful boy. And she’s now done a bachelor of arts at Newcastle University. Her ambition was always to be a case worker, to help other children who were in similar circumstances to her. She just got a part-time job at Barnardos, mentoring children coming into care. She was so excited when she came to tell us she had the job. It’s another stepping stone. Life is looking pretty good for her.

Budget Week should in principle be a great opportunity for an educated national discussion about issues of public finance and macroeconomic management. But unfortunately the budget debate is always shrouded in such a thick fog of political rhetoric and misinformation that it turns into the most tedious week of the year.

The greatest nonsense tends to surround the interpretation of the deficit. Not that the discussion of the ill-fated CPRS, the resource rent tax, or the healthcare funding arrangements have been very informative. But when it comes to the macroeconomic policy aspect, you might as well read a good comic as listen to a minister or shadow minister on the radio.

There are two basic questions about fiscal policy that should be posed at each budget:

1. Is the fiscal stance, that is, the discretionary change in spending and revenue, an appropriate contribution to aggregate demand?

2. Is the fiscal balance on a sustainable path given the state of the government balance sheet?
(Continued)

It’s three in the morning here in Canberra. The BBC is reporting that the Labour-Lib Dem negotiations have collapsed while George Pascoe-Watson, former political editor for the Sun, is tweeting about a Lib-Conservative coalition with cabinet posts for the Lib Dems.

The IEA’s Mark Littlewood isn’t surprised that the Lib Dems and the Conservatives are close to a deal:

Nick Clegg himself is something of a classical liberal who is suspicious of big government, sceptical of high spending government projects and a firm civil libertarian. His key appointee at the heart of the delicate negotiations with the Conservatives is David Laws, the party’s education spokesman, who is also firmly on the classical liberal or “Orange Book” wing of the party. Laws has been assiduously courted by the Tories for several years and is seen by many of his fellow party members as an oddity within the Liberal Democrat party, albeit a highly gifted one.

But on twitter the #dontdoitnick hashtag is going off. Lib Dem supporters who thought they were voting for an anti-conservative party are outraged and dismayed.

Image from: http://twitpic.com/1mmtlu

From Stumbling and Mumbling

In one respect, the Left should be a little worried by the Conservatives’ failure.
To see what I mean, consider John Kay’s claim that there’s an intellectual vacuum” on the Left:

The search for a practical political philosophy for the left in Europe has…moved backwards since 1997. Market fundamentalism is out of favour, the failings of socialism are still not forgotten. Social democracy seems inevitably associated with high taxes and obstructive and overbearing public sector trade unions.

Now, there is in theory a solution to this. What the left needs is to pay much greater attention to questions of ownership. It needs to break away from the post-war social democratic view that the evils of capitalism could be tempered by trades unions and state action alone. I mean this in four ways:
1. Some form of worker ownership would abolish the toxic class conflict that has bedevilled some (yes, public sector) industries such as Royal Mail or the tube.
2. Intelligent cuts in public spending can only be done through decentralization, because workers on the ground know better than Whitehall where the waste is.
3. The financial crisis was not (just) a market failure, but a failure of ownership. As John himself writes in Obliquity:

[Banks’ bosses] supposed they were in control of large financial institutions, when in reality the floors beneath them were occupied by a rabble of self-interested individuals determined to evade any controls on their own activities.

This means the Left should abandon its view that ownership structures are a question best left to the private sector.
4. In a globalized world, it’s difficult to redistribute income through the tax system, partly because taxes on profits are shifted onto wages. Giving workers ownership might, therefore, be a more feasible egalitarian strategy.
Leftist thinking should, then, pay more attention to issues of ownership.
And this is where Cameron’s disappointment is, in a sense, my disappointment too. His “big society” idea went down about as successfully as Nigel Farage’s plane. A big reason for this seems to have been that people just don’t want to take control of local services.
Which raises the disturbing possibility. Could it be that a possibly coherent theme for the Left – empowering workers – would be unpopular with voters because they don’t want the responsibility that comes with power?

Joseph Agassi Liberal Nationalism for Israel: Towards an Israeli National Identity. Gefen, Jerusalem, 1999.

There are lots of explanations for why economics has become so excessively formalised. Because much of its subject matter is readily quantifyable – because it deals with money and the creation and distribution of standardised things it is certainly possible, and beneficial to quantify and formalise lots of stuff. But then a lot of the ideas are best explored in discussion – or so people thought until around the 1950s.

In the 1950s and 60s lots of disciplines succumbed to the siren song of formalism and mathematicisation. There were people who thought that cliometrics would displace history. But, though obviously enough quantifying things can be very useful in history as in any attempt to get at the truth of things, there are a vast number of questions in history for which quantification is not particularly useful.  Today in history there is no presumption that you can’t be doing important work if it hasn’t been formalised.

If I were to speculate as to why this sorry state of affairs exists in economics, I’d say that it has mostly been driven by the professionalisation of academia. PC Chair Gary Banks commented on the lack of academic engagement in contemporary policy issues:

Whether academics could be drawn on more is a key issue. In an earlier era, the involvement of academics was instrumental in developing the evidentiary and analytical momentum for the first waves of microeconomic reform. Examples from the trade and competition policy arena alone include Max Corden, Richard Snape, Fred Gruen, Peter Lloyd, Bob Gregory, Ross Garnaut, Fred Hilmer, among others. Where are the new academic generation’s equivalents in support of the ‘Third Wave’? Only a few names come to mind, for example, of academics making a notable public contribution to policies bearing on human capital development.

I would argue that this is driven to a substantial extent by the need for academics to target publication in top journals.  And top journals are unlikely to publish highly context specific applied economic work. Yet I would have thought that, except for some with very specific and high level strengths in theory that’s where economists will be most socially productive.   (Continued)

"Why is everyone voting Conservative?" tweeted an exasperated Holly Hawthorn, "VOTE LIB DEMS!!" But it was already too late. By the time the votes were counted the Liberal Democrats had lost thirteen seats and picked up only eight. And most of the seats they lost went to the Conservatives.

In an election that was all about Labour losing seats, the Liberal Democrats were struggling to defend their own against the Conservatives. When it came to picking up swags of Labour held seats, they weren’t in the hunt.

Before the 2005 election academics Andrew Russell and Edward Fieldhouse wrote:

In tactical terms, the Liberal Democrats have aligned themselves as an anti-conservative party in recent years, despite the fact the class profile of their supporters is similar to that of the Conservatives. The party finds itself competing with the Conservatives for the majority of its existing and target seats. However, if the Liberal Democrats are to make substantial gains in future elections they must also make in-roads in Labour held areas (p 216).

But in 2005 this changed. A poll by Ipsos MORI suggests that around one in ten of those who voted for Labour in 2001 shifted to the Liberal Democrats. The Lib Dems gained twelve seats from Labour with Labour gaining no seats at all from the Lib Dems. The MORI poll suggests that attitudes towards the war in Iraq were partly responsible for this shift. Disaffected Labour voters tended to favour the Lib Dem’s position on the war.

The 2005 fight against the Conservatives was less successful. The Lib Dems picked up three seats from the Conservatives but lost five.

In 2010 the Lib Dems reverted to the old pattern failing to pick up a large number of Labour seats (they gained Norwich South and Burnley). All up, the Lib Dems gained eight seats, some newly created (eg Bradford East), some Labour and some Conservative.

While they picked up eight seats, they lost thirteen. And in contrast to the gains, there was a clear pattern with the losses. Most of the seats the Lib Dems lost went to the Conservatives.

For Lib Dem supporters who saw the gains of the 2005 election as part of a long term trend, the 2010 election was a crushing disappointment — especially after some very positive opinion polling numbers. As Holly Hawthorn put it: "Seriously, all of you who said you were voting Lib Dem & then didn’t…you suck."

(Continued)

Some time ago a coworker of mine found a file on the train and gave it to me. A thick wad of papers detailing a conspiracy against all that was good in the world: The Queen, her constitution and her mighty railways….and the writer’s right to place her wheelie bin on the kerb. A few months later the same coworker found a similar file on the train. The writer is obviously keen to spread her message, so I feel I might oblige.

Click through for hi res

First up though is how striking the file is visually. It’s a brilliant work of mixed media, collage, found texts, vastly changing text sizes and styles and graphical work. As art it far surpasses the chaos of other celebrated efforts, such as The House of Leaves, except for the fact that this is entirely sincere. Within we have heavily annotated railway bulletins and photocopied history books, text spilling through all available space in the margins. We have text that rises and falls in size with her level of indignation; the largest word is “Fornication”. We have copies of all her correspondence to councils, to treasury, to the reserve bank and her applications for legal aid, the last of which contains a detailed exposition of the forces rallied against her. Any given page must also be read from multiple angles to capture all the thoughts she has crammed into every inch of paper.

The conspiracy itself can not be summarised easily, so here is an incomplete list of the antagonists named throughout the text – keeping in mind that terms are usually strung together:

Unions, Moslems, Catholic Universalism,  Nazis, the EEC, TV, environmentalists, masons, Europeans, Asians, “Bar mitzvah boys” and the “German Jew Master Race”, “Cain’s children in Japan”, Veolia (Cannix – nazis), gypsies, fenians, Miranda Divine (“the not so divine Miranda”), John “How-Hard”, the “Ruddy”, Buddhists, Hindus, racists, fascists, Marxists, Satanists, Hitlerists, socialists, modernists, feminists, humanists, hospitals, “internet winkypop Ency”. developers, Tories, Danes, Irish, Picts, Scots and Canaanites. (Continued)

One of the catchiest phrases doing the rounds on Twitter as the UK election results come in is "Activate the Queen". It all started with a BBC radio interview with Professor Peter Hennessey of the University of London back in March.

Here’s a quick transcript:

Hennessey: "The understanding is that the Prime Minister of the day doesn’t activate the Queen until he or she resigns. And the Prime Minister of the day, ie Gordon Brown, doesn’t have to resign straight away. If it’s messily hung and it’s very close he could face parliament with the Queen’s Speech and only when voted down on that Queen’s Speech — which is a matter of confidence — would he have to resign. And normally the Queen would then turn — and the word is always normally — to the political figure who commands most seats in the House of Commons or is most likely to be able to command the House of Commons — command the confidence of the House of Commons. But it gets very messy Sarah, if the Prime Minister of the day who’s lost a vote of confidence asks for another dissolution because the Queen doesn’t have to accept that request. She would normally turn to David Cameron …

Interviewer: So … one second … If the Prime Minister of the day doesn’t effectively lose completely but something happens and he thinks ‘let’s call another election’ he’s not necessarily in a position to do that?

Hennessey: The Queen doesn’t have to grant that request and almost certainly would not because he’s had dissolution and had his election. She would then offer the chance to form an administration to David Cameron. And if he put — and this is where it gets messy and very uncertain — if he put a Queen’s Speech to the House of Commons which he lost on and he asked for a dissolution of Parliament thereby triggering an election he would get one. He would almost certainly get one. And these guidelines make all that pretty clear now for the first time. You see the Queen is like Heineken lager, there are certain parts of the Constitution that only she can reach. But the real point is, she mustn’t be politicised. The parties have to sort it out among themselves and she gives her good housekeeping seal of approval when they’ve sorted it out.

The guidelines Professor Hennessey is referring to are the Cabinet Office’s Guidance — Elections and Government formation (DRAFT). These explain the conventions in the case of a hung parliament.

Update: Guardian cartoonist Steve Bell draws the Queen as a Dalek “ACTIVATE! ACTIVATE!” But nobody seems to get the joke.

It’s official, the UK has a hung paliament. With Labour’s Teresa Pearce holding Erith and Thamesmead the BBC is reporting that "There is now no chance of the Conservatives winning a Commons majority." Since the result gives nobody any satisfaction, a quick witted commentator on BBC tv is calling it "the Mick Jagger election".