Credit and Credibility

Are banks crazy or a cartel?

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When a government (let us say, in Athens) could possibly renege on promises made to banks who loaned them money or bought their bonds, which that government is unable to fulfill without draconian cuts to public services, all right-thinking people attack the feckless politicians and threaten a collapse of confidence and the world economy. This is a DEFAULT! Other governments and the IMF might jump in to pour money into the state coffers, on the condition that they flow out the other end into the investors’ pockets.

But when a government (could be in Athens, or in London, or for that matter Madison, Wisconsin) has made promises of pensions to government employees, but has failed to fund them adequately, it is short-sighted and greedy for these civil servants to insist on these promises being honoured.

Why is a default such a terrible thing? Because, they say, if the country defaults on its debts it will be shut out of the credit markets. Hmmm. Let’s suppose it is true. Why? Suppose you own a bank, and your thinking of lending to one of two countries, let’s call one of them Piigsia and the other Sameria. Both are heavily indebted. Piigsia introduces crushing austerity measures, while Sameria repudiates its sovereign debt. Which of those countries would you rather loan your bank’s money to? The one that’s shown a great willingness to pay off its debts but is financially crushed, or the one who may be more likely to try to weasel out of its debts, but is eminently capable of paying. Solvency is not merely (or even primarily) a state of mind. I mean, what good is it to have the current government express a willingness to pay off its debts, knowing that it’s likely to be punished by voters for these “good” intentions? Maybe they just don’t want to be serial defaulters, so having avoided defaulting this time will encourage them to default on the next batch of loans.

As for Sameria, it sucks for the other banks that have lost their money, but why should I give up a chance to make a good profit for the sake of punishing Sameria for hosing my competitors? In fact, in a competitive market, why shouldn’t I be happy that my competitors have made a loss, and just try to get better conditions for my loan?

Continue reading “Credit and Credibility”

Genetics and Democracy in the United Kingdom

Solving the democracy deficit through modern science

 

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With the impending union of male and female royalty breeders, there has been increasing tendency to cite Thomas Paine’s evergreen mockery: “the idea of hereditary legislators is as inconsistent as that of hereditary judges or hereditary juries; and as absurd as an hereditary mathematician, or an hereditary wise man; and as ridiculous as an hereditary poet-laureate.” (Paine never got to see the number of mathematician children filling the posts in most of today’s leading mathematics departments, but the point is well taken.) Seen as the monarchical version of an election — the keystone of the procedure by which a legitimate head of state is created — a Royal wedding certainly feels a trifle arbitrary. But this opposition to monarchy, though it wears the finery of modernity, has failed to keep up with advancing technology. True, it might formerly have been the case that the hereditary principle made the choice of head of state no different from a lottery (for which, see this suggestion). It seems impossible to unite the hereditary principle with the increasingly popular beliefs that rulers should be selected by some non-random process, and that hoi polloi should have something to say about it. But now the following arrangements have been announced by the Palace (a particularly sodden corner of the palace wine cellar, to be precise)*:

  1. Following the wedding, a selection of at least 5 royal spermatozoa** will be extracted and fully sequenced by a specially selected team at the Royal Institution for Genetics Pedigree Studies. The secret method (which, in a nod to popular taste, does use beer as a reagent) has been designed to be maximally non-destructive.
  2. The sequences will published on the website princesperm.gov.uk. The public will have 5 days to register and vote for the one that they prefer be invited to form their new ruler.
  3. The elected sperm will invited in the first instance to inseminate the royal egg. Should it fail in its attempt, the second-place sperm will be sent in. In the case of a repeat failure, a national referendum will be held to determine the correct voting procedure.

* It may be argued that this election proposal, being purely fictional and even farcical, has no bearing on the justification or not of the British monarchy. A dangerous argument indeed, for those who would dispense with fiction and farce would leave central pillars of the British constitutional order bereft of all foundation.

** Why are the future queen’s eggs not also sequenced? Choice of the ovum is a royal prerogative, cf.  Blackstone, Commentaries on the Laws of England, v. 5, section 113 (Oxford 1765-1769).

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New Year Austerity Plan

A Press Release from the Ministry for Calendars, Clocks, and the Underclass

Deputy minister for Temporal Affairs Nigel Thwart (Lib-Dem) is releasing today guidelines for the coalition’s plan to save £120 billion by cancelling the new year. ‘We found that 1983 was still in excellent condition. Military chronologists have refurbished the year and put it into place to be serving us again starting shortly after 23:59 GMT on 31/12/2010. The year has functioned flawlessly in intensive testing, and we are confident that it will meet all the nation’s chronological needs through December, if not longer. We do recommend early bedtimes, though, to avoid overstressing the slightly threadbare post-midnight hours.”We reject claims of some malcontents that the Liberal Democrats have violated the pledge famously signed in blood* by Nick Clegg and other party leaders to “move the country into the future”. This is a coalition government, and we cannot expect to govern as we would like to had we a majority. We are most proud of our party’s influence to moderate the initial Conservative Party plan to return to 1940, which is currently owned by the Smithsonian Institute in Washington. While this year would have been substantially cheaper, the Liberal Democrats maintain that such a regressive move would blatantly contradict our election manifesto pledge.’The year will be sold to a consortium of private investors, and leased back by the Crown, leaving the taxpayers with substantial savings.’We are confident that it will still be possible to modify the year to introduce a referendum on election reform.’
* Mr Clegg’s spokescaitiff has emphasised that it was not the Deputy Prime Minister’s own blood on the signature.

(by DS and JB)

Obesity and education standards

Applying lessons from education reform to win the fight agains obesity

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recent article in the British Medical Journal reports that obesity costs the UK £2 billion in direct and indirect costs. 22% of the British population is thought to be obese, defined as a body mass index (BMI) of 30 or higher; some experts predict that this cost could rise to £45 billion by 2050. The problem of rising obesity, with its multifarious costs, has been described as intractable. These defeatist sentiments ignore the lessons of some of the great successes of social policy, and how seemingly intractable problems can melt away, when attacked with the right combination of zeal and creative new thinking. Consider the progress in state education over the past two decades, and particularly in the 13 years of the Labour government, after Tony Blair announced his three top priorities in the election campaign to be “education, education, education”.

Back in the 1980s, doomsayers were lamenting a collapse in UK secondary education, with the dissolution of the grammar schools. Today, A-level marks are the highest they have ever been, which must surely reflect a huge increase in British school children’s educational attainment. Education experts have expressed amazement at the educational progress over just the decade from 1997 to 2006: In 1997 only 87.2% of A-level (age 18) marks were passes, while by 2006 that had risen to a stunning 97.2%. The fraction of A grades (the highest possible) rose from 16% to 24%. Similar progress was recorded in the GCSE performance (age 16). The percentage of state school applicants admitted to Oxford rose in that time from less than half to 55%, which can only mean that these pupils are learning more, compared with their counterparts at expensive independent schools.

The key insight came from the Prime Minister’s Office for Post-Structuralist Policy Initiatives (PMOP-SPI, pronounced mop spy, the first P being silent), which recognised, in the words of director Pauline deVrouw, “Standards were created for man, not man for the standards. Therefore the Commons is lord over the standards.” This has been extended in the brilliant new Department of Health white paper “Health consequences of the  standard kilogram”. “Obesity,” states the white paper’s forthright preamble, “has many causes, but ultimately it is a matter of centimetres and kilograms. The standard kilogram, although it was manufactured in London, is now kept in a vault in Paris, indifferent to the particular British mensuration needs.” The paper goes on to explain how just a 10% increase in the size of the kilogram  — easily achievable with current technology, and barely even noticeable to the casual observer — would produce a 9% reduction in BMI, and thus reduce the number of obese Britons and the attendant costs by more than half. This approach is found to be vastly cheaper than the next most cost effective plan for reducing obesity, a complicated scheme which involves citizens exercising more and eating less junk. (What costs do accrue — mainly new scales — would be borne by the private sector, and would, in the present economic climate, be useful as an economic stimulus.)

For all that the French call their jealously guarded kilogram “Le Grand K“, the fact is that the kilogram is underweight. Not only has it failed to keep pace with the increasing demands that our population puts on the scale, it has apparently been shrinking even in absolute terms. According to one estimate, the French have managed to misplace 0.005% of Le Grand K (50 micrograms) in its first century. That may not sound like much, but a 0.005% reduction in the size of a kilogram leads inexorably to a 0.005% increase in BMI for the entire population. From this we may infer that there are about 3000 British adults who are currently obese, who would not be obese had the kilogram not diminished.*

Just as Britain’s leaders had the wisdom to withdraw from its fixed exchange rates in the 1990s, and to avoid the unworkable European monetary union, so we need politicians intrepid enough to withdraw from our archaic pessantory union with France. Like the European Central Bank, maintaining its hard-money policies which suit powerhouse Germany and impoverish weaker economies like Ireland and Greece, the myopic French small-kilogram policy, while perhaps acceptable to gallic lightweights, is having unacceptable consequences on this side of the Channel. How could we expect the same kilogram to suit a nation of snail-peckers and a nation of haggis-and-roast-beef-chompers? We are still calculating BMI with a kilogram that was milled in the era of top hats and whale-bone corsets. It’s time to repatriate the kilogram, and take control of the Britain’s weight problem, just as we have set British education on its unstoppable upward trajectory.

* These are the individuals with BMI currently between 30.000 and 30.0015.

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What’s a queen for?

One really peculiar thing that immigrants from republican lands need to adjust to in the UK, is that they actually take this monarch thing seriously. Not in the sense that people regularly drink toasts to the Queen, or speculate about fine points of the order of succession, but that people genuinely think it a reasonable constitution order that the head of state should be selected on the basis that her father held a similar position many decades ago, and that her son (and grandson) should be presumed to take on the job after her demise. Having always lived in republics (except for a brief stint in the Netherlands) kings and queens seemed to me figures from fairy tales and history. I knew that there are people called kings and queens existing in the modern world, but that always seemed an unreal and somewhat ridiculous anachronism, like the toga party in Animal House, or hobby jousters. But when the most recent elections descended into chaos, the experts were clear that it would be the Queen’s prerogative (after consultation with her advisors) to decide which politician should be “invited” to form a government. Again and again the Prince of Wales makes scandals by interfering in London city planning, among other functions of government. They fuss and fume about the prince overstepping his constitutional bounds, but no one would think of telling the prince to just go fuck himself, and treat his “black spider letters” with the same consideration they would give to the letters of any citizen — is he even a citizen?

Which leads to my proposal, which I hope will be taken seriously, given the depth of the current financial crisis in Britain: A lottery for the right to be the next monarch. I suspect that very many people would be willing to stump up a few pounds for a shot, and quite a few might pay several millions for a really substantial chance. The winner of the lottery has exactly the same chance of having the personal qualities required of the head of state as the monarch selected by the genetic lottery currently in force. We might have to eliminate certain requirements of the job, like weekly meetings with the prime minister, to make it more attractive. They could keep the post until death, and then it would revert to the state for a future lottery.

Now, this may seem like a huge constitutional change, but when I read about the British Constitution, the only argument that ever seems to be presented for the hereditary principle is that it saves the British the nuisance of having to vote for their head of state, or of having some washed up old politician appointed head of state by his old confederates. I think it should be clear that my scheme also avoids these problems, as well as complying with all EU directives.

I’m sure the professionals can work out some good advertising slogans (“Paris is worth a mass, but London is worth a pound”; “The new Magna Carta” — stamped on a mock-up lottery ticket; “It’s never too late to have a royal birth”?)maybe a jingle or two, and a legal and constitutional framework.

All British institutions have submitted to the exigencies of finance, except the monarchy. It’s about time the Queen gets with the program and moves to the City.

Will small hospitals kill you?

Disquisition on medical statistics in The Guardian

A recent front-page article in The Guardian claimed to show that small NHS hospitals are killing people. “Huge disparity in NHS death rates revealed” was one headline. “Patients less likely to die in bigger hospitals“. “Safety in numbers for hospital patients” is another headline. The article makes no secret of its political agenda: “The results strongly suggest that smaller units should close. This presents a major challenge to the health secretary, Andrew Lansley, who has stopped all hospital reorganisation.” Online, Polly Toynbee decries “Hospital populism”, saying “Local hospitals may be loved, but they can kill.” Wow. That’s pretty bad. Here’s the schematic of the story: Smart and selfless experts want to save lives. Dumb public clings to habit (in the form of community hospitals). Evil politicians pander to dumb public, clings to campaign promises. “The health secretary, Andrew Lansley, has now put the project on hold, in line with his election promise to halt hospital closures, to the dismay of experts who believe that lives will continue to be lost.”
Continue reading “Will small hospitals kill you?”

Xenophobia: An international perspective

I find the difference in perspective on immigration between North America and Europe all the more striking, because on the standard left-right axis the European consensus — typically to the left of the U.S. on issues like healthcare, private enterprise, and invading other countries and torturing captives — is so far to the right on the U.S. and Canadian political spectra that it’s hardly to found at all. This was made clear in the recent controversy over the Arizona law that would have police checking papers when they have “reasonable suspicion” that someone is illegally in the country. This was treated as such an obvious affront to decency that even most of the right wing didn’t want anything to do with it. In most European countries, there would be nothing controversial about permitting police to stop anyone to ask for identification. (The U.K. is a slight exception here, as the irrational hatred of foreigners has to contend with an irrational hatred of identity cards. Utility bills are considered a superior form of identification.) In Germany (which, despite the popular association in the anglophone media with police-state tactics, is fairly casual about immigrants) I needed to show proof of immigration status in order to get a library card. And whereas even the farthest right in the U.S. distanced themselves from Republican representative Duncan Hunter’s proposal that the children of illegal immigrants be deported (presumably after having their citizenship revoked), I don’t know of any country other than the U.S. and Canada that automatically grants citizenship even to the children of legal immigrants. For instance, my daughter born here is not a U.K. citizen, even though her mother, as an E.U. citizen, has the right to live and work here. (The usually even-tempered journalist Joan Walsh has called Hunter’s proposal “crazy“, and says “I’m not sure Hunter has a soul.” I don’t think it’s a good idea, but it’s obviously not an absurdity, even if it does involve the procedural hurdle in the U.S. of requiring a constitutional amendment. There’s clearly a problem of having minor U.S. children whose parents can be (and are) deported.)

In the U.K. context, it’s barely controversial to bash legal immigrants, much less illegal immigrants. In the most recent prime ministerial debate, the one thing David Cameron and Gordon Brown agreed on was that the Liberal Democrats’ proposal of an amnesty for long-term illegal residents was simply insane and indefensible. They didn’t even have to respond to his counter-arguments, pretend that they had an alternative solution for the problem. It’s the putatively left-wing party in power for the past 13 years in the U.K. that can’t think of enough new ways to attack foreigners, that they have to invent bizarrely creative ways to attack foreigners, like the law banning foreigners from marrying without Home Office approval, or instituting new proposals that immigrants need to perform “volunteer” work to earn citizenship.

What I find amazing is how clear the consensus in the U. S. and Canada in favour of (legal) immigration is, and that the very idea of basing citizenship primarily on parentage rather than on birth in the country is treated as an absurdity by right-thinking people.

Drinking in the park

Codornices_Park_Berkeley chavez_park

 

We’ve been spending a month back in our old hometown of Berkeley, California. Of course, there are features that distinguish Berkeley from Oxford — the hills, the ocean, the redwoods and eucalyptus, the sunshine — but one that particularly struck me this time were the drinking fountains and toilet facilities in all the municipal parks. It’s not just Berkeley. The whole Bay Area, at least, seems to have these basic amenities in parks, as does Portland, Oregon, where we’ve also just been visiting. Some parks have clean, well-lighted, well-functioning toilets, while others have dingy, rudimentary sanitary facilities, but they all have something. Where I grew up, on Long Island, you also expected to have them, so I’ll make the inference that this is a general US thing. It’s not such a big deal if you’re not a parent or a child, but for children and their caretakers the opportunities to take in water and to let it out loom large. You can make a point of bringing water with you, but public displays of excretion are generally frowned upon in public, even if you do use your own containers, so the absence of lavatory facilities puts an effective time limit on playground visits. (Although, I’ve seen surprisingly large boys peeing on the grass at playgrounds in Oxford.) The only playgrounds in the UK that I’ve found to have toilets (I’m judgeing, admittedly, from a tiny sample, having been living there for less than two years) are the two in Regents’ Park in London, and these are exclusively for children, to the extent that each playground has a fulltime attendant who seems to have no duties other than to keep unauthorised age-groups out of the loo. Drinking fountains seem to be entirely unknown on the Sceptered Isle. Interestingly, there was recently a BBC report, on the suggestion of some children’s health advocates that providing water at the playgrounds would reduce the temptation to bring bottles of sugary drinks instead, a net plus for children’s health. A representative of the Local Government contended that it would be too costly to maintain the fountains, and that they would quickly be rendered unusable by vandals.

Now, it may be that the park officials were lying, and drinking fountains just seem like too much bother. But if they are to be believed, there is a huge gap between the US and the UK, either in the competence of municipal engineers and maintenance workers, or in the extent and intensity of antisocial behaviour. (The latter may really be the case. On my initial visit to England, for job interviews, I read in the local newspaper in Coventry that a new city playground had been taken over by feral youths, and that a father who had attempted to use the playground with his young child had been set upon and beaten.)

I’ve been in the UK long enough to be, at the first moment, shocked to observe in Berkeley signs, scattered around houses and apartment blocks, saying “No Solicitors” — much as I know that members of that occupation are not held in the highest esteem. For that matter, the trash bins stenciled “REFUSE ONLY” struck me for a moment as a polite variant of Nancy Reagan’s antidrug “Just say no” slogan.

Where the money is…

Mathematical finance as an accessory to crime

Not long after I finished my PhD in probability theory, a significant fraction of the field was devoured by the financial mathematics moloch. Particularly in Europe, probability theory positions disappeared, to be replaced by openings in financial mathematics, which either went unfilled or cycled among a very few senior researchers and a few quick-change opportunists (and, gradually, their fledgeling academic progeny).

Everyone felt they had to get in on the action, and of course there was a certain amount of positive feedback. When many jobs chase few graduates, it generates huge demand among students for training in such a demonstrably burgeoning field. Obviously, the academic feedback was limited by the fact that most of the eager young ‘uns were seeking employment in banks, not in academia — but the banks were hiring as well. Anyway, just about 10 years ago, a Dutch colleague asked me if I might be interested in joining his own institute’s planned financial mathematics group, for which they were proposing to create TEN new positions. My reply was that finance did not interest me as a topic of research, but I added that there was something unseemly — bordering on unethical — in mathematicians’ headlong chase after banking lucre. The current generation of mathematicians is the trustee of a vast and powerful system of analysis, whose creators were supported, honoured, and financed by public institutions. What is it but a crime, when we abscond with the fruits of this scholarship, and sell it off (cheaply) to banks, who will use it to extract billions of dollars from financial markets? Continue reading “Where the money is…”

An Omnibus named Perdition

christian_bus Atheist-Bus

The famous atheist buses have come to Oxford. What do they mean — other than that the redoubtable Richard Dawkins has found a new venue for self-promotion? I have already commented on the peculiar place — or, at least, what seems peculiar to someone who has generally lived in basically secular, non-theocratic countries — of religion in the public sphere of the UK, which appears to outweigh by far its importance in the private sphere (but maybe that’s just Oxford). It’s hardly a surprise, then, that the Anglican atheists would crave public acknowledgement of their private obsessions. The public forum par excellence is the public bus. The Christians are already there, and the atheists now have their gospel plastered on the side, saying “There’s probably no god. Now stop worrying and enjoy your life.” (Or is it “no God”? Hard to say, given the typography…) For those craving more detail, there is a url for Dawkins’s website. (Which, interestingly, when I checked it just now, featured a large photograph of the man himself, next to the slogan “The Enemies of Reason”. He seems to be selling DVDs, which perhaps reveal whether he is numbered among the enemies, or the enemies of the enemies. I’ve heard he once had ambitions to be a scientist, which explains a lot, when you think about it.) Continue reading “An Omnibus named Perdition”