Crappy New Year

As far as the economy goes, 2011 was a bit of a poo. It was also the year in which my already extremely shaky faith in politicians hit an all time low and so, as we enter a new year it is natural for us all to look forward and wonder what 2012 might bring.

So where better place to look than David Cameron’s new year speech? I’ve just watched it on YouTube. If you’d like to you can do so here or read the full transcript here. If you can’t be bothered then don’t fear, I have a selection of the best bits below.

On 2012, David says this:

It must be the year we go for it – the year the coalition government I lead does everything it takes to get our country up to strength.

I’d kind of assumed he was already going for it in 2011 but it seems as though he wasn’t. It does beg the question as to what exactly he was doing. Was he perhaps biding his time? Was he just waiting for the economic depression* to reach a certain level of calamity before calmly springing into action? Or perhaps he was just lulling it into a false sense of security?

Anyway, let’s not dwell on that. We are “going for it” now so let’s look forward:

The coming months will bring the global drama of the Olympics and the glory of the Diamond Jubilee.

It gives us an extraordinary incentive…to look our best: to feel pride in who we are and what – even in these trying times – we can achieve.

I know that there will be many people watching this who are worried about what else the year might bring…The search for work has become difficult… I get that… I know how difficult it will be to get through this – but I also know that we will.

This all sounds deeply uplifting until you think about it – at which point it makes absolutely no sense whatsoever.

I’ll start with the Olympics. I am glad that we have the Olympics and I even have some tickets for the tennis. I’ll also watch loads of it on the TV and cheer on the UK’s athletes all the way. Having said that, I don’t really understand the link David is making. What has getting excited about the Olympics got to do with finding a job? Is he implying that unemployed people just need some motivation? I hope not but either way I don’t understand it.

About the Diamond Jubilee I’ll be honest and concise – I don’t care. I absolutely could not possibly care about anything any less. The country’s most privileged family celebrating another milestone for the length of time they have been living a life of ridiculous luxury is I think, if anything, demotivating. If I were unemployed and having severe difficulty in making ends meet I’m not sure the royals having another party at the country’s expense would be the motivational catalyst that propelled me back to employment.

Back to David:

Too often our schools aren’t up to scratch, our hospitals aren’t always clean enough and our police don’t catch criminals. Brilliant and committed people work in public services – but somehow the system stops them doing their job. So we’ll change it.

Ok, but tell me how. The current government has cut funding for education and the police without providing any coherent policy on how, with less funding, those services will be improved. We’ve heard the big society idea about parents running schools but I don’t think too many people found it coherent. I find the policy of changing schools into “academies” to be at best confusing. The news is full of teachers’ concerns about this policy and rather than offer a clear explanation to ease these concerns, the government instead chooses to label the teachers as “ideologues happy with failure“.

If a government chooses to cut funding for education and the police whilst at the same time maintaining that education standards will rise and crime will go down, then the public deserves a very clear explanation of exactly how this will be achieved.

(I do appreciate though, that in 2011 the government hadn’t started going for it yet, so perhaps a good explanation is just around the corner.)

The NHS on the other hand does have a protected budget but the government’s justification for reform is one of the most shameful examples of misleading the public I have ever seen. I wrote about that here.

Onwards and downwards:

I will be bold about working to cure the problems of our society. While a few at the top get rewards that seem to have nothing to do with the risks they take or the effort they put in, many others are stuck on benefits…

David said exactly the same thing many times in the run up to the election but in the 20 months since he took over he has done nigh on nothing about the former problem of the few at the top (other than attempt to cut inheritance tax on the very rich) and in dealing with the latter has responded by cutting benefits and public services. In this respect, not only has he not been going for it, he has been going for the exact opposite.

So none of his speech so far made sense. What rabbit was he going to pull out of the hat that would possibly address all of the glaring holes in his arguments?

I profoundly believe that we can turn these things around. That’s what I mean by the Big Society…

I lost the will to live at that point.

RedEaredRabbit

* Yes, I said “depression” – the word that politicians around the world have been avoiding like the plague. It’s been three and a half years. Perhaps in 2012, their New Year’s resolution should be to wake up and call it what it is.

Creationist Economics

Evolution is truly amazing.

The are two reasons I think this. Firstly, just look at the wonderfully diverse range of organisms to which it has lead. Elephants, dolphins, giant redwoods, kangaroos, scorpions, sharks, squid, salmonella, venus fly traps, honeybees and naked mole-rats. They are all stunning examples of what evolution has caused.

The second reason I find it amazing is that it is so simple:

  • An individual’s offspring will share similar traits with that individual
  • An individual with beneficial traits is more likely to have offspring
  • Therefore more beneficial traits are more likely to be passed on from one generation to the next than less beneficial ones

That is pretty much it and all you need to add is a bit of time.

A friend of mine disputed evolution recently, on the basis that the species we see today are just too complex to have come out about through such a process. This is how I thought about it. (This is probably why I don’t have many friends.)

Suppose that a particular species has a one year lifecycle and on average each new generation is about 0.001% better than the previous generation. It’s a very small amount – one one-thousandth of one percent better.

Over a period of 1000 years you would notice little difference – the current generation would be about 1% better than they were 1000 years ago. It’s very similar to compound interest – invest £1 for 1000 years at a rate of 0.001% and you will get £1.01 back at the end. Look at this though:

After 10,000 years it will be worth about £1.11
After 100,000 years it will be worth about £2.70
After 1,000,000 years it will be worth about £22,000
After 2,000,000 years it will be worth about £485 million
After 3,000,000 years it will be worth about £10.7 trillion
After 4,000,000 years it will be worth about £235 quadrillion

Back in terms of our evolutionary example, our species that improved at a thousandth of a percent per generation is 235 quadrillion times better than its ancestor of 4 million years ago whilst being virtually indistinguishable from its ancestor of a few thousand years ago. Pretty cool.

Of course, like my friend, not everyone believes in evolution. Some favour Creationism. In Creationism you assume that there is a supremely intelligent being who made a supremely brilliant strategy for the development of species at the start of things and everything worked out from that brilliant strategy.

Now, I can hear you all saying, “That rabbit has really lost it this time, what the hell is he talking about now? I was expecting some sexy economics shit not a biology lesson.”

I am coming to that. I am a big fan of something that has come to be known as evolutionary economics. It works like this:

Suppose you want to achieve a certain outcome over a period of time in an environment with many unknowns. One way of doing it would be to work out the perfect strategy at the start and then run with it. Evolutionary economics would suggest that a better way of doing it would be to continually monitor and adapt your strategy, keeping the things that are working well, and replacing the things that are working badly with new things. Some of the new things will work and they’ll be kept. Some of the new things won’t work and they’ll be binned and replaced. Perhaps some of the things that worked well a while ago will stop being beneficial later. That’s fine, they’ll be adapted too. By doing this, the strategy continually evolves, adapting to the successes and failures along the way in order to ultimately succeed.

I strongly believe that in a complex environment the very best way to achieve success is by continually reviewing and adapting strategy. I do not believe that the very best way to achieve success is to come up with a strategy at the start and never adapt it in spite of how well it does.

Some people do though and they’re called politicians. When the Conservatives won the last election they did so partly based on the promise that they could cut spending and also achieve economic growth. The economic growth though, for one reason or another, has not materialised.

Some people will say, “You big muppet, George Osborne! You said we’d have economic growth and we didn’t! Your strategy was all wrong!”

I don’t agree with this way of looking at things. Sure, he’s a muppet but we are talking about the deployment of a strategy in a complex environment. The behaviour of the UK economy is not easily predictable – a huge number of unpredictable factors influence it. It is complex. His failure is not in his initial strategy, it is in being unable to adapt his strategy based on how well it is actually doing.

Imagine you are watching a horse race and horse number 3 is in the lead. You might say, “I think horse number 3 will win this race.” It would be a fair prediction. Horse number 3 might then take a fence badly and be overtaken by horse number 5. You might then say, “I think horse number 5 will win this race.”

You give your best judgment at a particular point in time and if the situation changes, you adapt your judgment. A politician does not do that though. When horse number 3 was overtaken, a politician would still back horse number 3 because that was what they said first. Horse racing is a brutal industry – when horse number 3 fell at the next fence, broke its foot and was shot by a vet, the politician would still back it to win.

In contrast to evolutionary economics, I have developed my own term for this kind of thinking – Creationist Economics. It’s impossible to get everything perfect first time around but politicians it seems, believe their strategies represent some kind of intelligent design.

At last week’s Conservative Party conference the general economic theme seemed to be, “We must keep doing what we’re doing because you can’t borrow your way out of recession.” (That’s actually not really true. You can borrow your way out of recession you are just left with more debt afterwards. What you can’t do is cut your way out of recession.) Either way, I am moving away from my point. George Osborne, favouring Creationist Economics, refuses to accept that his strategy has not realised the growth that he forecasted and instead stands by his policies through what I can only interpet as a matter of faith.

Of course, George isn’t the only disciple of the church of Creationist Economics. The Health Secretary, Andrew Lansley has an idea to reform the Health Service. Because the communicated benefits of his policy turned out to lack any basis in fact he had to work hard on a campaign of misinformation. (This is always preferred by creationist economists over accepting their strategy was wrong which is considered blasphemy.) Lansley found a couple of facts that if taken out of context he could use to make his strategy look like a good one. He didn’t exactly lie but he did intentionally mislead people, which I think is every bit as bad.

Let’s have a look now at Theresa May. Theresa’s new policy is scrapping the Human Rights Act. Unsurprisingly, this has come in for a huge amount of criticism from all sides. Like Lansley before her, Teresa was forced into telling a fib in order to maintain her creationist ideals. See if you can spot the fib:

What Theresa said:

We all know the stories about the Human Rights Act… about the illegal immigrant who cannot be deported because, and I am not making this up, he had a pet cat.

What Theresa said minus fib:

“We all know the stories about the Human Rights Act… about the illegal immigrant who cannot be deported because, and I am making this up, he had a pet cat.”

Let me summarise my thoughts:

  • It is not possible within a complex environment to devise a perfect initial strategy.
  • It is therefore necessary to monitor and adapt a strategy in order for it to be ultimately successful.
  • Politicians deny these things as they are creationist economists

You may not have realised this but most likely you are an evolutionary economist. Suppose you are making your first ever Sunday roast and when making the gravy you decide how much corn flour to add and it all goes thick and lumpy. Next time you do it you learn from your failed strategy and add less corn flour. Congratulations, you are an evolutionary economist. Would you ignore the evidence and continue to put the same amount of corn flour in your gravy forever? If so then you are a creationist economist.

To me it seems clear that our politicians are not governing our country in a particularly efficient way. It’s not just the current government – the opposition parties would and do embrace their own creationist themes. My complaint is with no particular political party it is with our system. If a politician tried evolutionary economics the media would crucify them for “flip-flopping”. It is much more beneficial for a politician to just get it wrong to start with, never waver from being wrong and spend their time and effort on misleading people into thinking they are right.

And while this is the case, we will all have to endure poor political strategies and politicians will have lumpy gravy every Sunday.

RedEaredRabbit

The Greatest Democracy on Earth

The United States is often marketed as the Greatest Democracy on Earth. I’m not sure I agree.

A couple of months ago there was a lot of worry in the global markets that the US was about to default on its debt. As I wrote about here, this was a very different situation to that of Greece who is very much in danger of default at the moment.

So, why is it different? After all, both of them need money. Let’s take a look.

The USA

Investors are banging on the door to lend the US more money.

Greece

Finding someone who wants to lend to Greece at the moment is harder than finding a dodo who can simultaneously breakdance, juggle six elephants and recite its seven times table in Welsh.

While both countries need money, investors believe that the US will be able to pay it back and Greece won’t. It is probably not a bad judgment.

So if the US isn’t a risk to lend to, if people are queuing up to lend it money – why was there ever talk of a default?

To understand this we need to look at US politicians. In the US (to all intents and purposes) there are just two parties, the Democrats and the Republicans and things are always very close between the two. With nothing to back this up, I am going to lazily say that 45% of the US public always vote Republican and 45% always vote Democrat. The remaining 10% decide who is in government and even they are often fairly evenly split.

Because of this the US always has a fairly evenly split Senate, which in turn leads to both parties needing to agree in order to pass changes to US policy. There’s nothing wrong with this in theory; in some ways it is quite good but it does require that to get anything done the two parties need to work together in a reasonably constructive manner.

That’s where the problem lies – they can’t. Or at least they don’t.

The President of the United States, is often referred to as the most powerful person in the world. Evidence clearly shows this is far from true. Take that “almost default” example. Without the Senate agreeing, Obama couldn’t even make the decision to take the money that the US needed and not default on their debt repayments.

Instead the decision went to the Senate.

Defaulting on your debt when people want to lend you money very cheaply would be more than a bit daft. In fact it would be so daft that even the Republicans knew it would be much worse for the US than just borrowing the money that people wanted to lend it.

The Republicans also know though, that their votes are needed for the decision to pass so instead of just saying “Fine borrow the money, let’s move on to something important.” They instead said, “You can borrow the money only if you do something totally unrelated that we want.”

(For more on that read my charming, metaphorical story about Obama flying an aeroplane. Or should that be an “airplane”?)

Had the bill not passed, the people who would have lost out would firstly have been the US citizens as their economy went down the pan. Then everyone else in the world would have been in trouble (as the health of the US economy affects us all).

Although there was a lot of posturing and political bravdo thrown around by both sides, that situation can be neatly summarised like this:

The Republican Party held the US government to ransom with the American people as the hostages.

I’m not being theatrical, this is simply what happened. The Republicans wanted some spending cuts and held the country ransome to get them and it was truly shameful. A far better way of doing things (without causing global economic chaos) would have been to say:

“We all agree that we need to borrow some more and while we would like to discuss other fiscal measures we will do so once this is sorted out. After all whatever we agree on those items, paying our bills is essential.”

Unfortunately this isn’t a one off. Obama has recently announced a new bill aimed at boosting the US economy through closing tax loopholes for the wealthy and increasing government spending. It is actually a very sensible bill but it doesn’t matter – it will be shot down by the Republicans and it won’t pass.

Is that stupid? No, it is ludicrous. Republicans, hate taxes on rich people and hate government spending. Their political campaigns are funded by the rich and that is of more interest to them than doing something sensible to actually help sort out the problem.

The US government needs to act decisively but can’t because of their politicians and sadly, their economy will experience far lower growth than it should do and we’ll all be worse off because of it.

Have you ever wondered why the US can’t bring in public health care or cut greenhouse gas emissions? Same reason – any sensible policy can be easily blocked by a few right-wing half-wits with their own agenda.

In light of this, is the US the greatest democracy on Earth or a bit of a fucking mess?

It’s not just the US though. Europe is in a big mess too. Do you see any sign of some decisive action from European politicians to put forward a clear plan to sort their mess out? If you’ve spotted one then let me know, it must have passed me by.

Politicians just don’t seem to realise that part of the remit we gave them when we elected them was to be able to sort this stuff out. In the US, Obama is trying but he’s ultimately powerless in achieving anything. In Europe they’re doing nothing and hoping it blows over. (It won’t.)

So what of the UK? The UK government has favoured spending cuts and austerity over any attempt to boost the economy. With interest rates at the zero lower bound and unable to be cut further to offset the cuts, this is at best a dangerous game. Basic economics shows that spending cuts in such a situation will harm growth but the government crossed their fingers and hoped that the economy would somehow sort itself out on its own. In the long run it probably will but that’s hardly a reason to dismiss opportunities to sort things out now.

The IMF has said that if the UK is not going to meet the government’s 2011 economic growth targets (it doesn’t have a chance by the way) that it should reconsider its policy of spending cuts and look instead at a policy of stimulating the economy.

After the election in 2010 it would have been very difficult for any political party to forsee the future and build the perfect fiscal policy to cope with such unknowns. In such circumstances, the elected government should:

– Have used macroeconomic theory as the foundation for their policies. (They didn’t)

– Absolutely be prepared to adapt their policies to match the continually changing and unpredictable economic climate. (They aren’t.)

The government based their policy of spending cuts on the hope that economic growth would happen anyway. It hasn’t and now is the time for them to understand that blindly pursuing this will only cause further harm to the economy.

When looked at objectively, the ability to assess and adapt seems like common sense but asking a politician to consider changing policy is not so simple. A lot of that is our own fault. When a government changes its policy we all say, “It’s a U-turn! You got it wrong! You’re rubbish!”

That really is missing the point. An effective government will not be made up of fortune tellers. Therefore an effective govrnment needs to be able to continually adapt their policies to fit with a volatile and unpredictable world. If, next week, George Osborne says that he is going to scrap some cuts and instead focus on some policies to stimulate the economy, we should not all be criticising him as a weak policitian for changing his mind. If he does this we should be commending him as a strong politician – someone who is able to adapt their policies to fit the situation in which they find themselves.

Of course this is all wishful thinking. In reality what will happen next week is that:

  • Obama will bang his head against a wall because the Republicans will block his sensible policies
  • Angela Merkel will keep her head in the sand and hope it all goes away
  • George Osborne will fly in the face of logic and stick with spending cuts

The really sad thing is that now, more than any time in the last three years, it is easier to know what a good fiscal policy is.

It just seems harder than ever for a politican to spot one.

RedEaredRabbit

How the Yes was Lost

Why do X-Factor winners sell so many records? Why does JK Rowling sell so many Harry Potter books? Why do people drink Actimel or Stella Artois? Why do people wash their hair in Pro-Vitamin-A-Anticomplex-Regenerise-Maxi-Revitaliftium-4?

Ladies and Gentlemen – I give you Marketing.

Concentrate, here comes the science bit. There are two types of marketing:

Good Marketing

Good marketing is when a marketing message supremely shows off particular aspects of a product such that lots of people want to buy it. Importantly, good marketing must not omit any weaknesses in the product that the consumer would not reasonably expect.

It would not, for example, be good marketing to tell people that a new drug solved high blood pressure while at the same time omitting to tell them it would make them incontinent. It would not however, be a violation of good marketing if they didn’t mention that the drug tasted nasty. A consumer would not reasonably assume their potentially life-saving medicine would taste yummy but they might not expect to be continually pooing their pants.

Bad Marketing

Bad marketing is far worse than simply failing to mention that a drug might make you incontinent. Bad marketing is when the message gets so far ahead of the actual benefits of the product that is being marketed that is misleads people into thinking it has benefits that it does not.

Got it? Good because it’s quiz time.

Do people buy Harry Potter books because of good marketing or bad marketing?

I’ve never read a Harry Potter book. I’m sure they’re fine. I doubt though that they are hugely superior to every other book written in the last 1000 years, as their revenue would suggest. This phenomenon however, is because of good marketing.  Nothing was misleading; they simply did a much better job of getting the message out about their books than anyone else did about their equally good or better books.

Do people buy X-Factor records because of good marketing or bad marketing?

Hopefully most of you answered bad marketing. The music is always terrible but people buy it because millions of pounds are spent on making people believe it is good when it isn’t. If my mum sang Agadoo on primetime TV every Saturday night to applause from Simon Cowell she would sell records. It wouldn’t make it good.

I don’t want to sound like I’m superior and immune to marketing. I’m not. After all, I have an iPhone. When I bought it I never even looked at any other phones for comparison. There are much more affordable phones which are very similar. An iPhone costs something like £35 a month for 18 months plus £100 up front. £730! A logical thing to do would have been to compare it with a similar smartphone that cost £25 a month and nothing up front (a saving of £280). I didn’t though. Why? Marketing.

At some stage I have been subliminally convinced that iPhones are a billion times better than all other phones so I didn’t bother looking at the alternatives. The reality is that they are a little bit better but are they really £280 better than the second best phone?

In moments of clarity, I can grudgingly admit this to myself but if I had to get another phone tomorrow I would again go straight to the phone shop and buy an iPhone without looking at the alternatives. This is the power of marketing. It can make people who are otherwise rational completely irrational and if marketing were motor racing, Apple vs other phones would be Ayrton Senna racing against my mum.

(Yes, that’s the second time I’ve mentioned my mum. She gives me £1 every time she gets a mention in my blog.)

iPhones represent  good marketing though. Apple don’t make anything up but they tell the truth in such a clever way that people really, really want to have their products.

Actimel? Hmm. I don’t want to get sued. In my personal opinion, Actimel is an example of bad marketing. This is because I believe it (and Danone etc.) makes carefully worded claims from which people infer health benefits that I don’t believe are really what they will receive. This article goes into it in a bit more detail.

Stella Artois – good marketing. It doesn’t taste better than other lagers, in fact it’s not really particularly nice but it outsells everything. It doesn’t even claim to taste better; it claims to be more expensive, which it is. It’s “Reassuringly expensive.”

Now that’s clever. It might not taste great but be reassured that you paid more for it than the nicer tasting alternative. Rationality completely out of the window. I sincerely hope that the Head of Brewing at Stella Artois is stinking poor and the Head of Marketing is stinking rich. It is pretty clear who does the better job.

Onwards and downwards. Bullshit shampoos? Scientists in lab coats talking about imaginary scientific breakthroughs while computer simulations of imaginary molecules start miraculously rebuilding damaged hair, almost as if the imaginary recipient had stood on their head in an imaginary bath of imaginary stem cells for a month. Bad marketing.

So, we have seen examples of good marketing and we have seen examples of bad marketing. The above examples of bad marketing though, are the work of mere amateurs. When you become really good, no – when you become exceptionally good at bad marketing, you are given a job as a politician.

When I first wrote about AV in February my final conclusion was:

There will be a massive campaign of misinformation that will significantly influence the choice of voters.

There was too – on both sides. The politicians campaigning for Yes to AV made very little attempt to accurately reflect its benefits in comparison with FPTP. They resorted to bad marketing.

Unfortunately for them they were far worse at bad marketing than the No to AV campaign. The bad marketing on that side was truly something to admire. Honestly, if they put that much effort into sorting out the economy and the environment we’d all be laughing.

We were told that AV was so complicated that none of us would understand it. Amazingly lots of people took this at face value. There’s a bloke I work with who thought this and he’s really very intelligent. Are we all so challenged that we cannot put a few choices in order of preference? I would hope not.

In fact, I would go as far as to say that a person who can’t understand AV probably can’t understand the relative merits of the policies of the candidates between which they are choosing.

For example, I am told by David Cameron that I am too stupid to understand AV but, at the same time, it should be blindingly obvious to me that spending cuts, VAT rises and restructuring of the NHS are no-brainers. They aren’t though – they are really much more complicated. If I am too stupid to understand how to rank candidates in order of preference how could I possibly be clever enough to understand the overall impact on the economy of raising VAT to 20% vs keeping it at 17.5%?

We were told plenty of other things that were all a result of a brilliant use of bad marketing. I was impressed when looking at each one individually but if I take a step back and look at the whole thing together it truly is a work of art. It is abundantly clear that a huge number of people spent a huge amount of time working on one of the most intricate examples of bad marketing that our nation has ever seen.

Many people voted No to AV because bad marketing told them that AV would mean Nick Clegg in government. How brilliant is that?

You should all vote in favour of the current voting system (which put Nick Clegg in government) because otherwise it might mean Nick Clegg in government!

But people bought it. It didn’t make any sense but it didn’t matter – rationality is absolutely no competition against bad marketing.

Let me take a moment to make something clear. If you felt you had a good understanding of the good points and bad points of both electoral systems and voted No to AV then I have absolutely no problem with your decision. My gripe is not with you. My real gripe is that the majority of the public was not given enough information on the good points and the bad points of each system to make an informed decision.

The politicians agreed to allow the country to choose their voting system and then spent all of their time and effort concocting nonsense to confuse and mislead everyone.

It was truly shameful but it was nothing more than we have come to expect – just have a look at my previous blog on NHS reforms. Like it or not, we live in a society where a politician’s job title is firstly, Director of Bad Marketing and a distant second is Secretary of State for Something or Other.

I wrote this blog post simply to highlight this problem and I don’t have a solution. The politicians have no incentive to give us the real facts so solving the problem would mean everyone ignoring what politicians told us about their policies and forming our opinions independently. “I already do this!” you shout and perhaps you do but your vote is much trickier for them to spend time winning than that of a person who doesn’t.

And as long as a significant proportion of the electorate has their vote decided by bad marketing over rationality, a politician has no reason to change their behaviour. Unless, of course, we decided to change to a fairer electoral system.

Oh. Damn.

RedEaredRabbit

Facts Evasion

When I’m not tweeting or blogging, I sometimes have to do some real work. Last year, I was asked to put together a report to analyse the performance of a particular strategy my company was pursuing and then present it to my CEO and the board.

“That sounds well important,” I thought. So I did this:

  • I clearly set out what I was going to measure and why
  • I gathered as much information as possible and analysed it
  • I accounted for any uncertainties in my measurements
  • I accounted for any external factors which could have influenced the results
  • I summarised how the strategy was performing based on these factors and tied it back to the things I said originally that I would measure
  • I made recommendations as to how we should proceed based on the gathered evidence and uncertainties

While I would like to think I was the first to think of this nice structured way of doing things, in fact I wasn’t. This is just, at a high level, the way you approach changing anything important, even if you’re doing it subconsciously.

If for example you were buying a house, you would not do it this way:

  • Buy a house
  • Gather as much information about houses as possible
  • Selectively discard any evidence which suggested you’d bought the wrong house
  • Selectively include any evidence which suggested you’d bought the right house
  • Set out what your house buying criteria were based on the bits of evidence you had not discarded

Well, you wouldn’t do it this way unless of course, you were a politician. Politicians, you see, work in the opposite way to everyone else. Let me explain with an example.

At the moment, the government is proposing a reform of the NHS. This is the evidence they are putting forward for why such radical changes are necessary:

Health Secretary, Andrew Lansley, speaking on PM:

You are twice as likely to die of a heart attack in the UK as you are in France.

Prime Minister, David Cameron, on the same day:

We’ve fallen behind the rest of Europe. We spend similar amounts of money but we’re more likely to die of cancer or heart disease. I don’t think we should put up with a second rate… errrr… with coming second best.

Note he actually almost called the NHS a second rate health service but thought better of it.

Well it all sounds extremely scary. But is it?

John Appleby, Chief Economist at the Kings Fund, London thinks things aren’t quite as bleak as the government is making out and writing in the British Medical Journal he explained why.

Although statistics from the Organisation for Economic Cooperation and Development (OECD) confirm that in 2006 the age standardised death rate for acute myocardial infarction was around 19/100 000 in France and 41/100 000 in the United Kingdom, comparing just one year—and with a country with the lowest death rate for myocardial infarction in Europe—reveals only part of the story. Not only has the UK had the largest fall in death rates from myocardial infarction between 1980 and 2006 of any European country, if trends over the past 30 years continue, it will have a lower death rate than France as soon as 2012.

You see, the government selectively chose one data point on the graph and discarded the rest of the data. This is what the data looks like if you don’t discard the rest of it:

Heart Disease MortalityThis doesn’t look quite so scary, does it? You see, when you look at all the available data, you get a very different picture. The UK’s death rates from heart disease have been plummeting and if the trends shown in the graph continue, argues Appleby, then we will have a lower rate than France by 2012.

This looks to me, (and John Appleby) like things are going in the right direction with our current system. Also, as Appleby points out, Lansley and Cameron chose quite a tough comparison. France has the lowest death rate from heart disease in all of Europe. A lucky choice, or cherry-picking a number to support an argument?

Either way – good for France, right? Well, not yet. Something Lansley and Cameron didn’t take into account which is absolutely massively important is this:

Are France and the UK using the same criteria to determine their causes of death?

As it turns out, possibly not. Speaking on More or Less on Radio 4 on 21st January*, Dr. Pete Scarborough, a Senior Researcher at the British Heart Foundation Health Promotion Research Group at Oxford University (get a shorter job title) noted that in the UK, if a person with a record of high cholesterol or high blood pressure dies, the coroners are much more likely to record the cause of death as a heart attack in comparison to France where the cause of such a death unless a heart attack is clearly shown to have happened, is generally recorded as “unknown”.

An additional point which Lansley and Cameron failed to mention is death from heart disease has a lot to do with lifestyle. The best way of avoiding death from heart disease is to avoid getting heart disease in the first place. Diet, smoking rates and exercise were all omitted from their conclusion.

Appleby in his article stated:

The trajectory for many causes of death swoops up and down over decades—often linked to changes in lifestyle behaviours rather than spending on healthcare.

Which makes perfect sense. Perhaps due to lifestyle, a higher proportion of people in the UK turn up for treatment for heart disease than they do in France. If that’s the case we should hardly be blaming the NHS.

You’ll recall, David Cameron also brought cancer death rates into the equation. On that, Appleby noted this:

As Cancer Research UK has pointed out, although the Eurocare data often feed headlines that the UK is the “sick man of Europe” for many cancers, trends from Eurocare actually show improvements in survival rates for the UK. These are confirmed by the Office for National Statistics, which last year reported improvements in five year survival rates between 2001-6 and 2003-7 for nearly all cancers. But Eurocare is problematic; the latest study includes diagnoses only up to 2002, and coverage is patchy (French data cover around 10-15% of people with cancer, the UK, 100%). Furthermore, differences in survival rates may reflect variations in how early diagnoses are made, not the state of healthcare in different countries.

Overall, I think again, this doesn’t seem quite as clear cut as we were led to believe but there is yet another important statistic they failed to mention. If our substandard healthcare is really causing a significantly higher death rate then shouldn’t our life expectancy be significantly lower than France’s? I went to the World Health Organisation’s website to check this out and found this:

The most recent figures for average life expectancy they have are for 2008. In France it was 83 for women and 81 for men. In the UK it was 82 for women and 80 for men. Irrespective of what people are finally dying of, the average life expectancy between the two countries is extremely close.

The WHO also conveniently shows average life expectancy by global region and here we can see whether we are lagging behind the rest of Europe, as claimed by David Cameron:

Oh. As you can see, the average for Europe for 2008 was 79 for women and 71 for men.

So much for us lagging behind the rest of Europe but, anyway, if we truly are experiencing significantly higher death rates from heart disease and cancer than the rest of Europe it is a bit puzzling. If they aren’t dying of that but have lower life expectancy then what exactly is it that they are all dying of? Rabies?

My conclusion based on this data (which was by no means all of it but a lot more than Lansley or Cameron used) would be that we are doing well and heading in the right direction. So where is the big problem? Where is the big need for a radical NHS reform?

Let me move back to my initial example of the report I had to do at work. If I had made a conclusion in advance, backed it up with one or two pieces of cherry-picked data and gone in front of the board with it, my audience would have torn me to shreds.
My report was important to me but compared with the importance of the NHS to the UK it was really nothing at all. This is the NHS we’re talking about – people’s lives.

My audience wouldn’t have accepted such a poor analysis of the data for my crappy report – so don’t you dare do it either. You are the audience now and this is really important. Don’t accept these arguments as the complete story – understand them for what they are. A couple of cherry-picked, airbrushed, bullshit numbers selected to back up a plan that the government wanted to do anyway, regardless of the what the actual evidence suggested.

If I couldn’t get away with such behaviour in front of my board then why should the government get away with it in front of the British public?

Pulling basic information from the British Medical Journal and the World Health Organisation is not hard to do – I did it with no trouble at all. The government’s position is nothing more than pure deception and when we look at the real evidence – their position fucking stinks.

RedEaredRabbit

*More or Less’s excellent piece on this same subject helped a lot with putting this post together. It’s available as a free Podcast so have a look for it.

How Tony Screwed Vince

Tony Blair has a lot to answer for. I’m not talking about Iraq though – not quite that bad but I’m still talking about something pretty terrible:

I believe that Tony Blair was personally responsible for David Cameron and Nick Clegg.

I’d better explain. Blair’s annihilation of IDS and Michael Howard convinced the Conservative party that they had to fight fire with fire. Wheeling out old people with poor communication skills wasn’t working. The Lib Dems had also tried it with Sir Menzies Campbell… but not for very long.

And so it came to pass that the other parties each created a leader in Blair’s image and lo, they were shit.

One politician who was not created in Blair’s image, however, is Vince Cable. On Twitter this week I wrote this:

I do feel sorry for Vince Cable. He looks like a man who ordered steak and chips but a turd sandwich arrived and his boss made him eat it.

Worse still, after he ate it, his boss made him go on TV and say, “Yum yum.”

(I would like to take a moment to apologise for saying “turd sandwich”. I shouldn’t have said that. I should have said “turd baguette” as a turd would fit much better in a baguette.*)

I do wonder how far Nick Clegg’s approval ratings have fallen since the heady days of the party leaders’ debates in the run up to the election. He did well in those debates, not because he had better policies but because he did the best job of articulating the problems with the policies of the other two. He did such a good job that I, and I’m sure many others, thought he believed in what he was saying.

A picture of Nick Clegg before the election

A picture of Nick Clegg before the election

Just a few weeks later it became clear this could not have been further from the truth. Once Cameron dangled his mouldy carrot of power in front of Clegg’s mouth, there was no turning back. Since that day pretty much everything that Clegg preached before the election has been swept under the carpet and while I can understand the lure of power I am still, in equal measure, impressed and horrified at how easily he has forgotten everything he put into his party manifesto.

Vince on the other hand hasn’t found his turd sandwich quite so easy to stomach. I think, in fact, he would be a happier man today if the general election had resulted in a decent gain of seats for the Lib Dems but no coalition. Vince was impressive in opposition. I also think he would be impressive as Chancellor in a Lib Dem government. He is distinctly unimpressive, however, when it comes to maintaining a smile whilst implementing policies with which he doesn’t agree.

This phenomenon reached a whole new level this week though when Vince announced that he might not vote for “his own” policy on university tuition fees. “His own” policy, by the way, is to allow universities to charge tuition fees of up to £9,000 per year.

I will now take a step back. I was lucky enough to attend university shortly before tuition fees came into being. I received the maximum student grant and had a huge amount of help from my parents but it was still a colossal task to pay off the £9,000 of debt I had when I left. If I did the same today under the proposed scheme I would likely have around £40,000 of debt. I have no idea how I would pay that off.

An argument often used in favour of hiking up tuition fees is that the mean lifetime earnings of people with degrees is higher than the mean lifetime earnings of people without one. While this is true it is pitting a simplistic argument against a complex problem. For a start, if you plot earnings vs number of people earning that wage you will see a skewed distribution – i.e. there are a small number of people earning huge wages which pushes the mean up to be higher than what most people actually earn.

Additionally there are of course, careers which require higher educational training which pay well below the mean. If I were selecting a university course today I would not, as I did 14 years ago, choose the subject in which I was most interested. I would instead choose between:

  • Which subject gives me the best chance of being able to repay a debt of £40,000?
  • I am not going to go to university

Tuition fees are not right and tuition fees are not wrong. I could write a whole other post on what I think about that subject and still only skim the surface. This blog post is not about what the best policy is though – it is about Vince and I must bring it back to that subject.

My belief is that Vince is more or less a good bloke but is currently in a position of terrible inner conflict. Does he go with what he believes or does he go with what David Cameron believes? I think he is one of the most capable politicians in the current government but sadly, I have serious doubts as to whether he will be able to stick it out in his cabinet role and a resignation before the next election would not surprise me.

I don’t know the reasons why Vince Cable decided to get into politics but I suspect his current predicament wasn’t in the plan. He is caught between two Tony Blair clones when he never wanted to have anything to do with Tony Blair at all.

When the labour leadership election was going on I wanted Ed Miliband to win. Not just because he had a better understanding of the important issues than his brother did but also that David would have been a third Tony Blair chucked into the mix and I couldn’t have voted for any of them. Ed will now have the problem of trying to break the “let’s all be Blair” stranglehold on British politics but I sense that most of us are more than ready to put that behind us so maybe he might just stand a chance.

You will have noted above when I said Vince might vote against his own policy I put “his own” in quotes. I did that because although it was widely reported in the media as being his own, I actually don’t class it as his own policy at all – it’s David’s. Vince’s own policy was the one under which the Lib Dems fought the last election and it’s interesting because it is more than a little bit different. It goes like this:

We will abolish tuition fees.

Think about his position for a moment. He wanted tuition fees abolished and yet he is now expected to be the one who takes responsibility for increasing them. It’s not easy to reconcile those two policies is it?

I mean – the difference between them would cause a pretty fucking massive problem for anyone, right?

Anyone that is, except for Nick Clegg.

RedEaredRabbit

*Yes, blatantly stolen from Alan Partridge’s “infected spinal column in a bap”.

When the History Grad took on the IFS…..

It was interesting to read today’s publication from the Institute for Fiscal Studies regarding their analysis of George Osborne’s emergency budget. At the budget, you may remember, George Osborne presented his policies and stated that they would proportionally impact the poor less than the rich.

I like the IFS because it is independent of any political party but is extremely well equipped to analyse their economic policies and give us a viewpoint unbiased by any political persuasions.

The IFS have spent lots of time looking at George Osborne’s policies and doing their own sums. They have included lots of things that George Osborne didn’t include in his model. Things like the cost of mortgage payments do actually affect poor people, as do cuts in housing benefits and tax credits. They have also included the years 2013 and 2014 in their analysis which were missing from George Osborne’s.

At this point, I would have liked the government to thank the IFS for their analysis, review it in detail and decide, based on this review, whether or not they should change their policies. This wasn’t what happened. Within hours, the government had given a press release stating that the IFS had missed some important things from their analysis, such as economic growth and if they had included these they would have come to a different conclusion. This is a bit odd, because the IFS have included more things in their analysis than the government did in theirs. They haven’t as far as I can see missed out anything which they government included in their model, they have just added things the government forgot to include. To my mind, this doesn’t make it a worse analysis, it makes it a better analysis.

If George is going to get into a verbal ruck with the IFS about economics, I worry his modern history degree won’t help him out much but there is a bigger concern that I have. For the government to have so quickly found a the flaw in the data presented by the IFS they would have had to take the IFS model, incorporate the things they felt had been missed and then recalculate everything on that basis. i.e. they would have to have an even better analysis already prepared and ready to go. If they have this analysis then they should publish it so the IFS, you, me and everyone else can read it and respond. I suspect this analysis has not been done and their reaction is purely a defensive one.

In an ideal world a government would form policies by gathering the available evidence, analysing it and then determining the best policy based on that analysis. Before they implemented it they would determine the way in which they would measure its success or failure and if it were not behaving as expected they’d adjust the policy accordingly. This might seem an unattainable idealism but actually we are all doing such an exercise in our every day lives all of the time.

Supposing you live in Wimbledon and you get a new job in Canary Wharf. You now have to decide how you will get all the way across town and back every day. There is nothing direct so you have lots of combinations of options. You could take buses, tubes, mainline trains or even river boats.

You start off by typing your journey into your iPhone app. It suggests that the quickest route is taking the District Line through Earl’s Court, changing at Monument and taking the DLR. You try this for a while but realise that every morning you get stuck outside Earl’s Court for 20 minutes because the people who manage the arrivals and departures there are half-witted. The model on your iPhone app didn’t take this into account so in this situation you would try a couple of the other suggested journeys a few times and after a while, based on your experience, you’d settle on the route which worked the best for you.

The government equivalent is to decide that on the first day of work, they need an emergency iPhone app journey plan. After this, no matter how inconvenient it becomes they will stick to the route they took on the first day and claim it is the best.
When newer better apps become available they accuse them of not including something their original model had never included anyway like “leaves on the line” and stick to sitting outside Earl’s Court for 20 minutes every morning, pretending they meant to do it.

No one would go in for this nonsense with their journey to work so why do politicians insist on it for something as important as the economy? The difference is this:

How much would it cost you to admit you were wrong?

Sadly we live with a political system which overly punishes this natural human trait. When the apple fell on Newton’s head his reasoning didn’t go like this:

I need an emergency gravity law. It is very important to get this out asap. Thinking it through would be an unnecessary waste of time.

…and then…

My emergency gravity law is that apples are attracted to heads, through a strange new force.

And then refuse to change his law when someone pointed out it was a bit more generic than that and in fact everything was attracted to everything else.

Of course he didn’t. Science would hardly be where it is if all scientists were to all insist that the first thing they ever thought of were the absolute truth. Politics a bit different though. For one there is the opposition. Imagine there were someone employed for the sole purpose of taking your job off you. If there were, would you want to admit you’d got something wrong? Also there is the press. Every newspaper has a political agenda, and while I think being able to learn from experience and adjust accordingly is a good trait, the press seem to call it a “U-Turn” and think it makes you a weak politician, not fit to do the job. All this gives an incentive for governing politicians to refuse to admit their mistakes and pretend the policy they first thought of was the best one.

I admit though, the comparison with Newton was harsh because politicians are under a lot more time pressure than Newton was. As important as Newton’s theory of gravity turned out to be, it wasn’t as though anyone at the time was having a terrible time directly because they didn’t have an equation to explain why they were sticking to the Earth. The new government didn’t have that luxury. When they came to power they were under immense pressure to put in place some policies to start addressing their finances – after all they had promised to do so and been elected on that basis. I don’t have a problem with them doing this, as long as they could have a process to continually review what they were doing, take on board other people’s opinions where necessary and adjust their strategy accordingly when they were wrong.

The reality is a long way from this though and the best model available to us today, from the IFS, suggests that our current economic policies are punishing the poor more than the rich. The government deny this but haven’t produced a better model to show how they can be so sure.

Would it be so bad to have a political system where a government could take constructive criticism of their policies into account and improve upon them because of it?

Wouldn’t that benefit to the country as a whole?

Would it really be so terrible of them to at least read the IFS publication with an open mind before responding?

I don’t think it would be terrible. In fact, I think they should read it. It is rather good.

RedEaredRabbit

Could I See the Job Description, Please?

For the last two years, George Osborne must have been odds on favourite to be the next Chancellor of the Exchequer and this week it finally happened. Strangely he doesn’t come across as having been particularly prepared for this event, and has spent much of this week wandering Downing Street with a look of utter bewilderment plastered across his eminently slappable face.

On Twitter, I recently parodied Osborne’s meeting notes from the first cabinet meeting:

Osborne Meeting Notes

However, joking aside there is surely a big concern here. The UK’s economy is in a bad way – The Office for National Statistics’ figures showed, as of the end of 2009, that the UK national debt stood at £950.4bn – equivalent to 68.1% of GDP. In such dire times, what skills and qualifications should the person in charge of the economy have?

Let’s do a a little quiz and compare the appointment with what would happen in the private sector when a bank is interviewing to appoint their most senior economist:

We have two candidates – let’s call them Gideon and Vince.

  • Gideon studied Modern History at university. He got a 2:1, so we can safely say he is quite good at Modern History.
  • Vince studied Natural Sciences and Economics as an undergrad before completing a PhD in Economics. Vince has also lectured in Economics at LSE and been Chief Economist for Shell – one of the largest companies in the world.

Q: You are on the board of the bank. What is your response?

Those of you who answered “Give Vince the job!” are in fact wrong. The correct answer is, “How the fuck did a history grad, with no experience of economics, get this far in our selection process?

You may think this a harsh assessment, but I stress again the financial mire in which we find ourselves and ask you to bear in mind the importance of the position of Chancellor of the Exchequer in addressing this. My cynical side can’t help thinking the selection process was more along the lines of: “He may know fuck all about numbers, but he is my mate.”

Now you may think I’m singling out George Osborne unfairly. “After all”, you may say, “Teresa May knows fuck all about anything useful at all, and she’s in the cabinet.” This is entirely correct and I do not want to single Osborne out – more to use him as an extreme case of a general concern I have. Cabinet posts, while hugely important, rarely seem to be filled with the best person for the job. Should we not insist that our Education Secretaries have extensive experience of working in schools? That our Health Secretaries have extensive experience of working in the NHS, and that our Chancellors have extensive experience of finance and economics?

We will never know exactly what the decision making process was and perhaps there was a lot more to it than this but can anyone, hand on heart, say that George Osborne is the best possible person to take on such a crucial role at such a crucial time?

RedEaredRabbit