Friday, 29 March 2013

It’s not just school grades that parents buy

Sandie Shaw claims that today, she’d need a private education to make it as a star. Is she right?

Mumford & Sons and Sandie Shaw
Mumford & Sons and Sandie Shaw 

Is there a single public figure in Britain who did not go to private school? With the Prime Minister, the Mayor of London and the Archbishop of Canterbury all owners of the black and pale-blue striped Old Etonian tie, it can sometimes seem that way.
Half the Cabinet, more than half of the country’s top medics and 70 per cent of judges went to fee-paying schools – compared to just 7 per cent of the overall population. It is not just men in suits, wigs and white coats who are likely to have been privately educated. Over a third of Team GB’s Olympic medallists from last summer went to private schools.
This week, the debate was reignited by the improbable figure of Sandie Shaw. The 1960s singer, of Puppet on a String and lack of shoes fame, was in front of the culture, media and sport select committee at the House of Commons. She claimed that it would be impossible for her, the daughter of a Dagenham car worker, to repeat her success in today’s world.
“At the moment, unless you are Mumford & Sons and come from a public school and have a rich family that can support you, you’re on the dole and you’re trying to work and by the time you get a sniff of a record contract you just grab anything they might offer you,” she said.
Poor old Mumford & Sons – forever destined to be wheeled out as an example of the public-school mafia that dominate the Top 40. Most of the members of the “nu-folk” band met while pupils at King’s College Wimbledon, incidentally the same private school attended by Nick D’Aloisio, the 17-year-old who landed himself a £20 million internet fortune this week. Then there are Chris Martin of Coldplay, Florence Welch, Dido, Lily Allen, Radiohead and nice, fresh-faced Will Young – public school educated one and all. Even the Saturdays, the girl band currently occupying the number one slot in the singles chart, contains two members whose parents paid for their education. 
How private schools have continued to attract pupils during the downturn has baffled some economists, particularly considering fees have increased by 75 per cent in the last decade. But this sheer weight of success – across the full spectrum of British life, from the track of Sir Chris Hoy’s Olympic velodrome to the stage of the Birmingham hippodrome – is one of the reasons why parents seem willing to dig deep into their pockets. Sandie Shaw’s comment struck home: a private school education increases your child’s chances, even their artistic ones.
The Sutton Trust, which monitors the rusty wheels of Britain’s social mobility, carried out a snapshot survey of the school backgrounds of 8,000 “notable people” deemed important enough to have their birthdays announced in the broadsheet newspapers. Even the arts – where you might think raw talent rather than education would be the deciding factor in a successful career – were dominated by private school pupils. Half of the 135 theatre producers and directors went to private school, and four out of 10 actors too (including Old Etonians Eddie Redmayne and Damian Lewis).
Pop stars, in fact, were one of the least privileged groups, only out-plebbed by policemen. The government-funded Brit School, the performing arts college in Croydon whose alumni include Amy Winehouse, Leona Lewis and Adele, has a far better track record than Eton, which hasn’t had a chart-topper since Humphrey Lyttelton. Even so, a considerable 19 per cent of singers and band members went to private school.
The success of private schools in the so-called “soft” areas such as sport and the arts is partly down to facilities, which have tended to mushroom over the last generation as schools have entered into sports-hall and recording studio “arms races”. Ed Smith, the former England cricketer, pointed out in his book Luck that when England toured Pakistan in 1987-1988 all but one of the 13 players selected were state-educated. When England played India in the summer of 2011, eight of the team’s 11 were privately educated, including Stuart Broad, an alumnus of Oakham and Andrew Strauss, the captain, who went to Radley.
This happens to be my old school (yes, I am one of the 52 per cent of newspaper journalists who went to private school), an institution where the playing fields stretch almost as far as the eye can see – certainly far enough for every single one of its 640 pupils to be playing cricket on a summer afternoon. It also boasts a state-of-the-art theatre, studio space for smaller productions, a music school and concert hall. My hackles rise when a begging letter arrives asking me to help fund yet another Olympic-standard fencing gallery.
Phil DeFreitas, the cricket all-rounder from the 1988 era, went to Willesden High School in north London. Its playing fields were dug up to build a new City Academy, with a glittering building by Sir Norman Foster. It has a basketball court and an Astro Turf pitch for football, but no lovingly watered cricket wicket. It is no surprise that when DeFreitas retired he ended up as a cricket coach not at his old school, but at Oakham, where his experience was used to train future privately educated Stuart Broads, not comp kids like himself.
It is not just the equipment, however. Lee Elliot Major, at the Sutton Trust, says: “There are just not enough state schools that have an aspirational culture. The grammar schools, whatever you may have thought of them, created pupils who aspired, and most independent schools share that. This is as true for pop stars as it is for doctors and lawyers.”
Jo Dickinson, an accountant and mother of three, is about to send her 11-year-old daughter to a private girls’ school. Both she and her husband, a banker, attended comprehensive schools. “My school was good, but it did nothing to nurture me or give me confidence,” she says. “My daughter’s school prides itself on inviting artists and actors as well as doctors and lawyers to give talks to the girls. It’s just something I never had.”
Rachel Johnson, the journalist and sister of Boris, says: “It’s peace of mind. That’s what you are getting when you take on that third mortgage to pay for fees. It’s the peace of mind that you can’t do anything more for your children.”
She thinks the fabled confidence that private schools give their pupils is more of a “veneer”. She, like many parents, frets that this comes with a major disadvantage. Namely, that children will mix in too narrow a social group, shut off from the real world. But this is usually outweighed by the hope that, articulate or not, they will get a leg-up, often in the form of an unpaid internship. In the 1980s, just five per cent of the film industry workforce had under-taken unpaid work, but this rose to 45 per cent over the last decade.
Ryan Shorthouse, at the Social Market Foundation, and author of a report about access to the creative industries, says it is not the unpaid element that is the key barrier. “Bright, talented and enthusiastic people will always find the means and ways to fund an unpaid internship; but they don’t all have access to the network of these internships. This is particularly the case in the creative industries, which tend to be made up of small firms, without the large-scale work experience schemes accountancy or law firms have.”
The confidence that privately educated children are supposed to possess is generated not just by small class sizes, world-class facilities and an encouragement to aspire. It comes from an innate understanding that they will grow up knowing the right people, that there is a network they can tap into. As Dr Elliot Major says: “Politicians talk of soft skills; it’s more than that. They are life-defining skills – that is what the top private schools are so good at giving their pupils.”
This is something that parents who are lucky enough to have money understand. For all the promises from Michael Gove’s education department to inject academic rigour into the state school system, governments will always struggle to compete with the “life-defining skills” on offer in the private system.

Wednesday, 27 March 2013

Cricket, Physics and the Laws of Probability

In the recently concluded test match between New Zealand and England an event occurred which in this writer's opinion once again questions the predictability of an lbw decision as a method of dismissing a batsman and especially the DRS system which is being touted as a scientific fact. On the last ball of the 99th over in the England second innings the ball, to quote Andy Zaltzman in Cricinfo:

The ball ricocheted from Prior's flailing bat/arms/head, and plonked downwards, in accordance the traditions of gravity, onto the timbers. It did not brush the stumps. It did not snick the stumps. It did not gently fondle the stumps. It hit the stumps. The bails, perhaps patriotically mindful of their origins in early cricket in England all those years ago, defied all the conventional principles of science by not falling off.

If the stumps and bails had behaved as cricketing precedent and Isaac Newton would have expected them to behave, England would have been seven wickets down with 43 overs left.

If the ball having hit the stumps fails to dislodge the bails then doesn't it introduce even more uncertainty into a DRS based lbw decision which its supporters claim to be irrefutable evidence? This incident requires that in an lbw appeal the DRS should not only predict whether the ball, if not impeded by the batsman illegally, would have gone on to hit the stumps but also if it would dislodge the bails.

Supporters of the DRS rely on the infallibility of scientific laws to promote their support for technology. Then, like true scientists they should admit the weakness of their science whenever an anomaly appears. Assuming for a moment that these scientific laws are infallible then how do they explain the reprieve that Prior obtained? Also, shouldn't the DRS have been used to declare Prior out since the ball had actually hit the stumps?

Hence I would like to make a suggestion which may unite the supporters and opponents of the DRS. I suggest that the LBW as a method of dismissing a batsman should be struck off from the laws of cricket. Instead, a run penalty should be imposed on the batsman every time the ball comes in contact with an  'illegal' part of his/her body. The DRS could be used to adjudicate on this decision. The penalty could be  ten runs and increasing every time the batsman uses such illegitimate methods to stay at the crease.

I look forward to a debate.

Related article

Abolish the LBW - it has no place in the modern world

In teachers they trust



Asked how he assesses his teachers, Mr Matti Koivusalo shrugs matter-of-factly that he has “no means” to do so. “There is no evaluation whatsoever for teachers. Everything is based on trust,” says the Principal of Haaga Comprehensive School in Helsinki.
Indeed, the “open” school culture means any feedback quickly reaches his ears, says Mr Koivusalo, who looks after 50 teachers and 600 pupils in grades one through nine (the equivalent of Primary 1 to Secondary 3 in Singapore).
It is easy to see how: Along the school’s hallway, pupils look up from their mobile phones and greet him as he walks past; some engage him in friendly banter. At the school cafeteria where free lunches are served daily — an established practice at all Finnish schools — teachers join him for lunch and chat about how their day has gone.
Said Mr Koivusalo: “If something bad happens, I’ll hear about it in five minutes … The atmosphere is such that (students and teachers) can come and talk about it freely without being afraid.”
Even so, sackings are rare in Finnish schools, say educators. Mr Vesa Valkila, one of the principals at Turku University teacher training school, tried to explain: “Finnish teachers have a lot of freedom and are trusted … that really motivates a lot of them to do their best.”
In Finland, a small country of 5.4 million people, its education system operates on this singular principle of trust.
The country’s model shot to global attention after Finnish pupils repeatedly excelled in international tests such as the Programme for International Student Assessment — despite having practically no mandated standardised exams, rankings or competition.
Schools take in students of all varying abilities, including those with learning disabilities, under one roof. The curious result is that, the differences between its weakest and strongest students are the smallest in the world, according to a Organisation for Economic Co-operation and Development (OECD) survey.
School leaders across Finland tell TODAY the same thing: “We trust our teachers”.
There are no national examinations in the first nine years of Finnish formal schooling, and schools and teachers are pretty much left on their own to educate their charges.
As Ms Armi Mikkola, counsellor of education at the Ministry of Education and Culture put it: “The administration is for support and not for inspection … Trust is part of Finnish society, it is a culture.”
Nevertheless, “with trust, there are some risks”, admitted Professor Jouni Valijarvi, Director of the Finnish Institute for Educational Research.
To mitigate risks of having underperforming teachers in schools, a stringent teacher selection process and rigorous teacher training is integral to the system, he said. “It is very important that we can say all schools are good schools,” added Prof Valijarvi. “Because in every school, we’ve highly-trained and qualified teachers”.
Yearly, 7,000 teaching aspirants apply to be class teachers (teaching the equivalent of Primary 1 to 6). Typically, there are just 800 spots available.
To teach secondary and upper secondary students (Secondary 1 to Junior College equivalent), 6,000 vie for 1,500 subject teacher positions yearly. Universities cherry-pick from this large pool of applicants, with two different selection processes for each category.
For class teachers, to prepare applicants for an entrance test, authorities will release study materials online on education-related topics such as pedagogical research studies. During the four-hour test, applicants answer about 100 multiple-choice questions. Even so, acing the entrance test does not guarantee a spot in one of the 11 universities offering teacher education.
In phase two, depending on the applicant’s university of choice (they are given up to three picks), there could be a psychometric test along with an interview, or an observed group activity. Some universities also select based on an applicant’s matriculation exam results — the only national examinations taken by Finnish pupils, at the age of 18.
Ms Anna Vaatainen, a student teacher at the University of Turku, is one who succeeded on her second try.
In her first attempt, she was invited by the University of Jyvaskyla for an interview but did not make it through. She went on to obtain a social work degree, and worked in an orphanage for four months, before deciding to give teacher education another go.
This time, after “studying very hard” for the entrance test again, she and three other applicants were tasked by the University of Turku to plan an imaginary school’s sports day. “I am better around people so this group activity might have worked for me,” she said.
Those hoping to be a subject teacher undergo a similar selection process, having to first pass an entrance test set by their subject faculty of choice. They will then apply to the faculty of education, which may require an aptitude test and interview.
The result is that you ensure true commitment to the job. Mr Jari Kouvalainen, a student teacher at the University of Eastern Finland, said: “Because we have to get through this really hard test, you have to be really motivated. With another five years of study, you’re really committed to this career”.
In the ’70s, Finnish officials moved teacher training under the universities, subsequently implementing a five-year master’s degree programme for all who want to become teachers. A combination of theory, practice and research was key to teacher education, they decided.
Class teachers major in the educational sciences and teach most subjects including Mathematics and Science at the primary levels. Teacher educators say that teaching younger children requires strong pedagogical skills to motivate and excite learners, and not just the transfer of academic knowledge at this stage.
By contrast, subject teachers major in their teaching subjects, while also having to complete pedagogical modules and teaching practicums. In-depth knowledge in their teaching areas is crucial, to give them the confidence to explain complex theories and tackle difficult questions.
Ms Anneli Rautiainen, head of professional development of teachers at the Finnish National Board of Education, thinks that research-based teacher education accounts for the high quality of teaching in Finnish schools today.
“The fact that we have a Master’s degree for teacher initial education is very important. As research-based teachers, they can analyse learning situations and know how to support their students better,” she said.
Student teacher Ms Tuula Hurtig agrees that conducting research has honed her critical thinking abilities and improved her teaching methods. Graduating as a history and civics teacher this year, her thesis involved research into how historical pictures impacted her students’ learning.
Head of teacher education at University of Helsinki, Professor Jari Lavonen, calls research-based teacher education vital — it combines with field practice to keep student-teachers in touch with classroom realities and “thinking about their teaching methods”, he said.
All student teachers undergo multiple teaching practicums as part of their five-year programme. Each one lasts between two weeks and a year.
Guided by teacher mentors, student teachers are attached to teacher-training schools set up by the universities, where they plan, teach and observe lessons. These 12 teacher training schools across Finland function as normal schools, with pupils coming from nearby homes. These schools also partner regularly with universities to produce the latest research in education.
Final-year student teacher Mikko Honkamaki, from the University of Jyvaskyla, worked with different mentors during each of his four practicuums — which broadened his perspective on various teaching styles — and got advice before and after each lesson. He also got to observe and critique fellow student-teachers, and vice-versa.
“Watching my peers forced me to focus on my own way of giving instructions ... Receiving and giving feedback has also been crucial to my growth as a professional,” he said.
It was a cold winter’s morning when TODAY visited Maininki School in Espoo city, half an hour outside Helsinki, and Ms Rose-Marie Mod-Sandberg was conducting an English Language lesson with her eight-graders (Secondary 2 equivalent).
The classroom was quiet as some students had fallen ill; it was a smaller than usual group. Ms Mod-Sandberg, 55, decided to get her pupils to share about their favourite American cities and imagine what they would do if they got there. As the mood lightened, she gave out worksheets which each student completed on their own.
She has the leeway to tailor her lessons according to her students’ abilities or interests on that very day itself, she told us. For instance, if the children were keen on a topic that was meant only for next year, she could dive into it. And if they seemed more tired than usual — such as after a strenuous Physical Education lesson — she could choose to do something less demanding, and pick things up later.
“If I want to teach a topic, I can teach it anyway and anytime I like,” she said. “Finnish teachers undergo a long training, so (school leaders) can trust us to be professional and to act in the pupils’ interest”.
In Finnish schools, teachers typically teach from 8am to 2pm before heading off to plan lessons or attend to parents’ queries. They are not required to take charge of after-school activities such as arts or sports clubs — usually run by private community organisations — and those who do so, are remunerated accordingly.
Schools leaders also said that a layer of stress is removed for teachers as there is no evaluation process linked to their salaries. In fact, the pay structure is relatively flat where pay increases with years of experience and teaching hours.
According to the latest OECD data, Finland’s average annual wage is S$59,852 or approximately S$5,000 a month. For those teaching at the primary level, annual salaries start at S$35,883 (about S$ 3,000 a month). After 20 years, their pay reaches a maximum level of S$64, 530 (S$5,400 a month).
Nevertheless, pay is not a main issue for Finnish teachers, said those TODAY spoke to. People are attracted to the career due to the high status that education is accorded in Finland and the autonomy given to teachers.
The government provides free education in the first nine years of a child’s school life, while schools receive funds to invest in slower learners. Teachers also hold a place in Finnish history, often cited as important figures alongside priests and doctors.
“Young people still see working as a teacher as very creative and independent, where teachers can make a difference in their pupils’ lives,” said Mr Olli Maatta, a teacher trainer at Helsinki Normal Lyceum, a regular Finnish school owned by the University of Helsinki for trainee teachers to serve their attachments.
At Haaga Comprehensive School, the school bell rings and children burst out of their classrooms into the snow-filled courtyard, throwing snowballs at one another and sledding down mini snow hills.
Starring out of his window as one of his teachers leads pupils back from a skiing lesson, principal Mr Koivusalo observes: “The role of an educator is very important. If a teacher loves his job, the children know it and they will want to come to school.”
Ng Jing Yng is a senior reporter with TODAY covering the education beat. She spent one and a half weeks visiting schools in three Finnish cities — Helsinki, Jyvaskyla and Turku — ranging from primary through to upper secondary (JC equivalent) levels. She spoke to students, educators, university faculty who train teachers and officials.

Tuesday, 26 March 2013

JP Morgan et al - Not a decent banker around

By Martin Hutchinson in Asia Times Online

In the past week, the detailed revelations from JP Morgan's grilling in the US Senate have combined with the Cyprus rescue blunder to generate one inescapable conclusion: public or private sector, European or American, there isn't a decent, competent banker among them. Truly almost 20 years of funny money and 30-40 years of misguided deregulation have drained the financial sector of the quiet competence it used to exhibit. 

I wrote about JP Morgan's "London Whale" derivatives insanities of early 2012 a few weeks ago. It demonstrated two failings that appear to me unforgivable. First, in spite of the experience of 2007-08 Morgan was still using value-at-risk as a major element of its risk management. 

Kevin Dowd and I pointed out the irretrievable flaws in this methodology in Alchemists of Loss, published in June 2010 - and we were by no means alone in doing so, though we may have had a "better mousetrap" than others in terms of an alternative risk management approach. A bank of Morgan's stature has a duty to keep up with the literature; it's as simple as that. 

The second failing is even more fundamental, because it rests on what Morgan thinks a bank should be doing. Bruno Iksil, the London Whale, was attempting to "corner the market" in an obscure and artificial credit default swap (CDS) contract. 

First, credit default swaps are not solidly based, because their settlement procedure can very easily be "gamed" - rather than the current procedure it would make more sense to select a random number between 1 and 100 as the percentage of the contract that was paid out on default. Second, index CDS contracts are doubly artificial, because the index itself is constructed as a basket of credit default swaps, none of which themselves trade with any liquidity; thus the index itself can be "gamed." Third, Iksil was trading in an "off the run" index, constructed five years previously, whose liquidity was even more restricted and whose relationship to any underlying reality was even more attenuated. 

JP Morgan would have done better to put their capital on red in Las Vegas. The CDS index Iksil was trading was so far removed from reality it was a mere gambling chip, with no underlying economic meaning. His trading volumes were so large that he controlled the market, which enabled him to report spurious profits until the beginnings of responsible risk management forced him to begin unwinding the position. His activity bore no relationship to true banking; it served no legitimate financial purpose, nor did it serve the financing or risk management needs of any client. 

This is the real problem of derivatives markets in general; the genuine client service they provide is minor, in some cases infinitesimal, compared with the gambling and manipulation activities they enable. If you are JP Morgan, and privy to a great deal of information about market movements to which less exalted institutions do not have access, you can make good money by exploiting others' ignorance. But make no mistake, the immense profits made in these markets are not secured by providing genuine service to clients, any more than Las Vegas casinos make money by providing investment opportunities to their foolish punters. In the final analysis, both activities are almost purely parasitic, and should be severely discouraged if not prohibited altogether. 

The only problem with prohibiting these activities is that the prohibition would have to be designed and enforced by public sector regulators. Public choice theory suggests that they are not capable of performing this function adequately and the Cyprus imbroglio shows just how inept and conflicted they are in reality. 

Legally, if US$7.2 billion was required for the Cyprus bailout beyond the European Union loan (the accuracy of that calculation is of course unverifiable), then the Cypriot banks' subordinated loans should have been wiped out, and the necessary amount taken from the banks' senior debt and uninsured depositors. (Any amount taken from insured depositors would have had to be made up by the Cyprus government, so would have added to the bailout need.) 

Instead, the proposed bailout took a 9.9% tax from depositors above 100,000 euros (the deposit insurance limit) and a 6.7% tax from deposits below 100,000 euros, which were theoretically insured, while leaving the modest amount of senior debt untouched. 

The Cyprus government rejected these terms, not because of the taxes' effect on small Cypriot depositors or on the Cypriot deposit insurance system, but because of their effect on the Russian mafia thugs who contribute about a third of the Cypriot banking system's deposits. One can only guess what inducements, positive and negative, the big depositors gave to the Cyprus legislature to take that position. 

Legality seems to have been utterly irrelevant to those arranging the bailout. Instead, by arranging a "tax" that fell so heavily on small depositors, they blew a hole in deposit insurance schemes worldwide. Depositors in banks elsewhere in the EU, or indeed the United States, can no longer believe that the first $100,000 (or whatever figure is "insured") of their savings is secure. 

Inevitably, calls upon the deposit insurance scheme will be made in times of financial stress, and at those times governments can use the depositors' funds to recapitalize the banks or indeed themselves. In 2008, depositors in Western Europe and the US could be reasonably confident that their governments were in decent financial shape, so would have no need to raid their citizens' piggy banks. In the next financial crisis, thanks to years of foolish, indeed evil, monetary and fiscal "stimulus" there will be no such assurance. 

I wrote some months ago about the problems involved in going back to a world in which government bonds are no longer a reliable store of value, and suggested that such a change would reverse 350 years of financial history, taking us back to the time before the establishment of the Bank of England in 1694. 

A world in which neither government bonds nor banks are to be trusted takes us back about 400 years further. After all, Samuel Pepys only occasionally buried his money in the back garden; most of the time he entrusted it to a reliable goldsmith, the precursors to the London merchant banks. The goldsmith-bankers were new in Restoration England, but as Edward, Earl of Clarendon wrote in his memoirs around 1670, before their time, the scriveners had been available for "money business''. A world without banks takes us back before the scriveners, before the first Italian banks (Monti dei Paschi di Siena, 1472) and even before the Lombard moneylenders of the fourteenth century. 

Needless to say, pushing our financial system back close to the Dark Ages will do nothing whatever for global economic well-being. A world without banks is a world in which all trade must be financed by merchants themselves, in which investments must be financed entirely out of equity or ad hoc loans from those with money. 

While much of Silicon Valley currently finances itself on close to this basis, it is unimaginable that business as a whole can do so; the needs of fixed assets, inventory and receivables are simply too great. A world with 13th century finance is more a less a world with 13th century living standards - and for only a 13th century world population. 

We thus live in a world in which neither the managers of JP Morgan nor the financial wizards of the European Union have the slightest awareness of the basic needs of a sound financial system. 

Admittedly the two problems cancel each other out: provided governments remain solvent both the need for deposit insurance and the speculative games of the trading desks can be eliminated by going back, not to the Dark Ages, but only to 1914. At that time, banks did not have deposit insurance, so depositors were forced to assure themselves that deposit institutions were soundly managed. 

This pretty well put paid to speculative games: the Knickerbocker Trust of New York went bankrupt in 1907 through speculation in the copper market, and for at least the next two decades it was accepted that speculation had no place in a soundly run deposit-taking bank. (Investment banks existed, but they were separately capitalized and did not rely on the bank's depositors for funding.) 

Without deposit insurance, banks would have to be properly capitalized, with a tangible capital base of no less than 20% of assets - calculated not on a "Basel" formula in which some assets are defined as "low risk" and discounted accordingly, but in which all assets and liabilities are fully reflected in the balance sheet. Only with such a heavy capitalization could depositors be sure the banks would stay in business. 

What's more, derivatives, securitization and other off-balance sheet risks would have to be undertaken by separate companies that did not themselves take deposits; bank depositors would insist that all such risks be taken onto the bank's balance sheet, which would make them impossibly costly. 

In order to discourage speculative activity further, it would also be necessary to return to a strict gold standard (or other commodity standard). The 1920s gold exchange standard, with the Federal Reserve able to increase credit at will, proved impossibly dangerous to the banking system after 1929, so a banking system with an active Fed would over time prove unable to attract depositors because of its risk. 

I'm quite certain that both the management of JP Morgan and the EU bureaucracy would regard such an alternative as wholly unacceptable - it would, for one thing, restrict sharply the ability for self-remuneration of both bankers and bureaucracies (which would have to finance themselves in a bond market without bank lenders, strong intermediaries or fiat money). 

However, by their ineffable folly, they have brought such a world (or the much worse dystopia where we lose 750 years of financial progress altogether) very much closer. 

Martin Hutchinson is the author of Great Conservatives(Academica Press, 2005) - details can be found on the website - and co-author with Professor Kevin Dowd of Alchemists of Loss (Wiley, 2010). 

Property, theft and how we must breach this sacred line

The 'private good, public bad' madness sees a bedroom tax foisted on the poor while the rich amass vast property wealth
Daniel Pudles
'By focusing on income rather than property we have gravely underestimated the extent of inequality.' Illustration: Daniel Pudles for the Guardian
On Easter Monday, in the wake of a festival of resurrection and redemption, between 600,000 and 900,000 households will either have to move out of their homes or have their benefits cut. The reason is that they are deemed to be under-occupying their property: in other words they have one or more spare rooms. The bedroom tax will hit some of the poorest people in Britain.
Two years ago I proposed something similar. Nearly 8 million homes in England, I found, had two or more spare bedrooms. But only 11% of this under-occupation was in public or social housing. The rapid growth in half-empty homes, according to the government"is entirely due to a large increase within the owner-occupied sector".
Because of the desperate shortage of housing, especially for larger families, I suggested a bedroom tax for owner-occupiers. It was a much gentler measure than next week's tax, as it would apply only to those with at least two spare rooms and would affect only those most able to pay.
The response was an explosion of fury in the rightwing press and blogosphere: the places where the current bedroom tax finds its only supporters. In the Telegraph, Ed West remarked that my idea was "far closer to fascism than the ethno-centric populism of the European radical Right … The state has no business in people's bedrooms – ever." I am still waiting for Ed to denounce the state's intrusion into the bedrooms of the poor.
The difference, of course, is that because housing benefit is paid by the government, the government is deemed to possess the right to withdraw it. But much of the wealth of private householders has also been provided by the state. The value of our homes, for example, has been greatly enhanced by the infrastructure and public services the state provides. Yet the proposal to reclaim some of this unearned wealth through a land value tax is angrily dismissed by the party promoting a bedroom tax for the poor.
Similarly, every year taxpayers in this country spend £3.6bn on farm subsidies. We could by now have bought all the farmland in Britain several times over. But this money has earned us no property rights: farmers still feel entitled to announce at public meetings that "it's my land and I will do what I want with it". Most of the land in this country, if you go back far enough, was seized from other people – often, in the case of the commons, from entire communities. Much of the law we abide by today was drafted to formalise these seizures.
There is a sacred line that divides the world into public and private property. The line is arbitrary and moves every year: ever further across the public realm. But it is policed religiously. As soon as you can bundle the public wealth you've snatched over the line and into the hallowed ground of the private sector, you can claim sanctuary.
Among the Russian government's backers are oligarchs who were enriched by acquiring government assets at a fraction of their value. Their political alliances have ensured that their wealth is neither questioned nor reclaimed by the government. But when the government of Cyprus plans to acquire some of the assets stashed by tax-avoiding oligarchs, the Russian prime minister denounces it as "stealing".
When the threshold is crossed, everything changes. Money spent in the private sector is deemed by politicians and the media to be a good thing. Money spent in the public sector is deemed a bad thing, even though (or perhaps because) it is more effective at distributing wealth. If you are on the right side of the line, the government will deregulate your business. If you are on the wrong side of the line (schools and hospitals, for example), it will subject you to ever more draconian regulation, with cruel and unusual punishments for the slightest resistance to its crazy targets and intrusive inspections.
Gagging clauses in NHS employment contracts are rightly denounced by ministers. But what of the gagging clauses deployed by banks or oil companies or insurance firms, which shield their malpractice from public scrutiny? Where in the media or in government have you heard a call for those to be removed? And why should freedom of information laws stop at the fence marked "private: keep out"? Why, for example, should we not have the right to know what the banks are cooking up?
Take a look at the astonishing chart of property wealth published by the New Economics Foundation and you get an inkling of why attempts to challenge the concentration of private property are denounced as fascism. The graph, using government statistics, suggests that the average property wealth of the top 1% of households is £15m. "The 1% are worth more than the bottom 99% put together." By focusing on income rather than property we have gravely underestimated the extent of inequality.
All this is blasphemy: a trespass into the holy shrine, which has been sanctified by a thousand speeches and editorials. But there is nothing inherently sacred about the veil of the temple that divides the two realms; nothing, as Easter approaches, that must forbid it from being rent in twain.

The immigration debate: evidence-free and more rancid than ever

The three big parties are pushing cowardly, populist policies as they compete to sound as tough as Ukip
Nigel Farage at Ukip conference, Exeter 23 Mar 2013
Nigel Farage: the three main political parties are falling over themselves to match his tough stance on immigration, says Ian Birrell. Photograph: Stuart Clarke/Rex Features
Nigel Farage must have been smiling to himself as he supped his pint of real ale last night. His party has no members of parliament, a situation unlikely to change at the next election, and offers promiscuous and profligate policies that add up to errant nonsense as a platform for government. Yet suddenly he seems to be running the country.
How else can you explain the way all three mainstream parties, panicking as Farage's Ukip insurgency picks up a few points in the polls, are falling over themselves to show they support his tough stance on immigration? Scarcely a day goes by without another apology for past failures, another gimmicky new policy, another sordid attempt to grab headlines.
Today it was the turn of the Tories. The prime minister, using buzzwords beloved by focus groups, announced a raft of restrictions on benefits, social housing and so-called health tourism. The speech bore all the fingerprints of Lynton Crosby, the party's new campaign manager, a proven master in the darkest political arts of exploiting voters' fears.
Never mind that migrants tend to be young and come here to make money, that statistics show they are far less likely to claim benefits than the indigenous population – even after working here for several years. Or that studies have shown they contribute more to the public purse than they take out. Or, indeed, that eastern Europeans I know fly home rather than risk the NHS, even for minor ailments and dentistry.
Nor is there any decent analysis of last month's disastrous Eastleigh byelection. The Tory campaign with a rightwing candidate revolved around immigration, with ceaseless talk of sending back foreign prisoners, cracking down on legal aid abuse and restricting benefits. Yet the party slipped to third place behind Ukip in a seat it once held; all the hardline talk did was revive the nasty-party image and deter moderate voters, while those wanting Ukip voted for the real thing.
Meanwhile, a masochistic Labour party indulges in self-flagellation. It apologises for failing to curb immigration in office instead of explaining that foreigners came here in unprecedented numbers because Britain was booming and played a key role in our success. Their positive contribution to public finances was greater than predicted. Migrants did not increase unemployment, even among unskilled workers, nor make an impact significantly on wages. Yet now Labour, too, talks of constricting benefits, a popular theme because it conjures up two demons: immigrants and welfare scroungers.
Even the Liberal Democrats have joined this rhetorical arms race, ripping apart their threadbare integrity. Nick Clegg last week abandoned his support for an amnesty for illegal immigrants and demanded a discriminatory £1,000 bond for those visiting from "high-risk" countries. All this would do is deter the likes of Nigerians, the fourth-highest overseas spenders in our shops, while preventing huge numbers of Britons from being able to host their relatives for a wedding or family holiday.
Clegg's despicable move highlights how all three parties are twisting themselves into contorted knots, such is their desperation to look tough. So the Liberals propose illiberal policies, Labour targets the poor and the Tories impose bureaucratic and statist solutions. And the voters do not trust any of them. Such scepticism is unsurprising when we learn theUK Border Agency is so incompetent it has a 24-year backlog of asylum and immigration cases. Inadequate border controls render any immigration policies irrelevant. It could also be pointed out that pressures on social housing, for instance, are caused by the long-term failure of politicians to ensure the building of enough new homes. Let us not forget that the real reason for Ukip's corrosive rise is the perceived collective failure of our political classes, not that party's ragtag collection of policies.
Britons think they have a natural right to travel, live and work wherever they want in the world. But amid talk of a global race in which developing nations are surging forward while Europe gazes morosely at its navel, our insecure politicians are proposing isolationist policies that have an impact on national prosperity and indicate hostility to the rest of the planet. They are also guilty of poor long-term politics: this pandering to cheap populism is significantly less liked by younger, more tolerant, sections of the electorate.
For the dwindling numbers of us still retaining faith in Westminster, this is a depressing state of affairs – as most politicians know in their hearts. Every speech has lines praising hardworking migrants, of course, but the overall tone of this cowardly discourse emits a rancid stench. This is fast becoming the most toxic political debate we have endured for decades, one that demeans the protagonists, debases politics and defeats the national interest.

George Osborne is using Britons as economic cannon fodder

This is a dangerous time to push the property market. The chancellor won't invest – yet he's happy for us to
George Osborne
Britons are already up to their eyes in debt … George Osborne. Photograph: Stefan Wermuth/Reuters
Massive public debt: bad. Massive private debt: excellent. Gordon Brown's bubble: economic ruin. George Osborne's potential bubble: economic salvation. Benefits for non-home-owners: unaffordable. Cash bungs for property buyers: essential.
Recite this catechism often and loudly, and over time you too will appreciate the wisdom of the coalition's economic policy.
The consensus over Wednesday's budget was that it was a do-nothing affair, a feeble huddle of small measures washed away in a sea of red ink and broken targets. In terms of central government giving and taking – the traditional stuff of Red Books – it was as small beer as that penny off a pint indicates. But stack up the announcements that don't touch the public balance sheets and the chancellor was strikingly radical.
Because it turns out that Osborne does believe in that apparent epitome of economic loucheness, borrowing to invest. He just wants you and me to do it, using our own wee savings. Sure, No 11 will give us a leg-up, by guaranteeing over £100bn of our loans and sloshing easy money through the banks. But, despite all Vince Cable's exhortations, the chancellor will not do the obvious and less risky thing of public investment.
Have a look at the supplementary document on Help to Buy that the Treasury issued alongside the budget. Billed as a "technical paper", it's not half as innocuous as that sounds. Rather, it's one of the biggest state interventions in the mortgage market in Britain's postwar history.
Help to Buy builds on (no pun intended) existing, largely failed, schemes to help first-time buyers purchase a newly built home. This is in itself problematic, since it's really a bung for the likes of Taylor Wimpey and Barratts and all the other purveyors of identikit housing estates. But warning signs really start flashing with Osborne's proposal to offer banks government guarantees on £130bn of mortgages where the borrowers have low deposits. This isn't just for new homes, it's for any house worth up to £600,000 and it's available not just to first-time buyers, but to people moving up the property ladder.
When the scheme was announced, Ed Miliband's troops successfully got ministers squirming over whether it would be offered to those buying a second home. But that is to miss the bigger point. The first is the risk to public finances: if the property market turns seriously sour, the government stands to make a loss. But the second is the way that ordinary Britons are now being used as economic cannon fodder. Osborne may say, as he did last week, that "you can't cure a crisis caused by debt with more debt". But he doesn't really mean that, because he's just about to launch a policy aimed to get Britain out of its depression – and it relies on households sinking into the red to take part in a property Ponzi scheme.
As I say, the policy is new – but the strategy it's part of has been knocking around for about three decades. The postwar British state used to protect citizens against market failure through the welfare state, through government pump-priming of the economy and through rising wages. But after Thatcher, it was increasingly left to Britons to protect themselves by taking on shares in privatised utilities, by buying up council houses – and by taking on debt, with all the attendant risks. This is what the political economist Colin Crouch has dubbed "privatised Keynesianism": debt is used to reflate the economy, but it is taken on not by the public sector but by individuals, couples, families.
Privatised Keynesianism sounds a bit joyless, but the political classes found something to give it extra zap. Call it housing-market heroin: the special high the Brits get when property prices are really taking off and Sarah Beeny is on the telly explaining how we can all cash in. Thatcher was the first PM to really push housing-market heroin with her right-to-buy programme and her Lawson boom but, with their love of aspiration and Home Ownership Task Force, Blair and Brown knew its potency, too.
Osborne's strategy combines both privatised Keynesianism and housing-market heroin. Yet this is a particularly dangerous time for him to push either. For a start, Britons are already up to their eyes in debt and, outside London, the housing market is flat on its back.
The estate agency Knight Frank estimates that it will take until at least 2019 before property prices are back to the levels of 2007. Add to that the Office for Budget Responsibility's forecast that real wages in Britain in 2015 will be 9% lower than they were in 2010. So the housing market looks less of a sure thing than at any time since 1994, and Britons' personal finances are a wreck. Osborne may think he's found an update of right-to-buy, but it looks more like right-to-be-repossessed.
Still, back to that coalition catechism. Government borrowing to build council housing: forbidden. Individual borrowing to buy an overpriced two-bed flat: encouraged. The way to make the economy stronger is to make it more fragile. And we're all in it together, except really, when it comes to managing your way through this depression, you're on your own.