Showing posts with label future. Show all posts
Showing posts with label future. Show all posts
Tuesday 16 January 2024
Tuesday 21 February 2023
Saturday 3 September 2022
Tuesday 28 June 2022
Every Decision is a Bet : Life is poker not chess - 2
Abridged and adapted from Thinking in Bets by Annie Duke
Merriam Webster’s Online Dictionary defines ‘bet’ as ‘a choice made by thinking about what will probably happen’. ‘To risk losing (something) when you try to do or achieve something’ and ‘to make decisions that are based on the belief that something will happen or is true’.
These definitions often overlooked the border aspects of betting: choice, probability, risk, decision, belief. By this definition betting doesn’t have to take place only in a casino or against somebody else.
We routinely decide among alternatives, put resources at risk, assess the likelihood of different outcomes and consider what it is that we value. Every decision commits us to some course of action that, by definition, eliminates acting on other alternatives. All such decisions are bets. Not placing a bet on something is, itself a bet.
Choosing to go to the movies means that we are choosing to not do all other things with our time. If we accept a job offer, we are also choosing to foreclose all other alternatives. There is always an opportunity cost in choosing one path over others. This is betting in action.
The betting elements of decisions - choice, probability, risk etc. are more obvious in some situations than others. Investments are clearly bets. A decision about a stock (buy, don’t buy, sell, hold..) involves a choice about the best use of our financial resources.
We don’t think of our parenting choices as bets but they are. We want our children to be happy, productive adults when we send them out into the world. Whenever we make a parenting choice (about discipline, nutrition, parenting philosophy, where to live etc.), we are betting that our choice will achieve the future we want for our children.
Job and relocation decisions are bets. Sales negotiations and contracts are bets. Buying a house is a bet. Ordering the chicken instead of vegetables is a bet. Everything is a bet.
Most bets are bets against ourselves
In most of our decisions, we are not betting against another person. We are betting against all the future versions of ourselves that we are not choosing. Whenever we make a choice we are betting on a potential future. We are betting that the future version of us that results from the decisions we make will be better off. At stake in a decision is that the return to us (measured in money, time, happiness, health or whatever we value) will be greater than what we are giving up by betting against the other alternative future versions of us.
But, how can we be sure that we are choosing the alternative that is best for us? What if another alternative would bring us more happiness, satisfaction or money? The answer, of course, is we can’t be sure. Things outside our control (luck) can influence the result. The futures we imagine are merely possible. They haven’t happened yet. We can only make our best guess, given what we know and don’t know, at what the future will look like. When we decide, we are betting whatever we value on one set of possible and uncertain futures. That is where the risk is.
Poker players live in a world where that risk is made explicit. They can get comfortable with uncertainty because they put it up front in their decisions. Ignoring the risk and uncertainty in every decision might make us feel better in the short run, but the cost to the quality of our decision making can be immense. If we can find ways to be more comfortable with uncertainty, we can see the world more accurately and be better for it.
Tuesday 12 April 2022
Sunday 2 January 2022
Monday 11 May 2020
Why some companies will survive this crisis and others will die
Andrew Hill in The Financial Times
The first written document about a Stora operation, a Swedish copper mine, dates back to 1288. Since then, the company — now Finland-based paper, pulp and biomaterials group Stora Enso — has endured through attempts to end its independence, the turmoil of the Reformation and industrial revolution, wars, regional and global, and now a pandemic.
“It would have been catastrophic for [Stora] to concentrate on its business in an introverted fashion, oblivious to politics. Instead the company reshaped its goals and methods to match the demands of the world outside,” writes Arie de Geus, describing one particularly turbulent era in the 15th century in his 1997 book The Living Company, shaped round a study of the world’s oldest companies he conducted for Royal Dutch Shell.
This is wisdom that companies today, wondering how to survive, let alone thrive, could use. Alas, de Geus himself is not around to help them: he died in November last year.
Part of his work lives on through the scenario-planning exercises that I identified last week as one way of advancing through the uncertainty ahead. The multilingual thinker was Shell’s director of scenario planning, where he developed the distinction between potential futures (in French, “les futurs”) and what was inevitably to come (“l’avenir”).
He also lived through the aftermath of the second world war, which destroyed Rotterdam, the city of his birth, and encouraged him and his friends to seek jobs within the safe havens of great corporate institutions, such as Shell, Unilever and Philips.
It is not a given that all the oldest or largest companies will outlive this crisis. Those that do, however, should take a leaf out of de Geus’s book.
Longtime collaborator and friend Göran Carstedt, a former Volvo and Ikea executive, says he discussed with de Geus last year how near-death experiences enhance the appreciation of being alive. “Things come to the fore that we took for granted. You start to see the world through the lens of the living,” he told me. “Arie liked to say, ‘people change and when they do, they change the society in which they live’.” That went for companies as much as for societies. Long-lived groups such as Stora owed their survival to their adaptability as human communities and their tolerance for ideas, as much as to their financial prudence.
These are big ideas for business leaders to ponder at a time when most are desperately trying to keep their heads above the flood or, at best, concentrating on the practicalities of how to restart after lockdown. In her latest update last month, Stora Enso’s chief executive sounded as preoccupied by pressing questions of temporary lay-offs, travel bans and capital expenditure reductions as her peers at companies with a shorter pedigree.
Some groups that meet de Geus’s common attributes for longevity are still likely to go under, simply because they find themselves exposed to the wrong sector at the wrong time.
Others, though, will find they are ill-equipped for the aftermath. What he called “intolerant” companies, which “go for maximum results with minimum resources”, can live for a long time in stable conditions. “Profound disruptions like this will simply reveal the underlying schisms that were already there,” the veteran management thinker Peter Senge, who worked with de Geus, told me via email. “Those who were on a path toward deep change will find ways to use the forces now at play to carry on, and even expand. Those who weren’t, won't.” For him the core question is whether those who interpret the pandemic as a signal that humans need to change how they live will grow to form a critical mass.
For decades after the war, big companies did not change the way they operated. They took advantage of young people who believed material security was “worth the price of submitting to strong central leadership vested in relatively few people”, de Geus wrote. Faced with this crisis, though, de Geus would have placed his confidence in those companies that had evolved a commitment to organisational learning and shared decision-making, according to another close collaborator, Irène Dupoux-Couturier.
The pressure of this crisis is already flattening decision-making hierarchies. Progress out of the pandemic will be founded on technology that reinforces the human community by encouraging rapid cross-company collaboration.
De Geus was adamant that a true “living company” would divest assets and change its activity before sacrificing its people, if its survival was at stake. That optimism is bound to be tested in the coming months but it is worth clinging to.
“Who knows if the characteristics of Arie’s long-lived companies . . . boost resilience in such situations as this?” Mr Senge told me. “But it is hard to see them lessening it.”
The first written document about a Stora operation, a Swedish copper mine, dates back to 1288. Since then, the company — now Finland-based paper, pulp and biomaterials group Stora Enso — has endured through attempts to end its independence, the turmoil of the Reformation and industrial revolution, wars, regional and global, and now a pandemic.
“It would have been catastrophic for [Stora] to concentrate on its business in an introverted fashion, oblivious to politics. Instead the company reshaped its goals and methods to match the demands of the world outside,” writes Arie de Geus, describing one particularly turbulent era in the 15th century in his 1997 book The Living Company, shaped round a study of the world’s oldest companies he conducted for Royal Dutch Shell.
This is wisdom that companies today, wondering how to survive, let alone thrive, could use. Alas, de Geus himself is not around to help them: he died in November last year.
Part of his work lives on through the scenario-planning exercises that I identified last week as one way of advancing through the uncertainty ahead. The multilingual thinker was Shell’s director of scenario planning, where he developed the distinction between potential futures (in French, “les futurs”) and what was inevitably to come (“l’avenir”).
He also lived through the aftermath of the second world war, which destroyed Rotterdam, the city of his birth, and encouraged him and his friends to seek jobs within the safe havens of great corporate institutions, such as Shell, Unilever and Philips.
It is not a given that all the oldest or largest companies will outlive this crisis. Those that do, however, should take a leaf out of de Geus’s book.
Longtime collaborator and friend Göran Carstedt, a former Volvo and Ikea executive, says he discussed with de Geus last year how near-death experiences enhance the appreciation of being alive. “Things come to the fore that we took for granted. You start to see the world through the lens of the living,” he told me. “Arie liked to say, ‘people change and when they do, they change the society in which they live’.” That went for companies as much as for societies. Long-lived groups such as Stora owed their survival to their adaptability as human communities and their tolerance for ideas, as much as to their financial prudence.
These are big ideas for business leaders to ponder at a time when most are desperately trying to keep their heads above the flood or, at best, concentrating on the practicalities of how to restart after lockdown. In her latest update last month, Stora Enso’s chief executive sounded as preoccupied by pressing questions of temporary lay-offs, travel bans and capital expenditure reductions as her peers at companies with a shorter pedigree.
Some groups that meet de Geus’s common attributes for longevity are still likely to go under, simply because they find themselves exposed to the wrong sector at the wrong time.
Others, though, will find they are ill-equipped for the aftermath. What he called “intolerant” companies, which “go for maximum results with minimum resources”, can live for a long time in stable conditions. “Profound disruptions like this will simply reveal the underlying schisms that were already there,” the veteran management thinker Peter Senge, who worked with de Geus, told me via email. “Those who were on a path toward deep change will find ways to use the forces now at play to carry on, and even expand. Those who weren’t, won't.” For him the core question is whether those who interpret the pandemic as a signal that humans need to change how they live will grow to form a critical mass.
For decades after the war, big companies did not change the way they operated. They took advantage of young people who believed material security was “worth the price of submitting to strong central leadership vested in relatively few people”, de Geus wrote. Faced with this crisis, though, de Geus would have placed his confidence in those companies that had evolved a commitment to organisational learning and shared decision-making, according to another close collaborator, Irène Dupoux-Couturier.
The pressure of this crisis is already flattening decision-making hierarchies. Progress out of the pandemic will be founded on technology that reinforces the human community by encouraging rapid cross-company collaboration.
De Geus was adamant that a true “living company” would divest assets and change its activity before sacrificing its people, if its survival was at stake. That optimism is bound to be tested in the coming months but it is worth clinging to.
“Who knows if the characteristics of Arie’s long-lived companies . . . boost resilience in such situations as this?” Mr Senge told me. “But it is hard to see them lessening it.”
Sunday 13 October 2019
Wednesday 31 July 2019
Modern Marriages - For Better or For Worse
By Girish Menon
Recently, I heard the story of somebody who was married for over 30 years and had a hostile spouse for an equivalent time period. This person it was revealed had no moments of intimacy from the outset but they performed the sexual act in a spirit of mutual need. The couple still retain their marital status and one of the partners told the other, ‘I will destroy you but not give you a divorce”.
On the other hand the courts in Mumbai receive over 3000 cases each month. The traditional Indian idea of a family is metamorphosing quickly and even rapidly catching up with the western world. My cousin has this quip,‘ While the Indian woman has changed the Indian male has failed to adapt to this change’.
From an economic point of view this increasing divorce rate is a good development. In this era when GDP growth is the altar that we are duty bound to worship, then more divorces mean an increased contribution to GDP growth. Every splitting couple will employ a minimum of two lawyers, they will need separate houses and their children will need some childcare. All of this creates economic opportunities and contributes to the GDP counter. Second marriages and divorces also further contribute to economic growth.
Among Malayalees the absence of ‘yogam’ is the catchall phrase used to explain away any failed marriage. In simple terms, it means the couple were not meant to be successful in marriage. This is a post hoc rationalisation akin to the use of the term destiny.
But is there a good predictive method for choosing a partner of longevity?
In economics, the process of mate selection could be looked at as an imperfect information problem. Horoscope matching, family compatibility, cultural similarity and many other factors have been used to establish the suitability of a partner. Unfortunately, none of them have proved sufficiently reliable. In true rational spirit modern couples have experimented with living together for long periods of time to overcome the imperfect information problem. However, anecdotal evidence seems to reveal marriage dissolution even among such couples. The reason could be the inability to predict and cope with unforeseen future events that hit every marital boat.
Fortunately, I have no advice to give in this matter. All that I have noted is the failure to observe Christian marriage vows ‘for better or for worse’ by many separating couples. However, even such vows are put to the test among long surviving couples; as an aunt remarked when my uncle retired, ‘I married him for better or for worse but not for lunch’.
Wednesday 25 July 2018
Thinking in Bets – Making smarter decisions when you don’t have all the facts – by Annie Duke
Some Excerpts
CHESS V POKER
- Chess, for all its strategic complexity, isn’t a great model for decision making in life, where most of our decisions involve hidden information and a much greater influence of luck.
- Poker, in contrast, is a game of incomplete information. It is a game of decision making under conditions of uncertainty over time. Valuable information remains hidden. There is always an element of luck in any outcome. You could make the best possible decision at every point and still lose the hand; because you don’t know what new cards will be dealt and revealed. Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.
- Incomplete information poses a challenge not just for split second decision making, but also for learning from past decisions. Imagine my difficulty in trying to figure out if I played my hand correctly when my opponents cards were never revealed for e.g. if the hand concluded after I made a bet and my opponents folded. All I know is that I won the chips. Did I play poorly and get lucky? Or did I play well?
- Life resembles poker, where all the uncertainty gives us the room to deceive ourselves and misinterpret the data.
- Poker gives us the leeway to make mistakes that we never spot because we win the hand anyway and so don’t go looking for them or
- The leeway to do everything right, still lose and treat the losing result as proof that we made a mistake.
REDEFINING Wrong
- When we think in advance about the chances of alternative outcomes and make a decision based on those chances, it doesn’t automatically make us wrong when things don’t work out. It just means that one event in a set of possible futures occurred.
BACKCASTING AND PRE MORTEM
- Backcasting means working backwards from a positive future.
- When it comes to thinking about the future – stand at the end (the outcome) and look backwards. This is more effective than looking forwards from the beginning.
- i.e. by working backwards from the goal, we plan our decision tree in more depth.
- We imagine we’ve already achieved a positive outcome, holding up a newspaper headline “We’ve Achieved our Goal” Then we think about how we got there.
- Identify the reasons they got there, what events occurred, what decisions were made, what went their way to get to the goal.
- It makes it possible to identify low probability events that must occur to reach the goal You then develop strategies to increase the chances of such events occurring or recognizing the goal is too ambitious.
- You can also develop responses to developments that interfere with reaching the goal and identify inflection points for re-evaluating the plan as the future unfolds.
- Pre mortem means working backwards from a negative future.
- Pre mortem is an investigation into something awful but before it happens.
- Imagine a headline “We failed to reach our Goals” challenges us to think about ways in which things could go wrong.
- People who imagine obstacles in the way of reaching their goals are more likely to achieve success (Research p223)
- A pre mortem helps us to anticipate potential obstacles.
- Come up with ways things can go wrong so that you can plan for them
- The exercise forces everyone to identify potential points of failure without fear of being viewed as a naysayer.
- Imagining both positive and negative futures helps us to build a realistic plan to achieve our goals.
CHESS V POKER
- Chess, for all its strategic complexity, isn’t a great model for decision making in life, where most of our decisions involve hidden information and a much greater influence of luck.
- Poker, in contrast, is a game of incomplete information. It is a game of decision making under conditions of uncertainty over time. Valuable information remains hidden. There is always an element of luck in any outcome. You could make the best possible decision at every point and still lose the hand; because you don’t know what new cards will be dealt and revealed. Once the game is finished and you try to learn from the results, separating the quality of your decisions from the influence of luck is difficult.
- Incomplete information poses a challenge not just for split second decision making, but also for learning from past decisions. Imagine my difficulty in trying to figure out if I played my hand correctly when my opponents cards were never revealed for e.g. if the hand concluded after I made a bet and my opponents folded. All I know is that I won the chips. Did I play poorly and get lucky? Or did I play well?
- Life resembles poker, where all the uncertainty gives us the room to deceive ourselves and misinterpret the data.
- Poker gives us the leeway to make mistakes that we never spot because we win the hand anyway and so don’t go looking for them or
- The leeway to do everything right, still lose and treat the losing result as proof that we made a mistake.
REDEFINING Wrong
- When we think in advance about the chances of alternative outcomes and make a decision based on those chances, it doesn’t automatically make us wrong when things don’t work out. It just means that one event in a set of possible futures occurred.
BACKCASTING AND PRE MORTEM
- Backcasting means working backwards from a positive future.
- When it comes to thinking about the future – stand at the end (the outcome) and look backwards. This is more effective than looking forwards from the beginning.
- i.e. by working backwards from the goal, we plan our decision tree in more depth.
- We imagine we’ve already achieved a positive outcome, holding up a newspaper headline “We’ve Achieved our Goal” Then we think about how we got there.
- Identify the reasons they got there, what events occurred, what decisions were made, what went their way to get to the goal.
- It makes it possible to identify low probability events that must occur to reach the goal You then develop strategies to increase the chances of such events occurring or recognizing the goal is too ambitious.
- You can also develop responses to developments that interfere with reaching the goal and identify inflection points for re-evaluating the plan as the future unfolds.
- Pre mortem means working backwards from a negative future.
- Pre mortem is an investigation into something awful but before it happens.
- Imagine a headline “We failed to reach our Goals” challenges us to think about ways in which things could go wrong.
- People who imagine obstacles in the way of reaching their goals are more likely to achieve success (Research p223)
- A pre mortem helps us to anticipate potential obstacles.
- Come up with ways things can go wrong so that you can plan for them
- The exercise forces everyone to identify potential points of failure without fear of being viewed as a naysayer.
- Imagining both positive and negative futures helps us to build a realistic plan to achieve our goals.
Wednesday 31 January 2018
Analysts caught off guard by 41% Capita share drop
Cat Rutter Pooley in The Financial Times
There may be some red-faced analysts across the City this morning.
Only two out of 16 analysts polled by Bloomberg had a sell rating on Capita before today, when its shares plummeted 41 per cent on a profit warning and planned £700m rights issue.
Of the rest, 11 had a hold rating and three a buy rating.
One of those buy recommendations came from Numis, which issued its note on the company two weeks ago.
Then, Numis described a meeting with the new Capita chief executive as “positive”, noting that:
It is easy to be critical of the past, but his observations on some of the structural and cultural issues at Capita highlighted some fundamental problems, but also material opportunities. We were encouraged by [Jonathan Lewis’s] comments on the need for great focus, cost reductions (whilst also re-investing for growth), and need to focus on cash.
Numis declined to comment immediately on whether it was reviewing the recommendation in light of the company’s update.
Jefferies, which has also had a ‘buy’ recommendation on the stock, characterised Wednesday’s announcement as a “kitchen sinking”, or effort to cram all the bad news out at once. The revelations could generate a 40 per cent decline in earnings expectations for the full year, it said, adding that the revenue environment remained “lacklustre”.
Shares are current trading around 210p, down 40 per cent.
Meanwhile, the ripples from Capita’s share price drop are leaking across the outsourcing industry. Serco slipped 3 per cent, and Mitie was down 2.4 per cent at pixel time.
There may be some red-faced analysts across the City this morning.
Only two out of 16 analysts polled by Bloomberg had a sell rating on Capita before today, when its shares plummeted 41 per cent on a profit warning and planned £700m rights issue.
Of the rest, 11 had a hold rating and three a buy rating.
One of those buy recommendations came from Numis, which issued its note on the company two weeks ago.
Then, Numis described a meeting with the new Capita chief executive as “positive”, noting that:
It is easy to be critical of the past, but his observations on some of the structural and cultural issues at Capita highlighted some fundamental problems, but also material opportunities. We were encouraged by [Jonathan Lewis’s] comments on the need for great focus, cost reductions (whilst also re-investing for growth), and need to focus on cash.
Numis declined to comment immediately on whether it was reviewing the recommendation in light of the company’s update.
Jefferies, which has also had a ‘buy’ recommendation on the stock, characterised Wednesday’s announcement as a “kitchen sinking”, or effort to cram all the bad news out at once. The revelations could generate a 40 per cent decline in earnings expectations for the full year, it said, adding that the revenue environment remained “lacklustre”.
Shares are current trading around 210p, down 40 per cent.
Meanwhile, the ripples from Capita’s share price drop are leaking across the outsourcing industry. Serco slipped 3 per cent, and Mitie was down 2.4 per cent at pixel time.
Sunday 29 October 2017
From climate change to robots: what politicians aren’t telling us
Simon Kuper in The Financial Times
On US television news this autumn, wildfires and hurricanes have replaced terrorism and — mostly — even mass shootings as primetime content. Climate change is making natural disasters more frequent, and more Americans now live in at-risk areas. But meanwhile, Donald Trump argues on Twitter about what he supposedly said to a soldier’s widow. So far, Trump is dangerous less because of what he says (hot air) or does (little) than because of the issues he ignores.
On US television news this autumn, wildfires and hurricanes have replaced terrorism and — mostly — even mass shootings as primetime content. Climate change is making natural disasters more frequent, and more Americans now live in at-risk areas. But meanwhile, Donald Trump argues on Twitter about what he supposedly said to a soldier’s widow. So far, Trump is dangerous less because of what he says (hot air) or does (little) than because of the issues he ignores.
He’s not alone: politics in many western countries has become a displacement activity. Most politicians bang on about identity while ignoring automation, climate change and the imminent revolution in medicine. They talk more about the 1950s than the 2020s. This is partly because they want to distract voters from real problems, and partly because today’s politicians tend to be lawyers, entertainers and ex-journalists who know less about tech than the average 14-year-old. (Trump said in a sworn deposition in 2007 that he didn’t own a computer; his secretary sent his emails.) But the new forces are already transforming politics.
Ironically, given the volume of American climate denial, the US looks like becoming the first western country to be hit by climate change. Each new natural disaster will prompt political squabbles over whether Washington should bail out the stricken region. At-risk cities such as Miami and New Orleans will gradually lose appeal as the risks become uninsurable. If you buy an apartment on Miami Beach now, are you confident it will survive another 30 years undamaged? And who will want to buy it from you in 2047? Miami could fade as Detroit did.
American climate denial may fade too, as tech companies displace Big Oil as the country’s chief lobbyists. Already in the first half of this year, Amazon outspent Exxon and Walmart on lobbying. Facebook, now taking a kicking over fake news, will lobby its way back. Meanwhile, northern Europe, for some years at least, will benefit from its historical unique selling point: its mild and rainy climate. Its problem will be that millions of Africans will try to move there.
On the upside, many Africans will soon, for the first time ever, have access to energy (thanks to solar panels) and medical care (as apps monitor everything from blood pressure to sugar levels, and instantly prescribe treatment). But as Africa gets hotter, drier and overpopulated, people will struggle to feed themselves, says the United Nations University. So they will head north, in much greater numbers than Syrians have, becoming the new bogeymen for European populists. Patrolling robots — possibly with attack capabilities — will guard Fortress Europe.
Everywhere, automation will continue to eat low-skilled jobs. That will keep people angry. Carl Benedikt Frey of Oxford university’s Martin School recalls workers smashing up machines during the British industrial revolution, and says: “There was a machinery riot last year: it was the US presidential election.” American workers hit by automation overwhelmingly voted Trump, even though he doesn’t talk about robots.
Soon, working-class men will lose driving jobs to autonomous vehicles. They could find new jobs servicing rich people as cleaners (a profession that’s surprisingly hard to automate), carers or yoga teachers. Young men will develop new notions of masculinity and embrace this traditionally feminine work. But older working-class men will probably embrace politicians like Trump.
The most coveted good of all — years of life — will become even more unfairly distributed. The lifespans of poor westerners will continue to stagnate or shorten, following the worldwide surge in obesity since the 1980s. Many poorer people will work into their seventies, then die, skipping the now standard phase of retirement. Meanwhile, from the 2020s the rich will live ever longer as they start buying precision medicine. They will fix their faulty DNA and edit their embryos, predicts Vivek Wadhwa, thinker on technology. (I heard him and Frey at this month’s excellent Khazanah Megatrends Forum in Malaysia.) Even if governments want to redress inequality, they won’t be able to, given that paying tax has become almost voluntary for global companies.
The country hit hardest by automation could be China (though Germany could suffer too, especially if its carmakers fail to transform). China’s model of exploiting cheap factory labour without environmental regulations has run its course, says Wadhwa. “I don’t think we need Chinese robots.” Even if China’s economy keeps growing, low-skilled men won’t find appealing careers, and they won’t even have the option of electing a pretend system-smasher like Trump. The most likely outcome: China’s regime joins the populist trend and runs with aggressive nationalism.
Troubled regimes will also ratchet up surveillance. Now they merely know what you say. In 10 years, thanks to your devices, they will know your next move even before you do. Already, satellites are monitoring Egypt’s wheat fields, so as to predict the harvest, which predicts the chance of social strife. Meanwhile, western politicians will probably keep obsessing over newsy identity issues. My prediction for the 2020s: moral panics over virtual-reality sex.
Friday 2 June 2017
The myths about money that British voters should reject
Ha Joon Chang in The Guardian
Illustration: Nate Kitch
Befitting a surprise election, the manifestos from the main parties contained surprises. Labour is shaking off decades of shyness about nationalisation and tax increases for the rich and for the first time in decades has a policy agenda that is not Tory-lite. The Conservatives, meanwhile, say they are rejecting “the cult of selfish individualism” and “belief in untrammelled free markets”, while adopting the quasi-Marxist idea of an energy price cap.
Despite these significant shifts, myths about the economy refuse to go away and hamper a more productive debate. They concern how the government manages public finances – “tax and spend”, if you will.
The first is that there is an inherent virtue in balancing the books. Conservatives still cling to the idea of eliminating the budget deficit, even if it is with a 10-year delay (2025, as opposed to George Osborne’s original goal of 2015). The budget-balancing myth is so powerful that Labour feels it has to cost its new spending pledges down to the last penny, lest it be accused of fiscal irresponsibility.
However, as Keynes and his followers told us, whether a balanced budget is a good or a bad thing depends on the circumstances. In an overheating economy, deficit spending would be a serious folly. However, in today’s UK economy, whose underlying stagnation has been masked only by the release of excess liquidity on an oceanic scale, some deficit spending may be good – necessary, even.
The second myth is that the UK welfare state is especially large. Conservatives believe that it is bloated out of all proportion and needs to be drastically cut. Even the Labour party partly buys into this idea. Its extra spending pledge on this front is presented as an attempt to reverse the worst of the Tory cuts, rather than as an attempt to expand provision to rebuild the foundation for a decent society.
The reality is the UK welfare state is not large at all. As of 2016, the British welfare state (measured by public social spending) was, at 21.5% of GDP, barely three-quarters of welfare spending in comparably rich countries in Europe – France’s is 31.5% and Denmark’s is 28.7%, for example. The UK welfare state is barely larger than the OECD average (21%), which includes a dozen or so countries such as Mexico, Chile, Turkey and Estonia, which are much poorer and/or have less need for public welfare provision. They have younger populations and stronger extended family networks.
The third myth is that welfare spending is consumption – that it is a drain on the nation’s productive resources and thus has to be minimised. This myth is what Conservative supporters subscribe to when they say that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals, because we “can’t afford them”. This myth even tints, although doesn’t define, Labour’s view on the welfare state. For example, Labour argues for an expansion of welfare spending, but promises to finance it with current revenue, thereby implicitly admitting that the money that goes into it is consumption that does not add to future output.
‘It is a myth that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals.’ Photograph: monkeybusinessimages/Getty Images/iStockphoto
Illustration: Nate KitchBefitting a surprise election, the manifestos from the main parties contained surprises. Labour is shaking off decades of shyness about nationalisation and tax increases for the rich and for the first time in decades has a policy agenda that is not Tory-lite. The Conservatives, meanwhile, say they are rejecting “the cult of selfish individualism” and “belief in untrammelled free markets”, while adopting the quasi-Marxist idea of an energy price cap.
Despite these significant shifts, myths about the economy refuse to go away and hamper a more productive debate. They concern how the government manages public finances – “tax and spend”, if you will.
The first is that there is an inherent virtue in balancing the books. Conservatives still cling to the idea of eliminating the budget deficit, even if it is with a 10-year delay (2025, as opposed to George Osborne’s original goal of 2015). The budget-balancing myth is so powerful that Labour feels it has to cost its new spending pledges down to the last penny, lest it be accused of fiscal irresponsibility.
However, as Keynes and his followers told us, whether a balanced budget is a good or a bad thing depends on the circumstances. In an overheating economy, deficit spending would be a serious folly. However, in today’s UK economy, whose underlying stagnation has been masked only by the release of excess liquidity on an oceanic scale, some deficit spending may be good – necessary, even.
The second myth is that the UK welfare state is especially large. Conservatives believe that it is bloated out of all proportion and needs to be drastically cut. Even the Labour party partly buys into this idea. Its extra spending pledge on this front is presented as an attempt to reverse the worst of the Tory cuts, rather than as an attempt to expand provision to rebuild the foundation for a decent society.
The reality is the UK welfare state is not large at all. As of 2016, the British welfare state (measured by public social spending) was, at 21.5% of GDP, barely three-quarters of welfare spending in comparably rich countries in Europe – France’s is 31.5% and Denmark’s is 28.7%, for example. The UK welfare state is barely larger than the OECD average (21%), which includes a dozen or so countries such as Mexico, Chile, Turkey and Estonia, which are much poorer and/or have less need for public welfare provision. They have younger populations and stronger extended family networks.
The third myth is that welfare spending is consumption – that it is a drain on the nation’s productive resources and thus has to be minimised. This myth is what Conservative supporters subscribe to when they say that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals, because we “can’t afford them”. This myth even tints, although doesn’t define, Labour’s view on the welfare state. For example, Labour argues for an expansion of welfare spending, but promises to finance it with current revenue, thereby implicitly admitting that the money that goes into it is consumption that does not add to future output.
‘It is a myth that, despite their negative impact, we have to accept cuts in such things as disability benefit, unemployment benefit, child care and free school meals.’ Photograph: monkeybusinessimages/Getty Images/iStockphoto
However, a lot of welfare spending is investment that pays back more than it costs, through increased productivity in the future. Expenditure on education (especially early learning programmes such as Sure Start), childcare and school meals programmes is an investment in the nation’s future productivity. Unemployment benefit, especially if combined with good publicly funded retraining and job-search programmes, such as in Scandinavia, preserve the human productive capabilities that would otherwise be lost, as we have seen in so many former industrial towns in the UK. Increased spending on disability benefits and care for older people helps carers to have more time and less stress, making them more productive workers.
The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.
The last myth is that tax is a burden, which therefore by definition needs to be minimised. The Conservatives are clear about this, proposing to cut corporation tax further to 17%, one of the lowest levels in the rich world. However, even Labour is using the language of “burden” about taxes. In proposing tax increases for the highest income earners and large corporations, Jeremy Corbyn spoke of his belief that “those with the broadest shoulders should bear the greatest burden”.
But would you call the money that you pay for your takeaway curry or Netflix subscription a burden? You wouldn’t, because you recognise that you are getting your curry and TV shows in return. Likewise, you shouldn’t call your taxes a burden because in return you get an array of public services, from education, health and old-age care, through to flood defence and roads to the police and military.
If tax really were a pure burden, all rich individuals and companies would move to Paraguay or Bulgaria, where the top rate of income tax is 10%. Of course, this does not happen because, in those countries, in return for low tax you get poor public services. Conversely, most rich Swedes don’t go into tax exile because of their 60% top income tax rate, because they get a good welfare state and excellent education in return. Japanese and German companies don’t move out of their countries in droves despite some of the highest corporate income tax rates in the world (31% and 30% respectively) because they get good infrastructure, well-educated workers, strong public support for research and development, and well-functioning administrative and legal systems.
Low tax is not in itself a virtue. The question should be whether the government is providing services of satisfactory quality, given the tax receipts, not what the level of tax is.
The British debate on economic policy is finally moving on from the bankrupt neoliberal consensus of the past few decades. But the departure won’t be complete until we do away with the persistent myths about tax and spend.
If tax really were a pure burden, all rich individuals and companies would move to Paraguay or Bulgaria, where the top rate of income tax is 10%. Of course, this does not happen because, in those countries, in return for low tax you get poor public services. Conversely, most rich Swedes don’t go into tax exile because of their 60% top income tax rate, because they get a good welfare state and excellent education in return. Japanese and German companies don’t move out of their countries in droves despite some of the highest corporate income tax rates in the world (31% and 30% respectively) because they get good infrastructure, well-educated workers, strong public support for research and development, and well-functioning administrative and legal systems.
Low tax is not in itself a virtue. The question should be whether the government is providing services of satisfactory quality, given the tax receipts, not what the level of tax is.
The British debate on economic policy is finally moving on from the bankrupt neoliberal consensus of the past few decades. But the departure won’t be complete until we do away with the persistent myths about tax and spend.
Sunday 15 May 2016
How Little do Experts Know- On Ranieri and Leicester, One Media Expert Apologises
In July of last year I may have written an article suggesting that the Italian was likely to get Leicester City relegated from the Premier League
Claudio Ranieri: the anti-Pearson … and the wrong man for Leicester City?
I made that decision based on the following: I have lived and worked as a journalist in Italy and have followed Ranieri’s career fairly closely since his early days in management. I also made sure that I spoke to several people in Greece, where Ranieri’s last job before replacing Nigel Pearson at Leicester, had ended in disaster with the team losing against the Faroe Islands and the manager getting sacked.
It was quite clear to me that this was a huge gamble by Leicester and that it was unlikely to end well. And I was hardly the only one to be sceptical. Gary Lineker, the former Leicester striker and now Match of the Day presenter, tweeted “Claudio Ranieri? Really?” and followed it up with by saying: “Claudio Ranieri is clearly experienced, but this is an uninspired choice by Leicester. It’s amazing how the same old names keep getting a go on the managerial merry-go-round.”
I started my article by explaining what had gone wrong in Greece (which was several things) before moving on to talk about the rest of his long managerial career, pointing out that he had never won a league title in any country and nor had he stayed at any club for more than two seasons since being charge at Chelsea at the beginning of the 2000s.
I threw in some light-hearted “lines”, such as the fact that he was the manager in charge of Juventus when they signed Christian Poulsen (not really a Juventus kind of player) and proclaimed that the appointment was “baffling”.
I added: “In some ways, it seems as if the Leicester owners went looking for the anti-Nigel Pearson. Ranieri is not going to call a journalist an ostrich. He is not going to throttle a player during a match. He is not going to tell a supporter to ‘fuck off and die’, no matter how bad the abuse gets.”
Claudio Ranieri instructs his players during Greece’s defeat by the Faroe Islands, the Italian’s last game in charge of the Euro 2004 winners. Photograph: Thanassis Stavrakis/AP
Rather pleased with myself – thinking that I was giving the readers a good insight to the man and the manager – I also put a headline on the piece, which read: “Claudio Ranieri: the anti-Pearson … and the wrong man for Leicester City?”
I did not think much more of the piece until a few months later when Leicester were top of the league and showing all the signs of being capable of staying there.
After a while, the tweets started to appear from people pointing out that I may not have called this one right. As the season wore on, these tweets became more and more frequent, and they have been sent to me after every Leicester win since the turn of the year.
At some point in February I decided to go back and look at the piece again. It made for uncomfortable reading. I had said that describing his spell in charge of Greece as “poor” would be an understatement. I wrote that 11 years after being given the nickname “Tinkerman” because he changed his starting XI so often when in charge of Chelsea, he was still an incorrigible “Tinkerman”.
It gets worse. “Few will back him to succeed but one thing is for sure: he will conduct himself in an honourable and humble way, as he always has done,” the articles said. “If Leicester wanted someone nice, they’ve got him. If they wanted someone to keep them in the Premier League, then they may have gone for the wrong guy.”
Ouch. Reading it back again I was faced with a couple of uncomfortable questions, the key one being “who do you think you are, writing such an snobbish piece about a dignified man and a good manager?”
The second question was a bit easier to answer. Was this as bad as the “In defence of Nicklas Bendtner” article I wrote a couple of years ago? (The answer is “no”, by the way, few things come close to an error of judgment of that scale).
I would like to point out a few things though. I did get – as a very kind colleague pointed out – 50% of that last paragraph right. He clearly is a wonderful human being and when Paolo Bandini spoke to several of his former players recently one thing stood out: the incredible affection they still feel for this gentle 64-year-old.
All in all, though, there is no point defending the indefensible: I could not have got it more wrong.
At the start of this piece I said that no one likes to be wrong. Well, I was wrong about that too. I’ve enjoyed every minute of being embarrassingly wrong this season. Leicester is the best story that could have happened to football in this country, their triumph giving hope to all of us who want to start a season dreaming that something unthinkable might happen.
So thank you Leicester and thank you Claudio, it’s been quite wonderful.
Leicester City manager Claudio Ranieri lifts the Premier League trophy. Photograph: Carl Recine/Reuters
Marcus Christenson in The Guardian
No one likes to be wrong. It is much nicer to be right. In life, however, it is not possible to be right all the time. We all try our best but there are times when things go horribly wrong.
I should know. In July last year I sat down to write an article about Claudio Ranieri. The 63-year-old had just been appointed the new manager of Leicester City and I decided, in the capacity of being the football editor at the Guardian, that I was the right person to write that piece.
Marcus Christenson in The Guardian
No one likes to be wrong. It is much nicer to be right. In life, however, it is not possible to be right all the time. We all try our best but there are times when things go horribly wrong.
I should know. In July last year I sat down to write an article about Claudio Ranieri. The 63-year-old had just been appointed the new manager of Leicester City and I decided, in the capacity of being the football editor at the Guardian, that I was the right person to write that piece.
Claudio Ranieri: the anti-Pearson … and the wrong man for Leicester City?
I made that decision based on the following: I have lived and worked as a journalist in Italy and have followed Ranieri’s career fairly closely since his early days in management. I also made sure that I spoke to several people in Greece, where Ranieri’s last job before replacing Nigel Pearson at Leicester, had ended in disaster with the team losing against the Faroe Islands and the manager getting sacked.
It was quite clear to me that this was a huge gamble by Leicester and that it was unlikely to end well. And I was hardly the only one to be sceptical. Gary Lineker, the former Leicester striker and now Match of the Day presenter, tweeted “Claudio Ranieri? Really?” and followed it up with by saying: “Claudio Ranieri is clearly experienced, but this is an uninspired choice by Leicester. It’s amazing how the same old names keep getting a go on the managerial merry-go-round.”
I started my article by explaining what had gone wrong in Greece (which was several things) before moving on to talk about the rest of his long managerial career, pointing out that he had never won a league title in any country and nor had he stayed at any club for more than two seasons since being charge at Chelsea at the beginning of the 2000s.
I threw in some light-hearted “lines”, such as the fact that he was the manager in charge of Juventus when they signed Christian Poulsen (not really a Juventus kind of player) and proclaimed that the appointment was “baffling”.
I added: “In some ways, it seems as if the Leicester owners went looking for the anti-Nigel Pearson. Ranieri is not going to call a journalist an ostrich. He is not going to throttle a player during a match. He is not going to tell a supporter to ‘fuck off and die’, no matter how bad the abuse gets.”
Claudio Ranieri instructs his players during Greece’s defeat by the Faroe Islands, the Italian’s last game in charge of the Euro 2004 winners. Photograph: Thanassis Stavrakis/AP
Rather pleased with myself – thinking that I was giving the readers a good insight to the man and the manager – I also put a headline on the piece, which read: “Claudio Ranieri: the anti-Pearson … and the wrong man for Leicester City?”
I did not think much more of the piece until a few months later when Leicester were top of the league and showing all the signs of being capable of staying there.
After a while, the tweets started to appear from people pointing out that I may not have called this one right. As the season wore on, these tweets became more and more frequent, and they have been sent to me after every Leicester win since the turn of the year.
At some point in February I decided to go back and look at the piece again. It made for uncomfortable reading. I had said that describing his spell in charge of Greece as “poor” would be an understatement. I wrote that 11 years after being given the nickname “Tinkerman” because he changed his starting XI so often when in charge of Chelsea, he was still an incorrigible “Tinkerman”.
It gets worse. “Few will back him to succeed but one thing is for sure: he will conduct himself in an honourable and humble way, as he always has done,” the articles said. “If Leicester wanted someone nice, they’ve got him. If they wanted someone to keep them in the Premier League, then they may have gone for the wrong guy.”
Ouch. Reading it back again I was faced with a couple of uncomfortable questions, the key one being “who do you think you are, writing such an snobbish piece about a dignified man and a good manager?”
The second question was a bit easier to answer. Was this as bad as the “In defence of Nicklas Bendtner” article I wrote a couple of years ago? (The answer is “no”, by the way, few things come close to an error of judgment of that scale).
I would like to point out a few things though. I did get – as a very kind colleague pointed out – 50% of that last paragraph right. He clearly is a wonderful human being and when Paolo Bandini spoke to several of his former players recently one thing stood out: the incredible affection they still feel for this gentle 64-year-old.
All in all, though, there is no point defending the indefensible: I could not have got it more wrong.
At the start of this piece I said that no one likes to be wrong. Well, I was wrong about that too. I’ve enjoyed every minute of being embarrassingly wrong this season. Leicester is the best story that could have happened to football in this country, their triumph giving hope to all of us who want to start a season dreaming that something unthinkable might happen.
So thank you Leicester and thank you Claudio, it’s been quite wonderful.
Sunday 13 March 2016
Sunday 13 September 2015
The lessons of history for Jeremy Corbyn
Martin Wright in The Telegraph
Conventional wisdom has it that Labour’s newly-elected leader will be taking the party back to the past. The most commonly imagined point of destination is the 1980s. Corbyn, we are told, is a latter day Michael Foot, whose tenure on Labour’s leadership will give us a Labour civil war and a decade or more of Tory dominance. A more positive historical allusion, has been offered by Melissa Benn, writing in the Guardian, who has argued that Corbyn is the direct heir of the Labour Party’s founding father, Keir Hardie. While both analogies are tenable, a more accurate parallel might be traced between Corbyn and a less well-known past Labour leader, George Lansbury.
Michael Foot and Tony Benn Photo: Getty Images
Lansbury took over the leadership of the Labour Party in 1932, in the wake of the disastrous economic crisis that had destroyed Ramsay MacDonald’s Labour government in 1931. MacDonald had nurtured the Labour Party into a position of power over the preceding two decades, but abandoned its rank and file in the moment of crisis to join a National Government with the Conservatives. The Labour establishment – seen by many in the movement as heroes only a few years previously – were, by 1932, seen by most socialists as traitors. The demoralised Labour Party was decimated in the 1931 General Election, and Lansbury was elected leader because he was viewed as the embodiment of honesty, purity and principle. Is this beginning to sound familiar?
Like Corbyn, Lansbury was a London politician who was located firmly on the left of the Labour Party – his first political home as a socialist was in the revolutionary Marxist Social Democratic Federation. Like Corbyn, he was a “veteran” MP who had taken part in the struggles of what seemed like a previous age; by the time he secured the leadership of his party he was already in his 70s.
Like Corbyn, Lansbury was a habitual rebel, and a thorn in the side of his party’s moderate leadership. As editor of the Daily Herald he supported just about every shade of Left-wing rebel tendency available. He campaigned for Communists to be allowed to join the Labour Party. In the period before the Great War he’d gone to prison for the incitement of militant unlawful protest on behalf of the suffragettes. He was imprisoned again in 1921, when serving on Poplar Council, for contempt of court, after refusing to implement what he considered to be an unfair rates system. Like Corbyn, Lansbury was a life-long pacifist. He was the main organiser of the mass anti-war demonstration in Trafalgar Square in August 1914. He was also prepared to meet – against his better judgement - some pretty questionable individuals in pursuit of peace, including, in 1937, Hitler and Mussolini. By comparison, maybe meeting Hamas isn’t so big a deal.
The parallels between Corbyn and Lansbury are so close that one might think that Corbyn is the ghost of Lansbury stalking the Labour Party. But what might history tell us about the Party’s current predicament? Lansbury’s leadership has traditionally been seen as a period of crisis for Labour – a spell in the proverbial wilderness. Lansbury inherited a depleted and divided party, struggled to make an impact against the overwhelming tendencies of the time, and by 1935 was driven from its leadership by his more right wing colleagues. Corbyn will need to be an exceptionally resourceful and gifted leader, not to mention lucky, if history is not to repeat itself in this respect.
Even if this is the case, though, Corbyn’s period as Labour leader need not be without significance. Lansbury’s tenure on the leadership may have been short, but it was not devoid of success. Like Jeremy Corbyn, Lansbury was a magician of mass-mobilisation. He managed to inspire more respect and devotion among grass roots socialists and labour supporters than arguably any other Labour leader before or since. He connected with Labour’s core supporters and mobilised them in a way that meant the Labour Party survived when it may have perished. He reconnected a wounded, demoralised and betrayed party with its core values and beliefs. Crucially, he created a political space in which the socialists of the future – among them Aneurin Bevan and Clement Attlee – could develop and prosper. And we all know what they managed to achieve.
Perhaps the real lesson that a bit of historical perspective can teach us about Corbyn’s remarkable coup doesn’t concern his electability, or alleged lack of it. After all, those that warn that he is unelectable haven’t done too well at winning elections themselves in recent years. No, history tells us that the Labour Party is experiencing a period when it needs to be revitalised, democratised and brought back into contact with its all-too-forgotten core beliefs. Like Lansbury over 70 years before him, Corbyn might well be the man for the job. If so, the really interesting question becomes not whether Corbyn can win in 2020, but who, out of the new MPs who were prominent in nominating and supporting him, will be the Bevans and Attlees of the future?
Conventional wisdom has it that Labour’s newly-elected leader will be taking the party back to the past. The most commonly imagined point of destination is the 1980s. Corbyn, we are told, is a latter day Michael Foot, whose tenure on Labour’s leadership will give us a Labour civil war and a decade or more of Tory dominance. A more positive historical allusion, has been offered by Melissa Benn, writing in the Guardian, who has argued that Corbyn is the direct heir of the Labour Party’s founding father, Keir Hardie. While both analogies are tenable, a more accurate parallel might be traced between Corbyn and a less well-known past Labour leader, George Lansbury.
Michael Foot and Tony Benn Photo: Getty ImagesLansbury took over the leadership of the Labour Party in 1932, in the wake of the disastrous economic crisis that had destroyed Ramsay MacDonald’s Labour government in 1931. MacDonald had nurtured the Labour Party into a position of power over the preceding two decades, but abandoned its rank and file in the moment of crisis to join a National Government with the Conservatives. The Labour establishment – seen by many in the movement as heroes only a few years previously – were, by 1932, seen by most socialists as traitors. The demoralised Labour Party was decimated in the 1931 General Election, and Lansbury was elected leader because he was viewed as the embodiment of honesty, purity and principle. Is this beginning to sound familiar?
Like Corbyn, Lansbury was a London politician who was located firmly on the left of the Labour Party – his first political home as a socialist was in the revolutionary Marxist Social Democratic Federation. Like Corbyn, he was a “veteran” MP who had taken part in the struggles of what seemed like a previous age; by the time he secured the leadership of his party he was already in his 70s.
Like Corbyn, Lansbury was a habitual rebel, and a thorn in the side of his party’s moderate leadership. As editor of the Daily Herald he supported just about every shade of Left-wing rebel tendency available. He campaigned for Communists to be allowed to join the Labour Party. In the period before the Great War he’d gone to prison for the incitement of militant unlawful protest on behalf of the suffragettes. He was imprisoned again in 1921, when serving on Poplar Council, for contempt of court, after refusing to implement what he considered to be an unfair rates system. Like Corbyn, Lansbury was a life-long pacifist. He was the main organiser of the mass anti-war demonstration in Trafalgar Square in August 1914. He was also prepared to meet – against his better judgement - some pretty questionable individuals in pursuit of peace, including, in 1937, Hitler and Mussolini. By comparison, maybe meeting Hamas isn’t so big a deal.
The parallels between Corbyn and Lansbury are so close that one might think that Corbyn is the ghost of Lansbury stalking the Labour Party. But what might history tell us about the Party’s current predicament? Lansbury’s leadership has traditionally been seen as a period of crisis for Labour – a spell in the proverbial wilderness. Lansbury inherited a depleted and divided party, struggled to make an impact against the overwhelming tendencies of the time, and by 1935 was driven from its leadership by his more right wing colleagues. Corbyn will need to be an exceptionally resourceful and gifted leader, not to mention lucky, if history is not to repeat itself in this respect.
Even if this is the case, though, Corbyn’s period as Labour leader need not be without significance. Lansbury’s tenure on the leadership may have been short, but it was not devoid of success. Like Jeremy Corbyn, Lansbury was a magician of mass-mobilisation. He managed to inspire more respect and devotion among grass roots socialists and labour supporters than arguably any other Labour leader before or since. He connected with Labour’s core supporters and mobilised them in a way that meant the Labour Party survived when it may have perished. He reconnected a wounded, demoralised and betrayed party with its core values and beliefs. Crucially, he created a political space in which the socialists of the future – among them Aneurin Bevan and Clement Attlee – could develop and prosper. And we all know what they managed to achieve.
Perhaps the real lesson that a bit of historical perspective can teach us about Corbyn’s remarkable coup doesn’t concern his electability, or alleged lack of it. After all, those that warn that he is unelectable haven’t done too well at winning elections themselves in recent years. No, history tells us that the Labour Party is experiencing a period when it needs to be revitalised, democratised and brought back into contact with its all-too-forgotten core beliefs. Like Lansbury over 70 years before him, Corbyn might well be the man for the job. If so, the really interesting question becomes not whether Corbyn can win in 2020, but who, out of the new MPs who were prominent in nominating and supporting him, will be the Bevans and Attlees of the future?
Monday 16 February 2015
Sunday 29 December 2013
Which will be the big economies in 15 years? It's not a done deal
Will China, Russia and Mexico, governed by extractive elites, really do so well? Is Europe such a write-off? And what about Britain?
How will China fare as an economy in the next 15 years? Photograph: Martin Puddy/Getty Images/Asia Images
Here is a puzzle that preoccupies futurologists, business strategists, economists and the world's foreign offices. Who is going to do best or worst economically over the next 15 years out of the world's current top 10 economies? In 2013, the US is comfortably number one, twice the size of China and two-and-half times the size of the number three, Japan. After Germany at fourth comes a cluster of countries with less than a trillion dollars of GDP separating them. France just pips Britain at sixth. Then follow Brazil, Russia, Italy and Canada with India, hurt by the collapse of the rupee, just outside the top 10 at 11.
The conventional wisdom, informed by conventional economics, is clear, represented faithfully by the conservative-leaning Centre for Economics and Business Research (CEBR) in its annual world economic league table released last week. The European economies, especially France and Italy, will sink down the league table, burdened by taxation, welfare and ageing populations. China is inexorably rising to take over the top spot, but in 2028, later than the CEBR thought last year. India will climb to number three. Russia will do well, as will Mexico and eventually Brazil. The UK, if it continues to shrink the state, keeps taxes low, deregulates its labour markets, continues to be open to immigration and disengages with Europe, may only fall one place in the 2028 ranking to seventh. But even though the UK and US will fare better than mainland Europe, the relative decline of the west will continue.
Britain's conservative press seized on the projections with glee, proof positive that George Osborne is on the right track and Euro-scepticism is triumphant. The Express trumpeted: "Booming Britain will be top dog as the rest of Europe stagnates", while one commentator in the Mail wrote of Britain's "renaissance": the CEBR had handed the chancellor a "weapon with which to attack Labour's agenda of despond and false promises".
Hmm. Booming Britain? Renaissance? The problem is that the economic theory that supports these predictions is itself in crisis. By prioritising the role of low taxes, deregulation, the inevitable efficiency of markets and the accompanying inevitable inefficiency of the state as drivers of growth, it assumes that the last 30 years – and in particular the 2008 financial crisis – had not happened. These are the terms in which UCL's Professor Wendy Carlin, leading the programme at the Institute for New Economic Thinking (INET) to reframe the economics curriculum to include economics' new advances, describes the state of much current teaching and debate, exemplified by both the CEBR report and the reaction to it.
For the best economics now has much more sophisticated understanding of what drives innovation, investment, productivity and growth than the simple faith in low tax and loosely regulated markets. It criticises the refusal to understand the complexity of how economies and societies create and assimilate paradigm-changing technologies. Nor is there room for assessing the quality of a country's entire institutional nexus – from company organisation to the accountability of government – in building inclusive, value-creating capitalism rather than extractive, value-capturing capitalism. The best brains in economics are now working on how economies work in reality, rather than as prospectuses for rightwing politicians and newspapers.
For example, in Why Nations Fail, MIT's Daron Acemoglu and Harvard's James Robinson present the results of 15 years of research into the rise and fall of countries and their economies. It is a far cry from the CEBR analysis, arguing that what differentiates countries is the quality and effectiveness of their economic and political institutions. Capitalism has to be shaped and governed to allow the new continually to reshape and even destroy the old: it has to allow multiple runners and riders, lots of experimentation and harness whole societies into accepting and taking risks. This happens best when economic and political institutions do not fall into the hands of one party or a group of self-interested oligarchs who essentially extract value; they need to be open and inclusive, constantly pushing back against the wealth extractors.
Acemoglu and Robinson are right, although inclusiveness and accountability go well beyond the democratic political institutions on which they focus – and for whose lack they doubt predictions of China's continuing inexorable rise. It extends to the integrity and soundness of the financial system, how effectively governments accept the risk of investing in frontier technologies that private entrepreneurs never undertake alone, how companies are prevented from falling into the hand of self-interested, overpaid boards and ensuring that workplaces are inclusive too. But they do recognise, along with the IMF and OECD, that growing inequality menaces vigorous societies. It is a proxy for how effectively an elite has constructed institutions that extract value from the rest of society. Professor Sam Bowles, also part of the INET network, goes further. He argues that inequality pulls production away from value creation to protecting and securing the wealthy's assets: one in five of the British workforce, for example, works as "guard labour" – in security, policing, law, surveillance and forms of IT that control and monitor. The higher inequality, the greater the proportion of a workforce deployed as guard workers, who generate little value and lower overall productivity.
The CEBR does warn that the break-up of the UK, if Scotland votes for independence, would qualify its optimistic predictions. But it never asks why Scottish voters might be so disillusioned if the Euro-sceptic, low-tax, low-regulation world it paints is so rosy: perhaps the Scots understand better than conventional economists what is really going on. More of what the CEBR recommends as the route to future riches – placing our faith in markets and individual incentives along with disregarding inequality and the dysfunctionality of our institutions – could break Britain up.
It is also reason to be sceptical about most of its projections. Will China, Russia and Mexico, governed by extractive elites, really do so well? Is Europe such a write-off? After all, Mr McWilliams, the affable Euro-sceptic who runs the CEBR, warned more than two years ago that European leaders had a month to save the euro.
I also bet that the US, if the destructive Tea Party can be held at bay, will hold on to the top spot. Britain, it is true, could catch up with Germany, but only if it builds on the effective industrial policy the coalition is developing and consigns small-state conservatism to the dustbin. Above all, I doubt the endless rise of Asian and Latin-American autocracies. The west is not dead yet.
Wednesday 16 October 2013
Why our future depends on libraries, reading and daydreaming
A lecture explaining why using our imaginations, and providing for others to use theirs, is an obligation for all citizens
'We have an obligation to imagine' … Neil Gaiman gives The Reading Agency annual lecture on the future of reading and libraries. Photograph: Robin Mayes
It's important for people to tell you what side they are on and why, and whether they might be biased. A declaration of members' interests, of a sort. So, I am going to be talking to you about reading. I'm going to tell you that libraries are important. I'm going to suggest that reading fiction, that reading for pleasure, is one of the most important things one can do. I'm going to make an impassioned plea for people to understand what libraries and librarians are, and to preserve both of these things.
And I am biased, obviously and enormously: I'm an author, often an author of fiction. I write for children and for adults. For about 30 years I have been earning my living though my words, mostly by making things up and writing them down. It is obviously in my interest for people to read, for them to read fiction, for libraries and librarians to exist and help foster a love of reading and places in which reading can occur.
So I'm biased as a writer. But I am much, much more biased as a reader. And I am even more biased as a British citizen.
And I'm here giving this talk tonight, under the auspices of the Reading Agency: a charity whose mission is to give everyone an equal chance in life by helping people become confident and enthusiastic readers. Which supports literacy programs, and libraries and individuals and nakedly and wantonly encourages the act of reading. Because, they tell us, everything changes when we read.
And it's that change, and that act of reading that I'm here to talk about tonight. I want to talk about what reading does. What it's good for.
I was once in New York, and I listened to a talk about the building of private prisons – a huge growth industry in America. The prison industry needs to plan its future growth – how many cells are they going to need? How many prisoners are there going to be, 15 years from now? And they found they could predict it very easily, using a pretty simple algorithm, based on asking what percentage of 10 and 11-year-olds couldn't read. And certainly couldn't read for pleasure.
It's not one to one: you can't say that a literate society has no criminality. But there are very real correlations.
And I think some of those correlations, the simplest, come from something very simple. Literate people read fiction.
Fiction has two uses. Firstly, it's a gateway drug to reading. The drive to know what happens next, to want to turn the page, the need to keep going, even if it's hard, because someone's in trouble and you have to know how it's all going to end … that's a very real drive. And it forces you to learn new words, to think new thoughts, to keep going. To discover that reading per se is pleasurable. Once you learn that, you're on the road to reading everything. And reading is key. There were noises made briefly, a few years ago, about the idea that we were living in a post-literate world, in which the ability to make sense out of written words was somehow redundant, but those days are gone: words are more important than they ever were: we navigate the world with words, and as the world slips onto the web, we need to follow, to communicate and to comprehend what we are reading. People who cannot understand each other cannot exchange ideas, cannot communicate, and translation programs only go so far.
The simplest way to make sure that we raise literate children is to teach them to read, and to show them that reading is a pleasurable activity. And that means, at its simplest, finding books that they enjoy, giving them access to those books, and letting them read them.
I don't think there is such a thing as a bad book for children. Every now and again it becomes fashionable among some adults to point at a subset of children's books, a genre, perhaps, or an author, and to declare them bad books, books that children should be stopped from reading. I've seen it happen over and over; Enid Blyton was declared a bad author, so was RL Stine, so were dozens of others. Comics have been decried as fostering illiteracy.
No such thing as a bad writer... Enid Blyton's Famous Five. Photograph: Greg Balfour Evans/AlamyIt's tosh. It's snobbery and it's foolishness. There are no bad authors for children, that children like and want to read and seek out, because every child is different. They can find the stories they need to, and they bring themselves to stories. A hackneyed, worn-out idea isn't hackneyed and worn out to them. This is the first time the child has encountered it. Do not discourage children from reading because you feel they are reading the wrong thing. Fiction you do not like is a route to other books you may prefer. And not everyone has the same taste as you.
Well-meaning adults can easily destroy a child's love of reading: stop them reading what they enjoy, or give them worthy-but-dull books that you like, the 21st-century equivalents of Victorian "improving" literature. You'll wind up with a generation convinced that reading is uncool and worse, unpleasant.
We need our children to get onto the reading ladder: anything that they enjoy reading will move them up, rung by rung, into literacy. (Also, do not do what this author did when his 11-year-old daughter was into RL Stine, which is to go and get a copy of Stephen King's Carrie, saying if you liked those you'll love this! Holly read nothing but safe stories of settlers on prairies for the rest of her teenage years, and still glares at me when Stephen King's name is mentioned.)
And the second thing fiction does is to build empathy. When you watch TV or see a film, you are looking at things happening to other people. Prose fiction is something you build up from 26 letters and a handful of punctuation marks, and you, and you alone, using your imagination, create a world and people it and look out through other eyes. You get to feel things, visit places and worlds you would never otherwise know. You learn that everyone else out there is a me, as well. You're being someone else, and when you return to your own world, you're going to be slightly changed.
Empathy is a tool for building people into groups, for allowing us to function as more than self-obsessed individuals.
You're also finding out something as you read vitally important for making your way in the world. And it's this:
The world doesn't have to be like this. Things can be different.
I was in China in 2007, at the first party-approved science fiction and fantasy convention in Chinese history. And at one point I took a top official aside and asked him Why? SF had been disapproved of for a long time. What had changed?
It's simple, he told me. The Chinese were brilliant at making things if other people brought them the plans. But they did not innovate and they did not invent. They did not imagine. So they sent a delegation to the US, to Apple, to Microsoft, to Google, and they asked the people there who were inventing the future about themselves. And they found that all of them had read science fiction when they were boys or girls.
Fiction can show you a different world. It can take you somewhere you've never been. Once you've visited other worlds, like those who ate fairy fruit, you can never be entirely content with the world that you grew up in. Discontent is a good thing: discontented people can modify and improve their worlds, leave them better, leave them different.
And while we're on the subject, I'd like to say a few words about escapism. I hear the term bandied about as if it's a bad thing. As if "escapist" fiction is a cheap opiate used by the muddled and the foolish and the deluded, and the only fiction that is worthy, for adults or for children, is mimetic fiction, mirroring the worst of the world the reader finds herself in.
If you were trapped in an impossible situation, in an unpleasant place, with people who meant you ill, and someone offered you a temporary escape, why wouldn't you take it? And escapist fiction is just that: fiction that opens a door, shows the sunlight outside, gives you a place to go where you are in control, are with people you want to be with(and books are real places, make no mistake about that); and more importantly, during your escape, books can also give you knowledge about the world and your predicament, give you weapons, give you armour: real things you can take back into your prison. Skills and knowledge and tools you can use to escape for real.
As JRR Tolkien reminded us, the only people who inveigh against escape are jailers.
Tolkien's illustration of Bilbo's home, Bag End. Photograph: HarperCollins
Another way to destroy a child's love of reading, of course, is to make sure there are no books of any kind around. And to give them nowhere to read those books. I was lucky. I had an excellent local library growing up. I had the kind of parents who could be persuaded to drop me off in the library on their way to work in summer holidays, and the kind of librarians who did not mind a small, unaccompanied boy heading back into the children's library every morning and working his way through the card catalogue, looking for books with ghosts or magic or rockets in them, looking for vampires or detectives or witches or wonders. And when I had finished reading the children's' library I began on the adult books.
They were good librarians. They liked books and they liked the books being read. They taught me how to order books from other libraries on inter-library loans. They had no snobbery about anything I read. They just seemed to like that there was this wide-eyed little boy who loved to read, and would talk to me about the books I was reading, they would find me other books in a series, they would help. They treated me as another reader – nothing less or more – which meant they treated me with respect. I was not used to being treated with respect as an eight-year-old.
But libraries are about freedom. Freedom to read, freedom of ideas, freedom of communication. They are about education (which is not a process that finishes the day we leave school or university), about entertainment, about making safe spaces, and about access to information.
I worry that here in the 21st century people misunderstand what libraries are and the purpose of them. If you perceive a library as a shelf of books, it may seem antiquated or outdated in a world in which most, but not all, books in print exist digitally. But that is to miss the point fundamentally.
I think it has to do with nature of information. Information has value, and the right information has enormous value. For all of human history, we have lived in a time of information scarcity, and having the needed information was always important, and always worth something: when to plant crops, where to find things, maps and histories and stories – they were always good for a meal and company. Information was a valuable thing, and those who had it or could obtain it could charge for that service.
In the last few years, we've moved from an information-scarce economy to one driven by an information glut. According to Eric Schmidt of Google, every two days now the human race creates as much information as we did from the dawn of civilisation until 2003. That's about five exobytes of data a day, for those of you keeping score. The challenge becomes, not finding that scarce plant growing in the desert, but finding a specific plant growing in a jungle. We are going to need help navigating that information to find the thing we actually need.
Photograph: Alamy
Libraries are places that people go to for information. Books are only the tip of the information iceberg: they are there, and libraries can provide you freely and legally with books. More children are borrowing books from libraries than ever before – books of all kinds: paper and digital and audio. But libraries are also, for example, places that people, who may not have computers, who may not have internet connections, can go online without paying anything: hugely important when the way you find out about jobs, apply for jobs or apply for benefits is increasingly migrating exclusively online. Librarians can help these people navigate that world.
I do not believe that all books will or should migrate onto screens: as Douglas Adams once pointed out to me, more than 20 years before the Kindle turned up, a physical book is like a shark. Sharks are old: there were sharks in the ocean before the dinosaurs. And the reason there are still sharks around is that sharks are better at being sharks than anything else is. Physical books are tough, hard to destroy, bath-resistant, solar-operated, feel good in your hand: they are good at being books, and there will always be a place for them. They belong in libraries, just as libraries have already become places you can go to get access toebooks, and audiobooks and DVDs and web content.
A library is a place that is a repository of information and gives every citizen equal access to it. That includes health information. And mental health information. It's a community space. It's a place of safety, a haven from the world. It's a place with librarians in it. What the libraries of the future will be like is something we should be imagining now.
Literacy is more important than ever it was, in this world of text and email, a world of written information. We need to read and write, we need global citizens who can read comfortably, comprehend what they are reading, understand nuance, and make themselves understood.
Libraries really are the gates to the future. So it is unfortunate that, round the world, we observe local authorities seizing the opportunity to close libraries as an easy way to save money, without realising that they are stealing from the future to pay for today. They are closing the gates that should be open.
According to a recent study by the Organisation for Economic Cooperation and Development, England is the "only country where the oldest age group has higher proficiency in both literacy and numeracy than the youngest group, after other factors, such as gender, socio-economic backgrounds and type of occupations are taken into account".
Or to put it another way, our children and our grandchildren are less literate and less numerate than we are. They are less able to navigate the world, to understand it to solve problems. They can be more easily lied to and misled, will be less able to change the world in which they find themselves, be less employable. All of these things. And as a country, England will fall behind other developed nations because it will lack a skilled workforce.
Books are the way that we communicate with the dead. The way that we learn lessons from those who are no longer with us, that humanity has built on itself, progressed, made knowledge incremental rather than something that has to be relearned, over and over. There are tales that are older than most countries, tales that have long outlasted the cultures and the buildings in which they were first told.
I think we have responsibilities to the future. Responsibilities and obligations to children, to the adults those children will become, to the world they will find themselves inhabiting. All of us – as readers, as writers, as citizens – have obligations. I thought I'd try and spell out some of these obligations here.
I believe we have an obligation to read for pleasure, in private and in public places. If we read for pleasure, if others see us reading, then we learn, we exercise our imaginations. We show others that reading is a good thing.
We have an obligation to support libraries. To use libraries, to encourage others to use libraries, to protest the closure of libraries. If you do not value libraries then you do not value information or culture or wisdom. You are silencing the voices of the past and you are damaging the future.
We have an obligation to read aloud to our children. To read them things they enjoy. To read to them stories we are already tired of. To do the voices, to make it interesting, and not to stop reading to them just because they learn to read to themselves. Use reading-aloud time as bonding time, as time when no phones are being checked, when the distractions of the world are put aside.
We have an obligation to use the language. To push ourselves: to find out what words mean and how to deploy them, to communicate clearly, to say what we mean. We must not to attempt to freeze language, or to pretend it is a dead thing that must be revered, but we should use it as a living thing, that flows, that borrows words, that allows meanings and pronunciations to change with time.
We writers – and especially writers for children, but all writers – have an obligation to our readers: it's the obligation to write true things, especially important when we are creating tales of people who do not exist in places that never were – to understand that truth is not in what happens but what it tells us about who we are. Fiction is the lie that tells the truth, after all. We have an obligation not to bore our readers, but to make them need to turn the pages. One of the best cures for a reluctant reader, after all, is a tale they cannot stop themselves from reading. And while we must tell our readers true things and give them weapons and give them armour and pass on whatever wisdom we have gleaned from our short stay on this green world, we have an obligation not to preach, not to lecture, not to force predigested morals and messages down our readers' throats like adult birds feeding their babies pre-masticated maggots; and we have an obligation never, ever, under any circumstances, to write anything for children that we would not want to read ourselves.
We have an obligation to understand and to acknowledge that as writers for children we are doing important work, because if we mess it up and write dull books that turn children away from reading and from books, we 've lessened our own future and diminished theirs.
We all – adults and children, writers and readers – have an obligation to daydream. We have an obligation to imagine. It is easy to pretend that nobody can change anything, that we are in a world in which society is huge and the individual is less than nothing: an atom in a wall, a grain of rice in a rice field. But the truth is, individuals change their world over and over, individuals make the future, and they do it by imagining that things can be different.
Look around you: I mean it. Pause, for a moment and look around the room that you are in. I'm going to point out something so obvious that it tends to be forgotten. It's this: that everything you can see, including the walls, was, at some point, imagined. Someone decided it was easier to sit on a chair than on the ground and imagined the chair. Someone had to imagine a way that I could talk to you in London right now without us all getting rained on.This room and the things in it, and all the other things in this building, this city, exist because, over and over and over, people imagined things.
We have an obligation to make things beautiful. Not to leave the world uglier than we found it, not to empty the oceans, not to leave our problems for the next generation. We have an obligation to clean up after ourselves, and not leave our children with a world we've shortsightedly messed up, shortchanged, and crippled.
We have an obligation to tell our politicians what we want, to vote against politicians of whatever party who do not understand the value of reading in creating worthwhile citizens, who do not want to act to preserve and protect knowledge and encourage literacy. This is not a matter of party politics. This is a matter of common humanity.
Albert Einstein was asked once how we could make our children intelligent. His reply was both simple and wise. "If you want your children to be intelligent," he said, "read them fairy tales. If you want them to be more intelligent, read them more fairy tales." He understood the value of reading, and of imagining. I hope we can give our children a world in which they will read, and be read to, and imagine, and understand.
• This is an edited version of Neil Gaiman's lecture for the Reading Agency, delivered on Monday October 14 at the Barbican in London. The Reading Agency's annual lecture series was initiated in 2012 as a platform for leading writers and thinkers to share original, challenging ideas about reading and libraries.
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