Recently in Politics Category

What children learn at school is terribly imporant. Politicians tell us this, so it must be so. A great deal of taxpayers money is spent on schools, and when parents pay for private education the sums they are prepared to spend are extremely high.

Most things people value highly are subject to rapid innovation. Mobile phones, movies, cars, holidays, food. The quality of these goods and services benefit from the strong competition with the result that strong gains are obtained. But it's not the case with school. The same subjects are taught, in much the same way, perhaps now with an 'interactive' whiteboard taking the place of a blackboard. Teachers may be more smartly dressed, but they teach the same things in much the same way, with pupils failing to reach any higher standard, certainly if university tutors are to be believed.

The other thing is that there is very little global convergence. British children continue to study geography and French long after the point when it's clear that they have any great relevance to modern society. They no doubt study the Born-Haber process and electrolytic production of aluminium in Chemistry. The only conclusion I can come to is that whoever consumes what it is that teachers produce are not really very bothered about the ostensible product.

What then explains the high value placed on education? The only conclusion I can come to is that it is largely a positional good. Knowledge in itself is valueless, whereas an Oxbridge degree is of great value. This certainly is consistent with the fact that there is very little variation of graduate pay by subject studied.

The conclusion of all this: focus on passing exams and study what interests you!

Alan Greenspan was celebrated during his time as Fed Chairman as he seemed to have managed to slay the dragon of inflation without sacrificing the virgin of economic growth. For a decade or two we had the 'Goldilocks economy' which was neither too hot (heading into a boom) or too cold (heading into recession). His success led central bankers around the world to emulate him and his policies, becoming as close to pop stars as bankers or academics are ever likely to come.

Of course now we know that actually the whole time we were building up to a financial crisis which is possibly the most severe the world has ever known. The funny thing is that nobody seemed to question whether or not he really had managed to hit his inflation targets without any future trouble being stored up. A few questioned the bailing out of LTCM, even more the famous 'Greenspan Put' which saved the equity markets repeatedly, but none seemed to say 'hold on a minute, are we sure this is not going to end in tears?'.

This is in contrast to the long-term attitude of the Chinese. When asked about what he thought of the success of the French Revolution, Zhou Enlai famously replied that it was too soon to say. It is natural that elected politicians are impatient for fixes. They have their eyes firmly fixed on the next election, usually five or fewer years ahead. This means that good policies that take a long time to work will never get a chance.

The private sector has this kind of problem, in that corporations that produce products that take too long to become popular or successful will go out of business. But the difference is that these products remain available for others to develop and exploit. If someone can see a point in the future when profits will come, they will be developed. Lots of important technologies take a very long time to make money. The initial investors in the railways all lost their shirts. It took sixty years for electricity to become very widely adopted. The whole history of civil aviation has been a disaster for investors, but consumers have benefited enormously. It's hard to see how these technologies would have been developed by democratically elected governments.

Of course it can take a long time for the flaws in a new technology to become apparent. We may be seeing this with fossil fuels now, and also with the separation of ownership from control that followed the invention of the limited liability corporation. Over time this has resulted in managers helping themselves to the slice of the cake that would, in the absence of this separation, go to providers of capital. By controlling the capital the managers can extract rents from passive shareholders in a way that's all to familiar to the members of pension schemes that have seen their savings collapse.

Just for the record, I think central banks are a very bad idea. Banks existed quite happily for centuries without them, and I think that at best they convert frequent little crises (runs on undercapitalised banks) into rare but catastrophic global financial crises.

These are my forecasts for the year ahead:

1. The coalition government will continue with no major resignations, policy U-turns or improvements in poll ratings,
2. Ed Miliband will, maybe against the odds, survive, with a largely unchanged cabinet. Maybe he'll try to bring his brother back into the scene, or maybe David will be pushed off into Europe, Mandelson-style,
   
3. UK local elections will see a modest swing against the Conservatives, creating an increasingly polarised nation, with the prosperous South East looking very different from the fringe counties and countries in the union,
4. UKIP will fail to make real electoral success but will take votes from both Labour and Conservatives sufficiently that immigration and Europe will remain high on the agenda,
   
5. Obama will get re-elected because the Republicans will fail to unite around a single candidate,
   
6. Ron Paul and the Tea Party movement will constrain Obama's freedom of operation, so that he will be in office, but not seriously in power,
7. the Arab Spring will results in Islamist and other religiously-affiliated groups getting voted in by newly-enfranchised voters,
8. Sarkozy will have a close run battle with Marine Le Pen, but will triumph over her and over the socialist candidate, whoever he or she might be,
9. Mrs Merkel will continue to dominate politics in Germany,
10. The technocratic governments in Greece and Italy will become very unpopular, creating extreme political barriers to fiscal reform.
    

I've just read the most compelling argument I've yet seen in favour of AV, made by Kate Kate Smurthwaite in her blog.

The problem is that voting every five years for a person you know next to nothing about just isn't a very good way of aggregating individual preferences into communal action. With 60,000 people in a typical constituency there is no way that an MP has any meaningful dialog with his constituents and increasingly is a creature of his party machine.

I do not suggest that MPs are evil, or corrupt or particularly bad men (or women). I am just saying that whatever technical form of voting you choose,  a few numbers scrawled next to people's name on a piece of paper every five years is a pretty useless way of communicating what you'd like to see your taxes spent on.

The solution has to be to delegate power down to local communities, but there is no incentive for anyone with power now to do this. The Big Society remains a meaningless slogan, largely because it's about devolving power to local communities without central government having any less of the stuff. Maybe tax raising powers and proper transfers of powers to local communities will happen, but I think this is highly unlikely. Currently Parish Councils get to spend approx 0.2% of the taxes raised from local residents. If this even doubles I'd be astonished. District and County Councils get to spend a lot more, but nearly all of their spending is regulated to death, notably education spending, where schools are very tighly controlled by the Dept of Education for example.

Related articles

• Yes? No? What actually is AV? (johz.wordpress.com)
• AV referendum: David Cameron says 'most voters have not even heard of it' (dailymail.co.uk)
• Full transcript | David Cameron | Speech against AV | Hampshire | 18 April 2011 (newstatesman.com)

Waiting for Superman is a documentary about how big the gap between rhetoric and reality is when it comes to provision of complex public services like education. The USA is by far the wealthiest and most powerful nation on earth. It is a proper, functioning democracy that regularly replaces incumbents with challengers and thereby creates a proper incentive for elected representatives to govern in a way that makes voters better off. But in reality, public education in the USA has failed.

The funny thing is that everyone from the president down must know that it has failed, and will continue to fail. Initiative after initiative have been tried, but none of them have really succeeded. The UK usually follows the US example, after a discreet delay, to discover that the bright ideas of American educational theoreticians work no better in a European context either.

Different types of enterprises have different natural optimum scales. It seems that run a supermarket chain it's good to be really big. Maybe this is because then you can get the best deal from your suppliers. Maybe its because then you can afford sophisticated analysis of your customer's behaviour. Maybe it's because by being present in lots of locations you get to build a brand that a more locally-limited competitor can't manage. Your scale emerges naturally.

Schools, it seems to me, shouldn't have a big economies of scale. With the internet, cheap books, you should be able to run the purely academic side of school life on a very small scale. Maybe for sports and music you need a bigger institution. What is really far from clear is that you need a national curriculum, national testing, Ofsted, and the Department of Education. If we abolished GCSE's and 'A' levels, kids would not stop taking exams, they'd start taking the International Bacculaureat, or some externally set exams.

Nobody in any major party is willing to suggest any radical changes to the public sector education system in the USA or in the UK. The consequence is that those who can afford to support the public sector through their taxes, and have enough left over to educate their kids privately, will continue to dominate the well paid jobs in society for generations to come. Maybe this has something to do with the willingness of the political class to keep the status quo ante.

If you think that I'm crying wolf, and that education in the UK is really not that bad, just remember that one in four people in Wales leaves school functionally illiterate and one in five in England does so. This is after 15,000 hours of compulsory education. If Michael Gove believes that six 'free' schools are going to fix a problem of this magnitude he must be more deluded than his predecessors, which is setting a very high bar indeed. 

Andrew Calvert wants to kick Balls out of his constituency.

Ubervu allows comparison of mentions of a pair of terms on social media sites. You can see the comparison of Gordon Brown and David Cameron here. I'm not sure what it tells anyone.

David and Gordon seem to be level pegging on Twitter, but all but invisible on Facebook in comparison, whereas discussions about Gordon dominate the pair on intensedebate which seems to be a YASNS (Yet Another Social Networking Site).

On the whole, I don't think that people often blog or twitter lines to the effect of "What a brilliant job David Cameron is making of presenting the Conservative Party's policies" (except by people who are paid to do so), so I would guess that on balance David has won the war of the social media sites so far.

Another widget from the TPA (aka 'debt clock'):

I'm too lazy to write anything, so I cribbed this from the Taxpayers Alliance site.