Economics for Dummies

You set out to buy a TV and discover that for the £100 TV you have your eye on, you can save £10 by driving half an hour across town. You do so because you save 10%. That's obviously a bedroom TV so you also look for a main-room TV, this time for £2000. You discover that this TV is also on sale across town - for £1990. But you decide your time is worth more than that 0.5% saving, so you don't go.
According to my book on Economics you are being irrational. Your time is either worth £10 or it isn't.

I can see the point of view, but I'd wager that most people would act in line with the above. I wouldn't call this irrational: it's rational so long as you understand what people are deciding upon. And that is happiness, a psychological measure that standard Economic theory isn't altogether good at. People are happier when they think they're getting a great deal. They will spend 10 minutes on online price comparisons to save 50p on a DVD, but won't walk 100 extra yards to a shop that's 50p cheaper for orange juice, even if that only takes 2 minutes.

The discipline's de facto get-out-clause is that, however distasteful its proposed rules, if it accurately predicts the real-world, its a good theory. So there's surely a problem for it here. People don't think of money in the strict mathematical sense that Economics would like them to.

Its time for more subtlety in modern economic theory - and a change perhaps in some of its fundamental ground-rules. This is one of the thoughts of Richard Layard, Professor Emeritus at LSE. He's at a St Paul's Institute Event on Tuesday and I'll be there to report back.

What is Social Science?

Is Social Science a science? That question has been sat in my head for many years now. Its claim lies with use of qualitative and quantitative analysis. In broader terms, it seeks an objective body of knowledge that can be taught systematically. It is a soft science. Yet the more I study it, the more I understand that good vs bad social science is not just a matter of opinion, the mood of a University tutor on the day they mark an assignment. Good social science is well-structured, comprehensive and measurable. It builds on only the best, peer-reviewed theories that have gone before, leaving eccentric ideas that don't map to reality by the wayside. That and its brave attempt to illuminate our world provide it much in common with hard science.

A related question is what disciplines Social Sciences includes. Is Economics a Social Science? The London School of Economics seems to think so, being self-titled the UK's leading school of Social Science. What about History? hmm surely it helps in understanding today's society to be aware of patterns evident from the past? Philosophy? I'd vote that in too. Which makes it all the sadder that typical 3-year degree courses, Social Sciences in name, neglect to grasp not just topics but whole genres such as these, relegating them to 'Humanities' - which isn't the same at all.

Can we, together, lift one village out of the Middle Ages?

The Guardian is determined to turn around a single village in Africa, taking it from 'the 14th century into the 21st', over the course of 3 years: http://www.guardian.co.uk/katine

Having finished the exam for my OU Course on International Development, 'Challenges for a world in transition' on Tuesday it's reassuring to see how the tools and concepts learnt over the past 9 months can so easily be applied to this project. e.g. there's a section in there on the fact the villagers tend not to boil their drinking water. The people there were 'displaced by war 4 years ago'. The word 'sustainable' is just 3 minutes in to the introductory video, 'so that it doesn't end in 3 years when we move on'.

There's lots of chatter about people-centred development, as the Guardian editor says in the intro video, "We realise that throwing money at the problem isn't going to work. There is another idea of development that is from the ground-up, more sustainable. That's what we're trying to do here". As I learnt though, this seems empty of an idea how, even if they succeed with this village, it might make a broader difference, bar a vague notion that 'it might serve as a model'.

The language used to promote the launch is notably paternal. The writers ask themselves 'why bother?', rather than 'why interfere?'. The village is 'trapped in the 14th century': essentially a value judgment that their lifestyle is wrong.

The project is clearly in the 'development as done by development agencies' realm, with the associated question of legitimacy. You wonder if the project will prioritise what works best for the paper, best for their coverage, by extension best for the values of their lefty audience (in which I include myself) - than best for the people and culture they are operating within.

Being the Guardian, they're at least honest that ideas over development are contested and thus the project is controversial. They make this clear on the front page, no less, of Saturday's paper. They acknowledge that upon asking what one villager wants to make her life better, she doesn't say 'a Sony Vega 42" plasma and a subscription to Sky Sports': she says 'more time to sit with my friends'. They explain that the media needs to invent ways to keep the topic fresh, since otherwise it's such a slow-burning issue.

So I have mixed feelings over this project, but wanted to bring it to the attention of those of you who like me, following my recent course, are interested in the complex issues involved.

10 years on

Everyone else is busy summing up the last 10 years of Blair. Let's have a go.

Labour's achievements over the past 10 years are extraordinary: Northern Ireland, a national minimum wage, a nationwide ban on smoking indoors, devolved power to Mayors and Scotland/Wales/NI, gay equality and civil parsnips, the EU convention on Human Rights, Bank of England independence with consistent economic stability / growth, record investment in public services, some reform of the House of Lords..

The buts are Iraq, constant attacks on and weakening of civil liberties, a poor record on climate change, countless bungled IT projects, decreased social mobility, the increase in faith schools and other undesirable mixing of religion and state, the allegations of cash-for-honours and the dropping of that Saudi investigation..

Expansive lists for both 'good' and 'bad'. But then a lot changes in 10 years: the domain 'google.com' wasn't registered until 10 years this September.

More than all the details: Labour has shifted the political centre of gravity such that never again can the Tories (or anybody else) be the repressive, pessimistic, nationalistic force for evil they once were. Blair was the first post-war Prime Minister not seeming to long for a mythical 1950s sobriety and propriety. He embraced the 21st century, a product of our times. They say his achievements can be summed up in one word: Cameron.

I grew up under this government, a Labour government, a progressive government - I fear it will shape my expectations and imagination for years to come.

As Thatcher before him, Blair is the best statesman of his generation and, unusually, was empowered to reach some of that potential. I won't miss the spin, the doomed international ventures and the unanswered questions but I'll admit it: I'll miss him.

Nazi style

The kind of reaction to anything positive, no matter how carefully caveated, about the Nazis annoys me..

Bryan Ferry apologizes for Nazi comments

Why is it not allowed to admire Nazi iconography, uniforms and speeches - call it their brand if you will - while fully understanding the intense evilness of their endeavour and hating the fact they existed?

There's no contradiction here. From Prince Harry to the GQ Editor mentioned there, I wish people were given the benefit of the doubt and not pounced on by Press/NGO wolves at the slightest wrong move.

If we're not able to talk about it, admire some bits and despise others, how are we to learn about it? Censoring the discussion does nobody any favours.

Sidney and Beatrice Webb

London and political history connections:

• In the 19th century, one 'Sidney Webb' was educated at Birkbeck College.
• Birkbeck's motto is 'In nocte consilium', Study by Night.
• Sidney and his wife Beatrice set up the Fabian Society in 1884.
• In 1895, they created the London School of Economics (via a donation to the Fabian society).
  
• Not content with founding two great intellectual institutions that continue to this day.. in 1913 they started the magazine the New Statesman.
• They were closely involved with the Co-operative movement.
  
• Famous co-ops: Lurpak butter, Best Western hotels, Brittany Ferries, Ocean Spray cranberry juice.
  

Pretty impressive CV if you ask me.

Webcameron coverage of the MMC rally

http://www.webcameron.org.uk/blogs/3698

It really is a horribly cringe-making speech at our rally..

"There must be a way of treating people as if they're humans, not making them apply via a computer" .
I really think the biggest employer in Europe could do with a (decent) computerised job-application system. He alludes to the idea that we'll go back to warm and fuzzy reputation/tradition-based recruiting, but he knows they need a computer system to do it. He doesn't deal with that head-on, he trots out a glib 'HUMANS NOT COMPUTERS' line.

"Spending not on political priorities ahead of clinical priorities"
Pretty much any decision in the NHS, given it involves allocating taxpayers money, is political. Is he advocating lower accountability to voters?

"Spending money on computers rather than patient care."
I mean you can't lose with that one can you? 'I HAVE A PATIENT DYING OVER HERE!' 'Why don't you buy an iPod?' 'BUT HE'S DYING!' 'It plays movies too!'

But what about when you can't access the right records, when paper-based admin takes 4 x longer than its electronic equvalent? IT reform is urgently needed in the NHS and failing to acknowledge that reality to make a fluffy/telling you what you want to hear statement is cowardice.

"After 10 years of Labour .. we're having hospital closures"
Yes, but to specialise departments so that they serve people better. The era of the 'general hospital' is over and the very professionals Cameron is claiming to listen to are saying that too. Spending on the NHS itself is at record-levels and the Conservatives will never support that.

Up your MTAS

MTAS March in ..March!

What has Europe ever done for us?

Wasted billions of money. Legislated straight bananas. Opened UK borders to a flood of immigrants.

Newsnight yesterday went 'For' (Mark Littlewood) and 'Against' (Marc Glendening) on the EU. The dialogue lacked intellectual depth and seemed weighed down by polarised dogma. Neither man has a firm grip on what the EU is, has been or may become. I'll forgive them since they had only minutes to cover 50 years of history, but let me pick up some points in the limitless time that follows.

Mark Littlewood accepted his opponent's point that the EU is headed toward a federal superstate, with the difference that he approved. The terms are a trap. The EU is a new concept, a supranational authority unique in the world, neither a state nor a federation. To support the EU is not to compromise nation-states: it can and often is a 1+1 = 3 equation.

Look at Iceland or Switzerland, Glendening says. Points missed by his opponent include 1) not joining the EU is distinctly different to being in it for over 30 years and then leaving - and 2) those countries are not the UK . As for going back to the EFTA, economic integration without political integration doesn't work. UK trade would become subject to rules it no longer has say in, as Norway's is to its detriment. This has little to do that I can see with an 'empty chair' as Littlewood suggested: that was an unrelated situation where France paralysed the political operation of the EU by refusing to participate.

The poll 'Should more power be given to Europe' implies the UK can give power away to the EU. The EU's powers are mostly those that only the EU can possess. Power isn't mutually exclusive, the EU generates it where it did not previously exist. The UK arguably has a net gain of power due to its influence within that collective.

The idea that the EU is 'stuck in 1957' I find bizarre: it's the most forward-looking organisation on this Earth. It is a new model of political and social organisation, just finding its feet after these 50 short years. If it works, it may serve as a model to reduce conflict and increase prosperity throughout the world. Nation-states are losing their grip in a globalising world and the EU points to a viable political solution.

The most clearly erroneous comment from Glendening was 'Europe has had nothing to do with peace', claiming it is instead because fascism was defeated. Others point to NATO or Mutually Assured Destruction as the real benefactor. These ideas are short-sighted; fascism remains ever ready to return; America (NATO) is liable to unwitting expeditions we'd be better off without - and if the continuing proliferation of nuclear weapons is our best chance for lasting peace, we're in deep trouble!

To recommend that nation-states continue unmediated is to approve the only tool they possess to resolve disagreement: war. The UN (a political-only organisation) is powerless to prevent it, as we have seen. The EU makes war impossible primarily by economic, not political means. It can take credit, not alone but still in fair measure, for the peace and prosperity of the last 50 years.

The setup of the Newsnight debate reflected a simplistic view of the EU that the figureheads did little to modify: that one either wants to God Save the Queen and keep a sovereign state or give up all our national power to Europe. The former is untenable and the latter impossible. The sovereign state will continue to exist as the primary political organisation while the EU pursues necessary things that deserve respect: free trade and movement, political conflict resolution, the exporting of democracy, action against climate change, cross-border police co-operation, protection of human rights and the proper stewardship of international collective goods such as fish, air and energy.

I would hope for a more enlightened approach next time with the substance considered with more care. Nevertheless, I give great credit for covering the topic and wish only to see more of it.

Further information:

• My comments on 'Talk about Newsnight' before the programme aired.
• The pro-EU site 'What has Europe ever done for us?'
• The Euromyths site that aims to correct Euroskeptic propaganda.

Good morning everyone!

"The world shall soon dissolve like snow,
The sun refuse to shine;
But God, who called me here below,
Shall be forever mine."

A mantra for a Muslim suicide bomber about to set off on his deadly mission?

No: this is a verse from 'Amazing Grace'. It is typical of hymns, sung every morning in schools across the country. They are, almost without exception, filled with violent imagery, tales of death and destruction, struggle and victory over ones' enemies.

By law, every school is required to perform an act of 'Collective worship' every morning, for every pupil (except those specifically excluded). Not just faith schools, as people might assume: all schools. And not an act of moral teaching, of citizenship or cultural knowledge - but of worship. That perhaps the majority interpret the law as the former rather than the latter doesn't help. It's a license for the Church to get involved, a demand for the supernatural, the religious, the irrational. Every morning, for every child, in the social institution we trust to transfer real knowledge.

Full lyrics to Amazing Grace.

Where's my third of a Mars bar?

"Migrationwatch, which campaigns against mass immigration, said the gain to the native population would allow each person to buy just a third of a Mars bar a month."

I want my not-even-half-a-Mars bar! I must write to the Home Office to inform them of my address for delivery forthwith!?

Or is this one of the UK's most fervent anti-immigration groups admitting that immigrants make a net contribution to our economy, quite aside from the other benefits they bring?

Whoever thought of the Mars bar comparison is a genius. Beats the old 'buses' or 'football pitches' analogies any day. I recommend that from this day forward our GDP be measured in Mars bar-potential!

'4p a week' benefits of immigration