What’s the Deal with the Debt?

September 10, 2012

Why do we, as a country, have debt? I’m not talking about a specific debt (like the one we should be trying to pay off) here, more the general concept. We borrow to grow. To do those things for which immediate capital is not fully available but will yield enough of a benefit to be worth the loan. Some commentators have rightly pointed out that government borrowing has gone up (and is scheduled to continue that way for the whole coalition) despite the government’s bluster about paying off the bills. This in and of itself, whilst numerically worrying, is neither a cause for celebration nor despair. However the way in which it is used is critical.
Debt plays an essential role in growth, but must not be abused. It was through loans that the Metro system in Newcastle was constructed, that system has allowed previously dilapidated areas to prosper. When businesses are within easy reach by a larger number of people then revenue grows, along with their capacity to create jobs. In the other side of the equation, young professionals can live in these previously neglected areas now that a commuter route exists. This both serves to improve the area and provide affordable accommodation to those wanting to get onto the property ladder. All these benefits from borrowing in order to set up an urban light railway.
If there is a ‘right’ way to use debt then it stands to reason that there also exists a ‘wrong’ way. Sadly, this is the way that our government still uses after the last one was obsessed with it.
That way is when debt is used to maintain or expand the day-to-day operations of government departments. Essentially borrowing to plug each year’s deficit and then pretending nothing happened.
This misuse of debt is dangerous as it means that borrowed money is being poured not into a project with returns but into an indefinite financial black hole. Arguments rage about austerity vs. borrowing but what each side seems to miss is that the only way out of this mess is by doing both. We must balance our books on a day-to-day basis by not living beyond our means but at the same time not shy away from proper investment where needed.
The best (and sustainable) strategy for the government is to create the conditions in which both businesses and people can flourish, not using increased debt to expand it’s wage bill by creating and funding large numbers of public sector posts. The latter only serves to mask the underlying deficiency, such chicanery can only end badly.


Something to Keep in Mind

August 22, 2012

Another day, another union, another headline. This article among others today is focussing on the results of a study showing that national pay for teachers harms results (with the inference that regional pay will rectify this).
It goes without saying that the unions are against the idea (to put it mildly); whilst others think that regional pay doesn’t go far enough and want the variations set at school and even individual level. The arguments set out by the report are elegant and difficult to reasonably counter, however that is not the subject at hand here.

It would seem that the focus of public sector debate has been shifted away from rational arguments on the issues and onto emotional arguments about the users of the service. Nowhere is this more true than in schools and hospitals. I have nearly lost count of how many times I have seen media coverage come perilously close to accusing unions of deliberately trying to harm the users of a public service.

It might seem that way to said user when a service they have paid for is temporarily unavailable; however it is worth considering just what a union exists for – its members. No more, no less. They are set up in order to represent members in disputes, provide advice and negotiate for better conditions (some unions are more effective at this than others). Before anyone thinks that this is a straightforward case of misrepresentation and demonisation it is also worth noting that the union movement has done itself precious few favours on this issue. Unions no longer restrict themselves to lobbying on behalf of their members but all too often act as policy pressure groups and think-tanks. When this happens it is then the union’s turn to cry “what about the poor little children?!” In order to secure their goal, thus un-bottling a genie that will most certainly return to them in an unfriendly manner. Equally, what is to be said to members who feel that their best interests either are or might be sacrificed to an abstract ideology?

It is time to stop and think – who is supposed to be doing what?


Rail Against the Machine

August 15, 2012

“UNFARE!” The title of this morning’s  Daily Mirror neatly captures the frustration felt by many at yet another above-inflation rise in train fares. The government is taking much of the flack, and with good reason; they are holding onto a controlling mindset with regards to the rail industry. Why on earth does a government even have power to dictate what a company can charge for the services it provides?

The answer lies in the way the railways were ‘privatized’ in the first place. In any other industry the prices are kept low by a mixture of competition and regulation; competition introducing a fear of losing business while legislation prevents total monopolies and price fixing.
Sadly our half-baked semi-private system is rife with both.

Rail companies are given exclusive franchises for set routes, instantly creating a patch-quilt of monopolies, devoid of any meaningful competition.
To compound the problem, ticket prices are tightly regulated and tied together. The original idea (which has indeed happened) was to ensure that a ticket between A and B costs the same regardless of whose train is used to complete said journey.

It sounds nice; it’s clean and simple, easy to understand, unfortunately it’s also lunacy. It means that in the precious few areas where companies do compete, the main difference to your journey is the colour of the vehicle. Moreover, there is little immediate financial difference no matter whose train you board. The theory is that the grand pot of ticket sales is divided up by numbers carried, but only a minority of services get a headcount, so companies get approximately the same revenue unless there is a truly massive boycott.

Many of these measures were introduced as compromises to those on the left opposed to wholesale privatisation. However, the road to hell is paved with good intentions.
All these franchises and government controls add up to a zero-choice, zero-control system for passengers. With the system rigged to provide captive audiences the operators face no real accountability for the service provided whilst centrally structured ticketing eliminates the use of pricing to entice new customers.

We have ended up with a system in which nothing has really changed. Instead of a single unaccountable state monopoly, there are several equally unaccountable corporate monopolies. It is time to finish what was started. Competition is the way forward, but it must be true competition. It must be free enterprise.

What is needed is to allow any company to run a service between any two destinations freely and without state control. If any one operator actually risked losing large numbers of passengers should they announce an eye-watering fare rise; very few would be inclined to do so.
Similarly operators could compete in other areas such as comfort, service and punctuality – things that are often spoken of but rarely achieved with consistency.

Finally, it would also be of critical importance to allow operators to own the infrastructure on which the trains are run. This will not only allow operators to improve areas of their service that are currently beyond their control; but will also allow new routes to be built without the need for large-scale government initiatives which inevitably nosedive into overdue, over-budget dog’s dinners.

Britain can have the rail system that it both deserves and requires. All that must be done is to take a single courageous step and finish properly that which was blighted by compromise eighteen years ago.


Public Demons?

May 11, 2012

There is no point in denying it; we now have more than one enemy-de-jeur. With striking unions in the red corner and a serious mathematical quandary in the blue corner, politics is once again taking on its usual form: a boxing match between the unpalatable and the disastrous. In this often loud and closed-ear debate, the employees of the public sector are finding themselves caught in the middle. We should be asking however; “Is this fair?” “are we right to blame the employees for what is going on?”

I have to admit, my gut reaction is a firm and resounding yes, on the basis that the financing arrangement for the public sector is reminiscent of a house of cards on a breezy day. Fortunately, gut gives way to head and, whilst slower, head produces much clearer answers.

It seems only right to point out that ‘gut’ was not entirely wrong; the way we presently finance (and consequently, what we expect from) our public services cannot continue. Either the funding must be slashed, along with the expectations of what those services are to provide society as a whole, or the funding/expectations should be maintained and our taxes must be substantially raised in order to pay for it (those who know me will know that I would never seriously advocate the latter, however that is another discussion). Either way, expectations, budgeting and financing must all be aligned.

So why should we not demonise those who work in our hospitals and schools? The answer is simple – it is not their fault. I have broken the most commonly seen aspects of the debate into two sections:

Attitude

I will grant that there are many things that are not well within the workforce of our public sector, complacency is enormous – many people, particularly within management, go about their daily business with a sense of immunity, knowing that however badly they perform they will not be dismissed so long as they don’t actually kill anyone (at which point, they might just get moved on, but not to the doll queue). I have known of many cases within the public sector of behaviour which would simply not be tolerated in a private company; The public sector has yet to realise that this absolutely infuriates those who do not enjoy the same level of protection.

This sense of impunity is not the fault of the majority of the workforce, but more of the culture within HR departments. Across the whole public sector the unions are highly active, making it much more difficult to dismiss an employee who has performance or conduct issues, and often costly when dismissal does take place in the form of a tribunal afterwards (given that legal fees for tribunals often make the win/loss outcome financially moot). In many larger private companies employees creating problems significant enough to warrant dismissal are often dismissed with minimum regard to what a union might say, on the logic that a payout in settlement is often less than the employee was costing the company in the first place.
One can only begin to imagine the benefit that would be brought if the NHS decided that it would apply the same logic with regard to saving lives. If the health service is willing to spend hundreds of thousands on surgery to save one life, why is it not willing to spend a tenth of that amount in ridding itself of an employee whose conduct is putting dozens at risk? Similarly with education – whilst incompetent teachers are not as common as tabloids would have us think, why are we unwilling to pay the necessary price of getting rid of those that are there, so that we have fewer children whose potential is not only unrealised but also discouraged?

With changes such as these, not only will bad eggs begin to be routed out, but a shift of culture may begin, and hopefully the work of a department or organisation will not have to be carried by one or two key personnel within the team who time and again step up to meet the shortfall left by their less than conscientious colleagues.

Pay and Conditions

The debate over pay and conditions in the public sector is probably the largest number of heads in sands that I have ever seen, on both sides. The first delusion is that often cited by the public sector themselves: that they tolerate lower pay in order to carry out what they see as a public service vocation. Whilst I do not doubt the public service vocation part, the lower pay claims are lunacy. Low ranked admin work in the NHS is often equally paid with low ranked management work elsewhere, couple that with the fact that the public sector has a steeper organisational pyramid than most of the private sector (and thus a higher management ratio) and the differences in earning potential quickly become apparent.
Turning to the thorny issue of public sector pensions, these are light-years ahead of (or behind…) private sector pensions in that they are astoundingly generous by comparison. PWC estimates that for the average private sector employee to accrue an annuity that will yield the same level of renumeration upon retirement as someone earning the same salary in the public sector they would have to work for an additional forty-five years. Abolishing national pay rates and opting for local structures would help things, but not entirely level the disparity.
Again, I wonder aloud whether the public sector realise how much this grates at those in the rest of society? Combining the issues of pay and complacency gives many others the impression that those in the private sector work hard for nothing, whilst those in the public one can (should they choose) coast by in return for great reward. The public sector has certainly not helped its cause in reacting with such indignant fury at all attempts to rectify an unsustainable situation – going on strike to prevent pensions being downgraded to something most people could only dream of is most assuredly going to provoke some anger.

However those who say that the public sector have it easy are gravely mistaken. There is a reason that, in much of the private sector, a past career in the public sector is often referred to as having ‘done hard time’. The atmosphere in much of the public sector is one of oppressive omerta, anyone who tries to alert authorities, higher management or worse, the outside world to malpractice is swiftly rounded on, silenced and vilified (it is often said that there are only two sackable offences in the public sector: showing signs of Christianity and whistle-blowing). Whilst those who work in the public sector receive higher pay and better financial rewards, it is at the cost of working in an institution where conscience (and sometimes individuality itself) is all but prohibited, where employees are required to outsource their ethics, opinions and attitudes to the employer [the state].

It is thus that I cannot accept that public sector employees generally “have it better” since whilst pay may be higher, the private sector does not have to operate under the closest thing remaining in the western world to communist totalitarianism. It is down to the individual to make the decision as to whether the trade-off is worth it.

So there we have it. Does the public at large have a right to be angry with the public sector? Yes, most certainly. Is it fair to blame the employees within said sector? No. The blame lies squarely with the higher management and successive governments who have been unprepared to commit what is viewed as political suicide in tackling the problem.


Equally Unequal

January 28, 2011

With the football sexism fiasco comes one inevitable question: what happened to equality? Strangely, both sides are asking it, almost chanting in unison as though at the public debate equivalent of a premier league derby game.
Feminists are howling for blood, for a chance to make the ‘male establishment’ pay. The men are also asking what went wrong with equality, they wonder why equality doesn’t cut both ways as they know full well the kind of trouble they would bring upon themselves if they used the same rhetoric against the feminists as is inflicted on them by those same feminists.
This apparent double standard is by no means unique to this argument but is widespread in the political arena as a result of history. As equal rights movements have grown in influence and scope, there has been a critical blurring of objectives – should society strive for equality of opportunity or equality of outcome?
Sadly this debate has never really taken place in an open and objective manner and as a consequence the fairest goal is most often not the one aimed for.  All too often an employer (especially in the public sector) will say they are an ‘equal opportunities employer’ whilst at the same time trying to recruit to specific quotas. Some employers have guaranteed interview schemes for disabled applicants,
Which will have the inevitable side effect of rejecting perfectly capable and qualified non-disabled candidates. Now whilst I personally would be on the nice end of such an idea (having a disability myself), it does strike me as very un-meritocratic.
The primary problem is aiming for equal outcome, rather than giving everyone the same chance (which is, by definition, fair). One fact that no-one in the political establishment will admit to, no matter how widely accepted it may be, is that whilst we are all naturally born equal, it is just as natural that we do not stay that way – genetics makes short work of that! Some people are naturally smarter than others, while some are intrinsically stronger. This inequality of nature is likely to be further amplified by an inequality of nurture. Parents who ate themselves academic will not only pass that on genetically but also in the child’s upbringing, and the same can be said of a love of sport. If one knew me, it wouldn’t take much inference at all to guess that my parents cannot stand football. Similarly most teachers are able to speculate with some accuracy on the capabilities and attitudes of the parents of their class.
If we clearly do not stay ‘equal’ on all counts then there is a serious problem with the doctrine of equality of outcome. The only way to produce equality of outcome is to enforce to the lowest common denominator, eliminating positive outcomes where they exist out of ‘justice’ for where they do not. One such experiment took place in Russia throughout most of the 20th century – history records that it did not go well.
In short, it is folly to conclude that equality should be based in anything other than the capabilities of the individuals concrned, all else is calculated lunacy.


Twittering

April 10, 2009

I’m usually one for using new technologies, but here’s one I simply cannot see the point of, or even like, it is twitter. It’s just too shor


What Right?

March 27, 2009

Here is the background to the story in news-article form. Alternatively:

If you don’t want to read the link, what happened is that back in November, someone leaked a list of personal details of members of the British National Party (BNP). The fallout from this action was a little more muted than some expected, at the time there was great concern about vigilante action against people who were perceived as being racist.

The actual consequences of this leak have been far more subtle, but no less worrying. The primary cause for concern is the growing acceptance of the concept of companies and organizations to ‘screen’ their workforces of particular political views and allegiances. For years the Civil Service has barred BNP members from working within its ranks, (and by implication, barring its employees from joining said party). Similarly, the police have had similar blocks in place for a long time also, as can be seen from the story above.

The issue I wish to take up here is not the moral standing of the British National Party. In fact, the presence of the BNP in this debate is almost an obscuring one, since my point is independent of any individual politicla parties, but focusses on a wider concept:
Is it Legal or Right for a person’s political views to render them a target for discriminatory treatment?

I would be the first to admit that there are some circumstances under which it is sensible to ensure the operational neutrality of an employee, a fine example would be the returning officer at general and local elections, who is usually a high ranking local civil servant. Another examples of necessary operational neutrality can be found in the top ranks of the civil service (such as Cabinet Secretary) and throughout the military.

Operational neutrality however, need not necessarily mean that the person in question is not permitted to hold views, or even to express them in his or her private life. It simply means that these views must not be allowed to interfere with their day to day duties in which neutrality is assumed. I have yet to meet a person who is truly ‘view neutral’ rather than ‘operationally neutral’, and I am unconvinced that it could even be possible for a person to be entirely neutral in their personal views.

So why the obsession with preventing a particular viewpoint from being represented in our institutions and employment market? Would the civil service ban socialists on the grounds that they might try and ‘redistribute’ some wealth? Should the police ban those with morally conservative views in case they arrest people for being out too late? It is my feeling (and hope) that any such attempt would provoke utter outrage on the part of the general population.
It is instead assumed that people who hold such views are capable of reigning them in and keeping them in check when the moment to do so arises.
By implication then, the measures to bar some views but not others have an unstated, underlying assumption: that those who hold such views are not capable of such restraint, and that the contamination and of the impartiality of their work is therefore inevitable.

This is a very slippery slope, dangerous for the same reason that blaming society for an individual’s actions and crimes is dangerous: it removes a portion of the attributes of humanity from the subject in question.
Stating that a member of a party, however undesirable that party’s views may be, is incapable of putting those views aside for the sake of integrity is just as demeaning as the removal of personal responsibility implicit when pundits say of a criminal “society made him that way, it’s the system’s fault.” In each case, the individual is still in command, and still charged with the responsibility to make the right decision at each given moment as opposed to the wrong one.

The next fundamental reason to be concerned by this attitude of permitting political screening is that it sets a terrible precident.
If one day, one party is considered ‘ban-worthy’, it does beg the question of who is next? whilst I personally disagree on almost every level with the BNP, I am also aware that many people view the conservatives as “evil”, which would render a large portion of the population targets for vitriol and discrimination.

One principle in which I fundamentally believe in is the notion that I can, may and often will disagree vehemently with what someone else believes, but will defend to the hilt their right to believe it. Tragically I fear that this is greatly out of step with our current political times, where a small army of PC think-tank & pressure groups, along with a socialistic media believe in the doctrine of silencing opposing views rather than defending the very liberty of the right to hold a view. It is with great irony that, as much as I disagree with this ideology, I am willing to defend its right to exist.

One thing is for certain here: as long as opponents of each side continue to use emotive arguments and counter arguments in such settings, a true debate will not emerge. It is very difficult to establish which side is ‘right’, when all that can be heard across the battlefield is an ad-hominem bedlam, where each side is unwilling to counter the argument of the other with anything more convincing than”Racist!” or “Bigot!”.