Friday, January 03, 2003
Tolkien and Birmingham
[Part of the Eleventy-first Birthday Blog]
As a Birmingham boy, born and bred (and with some other childhood links as well), I think the best thing I can do to commemorate Tolkien's birthday is to point out some of the locations that inspired him.
A good place to start is by looking at Tolkien's Birmingham Discovery Trail, a guide to locations around the city. Among the tit-bits revealed is that Moseley Bog inspired more than just locations:
"Tolkien and his brother, Hillary, were regularly chased away by the miller, George Andrew. Covered in white dust as he was, he became known to them as the White Ogre - an unlikely antecedent for the wizard Gandalf."
Threre's also more about the original Two Towers, both of which are easily visible from Edgbaston Reservoir without sign of their significance visible.
Orthanc?
Baradur?
A pleasant stroll around the Reservoir would be a pleasant hour or so spent for visitors to Birmingham, though some of the other locations are a touch far to go.
The other set of locations linked with Tolkien are various pubs around Oxford. In particular, he and the Inklings, a collection of literary Christians, were best known for drinking in the Eagle and Child. Visitors would be advised to sit in the snug on the right as you enter, though Tolkien et al tended to use what was then the back room of the pub. For less alcholic locations around Oxford, try this list, ideally read alongside a timeline of his life and work.
If you're looking for a weekend away as the summer comes, a stroll around Oxford on the Saturday, finishing the day off in the Bird and Baby, then an hour's train ride to Birmingham and an exploration of (quite central) locations Tolkien grew up around, would be a cheap, enjoyable experience for anyone without a pathological adversion to students or Brummie accents.
(pictures from Virtual Brum.co.uk)
[Part of the Eleventy-first Birthday Blog]
As a Birmingham boy, born and bred (and with some other childhood links as well), I think the best thing I can do to commemorate Tolkien's birthday is to point out some of the locations that inspired him.
A good place to start is by looking at Tolkien's Birmingham Discovery Trail, a guide to locations around the city. Among the tit-bits revealed is that Moseley Bog inspired more than just locations:
"Tolkien and his brother, Hillary, were regularly chased away by the miller, George Andrew. Covered in white dust as he was, he became known to them as the White Ogre - an unlikely antecedent for the wizard Gandalf."
Threre's also more about the original Two Towers, both of which are easily visible from Edgbaston Reservoir without sign of their significance visible.
Orthanc?
Baradur?
A pleasant stroll around the Reservoir would be a pleasant hour or so spent for visitors to Birmingham, though some of the other locations are a touch far to go.
The other set of locations linked with Tolkien are various pubs around Oxford. In particular, he and the Inklings, a collection of literary Christians, were best known for drinking in the Eagle and Child. Visitors would be advised to sit in the snug on the right as you enter, though Tolkien et al tended to use what was then the back room of the pub. For less alcholic locations around Oxford, try this list, ideally read alongside a timeline of his life and work.
If you're looking for a weekend away as the summer comes, a stroll around Oxford on the Saturday, finishing the day off in the Bird and Baby, then an hour's train ride to Birmingham and an exploration of (quite central) locations Tolkien grew up around, would be a cheap, enjoyable experience for anyone without a pathological adversion to students or Brummie accents.
(pictures from Virtual Brum.co.uk)
Gary Farber has linked to a delightful piece in the New York Times, where various academics briefly discuss concepts or notions that are over or under rated. Not all are brilliantly put, but the conceit and the overall execution are good fun.
Sure, it has idiotic lines like "[the] use of the word evil, as in [e.g.] evildoers, is ... a wee bit clichéd at this point". On the other hand, Stanley Fish, of all people, has the interesting, though very political and cynical suggestion that:
"we will be hearing a lot of arguments for and against diversity.
But these arguments will be so much shadowboxing — stalking-horses for the real arguments — because diversity is not a condition anyone actually desires.
What people desire is the alteration of a situation that displeases them; they regard it as an injustice that some group or population has been excluded from a benefit. They are not for diversity with a capital D — no one is. They are for the limited expansion of the franchise in the direction of their preferences.
In short, diversity — and I would say the same for its close relatives — openness, balance and inclusiveness — is a political rather than a substantive rallying cry. You call for diversity when your enemies dominate the playing field. You preach balance when the numbers are against you; you tout openness when you and your friends have been shut out."
The best arguments, however, are for the underrated ideas, e.g.:
"Propaganda
It is difficult not to notice that Americans are on the receiving end of anger and resentment from around the world, not all of which is rational. We should use rational argument when we can, but we ignore at our peril that we are also a lightning rod for dark currents of hatred that flow through the psyche. The idea of propaganda is in bad repute because it is associated with crude cold-war caricatures. And clearly, advertising will be a disastrous approach to a Muslim fundamentalist culture that focuses its hatred on a culture of advertising. Like a psychoanalyst's handling of negative transference, we need to develop at the cultural level sophisticated ways of handling irrational hatred.
Jonathan Lear, Committee on Social Thought, University of Chicago "
Sure, it has idiotic lines like "[the] use of the word evil, as in [e.g.] evildoers, is ... a wee bit clichéd at this point". On the other hand, Stanley Fish, of all people, has the interesting, though very political and cynical suggestion that:
"we will be hearing a lot of arguments for and against diversity.
But these arguments will be so much shadowboxing — stalking-horses for the real arguments — because diversity is not a condition anyone actually desires.
What people desire is the alteration of a situation that displeases them; they regard it as an injustice that some group or population has been excluded from a benefit. They are not for diversity with a capital D — no one is. They are for the limited expansion of the franchise in the direction of their preferences.
In short, diversity — and I would say the same for its close relatives — openness, balance and inclusiveness — is a political rather than a substantive rallying cry. You call for diversity when your enemies dominate the playing field. You preach balance when the numbers are against you; you tout openness when you and your friends have been shut out."
The best arguments, however, are for the underrated ideas, e.g.:
"Propaganda
It is difficult not to notice that Americans are on the receiving end of anger and resentment from around the world, not all of which is rational. We should use rational argument when we can, but we ignore at our peril that we are also a lightning rod for dark currents of hatred that flow through the psyche. The idea of propaganda is in bad repute because it is associated with crude cold-war caricatures. And clearly, advertising will be a disastrous approach to a Muslim fundamentalist culture that focuses its hatred on a culture of advertising. Like a psychoanalyst's handling of negative transference, we need to develop at the cultural level sophisticated ways of handling irrational hatred.
Jonathan Lear, Committee on Social Thought, University of Chicago "
Thursday, January 02, 2003
William Safire in the New York Times has argued that the threat from North Korea could lead Japan to develop nuclear weapons. This is a plausible outcome, though one that continued US involvement in the region will probably prevent.
The thought that's troubled me is what would happen if the Koreas united after North Korea had useable bombs (which it may already have)? I don't think that Korea would necessarily disarm, particularly with China on its northern border. But in a region ostensibly more stable but with two powerful nuclear rivals, would Japan really stay non-nuclear? US forces might remain in the region in some strength, but there would be nothing like the current commitment. Would a region with three nuclear powers, all effectively bordering upon each other and with a history of mutual antagonism be a happy outcome?
The thought that's troubled me is what would happen if the Koreas united after North Korea had useable bombs (which it may already have)? I don't think that Korea would necessarily disarm, particularly with China on its northern border. But in a region ostensibly more stable but with two powerful nuclear rivals, would Japan really stay non-nuclear? US forces might remain in the region in some strength, but there would be nothing like the current commitment. Would a region with three nuclear powers, all effectively bordering upon each other and with a history of mutual antagonism be a happy outcome?
Valberg's Mystery Science Theatre has embarked on its longest journey yet. It's funny stuff - don't give up part way.
George Monbiot, as you'd expect, finished the old year on a low. Indeed, he found himself on a steep downward slope, as "[i]f we take into account such factors as pollution and the depletion of natural capital, we see that the quality of life peaked in the UK in 1974 and in the US in 1968, and has been falling ever since. We are going backwards."
Of course, the admirable Samizdata has already looked at this article, and some of its readers have even supplied clarity where David Carr, the author, could not bear to go. However, there's plenty left to deal with.
I'll confine myself to two main points of Monbiot's, one minor, but showing just how many things he's missing out, one pretty major:
1) "the repayment of debt, the pre-requisite of capitalism, is mathematically possible only in the short-term. As Heinrich Haussmann has shown, a single pfennig invested at 5% compounded interest in the year AD 0 would, by 1990, have reaped a volume of gold 134bn times the weight of the planet."
Haussmann's claim doesn't show up on a google search for his name and the word "pfennig". Or, if it does, my command of 5 +/-15 german words doesn't let me spot it. However, it's pretty clear what's going on, and George Gregg works through the exponential maths in the Samizdata comments.
Without the original, it's hard to know how sophisticated Haussmann is being. However, as phrased, the example is absurd. Debt repayment isn't impossible: if you repay £6 a year of an initial £100 loan with 5% interest, it would take you less than 40 years to repay the loan in full. If you repaid £51 a year on a £1000 loan, you'd repay it in 82 years. These are long time periods for most loan types, but all they assume is you're repaying slightly more than the interest charge each year: you're paying off the capital.
Monbiot's example is based upon you putting some money on deposit, and letting it roll up interest over 1990 years. Firstly, this ignores inflation, a pretty big mistake. A pound placed on deposit accumulates interest, but the purchasing power of the money declines (hence why commercial interest rates are above inflation). If you look for real interest rates, you get a more realistic result. A pound invested at 1% real interest will be worth £397,680,070.81 after 1990 years. This is still a crazy number, but nothing like as large as amounts buying gold weighing more than the Earth. Otherwise, modest sums of money left on deposit at positive real interest rates in hyperinflationary economies would buy quantities of gold weighing more than, say, the sun, in only a few years (a pound left on deposit at 10,000% interest, a realistic amount in a hyper-inflationary economy, would be worth £398,107,171 after 4.3 years).
Secondly, and more importantly, it ignores the two generally accepted reasons behind why interest gets paid. The first is, ah, to get hold of your money: if you want to get hold of people's money for a while, you have pay them as people tend to have a preference for spending money today (or at least pretty soon), when they can enjoy it, rather than hording it for 1990 years (when most of us wouldn't be able to). Sure, some will put some aside for their kids, but that sort of thing is encouraged by the money earning interest.
This ties in with the second reason. Would you rather have £100 of fun right now, or to deposit £100 in an account which promises to keep up with inflation, but nothing more, in the hopes your kids will draw on it in thirty years?Once you start to think about it, you may well take the money now. Not just because you'd rather spend it on cheap tat to buy their love. But also because there's an element of risk in the investment.
There are two ways your investment could go wrong. The bank could break its promise to inflation-proof your savings, and they could lose a large part of their value. Or the bank itself could go bust. These risks mean you really shouldn't be happy that you've got a "promise" that you'll get the same value of money back. Even if you're sure that you or your kids will be alive 30 years down the track, and you've no personal preference when the money gets spent, the chance that a bank could go bust is a big enough risk to mean that you should probably take the cash now.
(In most Western countries, deposit insurance covers this risk for small investors. However, that's paid for out of taxes (omitted from Monbiot's scheme), and the taxes you pay on your interest mean that you need a reasonable premium over inflation just to stand still. Higher rate tax payers in the UK currently suffer a negative real interest rate on bank deposits due to inflation and taxation on low interest rates).
But once these factors are taken into account, the idea that you'd have risk-free compound interest indefinitely is clearly absurd. The high return you might putatively get on your deposit is a fiction: over the years, many banks would go bust, lose you money through inflation or taxation or revolution or currency changes, or in some other way see you lose your shirt.
In theory, the real gains you make by depositing your money in the form of government bonds (the standard measure of the "risk-free" return, where the only risks are inflation and government action (no risks there then...)) are pretty small. The list of former bonds that lost all value via revolution, war or hyper-inflation is reasonably long. And though you could reinvest your interest in more bonds (after taxes), you've got to be pretty patient to wait out millenia...
The point to this discussion? A 5% interest rate over a very long period is probably long enough for pretty much all of the bad things interest pays you for risking to happen. Probably many times. And once you start to discount for just normal inflation, you're starting to talk your way down the hill.
Throw in that the reason why rates of returns required by companies are based on the return on government bonds is because that's the closest thing to a "risk-free return" that anyone can find (the US was a less risky investment than certain (now bust) US companies, which is why (except in exceptional cases) companies must pay higher interest, or generate bigger returns for their shareholders, than money in government bonds would).
This all leads nicely into the really substantive problem, my second quote:
2) "The economist Bernard Lietaer has shown how a system based upon negative rates of interest would ensure that we accord greater economic value to future resources than to present ones. By shifting taxation from employment to environmental destruction, governments could tax over-consumption out of existence. But everyone who holds power today knows that her political survival depends upon stealing from the future to give to the present."
Lietaer's work makes for interesting reading (a lengthier paper is here). He appears to have held serious posts, and to have a provocative book out there. What that doesn't mean is that he said (quite) what Monbiot suggests, nor that he'd be right if he did so.
As far as I can judge, Lietaer's main interest is in "community currencies", and in how these can avoid certain economic distortions and promote full employment. I'm not qualified to judge whether they would have these benefits, or whether there would be dangerous side-effects, but he at least has a couple of examples of currencies with negative interest rates which led to faster spending without inflationary consequences (to avoid them on a large scale, he proposes backing the currency with a basket of commodities). Without the necessary information, it would be foolish to dispute the overall plausibility of the scheme.
However, it is reasonable to doubt the environmental benefits. Lietaer argues:
"The higher the money rate of interest, the stronger is the pressure to discount the future and to place immediate gains ahead of long-term concerns. With negative-interest currency, this pressure is not only absent but even reversed, and more environment-friendly priorities automatically prevail.
During the economic depression of the 1930s, Europe saw a number of practical monetary experiments with negative-interest alternative currency. ... In Worgl, for example, people spontaneously started replanting forests just to dispose of their negative-interest currency in anticipation of future cash flow to be expected from the growing trees."
What does this mean and why does this happen? Because:
"The conceptual key to understanding this shift involves changing the "arrow of time" in the investment process. Under the present system, the discounted present value of any investment has to be higher than the interest rate of a risk-free government bond. This implies that anything that produces value more than twenty years in the future is basically worthless today, thus providing a systemic incentive not to care about the long-term consequences of our actions. Under the proposed system, the incentive works in the opposite way: income in the future would become more valuable than income today, thereby automatically prioritizing the long-term implications of today's actions.
Once the basic necessities of life are covered, the logical uses of money in this new context would include investing in ways that will reduce expenses in the future (pay back mortgages, improve home insulation, improve energy efficiencies, start one's own food gardens) and investing in anything that will keep, or increase in, value (land improvements, trees and forests, and any- thing else that grows over time). To prepare a nest egg for your grandchildren's college, one logical step is to plant a small forest or have a "savings account" that invests in such activities....
Consumption patterns would evolve toward products with longer lifetimes. Assume that one has $100,000 available and two types of cars are offered for sale: the usual car of today, which costs $20,000 and lasts four years, and one costing $100,000 that lasts twenty years. In today's currency environment it is logical to buy the short-lived car because one can put the $80,000 balance in a savings account and get more value in the long run. With the proposed alternative currency it is logical to buy the long-lived car. Today nobody builds such a car because there is no demand for it. But in the future, it could spontaneously become the type of car in greatest demand. Note that the total income of the car manufacturer is the same over twenty years (assuming no inflation), but that the burden on the environment is much lower. According to the same logic, people would tend to build houses intended to last forever--and spontaneously invest in further insulation and other improvements whenever they have extra cash."
Assuming a negative interest rate currency could be established, there's some plausibility to this. It's better to spend money now to save even small amounts in the future, as if you keep the cash lying around, you'll make a loss. Say the currency depreciates at 5% a year. It's then worth spending £100 to save £96 in a year's time. Say some insulation will reduce energy consumption very slightly, and is so shoddy it will only last a year. If the saving's even slightly more than the cost of holding on to cash, you'll spend the money.
But this doesn't necessarily reflect expenditures that are worthwhile environmentally. All the negative interest rate does is prejudice you towards spending money now, or pouring it in non-cash investments. The general emphasis of Leitaer's papers is that the negative interest rate encourages people to spend, spend, spend, creating jobs.
Some of those jobs will be in environmentally friendly trades: for example, replanting trees in Worgl, which was presumably part investment, part spending. But if you know that your money will be worth less if you don't spend it today, why not get that outfit that doesn't quite fit, or a present for someone you wouldn't normally shop for? Why look for the best quality vehicle, when there are active penalties for saving up for a vehicle that will last, rather than buying low quality vehicles and burning them out?
Of course, you might argue that spending's not what counts. What matters is that investment occurs, and that even moderate returns on environmental investments will be attractive. That's true as far as it goes. But, as mentioned above, only part of the cost of finance to companies is to do with the risk-free interest rate. A large portion reflects the risk premium. And whatever the investment, it seems clear that its position relative to the "risk-free return", positive or negative, will not change much.
The best manufacturing stocks will still offer better returns than forestry (e.g.). They may even become more attractive, as the improving economy (which Leitaer says would bring full employment) would increase demand for manufactured goods if spending was incentivised. Only if forestry in some way became hugely profitable would it be a preferable route for investors to take.
It's possible that after sating their spending urges, consumers would start trying to invest in vastly higher quantities than today, investing so much money that previously neglected forests, solar plants, etc would make an acceptable level of return. But it would take an awful lot of extra saving to obtain that sort of result on a national scale. After all, if home improvements to reduce energy expenditure aren't worth doing at the moment, it's unlikely that, provided companies offering real returns still existed, insulation would be the number one spending/investment choice.
So: Leitaer's proposals might, if they worked, have a modest effect. But the net impact might well be bad for the environment: if you buy low-energy light-bulbs, but also get a second SUV (got to spend the money somehow), or plant a tree and buy more GM stock, then it's hard to see how the environment gains.
Monbiot's gives it away with the line "By shifting taxation from employment to environmental destruction, governments could tax over-consumption out of existence". He may mean "tax" in the sense of charges for the use of the currency (the bedrock of Leitaer's negative interest rates), in which case he seems plain wrong. Or he may mean that huge taxes on "luxuries" are his "out" for how to save the world. Put me down as voting against.
UPDATE: Mindles H. Dreck has added high-octane fuel to the fire. Go see it burn with the fury of a thousand economists all crying out. Then just crying.
Of course, the admirable Samizdata has already looked at this article, and some of its readers have even supplied clarity where David Carr, the author, could not bear to go. However, there's plenty left to deal with.
I'll confine myself to two main points of Monbiot's, one minor, but showing just how many things he's missing out, one pretty major:
1) "the repayment of debt, the pre-requisite of capitalism, is mathematically possible only in the short-term. As Heinrich Haussmann has shown, a single pfennig invested at 5% compounded interest in the year AD 0 would, by 1990, have reaped a volume of gold 134bn times the weight of the planet."
Haussmann's claim doesn't show up on a google search for his name and the word "pfennig". Or, if it does, my command of 5 +/-15 german words doesn't let me spot it. However, it's pretty clear what's going on, and George Gregg works through the exponential maths in the Samizdata comments.
Without the original, it's hard to know how sophisticated Haussmann is being. However, as phrased, the example is absurd. Debt repayment isn't impossible: if you repay £6 a year of an initial £100 loan with 5% interest, it would take you less than 40 years to repay the loan in full. If you repaid £51 a year on a £1000 loan, you'd repay it in 82 years. These are long time periods for most loan types, but all they assume is you're repaying slightly more than the interest charge each year: you're paying off the capital.
Monbiot's example is based upon you putting some money on deposit, and letting it roll up interest over 1990 years. Firstly, this ignores inflation, a pretty big mistake. A pound placed on deposit accumulates interest, but the purchasing power of the money declines (hence why commercial interest rates are above inflation). If you look for real interest rates, you get a more realistic result. A pound invested at 1% real interest will be worth £397,680,070.81 after 1990 years. This is still a crazy number, but nothing like as large as amounts buying gold weighing more than the Earth. Otherwise, modest sums of money left on deposit at positive real interest rates in hyperinflationary economies would buy quantities of gold weighing more than, say, the sun, in only a few years (a pound left on deposit at 10,000% interest, a realistic amount in a hyper-inflationary economy, would be worth £398,107,171 after 4.3 years).
Secondly, and more importantly, it ignores the two generally accepted reasons behind why interest gets paid. The first is, ah, to get hold of your money: if you want to get hold of people's money for a while, you have pay them as people tend to have a preference for spending money today (or at least pretty soon), when they can enjoy it, rather than hording it for 1990 years (when most of us wouldn't be able to). Sure, some will put some aside for their kids, but that sort of thing is encouraged by the money earning interest.
This ties in with the second reason. Would you rather have £100 of fun right now, or to deposit £100 in an account which promises to keep up with inflation, but nothing more, in the hopes your kids will draw on it in thirty years?Once you start to think about it, you may well take the money now. Not just because you'd rather spend it on cheap tat to buy their love. But also because there's an element of risk in the investment.
There are two ways your investment could go wrong. The bank could break its promise to inflation-proof your savings, and they could lose a large part of their value. Or the bank itself could go bust. These risks mean you really shouldn't be happy that you've got a "promise" that you'll get the same value of money back. Even if you're sure that you or your kids will be alive 30 years down the track, and you've no personal preference when the money gets spent, the chance that a bank could go bust is a big enough risk to mean that you should probably take the cash now.
(In most Western countries, deposit insurance covers this risk for small investors. However, that's paid for out of taxes (omitted from Monbiot's scheme), and the taxes you pay on your interest mean that you need a reasonable premium over inflation just to stand still. Higher rate tax payers in the UK currently suffer a negative real interest rate on bank deposits due to inflation and taxation on low interest rates).
But once these factors are taken into account, the idea that you'd have risk-free compound interest indefinitely is clearly absurd. The high return you might putatively get on your deposit is a fiction: over the years, many banks would go bust, lose you money through inflation or taxation or revolution or currency changes, or in some other way see you lose your shirt.
In theory, the real gains you make by depositing your money in the form of government bonds (the standard measure of the "risk-free" return, where the only risks are inflation and government action (no risks there then...)) are pretty small. The list of former bonds that lost all value via revolution, war or hyper-inflation is reasonably long. And though you could reinvest your interest in more bonds (after taxes), you've got to be pretty patient to wait out millenia...
The point to this discussion? A 5% interest rate over a very long period is probably long enough for pretty much all of the bad things interest pays you for risking to happen. Probably many times. And once you start to discount for just normal inflation, you're starting to talk your way down the hill.
Throw in that the reason why rates of returns required by companies are based on the return on government bonds is because that's the closest thing to a "risk-free return" that anyone can find (the US was a less risky investment than certain (now bust) US companies, which is why (except in exceptional cases) companies must pay higher interest, or generate bigger returns for their shareholders, than money in government bonds would).
This all leads nicely into the really substantive problem, my second quote:
2) "The economist Bernard Lietaer has shown how a system based upon negative rates of interest would ensure that we accord greater economic value to future resources than to present ones. By shifting taxation from employment to environmental destruction, governments could tax over-consumption out of existence. But everyone who holds power today knows that her political survival depends upon stealing from the future to give to the present."
Lietaer's work makes for interesting reading (a lengthier paper is here). He appears to have held serious posts, and to have a provocative book out there. What that doesn't mean is that he said (quite) what Monbiot suggests, nor that he'd be right if he did so.
As far as I can judge, Lietaer's main interest is in "community currencies", and in how these can avoid certain economic distortions and promote full employment. I'm not qualified to judge whether they would have these benefits, or whether there would be dangerous side-effects, but he at least has a couple of examples of currencies with negative interest rates which led to faster spending without inflationary consequences (to avoid them on a large scale, he proposes backing the currency with a basket of commodities). Without the necessary information, it would be foolish to dispute the overall plausibility of the scheme.
However, it is reasonable to doubt the environmental benefits. Lietaer argues:
"The higher the money rate of interest, the stronger is the pressure to discount the future and to place immediate gains ahead of long-term concerns. With negative-interest currency, this pressure is not only absent but even reversed, and more environment-friendly priorities automatically prevail.
During the economic depression of the 1930s, Europe saw a number of practical monetary experiments with negative-interest alternative currency. ... In Worgl, for example, people spontaneously started replanting forests just to dispose of their negative-interest currency in anticipation of future cash flow to be expected from the growing trees."
What does this mean and why does this happen? Because:
"The conceptual key to understanding this shift involves changing the "arrow of time" in the investment process. Under the present system, the discounted present value of any investment has to be higher than the interest rate of a risk-free government bond. This implies that anything that produces value more than twenty years in the future is basically worthless today, thus providing a systemic incentive not to care about the long-term consequences of our actions. Under the proposed system, the incentive works in the opposite way: income in the future would become more valuable than income today, thereby automatically prioritizing the long-term implications of today's actions.
Once the basic necessities of life are covered, the logical uses of money in this new context would include investing in ways that will reduce expenses in the future (pay back mortgages, improve home insulation, improve energy efficiencies, start one's own food gardens) and investing in anything that will keep, or increase in, value (land improvements, trees and forests, and any- thing else that grows over time). To prepare a nest egg for your grandchildren's college, one logical step is to plant a small forest or have a "savings account" that invests in such activities....
Consumption patterns would evolve toward products with longer lifetimes. Assume that one has $100,000 available and two types of cars are offered for sale: the usual car of today, which costs $20,000 and lasts four years, and one costing $100,000 that lasts twenty years. In today's currency environment it is logical to buy the short-lived car because one can put the $80,000 balance in a savings account and get more value in the long run. With the proposed alternative currency it is logical to buy the long-lived car. Today nobody builds such a car because there is no demand for it. But in the future, it could spontaneously become the type of car in greatest demand. Note that the total income of the car manufacturer is the same over twenty years (assuming no inflation), but that the burden on the environment is much lower. According to the same logic, people would tend to build houses intended to last forever--and spontaneously invest in further insulation and other improvements whenever they have extra cash."
Assuming a negative interest rate currency could be established, there's some plausibility to this. It's better to spend money now to save even small amounts in the future, as if you keep the cash lying around, you'll make a loss. Say the currency depreciates at 5% a year. It's then worth spending £100 to save £96 in a year's time. Say some insulation will reduce energy consumption very slightly, and is so shoddy it will only last a year. If the saving's even slightly more than the cost of holding on to cash, you'll spend the money.
But this doesn't necessarily reflect expenditures that are worthwhile environmentally. All the negative interest rate does is prejudice you towards spending money now, or pouring it in non-cash investments. The general emphasis of Leitaer's papers is that the negative interest rate encourages people to spend, spend, spend, creating jobs.
Some of those jobs will be in environmentally friendly trades: for example, replanting trees in Worgl, which was presumably part investment, part spending. But if you know that your money will be worth less if you don't spend it today, why not get that outfit that doesn't quite fit, or a present for someone you wouldn't normally shop for? Why look for the best quality vehicle, when there are active penalties for saving up for a vehicle that will last, rather than buying low quality vehicles and burning them out?
Of course, you might argue that spending's not what counts. What matters is that investment occurs, and that even moderate returns on environmental investments will be attractive. That's true as far as it goes. But, as mentioned above, only part of the cost of finance to companies is to do with the risk-free interest rate. A large portion reflects the risk premium. And whatever the investment, it seems clear that its position relative to the "risk-free return", positive or negative, will not change much.
The best manufacturing stocks will still offer better returns than forestry (e.g.). They may even become more attractive, as the improving economy (which Leitaer says would bring full employment) would increase demand for manufactured goods if spending was incentivised. Only if forestry in some way became hugely profitable would it be a preferable route for investors to take.
It's possible that after sating their spending urges, consumers would start trying to invest in vastly higher quantities than today, investing so much money that previously neglected forests, solar plants, etc would make an acceptable level of return. But it would take an awful lot of extra saving to obtain that sort of result on a national scale. After all, if home improvements to reduce energy expenditure aren't worth doing at the moment, it's unlikely that, provided companies offering real returns still existed, insulation would be the number one spending/investment choice.
So: Leitaer's proposals might, if they worked, have a modest effect. But the net impact might well be bad for the environment: if you buy low-energy light-bulbs, but also get a second SUV (got to spend the money somehow), or plant a tree and buy more GM stock, then it's hard to see how the environment gains.
Monbiot's gives it away with the line "By shifting taxation from employment to environmental destruction, governments could tax over-consumption out of existence". He may mean "tax" in the sense of charges for the use of the currency (the bedrock of Leitaer's negative interest rates), in which case he seems plain wrong. Or he may mean that huge taxes on "luxuries" are his "out" for how to save the world. Put me down as voting against.
UPDATE: Mindles H. Dreck has added high-octane fuel to the fire. Go see it burn with the fury of a thousand economists all crying out. Then just crying.
ArabNews.com looks back:
"There is no longer any serious doubt anywhere that the events of Sept. 11 created a new world order. And in that new order there is no doubt at all that there is now only one superpower: The United States. At present the superpower is behaving like the proverbial bull in a china shop. It is not yet breaking but it is certainly threatening, accusing and blackmailing."
That's some bull!
(the article also gets round to blaming the Zionists, but it would, wouldn't it...)
"There is no longer any serious doubt anywhere that the events of Sept. 11 created a new world order. And in that new order there is no doubt at all that there is now only one superpower: The United States. At present the superpower is behaving like the proverbial bull in a china shop. It is not yet breaking but it is certainly threatening, accusing and blackmailing."
That's some bull!
(the article also gets round to blaming the Zionists, but it would, wouldn't it...)
Wednesday, January 01, 2003
Unexpected aftermaths of the tech crunch: apparently, because of the sums raised in floatations, there are tech companies that cut back on spending so sharply when the boom ended that they've been left with substantial cash piles. The article gives a few examples, but the gist is that companies have many, many millions, and so can sustain a zombie existence whilst not doing much.
You'd think that shareholders would be tempted to cash out the assets, but I'm sure it's more complicated than that. Still (as the article describes) this may be one of the few busts where one of the problems is companies still having "too much" money...
You'd think that shareholders would be tempted to cash out the assets, but I'm sure it's more complicated than that. Still (as the article describes) this may be one of the few busts where one of the problems is companies still having "too much" money...
Anyone looking for reasons to doubt the sincerity of the British government's approach to Zimbabwe could do worse than to read this sports story. The big link is to a government site dedicated to trade "boosterism", with a section on Zimbabwe. Some tasty extracts from the story:
"ZIMBABWE has the most sophisticated economy in the region outside South Africa. Over recent years, Zimbabwe adopted an increasingly open-market policy and attracted new investment. The UK is one of the largest suppliers of goods and services to Zimbabwe and is one of the largest investors year on year. Although new investment has greatly diminished recently owing to the present unstable economic and political situation.
Who says so? Tony Blair. Or folk operating on his behalf, at least. The above benign assessment of the murderous, corrupt regime of Robert Mugabe appears on www.trade partners.gov.uk/zimbabwe/profile/index/introduction.shtml. ...
Thanks to tradepartners.gov.uk, I also understand that the UK is Zimbabwe’s second-largest trading partner after South Africa, that we are its largest investor, with 400 British companies based there, and that the UK also provides Zimbabwe’s biggest export market. I know there are opportunities in the communications and power industry and I’m very glad for the contact numbers the site provides. It would seem, in fact, that I am all set up for a long and mutually profitable relationship with Mugabe — just provided that I don’t want to play him at cricket.
...
Still, it might be worth asking why Zimbabwe should be off limits for a group of men with nothing more serious than a lump of wood in their hands (and no recent track record of wielding that with any dangerous capability), but not those who produce the nuts and bolts for planes that could be used to deliver weapons of mass destruction.
Hell, while we’re at it, let’s ask why Zimbabwe should be a playground for BP-Shell, Costain, Unilever, RTZ, Standard Chartered, British Airways, Barclays Bank and British American Tobacco, to name just the largest of the many UK-based companies operating there. The tobacco industry alone was worth roughly £400 million to Zimbabwe in 2001 and £200 million in 2002, the drop caused not by a rush of boardroom morality, but the disastrous, brutal incompetence of Mugabe’s farm reclamation programme.
Supermarket shelves in Britain remain stocked with vegetables imported from Zimbabwe. So how we will drive a stake through the heart of this evil dictator? That’s right — we won’t play him at one-day cricket."
Joined-up government in action once again...
"ZIMBABWE has the most sophisticated economy in the region outside South Africa. Over recent years, Zimbabwe adopted an increasingly open-market policy and attracted new investment. The UK is one of the largest suppliers of goods and services to Zimbabwe and is one of the largest investors year on year. Although new investment has greatly diminished recently owing to the present unstable economic and political situation.
Who says so? Tony Blair. Or folk operating on his behalf, at least. The above benign assessment of the murderous, corrupt regime of Robert Mugabe appears on www.trade partners.gov.uk/zimbabwe/profile/index/introduction.shtml. ...
Thanks to tradepartners.gov.uk, I also understand that the UK is Zimbabwe’s second-largest trading partner after South Africa, that we are its largest investor, with 400 British companies based there, and that the UK also provides Zimbabwe’s biggest export market. I know there are opportunities in the communications and power industry and I’m very glad for the contact numbers the site provides. It would seem, in fact, that I am all set up for a long and mutually profitable relationship with Mugabe — just provided that I don’t want to play him at cricket.
...
Still, it might be worth asking why Zimbabwe should be off limits for a group of men with nothing more serious than a lump of wood in their hands (and no recent track record of wielding that with any dangerous capability), but not those who produce the nuts and bolts for planes that could be used to deliver weapons of mass destruction.
Hell, while we’re at it, let’s ask why Zimbabwe should be a playground for BP-Shell, Costain, Unilever, RTZ, Standard Chartered, British Airways, Barclays Bank and British American Tobacco, to name just the largest of the many UK-based companies operating there. The tobacco industry alone was worth roughly £400 million to Zimbabwe in 2001 and £200 million in 2002, the drop caused not by a rush of boardroom morality, but the disastrous, brutal incompetence of Mugabe’s farm reclamation programme.
Supermarket shelves in Britain remain stocked with vegetables imported from Zimbabwe. So how we will drive a stake through the heart of this evil dictator? That’s right — we won’t play him at one-day cricket."
Joined-up government in action once again...
Edward Heath's positions on Europe (as well as his friendships with, e.g., senior Chinese leaders) have always suggested that he didn't care a great deal for the idea of self-determination. Papers just released under the official secrets act suggest that this has been a long-running problem:
"EDWARD HEATH was willing to overrule Northern Ireland’s Protestant majority in 1972 and redraw the border with the Irish Republic, forcing up to half a million people to leave their homes.
Official papers released today under the 30-year rule show that Mr Heath’s Conservative Government was so desperate to find a solution to the bloodshed in Northern Ireland that it considered a form of “ethnic cleansing” that would have created a Protestant-only statelet.
...
Historians, who have long suspected that the Heath Government was toying with radical measures as it flailed from crisis to crisis in Northern Ireland, expressed astonishment at a plan which would almost certainly have caused great bloodshed and would have proved hopelessly impractical.Officials said that the scheme would provoke widespread resistance, offered no guarantee of peace and might wreck Britain’s reputation in the eyes of the world.
Paul Bew, Professor of Irish Politics at Queen’s University Belfast, said: “From the autumn of 1971 through to the summer of 1972 government thinking was all over the place. What was completely absent from the British Government’s thinking was the concept that the Union of Great Britain and Northern Ireland was an absolute value to be defended.”"
Now, the union may not be an "absolute value", but the idea that a serious solution would see half a million people moved for administrative convenience is grotesque. How Heath's views on people's ability to choose their rulers have ever commanded respect is beyond me.
"EDWARD HEATH was willing to overrule Northern Ireland’s Protestant majority in 1972 and redraw the border with the Irish Republic, forcing up to half a million people to leave their homes.
Official papers released today under the 30-year rule show that Mr Heath’s Conservative Government was so desperate to find a solution to the bloodshed in Northern Ireland that it considered a form of “ethnic cleansing” that would have created a Protestant-only statelet.
...
Historians, who have long suspected that the Heath Government was toying with radical measures as it flailed from crisis to crisis in Northern Ireland, expressed astonishment at a plan which would almost certainly have caused great bloodshed and would have proved hopelessly impractical.Officials said that the scheme would provoke widespread resistance, offered no guarantee of peace and might wreck Britain’s reputation in the eyes of the world.
Paul Bew, Professor of Irish Politics at Queen’s University Belfast, said: “From the autumn of 1971 through to the summer of 1972 government thinking was all over the place. What was completely absent from the British Government’s thinking was the concept that the Union of Great Britain and Northern Ireland was an absolute value to be defended.”"
Now, the union may not be an "absolute value", but the idea that a serious solution would see half a million people moved for administrative convenience is grotesque. How Heath's views on people's ability to choose their rulers have ever commanded respect is beyond me.
Wow. Hasbro have come out with a real treat: theEbay Auction Game. Sadly, Amazon seem to be offering this game at a fixed price.
Jane Galt has an excellent piece on some of the obstacles facing attempts to enrich poor countries. It masquerades as a book review, but the generality of the original text lets her (and her comments section) cover quite a bit of ground. A useful introduction to the subject.
This story may not have huge implications. However, it does suggest that the use of oil money to buy sympathy among foreign policy elites, and to maintain credibility overseas, can take a wide variety of forms:
"A SAUDI prince who blamed the September 11 attacks on United States support for Israel has given $500,000 (£322,580) to President Bush’s old school.
The Phillips Academy in Andover, Massachusetts, where Mr Bush and his father before him were pupils, said that despite public criticism, it will keep the money, part of a $3.3 million endowment for a scholarship fund named after Mr Bush Sr.
After the attacks on New York, Prince al-Waleed bin Talal, the world’s sixth-richest man, made a $10 million donation to a victims’ fund, but it was returned by Rudolph Giuliani, the city’s Mayor, after a letter by the prince speculating on the terrorists’ motives was published."
"A SAUDI prince who blamed the September 11 attacks on United States support for Israel has given $500,000 (£322,580) to President Bush’s old school.
The Phillips Academy in Andover, Massachusetts, where Mr Bush and his father before him were pupils, said that despite public criticism, it will keep the money, part of a $3.3 million endowment for a scholarship fund named after Mr Bush Sr.
After the attacks on New York, Prince al-Waleed bin Talal, the world’s sixth-richest man, made a $10 million donation to a victims’ fund, but it was returned by Rudolph Giuliani, the city’s Mayor, after a letter by the prince speculating on the terrorists’ motives was published."
A light-hearted series of sporting predictions for the new year includes this "treat" for May:
"Your foray into the demanding world of kick boxing can best be summed up by the simple phrase: I’ve never seen so much blood."
"Your foray into the demanding world of kick boxing can best be summed up by the simple phrase: I’ve never seen so much blood."
A fairly light Times article about the relationship between Labour and the Unions (which suggests that they are mostly irrelevant to modern politics) includes this interesting anecdote. Blair has frequently been accused of political weakness when faced with certain types of confrontation. This suggests that this hasn't always been the case:
"Mr Blair first learnt the fundamental weakness of the trade unions when, as Shadow Employment Secretary, he ditched Labour’s commitment to the closed shop in 1989. The National Graphical Association, the breaking of whose closed shops had been the cause of the News International dispute, was enraged. Tony Dubbins, the NGA leader, summoned the mere Shadow Cabinet member to his office. As John Rentoul, Mr Blair’s biographer, puts it: “Blair went, and was subject to a one-sided screaming match. But the verbal violence was an expression of Dubbins’s powerlessness. The deed had been done.”
The lesson of this early encounter is that a young, inexperienced Tony Blair, with no power base, faced down one of the party’s most important trade union figures. It is something he has continued, and will continue, to do. Labour shouldn’t “sleepwalk” into divorce [from the unions]. It should rush, head first."
Given the financial aspects of the relationship alone, this isn't necessarily wise. But the article makes a couple of interesting points.
"Mr Blair first learnt the fundamental weakness of the trade unions when, as Shadow Employment Secretary, he ditched Labour’s commitment to the closed shop in 1989. The National Graphical Association, the breaking of whose closed shops had been the cause of the News International dispute, was enraged. Tony Dubbins, the NGA leader, summoned the mere Shadow Cabinet member to his office. As John Rentoul, Mr Blair’s biographer, puts it: “Blair went, and was subject to a one-sided screaming match. But the verbal violence was an expression of Dubbins’s powerlessness. The deed had been done.”
The lesson of this early encounter is that a young, inexperienced Tony Blair, with no power base, faced down one of the party’s most important trade union figures. It is something he has continued, and will continue, to do. Labour shouldn’t “sleepwalk” into divorce [from the unions]. It should rush, head first."
Given the financial aspects of the relationship alone, this isn't necessarily wise. But the article makes a couple of interesting points.
Tuesday, December 31, 2002
This is a rather puzzling column, possibly inspired by slightly too much sherry, that nonetheless tells a delightful tale about what presents central bankers received over the Christmas period, and how most are tiring of the "Inflation Buster" game, prefering "Death to Deflation", an old-time classic...
John Ray has a very productive suggestion of how to support a cricket boycott of Zimbabwe by contacting the Australian team. Follow the link for instructions.
Who cares about the substance of the review? Tim Blair goes right for the low blow with this classic opening:
"CHILDREN'S television is quite an art. It's not just a matter of throwing together simple tunes, basic storylines and bright colours. Successful children's TV also requires the presence of a large, formless creature, an entity usually combining equal elements of human and bovine. The cow-beast is crucial.
So it is with Bowling for Columbine, Michael Moore's Cannes-winning documentary on the wrongs of guns, capitalism, and America"
Via Instantman
"CHILDREN'S television is quite an art. It's not just a matter of throwing together simple tunes, basic storylines and bright colours. Successful children's TV also requires the presence of a large, formless creature, an entity usually combining equal elements of human and bovine. The cow-beast is crucial.
So it is with Bowling for Columbine, Michael Moore's Cannes-winning documentary on the wrongs of guns, capitalism, and America"
Via Instantman
The Times' letter page had a couple of very curious letters in it yesterday. The first is rather odder than the second.
"From Sir Bryan Thwaites
Sir, If President Bush and Prime Minister Blair personally take deliberate decisions which they know may “halt all Iraqi oil production, ‘seriously degrade’ the country’s electricity system, provoke civil unrest and create 900,000 refugees” (report, December 23), then in my book they should be arraigned as criminals who will have violated human rights on a scale not seen since the Second World War.
Yours faithfully,
BRYAN THWAITES,
A13 Albany, Piccadilly, W1J 0AL.
bthwaites@dial.pipex.com
December 24. "
My paper rapidly gained various annotations. The spirit of them would run: "Rwanda, Cambodia, Vietnam, Afghanistan [by all sorts of folk], Congo, Zimbabwe, South Africa, Argentina, Russia [all over the place], North Korea, Indonesia, Ethiopia, Eritea, Sudan, Iran/Iraq, Israel [if we're being an equal opportunities critic], Lebanon, "Kurdistan", Bosnia, Croatia, etc, etc, etc".
Certainly, there's room for dispute on the precise scale of some of these events. Some involved less than half a million refugees, nowhere near 900,000. Others involved rather more than a million deaths. The historical ignorance of Times letter writers today...
The other letter is less odd, as it only betrays a less than total knowledge of the output of all UK newspapers...
"From Mr Richard Todd
Sir, It will be interesting to see when the first letter is published that puts the blame for North Korea’s reactiva- ted nuclear programme (reports, December 27 and 28) firmly on the US.
Yours faithfully,
RICHARD TODD,
Mattingley Cottage,
Mattingley, Hampshire RG27 8JY.
December 29."
Observant readers of this site will recall that on the 24th of October the Guardian published a letter from a Labour MEP that I reproduce for your amusement below:
"The North Koreans are right: the US has failed to carry out its 1994 agreement to construct two light water reactor power plants (Leaders, October 22). They were scheduled for completion in 2003 and are running at least seven years late. All the North Koreans have, eight years on, is two holes in the ground. The US is threatening not to allow the delivery of key nuclear components until after the International Atomic Energy Authority "completes" its tests on North Korea's sealed nuclear plant, which will take up to three years, pushing the completion back until 2013 at the earliest.
In the meantime the promised deliveries of heavy fuel oil by the US to tide over North Korea's flickering power system over have proved sporadic, as the Republicans in Congress have blocked funding.
All of this is compounded by Bush's, new strategic doctrine of pre-emptive deterrence (James Rubin, October 23). While one deplores any further nuclear proliferation, is it not surprising that the deeply suspicious, isolated and authoritarian regime in Pyongyang has now concluded that they are being played for time and that the US is not looking for a solution, but rather merely trying to get its sequencing right: first Iraq, then North Korea.
Glyn Ford MEP
Lab, South West England"
"From Sir Bryan Thwaites
Sir, If President Bush and Prime Minister Blair personally take deliberate decisions which they know may “halt all Iraqi oil production, ‘seriously degrade’ the country’s electricity system, provoke civil unrest and create 900,000 refugees” (report, December 23), then in my book they should be arraigned as criminals who will have violated human rights on a scale not seen since the Second World War.
Yours faithfully,
BRYAN THWAITES,
A13 Albany, Piccadilly, W1J 0AL.
bthwaites@dial.pipex.com
December 24. "
My paper rapidly gained various annotations. The spirit of them would run: "Rwanda, Cambodia, Vietnam, Afghanistan [by all sorts of folk], Congo, Zimbabwe, South Africa, Argentina, Russia [all over the place], North Korea, Indonesia, Ethiopia, Eritea, Sudan, Iran/Iraq, Israel [if we're being an equal opportunities critic], Lebanon, "Kurdistan", Bosnia, Croatia, etc, etc, etc".
Certainly, there's room for dispute on the precise scale of some of these events. Some involved less than half a million refugees, nowhere near 900,000. Others involved rather more than a million deaths. The historical ignorance of Times letter writers today...
The other letter is less odd, as it only betrays a less than total knowledge of the output of all UK newspapers...
"From Mr Richard Todd
Sir, It will be interesting to see when the first letter is published that puts the blame for North Korea’s reactiva- ted nuclear programme (reports, December 27 and 28) firmly on the US.
Yours faithfully,
RICHARD TODD,
Mattingley Cottage,
Mattingley, Hampshire RG27 8JY.
December 29."
Observant readers of this site will recall that on the 24th of October the Guardian published a letter from a Labour MEP that I reproduce for your amusement below:
"The North Koreans are right: the US has failed to carry out its 1994 agreement to construct two light water reactor power plants (Leaders, October 22). They were scheduled for completion in 2003 and are running at least seven years late. All the North Koreans have, eight years on, is two holes in the ground. The US is threatening not to allow the delivery of key nuclear components until after the International Atomic Energy Authority "completes" its tests on North Korea's sealed nuclear plant, which will take up to three years, pushing the completion back until 2013 at the earliest.
In the meantime the promised deliveries of heavy fuel oil by the US to tide over North Korea's flickering power system over have proved sporadic, as the Republicans in Congress have blocked funding.
All of this is compounded by Bush's, new strategic doctrine of pre-emptive deterrence (James Rubin, October 23). While one deplores any further nuclear proliferation, is it not surprising that the deeply suspicious, isolated and authoritarian regime in Pyongyang has now concluded that they are being played for time and that the US is not looking for a solution, but rather merely trying to get its sequencing right: first Iraq, then North Korea.
Glyn Ford MEP
Lab, South West England"
