Euthanasia needed

We badly need to inject the notion of (involuntary) euthanasia into Western culture, even though the legislative battle for voluntary euthanasia has not yet been won. Yet another report published this morning talks of the widespread neglect and ill-treatment of those with dementia in hospitals and nursing homes. True, a great deal of kindly euthanasia by means of injection and gentle starvation also goes on already. But we really ought to bring the whole subject out into the open and make honest people of ourselves before we finally have to admit that no health scheme, national or private, can possibly cope with the cost of sustaining increasing numbers of wretched, vegetative lives who no longer have any sort of personality.

We all know that the notion has pot-holes and potential abuses but not so many that most of them cannot be anticipated. A graded scheme depending on the level of senility, the wishes of relatives and how often they visit their institutionalized old folk, the real usefulness and cost of other medical treatment, could be carefully devised. Essentially it’s no different from the various rationing schemes, overt and covert, that are already being adopted for ultra-expensive surgical operations or drug treatments.

There’s no hope of reform anytime soon but, hopefully, just by writing about it — and hopefully your reading of it — I might have pushed a grain or two of neuronal sand towards the more sensible culture that we’ll have to acquire in future years.

Niall Ferguson and Aesop’s fable

I’ve been an avid reader of Niall Ferguson’s books ever since he wrote the definitive history of the Rothschild banking family in 1999, The House of Rothschild. He’s a prolific writer and I haven’t read all his books, but most of them — sufficient for me to keep in touch with the gradual development of his thinking. However, as his scope became increasingly world-wide in successive books, I’m no longer an admirer. I think he has gone increasingly awry. In his latest book, Civilisation: The Six Ways the West beat the Rest, he has gone badly wrong.

His basic assumption is that powerful empires or countries (modern America is his principal target) may take a relatively long time to reach their zenith but they can crash very quickly. I don’t quarrel with him there. The main message of his book, though, is that, since the 17th century, the West came to the fore, as against Asia, for six main reasons — “killer applications” as he calls them. These are, in brief, the following: 1. A fractured Europe produced a more competitive culture; 2. The Scientific Revolution occurred in Europe; 3. The Rule of Law and Representative Government were more advanced in Europe (and then in America); 4. The development of Modern medicine; 5. The development of the Consumer Society; 6. The Work Ethic.

I don’t quarrel that all six were important. However, just as all six enabled Europe to establish a 400-year clear lead over Asia, Niall Ferguson hasn’t explained why England was enabled to establish something like a 200-year clear lead over the rest of Europe and America in the 17th and 18th centuries. It was only until the last few decades of the 18th century and the early decades of the 19th century that Europe (principally Germany) started catching up. To be more rigorous and comprehensive, he ought also to have explained our particular lead over the rest of Europe.

The reason is that England had a high density of provincial banks as well as a high density of merchant banks in its principal port-city, London. As to merchant banks, Europe had several port-cities with many of them (e.g. Amsterdam, Stockholm, Hamburg, Gdansk), but no European country had any provincial banks worth speaking of. The reason is that the European countries, living cheek by jowl with one another, were constantly at war. Banks in the countryside were never safe. Most folk with money, rich landowners or middling farmers, kept their money under the mattress. It was only a few port-cities that were rich enough to afford their own private armies for protection which had banks. In continental Europe there was never enough money heaped together as capital in countryside banks able to invest in any local industrial projects that might arise because of the growing scientific revolution. In England, there were not only plenty of provincial banks able to invest in local projects but they were also able to tap into further rich sources of funds of the merchant banks of London. This reason should have been added to Ferguson’s “killer apps” as the absolutely necessary precursor to the other six.

But this then leads Ferguson to a more serious error in his final verdict. This is that several Asian countries will now overhaul the West in every way (once again, America being his principal target). He advances several reasons. What makes one instantly suspicious is that he too frequently compares various inferiorities of the West with Hong Kong and Singapore rather than compared with South Korea, China or Japan. But Hong Kong and Singapore are city-states which are not fully typical of Asia. They both still have a strong residual English culture which was implanted 200 years ago. They’re much more Chinese than English, of course, but, nevertheless, they are not typical of the growth countries of Asia. Even Hong Kong remains distinct from mainland China in many ways.

Ferguson lays great emphasis on the high scores of Asian schoolchildren in mathematical tests — as though these were the only criteria of future economic success. He doesn’t mention that both the Chinese and Japanese governments happen to be deeply worried that their authoritarian teaching methods also severely cramp the creative abilities of their young people. They’d dearly love to be able to transplant Western schools into their country. Ferguson also cites the large and growing number of patent applications by China, Japan and South Korea. He doesn’t realise that 99% of all patent applications are not new ideas at all but merely refinements of existing products and methods, usually carried out within large corporations. He says that the overwhelming number of Nobel prizes won by America, Germany and the UK don’t count for all that much because the recipients are old men by the time they receive them. This is a poor argument. Also, he doesn’t mention that although China, Japan and South Korea have been industrialized for a century, none of them have initiated any brand new technologies as America, Germany and the UK have done. Nor has any Asian country opened up any brand new scientific disciplines.

Many brilliant, creative young Asian scientists are coming well to the fore in research and are increasing their appearance in heavyweight scientific journals in the more complex scientific subjects such as particle physics and genetics but almost all of these are second-generation Asians born in the West or are post-doc graduates who’ve lived in the West for a number of years and absorbed our culture. Thousands of rich Chinese are now migrating every year to the West in order that their children will be given a freer, more liberal education; and scores of thousands more rich and middling Chinese are sending their children to Western schools and universities.

In short, although China, Japan and South Korea may yet supply the whole world with all the consumer goods that it can afford (and probably will), they will still be deficient in new ideas, fundamental research and advanced technologies. Until their authoritarian cultures change, these countries will be followers, not leaders. This is not to say that America will never crash. I think it will suffer a major currency catastrophe as the dollar becomes increasingly inflated, but so will Western Europe and China at the same time because we’re so interlinked by trade. When a new world trading currency is devised (and this will have to be done within days) then maybe the chastised governments of all nation-states, particularly America, will become a great deal more modest in the monetary and economic control they think they have now.

Altogether in his latest book, Niall Ferguson has become much too simplistic and, in particular, much too harsh about the country which a few years ago offered him a much larger salary than he was earning at Oxford. His is the classic Aesop’s tale of the traveller who took pity on a frozen snake and put it near his camp fire to warm up.

When gold flows like water

The whole world is in a strange “phoney catastrophe” period at present where everybody (specifically, the treasury departments of America, the Eurozone and China) are looking over their shoulders at the others wondering quite what is going to happen next. Each of them have different strategies for their own economies. Each of them is trying to advise the others. All of them are desperately hoping that world trade will continue to hold together.

In these strange times, what took my attention this morning was a lecture given to economist students at George Washington University by Bernard Bernanke, one of the most powerful individuals in the world and Chairman of America’s central bank (the US Federal reserve). The lecture is actually the first of four and in his first one he devoted most of his attention to disparaging the gold standard in a slew of arguments. Quite why he should want to do this is intriguing. Only 12 months ago he told a US Congressional committee that he didn’t know much about the history of gold and more or less shrugged his shoulders about its importance. However, when questioned by Senator Ron Paul, he refused to say why the Fed has a large stock of it in its vaults or how much there was.

His lecture has not yet been posted on the Fed’s website so we don’t know what his precise arguments were or their balance. Whatever they are, what can be said with certainty is that a far more effective spokesman against the gold standard is Warren Buffet. As the most intelligent and effective investor in stocks and shares in the world in the last 50 years and, besides, being among the richest, his voice carries far more weight. He is noted for one particular quip which has already raised a laugh from tens of millions of people all round the world and will probably continue to do so — at least for some time yet.

Buffet’s quip goes like this: “Why dig up gold buried in the ground only to bury it again in bank vaults?”

Indeed, if that were the case, Mr Buffet is quite right. It has certainly applied all through the last century. But then, we didn’t have a gold standard at any time after 1914. We had schemes that were called gold standards by governments but nothing that came close to being the true gold standard as recommended — and successfully applied — by an even greater genius than either Bernanke and Buffet, namely Sir Isaac Newton when he was Warden of the Royal Mint in 1696.

(Incidentally, we can be sure that the industrial revolution would never have occurred when it did had not Newton trail-blazed the laws of physics and given England a temporal advantage. We can be equally sure that the industrial revolution would never have occurred in England, and not somewhere else, had Newton, wearing his financial hat in the latter half of his life, not trail-blazed the tie-up of the English sovereign (today’s pound) to the value of gold.)

But returning to most of the last century, what we had then were false gold standards. What we had then was not only the value of national currencies tied to gold, but also the value of gold tied to national currencies. Governments fixed them both together. They inflated or deflated as one. It wasn’t Newton’s gold standard.

On the basis of the last century alone, Warren Buffet’s quip is sound. It would be absolutely sound if, during the last century, there hadn’t also been a free market in gold as Newton assumed as well as an “official” price. (In his day, even a genius like Newton couldn’t have conceived of the abstract notion of an official price of gold. It was freely valued from the western-most tip of Europe through to the eastern-most coast of China. In between, in Central America, the lashings of gold there hadn’t yet “graduated” into currency but were still at the stage of being ornaments of the very highest status. Unfortunately most of these beautiful objects were melted down by the Spanish conquistadores and became coins.)

Between Newton’s lifetime and 1914, a free market in gold existed. Gold was not dug up and then re-buried in bank vaults. It flowed like water. It flowed into bank vaults whenever a bank’s business customers were doing well by sales of goods (including exports) and it flowed out whenever there was a financial panic and people rushed to the banks to change their banknotes for gold. These panics were usually caused by harvests that were either too poor or too good or by over-exuberant credit being given to the latest technological whizz such as cotton mills, or coal mines or canals or railways. They were not caused by gold, as many economists say. Gold was the ultimate reserve and, because all banknotes were fully backed by gold, the banks, and in turn the Bank of England, never ran dry.

As the US dollar, the Eurozone euro and the Chinese renminbi continue to yo-yo themselves downwards in value compared with the price of food, commodities and gold, and as governments dig themselves further into impossible debts that our children and grandchildren can never repay, then a return to a gold standard will be inevitable one day. Fortunately there are still economists, albeit a minority (those who read history as well as their economic text books), who know exactly what must be done. But, as is so frequently the case, it will probably take a financial catastrophe to bring governments to their senses.

An irresponsible historian

I frequently scorn politicians (of the West) who, by and large, are uneducated in the sciences and thus have little understanding of the value-adding industries which actually pay the taxes to keep them in being. This morning I find myself even more scornful about the educational deficiencies of one of our leading historians, Andrew Roberts, who wrote a diatribe against French people in the Daily Mail this morning. He has written several well-received books and received many awards, but he sank into the gutter this morning.

What prompted him was yesterday’s murder of a Jewish father and three Jewish children, aged 3, 6 and 8 outside a school in Toulouse. Previously, the same gunman had killed two Muslims and a Caribbean man. Hopefully, the murderer will be caught as soon as possible but, until then, we don’t know who he is or what nationality he has. Despite this, Mr Roberts assumes that the murderer is a Frenchman. This then gives him the opportunity to flow into a nasty recital about how French officials delivered 77,000 French Jews to the German occupiers in World War II, thus starting them on their journey to the death camps. As an historian he ought to know that several other occupied countries (with the honorable exception of Denmark) did the same. But no, Roberts reserves his hatred (for there can be no other word) for the French alone. He writes: ” . . . the foul bacillus of French anti-Semitism has never been far from the surface of French national life.”

Andrew Roberts ought to know that anti-this’ism or that’ism occurs from time to time in all countries. If he were the slightest bit educated in the modern human sciences such as anthropology he would know that human beings are small-group creatures, the product of millions of years of evolution on the open plains. We have fierce in-group out-group propensities in our genes. During periods of stress, hatred towards another race, or culture, or ideology, or schism, can be aroused like the drop of the hat.

All I can say is that there is one historian whose words I’ll not be reading again, and one editor whose newspaper website I’ll not be dipping into again.

Towards more competent governance

While US and Eurozone bank and treasury officials continue to dither about what to do next by way of a hoped-for economic revival, what seems to me to be the most significant event since the credit-crunch has taken place in China in the past week or so. It was triggered off by the police chief of Chongqing, one Wang Lijun, fleeing his office and seeking the safety of the US consulate there. He left with Chinese government officials the day afterwards, According to the New York Times, citing an official Chinese document, Wang Lijun had been investigating corrupt practices concerning the family of Bo Xilai, the governor of Chongqing. A few days later, Mr Bo was relieved of his post, despite the fact that he had one of the highest reputations in China as a through-and-through communist and, apparently, was tapped to join the nine-man all-powerful Politburo before too long.

Even more extraordinary in my opinion is the speech a couple of days ago by Wen Jiabao, the Chinese Premier, to the closing session of China’s national assembly. He not only said that Mr Wang’s evidence was being looked into but that China should build on the recent experiments in village democracy. In other words: “Go West, Chinese government”. American presidents have been haranguing China for years about this. But this is the first time that it had been stated by a top Chinese official. Even Deng Xiaoping, who had unleashed the first experiments in free enterprise into China in 1979 hadn’t gone as far as to promote further change in governance. He backed up the tank-led communist break-up and slaughter of the students in Tiananmen Square in 1989. He may have thought privately that China needed a more Western-type governance, but he didn’t say so. He may have thought — probably quite rightly — that the China’s traditionally authoritarian culture was too deep to change much overnight.

The ousted Bo Xilai would almost certainly have made it to the Politburo, and perhaps Premiership in due course, because of his governorship of Chongqing. With a population of over 30 million and still growing, Chongqinq was the largest of the four directly controlled municipalities of China, the others being Beijing, Tianjin and Shanghai. Reflexively, the latter three had predominantly supplied the successful candidates for the Politburo in years past and it was now Chongqing’s turn. If Bo Xilai’s career had not been brought to an end, and if he had been elected further, then China would almost certainly have drifted more deeply into a recent powerful swing (since the credit crunch) to communist-controlled industries rather than to encourage more free enterprise.

This, at least, is the opinion of someone who is probably the most well-informed person to judge. He is, Zhang Xin the biggest property developer of Beijing’s central business district. In conversation with Charlie Ross on yesterday’s Bloomberg website, Mr Zhang said that Premier Wen’s speech was the clearest indication yet that China is proceeding to Western ways with all circumstpect speed. It must be noted that, already, China’s President-in-waiting, Xi Jinping, has visited President Obama in Washington with full state honours.

Whereas China’s highly meritocratic official-led government might be gradually moving towards Western ways, our so-called democracies have, if anything, become far more controlled by their officials in the last few decades than is ever apparent in the conventional media. The way that massive immigration into Europe and America has occurred in the last few years, despite public opinion and the token statements of politicians, is sufficient evidence. The simple fact is that our type of politicians, almost totally uneducated in the sciences, are not up to the job. They have little relevance to our modern way of life which now depends completely on science. (Incidentally, all the Chinese Politburo are scientists at doctorate level or science related.) What’s needed is some sort of elected officialdom. This in-between situation is what both China and the West seem to be approaching. In the meantime, however, China will have to act as the broker to knock America’s and Europe’s heads together and bring about a sensible world currency system. Without this, all three economic systems might collapse completely. We can’t keep on printing money forever.

The survival of the 20-class

Average parents of the 80-class in the advanced countries can’t afford the two children who are necessary to replenish their numbers and be able to afford a house, the basic stock of household goods and the obligatory annual holiday. The 20-class, though free of debt and, indeed, owning at least 90% of the wealth of the country, also can’t afford more than two children. In their case, however, it is not financial, but mainly due to their more extensive social life (and, often, second homes and multiple international travel) which gives them too little time to raise more than two children.

This has been going on for about two or three decades now in the advanced countries of Europe. Unless some new wonder drugs come along very shortly which will extend the life of the old by several more years, then populations will start to decline very steeply indeed within the next 20 years or so, and then a little less steeply in the following decades until Europeans become extinct or perhaps stabilize at a much lower figure when something between two and three children will be affordable and desirable again.

The top levels of governments have known about this for many years past, of course, and this is why, defying public opinion and party manifestoes, European countries have, for some years, been surreptitiously allowing the ingress of millions of poor migrants from Asia and Africa in order to keep up the tax-paying numbers. But public anger is growing in all the European countries and it is highly likely that the flood will have to be reduced to a trickle if governments want to remain both democratic and in power. Besides, immigrants who desire our household goods more than anything else soon adjust their own family sizes to less than replacement numbers once they’ve arrived.

For slightly different reasons (governmental or cultural diktat) China and Japan are also on the point of imminent steep decline. America, however, is 30 years behind both them and Europe because its declining fertility rate of the indigenous population has only recently dipped below two. With only a slightly longer delay so will the billions of surplus rural worker parents in the rest of the world who are now migrating into the metropolises of their own countries. Whether they find jobs or not, the evidence is already very clear that, by one means or another, their top priority, beyond basic food, is to buy TV, video players, dish aerials and the like — electricity being increasingly tapped into for free. The millions who are presently trapped in refugee camps will, presumably, have to remain and die there as aid from the advanced countries continues to be savagely reduced, at least from Europe and America.

The survival of man is really up to the 20-class in every country. This is the class which, in addition to being wealthy and enjoying the best fruits of the earth, also takes all the important economic decisions and administers the basic physical infrastructure of civilization — as well as ‘higher’ culture. Because of increasing automation they require steadily fewer workers from the 80-class from year to year. What looks like permanent unemployment among the young has already been building up for the past decade or so and will almost certainly keep on swelling as educational requirements for jobs keep growing.

But the 20-class will presumably want to continue. They have two remedies and there’s already evidence that both of these are now being sampled. The one is to select the brightest children from their increasingly dysfunctioning state education systems and to fast-track them into much better schools or universities and then so be able welcome them into their class to make up necessary numbers. (Harvard University, among others, is actually recruiting from a few exceptional state schools in England). The other remedy is mainly derivative (from what one picks up from the media) in that some of the 20-class are already beginning to have more than two children. This was very unfashionable only a few years ago.

We’ve probably got several catastrophes due to hit us in the coming years — world currency breakdown, mass starvation in many countries, explosive wars in the Middle East — but I can’t see how the underlying trends discussed above will not also steadily continue. After all, these trends will be mainly due to 80-class populations voting en masse as to the desirability of owning consumer goods versus the expense and bother of raising too many children.

A question of breeding

Imagine a human being who is, say, ten feet high and covered in hair like an Afghan Hound or a St Bernard. Imagine another human who is, say, two feet tall and hairless like a Chiwawa. Imagine a variety of different sorts of humans of all sorts of exotic appearances and abilities who were being bred for special circumstances such as living happily underground, or under the sea or travelling in space. Genetically impossible? Not so. Pure science fiction? Not necessarily so. It’s certainly difficult to imagine such humans, but who knows what we may get up to in a few thousand years’ time, or even a few hundred.

Mind you, it would need a much different ethical perspective from most of today’s cultures because originating and then maintaining distinctly different ‘breeds’ of humans would require the constant culling of foetuses or new-born babies who don’t come up to specification in each category. But when we consider that, not so long ago, euthanasia of old folk was practised in different parts of the world, one particular culture more recently sent millions of Jews and other ‘misfits’ into gas chambers, and that, even today, millions of girl babies continue to be asphyxiated every year, then our ethical sense is actually quite flexible.

Constant culling of new-born babies would have to be practised because, otherwise, all the different ‘breeds’ of humans would start to interbreed voluntarily and, gradually, a ‘standard’ human type would emerge with just the normal range of variations that we have today within any ethnic group. Indeed, it’s already the case today that, if the present sort of interbreeding that now goes on between Chinese, Indians, Africans, Caucasian whites and so on were to continue and intensify, then a standard hybrid will inevitably evolve. He’d probably be rather similar to those who migrated out of Africa 60,000 years ago.

The reason why all this is possible is that genes themselves are not involved. Precisely the same genes (albeit with slightly different variations) with precisely the same basic functions remain unchanged whichever way breeding goes. What’s different is that, while in the womb, different stages of development vary between one foetus and another. For example, the genes that make for eye colour or brain size or leg length are turned on and off at different times and for variable lengths of time when comparing different foetuses — and, of course, the resultant babies when born.

It is this on-off feature which has been the greatest discovery in biology apart from that of genes themselves. It has been suspected for a decade or two but it has only been identified in the last two or three years. This switching feature is called epigenetics. Like genes, our epigenes are inherited from our parents and, like genes, with a slight random scatter of variations. For example, in a large family we can usually recognize a common ‘theme’ among the children but with a scatter of other characteristics. These are due to slight variations among the standard genes but, just as importantly, slight variations in the epigenetic switchings that each child has inherited.

The big difference is that genes (and their slight variations) can, and do, exist unchanged for thousands, sometimes millions, of years while epigenes much more freely arise in each generation. They can also disappear each generation unless they are actively selected for their usefulness by the environment. They may only last for a few generations or a few hundred years. In the case of dog, cat or pigeon breeds, etc, the predominant environment is the particular choice of the breeder from the newly born. In the case of humans it is the more generalized environment of the normal way of life or culture in which the child was created which does the selecting. In both cases it is the inheritance of epigenes that is far more important than genes.

For example, at the time of the First World War the epigenes of the Medieval Ages was still very much in evidence. The epigenes of the masses had long adjusted themselves to successfully surviving on poor diets. The average weight and height of the ordinary soldier was far less than the officer class which had been recruited from aristocracy and the rich who had enjoyed better diets for generations and whose epigenes had been selected differently. However, with more nutritious diets since 1914, the epigenes of the masses have successively re-set themselves over the four generations since then to something close to a ‘standard’ size and weight (actually that of our Neolithic ancestors).

At this stage of writing, I originally proceeded with many hundreds of words with sociological implications, but I deleted these and will ask a simple question instead. (Besides, breakfast calls!) In all modern advanced countries there appears to be a pulling away of a new minority “meta-class” which, despite our ‘democratic’ procedures, possesses most of the wealth and takes all the important decisions. It largely educates itself in its own schools and favourite universities, and almost exclusively marries within itself. So far, it’s been about 200 years in the making and this is far too short for any significant genetic changes to have taken place. But we can certainly say that subtle epigenetic changes have been going on, and probably many of them. So my question is: Can we be certain that modern man is not already beginning to breed itself into two ‘types’?

Listening to my favourite women

In times past I’ve far preferred a woman doctor or a personnel manager. They’re more perceptive in subtle matters than men. When it comes to economics, which I regard as among the more subtle disciplines, I pay a great deal of attention to women. Thus I perk up whenever I come across anything written by Christia Freeland, Carmen Reinhart, Amity Shlaes, or Gillian Tett, four of the leading practitioners of today. They’ve all written, or co-authored, superb books (respectively, Sale of the Century: The Inside Story of the Second Russian Revolution; This Time is Different: Eight Centuries of Financial Folly; The Forgotten Man: A New History of the Great Depression, and Fool’s Gold: How Financial Greed Corrupted a Dream and Shattered Global Markets).

Amity Shlaes popped up this morning in an op-ed on the Bloomberg website. She comments on the complacency of Bernard Bernanke, Chairman of America’s central bank, the Fed. Even after injecting almost $2 trillion into the American economy, Bernanke thinks that hyperinflation is nowhere in sight. Careful! says Shlaes. Even when inflation is officially stated to be low, say up to 2% or 3% or 4% (usually done by cooking the cost-of-living indices), real inflation is often hidden and much higher, even into the danger zones of 6%, 7% or 8%. And when real inflation is at these levels then hyperinflation can suddenly be unleashed.

She uses a metaphor which is so apt I’ll quote it in full: ” ‘Sudden’ is more like it. The thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.”

She cites several examples of this from history. The one that is more dramatic than most is the hyperinflation which shook Germany in 1923 and disembowelled the middle class (and produced World War 2 as a consequence). At that time, most financial analysts — in both Germany and abroad — thought that Germany was short of money, not that it already had far too much in circulation. But, to quote Shales again: “The Germans didn’t know it, but [in 1922] they had already turned their money into wallpaper; the next year would see hyperinflation, when inflation raced ahead at more than 50% a month. It moved so fast that prices changed in a single hour. Yet even as it did so, the country’s financial authorities failed to see inflation. They thought they were witnessing increased demand for money.”

Bernanke is resting awhile from actually printing more money via quantitative easing but, in keeping the basic interest rate at 0.5% he is, in effect, continuing to fertilize the soil from which hyperinflation could spring. Meanwhile, the rest of the world is inflating in various ways to cope with the cheapening dollar.

In the last day or two, since the European Central Bank “loaned” banks another huge amount of newly printed Euros, the stock market has bounced up. But the total trading is thinner than it has been for years. It’s only froth. The large corporations will still hang onto their cash and not invest for the time being. To the continuing desperation of politicians, and despite the extra money, the banks are unlikely to find all those hoped-for proto-businesses to lend to. The euphoria won’t last long. Business (that is, recession) will be as usual quite soon. I’ll continue to pay much more attention to my four favourites (who are all more or less in the same camp) than to any of central bankers.

Repopulating the countryside

One feedback I received from yesterday’s “Hints of the Fourth Era” came from a friend in Australia:

“If population decreases significantly (as David Brooks has also suggested in a recent New York Times article), will this spawn a return to more rural environments, or will humans concentrate in megalopolises and leave much of the hinterland to nature? What do you think?”

My reply to him this morning:

“I realized this morning that my piece of yesterday gave no hints at all of the fourth era! What I was describing was the tail-end of the industrial era — the accumulation of super-metropolises. (I was very impressed with a recent David Brook op-ed, but it wasn’t the one your refer to, “The Fertility Implosion”. I’ve now read it. It parallels my own thinking on the matter in recent years that although world over-population is serious enough at present it will look after itself in the time-honoured ways of all over-populating species. If anything, the collapse of populations in the advanced world (to start with) is more serious over the slightly longer term.)

“Some recent world-wide surveys and conversations by researchers at the Poverty Action Lab, Massachusetts Institute of Technology, have been an eye-opener to me. Poor parents in the shanty cities are reducing their family size at a rate of knots but not in order to enjoy a more varied (more expensive) diet or (apart from a minority of parents) to afford to educate their children. They are doing so in order to buy TV, video players, dish aerials and the like. (In many of the larger shanty cities they are usually able to tap into the electricity grid for free and, usually, the city government/utility corporations turn a blind eye to this for fear of social unrest otherwise.)

“To turn to your question: In 50 or so years’ time (in the advanced countries) metropolitization will be largely complete, I guess. (There’ll still be many smaller cities and towns surviving if they can offer unique attractions [architectural history for tourists, academic for the young, festivals for the arts] and many existing picture book villages and hamlets [week-end pads of the city elite].) The metropolises that remain will all be losing their populations. The ones that can keep their heads above water will be those with a good mix of industries and scientific research. If I’m right in thinking that biological industries will then be far more important than now then I can envisage two consequences at least.

“Economically successful metropolises would be able to top up their less than replacement birth rate (if indeed this continues) by means of IVF and IVG (In Vitro Gestation) and the placing of babies with infertile couples and well-paid foster parents. This would undoubtedly be expensive but this would probably be one of the most important items in a city’s expenditure. Secondly, one of the greatest lessons that evolutionary biology is already teaching us is that man is still a small-group social mammal. This is when he is most effective. So, yes, I can foresee small, highly specialized businesses starting to migrate out of the more successful metropolises and recolonizing the countryside. I can foresee many biological businesses making special carbon-based materials using DNA-type algorithms, as well as many others using highly automated procedures which will allow shorter production runs and more versatility in relatively small factories compared with today’s.

“I can foresee a three-stage life pattern rather similar to that which already happens (rumspringa) in Amish and Mennonite communities in the US. Children would be raised in secure pleasant surroundings in highly specialized production villages in the countryside, then as teenagers migrating to the metropolises for further education (and to have a much wider choice of future partners) and then, after graduation, and wanting to start a family of their own, returning either to their home village or migrating to a more appropriate one according to their speciality.

“So this could be the real start of the fourth era — a repopulating of the countryside which, by then (in 50 years’ time), will be almost exclusively owned by farming syndicates and corporations, or set aside as nature reserves.”

Keith Hudson

Hints of the fourth era

Man’s predominance on the face of the earth has expanded and contracted three times. Each time, at maximum expansion, one way of life existed everywhere. When man left Africa 60,000 years ago and paddled his way along every coastline and up every major river, he sought out and discovered almost every savannah-like region that was available for hunting-gathering unless it was protected by impenetrable mountain chains or jungle. There were no pockets of agriculture, never mind permanent habitations, anywhere while the hunting-gathering bonanza was going on.

However, once man had devastated large numbers of prey species everywhere that he was able to with his sprung-javelin and bow-and-arrow (and causing the extinction of many species), man had to invent a new, more productive food technology to replace his relatively inefficient ballistic skills. Almost simultaneously, the selective breeding of grain, root crops and domesticated animals appeared independently in at least half-a-dozen regions around the world. Within a relatively short period, there was not a square yard of soil anywhere in the world, capable of being exploited by manual labour — by terraces up mountain sides or pastoralism on the plains, that was not exploited. There were also villages, towns and cities (particularly sea ports) where hand-made goods could be exchanged, but there were no manufacturing cities as we know them today.

The third wave, industrialization, started in England at around the seventeenth century mainly due to two concurrent developments. One occurred quite widely in northern Europe, the other only in England. One was independence of thought (thus innovation), newly released from the shackles of the Roman Catholic Church, and the other was a well-connected network between the merchant banks of the major ports and those of the provinces, the so-called “country banks”. The latter existed nowhere else in the world due to incessant warlord plunderings on all continents.

The principal phenomenon of the third era — industrialization — is the gargantuan hoovering-up of countryside populations everywhere and the growth of super-metropolises where the bulk of the wealth (apart from food) is now created. The process is something like three-quarters complete in the advanced countries while still accelerating in the remainder. However, well within 50 years, the result is likely to be a world in which the bulk of its population lives and works in, or near to, maybe no more than 100 to 150 super-metropolises. It is these, rather than nation-states as we know them today, that will be fiercely competing against one another. They’ll be mainly competing by a device that is already being used between London, New York, Singapore, Hong Kong, Shanghai and a few more — corporation tax levels. Those super-metropolises which choose the more profitable industries, or the best mix of them, and give them the most enticing tax levels, will be the ones that will fare best at any one time while others, with less astute city-managements, will sink into various levels of poverty.

The individual in each of the three eras so far has had his own typical way of life and stock of personal goods (portable in the case of the first era). This applies today for most people in the advanced countries. We all have a largely similar way of life and an almost identical stock of personal goods — house, car, television, personal computer, lounge furniture, etc. and there don’t seem to be any more that we have the time, energy or space to enjoy. Also, our family size is now substantially less than replacement. Also, the evidence (so far, anecdotal) from even the poorest who live in shanty housing in the newly-growing super-metropolises is that they would rather have our stock of gewgaws than too many children or too fancy food because the latter are expensive.

As the third era fast congeals into 100-150 super-metropolises with a declining total world population, might we have a hint or two as to how the fourth era will shape up? Increasingly savage corporation tax competition will no doubt produce a few clear winners, but how will they fare if even their own populations continue to sink? How will they stabilize in sufficient numbers to keep their basic city infrastructure going? How will they ensure their own survival with enough of those scientific specialists who are increasingly required in the modern world?

My guess is that the super-metropolises which succeed will be those that give early tax preferences to biological industries, such as neuroscience and evolutionary genetics. From what we know already, both of these are already giving clear pointers as to how to vastly improve educational efficiency (better early childhood experience mainly) and health (particularly the elimination of harmful genetic and epigenetic variations).

As to better health, this will require, more than anything else, the preliminary screening of millions of individual DNA sequences (better still, tens of millions) before clear causations can be arrived at. It is obviously far too premature to even remotely guess which might be the super-metropolis winners in 50 or 100 years’ time. But it might be salutary to us to remark that, while mass-sequencing remains controversial to us in the West, one research institute in Beijing last year took delivery of the largest single order of the latest Illumina DNA-sequencers ever made so far.

The third elephant in the room

We’re now moving into a totally new economic era. Most of the population are now locked into an urban-centred way of life. Most of the population are now fully stocked up with a standard range of consumer goods. Most value-adding (exportable) goods and services are being steadily automated. Even while families in all of the advanced countries are not replenishing themselves with sufficient numbers of children, the number of young people without jobs is steadily rising (20% and rising in Europe and America among 16 to 25 year-olds). Starting about 20 or 30 years ago, the economies of all advanced countries are producing surplus people.

There is now no list of new consumer goods of sufficient weight or unique wonderment to incentivize the working population to work and save in the way that it did during the whole of the last 300 years. “New” products are either marginal enhancements of the present stock or fashionable variations. Moreover, there is no sign that adults are willing to share their working weeks or their incomes with the younger generation. Employers shelter behind educational credentialism to make recruitment and training easier, but yet still excoriate governments for not producing enough well-educated specialists which the essential jobs require.

Politicians, for the most part, are desperate for a resumption of the old-fashioned type of economic growth to ease them out of the current impasse. Scientifically untrained for the most part, they don’t realize that the main physical driver of economic growth in the past 300 years has not been the number of workers nor the consumer baubles they made, but access to increasing amounts of energy at an increasingly cheaper price. Respectively, the one is stabilizing, and the other is that the worm has turned and cheap prices of energy have now gone for ever.

Is there any hope therefore? Yes, there is, because the less visible factor behind the availability and cost of energy is the efficient use of it. This has always been, and always will be, the only true source of profits. Those industries (as to products) or those countries (as to transport infrastructure) which can steadily improve their energy efficiency will survive in better heart than those which don’t. In short, even without GDP growth, or even with declining GDP, we could maintain, or even improve, present standards of living.

Unfortunately, there are two elephants in the room already which politicians have still not fully registered in their minds. One is the unstable world-wide currency situation which has still to be resolved to avoid catastrophic breakdown. The other is the deplorable educational systems in the advanced countries which cannot yet supply enough specialized young people who are well-trained enough to force adults into job sharing in the coming highly automated era.

Be careful, America!

A few days ago Israel and China signed their first trade agreement at governmental level. What might result from this in due course intrigues me enormously because, simultaneously, their cultures share one feature in common and are poles apart in another. How will these have a bearing?

The feature they share in common is that, traditionally, they have both placed the status of the scholar above that of any other calling. In older times, parents with daughters of marriageable age in both cultures would seek scholarly young men rather than those who were merchants. In this they are both distinctly different from most of the other predominant cultures around the world such as the American, the West European, the Latin American, the Islamic, etc.

The feature in which they differ enormously is that the Chinese are highly deferential to authority. Unless oppressed too harshly over too long a period, they will generally obey whatever their government decides. In school, children and students learn in highly disciplined teacher-led contexts and seldom raise questions. Indeed, even though China produces many thousands of graduate engineers and scientists every year, the Chinese government is very worried about their young people’s lack of creativity compared with those in the West. Senior officials say so quite frequently. At family level, parents who can afford it are increasingly sending their teenagers abroad for further education. In contrast, Jews are notoriously individualistic and, in particular, are highly creative in the arts and sciences.

Ah! the sciences. If Chinese and Israeli firms are going to have a growing relationship in future years then the sciences will be important. What pattern might this take? The number of Nobel prizes in science can give us a guide. Both countries began to industrialize and carry out scientific research seriously about 60 years ago (the Communist Revolution occurred in 1949; the State of Israel was founded in 1947). Since then, Chinese scientists have won 9 Nobel prizes and Israel 3. Considering that China has a population of about 1,200 million and Israel 6 million then, proportionately, it would seem that Jewish researchers have been almost 70 times more innovative than Chinese.

The ratio is even more lopsided if we include Nobel science prizes won by Jewish-Americans (with a population of about 9 million out of 300 million Americans). My conservative estimate based on surnames on a Wiki list gave them 30 prizes out of a total of 250 won by Americans as a whole. Interestingly, the number of science Nobels won by the Chinese-American population (of about 4 million) is 8 — almost as much as mainland China and twice as productive than non-Chinese American scientists! This is eloquent evidence that it’s not so much Chinese brains that lack something but that the freer more liberal culture of America is immensely more conducive to creativity than China.

If we assume that the authoritarian culture of China is not going to change very much in the coming years (it’s hardly done so far) and that the American scientific culture took at least three or four decades to become so prolific, then it is reasonably safe to assume that, for some considerable time to come, Israel is going to be the predominantly creative pole of the Chinese-Israel trade relationship. The Chinese are likely to continue concentrating on what they are already so very good at — copying and mass producing of what has been designed elsewhere.

In terms of annual gross production of consumer goods China is already destined to overtake America by 2020/30 according to the usual think-tanks. So far, America is still way ahead of China in making highly sophisticated producer goods — hot out of research labs — and could, in theory, still retain a reasonable body of export trade. But what if China responds with swish producer goods of its own — hot out of Israeli research labs? — and competes both in America domestically but also in America’s present export markets? As Israeli researchers are already well up with America in several research areas (biology, communications, nanotechnology, drones, etc) this is something for America’s long term planners to think about beyond the massive currency adjustments that can’t be far off now.