The nonsense of the bitcoin

Since subscribing to The Economist four weeks ago after many years’ hiatus I’ve found that its front cover headline has so far supplied me with a useful prompt for a blog-post, even before I break open the plastic covering and read what its unknown writer says about it inside.

The headline today is “The trust machine” and the sub-headline is “How the technology behind bitcoin could change the world”.  Both the bitcoin and the technology itself are, in my view, nonsense. The bitcoin itself, created by the massive use of electricity in solving a maths problem in your and anybody’s computer is still a hobby coin of a small minority of enthusiasts despite years of propaganda. is still no more a currency than a Lego brick.

The blockchain or ledger system is designed — sensibly in principle —  so that every bitcoin ever created keeps its unique identity forever. It means, however, that a huge and growing load of data has to be shared and processed by everybody who uses bitcoins. It means that, in due course, if bitcoins ever took off as a currency that every personal or business computer in the world will be working non-stop in keeping the ledger system alive and well. In short, it’s not scalable.

Breeding children with better intelligence and health — again! The race is now on

What is so fascinating (and politically important) about the future avoidance of genetically handicapped children is whether tests will become widely available or whether their costs structure will develop so that they will be taken up preferentially by social elites.

Will the tests be cheap enough so that they will be available to all prospective parents in a country’s population, or will they accrete a cost-grading structure so that they will only be fully affordable by an elite sub-population?  Will protective practices develop?

In some advanced countries such elites are already discernible as having substantially better health and intelligence already. And, because their young people tend to meet preferentially with other similar young people at their elite schools, universities and places of work, they tend to marry among themselves and thus take their particular qualities into the next generation, tending to remain a distinct sub=population.

It’s impossible to know what will happen.  So far. well over 4,000 genetic diseases have already been identified. Each of us has about 23,000 genes in doubles, one of which derives from the mother and the other from the father. In each case, one of the doubles could exist as a harmful variation caused by a mutation. In these cases, the disease exists in a weak form (recessive genes)and doesn’t have any outward effect — its bearer is called a ‘carrier’ only.

If, however, any of these single mutations meet up again after partnership and marriage, a further fertilization could result could be matched pair of mutations causing a handicapped child, ranging from someone with a permanent but trivial defect to a much more serious disease which may need lifetime care or brings about premature death.

Thus there could easily be 23,000 genetic diseases that already exist all over the world but are only fully visible when a child is born to unsuspecting parents  — unless detected beforehand. There could, in fact, be many more than 23,000 genetic diseases because genes are so long and complex that many genes carry more than one mutation.  Some of these could be greatly deleterious if matched up later during fertilization.

Some single-carrier recessive diseases such as cystic fibrosis are surprisingly common in some parts of Europe and thus sufficiently serious to be screened away regularly already during, say, IVF treatment, in order to to avoid children with the full-blown double-gene version who are destined to die before adulthood.

But with a possible 23,000 genetic diseases in existence — or even more — then the potential programme for extinguishing all possibilities is immense.  Furthermore, with increasing inter-marriage between differeent ethnic groups in modern times then all genetic diseases that aris in different parts of the world tend to become more widely dispersed — in a non-expressed single carrier state — and remain longer in the population before being extinguished naturally, which used to happen when we lived in smaller non-travelling hunter-gatherer groups for thousands of years.  Also, besides the natural extinction of genetic disease ass they arose in children most, if not all hunter-gatherer groups would cull handicapped children at birth — if not instinctively then very close — because such groups couldn’t afford to carry permanent dependents.

It’s a huge programme for mankind and will undoubtedly continue for many centuries, perhaps millennia. But now that the first and most respected genetic testing firm, 23andMe, can now test for a small number of genetic diseases and has now been given the go-ahead by the US Food and Drugs Administration then we can be sure that the race is now on between all intelligent couples who hope to have children.

America deep in trouble

Obama is now planning to sell part of America’s oil and gas reserves — something that is only supposed to be done when America is in some sort of crisis, particularly an oil crisis.

True, it’s not going to give it away at present-day low prices but over a period of years when, undoubtedly, prices will be higher, nevertheless it’s reality talking — nor the vain hopes for the resumption of a normal economy that Janet Yellen, the Chairman of the US central bans keeps on telling the punters by promising to raise basic bank rates.

Norwegians are far more intelligent than Brits

“David Cameron this week said that Britain should not seek to emulate Norway by putting itself outside the European Union. In fact, Norway is happy and free outside. If anything, we would like an even looser relationship with the EU.” So writes Kathrine Kleveland in today’s ghastly-excellent Daily Telegraph.

Norwegians are even far more intelligent than the Brits.  Thirty years ago when they did their (simple) maths calculations they decided that normal taxation would never be able to pay for the welfare benefits for their old folk and the deserving poor. So they nationalised their share of the North Sea oil and gas fields and placed the profits into a pensions and welfare investment fund against that future date.  By now it’s enormous.

Instead our civil servants decided to take the easy way out and manipulated our politicians in the last 20 years to allow massive immigration into the country. They forgot that the amplified population would also be producing more old fold and poor in due course.  Instead of up-skilling the workforce rather than down-skilling, how much more unintelligent can you get?

Our desperate contender for the Tory leadership

Our most desperate contender for leadership of the Tory Party when Cameron finally decides pick a date is Theresa May, the Home Secretary.

Perhaps she is not the most desperate — I suspect George Osborne is by far — but she is easily the most desperate in looking for topics that will lift her into prominence within the Tory Party MPs.

She tried it two weeks ago when she said in a public speech that the massive immigration of the last 20 years was a waste of time and resources and had had no effect on the economy of the country. (She was wrong on the last point — it was yet another ratchet turn downwards in the average skill content of our population to suit low-skill employers.)

She is now proposing that the police should be given powers to view everybody’s website viewing history.

Not a chance, old duck!  Given the vast amount of pornographic websites that people (mainly men) of all classes from top to bottom visit, then it’s the most ridiculous idea that any politician could have ever made. She cannot have the merest whisp of political judgement.

King Canute Osborne

If there’s one thing that governments are incompetent at and never lead the way and always follow private initiative — unless it’s connected with weaponry — it is infrastructure.  And this applies to personal services as well as to physical systems.

In this country, as a part of his campaign to make sure he’s the next prime minister, Chancellor George Osborne is now waxing eloquently about spending vast amounts on infrastructure. The one he’s setting the most score on is the rehabilitation of Manchester and other northern cities as the ‘Powerhouse of the North’. He will be unable to achieve this anymore than King Canute could turn back the tide.

Manchester will still be heavily siibsidized by London in future years just as young talent from all over the country — whether artistic, scientific, business, media, political or civil service — will continue to flow to the London-Cambrdge-Oxford box preferentially, where it’s all happening.

America and others — too clever by half

In calling on America, Russia, Iran, Saudi Arabia and Turkey to ” abandon national perspectives for global leadership” in their forthcoming talks in Vienna over the Syrian civil war, UN Secretary General Ban Ki-moon shows that he himself is being naive.

Since when — ever since the dawn of man 200,000 years ago — did any territorial culture yield its own priorities to those of others?  Only when there’s a precisely identified common enemy.  There’s a chance then.  But not in the highly confused situation in Syria and Iraq.

By virtue of his office, Ban Ki-moon cannot say what ought to be said. This is that now that most of the world population are aware of, and want the same status goods and services of the typical citizen of the advanced countries, then each of the countries at the Vienna talks ought to examine their navels first. In short they each ought to set about carrying out what is now essential for any country that wants to upgrade its standard if living — develop an adequate scientific education for all its children.

China’s one child families — just like ours

Although China’s official policy of strictly one child per family has been relaxed, little will change according to most demographic commentators.  Most of the Chinese urban population is now eagerly trying to buy all the status goods that drove the industrial revolution in the West.  They, like us, will have little weekly or monthly surplus for raising extremely expensive children in a modern economy.

The big mystery of Occam’s Razor and economic success

How is it that the industrial revolution, which didn’t depend on science in any way at all at its inception, spread like wildfire into only four other countries outside England in the 19th century — France, Belgium, Germany and America.

England and these four countries then dominated world trade in the 19th century right up to the First World War.  Even more astonishingly — given that their present total population in the world is only a small fraction of what it was  a century ago — how is it that they are still streets ahead in world trade?

What was unique about those five countries?  It was that they were the only countries in which challenges had been successfully achieved against the hegemony of the powerful Medieval Church ruled from Rome.  Furthermore, the challenge was correlated with the power of individual thought and the rise of what we now call scientific research.

Under the Law of Parsimony or Occam’s Razor which states:

“Among competing hypotheses, the one with the fewest assumptions should be selected.”

applies. It is the notion that the apparently trivial awakening of scientific research deep within the cultures of those five countries makes all the difference to economic success.

It is not surprising also that the same five advanced countries should continue to win almost all the Nobel Prizes in science in all the years since its inception. No country without at least one or two centres of outstanding scientific research has a chance of producing the innovations with which it can break into high value trade and thus a high standard of living fr its citizens.

Hardly a serious tax proposal

On another blog-site, an economist is actually suggesting that because births to older mothers are a great deal more expensive to the NHS then a tax will have to be imposed on middle-aged women who have unprotected sex. The relevant figures for late births are  that since 2006 more than 110,000 babies have been born to mothers in their late 30s — four times the level since the 1970s. For women in their 40s, births have been above 29,000 for four years in a row — five times the level since the 1970s.

I cannot think that this is a serious suggestion but it’s certainly a logical one/  But does the economist concerned have any idea at all who these women are? Well, I’ll tell him. They are the highly intelligent (and thus highly impressionable) career women who have paid too much attention to the eructations of extreme women’s libbers while in their twenties and now regret not having had children when they were more able to.

As to the rest of the population (85%) of this country — and many other European countries and, more lately, America —  their fertility rate is still declining because, simply, they can’t afford to have the two requisite children to replenish the population.

Back to the middle-aged bloomers, their children will be of slightly less overall health quality than the average (deterioration of sperm and eggs) — nothing too serious — but as for intellectual ability and motivation in their subsequent careers, they will more than make up for the increased NHS costs when born. Once the prosperous part of the population has rectified itself then mothers will resort to more youthful deliveries. It’s a catch-up phenomenon.

Good rich men or bad rich men?

Unusually, I quote below a communication from a reader who wishes to remain anonymous followed by three brief comments of my own.

“I personally don’t have a problem with people becoming extremely rich, if it is a result of their intellect and hard work.  Larry Page and Sergey Brin for example. It is even more admirable if a self-made millionaire started off in impoverished circumstances or from a very disadvantaged background.  It is interesting that many of the intelligent self-made super rich, from Andrew Carnegie to Bill Gates are extremely philanthropic and end up giving away most of their fortunes.

“But there is something utterly repellent about the unintellectual, bling-obsessed, super-rich who have colonised London, whose fortunes come from dubious or inherited circumstances — Russian oligarchs, Arab oil sheiks, well-connected Nigerians, British hereditary rich and aristocrats, ruthless Central Asian property spivs, etc. — and of course their descendants.  It is not just repellent, it is arguably unfair, because there is very little economic trickle down and yet the rich push up the cost of living for the poor (pushing up house prices — I think we need a mansion tax).

“Watching a TV programme tonight on the super-rich spending hundreds of thousands of pounds on individual items of jewellery or clothing in Britain’s trashiest neighbourhoods, Knightsbridge and Mayfair, makes one think socialists sometimes have a point. . . ”

My comments:

1. I think the comments of your first paragraph reflect the fact that they are products of your culture.  You cannot avoid being partial to them, compared with:

2. The second bunch of rich men belong to a culture where we can’t make a true comparison between their abilities and those in the first paragraph.

3. It is better that money spent on luxury status goods sold in Knightsbridge and Mayfair shops starts circulating among the lower paid immediately after purchase rather than collectibles which, more often than not, are bought from the already existing rich and remains unused and out of sight of everybody except among their own kind — in short, un-circulating wealth.

The latter difference also occurs whether a prime London house remains empty and bought purely for possible capital appreciation or for family living with servants and spending on suppliers and ancillary tradesmen.

The only solution that would go a very long way to ironing out the anomalies as well as circulate money more widely would be a status goods tax.

Letting employers off the hook

Up until a mere 200 years ago it was employers, not governments, who took first responsibility for  children’s education. Indeed, the more enlightened employers in this country were already founding new grammar schools and municipal universities in those years — the latter because the only universities this country had then, Oxford and Cambridge, were little more than theological colleges and were not teaching anywhere near enough engineering and science.

Governments in this country and Europe took over education in the 19th century because they were becoming increasingly nervous.  As factory workers passed through the sweated labour conditions of the early years of the century, they started making demands. They were gaining just enough wage surplus (at least among a disciplined minority) to have aspirations for the higher status goods that, hitherto, were enjoyed only by the aristocracy and the upper middle class. They wanted more earnings, naturally, but also more parliamentary representation.

In short, the working populations of most northern European countries and Britain were seething, and government politicians were frequently afraid to go to sleep at night.  There were revolution all round Europe in 1848 and we came close too on several occasions. Governments — and by this time with a growing number of semi-politicians or civil servants has somehow to get their populations under control.

This is very easily done if you can get hold of children at an early enough age when they are eager to learn and their minds are still pliable. Up until puberty children will believe almost anything they’re taught by adults because becoming adult is the one thing they want more than anything else. And, of course, once the successful European countries had instituted state education for all children by the turn of the last century then all other government were bound to follow as a mark of cultural necessity.

In future years when the world economic system gets closer to its fundamental state of ‘least effort’ — and the cost of governments become minimal — then education will return to businesses and employers who will need far more vocationally trained specialisations than ever before.

Nonsense of the whaleboat capsize

That the whale watchers’ boat that suddenly capsized off the Vancouver coast yesterday was due to a freak wave on a sea that was as smooth as millpond is as nonsensical an excuse as anything I have read in a long time. The boat went down so quickly that the crew didn’t even have time to sound a Mayday call.  Nobody saw the tragic event that claimed several lives.

They were killer whales they were looking at — the smartest species on earth except for us and chimps. They are capable of the most varied and astonishing acts in different parts of the world when catching the local prey on sea shore or in the sea. As well as high intelligence are they not also highly emotional creatures?

Could it not be that they thought it a bit of fun to see whether they could capsize the boat? True, the boat was too big for one to have done it alone but several of them lined up on side could easily have done so.  Or if it wasn’t fun, could it be that this particular pod was angry that the watcher’s boat had interrupted what would otherwise have been a successful meal?.

Pure speculation on my part but a speculation that’s a country mile more sensible than the boat owners’ speculation who, after all, don’t want it to be known that their future business might now be in jeopardy.

Let’s wait and see what some real full-time experts of whales say about the matter.

What hundreds of millions of losses?

David Cameron said yesterday that if Britain left the European Union it would cost “hundreds of millions”.  In the case of such a large amount of money aren’t we entitled to know a little more?  We don’t need to know the details, just what the losses of a hundred million here or there would actually mean.

What are the skills of the immigrants?

Within the context of current European political correctness yesterday’s advice of ex-Australia PM Abbott in telling Europe to close its borders completely sounds uncomfortable, not to say brutal.

The fact is, though, there is a potential for many millions more immigrants from countries other than Syria.  Young men — economic migrants only — are already starting to flow into the heart of Europe in their thousands from Afghanistan, Pakistan, Iraq, and even from some of the \Balkan countries which are already members of the EU and are seeking better-paid jobs in Germany.

How long will it be before ordinary folk in Europe — as they are already doing in Germany and France — start to make their voices heard and produce a revolutionary situation such as Europe hasn’t had since 1848 when pretty well all governments were overthrown one way or another.

Once again, the human instinct for altruism and generosity to the many families of Syria who have suffered from civil war is a strong one.  But there is a stronger one when it comes to it — job protectionism.  Most politicians of any experience already know this — it’s part of their trade — but the ideological civil servants at the heart of the Brussels Commission don’t appear to have the message yet.

Mr Abbot said: “Misguided altruism is leading much of Europe into catastrophic error” He then goes on to say — a sentence I take issue with — “No country or continent can open its borders to all comers without fundamentally weakening itself.”

Whether substantial immigration leads to the weakening or the strengthening of the recipient population depends entirely on the average skill content of the immigrants compared with the recipients . That’s what really needs to be borne in mind.

Adjusting to a new Constitution

One of tiny minimalist sequeli of adjustments constantly going on towards the awakening of the economic system’s least energy environment may be electro-magnetic changes between sub-atomic particles around a nucleus which causes a protein molecule to change its shape, appearance and chemical properties immenesly even though not a single atom has been changed there. In doing so, howcver, it has been able to save the Tory government from being called “nasty” — a condition is has reached too many times in recent years —  and from which the decision in the House of Lords yesterday saved them.

The law of least effort

If it was Hayek who introduced us to the notion of spontaneous order — a brilliant intuition — it still took a bona fide scientist — Richard Feynman — to demonstrate that the law of least effort defines it precisely.  Under Hayek it is possible to imagine several spontaneous orders occurring alternatively (or even serially) within a system.  Under Feynman there is only one.

Economic systems always tend to those of least effort — if only governments would leave them well alone instead of constantly stealing for themselves by means of  inflation and money-printing.

Is there hope for Africa?

Robin Bootle usually writes a good piece in Monday’s DT and today he devotes it to Africa.  What are Africa’s vital statistics?

(a) Enormous mineral resources (though bear in mind that new carbon-compounds of superior specifications may be overtaking metals in 50 years); (b) a working age population of 500 million that could grow to 1.3 billion by 2050 (that is, if Africans want to work anywhere near as hard as, say, Chinese or north Europeans.

Bootle ends his article with “But potential alone is not enough.  In the end natural resources wealth does not get you to very far — look at Russia. It may even be a curse.  At bottom, what really matters for economic development is governance.”

I agree with two sentences out of three but the last needs taking backwards. Government can only grow out of economic development and the latter can only grow out of leading edge scientific research.  Unless any of the 180-odd Third World countries develop some high-level scientific expertise (e.g. Singapore, Israel, Cuba) then they have no chance of breaking into the high-value part of world trade and thus raise their standard of living.

Failing scientific research, until most Third World populations are much reduced and they can develop their only sure permanent high-value trade — holiday-, adventure- or scientific-tourism — then their per capita standards of living will be way behnd those of the First World for a very long time to come.

Sauce for the goose is sauce for the gander

On the Adam Smith Institute blogsite, a single Negative Income Tax, is being proposed. This Negative Income Tax (NIT) would act as a minimum income guarantee for all British citizens and be tapered away as people’s earnings rise through work — if and when they obtain work.

Unfortunately, the NIT has a major flaw and this is that, above a subsistence wage — presumably the standard minimum that is contemplated for our culture — a normally functioning individual also needs a daily routine and a socio-economic role.

Without the latter, you may well gain “up to £6bn in administration costs” but also incur far more in increasing alienation and negative GDP costs.  Also implied is the continuation of a state of permanent balance of payments deficits — that is, if the country is hoped to remain as an entity rather then bifurcating into two (or more) separate economies which Britain is tending to do at present.

Of course, what is sauce for the goose is sauce for the gander and the above applies to any existing advanced country that neglects scientific research, even if derived from only a small proportion of its population (as in Britain at present).

The fatal flaw of the EU

In my post of last Thursday (“One step only for a successful EU”, 12 October) I made the whimsical suggestion that the EU should have adopted one language only from the start (Euro-Esperanto!) — just like any other self-respecting government. In that way it could develop a unifying culture of its very own and not remain the fractured mess that the 28 nations are today.

One correspondent has written to me and told me that in her opinion this wasn’t such a silly suggestion.  She had learned Esperanto when young and it took her no time at all. A sophisticated Euro-E language could have developed quickly — as indeed did modern Hebrew when Israel was founded in 1947.

At that time most Jewish people in the Mediterranean region spoke Greek or Aramaic but they decided to reach back well over 1,500 years to when Hebrew was previously spoken. This meant that everybody who migrated to Israel had to learn the language from new. That was real commitment!

However, further research (Wikipedia) tells me that the new Israel also allowed Arabic as an official language for those original Arab house-owners who elected to stay there. Perhaps that was a mistake. Oppressive though the exclusion of all languages save one has always been when a new nation-state has been founded, perhaps Israel would not have its present Palestinian problems if there’d been one language only.  It’s a moot point.

Waiting for the shorter working week

As recently as 150 years ago we went to bed by candlight — derived rom meat fat — or an oil lamp — derived from whales. The immense potential bonanza of energy — 50-fold? 100-fold? — derivable from underground oil or gas was barely suspected.

Considering that everything we do requires spending energy then it would have been reasonable for someone 150 years ago to forecast that today we needn’t be working for more than an hour or two every day.  It hasn’t worked out like that.  On average each of us works at least twice as much as the average farm worker of 150 years ago and has half the holidays (well over 40 Saints’ Days in previous times).

What has happened?  Have we been exploited by capitalists? Not at all.  The reason has to do with the concomitant explosion in different jobs and specializations brought about by virtually unlimited energy and each of the job-groups raising protective barriers around themselves. These gradually accumulate all sorts of pseudo-credentials and private practices. Altogether, these immediately selfish practices by groups leads to a woefully inefficient economic system.

The law of human nature

There is one powerful ‘law’ that drives human nature. It has many instinctual components and some of those hit us individually when we least expect them, and some of us have a rare intellectual bent but, by and large , we are all driven by one trend, as if carried along by an ocean current in a raft without a sail.

Most of us most of the time do what our principal social group tells us to do. Our principal social group, of course, is our working group — the one by which we earn a living. This doesn’t necessarily mean that we can determine our overall economic future in the same way that we can often do so in the case of other practical systems, the reason being that the same intellectual bent mentioned above has also produced a variety of specialized working groups. The economy of the future is the result of all these groups working together — sometimes in association, sometimes in opposition.

The one thing that can be said about our economic future is the same that happens to all physical systems that we observc.  It will stabilize in a mode of ‘least effort’.  It will make use of whatever energy inputs it has (solar energy plus a variety of its by-products) in order to produce the most efficient system. This has two consequences: (a) There is nothing that governments can do to affect their ultimate future by way of altering the money supply or changing interest rates; (b) economics as a subject now has a chance of becoming a scientific study.

Ending with a bang or a whimper

The big problem of the modern world – or what economists say is the big problem — is that there is too much debt.  What’s more, although it’s mostly tied up in the First World countries it is the Third World countries which are suffering more because they don’t have the sophisticated ways we have of camouflaging the debts — at least for the time being.  Whereas the First ‘world countries are still sailing along — or at least surviving — Third World countries are floundering and seem to have no hope of growing their economies according to the dicta of orthodox economists.

Too much debt necessarily means there’s also too much money in the modern world — that is, it’s the product of the same credit that was created when the debts were first taken on and the money created by the central banks. But a great deal of that money also is camouflaged.  This time it has been spent on luxury status goods, most noticeably in recent decades in ‘serious’ works of art by contemporary artists, of which the quantity — and hence the locked-up value — has grown exponentially.

The dilemma implies: “How does it all end? With a bang or a whimper?” No one knows, although Raghuram Rajan, the Governor of the Reserve Bank of India, thinks it will end catastrophically — a repeat, though probably worse, than the 2008 disaster which came within a hair’s breadth of the total death of First World Banking. If we’re faced with such a close down, then there’ll have to be a similar money-making emergency procedure. This time, in my view, it’ll have to be by a consortium of multinational corporations rather than major governments which, by then, will have lost all credibility when it comes to controlling money.

The other way, which I think is more likely, is a continuation of the present world trading recession in which the truly bankrupt businesses will gradually be exposed one by one and, hopefully, a major correction taking place in the art world industry. The latter would release a great deal of money a valuable for normal investment.

Overall, the situation will be controlled by the world economic system as a whole, in particular whether China’s exports of consumer goods continues to be constrained by what is largely a stabilised market of only those consumers who can presently afford them.

A self-correcting world economic system will be gently pushing the over-large populations of most Third World countries to a fraction of where they are now as their only chance of increasing their per capita standard of living.

Sense at last in Syria

In an interview to be screened tomorrow on CNN Tony Blair more or less confesses that the invasion of Iraq in 2003 was a mistake and may have been the principal cause of the rise of present-day Isil terrorism in Syria.

Saddam Hussein may have been a nasty piece of goods but at least he and his Baathist Party was pacifying the mutual antipathy between Sunnis and Shias.  People had 24 hours of electricity in his day and people could walk the streets in the evenings in safety. A middle class of professionals in science, medicine, law and others sectors was becoming gradually established in Iraq, moving the country to the necessary secular culture that modern consumers prefer.  Instead, the country has been set back at least 50 years and more like 100.

The same applies to Bashar al-Assad in Syria.  For some inexplicable reason, Obama also took against Assad and his secular Baathist government and thus virtually invited Isil to switch from Iraq to Syria as their main centre of operations — and very successfully so far. Thank fully, the Russian have brought some rationality into Syrian policy making by Obama and both of the big powers can now finish off Isil between them.

Driverless vehicles galore

In previous posts I’ve argued against the wide take-up of driverless cars. My reason for doing so is because the personal or family car is a status good. It is the modern replacement for the horse and carriage of the aristocracy of 200 years ago.  True, the car has also become a vital production tool for many businesses and jobs but, for most owners, the cost and afraid of a car is still an important status good and this was the only reason for its introduction in the first instance.

The idea that millions of us, instead of commuting to work in a car, will drive to work in a driverless car is, I think , a risible one. Equally so is the idea that thousands of automated freight lorries will be driving in long fleets along motorways safely at high speed.  In both cases, if we need a new technology — and we certainly do — let it be using pressure tubes such as the Hyperloops that Elon Musc is hoping to deliver in the next fewyears.

The one area where small driverless units could be immensely successful would be the final flourish that makes complete sense of the uber-taxicab, now taking off in many of the largest and most congested cities of the world. The cost per trip may be higher than at present on private car, tram, bus, train or taxi (though not the bicyclc!) but there would be an extraordinary gain in the energy efficiency of the city as a whole from which all concerned would actually benefit.

“The Economist” in trouble?

You can tell that The Economist is in trouble. Like many other magazines it’s taken to bringing our Special Issues and Briefing Notes. I made a bad mistake in re-subscribing a few weeks ago.  Instead of all the interminable stuff it takes days to wade through — if, like me, you like to to keep abreast of wide-angle events — why doesn’t it reduce to its original size of about 12 to 20 pages when it had a genius editor (Bagehot) instead of its present-day 90-odd pages. Among other things, it would be a huge loss of face.

Today, the theme is “Reinventing the Company”, which ought to be interesting.  If so, I’ll write about it in a later post because it’s a great interest of mine, particularly within the context of the epic battle now looming between the multinational corporations and big governments.

How will it all go?  My guess is that governments will be much reduced in the coming decades  — though, if anything more important than ever — while multinationals will have raced to the bottom with declining profit margins from consumer goods and will henceforth because more or less agents for infrastructure development.

But let me see what the bright young Oxbridge types at The Economist say about it.  I’m quite prepared to change my mind.

Hurrah! No need to worry — China surges?

There we are then! We needn’t have panicked over the past few weeks about China’s apparent economic hiatus. We are told this morning that The People’s Bank of China have now done the decent thing, lowered interest rates (which we can’t do in the West) and global markets can surge again.

Or will they?  Is there still a rapidly growing world market for the consumer goods that China makes so well and exports so cheaply?  In the last two years or so, did the market start declining of its own accord causing China to think about becoming a more service-type domestic market or did the latter decision cause investment to be withdrawn from export production?

We don’t know yet, nor will we know for sure for some weeks or months.  However, if the export levels of some two years ago don’t recover quickly, then the concept of incessant economic growth as assumed by most economists is as dead as the Dodo.  Economists will have to get used to the idea that the world trading system is itself self-limiting and is on its way to ‘least effort’ which is common to all physical systems.

Questions about elitism

Will we always have social elites?  Yes. Will some social elites exist permanently? Possibly.

The second question used to intrigue me enormously because, in England, the new middle class of 1870s — the 5% children and grandchildren of the enterprising industrialist class of the 19th century — grew in prosperity and consolidated all through the subsequent 20th century, centred increasingly firnly around the 150 boarding private schools for the children of the rich (educating about 7% of all children).

Even today, something like 15% to 20% of the population now have privileged positions in all the important decision-making sectors of British society — civil service, politics, business, military, culture, law and even about half of all basic scientific research. It is not completely separate from the broad mass of the population but is only accessible to rare brilliant or enterprising individuals.

What particularly interested me was that, in learning some years ago of the existence of something like 4,500 genetic harmful mutations within human DNA, this privileged class might be able to retain their dominance forever and a day. They could do this by preventing the cross-matching of the single-copy carriers of recessive mutations.  The privileged sub-population at the top could, in principle, steadily pull itself away from the bulk of the population in terms of health, intelligence and good looks (all highly correlated).  Indeed, there was plenty of evidence that all this was beginning to happen anyway.

This bifurcation into two different populations within the ‘parental’ one is a well-known phenomenon in evolution and is called Sympatric Separation and there was no reason to suppose that that it could not happen again — producing something similar to what Aldous Huxley had written about in his classic, Brave New World.

Where I was wrong was in imagining that the techniques for the identification of deleterious genetic diseases would be so soon upon us. If, in the meantime young women of the privileged class, could choose young men whose DNA would not supply identical matches to their own genetic weaknesses then elite parents could gradually ‘breed-out’ handicapped and diseased children compared with the masses and pull away in all sorts of ways from the main population.

However, it turns out that many research labs are already working on this problem (and commercial possibilities!).  A Spanish firm, Genomix, is already offering a method for a fee of £1,800 whereby up to 4,500 genetic diseases can be identified. .  Almost any couple seriously contemplating marriage can thus see whether they have any deep flaws between them. In these cases, if the couples decide to finish their relationship or if they make sure of getting their pregnancies tested well beforehand, then one in four of their children who might have inherited one or more of these genetic diseases of lesser or greater severity might be avoided.

Thus, human breeding of better quality children can be quite widely ‘democratized’ far more quickly than I had anticipated.  What with the growing realisation that advanced countries need to update their skill-training enormously in the coming years in order to remain in the world trading system, it’s going to mean something like a new social, genetic and educational revolution is not far off.

So, to return to my original questions about elitism. Will we always have social elites?  Yes — because that is the way that all groups have held themselves together for millions of years and is hardly going to change now. Also subpar males are excluded from the fatherhood stakes. Will some social elites exist permanently? Most unlikely. The pressure for change so that social elitism will now have to change every generation — is going to grow powerfully from now onwards. The competition ensuring that differentials will never be as snobbish as they are now will more likely than not to grow significantly from now onwards.

What’s to follow the nation-state?

There was a time — somewhat over a century ago — when the brightest young people (almost exclusively men) automatically joined the civil services of the trailblazers industrialising nations such as Britain, France, Germany and America.

Their personal interests of high social power lined up with their own nations’ — the wish for military, colonial and economic power.  However, in the course of the century, senior civil service mentalities didn’t always match up to the complex demands made upon them  — particularly of an awakening electorate — and, individually, bright young minds started peeling away from government service to join other employers, particularly those which had clearer objectives and were beginning to explore the wider world.  They could therefore offer a more interesting environment.

The above is therefore an exceedingly concentrated description of the rise of the nation-state from a period with clear objectives until today when the civil services which actually try to run the advanced nations, have become  increasingly confused as to what is national business and what isn’t. Until senior civil servants learn to to open their conversations to think-tanks, private experts and scientific research, and down-size more than somewhat, then their nation-states will crumble as empires did of old.

What about sword attacks, then?

I was recently criticised in slightly sarcastic terms for writing that Obama — and several American Presidents before him — had been unable to do anything about the frequent massacres that go on in America using guns because of tis history, and its gun history in particular. Such is the relatively anti-government nature of American culture, that I suggested that even if guns were brought under control — as is possible in some simpler cultures such as Australia — then some other methods of killings would take place such as by bombs or knives.

I didn’t think of swords! But such is the latest attack in Sweden yesterday.  A 21 year-old young man with racist tendencies killed a teacher and a student and badly injured two more. As with all these massacres in the advanced countries, there’ll now be a great amount of hand-wringing and moralising, nothing could or will happen to greatly ameliorate the basic situation, and the incident will be quickly forgotten about.

What can be done about these repeated events?  Nothing. Nothing at least in modern times when old-fashioned working communities no longer exist — as is usually the case — or when working class communities are deeply infiltrated by large numbers of immigrants with new cultures to which indigenous cultures can’t adapt quickly enough to. We re a deeply social species and once our natural groups are disturbed there’s no general discipline over individuals who may be acting oddly — usually by living isolated lives by themselves or, often, with an elderly mother, nnd .unable to blend into normal society around them.

No doubt some sophisticated check-pointable index could be arrived at whereby the degree of breakdown of any community in advanced countries — particularly among the more fragile poorer classes — could be assessed. But nothing much could be done then. Nor will it until the latest phases of the industrial revolution — the super-large cities of at least 1 million inhabitants or more starts giving way to what my be a significant follow-up phase.

In previous posts I’ve suggested that this will probably happen when education standards and skill standards are very much higher than today, and when older adults, once their children are independent in the cities, will return to live in communities in the countryside and practise their skills over the internet.

The coming of age of economics

If the ‘Hudson Economic Theory’ is correct — that the world economic system is essentially self-correcting leading to ‘least effort’ just like any other physical system — then it gives economists more scientific opportunities than so far. Instead of mainly being commentators on the disruptive effects of individual government decisions on their economies — assuming that governments have a ‘right’ to intrude! — then economists can be much more detailed and objective observers of human nature, just like evolutionary biologists.

Whereas the latter are concerned with quite a welter of instincts and consequent emotions that have been triggered off and shaped over approaching 4 billion years since life began, economists are more narrowly concerned with only a few of such.

One is the way in which something like 6 million years of living on the savannah in small groups has affected the basic selfishness-sociality balance. The other is the way that money has entered the scene since (probably) the beginning of our species — 200,000 years ago — as being a very convenient method of demonstrating personal social power-ranking within groups.

Because status ranking in groups leads to a peaceful way of females being able to choose suitable males of good genetic ability as fathers for their children — instead of males sometimes having to fight to death, as with many other mammalian species — then economists now have a satisfactory basic ‘law’ of economics instead of the previous assumption that they made — that man is mainly selfish. He’s not.

The existence of, and the exploitation involved in the practice of rank-ordering is also modified by living in groups where altruism can also contribute to group efficiency. Groups fight one another quite selfishly when necessary –and always will do — but they are also capable of basic welfare internally.

A nonsense narrative and so many tame economists

To hear one economist after another — as one does these days! — say that a deflationary economy is a very bad thing and leading to, one infers, the death and destruction of the whole economy.  It would be an economy in such a state that all of us would be suffering in one way or another.

Having just heard yet another economist proceed in this way — on this occasion a BBC economic journalist (definitely not Robert Peston I might add) — this lunchtime, let’s set the record straight once and for all.  What he said is that, in a deflating economy, money starts revaluing and prices starts declining. People decide not to buy today because prices will be less tomorrow.  And so on it goes — he implies — the economy sags and, before too long, unemployment grows and, before you know it, we’re all in trouble.

This is, of course, a nonsense narrative.  We don’t stop buying simply because prices might be cheaper tomorrow.  We all have constant wants — such as food — and we all continue to buy.  For many items, we buy just as much today as we always used every day whatever the price.

What actually happens is that as the economy declines then it starts to cull one inefficient supplier after another as they go bankrupt.  As we approach efficient suppliers of any one item we find tbat its price stabilises.  The economy, like any physical system start correcting itself.  It will be automatically searching for the ‘least effort’ route.

Over the years — that is, since the 1930s when governments started printing money — we have all been programmed to think in terms of inflation  between 0.5% and 2.5% per year as being acceptable. It means that if we have cash savings then e are losing that much every year  but as most people don’t have reserves it doesn’t matter.  Rich people have higher returns from their investments than inflation.  On the other hand, governments save enormous amounts every year by paying back bad money as interest on their debts compared with the good money that they borrowed in the first place.

A mildly deflationary economy is a desirable state to be in.

One step only for a successful EU

According to Ambrose Evans-Pritchard in a main article in my today’s ghastly-excellent newspaper — and no doubt true enough — a major eruption is now taking lace in Portugal against the diktats of the Brussels Commissioners of the EU. “Antonio Costa, Portugal’s socialist leader, has refused to go along with further pay cuts in the public sector, or to submit tamely to a Right-wing coalition under the thumb of the now-departed EU-IMF ‘Troika”.

Apparently, it has surprised Brussels.  It oughtn’t to have done if only they had paid attention to history. There has never yet been a new government since the Mongols that didn’t insist on one culture and one language from its initiation. After seeding, an elegant Euro-Esperanto would have evolved well within a generation.

A ridiculous idea?  Perhaps, but only because the 28 cultures of the EU countries are so different that there is no likelihood of even the mildest measure of budgetary agreement being agreed between them every year. Even the two most enthusiastic proponents of the EU — German and French civil servants and politicians  — are further apart politically and culturally today than they were 50 years ago.

Go easy on the sunscreen

If you lather up with sunscreen oil, in particular one that contains oxybenzone, a common UV-filtering compound, you may be damaging popular coral reefs in Hawaii, the Caribbean and elsewhere if you swim there.  Better use scuba wetsuits or don’t apply it before you swim or dive. .

Prolific sources of new fish and expanded webs of ecology around them, coral reefs which can remain a joy for children and grand-children for decades to come can be effectively prevented from decaying by foregoing hygienic products while active. This is what a multi-expert team of researchers from the Haereticus Environmental Laboratory; the U.S. Oceanic Administration; the National Aquarium in Baltimore; the University of Hawaii; and Tel Aviv University and Ben-Gurion University of the Negev, have concluded after a world-wide detailed study.

Apparently oxybenzone attacks the soft algae tissue that lives within the coral and also prevents their larval stages becoming buoyant and floating away to distant waters in due course.

Here ends my ultra-modest contribution to the world environment this morning.

The inevitable steep contraction of governments

On another blog (Adam Smith Institute), Felix Marble writes of the coils of the tax authorities as they increasingly wrap themselves round small businesses and ordinary wage earners. “There is no escape. HMRC does not do e-mail. Letters go unanswered for months and one has to wait 45 minutes on the phone before being cut off.”

Radical tax changes are constantly promised yet taxation guides double in length every few years. The present one in this country is now over 1,000 pages long. Marble is desperate.  Will this ever end, he asks?  Intrinsically, no, of course it won’t.

(a) It’s not in the HMRC’s own interests that they should reduce their work and numbers; (b) HMRC can’t recruit anywhere near the same quality of senior personnel that it used to 100 years ago, or even 50 — too much competition from employers with more interesting job opportunities for bright young graduates. How, then, would any advanced country be able to simplify what is already an over-complex taxation system they don’t fully understand themselves?

But competition between countries will.  Ever since the Treaty of Westphalia in 1648 when leaders of cities, regions and countries shook off the open boundaries of empires and re-dedicated themselves to territorial protection of their own cultures just as we were doing instinctively for hundreds of thousands of years as hunter-gatherers — they’ve been increasingly competing with one another  — that is, more or less permanently. It’s not warfare these days — at least not between the major powers — too dangerous and expensive — but it’s everything else in order to maintain their own country’s standard of living and keep their citizens happy.

The most important method of all is the competitive taxation of business in order to attract the best international business to set up headquarters and production systems in their own countries.  In short it’s warfare between major multinational corporations and big governments.  And which way is the battle going?  Against governments, of course, because it’s only business that can supply the true value-added component — profit (or energy efficiency) — to the economy.

Governments will very likely be slowly ground down to their basic functions of peace and security internally and eternally and welfare for the deserving poor but also an entirely new function — the funding of the new meta-scientific era into which we are now headed. Businesses will not be able to afford this in addition to their new function of maintaining happy workforces in order to keep themselves fit and efficient  even in razor-thin energy regimes (in exactly the same way as natural species do).

The Needham Paradox

After a visit by my granddaughter and followed up by an e-mail (below) to her I thought I’d repeat it here.

Good to see you this morning.  The English chap whose name I’d forgotten was Joseph Needham — hence the ‘Needham Paradox’.  He was a remarkable fellow.  During his time in China during the Second World War he actually rescued thousands of ancient manuscripts of Chinese inventions that would have been lost otherwise and no one would ever have realised just how much early Europe owes to the early Chinese Empire. Although he was a research biologist before the War when he returned to Cambridge he was made a Fellow and allowed to what he wanted. So he set to over many years and wrote 14 thick volumes of Chinese inventions

The ‘Big Four’ Chinese inventions usually spoken about that really lifted Europe up out of its post-Roman occupation Dark Ages into  (at least in England) a comfortable Late Middle Ages ready for the scientific take-off in the 17th century are paper-making, gunpowder, moveable type printing, the ship’s magnetic compass.  But there were at least 150 to 200 other important inventions that had made their along the Great Silk Road from about 900AD (when tney’d finally domesticated the camel) through the middle of Asia from northern China (avoiding Tibet) through to Istanbul and thence (by boat) to Venice.  The industrial revolution would never have taken off so quickly in Manchesrer  in 1780 unless all these inventions hadn’t already been in daily use.

I was wrong when I said that the inventions came from a 900AD to 1400AD period.  They started at about 2,000 BC!  For example, Chinese farmers sowed their grain and rice seed in straight rows and were 20 times more fertile and productive  than the rough broadcasting of Europeans who didn’t catch on until about 1400AD.  (It was only then that we started to become reasonably well-fed!)

What’s so shocking about the latter example is just how ‘trivial’ some of the greatest ideas are!  Yet they can sometimes take thousands of years just to catch on!  Another example of how slow cultures are to change.

What about our cities, then?

Today my newspaper is holding a Smart City Conference at which all manner of experts will be speaking about cities. Today, half the world’s population lives in cities and by 2050, 70% will be, so cities, which presently seem unstoppable, are of obvious importance, warts and all.

The one feature of the modern city which is implied by the title and which seems to be one that will be repeated innumerable times in the course of today is that of communication within it.  The more this is improved, the better they will be.

Well, I’m not so sure.  Cities strike me as the by-product of civilization and our type of civilization — exceedingly large and tall hierarchical silos of power — and which, to my mind, might be coming to an end end rather than able to grow much further.  Yes, we need plenty of communication for young people to meet and marry, and for other young people with ideas to meet and spark new ones, and we need efficient communications simply because we use so much of it these days.  It’s also nice to have plenty of entertainment, specializations, places of learning, museums, hospitals, and shops concentrated within easily travelled distances from each other.  But there’s a lot of angst, crime, uncertainty and exploitation going on also.

I’m beginning to think that cities are half-way houses towards re-cycling ourselves back to the countryside whence we originally came.  Once adolscents have acquired sufficient specialiazations in the city to make a living and marry, it might be an idea to take their skills back with them while they raise their children in the countryside — capable of being a far healthier, happier, interesting and natural place to live and develop their basic skills. .Then, when sexual urges grow and adult aspirations call, they can migrate to the cities for the next stage in the cycle.

That’s enough from me this morning on this topic.  My grand-daughter will be visiting me soon so I’ll get this away.

A basic flaw of growth-economists

Madsen Pirie, Hans Rosling,  Angus Deaton and a few more economists have a flawed argument.  It is true enough that Third World populations can be lifted out of abject poverty fairly readily. But not if they think they can left themselves up further by trading hand-made goods. This can only go on so far because trade is not as free as most economists assume it is — that is, with an equal eagerness to trade by both sides.

Most of the high-value part of world trade is hierarchical because that’s human nature. Just as each of us individually seek a higher standard of life, so do countries/regions/cities seek to trade upwards to more advanced goods and services, not downwards. The structure of today’s high-value trading world is little different from that of the earliest years of the IR when it spread like wildfire into no more than five or six countries in which the scientific method had been quietly simmering for a couple of hundred years beforehand from Leibniz and Newton, etc, and from which almost all innovation has sprung since.

The only exceptions to the success of this elite group have been the Confucian countries — Japan, S. Korea, Hong Kong, Singapore and China — which, so far, have proven to be good copyists but largely deficient in innovation. Whether they prove to be up to scratch in the medium-term future and thus join the ranks of fully inventive First World countries still remains to be seen. Needless to say, now that the typical citizen of First World countries is now satiated with standard status consumer goods, the material future of trade lies in the huge prospects of new carbon-based materials and new biological production methods based on DNA-type algorithm software leading to new infrastructure of vastly superior performance to today’s metals-based ones.

Looming unemployment

We’re losing thousands of iron and steel jobs in this country.  The news has suddenly emerged in the last few days only — no doubt because China itself is shedding vastly higher numbers. President Xi Jinping happens to be visiting and no doubt David Cameron will be telling him of our problems.  But there’s nothing that Xi will be able to do.

In retrospect, it would have been better not to have given so many opportunities for Indian iron-masters to take over most of our old industries here even though they were able to keep on employing a few thousand workers. In 50 years’ time in the advanced countries it would be surprising for any iron or steel to be made or used any longer. It’s a 3,000 year technology that’s really had its day now. Carbon-based compounds of superior performance, very possibly made by DNA-type algorithms, will be available.

It’s a pity these materials weren’t already available.  There would then be some lower-grade jobs immediately available.  But we need to be training many more scientific students and graduates yet, and they will take time to feed through and produce the new materials. As hinted before, maybe this is what lies behind the new love affair between China and ourselves. If anything, China needs new more manpower-intensive technologies than we do. We still have the sort of culture that can innovate. Maybe this is what Osborne was discussing in Beijing for several days last week.

Bank of England doing as it’s told

Mark Carney, the Bank of England Governor, is to make “a potentially seismic intervention into the debate on the UK’s place in the European Union.”

It will be hardly “seismic”!  Most people will take no notice at all. The Referendum is still far too far away yet (sometime before end 2017) for anywhere near the majority to have made up their minds (even though they may say they have to pollsters). Nearer the event, the fact that half-a-dozen forceful government ministers have already said that they want to speak out against remaining in the EU — and strongly against the prime minister no doubt — means that at least these will be well represented. People aren’t interested in dry-as-dust bureaucrats such as Mark Carney or Treasury officials — either that or they’ll be guided by other EU-related events going on at the time.

It all goes to show really that the Bank of England is not an independent institution.  It hasn’t been since the start of the Second World War nor has been within a whisker of it since.

The three main Nobel science prize winners

A very interesting article in the current New Yorker Magazine sent to me by Steve Kurtz might go a long way to explain one apparent anomaly about human nature. It concerns very small DNA-like snippets of chemicals called transposons. Quite what they are and exactly what they do are still much of a mystery even to research biologists. Detailed investigations into them have only recently started.

Every time a fertilizations occurs the 23 chromosomes of the sperm and the 23 of the egg break up into pieces (three or four times per chromosome) and then recombine as two brand new sets of chromosomes. All this is a very complex process and far from being perfectly tidy. What also happens is that parts of the DNA, transposons — perhaps fragments of where the breaks had occurred — dart about between the large writhing chromosomes and copy themselves into almost anywhere they can find a niche.  Although transposons are very short and genes are very long, the former can often introduce uniquely new features into the functions of the genes themselves.

Now these mutations, by themselves, would make the normal working of body cells impossible and so regulatory genes have evolved which patrol the chromosomes and make sure that the transposons, once they have found a new home, remain quiescent from then onwards. Except when neurons, or brain cells, are dividing into two.  We have six or seven basic sorts of neurons and although every new neuron may have acquired an additional cluster of transposons they don’t affect their main work-a-day functions.

But what they may be doing is adding additional quirks to their host genes. Some researchers are now speculating that this may be the reason why one group of humans so readily develop new cultural habits so readily.  For example, if an love-large hunter-gatherer tribe in New Guinea splits into two they’ll be speaking two different, almost mutually incomprehensible languages within a couple of generations; in the same period they’ll be wearing different head-dresses and signs of rank, too; and any other activity outside the basic ones of food-getting can also change to remarkably different extents.

But whether these relatively trivial transposons are the original cause or not of vast cultural changes between neighbouring peoples who may, otherwise, be expected to live similarly and have similar cultural beliefs, the facts of life are quite different. Cultures are not amenable to change from the outside.  It is this problem that has mystified economists for 60 years as they tried to get economic growth growing in most of the countries of the world since the Second World War.

Ever since 1780 when mass cotton spinning burst on the scene in England, and was rapidly adopted by Germany and America also, these three countries have remained the only ones who seem to be still in touch with elusive strands of scientific enlightenment that grew in the 16th and 17th centuries, particularly due to two of the world’s greatest scientific geniuses, Leibniz and Newton. And it is these three countries which have won almost all the scientific prizes in the last century. Without being complacent or arrogant, it is difficult to see how this is going to change much in the next century.

Are we kowtowing to China?

Are we kowtowing to China? Or has there been a change of heart by China towards us? A bit of both probably. When Gordon Brown was prime miniister he was only too willing to kowtow but the Chinese wouldn’t let him. He had to stop all that nonsense about China’s lack of human rights even though the country had rescued millions of peasant Tibetans from being one of the worst feudal cultures in the world largely owned by a handful of families.

But, probably, China’s change of heart has been the greater.  George Osborne, the Chancellor, has just returned from a week in China (note once again that David Cameron is not the important member of the UK duo). Had Osborne wanted to go in the previous six years there was nothing to stop him. He must have been interested in China but his mind — his reading material — has always been strictly American.

Although we’ve had very little trade with China so far, the country has, in fact, invested more in us than in the rest of Europe combined. Which, considering how much trade China has with Germany is a little strange. Germany has rather burdensome rules regarding trade union representation on the boards of companies whereas this country has hardly any regulations at all. Perhaps this is why we are being favoured with China’s attention.

Anyway, what with a banquet in Buckingham Palace and a few days’ stay here, President Xi Jinping is beyond anything he’s received before, even by Russia.  Obama shared his last visit with a concurrent visit by the Pope.  This country has a lot of attractions for China. We host the main business and cultural language of the world, something all rich parents want their children to speak fluently.  We have more than a proportionate share of the best scientific researchers in the world. China has had a green card system for many years now but so far it has had little success in recruiting any.  Why not invest in them here?

We ought to be able to get some sense of what is going on in the next few days.

Brilliant Hans Rosling — but fallacious, too

I missed the second Hans Rosling lecure on BBC 2, thinking it was a repeat, but saw the third this evening.  As was the first, it was brilliant for 80% of its content but went astray on the final fifth of the talk.  To be fair, what he said himself at the end as to the future of the Third world countries was more of a personal hope than anything he had evidence for. He was also being slightly disingenuous by simply not mentioning Angus Deaton and other poverty economists who have shown that any attempt by First World countries to help Third world countries by way of developmental aid has been shown to be nugatory. Once a Third World country can dig itself out of a subsistence level of poverty then it faces increasingly severe difficulties in proceeding further.

The fact is that, by and large, countries will mainly trade only with other countries which produce high-value goods and services comparable with their own.  In other words, there is little hope for Third World countries to break into the high-value trading network — and thus improve their standard of living — unless they have the sort of quality of scientific research which is able to throw up sought-after innovations from time to time.

This runs counter to what conventional economists, politicians and middle-class charities have been saying, and hoping for, in the last 60 years.  Build the right sort of Western-type ‘democratic’ institutions in the Third World and all should start working out.  But it hasn’t worked out that way and, if anything, Third World countries are often thrown into deeper states of economic confusion when the world goes into its periodic bouts of panic when investors start moving immense tranches of money around.

I’m afraid that Hans Rosling will have to wait for a very long time yet before most Third World countries will be able to approach the living standards of the First World. Many of them will have comparative advantages in growing food and supplying some resources that some First World countries will still need.  But apart from those, the only long-term strategies that make any sense are (a) steep reduction of populations, (b) development of various sorts of tourism services.

Becoming what we’re really like

In these days of Jeremy Corbyn and fellow idealists it’s timely to read an essay by Terry Eagleton on Thomas More’s Utopia, a book that will be 500 years old exacly next year and, according to Eagleton “is astonishingly radical stuff.”

Some of More’s views seem to justify this. He criticises the land-owing aristocracy of his day, and of their propensity to evicting tenants and thus expanding their own holdings. War is savagery, fit only for beasts. Of the extreme obsession of monarchs and other rich people to amass gold and silver for ornaments, they would be better to make chamber pots out of them. (Moore doesn’t explain how that might better the lot of the poor!)  Above all, it would seem, people should work as short a week as possible so they have time to attend public lectures.

All this seems innocent enough but then there’s an altogether different side of the coin according to More.  Before they marry, men and women should be able to view the naked bodies of their prospective partner, particularly during carnivals when there will be plenty of feasting, drinking and copulation.  Of course, Moore wrote his book just towards the end of the Medieval Warm Period when it was a lot warmer than now.

But strangely, however, More’s Utopia would also contain slaves.  In 1616 England, they still existed and More saw no reason while they should be given their freedom. Indeed, on some ‘festive’ days, adulterous wives would be made into additional ones. Needless to say in this context, religious heretics could be executed.

After a quick canter through various other Utopias that have been written in the last 500 years, Eagleton drops back into muddled thinking which, as I’ve already noted in my opening paragraph. More’s ideas are not so much ‘radical’ as a highly personal collection of prejudices which have no justification for today.  Thankfully, we’re learning to eschew the utopias of religious organisations and political parties and. via genetics, gradually reconstruct what humans are really like.

Much more in the Chinese deal

Some of the deals that David Cameron and George Osborne get up to are so large and the details so financially obscure that I, for one, am quite sceptical as to what motivated them in the first place.

In the case of the vast subsidies that go to land-owners and consortia who run solar cell farms and vast sea acreages of wind turbines, Cameron and Osborne have what seems like a reason — man-made global warming — if you are a fellow believer. Then there’s HS2, a super-fast new railway from London to the north. Then there’s the latest one, a large French-owned nuclear reactor to be built at Hinkley Point, Somerset, designed by British civil engineers and largely paid for by a Chinese loan.

But why have Cameron and Osborne have gone such a bundle over getting the Chinese involved?  Xi Jinping , the Chinese President, is coming here next week.  Could it be that a widening out of trade with China is in the offing?  So far, only 3% of our export trade is with China and that’s mainly taken up with Chinese children coming here to our private schools or in selling luxury goods to Chinese tourists. This relatively trivial level of trade with China (and many other countries, too) could be amplified considerably if we were allowed to by the EU.

However, if we came to an understanding with Xi Jinping that trade could be greatly augmented in the coming decades then that would be just the right sort of argument that could be used by many Tory MPs as backing up leaving the EU in the coming referendum. The government could get off the hook they are now on with an increasing majority of the country wanting to leave, even though the government, formally, wants to stay in.

It’s just a speculative thought that there is much more in this new relationship with China than meets the eye.

Germany losing its lustre

The full extent of Volkswagens’ stupidity in cheating pollution tests — far higher than contemplated — is only just dawning on the firm. Just what is going to be left of the business —  hitherto the largest car producers in the world — is anybody’s guess.

Now that some major investors in VW  are beginning to organise themselves to prepare for class action in the courts  — which include the sovereign wealth funds of Qatar and Norway, two of the largest in the world — then previous estimates of regulatory fines of $20 billion or so are now giving way to court fines of $40 billion.

We all know what happened.  A few clever software engineers, knowing the dilemma faced by their senior management over what they felt were too strict emission standards flew a kite by proposing software that could evade high results under test conditions. But they weren’t the decision-takers. Senior management were and so long as they could plead dumb about knowing the details, then — problem solved! And senior management then at VW is top management now.  They’re the stupid ones, not the software engineers.

In suing Volkswagen, share investors will be using customers’ evidence in court under Germany’s own Securities Trading Act — and going right back to 2009 when VW started fitting the dodgy exhaust systems.  Although this is a case if customers acting indirectly it’s another example of the old adage, the “Customer is King”.  Because Germany has too high a reputation as first class engineers I don’t suppose its other exports will be affected much, if at all. But for stupidity of top management VW takes the top prize away from GM of some years ago and that will diminish Germany’s lustre for some years to come.

Free trade is not what it is supposed to be

The latest Nobel Prize for economics was given to Angus Deaton for his decades of careful investigation of the poor, particularly of their shortage of food, not just energy food as such (carbohydrates), but the sort of nutritious food that’s necessary for an adult to carry out a day’s normal activity on a permanent basis.

He came to the conclusion that the only way the lot of the poor could be alleviated was by massive economic growth all round the world. The problem about this is that international aid to the Third World has been trying to achieve this for over 60 years and has not succeeded. The cultural gap between the First and the Third World is simply too great for the simple adoption of the institutions of the advanced countries — hitherto regarded as necessary.

But this is due to a fallacy regarding ‘free trade’. Free trade is not what it seems to be — a fair voluntary exchange between two parties. It may have been that to start with early in mankind’s trading history when relatively trivial items were exchanged, but no longer applies in the modern world.  Once an advanced trader has enough of any staple items he may require — such as food or metal resources — he’s not interested in any more trade with the junior party unless high value goods or services are involved, and that’s usually unlikely.

In other words, if we maintain the fiction that countries have to trade from behind territorial boundaries in order to maintain or improve the standard of living of its citizens then, for the most part, it will only exchange its goods and services for others of equal or similar value — that is, upwards, not downwards.  Countries aspire to trade upwards in exactly the same way as individuals aspire upwards to reach a higher social level.

In short, trade is hierarchical, not equally motivated in both parties. This is why today most high value trade is still as much confined to a relatively small number of advanced countries as it was well over 100 years ago.

The past is not a good guide to the future

The past is in no way “a very good guide to the future” (to quote another economist-blogger today).  We have just been  through a period of 200 years of man’s history which was unique in 8,000 years of civilisation. In this period, ordinary people in a dozen countries — unfortunately no more than that — by being able to buy status goods, have regained a comparable way of life with individuals in governments.

We have nothing to learn from before 1780 and precious little to learn from 1980.  We are now into a new meta-educational era and a total fog as to how to comport ourselves economically from now onwards.

There’s not enough in common between Europeans.

A very silly title on The Economist cover page this week.  It shows a rather slim version of the British Isles walking along carrying a brief case.  Above it are the words, “The Reluctant European”.

There’s a category error here. Brits are not Europeans. Europeans live on an island of their own which they share with Asia.  Most Europeans regularly speak two or three languages if necessary. Most British people speak only English. On the basis of language, an alien visitor would certainly rate the English as American rather than European.

We go to Europe on holiday or on business and we enjoy the place and its customs.  We love many scenarios in Europe quite as much as our own. But we are not Europeans and Europeans recognise any of us a mile off nothing other than English we’re ‘over the water’. Actually, the main problem is not our role compared with Europeans’, it’s their role compared with one another.

The EU is now so vast and contains so many different psychological cultures that Europeans are really only Europeans in vaguely generic terms.  As for  28 different types of Europeans, there’s not enough common abut them that ‘s going to hold them together year after year in the future.

God help many of the Third World countries

In the coming years, governments will be competing against one another increasingly fiercely somewhere along a spectrum between two illusions.  One is that a practical market can only be arrived at by ‘free’ individual and commercial competition; the other is that a practical distribution can only be arrived by ‘democratic’ choice. Either way can, and often does, lead to disaster.

Both viewpoints ignore the basic law of human activity — as basic to us as gravity is to physics or the hydrogen-bond is to genetics — and this is that we can only act as hierarchical collectives (albeit of vastly different sizes and structures). The only way that a practical market can be arrived at is to have no faith at all in any cognitive assumptions of investment and productivity beforehand but to ‘suck it and see’ — that is, scientific research.

The country, or region, or city, that randomly stumbles on the optimum blend of investments will find that its economic system arrives at the fundamental mode of ‘least effort’ — towards which all practical systems tend — sooner than the others. And God help those governments which make no attempt to develop scientific research.