The cultural mystery to come

Being stuck in one chair permanently — and an immobile one, too — and not meeting a new face from one year to the next I have no need of a mobile phone, let alone a smartphone. Nevertheless, I’m fascinated by this new device.  Smart phones are still what I consider to be expensive, but they’ve never been expensive enough to count as  status goods except perhaps for a very short while some 20 years ago when the very first mobile hones — as heavy as bricks — were first introduced.

That phase was very brief because Moore’s Law — the number of transistors that could be got onto a silicon chip — was already growing exponentially.  Prices came down very rapidly. Now that world sales of smartphones appears to be at their maximum already even the relatively expensive price of £700 will start coming down steeply before too long.

But what fascinates me more than anything about smartphones is the way that children have taken to them. Six hours a day seems a normal usage from what I’ve heard — two hours at the very least but as much as 12 hours in some cases. Any social custom that occupies so much time during waking hours is going to have the most profound effects on the overall culture in due course. The way we live, The way we work. Our attitude to government. I don’t think we can begin to guess what these effects might be.

I’m particularly intrigued as the effects of the smartphone on pre-pubescent children. This is when minds are at their most open to new influences — not just open but positively hoovering new data at a rate that they will never  achieve again. This was when children were most conditionable by the values of the adult word. The difference today, though, is that children are no longer deferential to adult authority but mainly only to their own kind. Apart from some basic skills, such as adequate reading and writing — in about half of children — and adequate basic maths — in about one quarter — most of their other skills, whatever they may be are going to be derived from their contemporaries.

And then, when the frontal lobes start developing between puberty and the age of about 30 years, they can only develop the skills that were already laid down at puberty.   Brand new skills cannot be adequately learned after puberty.  But what are the skills that have been learned?  I suppose young adults between the age of puberty and 30, who’ve also been affected by the smartphone, can give us a clue — if they had the time to tell us. But as for the pre-pubescent children who are presently experiencing the full gamut of the new device, we have no idea.

When they start to reach the age of 30 hears of age in 10 to 15 years’ time — or, rather, when the articulate one quarter of them start to do so — then we will begin to know no doubt. But until then the future culture of the advanced countries must remain a veil of mystery.

The winning strategy for the EU Referendum

Fear being an easier emotion to arouse in someone than, say, loyalty, you can be sure that it will be frequently resorted to during the Brexit dispute between now and 23 June. The Stay-in lobby has already used fear twice in the first week.

The first was fear of where will our export markets be if we lose those of the EU. This ignores the fact that those European companies that trade with ours now will continue to do so. The second fear, as of yesterday, is that it would take ten years of bureaucratic hell to extract ourselves from the regulations and agreements that we have acquired over the last 30 years.  Rubbish !  Most of them will fall away overnight.

On the other hand, although supportive emotions seem to be harder to elicit, they are surprisingly effective when the right formula is found. As it happens, the Leave lobby turned around a 55:45 public opinion against leaving into a 45:55 ratio in favour within a week. The Leavists simply had one eminent personality every day coming out with a 30 or 40 word comment — no more. In effect, what they were saying was: “Don’t leave the group of which I am a member. You’re very welcome to stay and be my friend.”

A much cleverer strategy than the fear-mongers ! The Leavists are simultaneously using our instinct for social hierarchy (‘follow my leader’) and that of wishing to belong to a group. As there are 115 days to go before the Referendum vote on 23 June, then if they use 115 more eminences in the coming weeks then they’ll be home and dry — that is, we’ll be leaving without a doubt.

When economists reach a Copernican moment

How will the world’s present financial system end? Will it be with a bang or a whimper?

Increasingly, central bankers and ex-central bankers are coming out of the woodwork by saying that it’s going to end in a bang. The latest one is Mervyn King, ex-Governor of the Bank of England in today’s Sunday Telegraph. And, they say, it’ll be a bang that’s far worse than the 2008 Catastrophe because the indebtedness of the world is so much more lopsided than then. The big commercial (High Street) banks of the West — four in this country, two in most European countries and nine in America — are all on the cusp of bankruptcy with few reserves, and they’re all deeply interconnected.

However, it could all end in a whimper many years hence if the banks continue not to do what their governments have been desperately beseeching them to do for the past seven years. Lend much more money than they have been doing in order to get their economies moving again. But no, despite being rescued by their governments between 2008 and 2014, the major Western banks are still only going to lend prudently. After all, it was lending imprudently that caused the 2008 affair ! They’re bot going to be caught with their trousers down again !

Which will happen? Who knows? Take your pick. Either way, millions of people will lose their jobs in America, Japan and Europe, either very rapidly or over many years — and automation will continue taking over. The world’s economic system will adjust itself to maximum efficiency (‘Least Effort’) accordingly — not to a level of activity that governments and their economic advisors would like — but according to the laws of physics, how much energy is injected into it and how much less energy is required by successive designs of automata.

In either case, economists will have to be as brave as Copernicus when he said that the earth went round the sun. In other words, man’s economic system will finally be seen as subservient to the world’s physical and ecological environment, not superior to them.

It’s social ability plus that is needed these days

Why all modern politics of the left and right — a form of warfare — can be considered to be well and truly out of date is that neither of them will publicly admit that humans are a highly hierarchical species. We are capable of social distinctions to an almost infinite degree of subtlety compared with other species.

Actually, almost every thoughtful adult in the country already knows it to be true. The most universal and unchallenged folklore there is says: “How to get ahead is not what you know, but who you know.”

Like all folklore, such a saying needs a tweak or two to be continuously true. Occasionally in history, within any culture, completely new echelons of power sometimes emerge with completely new repertoires of skills. The ability to socialize in one group after another is not so important. They bring their own social pals with them.

And then, today, we are becoming so specialized that competence in one speciality or other is becoming increasingly necessary before individuals find their most appropriate social network to take them to the top. This is why the electorate is gradually withdrawing its respect for politicians in general because socialization manoeuvrings is all that most of them have to offer with scarcely any useful specialists among them.

Proceeding towards a low-skill economy

Britain’s Finance Minister, George Osborne, wishing us to be known as a high-skill country, has raised the minimum wage. In this way he hopes that employers will be induced to raise workers’ productivity and, presumably, their skill levels. What Osborne doesn’t appreciate , however, is that, usually, productivity improvements in any particular sector come in quantum — and necessarily expensive — jumps rather than in marginal improvements. Automation only comes about when human energy becomes relatively too highly paid.

All that will happen is that many small and medium employers will go out of business, and the ex-employees thrown onto the welfare state where they will lose whatever skills they might have had. We will therefore carry on proceeding towards becoming a low skill country for the bulk of the population and where only the top educational quintile can be considered to be ‘advanced’ — adding saleable value in goods and services for export, and thus survivability.

The financial solution is obvious, but who will bring it about?

At times of desperation such as now, all sorts of ridiculous ideas will emerge from the woodwork. We already have one — negative interest rates. It is already being practised by half-a-dozen advanced countries that ought to know better and, so it is said, 20 other countries somewhere in the world. It won’t last for long. If banks don’t recall the money from the central banks in order to lend it to entrepreneurs, then their own depositors will withdraw their cash from the banks and keep in under the mattress.

Another one that’s just becoming fashionable is “Helicopter cash”. There’s dispute as to who first invented the phrase — meant only as a joke to start with — but it’s appearing in more than a few newspapers at present. It’s a variant of Maynard Keynes’s original suggestion — again only a humorous one — that the Great Depression (the 1929 one) could have been alleviated — consumer demand encouraged — by burying bottles of money down old coal mines. At least this trope had the merit of causing people actually to work to get hold of the money.

Helicopter cash — or meat pies from heaven, as the Chinese say — doesn’t have to be worked for. It’s a free gift from the government. If large quantities are dropped and continued for long enough — beyond a relatively brief ‘sunset period’ of years — then it’s effective. But you’re also into hyperinflation and an even more desperate situation when it all crashes.

The Chinese have just joined the International Monetary Fund (IMF) — a mark of high status they’ve been aiming for years — and will be hosting fellow members in Shanghai this week. The IMF will also be searching for a way that the world can dig oneself out of a massive negative balance of trade. This is something that could never have happened if (a) there’d been an international body using double-entry bookkeeping on all world trade — and preventing debt building up in the first place — or (b) a gold-standard trading currency which would have carried ou double-entering automatically.

International politics is not yet in a state that either solution will be possible for a long time yet — if ever at all, given man’s nationalistic instincts. It will probably need another 2008 catastrophe when a few of the largest multinational corporations solves the problem by bringing about a self-balancing trading currency of their own. They know that they’ll never solve the problem of territorial rivalry but at least they can keep the world economy going.

Why hasn’t the Queen retired? In two months she’ll be 90 !

Because her successor, Prince Charles, is still too much of a loose cannon — out of control of the civil service. He has his own advisors, chosen by him , and although paid by the civil service they’re more loyal to him than to the Cabinet Secretary.

The longer that the Queen can be timetabled to do this job and to do that, and the more often that Prince William can be quietly brought onto the scene as a public speaker, opening this or that event and becoming more popular, then when the Queen dies in harness — almost literally ! — the greater are the chances that the royal courtiers will have of swinging the population to jump over Prince Charles and agree that Prince William should be King instead.

The problem for the royal courtiers right now is that although the Queen is still amenable — having been conditioned into dutiful obedience since childhood — Prince William is now kicking up ! He’s opened a couple of public events recently, but he’s more recently let it be known that he has a job of work to do — as a rescue helicopter pilot. He’s sticking with his Dad.

The big secret of the European Union

More precisely, it’s the real reason why the European Union (EU) is so desperate for Britain to stay. If we left, only 27 official languages would remain. None of the EU countries would be able to use English any longer in any EU event. Meetings would take 10 times as long and be 20 times as costly.

Most politicians may not realise this, but the bureaucrats in Brussels most certainly do. Without English speakers, proportionately recruited from all the different countries of the EU, the officials would not have been able to pass half the regulations they have done.

The earliest officials — when the EU was merely six countries — must be kicking themselves that they didn’t make English its one and only official language. They might have got away with it on purely pragmatic grounds. If they had, the EU would be a bona fide nation-state like every other and not the fragmenting mess it is now with a third of its members re-establishing border controls.

Waiting for the warming to end

We all know that global warming has been taking place over the past 200 years. It has coincided with the Industrial Revolution — when, of course, a huge amount of coal and oil has been burned — so it’s not surprising that the warming has been blamed on the CO2 released into the atmosphere, never mind that a more than a dozen warmings and coolings have been going on in the generally warm period — the Holocene — since the last Ice Age 12,000 years ago.

What is surprising is that those who support the theory of man-made global warming seem to get a great deal more upset that those who are sceptical of it. I think the reason is that, right from the beginning of setting up the Intergovernmental Panel of Climate Change (IPCC), the very name of it assumed that change — something unusual — had been going on. An IPCI — the last letter connoting “investigation” would have been far more appropriate.

A good example of this has occurred with the temperature rise apparently slowing down at the beginning of the 21st century, which is not explained by the IPCC. So the researchers involved took to calling it a hiatus. Global warmists replied by citing a study published in Science magazine last year that the actual recordings were unreliable. However, a more exacting study, published in Nature Climate Change, has confirmed that a definite pause in the global temperature took place between 2000 and 2014 even though fossil fuel usage had gone up by 2% to 3% a year.

Going into Amazonia

The Channel 4 documentary about the hitherto ‘lost’ tribe of Amazonians — one of many along the shore of one ;particular river — was interesting enough, although greatly repetitious of distant river shore scenes with naked bodies and deadly-looking spears.

The Brazilian anthropologist, Carlos Morellis, who was in charge of trying to protect these and similar hunter-gatherers was aware, when first meeting them — or, rather, when they chose to meet him — that they were very fearful of white men and it took him a whole year and a workable knowledge of their language before the penny dropped.

They and many thousands of Amazonian hunter-gatherers had been treated verry badly by white fortune-seekers looking for gold, illegal loggers, and those who enslaved native men to tap rubber trees.  A photo was shown of such a group with chains round their necks and wrists. Those who didn’t comply were, simply, shot. Indeed, in between Morellis’s two visits to one tribe of 20 adults a year apart, only four were left on his second visit.

Anyway, after Morellis had spent a lot of time patrolling up and down their river, one group decided to risk all by approaching him more and more closely over a period of weeks. They’d evidentially decided that not all white men were as heinous as those they had come across so far.  When both parties finally trusted the other, the documentary showed some delightful scenes of a boy, no older than seven or eight years using Morellis’s video camera just like a professional — deciding on unusual camera angles, assessing his work frequently. He was probably the fastest-learning trainee camera man in the whole world during 2014.

What else? Quite besides the overwhelming fear that they still had of white business marauders, they didn’t like living in the rain forest anyway.  Poisonous snakes and jaguars were their natural enemies and they’d be glad to leave them behind.  Also another reason for wanting to leave their jungle habitat was that they seemed to be ashamed of being mostly naked. This puzzled me. In the hot rain forests — warm even at night time, they certainly didn’t need clothes for temperature reasons.

What was unusual about this group is that it had no status ornaments, yet they definitely had a leader and there would almost certainly have been a hierarchy of loyal males below him. In fact, the leader, a young man no older than his late 20s or very early 30s seemed to go to great lengths to show his ability to imitate bird song.  Some of these involved intricate combinations of hand movements and mouth.  I think he was trying to convey to Morellis the reason why he was the leader. Replies from birds — which he always seemed to receive a few seconds later — suggested that he was highly skilled.

Such a skill would always be highly useful in a dense rain forest where one can hardly see more than a yard in from of you. It would give some sort of indication of the life forms around.  Also, one of the most valuable skills is to locate wild honey. A very widespread practice among many hunter-gatherers is the ability in many different regions of the world to imitate a honey bird, attract him (or her !) to your settlement and then follow it while searching out a local wild beehive. The menfolk climb the tree and smoke out the beehive, take the honeycombs and reward the bird with a portion. This is a very widespread example of synergy.

In short, I don’t think that the hunter-gatherers felt any shame in not wearing clothes. But if they had clothes they would be able — just like every culture on earth — to demonstrate clearly just where they ranked in their own social order when they met people — such as Carlos Morellis and his friends.  The hunter-gatherer leader want the dignity of being able to have equal status as Carlos Morellis.

No surge in Third World shale gas development

As a corollary to my penultimate post about the unique period of history that we call the Industrial Revolution (IR), the steam engine would not have been enough to get the IR going. It necessarily needed vast amounts of underground coal as well to feed the hundreds, then thousands, then tens of thousands of steam engines that were powering industry and transport during almost all the 19th century.

However, if the IR had depended on the steam engine and coal alone then it probably would have petered out by about 1880. What happened then was just as miraculous as the existence of coal. It was, of course, the existence of an even cheaper and less polluting source of energy — oil and gas — at about that period. Steam-engined motor cars, unlike railway locomotives, were snuffed out of existence before they could properly be developed.

And now, in the last few years, we have an even larger source of even cheaper, even less polluting energy — shale gas and oil from much deeper, originally oceanic, deposits. Surely, therefore, the case I was making in my penultimate post doesn’t stand up. We now have more than enough energy for the IR to continue for a long way into the future yet.

Not so. Most people in the First World countries are content with what they already have now by way of consumer goods. They only need new ones from tine time as replacements for existing ones. The Second World countries, such as India China and Brazil (perhaps !), are setting themselves up to make them also.  Whether they’ll succeed in suppling all their populations remains a moot point.

The rest of the Third World countries, however, would also like modern consumer goods, of course, but they cannot afford either to make them or to buy them. They are all dependent on First World sources of loans — governmental and private. As the present world’s trading balance is hugely negative already they’ll never be able to get out of debt while the American dollar remains the world’s main trading currency.  America can always inflate its dollar faster and more effectively than any other country.

And there are no signs that the First World countries are prepared to help the Second and Third World countries in the same way that America helped Europe get back on its feet with huge loans after the Second Wold War. There’ll be no surge in shale gas and oil production also except a gradual changeover to shsle gas in existing First World countries. Shale gas is pretty well available everywhere but it still takes lot of investment first to get the industry going.. First World countries are as little likely to develop shale gas production for the Third World any more than they are helping them with sufficient aid already

Meanwhile, the advanced countries, principally, America, Germany and this country — which continue to win almost all the Nobel prizes in science — because they have cornered pretty well all the existing sectors of scientific research — and any new ones that come along — are developing the next phase of economic development. These are sophisticated personal services in education and health care. These are, of course, extremely expensive because the involve years of high skill training.

China and India might possibly be able to muscle into advanced scientific research in the coming decades. But apart from brilliant outliers such as Israel, Singapore and Sweden –already First World countries on their own account — in terms of research, it is difficult to see how Third World countries can ever break into the trading network between First world countries within at least a century or more.

Waiting for the Africans now

The German newspaper, Die Welt, tells us that there are already 200,000 Africans pooled in Libya waiting for calmer weather before crossing to Sicily. This is not so large a number as the million or so already on their way — largely overland — from Syria, Iraq and Afghanistan but, potentially, the number of migrating Africans out of a population of over 1 billion, could be ten times as many before too long unless the EU do what I suggested over a year ago in this blog — effectively blockade the ports from which their rubber dinghies set out

If there is one thing that characterises the EU more than anything else it is that, with 28 member countries but no Cabinet of four or five which is able to take practical decisions, there is no possibility that the surge from Africa will be stoppable once it starts.

Dropping back into normality

There is one invention more than any other that was responsible for the Industrial Revolution (IR). Without it, the IR would simply have not happened as explosively as it did from the 1780s and onwards. It is the steam engine, initially used for pumping out water from coal mines. Even while the steam engine was at a relatively crude state of development, it was already being used in dozens of coal mines in this country allowing them to go deeper than ever before — thus magnifying the amount of coal produced from decade to decade.

Most of the coal at thst time was used for domestic fireplaces in this country but, as the steam engine became much more efficient — by recycling copious waste heat instead of throwing it away at every stroke — then more coal was available to be used for steam engines in the new cotton-spinning factories of the North of England. Up until then, dependent as they were on the motive power from water mills only, cotton-spinning — and, subsequently, cotton-weaving and colour printing factories — would only have developed at a sedate pace during the rest of the 19th century. The IR would scarcely have been noticeable.

Instead, the cotton industry grew at a ferocious rate and its massive profits were able to be fed into investments in developing the railways, the iron and steel industry and so on. The IR was able to continue at a fast rate — variously between 2% and 4% per annum for the rest of the century and, indeed, for most of the 20th century also. But the IR declined steeply in the advanced countries from the 1980s — when average wages in real money terms started to decline.

Despite what advanced governments wish for, the 2008 Great Recession gave us warning that the IR is now over and done with. In erms of economic growth, all the main advanced economic blocs — Japan, America, Europe, UK — have now stabilised at the sort of figures — 0.1% to 0.5% per annum (at the most) — that have always applied as civilisation developed from about 8,000 years ago. Most people in the advanced countries are content with those rates of ‘growth’ — so long as governments can prevent them going negative!

Living a natural life?

There’s a documentary on Channel 4 this evening which I’m looking forward to watching. It is of a hitherto unknown tribe of hunter-gatherers who emerged from isolation in deepest Amazonia in 2014. The did so voluntarily apparently, presumably because they thought they’d be better off. There was a photo of them in my newspaper a year or so ago and I’ve been intrigued to learn more ever since. With luck, tonight’s programme should satisfy a number of questions..

Even so, there’s been a huge amount of nonsense spoken about Amazonian and New Guinea hunter-gatherers by the more naive members of the environmental movements. Hunter-gatherers are supposed to be much more in tune with nature than we are and are fully conscious of the need to be good stewards of the rich ecology around them.

Nothing could be further from the truth. Rain forests are not hunter-gatherers’ natural habitat. Groups were pushed there by farming man in relatively recent times — anything up to about 5,000 years ago. Once there they proceed to hunt whatever’s available until usually all animal sources of food have gone. The only exception for some groups, taking a little farming knowledge with them as they were exiled, is domesticated pigs and fowl. Some tribes don’t even have those. One shown recently on television showed a clan which, for protein, lived entirely on small fruit bats at night time. All other animal food for miles around had been totally extinguished.

Ironically, an accurate perception of the natural environment and of the need for renewable systems has only come along with industrial — that is, scientific — man.

Waiting for the next catastrophe

Whenever you hear that gold standard currency was a disaster — as used in the 19th century by over 40 trading nations — and that gold is a largely useless yellow metal except for personal ornaments, don’t believe a word of it.

The facts are that: (a) most central banks buy gold from time to time to build up stocks because they still regard it as a fundamental currency; (b) gold continues to be mined even though it is becoming more difficult to find; (c) When the euro currency — the epitome of paper currency — was started 15 years ago, the European Central Bank (ECB) made sure that it had plenty of gold bullion in its vaults; (d) Special Drawing Rights (SDRs) — an invention of the International Monetary Fund (IMF) designed to do away with gold as a currency — are simply not used. The IMF also keeps gold bullion in its vaults.

In other words, don’t pay attention to what government officials say about gold, look at what they do with it. It is no wonder, therefore, that China and Russia, already the largest producers of gold in the world are not letting up. They’re producing against the day when the next 2008-type dollar catastrophe hits the world and when a new trading currency can be introduced which is not dependent on the deliberations of bureaucrats for its value.

Who is more ambitious?

In the House of Commons yesterday during the Referendum debate David Cameron got shirty with Boris Johnson , not to say, according to some accounts, downright nasty. The charge was that Boris is only supporting the Leave EU lobby because, if the vote goes that way, he saw a chance of becoming Prime Minister.

Maybe Boris Johnson has been duplicitous in dealing with Cameron in the last few weeks and didn’t give any hint that he might have secretly intended to vote to leave. Maybe, he hasn’t been. Either way, is Cameron implying that, in becoming Prime Minister six years ago, he had no personal ambitions himself?

An even bigger future for shale gas

The Saudi tactic of overproduction of oil, adopted in order to cripple the new American shale oil and gas industry was successful, as far as it went. Over the last 18 months, the number of fracking wells declined from 1500 to 440 and what oil and gas continues to be produced is loss-making.

However, during this period most producers have been able to improve fracking technology and have brought down the average production cost from about $70 to $80 per barrel of oil equivalent to $40 to $50. Also, most of the 1,000 wells that have gone out of production have been bought by large oil firms. When the world oil and gas price recovers from the present $40 to, let us say, $80 or more then all the fracking wells will be rapidly brought on line again This is what the International Energy Authority thinks will happen, anyway.

This has been a classic case of Unintended Consequences. Not only was the fracking industry forced to be vastly more efficient, but continuing production in the remaining wells has also been revealing that the potential supply from the Permian Basis of West Texas to be hugely greater than was previously realised.

Evolution versus Design

A 150 year-old perennial argument raises its confused head again This is de to a recently published book by Jerry Coyne, Faith Versus Fact, and, in particular, its subtitle, Why Science and Religion Are Incompatible.

Richard Dawkins has been hammering this for 40 years in series of well-written books. Due to the aggressive way he’s been pushing the atheist case, I think he raises more hackles than if he’d been gentler on religious believers. I really don’t think his lifelong devotion to the atheist causes it has made the slightest difference. On balance the populations of the advanced countries are steadily swinging into the Darwinian camp.

This is not because they’ve been persuaded by rational arguments — except for biology students — but because we are hearing increasing numbers of good news stories about stem cells, treatment of genetic diseases and so forth. In short, emotional approval of the evolutionary case.

Strictly speaking, Richard Dawkins’ — and Jerry Coyne’s — case is irrational. There is no reason whatsoever why the universe should not have been initiated by design — so long as it is an entity that is quite unlike the anthropomorphic God or Gods that religious believers envisage.

Goodbye to the central banks

Janet Yellen, the Chairman of the American central bank — the Fed — will be sleeping uneasily tonight. The latest index of Purchasing Managers fell to 51,.0 from 52.4 in January, the lowest since September 2009. She’ll be wondering how long it will be before she’ll have to reverse her 0.25% interest rate hike of a few weeks ago — and how she can explain why. Normal service is not being resumed after all.

The absurdity of it all is that real interest rates — as charged by banks or other lenders — continue as normal. Whenever money is lent against repayment in the future, risk is always involved. Ever since the Great Recession of 2008, whatever central banks say about the matter is of no importance. In fact, in some other countries — Denmark, Sweden, Switzerland, Japan and the 18 countries of the Eurozone — where central banks are trying to force high street banks to lend money by means of charging a negative interest rate then we’re now entering a period of total nonsense. Many commentators, such as Morgan Stanley, one of the less offensive investment banks of the past ten years has described the negative interest rates as “dangerous”.

There’s no fundamental monetary reason why central banks should exist. They only came into existence to get governments out of financial holes. If they continue to be as useless in five or ten years’ time as they are today then they might as well be allowed to die.

Ridiculous Mr Cridland

Just how ridiculous is it that the man, John Cridland, who is going to bring out a government-funded report on how to revive the economically run-down regions of the North of England says that its recommendations are only a “leap of faith”?   In this scientific age there couldn’t be a more ridiculous statement.  Leaps of faith are for religious revivalists and their credulous converts, not for millions of poor people who are subsidized by the taxes paid in London and the south-east of England.

Cridland’s report will recommend that road and rail links are built between the main cities of the north — Manchester, Leeds, Sheffield, Newcastle and the like. This has been conventional wisdom for some years now ever since Jim O’Neill’s “Northern Powerhouse” project said the same two years ago.

What does science say about the matter? Firstly, the evidence is clear that Northern England is deprived because young people of any intelligence and initiative at all migrate to the south — and stay there. Secondly, children of outstanding ability in any unusual skill are identifiable at puberty. Thirdly, we should thus be building specialist secondary schools where encouragement from mentors (not teachers) and competition from peers are available. Fourthly we need specialist scientific universities to follow up the special schools.

If that were done the northern countries of England would have a chance of attracting multinational corporations which could start to stem the migration tide towards the south.

The era that is now upon us

The biggest single fallacy that most modern economists are suffering from — tens of thousands of American economists and hundreds of thousands of Chinese economists all reading from the same text books — is that they all think that the explosion of economic growth that took place in northern England between about 1780 and 1980 can be continued. That is, that it can supposedly continue in the advanced countries, and then radiate into the rest of the world until everybody has a ‘high’ standard of living.

This will plainly not be the case because, apart from a relatively few Virgin space flights for the imaginatively-deprived, there are no more new consumer goods or experiences for the masses. We — rich and poor alike — already have the full kit to fill the waking hours of the day.

The social differential between the elite and the masses is that the former are more intelligent, more good -looking and healthier than the latter. The economic difference is that the former are steadily becoming more prosperous while the latter are suffering steadily declining earnings if we compute them with the past in real money terms.

The reason why the elite are prospering and the masses are not is that automation is steadily encroaching on the jobs of the latter. The reason why the elite will not be affected is: “Otherwise, who will programme the programmers?”

The DNA-based machine tools of the future will not need to be scrapped out and rebuilt at great expense as the present type are. They’ll just need the addition or subtraction of a gene now and again and, of course, constant improvement in software in order to reduce energy requirements — as against one’s competitors in other countries. Investments in the future will not be so much spent on hardware as on the education of the elite.

The Referendum is going to be more interesting now

Now that Boris Johnson has decided to join the Leave EU lobby, then this is likely to ensure that Britain will be coming out on 23 June. Boris Johnson is a clown and extremely popular in the country among both Labour and Conservative voters but he’s no mean heavyweight either. Together with Michael Gove, Justice Minister, there’ll be two charismatic figures heading the Leaving group.

Boris’s decision will cause consternation throughout the EU. The EU badly needed Britain far more than Britain needed the EU if only to act as an honest broker between a disciplined, still economically successful Germany and an increasingly quarrelsome France that’s going to start needing bail-outs before too long.

If the Referendum goes against David Cameron, then he’ll be obliged to resign as leader of the Conservatives and thus Prime Minister. It’ll likely be Boris Johnson in his place. Interestingly, Michael Gove has never expressed a wish to be Prime Minister. Even less so now. As Justice Minister, he’s got the chance of sharpening up an inefficient and too privileged judiciary in this country but it will need his undivided attention for at least a couple of years, such are the protective practices around it that need to be softened up.

Applying a little thought to where profits come from

That the prognosis of the previous post will be considered nonsense by the less thoughtful of both the rich and the poor is due to the fallacy that Karl Marx successfully put around in the 19th century — the Labour Theory of Value. This is that the rich can only become so at the expense of the poor — that the rich will always need a mass market to make their profits from.

Yes, one can always make a profit out of employing the human energy of slave labour.  However, you can also make more profits by employing the energy of free labour — so long as they’re desperate enough for work for a pittance.  However, you can also make more profit still by supplying energy to robots.  But does that only apply if there’s also a mass market of people — the Third world perhaps? — who have not yet bought the standard kit of consumer goods that advanced populations already enjoy?

No. If I have a robot — or a set of them — that makes all the consumer goods I need and you develop software for another robot that enables it to produce the same goods with less energy, then you’re making a profit — the difference in energy costs — at my expense. I will then have to set to and develop even more energy-efficient methods.

So there we have it. We don’t need vast and growing consumer markets. We simply need a multiplicity of specialised robots, each of which is being competed against its equivalent by a group somewhere else in the world who are continuously making their software more efficient in the use of energy.

Just as there are millions of different species in he natural environment which are competing against one another by means of energy efficiency, so the human economic environment will operate according to the same principle — instead of millions of species, read millions of specialised robots.

Now that biological research is proving to be the fastest growing sector of science so far in our history we can expect in the years to come to see more DNA-related carbon-based goods of superior performance taking the place of metals-based materials made with highly inefficient high-intensity energy.

Disuniting America and Europe

The usual phrase used by EU supporters is “ever closer union” — that is, a United States of Europe in imitation of the United States of America.

Which, of course, America isn’t. It is becoming two nations. Because technology is developing faster than state education systems can deliver by way of enough sufficiently educated young adults then all advanced countries are dividing into two parts. These are approximately 20% of the population and 80%.

As the higher-paid 20% pay at least 90% of the taxes that subsidize the wages of the rest — or pay for their total benefits if they’re very poor — then the 80% will continue to breed themselves out of existence in due course as their birth rates continue to decline well below replenishment.

Whether the 20% want to start having more children than two per family remains to be seen. If they don’t want to give physical birth to more children then they’ll certainly want to adopt children from parents who can’t afford to raise them.  The prosperous 20% will want to maintain viable numbers in order to keep the infrastructure going.  And now that IQ tests can be successfully applied to children as young as two years old — and probably even younger in due course — then the existing intelligence divide between the 20% and the 80% will continue to widen.

What about today and Sunday?

This was when the 28 Prime/Foreign Ministers were to have decided what to do about the mass migration into the EU.  Yesterday, however, much to the annoyance of most, it was dominated by the Brexit question.

Opinion is divided between the neo-liberal Angela Merkel and followers who want to allow a million or more Syrian migrants into Germany and EU, and the Visegrad Four, or V4, an alliance of Czech Republic, Hungary, Poland and Slovakia which don’t want them.  To these may be added Denmark, Sweden and Austria which, after being inundated, are now only allowing very small numbers in.

The obvious solution is to build large assessment centres at the main entry points on the boundary of the EU, sending back those migrants who don’t have genuine cause for seeking asylum. At the time of writing, no-one knows what the consequences on the returnees will be.  There are also rumours that Greece and Italy may have to be excluded from the visa-free travel zone within the EU — though not from the EU itself. This would be a fundamental breach of the EU.

Tomorrow should be an interesting day for the EU !

Cleaning up our own stables next

David Cameron did a deal with the other 27 Prime/Foreign EU Ministers  in the early hours of this morning.  On Monday there will be a short Act of Parliament announcing a Referendum on 23 June on whether the country leaves the EU or remains.  Six Cabinet Ministers have already let it be known that they oppose Cameron’s deal and that we should leave the EU.

The heavyweight intellectual among the six is Michael Gove, now Minister for Justice and ex-Minister for Education.  He has come out with a 1,570-word statement on why he opposes the EU.  It is well argued and superbly well-written as one might expect.  The crucial sentence is the following:

“… our membership of the European Union prevents us being able to change huge swathes of law and stops us being able to choose who makes critical decisions which affect all our lives.”

This is true enough but there is an important proviso in this country.  A great deal of the tenor and direction of government policy in Britain is set almost as much by our own unelected civil service as the bureaucracy in Brussels sets it for the EU.  If we vote to leave the EU in June then we ought to follow through with reforming our own governmental system next.

Why has there been the rush?

Why has there been such an untimely rush for David Cameron to have insisted on some sort of verdict from the 28 Prime/Foreign EU Ministers yesterday?  Until three months ago, Britain’s referendum was going to be held in the Autumn of 2017.  It’s now going to be June this year.

The answer is that Cameron wants to retire.  He’s argued to himself — quite rightly — that the longer we wait for a referendum the more likely it will be that it will turn against prolonging membership of the EU.  The sooner it’s held, the more likely that Cameron can retire with a success behind him.

Living in a modern anomaly

These days both those who have private pensions and those who can only rely on state benefits in old age are becoming worried.  Most private pension funds depend on high stock market shares.  If the latter ever come down seriously the pension funds have black holes.  As for state benefits, they’ve traditionally depended on each old person being supported by several workers.  It’s becoming the other way round now.

I’d like to suggest that both funded pensions (FPs) and PAYG are contingent on the continuation of the capitalist — aggregated savings — model.  But what if the industrial revolution turned out to be a unique development in history?  After only 200 years or so, it already seems to be subsiding into the longer term historical pattern of old age being supported only by family or local community aided, when necessary, by euthanasia?

Most of us in the advanced countries have as many consumer items as we have time, energy or inclination to use but, unlike former historical times, we can now expect to live much longer.  It is already the case that both FPs and PAYG systems are in danger. Due to intensive competition between increasing numbers of specialisations, then education for one’s children and health care for oneself are now becoming the main economic incentives.

But, unlike the recent past, no reasonable assessments can be made on the likely returns to investments. We simply don’t know what innovations — and presumably productivity gains —  may turn up from  investments in educational and medical training and subsequent research.

Philosophical governments — one day !

The OECD — a Paris-based think-tank for economists from 26 leading countries — says that the world must take urgent action to dig itself out of its present lassitude. Interestingly, it calls it a ‘growth trap’.  Is this an unconscious recognition that there may be a deeper reason for the lack of economic growth?

Could it be, for example, that most of the successful advanced countries are already replete with consumer goods, and that there are no new goods to follow?  Could it be that China’s old growth rate of 10% has declined to 7% because of this?  And, when the middle classes of the rest of the world have been satiated, then China’s growth rate could sink even lower?  That’s my suggestion anyway, scorned though it is by orthodox economists.

The OECD calls for higher investment, loose monetary policy and structural reforms in order to boost economic recovery. But haven’t governments been pushing banks hard for the last seven years to invest more in businesses?  Governments couldn’t have had much looser monetary policy than they have now — what with 0% base rates almost everywhere outside China and even negative rates in 20 countries?  As for structural reforms, are governments supposed to dampen down automation to prevent too many jobs being lost or downgraded?

One day, the OECD, along with many other bodies of economists, will accept that the world economic system, being a mechanical system, is subject to the same laws of physic as everything else and that, one day, it will find its own activity level when governments learn not to interfere.

Will Greece be cut off today?

The 28 Prime/Foreign Ministers of the EU have not yet resolved special British concessions in an all-night session.  Today, they are more anxious to move onto the more difficult question of how to halt migrants from Syria and Africa at its borders before the Spring rush starts. Even if Greece has to be cut off from road connection !

So will there be two more nails in the EU coffin at the end of today?

How to foster entrepreneurialism

Entrepreneurialism, like any other distinctive ability, such as intellectual creativity, or even soccer prowess, shares two facts with them all.  The first is that signs of the talent are evident at the age of puberty.  The second is that, given mentoring to the right degree, the talent can be taken right up to the cutting edge of the subject before the age of 30 years. All six of the largest IT businesses in the world right now were established by sub-30 year-olds.

This is when the last remaining part of the brain — the frontal lobes — becomes fully developed.  Peak performance before the age of 30 doesn’t come often in these days of high competition.  But it rarely comes afterwards when there is literally no more space for net neuronal development — that is new ideas and techniques.

Given that there has been least governmental interference in the development of league soccer than entrepreneurialism or scientific research since the 19th century what has it done that gives soccer in this country such a high reputation?

Firstly it has a formal and informal scouting system that enables pretty well every youngster with real talent at puberty to be identified. Secondly — at least in the formative years of league soccer in the 1920s — talented players at puberty were enrolled as apprentices in clubs and thereby given early experience with mentors. What with the advancement of the school-leaving age this doesn’t apply any longer unfortunately, and soccer clubs have had to increasingly recruit real talent from abroad.

Even more so, the school-leaving age has had even more unfortunate effects on the crop of entrepreneurs and research scientists that we used to have 100 years ago, postponing and even largely extinguishing what ought to be available given the more equal quality of good schooling at the junior level within the whole population rather than the highly variable standards in secondary education.

This is why most entrepreneurs of large successful businesses come from private schools in this country — 7% of the population — where there is far less government interference — and, indeed, about half of the leading home-grown research scientists.

A ittle bit down the road a bit from Kathmandu to Simhara can be seen wooden juggernaut wheels, 12 ft diameter, still being made for religious processions.  The last time we had such juggernauts in this country was in my home town of Coventry in the 1400s.

Much as one would like to see Nepal come into the 20th century — as with about 180 other Third World countries it’s not likely to happen for a century or three yet.  The scientific research scene — and hence innovations and hence entrepreneurs — will remain crowded out by that in a small cluster of advanced countries.

Is there a genius among the EU immigrants?

It’s very possible.  There are many more geniuses in these modern highly educated times than ever before.  Potentially brilliant minds are no longer blunted by a poor childhood — that is, poor in nutritious food, poor in available information or lacking encouraging parents.  It has been suggested that in the top few advanced countries the ‘genius rate’ is now about 1 per million per generation.

There’s also a cultural ‘releasing’ effect when an enterprising person leaves one culture for another and, not completely understanding the traditional restraints of the new culture, proceeds to stretch the limits of opportunity beyond those that are well and truly internalised in the minds of the natives.

A recent survey of the Forbes 200 rich list of Americans revealed that 40% of them were either immigrants or the children of immigrants.  An article in this week’s Spectator, “Is the next Steve Jobs really among Syria’s migrants?” by Ed West, gives some more examples.  In Britain, Chinese, Indian and Bangladeshi pupils vastly outperform poor indigenous kids from poor and averagely-earning families and are equivalent to pupils at the best private schools, while Pakistani, African and Caribbean pupils do less well.

Of course, none of this is a justification for mass immigration into the advanced countries — for, generally, low-skill jobs.  The three million migrants that the last Labour administration and the present Conservative government have allowed into the country in the last 15 years will cost considerable extra public spending on new schools, hospitals, welfare services — ultimately, nursing homes ! — and has prevented the higher quality, and more scientific, education for native children that’s desperately necessary to maintain our comparative way of life in an increasingly competitive world.  We might well have gained one or two immigrant geniuses in future years but we are more likely to have thwarted three or four of our own.

Hurry up, Pope Francis !

I scarcely ever read the editorially dirigiste centre pages of my terrible/excellent morning paper but there’s an op-ed this morning by Peter Stanford, “The Vatican should abolish priestly celibacy”, of which I thoroughly approve.

Except it doesn’t go anywhere near far enough. Because Stanford is a part editor of the Catholic Herald he is diplomatic throughout, and takes a long-distance view of the Catholic Church aad how celibacy developed. H actually hangs his story on the penultimate Pope — John Paul II — and his relationship with Anna Teresa Tymieniecka, a married lady who was the translator of one of his books.  Stanford doesn’t mention it but, apparently, they actually went on a camping holiday together !  He met her when he was a cardinal.  Anyway, then and since, they exchanged many letters and his to her have turned up recently.  They make them “more than friends, less then lovers”.  Her letters to him still exist under lock and key and would make more interesting reading because she is said to have been passionately in love with him.

It rests on this sort of case that Stanford says priests should be allowed to marry.  Apparently some surveys say that anything up to 50% of priests are still sexually active. But what about the thousands of North American and Irish Catholic priests who’ve been paedophiles?  Any normal person would suggests that if these thousands had been married then a great deal fewer young people’s lives would have been ruined with lifelong guilt and disruption.  It’s about time Pope Francis comes out and said this.

The next-but-one EU Referendum

There is so much woffle being said on both sides in the British Referendum debate — whether to remain in the EU or to leave — that I’m ruminating whether I’ll bother to vote at all.  The real test is not whether the EU has a future as a United States of Europe (USE) — which is being planned as a copy of the United States of America (USA) — but whether it’s going to hang together for much longer anyway.

The evidence is about equally balanced both ways at present.  On the one hand, we have an implacable EU civil service based in Brussels which is intent on nothing else than a USE.  On the other, we have the continuation — if not intensification — of sharp cultural divisions between the 27 member countries which, according to some, will only get worse each time the EU meets new problems.  We actually needn’t wait for those.

The EU still has an enormous financial and economic problem with countries such as Greece still receiving a bail-out and Italy and France shortly needing ones of their own.  Also, the EU still has another enormous problem since, along with America, it decided to oust President Bashar Assad by bombing Isis but avoiding other dissident groups in Syria.  The devastation caused by the bombing actually became a twin problem — the enticement of Isis jihadists out of Iraq and into Syria, and the forcing of millions of Syrians into either refugee camps in adjoining countries or, if they can afford to pay traffickers, to flee to the EU.

Politicians tell us that we’ve all got to vote because voting in a referendum is only a ‘once-in-a-generation’ thing.   Who says so?  Is that a law of physics?  If Britain votes to stay in the EU in June  I wouldn’t be surprised if we didn’t vote again in two or three years’ time when the financial problems and the immigration problems — singly or together — become altogether too much for the would be arriviste USE

The greatest flaw in our financial system

As a comment on my posting “When Economics becomes sensible again” a reader has written:

” You say, ‘There is a vast imbalance of debt’. I wonder how you come to even think of the possibility of imbalance?  Wherever there’s a debt there’s always a balancing credit, by definition – whether you’re dealing with money or anything else.  But I’m sure you must have an answer . . .”

I replied: “Yes, I do have an answer and it is a very obvious one. A debt immediately starts acquiring a running penalty — interest payments — until it — and they — are all paid off.”

The reason why I’m also making this a separate post is that this actually puts the finger on what has been the greatest weakness in our financial systems both during the gold-standard years before World War I and afterwards — especially afterwards.

The Bank of England saved a major bank from bankruptcy in the mid-19th century but such was the furore afterwards — that it contradicted the terms of the Banking Act of 1844 — that it never did so again.  When Overend, Gurney & Company, the largest commercial bank in the world, collapsed in 1866 the Bank of England did not save it.  This caused a great deal of suffering among shareholders, depositors and bank workers  but it was all over and done with well within two years and it had no repercussions at all in other countries.

But after World War I, especially after 1931 when this country left the gold standard, the Bank of England began helping finance houses and banks.  After World War II, by which time hundreds of banks in the country had become the Big Six, they were deemed TBTF (‘Too big to fail’).  After the 2008 Great Recession — as it is increasingly being called — the government fell over itself to save the Big Five.  But it was one thing giving them enough cash over the fateful September weekend when the cash machines had to be ready for the Monday, it was quite another to then start feeding the banks with massive amounts of Quantitative Easing in order to get them to start lending again.

They didn’t do so — and are still not doing so — and although eminent and experienced advisors — e.g. Paul Volcker in America and Sir John Vickers in this country — have been calling for banks to  be treated he same as every other  business, it still hasn’t happened.  The banks remain a ‘Moral Hazard’.  And, as most advanced governments are themselves also deeply in debt, they won’t make an honest job of it until the debt imbalance is so great that it can’t be ignored any longer and the world financial system is in danger of crashing — again !

A human ecosystem?

One of our present obsessions are cookery programmes on television.  At the same time we are steadily eating more ready-made meals from year to year which are, increasingly, tastier and more nutritious than the generality of home-prepared food. We’ll also soon end the practice of confining sentient animals in factories from the day they’re born till the day they die — far more barbaric than ancient hunting when at least animals had a taste of life and exuberance for a while before being killed.  The factory production of protein, fruits and vegetables will also give us a far wider variety of superb tastes than ever before.

When our genetic expertise is sufficiently far advanced, do we imagine that we’ll not be tempted into budding new species for hominim from Homo sapiens?  I’m sure we will.  New species that are able to hibernate for long periods of time — enabling us to travel to distant planets?  Others who can live comfortably — and enjoyably — in space satellites and carry out important functions for us on earth?  Others who can live under the sea.  Others who are good athletes?  And, quite simply, other breeds of hominim just for the sheer interest of it — in short a richer human ecosystem than the one we have now?

Of course, all the above possibilities couldn’t possibly be proposed now because traditional beliefs in egalitarian souls still persist, but our sense of curiosity — although the last instinct to have evolved in our ancestry — is now arguably as strong as any of the traditional ones.

Progress?

The verdict is still out whether it might be better to have remained being a simple hunter-gatherer in the past and not to have had additional brain genes which enabled us to make superb flesh scrapers and axes out of flint. Without such innovations our children might not be suffering today from diesel fumes nor, when adolescent, committing suicide in higher numbers from year to year because of automation and an increasing lack of worthwhile jobs and normal social roles for all.

Economics as a science

Economics should now start to be treated as a full-blown scientific subject and cut itself completely away from its political economy moorings of the 18th century.

Economics ought to be able to interweave with many other scientific topics such as behavioural psychology in such works as “Prospect Theory” (1979, later revised in 1992) by Amos Tversky and Daniel Kahneman, and in the recent best-seller, “Thinking Fast and Slow” (2014) by Kahneman alone. They were the first to suggest that man is not the 100% selfish and always rational individual when buying and selling goods and services as standard economics assumed.  Man can take all sorts of wayward, sometimes severely damaging financial decisions

This posting interweaves economics and human behaviour a great deal more deeply and wider than the above authors because, in the meantime there has been a magnificent flowering of evolutionary biology since accurate sequencing of human and other animals’ genes was able to be done at the turn of this century.  And here, the term “instinct” will be used rather a lot as part of its necessary rehabilitation after being scorned by the politically correct fashion of the last 50 years or so who considered we were so superior to other animals that we couldn’t possibly much affected by instinct.

But there is also another widespread assumption of present-day economists that must be modified.  This is that the explosive economic growth of the industrial revolution of around 3% to 4% when it started at around 1780 is par for the course and could be maintained indefinitely however finite the earth’s resources are or however large its human population has grown.  The basic laws of physics enter here and, in particular, the derivation of the Principle, or Law, of Least Effort as especially described by Richard Feynman, in his famous “Lectures” in the 1950s and ’70s is of special importance..

The Principle of Least Effort means that, for any level of energy applied, any mechanical system reaches a stabilisation point using least energy — any surplus being used to overcome internal constraints in the system and then subsequently sloughed off as waste heat.  And this applies as much to the world economic system as to anything smaller or larger.

As both economic growth and the annual increases in energy has been decreasing since about the 1980s to about 1% to 2% at the present time, we could make a reasonable guess that constraints against further economic growth are growing and that we may not be far off a stabilisation point.

Looking at constraints very briefly here what might they be?   Almost all of these can be summed in the one term already mentioned — instincts.  Within our genes we all have deep proclivities to feel and act in certain ways that generally made survival sense during the millions of years when our predecessors lived in small groups on the African savannah — and, indeed, in the forests before that.  But in today’s social structures — fashioned as they are by the nature of modern innovations and the exigencies of work — the same instincts, if they interene too often, may be economically inappropriate, counter-productive or even disastrous.

Here are some of the strongest instincts — though nowhere equally elicited in every individuals.  All these can, and do, override rational economic decision-making on occasion: (a) socialization — the strong desire to belong to a group; (b) the desire to have an agreed role within a group (c) the automatic belief that the culture of one’s own group or class is superior to most others;

(d) easily worked-up state of euphoria or fear or even change of cognitive beliefs within a group — peer pressure; (e) strong loyalty to one’s group and to protect its comparative advantages for survival at almost all costs; (f) males generally to have sex whenever possible and with younger females in particular;

(g) females generally to choose males of higher social ranks; (h) females generally to eschew genetically handicapped males as sexual partners. (i) altruism mainly confined to individuals of one’s own group and generally extended only rarely to individuals who may impinge on one’s group.

All the above are group related.  They are a far cry from the usual motivation ascribed by conventional economists — greed, or selfishness or self-care, though even they will grant that altruism of the above sort also exists and can influence economic decisions.  There is also another sort of altruism or benefaction, and this is when it is exhibited publicly, or at least semi-publicly, and motivated by desire for a gong or status or popularity — in other words another form of self-care.

But it’s the altruism of the penultimate paragraph that can cause economic problems.  Often when it is extended to different groups or classes or countries outside one’s close knowledge then it can be counter-productive.

When economics becomes sensible again

On the face of it,  economics ought to be among the simplest of all subjects that scholars study.  After all, the world’s economic system consists only of an aggregation of simple transactions that two individuals take.  Sometimes the individuals act on behalf of organisations and sometimes the transactions involve many items simultaneously but, nevertheless, the simple one-to-one exchange applies.

The net result of all this at any stage and at any one instant of time ought to result in a zero balance of trade the whole world over where everybody’s spending equals everybody’s income.  Yet this is not what has happened.  There is a vast imbalance of debt and no-one — not even some of the brilliant individuals who study economics — can explain why.  Nor can they explain how to emerge from the situation.

The reason is that once governments took over the means of producing money by printing banknotes instead of minting silver or gold, then the old-fashioned notion of transactions having to be balanced went out of the window.  Never mind that the Chinese had tried this once before in the Middle Ages with disastrous results, European countries weren’t aware of this and proceeded to do so all over again in the late 18th century.  In both cases, it was a quick get-out in order to pay for wartime armaments.

In both cases the governments concerned promised to pay back those who had banknotes. In China’s case it was with silver and bronze coins, but it took centuries for the country-wide economy to get back to normal.  In our case, the original promise concerned bringing back gold coins was largely carried out in the course of the 19th century if depositors wished but, towards the end, money in circulation had to be augmented by the use of personal cheques.  This was the beginning of the money supply and its valuation losing contact with reality and compounded not many years when vast amounts of paper money had to be printed to pay for the First World War.

Considering that we now have world-wide communication then getting back to gold ought to be much more rapid and relatively simple — indeed, it is highly likely if governments’ intransigence continues for much longer and puts multinational corporations normal business at risk.  If things become even worse than now they will surely step up to the plate in and initiate a currency of their own to keep the world economy going in reasonable heart.

The trouble is that since the industrialised countries took to printing money universally and exclusively since 1931 all subsequent economics text books have mis-described what money really is — or has been since 900 AD when silver and gold coinage was first invented by business as a convenience.  Modern text books describe money as a unit of sccount — which can be used variously as a medium of exchange, a unit of account or as a store of value.

When a government is in a state of collapse money means none of the three above things. Almost a anything of value — cigarettes, chocolate, even bucket of water sometimes — is money.  If it’s desperately needed and can conveniently passed around then it’s money — real money.

It was, in fact, the insufficiency of silver and gold coupled with a lack of world-wide value of gold and silver as coinage that prevented them being used in the end during the fantastic prosperity that the industrial revolution brought about in 19th century England and a small cluster of other European countries.   There was no world gold exchange at the time wherein the shortage of gold and silver would be automatically adjusted upwards as the demand for money grew.

At that time we only had local gold and silver exchanges that centred around the nearest gold or silver mine where the metals had value as highly desirable status ornaments that could be carried by individuals according to their social rank.  By the time that world gold silver exchanges opened — in London in the 1930s — all the countries in the world had gone over to fiat currencies that were jingoistically printed by all governments and whose values could be manipulated from time to time by changing instructions to the banknote printers.

We’ll only have a zero-balancing world trading economy when we get back to gold.  Of course, when most of the world’s populations start to have cheap smartphones the most of the money will be in digital form but it still won’t alter the basic need that for every unit of digital money there will have to be a certain amount of gold (or silver or platinum) in despot somewhere able to be exchanged if an owner of digital money really wants to.

Alan Greenspan, as wise a bird in economic matters as any thinks that it would be in China’s best interests to make its own currency, the yuan (or renminbi), gold-backed then, if China doesn’t do so fairly soon and if the present world monetary dilemma continues then I can’t see any other option than for gold-backed currency to return via multinationals moving into the mess by default.  It is only then that economics will become the sensible subject it always should have been.

Promotion to the first league of nations

Western politicians are really beyond amusement when they persist in describing history back to front.

And they do a lot of incidental damage, too.  Syria — or the EU, suffering mass immigration — wouldn’t be in the scrape they’re in if America, Britain and others hadn’t taken against Bashar al-Assad because he was cruel, like his father — though nowhere near as much.  But Assad had secular Baathists in his Cabinet.  Like those of the other cruel guy, Saddam Hussein, his Baathists were at least bringing their countries into the 20th century and out from under religious fanatics.  But no, we wanted Syria and Iraq to have the full shooting match of all the ‘democratic institutions’ that we had — and then economic growth will follow as night follows day.  So they say.

The truth of the matter is that, whatever democratic institutions we may have in Britain, they had to be forcibly wrenched from the government in the mid- to late-19th century — because on several occasions government ministers couldn’t sleep at night for fear of having their throats cut or their houses burned down.

It doesn’t matter what sort of government a country may have.  If it wants to join the top league then it had better show how it can create innovations first.

Why do we have left and right politicians?

I have little truck with exclusively left-wing or right-wing in politics.  Both hide a partial truth.  The left-wing has socialization  going for it — but not socialism which is an ideology– and the right-wing has pecking order going for it — but not traditional order which is also an ideology.

The essentials are both features of man.  Without socialization, hunter-gatherer tribes would never have held together as efficient survival organisations for millions of years.  Without a pecking order, females would have chosen their partners randomly up and down the local milieu and the least talented males wouldn’t have been ignored.  Without a pecking order inferior genes would have had an equal chance of being passed to the next generation instead of tending to be extinguished.

Pecking order is our — and several other species’ — relatively gentle mode of quality control instead of males, desperate for sexual opportunities, fighting it out between themselves like walruses or stags, sometimes to death.  Starting with childhood fighting — generally among boys only, of course — pecking order proceeds less and less violently into adolescence and then into young adulthood.  By then. when wanting to have children, females choose males for reasons other than physical strength — more to do with qualities that would make him a good provider for herself and her children.

But why just one spectrum of left to right parties in any country that remotely has a voting system?  Even in countries that have proportional representation and, maybe, half a dozen parties. they nearly always divide into those of the left and those of the right when debating single issues.

The answer is very simple.  For millions of years our predecessors lived in small groups, each requiring extensive territories in order to guarantee a steady food supply.  One group rarely saw another one, and when they did there was always a mutual suspicion that the other might be intruding on its food supply.

At their best, the leaderships of neighbouring hunter-gatherer tribes are always suspicious of each other, more often squabbling and often at war. The same effect is scalable up to the empires of yesterday and the nation-states of today.  We and the French, our nearest neighbour, have been at odds for hundreds of years with one another and will, without any doubts, continue to be at odds for hundreds of years more — that is, if countries retain their present types of centralised governments.

Two myths of most modern economists

Most are looking for a resumption of 2% to 3% annual economic growth as occurred during the industrial revolution in First World countries from about 1785 to 1985.  The problem is that the industrial revolution was an exceptional one-off event in history and never to be repeated.

Most are looking for First World prosperity to spread across the whole world — affecting a five-fold increase in numbers of the population.  Well, it can’t under the basic laws of physics (including the Principle of Least Effort) unless energy inputs from fossil fuels also rise about five times higher than now.

The whole world could have approximately equal levels of prosperity if — or rather when — (a) its population is reduced to at least five times lower than now;  (b) every country has its own centres of scientific excellence each more or less contributing innovative by-products that can be traded in a balanced way between all.

How to deal with Muslim extremists

There can scarcely be a sillier idea than the government’s recent plan to house all extremist Muslims prisoners in one unit. This is a sure way to make them all more fanatical than ever before.  It’s to be hoped that better counsel will prevail sooner rather than later

But before considering what should be done with them what is the point of locking them away anyway?  Is it to prevent them carrying out acts of terrorism?  Or is it for retribution reasons?  Or is it to rehabilitate them?

As far as the generality of criminals is concerned, the lesson has already been learned over the years of over-crowded prisons and constant recidivism.  At the end of the day, rehabilitation must be the only option to be treated seriously — or the main one, anyway.  Rehabilitation may be expensive while it lasts, but it is far less expensive than nearly 70% of ex-prisoners committing crimes again and having to be prosecuted and returned to prison.

The sure way of rehabilitating anybody with wildly aberrant ideas is to immerse them individually in a group of normal people — albeit not sitting around in ‘therapeutic’ groups and talking about their problems but actually to fold them into a group carrying out meaningful daily activities, or even on a long adventurous holiday.  There’s no need to persuade or force the individuals to change their ideology and become more normal.

Sooner or later — but no longer than a few weeks — the aberrant individuals will voluntarily adopt the culture of the group.  This is called the ‘Stockholm Effect’ among other terms, but it’s only another instance of any individual’s strong need to be fully socially acceptable into a group.  Neuroscientist researchers have recently identified a small part of the brain — which they term the ‘loneliness centre’ for want of a better term at present — which comes to life when a person feels lonely and drives him or her to find companionship.

An Industrial Revolution all over again

Yes, I think we’ll have another industrial revolution — that is, involved in manufacturing — No, I don’t think it will follow immediately after the present one.  What we’ll have in the immediate future in the advanced countries is the take-over of a great many of the repetitive jobs — mechanical or cerebral — by automation and the development of a job structure largely of service jobs.

These will be a mixture of added value service occupations with which the country can earn a positive balance of payments in trade with other countries — or at least a zero balance — with the bulk of the population engaged in a circularity of services adding no net value — but not subtracting it from the common wealth either.  The latter is the Irish Village syndrome — where everybody earns a living taking in another’s laundry.

Meanwhile, there will be growing the possibility of developing a whole new tranche of thousands of new exotic materials of much superior specifications by natural DNA methods. This will be a consequence of a whole new genetic sector that was initiated by the Human Genome Project (HGP) that was at least concerned with sequencing many different species’ DNA as well as our own. This area of scientific research is growing with a celerity that has never happened before.

However, as well as the actual process of DNA-based manufacturing, some entirely new software will have to be developed. The reason for this is that, so far, methods of manufacturing materials are relatively crude, usually by crashing together atoms and molecules at high temperature and, subsequently by grinding or fitting them together by force.

However, DNA-based materials are made by the precision-fitting of enormously complex Lego-like molecules, gently introduced to one another by natural chaperones.  This will require altogether different programming languages from those of present-day robots.  A start has already been made on these but we’re probably talking of decades of development because they will have to proceed in step with the manufacturing methods themselves.

One of he consequences of DNA-based manufacturing is that consumer and producer goods could be made locally so long as there’s a local supply of energy such as solar or geothermal or shale.  This leads to the notion that manufacturing in the ore distant future will not require long-range freight.  Instead, trade could be by means of buying and selling software licences between, probably, quite small specialist groups as part of communities nearer in size to medieval villages rather than the cities of today.  It’s an intriguing thought as a by-product of the inevitably superior DNA manufacturing methods — and products — of the future.

Classifying countries one way or another

It was a silly fashion of political correcrtness some years ago that swept away the terms First World countries and Third World countries, calling them “developed” and “developing” instead.  It’s a nuisance because they’re so similar-looking that one has to keep on double-taking when reading.  Besides, “developed” counries are themselves developing. Because “developed” and “developing” are so unsatisfactory the term “emergent” has also . . . well, emerged.

Also, when Jim O’Neill worked for Goldman Sachs (GS) he devised yet another variant — the  BRICS countries for countries like China, India and Brazil.  But as they’re all suffering badly at present (except perhaps India) the BRICS classifcation has now been dropped by GS — nor does GS persuade its clients to invest there either..

There are no hard and fast demarcations between the three World terms. Most countries of Western Europe, for example, are somewhere between being First and Second World.  Eastern European countries — the ex communist regimes — are Second world.

The only indubitably First World countries — America, Germany and Britain — are the prime inheritors of the Western Enlightenment and the rise of science kf two or three centuries past.  Only they generate a steady stream of fundamental ideas and innovations which emerge from having a high density of basic research institutions. These three scoop up almost all the Nobel prizes in the science subjects.

Of course, those three First world countries may not maintain their status in future years.  Much will depend on levels of funding for fundamental scientific research by their governments.  If I were American I would be much relieved to learn that Obama is now throwing a lot of funding at the  neuro- and biological sciences.  This is the big growth sector of the future — not for more consumers’ status toys as during the industrial revolution period so far but for increasingly sophisticated services in the life and death department — adequate education for one’s children’s future career and better health for oneself.

Also, countries that I would describe as being at the top end of the Second World in terms of being more than usually innovative, such as Sweden, Singapore, India and Israel might join the First World in die course — as could a few European countries.  Whether China, capable of vast numbers of innovations in pre-Ming Dynasty eras (up to about 1400), its future is debatable.  Today its population is so deferential that, like South Korea (Second World) and Japan (barely First World), its research scientists are seldom creative until they’ve spent years in the First world countries absorbing a more permissive culture and not pouring scorn on way-out ideas.

The politically correct who favoured developed and developing didn’t like the hierarchy implied by First, Second and Third /world.  Well . . . if they choose to ignore the pecking order that’s deep in mankind so be it.  But most folk don’t worry about it.  First, Second and Third soccer league tables — among many other activities — are the obvious way of running the schemes.  Whatever First World politicians may say about helping Third World countries with government aid — fairly trivially instead of high quality research labs which is what they really need for promotion — the fact is that, between themselves, First World countries are always in a state of high competition between themselves in order to attract the multinationals.

I don’t sjuppose thet the First, Second and Third classifacations will come back into use until the present wave of political correctness blows over

So gravity waves exist after all !

Yesterday’s  confirmation that gravitational waves exist is one of the greatest half-dozen scientific events of the last 100 years.  Strangely enough, although gravity seems a strong unavoidable force in our daily lives — as I learned a few weeks ago when breaking a hip —  it is millions of times weaker than electrical forces.  The latter, in turn, are millions of times weaker than the nuclear forces inside the atom.  Relatively weak though gravity is, it is hugely important and the galaxies and solar system couldn’t exist without it.

Even so, and even though no immediate applications have been spoken of — at least to my knowledge — knowing a bit more about gravity will start to weave a better understanding of the still largely mysterious world around us. So we’ll say to the scientists involved “Well done !  Continue to enjoy your work.”

Why Trump is wrong about America

Donald Trump may be right about Angela Merkel.  Her political career has been badly damaged and she may never recover her position as the EU’s No. 1.  But when he says that if he were President he would make America “great again” that’s the sort of language of the last cenury.  He’s obviously not understanding just what has been going on in the advanced countries — of which, of course, America has been in the vanguard for many years.

What is going on in evolutionary terms is that there is now an intensive selection for intelligence going on.  The state school systems in America, Britain, France, Germany and a few more countries in northern Europe are not able to produce as many high grade scientists, engineers and other highly-skilled professionals whose jobs could be shared.

The result is that in the advanced countries a yawning gap is opening up between a minority of interesting, well-paid jobs and the broad mass of the working population whose incomes, in real money terms, is steadily declining and in which, if anything, innumeracy and illiteracy are growing when compared with earlier times when state schools were first brought about.

The irony is that Trump is receiving support from that part of the electorate which is becoming adversely affected  by increasing automation and increasing specializations.  He is abjured not only by Democrats, of course, but also by fellow Republicans.  Although an intelligent man himself, if he becomes President, his personality is such that it is to be wondered whether he would be able to recruit advisors of the right calibre.

As a populist, Trump is exactly the sort of President that the Founding Fathers wanted to guard against when they wrote the Constitution and instituted the electoral college system.  Using this, the popular will of any political party can be circumvented by wiser heads if necessary.  Perhaps this is why Michael Bloomberg is now being spoken of as a possible late entrant.

Trump is wrong about Europe

Donald Trump was correct yesterday when he says that Angela Merkel made a tragic mistake when she welcomed a million immigrants into Germany– and 200,000 a year for several years thereafter.  Immediately after her statement, middle-class Germans interviewed by middle-class media journalists pronounced themselves happy with what Merkel had said.  But a week or two after then, working-class street demonstrations organised by a growing extreme right-wing party showed the feelings of many in the population who erceive that their jpbs might be in danger from immigrants.

Trump was wrong, however, when he predicts a “revolution” in Europe.  As mentioned above, reaction has already started and, according to rumours, the Brussels bureaucracy are already having to think of draconian methods of keeping immigrants out — both the ‘deserving’ and the ‘undeserving’ — which they’ll have to employ within weeks from now before the number of would=be immigrants swell with oncoming better weather.

Considering that most of the Middle East is at a high point of tension — or actually war-torn already  — and that war-torn Africa with 1 billion inhabitants is almost certainly going to grow to 2 to 3 billion within the next 30 years, then the EU faces a potentially massive invasion greatly disproportionate to its indigenous people and cultures.  Whether America faces immigration of comparable intensity from Central and South America is something that that only Americans can judge.  But it’s obviously of enough concern  already in giving Trump such a big vote in the New Hampshire primary.

Digging up gold and then burying it again

With reference to what I wrote in the previous posting concerning the need for a permanent depository of a valuable asset in order to back up a world digital currency, a correspondent has written to me quoting the charge that’s often made against the gold standard.

Apparently, this is something that Warren Buffet used to say:  “What’s the point of digging up gold out of the ground and then burying it again in a bank vault !”

The above usually raises a laugh but, if a valuable asset like gold is ‘buried’ in a bank vault for long periods of time, its very inactivity is actually serving an important psychological service.  It gives you the assurance that if an economic panic is in the offing and the value of your banknotes is in question, then you can always exchange them for an asset with a respectable value however the economy turns out.

Provenance of digital money

The point I needed to make more of in my last posting is that all sorts of spurious things are done in the financial sector to  make digital non-money look like real digital money.  This is indeed how, since the 1970s and the increasing use of digital methods of moving money around, the whole stock of world money has been able to breed just like fruit flies far beyond the quantity required to buy, sell and insure the goods and non-financial services in the economy.

The essential fault of digital money as it exists at present is that, unlike paper  banknotes, each unit can’t be identified with a number. Once a unit of digital pound or dollar comes into existence by one doubtful method or another then, because it has no identity, it looks the same as any genuine pound or dollar printed on the instruction of a country’s central bank.

This, in fact, was the only good feature of bitcoins.  Each bitcoin that is made is given an identity number which either follows it for the rest of its life or is scrapped when the unit is absorbed into a larger bloc of bitcoins under a new aggregate number.  But this could never be a safe system for world-wide digital money because each bitcoin, as it is repeatedly recycled, acquires a growing raft of validation information — its past history — which, in due course, would become so large that it would need enormous electrical power requirements when passing through an individual’s smartphone or personal computer when buying or selling an item.

The only way of using digital money whose provenance can be relied upon is if every single one of them was numerically locked into a specified share of a valuable asset kept in a secure depository.  If necessary at any time — say during a financial panic — the share of the asset could be redeemed by the owner.  This numbering system can remain in the depository and, unlike bitcoins, doesn’t have to be carried around when each unit of digital money is used and re-used every time it passes through a smartphone or personal computer.