Monday, 24 November 2014

A recipe for old-fashioned economics

The trouble with standing for election is that it gives you the potentially disturbing opportunity to see yourself as others see you.  You fail to get elected, and suddenly you are puzzling out obsessively what it is about you that sort of failed to enthuse people.

All of which is a way of saying that I'm out of sorts at the moment, having failed to get elected to the Lib Dem federal policy committee for the second time in two years.  But, hey, my electorate have spoken...


Of course there are compensations.  I won't have to crawl up to London and back again at dead of night.  I won't have to sit through interminable debates about the Health and Social Care Act, or constitutional reform as understood around 1956.  But I'm sorry, nonetheless.

I imagine that not nearly enough people want a member of the policy committee who is really pretty loyal to the current leadership.  I'm not on anyone's lists - both the Orange Book people and the Social Liberal Forum furrow their brows when I speak.  Perhaps I should be pleased to have won as many votes as I did (thank you, everyone!).

But one thing does worry me.  I stood on a promise to take the party's economic policy by the scruff of its neck and to make it work for people.  I might not have succeeded in this, but I was determined to try - because it worries me that even self-described radical Liberals seem to have almost no interest in economics at all.

The result is that Lib Dems tend to get rolled over when it comes to economics.  This is not a critique of austerity, but it is a criticism of our failure to think creatively about what else might be possible.

And when you don't think radically about economics - when you can't see the point, I'll tell you what happens.  You become deeply conservative on the subject.

So, an obscure debate took place in the Commons last Thursday, about the way money is created.  It was the first time Parliament has debated this very important issue for well over a century, and there was a great deal to be said about the underlying causes of the 2008 crash.

You don't have to agree the entirely line by Positive Money, the campaign group around these issues, or to have agreed with everyone who spoke - and many of them disagreed with each other - to find these issues pretty important for the future design of our money system.  Both Adair Turner and Martin Wolf have been talking about this issue in the last few months.

I'm not even sure what I think myself - but it is a healthy departure to have MPs discussing the possibility of varying how much publicly-created, interest-free money there is in circulation (a good deal less now than when I was born).

But here's the point.  The debate was sponsored by MPs from four parties but no Lib Dems.  As many as 30 MPs took part, including a very distinguished former cabinet minister, and - you guessed it - no Lib Dems.

I think we urgently need to take what Keynes said to heart (as a good Liberal):

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."

That's what happens when you stop thinking about it.  The defunct economist in all of us, the default common sense of a few generations back, comes to the fore.

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Thursday, 20 November 2014

Why privatisation is over (nearly)

I have a BFI copy of the classic Post Office film Night Mail, with the Britten-Auden collaboration that emerged as night mails crossing the border-bringing-the-cheque-and-the-postal-order. It now looks like a hymn to public service commitment.

One of the other features in the DVD was a sequel, in colour, dated from 1963, called Thirty Million Letters. It is a touching, emotional and absolutely brilliant evocation of what a postal universal service obligation used to mean. There are postmen walking through blizzards, delivering post from a pony and trap, by plane and in constant supportive contact with the public.

The universal service obligation, which the newly privatised Royal Mail is so keen to dispose of, was portrayed there as a thing of beauty – a commitment of pride, a national treasure, a precious stone set in a silver sea...

I can see that the chief executive of the Royal Mail is in a difficult position. Now the Royal Mail is a private company, its continued universal obligation holds it back.

The pressure is on from innovative new competition, from click and collect to Amazon drones. It is difficult out there. It is also difficult for Business Secretary Vince Cable – criticised that he undervalued the shares, and now criticised just weeks later that he overvalued them.

But the abolition of the universal service obligation, a feature of the Royal Mail since Victorian times – which now seems inevitable – is such a scandalous volte face by the Royal Mail that I have been wondering if it marks the end of privatisation as an instrument of policy.

The appalling things is that, as predicted, a universal service obligation shifts from something which we took for granted with quiet pride in the 1960s into something which is too expensive.

Privatisation was born in 1984 as a means of improving service, encouraging innovation and providing a form of popular capitalism – and also of course of raising national revenue (selling the family silver, as Harold Macmillan put it).

After three decades, it has become something else. Here are three reasons why it is reaching the end:

1. Instead of setting free public services by giving them entrepreneurial energy, the process seems to have had the reverse effect – it transforms them into the worst kind of intractable bureaucratic megaliths, apparently without care or thought.  As bad as before, but more expensive.

2, Customer facing UK business is itself going through a period of serious dysfunctionality, based on dysfunctional CRM business practices, set in concrete by dysfunctional IT systems. The prospects of handing over any more services to that kind of customer services does not bode well.

3. Nobody any more believe that privatisation will lead to a better service. Quite the reverse.  That was not the case in the 1980, and the great privatisations back then – British Gas, BT – have retained their functionality, but it certainly is now. State owned East Coast railway lines provide by far the best service.

4. The need to save money means that there is simply no opportunity for profits that privatisation might once have offered, especially in health – which is why so many contracted out NHS services are being abandoned.

None if this suggests that privatisation will stop dead. There are also good reasons for contracting out some services inside the state system – and always will be - but, despite the scare stories, privatisations seem to me to have reached the end of the line.  The revelation of just how much universal services and competition are incompatible will only hasten their demise.

The remaining two justiications are that privatisation helps raise money – which is not enough of a reason for doing so in itself if the management is going to be worse or more expensive – and that they can then raise investment money off the government's balance sheet. This is still an important driver. But there is a political limit: if privatised services are acknowledged to be worse,  less reliable, less effective and less universal, then the tide will turn,

I think it just turned.

Tuesday, 18 November 2014

Iinnovation versus manipulation in the NHS

Targets came from Jeremy Bentham, in a labyrinthine journey via Robert Macnamara and Key Performance Indicators. They purport to provide transparency and accountability, and – in some ways, in the absence of anything else – they do.

The difficulty is that they never quite measure what they claim. They are indicators of the thing – success – and not the thing itself. And in that gap, so many difficulties follow.

I write all this because of a blistering attack by the influential NHS blogger Roy Lilley this morning about the effects of too close attention to targets is having on an NHS which feels itself embattled – and the tricks the managers are laying to avoid confrontation with the regulators, like delaying all operations to insert patients from the waiting list, or declaring a local emergency so that the targets don’t apply.

Many of us involved in Lib Dem policy in 2010 believed that the coalition would dump the Blair-Brown idea of targets altogether, and they did to some extent. But enough of the old edifice remains to twist the purpose of services and create waste.

Why didn’t they go further? I think because nobody had thought through enough – as they still have not in enough detail – how to provide accountability without some kind of target-driven inspection system.

But we have come some way. What we have left is the bones of the old Blairite, utilitarian design that dreamed that public services were giant humming machines, run outside politics by men in white coats, huddled over the dials.

That system remains because Whitehall has not yet realised how far the target numbers are from reality – cf. Goodhart’s Law – and how delusory their progress figures are. Or what to do about it. That is all now deferred for the next Parliament.

I thought before, and still think, that it was a wasted opportunity, but you can’t move until there is some consensus about what you do instead – and that remains elusive, though John Seddon’s work points in a pretty clear direction.

In the meantime, the NHS is still overseen in this bizarre system of management-by-numbers, which stands in relation to leadership as painting-by-numbers stands to art (see my book The Tyranny of Numbers).

You can see how targets might keep hospitals to the task in hand when budgets are increasing. But when they are shrinking, and demand is rising – partly because of the way contracts have tended to narrow services and spread costs – then targets just become ridiculous.

And in the midst of a crisis, like wartime for example, checking on the success of hospitals by peering at the target figures just becomes like satire.

The real question is this: who in the top eschelons of the NHS is watching over trusts and hospitals and supporting their leadership when they are providing innovative solutions despite targets? And who is holding them to account when they are meeting targets by putting all their energy and ingenuity into tricking the system?

Monday, 17 November 2014

Why free traders might oppose TTIP

David Cameron chose to emphasis TTIP in his speech in Australia, explaining that the Transatlantic Trade and Investment Partnership – its proper title – will give a ‘rocket boost’ to the global economy.

I find this argument strange. There is very little evidence for it. The study it was based on has been discredited (at least according to WDM), and – in any case – you have to be suspicious of this kind of cost benefit analysis, which only adds the benefits and does no subtraction for the disbenefits.

Similar one-way analyses have been used to justify an end to supermarket restrictions on Sundays and the expansion of Heathrow. It is a kind of fantasyland.

There are three accusations that are being thrown at TTIP at the moment. The first is that it endangers the NHS. I believe this isn’t the case since the European Union has legislation that puts public services beyond the reach of TTIP.

But actually nobody seems to know and I find it extraordinary that, because these issues are not on the mainstream agenda for Labour or Conservative – the BBC fails to pin down the chapter and verse, or even to cover the issues much. Nor do any of the parties volunteer it.

The second accusation is that the special measures will allow corporations to sue sovereign nations for undermining their investments.

This seems to be quite true and bizarrely, presumably because it involves American corporations rather than, say, Romanian ones, UKIP stays silent on the issue.

The third accusation is not really articulated properly and is about the limits of the free market. This is the critique of the research which Cameron uses for his claims about the benefits of TTIP. Again, completely unexamined by the BBC.

There are difficulties here. It is true that open markets will tend to raise all boats, but there are already wide-ranging trade agreements between the EU and the USA and it is not clear how much this one will add.

It is also true that the meaning of free trade has become blunted and coarsened since its great days as the centrepiece of Liberal economics.

What began as a critique of monopoly, and an underpinning of the right of the small to challenge the weak, has become the opposite. Free trade, as understood by mainstream policy-makers, seems to me to have become the absolute reverse: a justification for monopoly and a buttress for the strong and rich to control the weak. This is not its original meaning or its correct one.

It seems to me highly likely, given this, that TTIP is a buttressing of the big over the small – I can’t see how my local healthcare co-op is going to be taking over any American hospitals. It is a means by which the big can ride roughshod over the small – it is a recipe therefore for poorer service and the suppressing of innovation.

Since small businesses create jobs in a way that big businesses are constrained from doing, this would make TTIP a net job destroyer and therefore corrosive of prosperity.

This column is my assertion of the right as a free trader to oppose TTIP. In the absence of clear evidence, it is a technocrat’s charter and, as such, brings the backlash against technocracy – really our biggest threat at the moment – that much closer.

Thursday, 13 November 2014

Why are we so fascinated by Alan Turing?

The new Benedict Cumberbatch film comes out tomorrow in the UK.  It is called The Imitation Game and it concerns the code-breaking career of Alan Turing, the British candidate for the inventor of computing.  It is also the UK candidate for the next Oscars ceremony.

What I have been wondering is why Turing has become such a compelling figure in our recent past - and, at the age of 102 if he had lived, he might even have still been alive.

When I first began writing about him, when I was writing my book Authenticity, Turing was a half-forgotten, fringe figure.  Now he is a symbolic martyr who helped create the modern world.  In between, something happened.

There are three possible ways of thinking of this. There was his prosecution for homosexuality and subsequent suicide (and it almost certainly was suicide, as I explain in my book Alan Turing: Unlocking the Enigma). With the issue of sexual tolerance right at the top of everyone's radars these days, this makes him something of a martyr - enough to be given an official pardon last year.

As I explained in the book, the suicide was most probably not directly to do with the prosecution, and more likely to be linked to hounding by the security services, but actually we can't know.

The other way of thinking about his importance as a figure is that he was such a pioneer of virtuality, and as such a co-creator of the IT revolution. He conceptualised computers and then brought them into existence to crack the Nazi codes.

Finally, Turing was a contradictory personality who strongly believed that machines could think and feel - the founder, in that respect, of the Turing Test. He was in this respect another pioneer of tolerance - he believed, not so much that his computers should be given rights, but that they should be given the benefit of the doubt.

It is never entirely comfortable when a complex human being becomes a symbol of things beyond themselves. Turing has become a symbol for the modern world, as a prophet of IT and scientific rationality, a martyr for gay rights, and also of genius cramped by convention and intolerance.

He would have found none of these entirely comfortable. He is portrayed sometimes as a social misfit, somewhere on the autistic spectrum – in fact he was a witty and entertaining friend. He enjoyed Snow White and had a particular fascination for fairy tales. He was, in fact, a far more rounded figure than he is given credit for being, as the new film portrays him.

As for the symbolism of the apple, it is a bizarre twist of the modern world that Turing’s fatal apple (poisoned with cyanide) is sometimes given the credit for being the original for the logo which now graces Apple computers – as if the apple of the tree of knowledge was somehow inadequate to the task.

In fact, the Apple logo’s designer Rob Janoff denies that he had even Adam and Eve in mind when he penned his first draft. He put the bite in, not as a tribute to Turing, but to emphasise scale and to show this was not a picture of a cherry.

What seems to underpin our fascination with him is that he was a pioneer of the modern world, and perhaps of tolerance to people who approach the world more like a computer would - as perhaps he did.

The Turing Test never claimed to be able to verify anything metaphysical, but that is where the debate is going.

 It is a debate about authenticity, which asserts or denies that there are attributes which are uniquely human, not so much conventional intelligence, but love, care and generosity. Turing believed that intuition was computable. Even if a computer passes his test, we won’t know if he was right or not.

Turing was wrong about his predictions: he expected his test to have been passed by now. But we are now in thrall to computers in ways that might have surprised him: in practice, the closer to human intelligence the robot who phones us up can be, the more unnerving the experience – and, for the time being, the more frustrating, because of the inability of IT to deal with human complexity in the ways that Turing predicted.

If the corporate world wants to replace teachers and doctors with screens and software, because it is cheaper, it is not always obvious which side Turing – a great humanist – would have been on.

I like to think he would have been on the side of humanity again, but who knows.  Find out more in my ebook Alan Turing: Understanding the Enigma.

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Wednesday, 12 November 2014

Projecting our loss of innocence

When Arthur Miller was writing The Crucible, he mentioned to a friend as he left dinner for the evening that he was working on a play about the Salem witch trials.

She was astonished that he could see any parallel between witch trials and the McCarthyite hearings against un-American activities, going on at the time. Yet now we call both ‘witch hunts’ without batting an eye. It is sometimes more obvious with the benefit of hindsight.

These kind of frenzies emerge often with good reason, but involve a great deal of projection. I have a feeling the un-American witch hunters were projecting their own sense of betrayal – and nearly everybody in public life seems to carry one of those – onto the nation.

I wonder in a similar way whether the ferocious elements of the furore about child abuse is caused, to some extent, by people projecting their own loss of innocence onto children.

This is not to suggest that the child abuse campaign isn’t important, but it might explain the fringe elements like banning single adult males – or those who appear single – from public parks, as they have done in Telford and Weston-super-Mare.

So I’m grateful to Jonathan Calder for being the first to draw my attention to this. It is a frightening trend, not just because of its assumptions, but also because it undermines family life in its own way (if you need a child with you to prove your own innocence) and therefore makes abuse more likely, not less.

I realised more than a decade ago that the issue had the potential for tyranny of this kind, when someone I knew well told me that it didn’t matter if a few innocent people were gaoled in order to catch the paedophiles. Since another friend of mine was one of those innocent people facing gaol at the time, this was not comforting.

Important causes may always have the potential to draw out this kind of insanity. But we have to be careful, because this is also how causes undermine themselves - whenever something is considered so important taht a mere accusation is evidence of guilt.

There is a strong current in the child abuse ‘industry’, if I could call it that , which regards abuse as mainstream in family life, and justifies the treatment of children accordingly – seized in the middle of the night by police during the satanic abuse panic.

There is another strand which assumes that children will usually be better off in local authority care than at risk of abuse at home – though, historically, that is more often a case of out of the frying pan and into the fire.

Both of these get in the way of keeping children safe, because they risk changing the boundary lines of the issue. A world where single people are regarded as pariahs, or anyone who happens to have left their children or grandchildren at home, is a much more dangerous one for children.

Tuesday, 11 November 2014

How to waste a staggering £15bn

Martin Mogridge was a transport economist.  He was originally a physicist who wore long hair and leather trousers, and a cultivated air of exoticism. His interests included science fiction and Victorian eroticism, and just before his untimely death in 1999 at the age of only 59, he began studying Hebrew.

Over the previous three decades, while the major cities of the world enthusiastically demolished their slums and built massive urban highways, transport experts had been puzzling over the phenomenon of how new roads – even widened roads – seemed to increase traffic.

Economists had noticed that, if there is more road space, then people find it worthwhile to pay to use their cars, if they had one. Then public transport attracts fewer paying passengers and the fares go up or services reduce, and even more people go by car. 

Even in the 1930s, they had noticed that new roads released what they called ‘suppressed demand’. Worse, then the traffic goes faster and the buses find it more difficult to negotiate traffic streams or cross big highways. It all combined together to create what was called the Downs-Thomson Paradox, described like this:

“If the decision to use public or private transport is left to the free choice of the individual commuter, an equilibrium will be reached in which the overall attractiveness of the two systems is about equal, because if one is faster, cheaper and more agreeable than the other there will be a shift of passengers to it, rendering it more crowded while the other becomes less so, until a position is reached where no-one on either system thinks there is any advantage in changing to the other... Hence we derive one of the golden rules of urban transport: the quality of peak-hour travel by car tends to equal that of public transport.”

That was a vital clue: the speed of road transport and public transport are linked, and the journey times door to door for both are often very similar. Mogridge realised that, in London, everything depended on the speed of the underground system, which is why the traffic in London has stayed at a pretty average speed since 1900. 

If you build more roads, people go back to their cars because it is then quicker than going by underground – until the point when the speed is so slow that underground travel is faster. Then they leave their cars behind and go by tube.

The solution to speeding up the traffic is therefore to speed up the main public transport infrastructure. What’s more, said Mogridge, this works even if you take space away from cars to make room for public transport. It was the thinking that led to plans like Crossrail – the new high speed underground line across London – as well as on Zurich’s successful strategy to reduce car use based on better pedestrian access and investment in trams. 

By the end of his life, Mogridge reckoned that traffic speed could be doubled just by reducing space for cars, though it remains difficult for public officials – at least in the UK – to act on this new law of traffic management.  Read more in my book The New Economics.

What applies to London also applies to he trunk road system.  What is really staggering is that David Cameron has announced road-building plans which fly in the face of this knowledge.  In fact, £15bn worth, about which he claims:

“This will be nothing less than a roads revolution – one which will lead to quicker journey times, more jobs, and businesses boosted right across the country."

If Mogridge was right, and I think he was, the very last thing this will do is boost journey times.  It is a staggering waste of money and it seems at the very least unproven that it will boost business, except of course the business of road-building.  Road-building tends to move jobs from the poor areas to the rich areas, and rarely the other way.

Every one of those extra lanes, built at such enormous expense, will attract the road traffic to fill them again and I feel despairing of the establishment's ability to learn anything very much - and their amazing ability to keep plugging away with their money at the futile and hopeless.

It makes you yearn for austerity.  It's a pity it has got such a bad name.  At least it meant a little forethought before slinging money around at all the old shibboleths.

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