The libertarian slavery paradox

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The Political compass as libertarians see it

I happened to be watching the remake of the TV series Roots recently (based on the Alex Haley novel) and it did occur to me how it creates a bit of a troubling problem for libertarians. They like to see themselves as the ultimate liberals at the opposite end of the political compass to nazi’s and authoritarians. However I would argue that logic would dictate that any libertarian society would inevitably eventually become a slave owning society.

Think about it, in a libertarian society if someone owes you money or compensation for something, how do you get them to pay? Let’s suppose someone did a shoddy job tiling your roof, or he ran over your 6 year old kid and she’s now paralysed for life and needs expensive treatment, or someone simply defaults on their loans to a bank without paying (which is bad news for savers, recall there will be no federal insurance on banks under libertarianism, if enough borrowers default the bank goes under). Without a government, in a libertarian society with lax law enforcement and little to no regulations means that courts will be toothless. And without some sort of authority to enforce the law people, in particular the wealthy with their vast fortunes and private armies, can simply ignore the law. And those at the very bottom, can simply shrug their shoulders and say, well I’m broke, I’ve got nothing to pay with, I own no property, so your screwed, now if you’ll excuse me I’m going to go get drunk, then drive to the park and fire my gun at squirrels near where your children play.

And the thing is that this wouldn’t only be allowed in a libertarian society, it would be considered a perfectly moral act. Libertarians often claim to follow the philosophy of Objectivism, which basically amounts to saying that its okay to be a selfish jerk and that being a kind and caring person who gives the slightest thought for others is morally wrong. In such a society, it would be considered okay to default on debts and basically screw everyone else over. This will be normal. But if everyone did that, society would quickly fall apart. Banks won’t lend money to anybody, even those with good credit. Doctors would refuse treatment without payment up front (and patients with any sense would refuse to pay until the treatment was completed). Without some sort of a system (let’s call it “a government”) to make sure people honour their obligations, the whole economy would unravel.

Now libertarians would say, oh but we’ll just have this code of honour whereby if anyone does something bad we’ll give them a terrible review on Facebook or something. Ya, and is that actually going to help? Donald Trump went bankrupt four times, you’d think after the 2nd time people would have learnt the lesson not to lend him money. You’d think nobody, least of all libertarians would have voted for him, but here we are. There are a host of well known scams around, many of them simply modern takes on old con tricks, yet thousands still fall for them every day.

They have this TV programme on UK TV called “Rogue Traders” where they set up a sting operation and catch various con-artists, dodgy used car salesmen, telemarketing fraudsters, cowboy builders and rogue tradesmen and then essentially name and shame them. Thing is, very few end up out of business. Some of them keep appearing in multiple episodes, sometimes under a new name or sometimes openly trading under the same name (one even put “as seen on rogue traders” on the side of his van!). Generally what’s stopped these people becoming season regulars is that the authorities eventually caught up with them and put them out of business.

But in a libertarian society there’s no authority and no social safety net. So how do you enforce any sort of law or civil suit? My guess is that what will happen is when the repo men arrive to cart away someone’s stuff, if they don’t find enough stuff to pay the debt, they’ll take away the debtor and his family and force them to work off the debt. This is pretty much how slavery worked in a number of society’s throughout history and how the practice of bonded labour works to this day.

Now libertarians will no doubt say, no we’ll outlaw slavery. But its going to be impossible to enforce that when the rich and the powerful have their own private goon squad. And unfortunately even in this day and age there’s several parts of the world where bonded labour is still practised, despite laws outlawing the practice. And it tends to occur in places where the government’s authority is weak or corrupt. For example in Somalia and Libya, countries with little in the way of government and lots of guns (as close to a libertarian society as you’ll find!) there are active slave markets.

And there’s the second problem for libertarians, democracy would collapse pretty quickly in a libertarian society. Taking objectivism to its logical conclusion, the easiest way to win an election is to bribe election officials and intimidate voters. e.g. the wealthy landowner threatens mass evictions, the billionaire says his goons will go on the rampage if they don’t win the election. This is how African dictators can win elections with margins of +90%. And even if the wealthy lose the election, they can simply ignore anything the government does that they don’t like, as they are essentially untouchable in a libertarian society.

In a society whereby the wealthy can grow their fortunes unchecked and utilise the power it gives them without any checks or balances, then it becomes essentially impossible to have a democratic and free society. Take for example Rockfeller or the other billionaire’s of the “robber baron” era. With no government to break up his monopoly (and an Objectivist philosophy that basically said it would be morally wrong for him to give anything away to charity) his fortune would have grown even larger, his descendants would now not only control 90% of the US oil supply, but probably 90% of the US energy supply as well as many public utilities (e.g. internet access, water, hospitals, police, fire services, etc.). At this point, they become the defacto ruling royal family of the US, emperors in all but name, with the role of US president essentially becoming “ass kisser in chief” (you can just see the debate with Hilary and Trump demonstrating their butt kissing techniques).

Now libertarians will say, oh that would never happen, we’d just boycott the business of those we don’t like (in which case you need to go look up the meaning of the word “monopoly” cos that’s sort of the problem, you can’t boycott a monopoly!). Or they’ll argue that sooner or later another billionaire will build up an even vaster fortune and take over. Oh great, so because one rich asshole is better at screwing us over than some other rich asshole, he gets to be emperor instead. Ya, that sound way better than our current system of government!

The sad fact is that libertarianism only works if you ignore the last thousand years of history. A libertarian society would quickly become a feudal society, where the rich will grow vast fortunes unchecked and abuse their power without limit. Where the poor, if they are unable to pay the vastly overinflated prices the rich with their monopolies charge, will be at risk of being sold into slavery. Where speaking out will be impossible, as the press and internet are controlled by the rich. And those who do a Robin hood and fight back will be derided as socialists and terrorists.

In truth, if there’s anything that libertarianism is at the oppose end of the political spectrum to it is democracy and free markets.

The Trouble with AirBnB

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There’s been a massive increase in the number of spare rooms,or even entire flats, offered for rent on AirBnB, across the UK and worldwide. We’ve recently identified several within the building where I live. However this is cause for concern, because there are quite a number of issues with AirBnB. Put rather bluntly, if you are offering rooms on AirBnB you might be breaking the law and you are also possibly jeopardising your neighbours financial well being.

So what’s the problem? This clip from Adams ruins everything sums up the main arguments against AirBnB. Cracked also reviews the major arguments against it.

But for starters, if you are offering rooms on AirBnB what kind of mortgage do you have? Because if you’ve got a owner occupier mortgage that only allows you, your family and non paying guests to stay in the property. Even with a buy to let mortgage only registered tenants on a long term least (generally more than 90 days) are allowed to stay. If you are renting rooms, or worse the entire flat on AirBnB, then you are almost certainly breaking the terms of your mortgage. In theory if the bank finds out, they could tear up your contract and demand immediate repayment (i.e. you get 30 days to come up with say £100,000 or lose the house!).

And this issue of who is allowed to stay in the property is not some minor bureaucratic point. People tend to prioritise mortgage or rent payments above all else, as they don’t want to end up homeless. So the risk to the bank of you defaulting on a mortgage loan is relatively low, hence why they can get away with offering such a low rate of interest on such a large loan. By contrast hotels and B&B’s are a much more risky business (recall Trump’s four bankruptcies involved exactly these sort of properties). They are much more likely to go bankrupt, hence why they have to put up a higher proportion of starting capital and get charged a higher interest rate. While some banks are starting to offer AirBnB compatible mortgages, they generally involve a higher rate of interest and a larger deposit. So unless you are on one of these mortgages, you are likely to be committing mortgage fraud.

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Then there’s the issue of home insurance. Again, home insurance assumes you are either renting (long term) or living in a house you own. AirBnB type arrangements aren’t covered. Some insurers are starting to offer AirBnB compatible policies, but as with the mortgages these cost more than a conventional insurance policy. If you are renting out rooms under AirBnB and you lack an appropriate policy, then you (and any of your guests) are likely to be uninsured and there is very little chance of your insurer paying out in the event of a claim.

Also the above only applies to home insurance. There’s also the issue of getting liability insurance (in case you being sued by a guest if he falls in the bath tub or tumbles down the stairs). Then there’s your block insurance if you are in a larger apartment complex. Hotels and B&B’s have to comply with a long list of safety requirements to be given permission by the local council to operate and too convince any insurer to provide them with cover. e.g. does your building have a sprinkler system? I know mine doesn’t, but I know that in some countries hotels (above a certain floor height) are legally required to have one (and this applies even if the building is a mixed development). Hotels tend to have better security arrangements, CCTV, key cards and codes that expire every 24hrs, security guards, etc.

Hotels aren’t doing all this for fun, they are doing it generally because their insurance policy will be voided if they don’t. e.g. in the UK there are no sprinkler requirements, but your insurer (or fire officer) may insist on expensive modifications (e.g. putting in fire walls and new fire escapes) if you don’t have a sprinkler system.

Now I’m not usually the sort of person to get worked up about health and safety, but this is one situation where the H&S killjoys experts have a point – hotels, B&B and hostels do catch fire, there have been several large and often fatal incidents over the years (e.g. the MGM Grand fire or the Downunder Hostel fire in Australia, hence why the regulations are so strict. And no, small B&B’s aren’t exempt, you still have to comply with at least some minimum level of safety.

This raises the question as to whether, in the event of a claim, would the insurance company pay out. My guess is they’ll probably take it on a case by case basis. If a fire started say in an AirBnB rented property, they’d likely pay out to any of the neighbours effected, but refuse to pay out to the AirBnB owner (so he gets saddled with maybe £50,000 of fire damage and he’s still in debt to mortgage company). If it was an issue nothing to do with any AirBnB property (e.g. the roof caves in), they’d likely just pay out and not ask any questions. However in a scenario where say a large number of flats in a block are AirBnB and say the building burns down, the insurer might well argue that the block was essentially functioning as an illegal hotel, thus invaliding the policy and they are within their rights to refuse to pay out to anyone.

Suffice to say, its hard to say which way things could go, it will likely take a few test cases to sort out. However the implication is that if you’ve got AirBnB owners in your building, there is a risk that you might not be fully insured anymore. So anyone renting rooms via AirBnB is having a potentially detrimental effect on their neighbours. Quite apart from all the other issues with large numbers of people coming and going at odd hours.

And as I mentioned earlier, you generally have to apply for planning permission if you are planning to set up a hotel or B&B. And yes, this applies even if you don’t plan to make any alterations to your building (as you are changing the use of your property). In some parts of the world you will also need to apply for a license of some sort in order to operate a hotel or B&B. And this is not some bureaucratic rubber stamp process. Any application from an AirBnB owner for permission to operate has a very strong probability of being rejected. Why?

Well because, as noted, homes and apartment blocks often don’t comply with the same building codes imposed on hotels. There’s also issues like disabled access, which hotellers have to cater for (newly built apartments also have to have disabled access, but older residential blocks don’t) and possibly parking issues. Then there’s the provision of water, electricity, broadband and public services (e.g. bin collections, access for fire engines and emergency vehicles), which will be based on the assumption that all the apartments in a certain area are domestic properties, not defacto hotel rooms. This is why hotels pay business rates to cover these costs. An Airbnb might also need a different form of TV license to those used by a domestic property.

And speaking of which, you are paying tax on any earnings you make from AirBnB, aren’t you? You’d need to declare this as income on your self assessment tax form (as well as paying those business rates, water charges, TV license, etc.). So its very likely than anyone offering rooms on AirBnB is not paying their taxes in full….like David Cameron’s dad, or Jimmy Carr.

Also the freehold (or leasehold) on many buildings may well prohibit any form of AirBnB like activity (mine forbids the operation of any form of business within the block for example). Getting around this is going to be harder than dealing with the council, as you’d need to get your neighbours or the leaseholder to agree (and they’d either say no or insist on a cut of any of your profits).

Another issue for councils is the fundamental matter that they don’t want all the apartments in a city turned into hotels. This makes it harder for people to buy or rent. If its possible for a landlord to kick out his tenants paying £1,000 a month on a 3 bedroom apartment and then move in AirBnB guests paying £50 a night each (i.e. up to £4,500 per month!) everyone would do it and city centres would be full of AirBnB‘s with nowhere for the people who live there to rent. So AirBnB is contributing to the housing crisis in the UK. Hence it is not unreasonable for the authorities to be resistant. And while some aren’t doing much about it at the moment, a crack down is going to come at some point. Already some cities are starting to take action and my guess is that this is only the start.

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Protests against AirBnB by renters facing eviction is a growing problem

Then there are other issues, e.g. lets suppose you are an AirBnB owner and one of your guests refuses to leave at the end of his stay (as has happened on a few occasions already), nor will he pay you anymore. What are you going to do? Drag him out by the scruff of the neck? Okay and then when the cops show up they’ll be putting the cuffs on you (for assault) and letting him back in. In the UK a landlord has no legal right to undertake an eviction. Only the courts can sanction an eviction and it can only be carried out by an agent of the court (e.g. a bailiff). Until your tenant has had his day in court, he remains your tenant, you can’t throw him out or harass him in an effort to try and make him leave, indeed doing so would likely make it harder to secure an eviction.

While yes it is true that certain providers of shorter term accommodation can get around the need for a court order, but they still can’t drag someone out of the building (there is a due process they have to go through as well). And they are operating within a tightly defined legal frame work. As I think we’ve established, any AirBnB owners is likely to be operating in legal limbo and is almost certainly in breach of the law. So it would be up to the courts to decide. While they would almost certainly authorise an eviction, that could take weeks. And one wonders what the court will make of someone admitting under oath to operating an illegal hotel, in violation of planning laws, building codes, while simultaneously committing tax fraud, insurance fraud and mortgage fraud.

And note that we are talking about the UK here. UK law blatantly favours the landlord, unsurprising in a country where the landlords and the landed gentry have been making the laws for several centuries. In certain US states or in Europe the legal situation is very different. It can take months, sometimes years to evict someone.

As for AirBnB guests they have to consider the risks they are taking. For example, what do you really know about the person you are renting off? There’s already been a number of clients who’ve been scammed by rogue landlords and con artists. You might find the room you’ve been offered is well below the standards, or even dangerous. There’s even been guests who’ve died during their stay at an airbnb (due to poor safety standards or carbon monoxide poisoning). You might find your host suddenly cancelling on you days before you travel. Note that a recent crack down by authorities in London caused many to lose their bookings. This link includes a few tales of woe from Airbnb guests and providers.

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And this brings us to the racial profiling. About the one thing you will know about your AirBnB guests or hosts is what race he is, as he will provide either a photo or a short video. Trouble is you can’t really tell a lot from that. You’re host could be fine, or he could be Begbie from Trainspotting, or an axe murderer on the run from Eastern Europe whose previous premises was the inspiration for the movie Hostel. As a result this has let to accusations of racial profiling or profiling by social class by both hosts and guests.

Certainly, the fact is that the law, factors, insurers and mortgage companies haven’t quite caught up with events. Once they do, they’ll likely re-draft laws and policies to accommodate things like AirBnB. However, this will almost certainly come at a price. AirBnB owners will suddenly find it costs a lot of money and hence there’s a reason why hotels charge £100 a night for a room (because that’s about what it costs to pay off all those bills!) and suddenly AirBnB isn’t the brilliant money making scheme they’d thought (much like Uber). Also changes to the law, while bringing AirBnB the right side of the law, they will probably allow more leeway for AirBnB operators to be blocked from operating, if for example other residences in a block object to it.

And inevitably further crack downs will come at some point, both by the authorities and perhaps private investigators operating on behalf of insurers and mortgage companies. And woe to any AirBnB owner who gets caught in this dragnet.

Trouble is brewing…

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I worry that we’re going to see a lot more strikes over the next year or so as the full impact of brexit works its way through the economy. Already, there’s been a number of strikes, southern rail for example, multiple ones at Heathrow, the London underground, etc. But I worry that is just the start.

I’m not usually the one to get too involved in Union politics, but I happened to go along to a recent meeting and I think it highlights many of the problems. No doubt the Tories will try to spin any strikes as some sort of leftist plot to get Corbyn elected. Well his name, nor did the labour party come up once in the meeting. The only time I’ve heard any union member mention his name it was as the butt of a joke afterwards.

What the union did discuss was the hypocrisy of lay-offs of some research staff while on the teaching side we’re massively overloaded, largely because brexit has made it so much harder to recruit. At the same time the unions worry that the drop in the value of sterling and rising inflation means we’ll effectively be swallowing a 20% pay cut over the next few years. And deducting inflation from any pay rises since the start of the financial crisis means we’ve already had to take a 9% pay cut since then, which is better than the defacto 10.4% average pay cut across the UK. And this cut in wages in real terms at the same time as inflation rises is also a factor in why a third of UK families are living in a defacto state of poverty.

So naturally, the unions are less than pleased and the likelihood of industrial action is increasingly strong. And across the public sector, the NHS for example, this picture of workers stretched and overworked while being forced to swallow a defacto pay cut is replicated. And in the private sector too, it is inevitable once people start to notice how their pay packet seems to get that bit lighter every month that they too will start to demand a higher salary.

One feature of strikes that I think people don’t get is that they often don’t start for the reasons they are really about. Take the Southern rail strike, officially its over who gets to close the doors on a train, the driver or the conductor. This sounds silly yes, but then again many marriages collapse usually for some very silly reason, such as the colour of a IKEA futon (IKEA is Swedish for “arguments” I assume, I’m sometimes surprised they don’t have marriage counsellors and divorce lawyers in their stores). Its all about trust and a break down in the relationship between workers and their bosses.

For example, another issue that came up in our union was some changes to the employee evaluation process. To cut a long story short, management told the union one version of why they wanted certain changes, which I have to say I thought seemed pretty reasonable. However, when one or two union members, who are also line managers of staff, went on a training course they were told a completely different version of why the management wanted these changes (to promote a more commercial style rank and yank system). Naturally they fed this back to the union who has now rejected these proposed changes.

And I’ve seen this happen in more than a few other occasions, both in the public sector and private. Management come across as two faced, they say one thing to the unions, then another thing to senior staff or the media, failing to understand that word will get back to the unions one way or another (such as by them reading a newspaper!). So you can see how, after being promised that they won’t be put out of a job, the conductors on southern rail assumed the worst when they learnt Southern was buying a load of driver only trains. And so they pushed the panic button.

If you go behind someone’s back and lie to them, they will generally assume the worst. Honesty is the best policy. If management really do want to bring about certain changes, then you need to get buy in from staff first. Trying to steam roller any opposition will just lead to the sort of chaos we’ve been seeing in Southern rail. In fact its worth noting that strikes in Scandinavia and Germany are less common, in part because there’s a much closer working relationship between unions and management, with union rep’s often sitting on company boards.

So a lot of the strikes we’ll be seeing may well start for seemingly silly or trivial reasons, but in many cases they’ll represent the straw that finally broke the camel’s back. And like I said, the bulk of that pile of straw represents the usual “we’re overworked and underpaid”. Pay staff more, hire more staff to take the load off and they’ll put up with a lot more hassle. That’s a big problem for the government (and the private sector) because it would mean them having to push up public sector pay (or hiring more staff). Whatever it costs to fund a hospital or university today, it could be 20% more expensive in five years time. And with falling tax revenue post-brexit those are bills the government can’t pay, nor can those in the private sector, so some union militancy is very likely.

Now the Tory reaction to all of this will no doubt be to look at ways of preventing strikes. For example, they might well ban public sector or workers in industries like power and transport from going on strike. Well let me head off that one, it won’t work. Other countries have similar laws and all that happens is you end up with more wild cat strikes. Keep in mind that all workers need to do is pull a bunch of sickie’s all at once. If management insist on sending in doctors, well its very easy to make yourself unfit for work, just don’t sleep or eat enough. In some safety critical jobs its actually illegal for a worker to attempt to work without getting a certain number of hours sleep first. If you work in the food and beverage industry you are supposed to avoid your place of work if you’ve been exposed to a food borne disease (so just visit a relative with a wee nipper with a tummy bug and you’re off work for 48 hrs!).

Also there’s the option of work to rules. We’ve got one of those running right now in our place and I think long term its probably going to be what forces a compromise from management far more effectively than any strike can. Work to rules can, over a long enough time period be crippling, as often there’s all sorts of things workers are expected to do on a daily basis, which their contract doesn’t even mention. For example a couple of years ago the Irish public transport workers noticed that there was nothing in their contracts that obliged them to collect fares, so rather than going on strike they simply refused to collect fares for a day, meaning the company had to pay for the whole system to run without any revenue coming in!

But perhaps the biggest danger for management is what if staff start leaving, either taking early retirement or immigrating to Europe. If I’m honest, the pay rates in Ireland look awfully tempting right now (thanks to the falls in the value of sterling). If I hadn’t bought a house recently, I’d probably be applying for jobs back home right now. And I’m guessing there’s plenty of junior doctors (who may not have mortgages) thinking the same thing, particularly given how horribly they are being treated by the government recently. The UK risks a brain drain post-brexit as workers move overseas. A situation that would not be helped if immigration is restricted. And this doesn’t just apply to highly skilled labour like doctors or lecturers. Keep in mind that even when it comes to say, train or bus drivers, its not as if a boss can wander down to the job’s centre and recruit a few dozen fully trained and qualified drivers right then and there. It takes time to teach such people and for them to build up enough experience to do their job effectively.

So I think the message is buckle up and get used to the fact we will see more in the way of strikes, work to rules and public serviced stretched. There is a way out (aside from the obvious, halt brexit), but it means management being willing to pay up, hire more staff to relief staffing shortages and increasing pay to match inflation. But that in itself will have a knock effect by making a lot of things much more expensive.

Delayed reaction

One of the problems with Brexit and Trump, is that while both are expected to cause serious economic damage, often to the very people who voted for such policies, but it might be sometime before the full impact of this is realised, as the primary risk is the long term damage.

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Indeed we are already seeing the effects. For example, recent rationing of vegetables in the UK. The supermarkets blame unseasonal weather in Spain. However, relatives I have in Spain, Ireland and Germany and they report that while yes supplies are down and the price of certain vegetables is up, there’s no rationing. The obvious explanation is that the drop in supplies in Spain has pushed up the prices. But with the UK pound having dropped in value by 20% the UK supermarkets are being outbid by their competitors from the rest of Europe who can pay the Spainsh growers in euros.

Similarly brexit has been disruptive to businesses, 58% of firms say so. There’s been many job losses since brexit, the banks are already quietly moving out of London. But employers, aware of how politically sensitive any such claim would be, are going out of their way to avoid saying so, often blaming other factors instead. e.g. we’ve seen a few redundancies in the uni. The official reason is that the research units they worked for didn’t bring in enough money….what they don’t mention is that the main source of research money was from the EU! The UK government has promised to pick up the tab for research, but we’ve certainly not seen any of that money, so now people are losing their jobs.

In another example, we have the recent revelation regarding NHS overcrowding. Well in part this is due to the fact that the NHS has been chronically underfunded since the Tories took office. But brexit has made it increasingly hard for it to recruit. They, like universities (we’ve been unable to fill a number of vacancies since brexit), will find it difficult to recruit staff from abroad to plug staffing shortages, as foreign staff will be fearful of the impact of brexit. The reduced value of the pound makes UK salaries look less attractive (and the rise in racist incidents and xenophobia doesn’t help either!). So the end result, waiting times go up and granny’s reward for voting leave is she’ll be waiting longer for that heart operation.

Politicians are experts at taking credit for something that happens through no action that they have taken (often despite their policy rather than because of it). At the same time, they are also very quick to try and avoid blame for something that is very much their fault. But the problem is that a lot of the time the effects of their term in office don’t show up until after they’ve left office.

Case in point, the Great Recession. The Republicans have tried to blame everyone other than themselves for this, Bill Clinton, Obama, Hilary, working class people, the tooth fairy, etc. The reality is that the two people who have to take the bulk of the blame for the financial crisis are Ronald Reagan and Margaret Thatcher. Their policy of deregulation, neo-liberal turbo capitalism and the rat race “greed is good” attitude it brought with it, set up a massive bubble in the world financial system. A bubble that finally popped in 2007.

And the warning signs were there right from the start. There were numerous scandals, with companies going bust, billions lost and the government forced to step in, cheque book in hand to rescue reckless gamblers. LTCM (Long Term Capital Management), the Junk bonds scandal of the 80’s, Stratton Oakmont (of Wolf of Wall street fame), the Guinness trading fraud, the failure of Barings bank or BCCI, the American savings and loan crisis, ENRON etc.

Indeed, its worth noting that a number of these scandals and failures listed above occurred within the term limit of both Thatcher and Reagan, or their immediate successors. So nobody can plead ignorance and say they didn’t realise the dangers. And it was in this era that the concept of “too big to fail” was established. The lesson many on Wall street took away from these early scandals was that no matter how badly they screwed up, the government would bail them out. Profits had been privatised and risk had been socialised.

This is not to say all other presidents in between escape blame. G. W. Bush was clearly asleep at the wheel in the lead up to the crisis. There was a massive property bubble building and a huge rise in credit. A number of experts were warning that this wasn’t sustainable. He and his advisers should have realised the danger and taken away the punch bowl before the party started to get rowdy.

Bill Clinton often gets blamed for the crisis because he repealed the depression era Glass-Steagall act. However, we have to put this decision in the context that the banks were simply by-passing the act (via overseas subsidaires), in part thanks to legislation passed under Reagan and trading in derivatives had been left unregulated by the Reagan Adm. (which was ultimately the trigger for the financial crisis) Clinton’s options were to do nothing, or get rid of the act and then try to replace it with something that actually worked. So in and effort to get a GOP controlled congress to play ball with him and regulate derivatives, he signed a repeal as a concession (one that had been put on his desk by Republicans, i.e. they initiated the repeal, then pressured Clinton into signing it, not the other way around as its often presented). Of course Republicans being the backstabbing two faced gits that they are, they simply took the repeal and didn’t put in place any new regulations.

To draw an analogy if was Thatcher and Reagan who designed and commissioned the warehouse made of matchwood with no fire exits and crammed full of oil soaked rags built right next to an orphanage. Newly appointed fire safety officer Bill Clinton should have done something about it. But as it was already built and afraid of catching flak from the powerful builders lobby and their Mafia allies, he caved into pressure and just signed off on it without inspecting the building. It was however ultimately nightwatchman Bush, who was asleep on duty in the warehouse when it went up in smoke. And it was likely his habit of smoking indoors and his failure to extinguish his cigarette that caused the fire to start in the first place.

In short, yes it would be unfair to blame Reagan and Thatcher alone for the financial crisis, G. W. Bush, Gordon Brown, Blair, Clinton and anyone who with a credit card who spend money they didn’t have prior to the crash, we all need to take some of the blame. But clearly it was these two who set the world on the road to ruin. But the problem is that the bomb didn’t go off within their terms, hence they didn’t get the blame. Indeed there are (as noted) some Trump voters who blame Obama for the crisis, even thought he wasn’t in office until well after the crisis had started.

So one has to worry that history is about to repeat itself. Trump and Brexit will both have lasting long term impacts on the global economy. Potentially, we might well look back in a few decades time and point the finger at this moment as the point where Western capitalism and democracy failed. But it will take a while for such damage to appear. Indeed, given that Trump’s plan seems to be to cut taxes and increase public spending, we could well see a temporary jump in the economy, even thought he’ll just be starting another unsustainable bubble.

The US has a major problem with its national debt. As I discussed in a prior post, if something isn’t done about it, sooner or later the US government will go bankrupt. And Trump is talking about borrowing anything from $10 trillion to $20 trillion. This could potentially double the debt and push it to levels equivalent to nations like Greece or Italy. At the same time, his racist, xenophobic and anti-science policies will stifle investment. The next generation of investors and entrepreneur’s will bypass America and go elsewhere. Already in fields such as renewables or biotechnology America is falling behind its rivals. Tariffs and protectionism, will just make things worse in the long term.

In short, Trump policy will make it very difficult for the US government to raise tax revenue to pay off its debts. And with the baby boomers retiring the US needs to start raising income just to pay the pensions of those retiring. At some point, it could be a few years time or twenty, the US government won’t be able to raise the cash to pay its obligations, never mind service its debts and it will default. Of course the likelihood is the markets will see this coming and stop to lending any money to the US government, leading to a sovereign default.

Now Trump supporters will say, so what that’s only bad news for China and those pricks on wall street, isn’t it? Well two thirds of America’s debt is internal, that is to say held within the US. And American pension funds are the main holder of US treasury bonds. If the US were to default as Trump has implied, he’d be bankrupting every pensioner and saver in America. Print more money? That will destroy the value of the dollar, which is bad news for billionaires like him or anyone on a fixed income (such as pensioners). In short, there is no way that Trump or any of his successors (whether Democrat or Republican) can dig their way out of this hole without screwing over pensioners and baby boomers, or in other words the very people who put him in office. Trump’s economic policy is essentially the same as Argentina’s prior to the crash in 2001.

In Britain Theresa May has committed the UK to an economic policy that is also unsustainable. Brexit is going to be expensive, perhaps a cost of up to £66 billion just to leave and maybe as much as £25 billion per year to fund all those subsidies she’s promised to those who will lose out (car makers, universities, farmers, etc) as well as the loss of trade. Put quite simply that’s unsustainable. There was something of a stopped clock to Osborne and Cameron’s obsession with deficit reduction. In that they were doing it because they couldn’t bring themselves to spend public money on the poor and the needy (who’d just blow it all on stuff like pasties and rent). But that’s not to say that the UK hasn’t got a big problem here, one that will get worse with time as more and more baby boomers retire.

Digging the UK out of this hole becomes difficult post-brexit. Making it harder for young Polish workers to come in and take over paying the taxes that pay for the pensions of retiring British workers isn’t helping matters. Quite apart from making it harder for companies to recruit (i.e. longer waiting times in hospitals, you won’t be able to get a plumber, train and bus strikes and delays become more common, etc.). Letting the value of the pound slide leads to high inflation, which means pensioners take a hammering and workers start demanding higher wages (anyone paid in sterling reading this has essentially taken a 20% pay cut this year thanks to the falls in the value of sterling).

Cutting public spending? Well the two biggest line items in the budget are the NHS and the welfare bill. And pensions and working tax credits are the main source of welfare spending, not unemployment benefit (tiny by comparison). In short, there is no way the UK can dig itself out of this hole that doesn’t screw over the very pensioners who vote Tory and voted overwhelmingly for brexit. My advice to any pensioner is don’t retire....ever!

In fact here’s a prediction, my guess is that what will finally push the US over the edge will be its greatest ally the UK. You can just see the scenario. The UK, at some difficult to predict future date, goes broke as a result of brexit and defaults on its debts. American banks post huge losses. Worried the US might be next and needing cash in hand to prevent a run on their reserves, they all dump their holdings of US treasury bonds. The US government finds it impossible to obtain credit and defaults as well.

What about the IMF? Well do you think China or the EU is going to be terribly helpful after Trump and Brexit? They’ll rescue themselves and their own banks but that’s it. Keep in mind that some bankers may actually be able to profit handsomely from the crisis, the same way they profited during black Wednesday.

So the real danger with Trump and brexit is the long term lasting impact they will have, not the short term. Its important to realise this and when things do hit the fan, remember how we got here. And also as we go along, remember that while many may be reluctant to admit it (particularly those who voted for these clowns in the first place!), but both are already having an impact on the real economy and on people’s lives.

Blogging catchup

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There are dark clouds on the horizon…..

My travels down south

One of things you need to get used to in Argentina is the crippling bureaucracy, forms stamped in triplicate, checked, queried sent back and then recycled as fire-lighters. They say you have to be patient to be Argentinian. The brits could have stopped any invasion of the Falklands just by getting them to queue and fill out the appropriate paper work (trouble is the argie’s are so used to standing in large queues so they’d out queue the British!).

They do try to cut down the red tape at border control by streaming people into different groups, one for locals, another for those from neighbouring South American countries, another for everyone else and one for Americans (they implement the same harsh checks the Americans implement on Argentinians, so any American going to South America, bring a big book, expect a long wait and to be finger printed, photographed, body cavity searched and asked if your a terrorist/rapist/nazi or here to steal our jobs). Naturally one has to dread what will happen post-brexit if the UK tries to restrict immigration from its neighbours. The queues will be horrendous. As it was it took an hour to work my way through a half empty Buenos Aires airport and about four hours to go through the border into Chile.

Another little incident, on the taxi ride in London, the taxi driver saw a crash in the opposite carriageway. He dialled 999….and got put on hold…..for ten minutes before he had to give up and focus on driving (he was on a hands free btw). He was getting the same fobbing off from the cops as I’d been getting from BA. Imagine you’ve got an axe murderer breaking down your door and you’re on the line to the cops and getting put on hold like that. Britain truly is going to the dogs.

By contrast I lost my wallet. Within twenty minutes, as a result of a call to an non-emergency line (by someone else rather than me) there were two Argentinian cops outside. Granted there wasn’t a lot they could do and let’s face it a tourist losing his wallet is hardly a police priority, but its in stark contrast to what you’d expect in the UK. The fact is UK policing, like so many things in the UK (public transport, hospitals, roads, public housing) is kind of crap and no way near up the standards of those in other countries. We have public services many developing nations would be ashamed of.

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Of course Argentina is at the back end of a major economic crisis. Frankly all those brexiters whinging about how bad they’ve had it the last few years come across as a bunch of spoiled brats compared to what the Argentinians have been through since 2007. Are they voting for brexit from their South American neighbours? Are they blaming migrants from Chile for all their woes? No of course not. Yes the previous government Argentine did labour on about the Falklands (predictably), but the current regime’s gone quiet about that. In short it does tend to suggest Brits lack backbone.

Trump train wreck draws nearer

Trump hasn’t even been inaugurated and he’s already in a crisis. Normally a president gets a honeymoon period from Congress and the press. Even that’s run its course for Trump already. And some of those leading the assault are his fellow Republicans. It doesn’t bode well, particularly given his disastrous press conference. Then there’s him appointing his family members to senior positions and not putting his money in a blind trust fund.

All in all it leads me to the conclusion that Trump will probably be impeached at some point. For the moment the GOP will hang onto him, as they need him. But sooner or later, after a few scandals, after his supporters realise they’ve been had and start jumping on the anti-Trump band wagon, there will be moves to oust him.

Recall how all through the election he went through cycles of being denounced and disowned by his own party. That sort of cycle continues, things will come to a head eventually. And there’s several obvious flash points already, his differing views on healthcare reform, his sucking up to Russia, his dubious appointees, the very real possibility of corruption scandals and conflicts of interest, sex scandals, confrontations with China, etc. And keep in mind it doesn’t require a majority of Republicans, only enough to join with the democrats and swing an impeachment vote.

Tories let their brexit fantasies slip

A brain fart from the chancellor let slip the Tories post-brexit fantasies. He suggested that the UK could “punish” the EU for imposing tariffs on it by lowering its corporation tax. Let’s think about that for one minute. As noted in a prior post, the UK will probably have to in some way subsidise its manufacturing sector post-brexit. The governments overall costs will be up (by tens of billions), tax revenue will be down (no young Poles to pay for the NHS), so cutting taxes is not a long term strategy without some major cuts to public spending.

That means no subsidies to farmers, manufacturing, fishermen or the regions. It means big cuts in NHS spending and cuts to the welfare budget. Keep in mind that working tax credits and pensions are the main source of welfare spending (over 50% of total spending), unemployment benefits are less than 10% of the welfare budget. So any significant cuts to welfare would impact on pensions and working tax credits.

In short one has to ask how popular the idea of a massive tax break to corporations would be while manufacturers get hammered, millions lose their jobs. While those lucky enough to keep their jobs lose their pensions, benefits, tax credits and see big cuts to public services. It doesn’t quite tie in with the Tory mantra of looking after working families. So it is something of an empty threat.

Of course they can only make it thanks to their ally Corbyn. He’s rendered labour so unelectable that the Tories could conceivably get away with such a thing. It also betrays the reality that brexit will be negotiated to benefit only those in the UK who live within the M25. The rest of the country will get screwed.

True GDP

Speaking of London, its commonly stated how the UK is so much better off under the Tories. Actually, that’s not true, it depends on where you live. As the graph below shows, if you live in London or the South East then yes, the GDP in your region has gone up by rather a lot. However, in the rest of the country its a different story. Scotland and the South West has seen a decline and then a recovery (no thanks to the Tories), while the rest of the country has never really recovered from the crash. Northern Ireland has flatlined.

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So when you hear stories about how well the economy is doing, ask for a minute yes and for who?

Corbyn rebranded

Corbyn promised to rebrand himself as a populist firebrand prior to Christmas. To copy the tactics of Trump and co. to push labour to victory. So how is that working out? Predictably, not so well. Indeed, my suspicion is that this was a plot by some Blairite’s in his cabal to push the Corbyn train wreck over the edge.

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For starters what Trump calls “post-truth” the rest of us call “lying. Corbyn goes around promising the sun the moon and the stars and he’s going to be accused of the very thing he berates the likes of Tony Blair for. Recall that what got Tony Blair such a bad name with those on the left, was those lies over Iraq. While Trump and Farage might be able to stir up the laden racist living in some easily deluded fools, I’m doubting Corbyn can use the same tactic with those on the left. They like there “facts” too much.

And we’re ignoring the fact that the media are unlikely to give him a free ride. While they failed to take Trump and the brexiters to task for their numerous lies (perhaps because they were so numerous it was hard to keep up). But they are certainly not going to let Corbyn away with that. He says anything that sounds like a change in policy his flip flopping, he back tracks he’s dithering, he promises anything that’s probably undeliverable they’ll line up experts around the block to denounce him.

Is this fair? No, but its the reality that every left wing leader has had to deal with for some time. Brown, Miliband, Sturgeon have had to put up with the same. If you can’t take the heat, stay out of the kitchen.

And given that there’s two by elections coming up, at least one of which he’s likely to lose, it doesn’t bode well for Corbyn. Losing a byelection to a sitting and unpopular Tory government in a safe labour seat would be unprecedented and just plain bad. Losing one to UKIP would be disastrous and fatal. My guess is that if labour loses these next two byelections, we’ll probably see another leadership challenge shortly there after.

Perhaps more worrying for labour is the reasons for these byelections. Two MP’s simply up and quit. It suggests that many within the labour party are simply admitting defeat. They know Corbyn’s leading the party off a cliff but that they won’t be able to unseat him until its too late. They know he’s essentially allied himself with the Tories on brexit. Any political ambitions they have are about to be dashed. And come the next election a lot of them are about to find themselves unemployed. So yes, some are out looking for work already and if an opportunity comes along (such as to become director of the V&A), they are going to take it. So labour will probably face a dripping away of MP’s as they flee the sinking ship.

Cycle status

Chris Grayling, the transport secretary has shown himself to have some UKIP like views towards cyclists. Firstly he knocks one off his bike getting out of his ministerial car. Secondly he say’s they aren’t proper road users. I’m reminded of the the late (insane and drug fuelled) major of Toronto Rob Ford, who banned cyclists from the cities streets….then left wondering why there were so many new cars on the road.

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Any car driver who dislikes cyclists, just imagine he’s in a car instead. Do you want those tail backs to be even longer? More delays more misery. Cyclists are doing you a public service. And if you want to rant about them not paying road tax, well neither do you, there’s no such thing as road tax, roads are paid for mostly out of general taxation. And as for vehicle tax, cops, the queen and tractors (to name a few) don’t pay that either. Try screaming abuse at them and see what it gets you (about 6 months I’m guessing).

Either way, making Chris Grayling transport secretary is like making Jimmy Savile minster for children.

Brentry

On my travels I read an interesting article in the Economist about Brentry, that is the UK entry into the wider European economy. After the Romans abandoned the UK it had become a continental backwater, invaded and fought over by one group after another. By 1066, the rest of Europe had bounced back from the dark ages, international trade was expanding, new ideas from the east (well actually old ones that had be rediscovered) were being implemented and tried out. Britain however, was still essentially caught up in the dark ages.

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While William the conqueror and his methods were certainly brutal, one has to acknowledge the economic benefits the Normans brought with them. The UK started to trade with the rest of Europe. The Normans brought security as well as new technology and new ideas. They went on a building boom, castles, city walls, restored Roman roads and then later built many of the country’s now famous cathedrals. A sort of medieval Keynesian economics was at play. By the king’s death, Britain was booming. One is reminded of this Monty python sketch.

Indeed the Economist suggests that the Brentry might even explain the North/South divide. Its often forgotten that there were two invasions of Britain in 1066, one by the Normans, but an earlier unsuccessful one by the Danes (well more specifically the Norwegian king), that was beaten off. Much of northern England had been under Danish influence for sometime, so many supported this invasion. Needless to say they weren’t in a mood to bend the knee to a bunch of cheese eating surrender victory monkey’s. So they resisted, the Normans put down the rebellions with their usual brutality, but this put the north a good century behind the rest of the UK in economic development and they’ve been playing catch up ever since.

War of the worlds hysteria

I also came across a release of Orson Welles infamous War of the World’s broadcast. It is often remembered for the supposed national panic in unleashed when it was mistaken for an actual news broadcast. Well in truth this is mostly a fake news myth invented by the media of the era (sound familiar?).

While yes a small number of very silly people did mistake it for actual news, but these were isolated incidents. Most were quickly informed it was just a radio play of a book that had been available for several decades. There’s no evidence of anyone jumping from roof tops or being treated in hospital for shock, or mass evacuations of New York suburbs. The newspapers blew the story way out of all proportion. Why? Because they, in particular those controlled by Randolph Hearst (the Rupert Murdoch of his day) saw radio as a threat to their business. So the exaggerated the level of panic. And let’s face it, it sold lots of papers.

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Indeed, some pointed to how strange it was some getting in a tizzy over aliens from Mars while ignoring the very real threat from Hearst’s buddy Mr Adolf across the pond in Europe.

Now everyone’s been Trumped

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Analysis
So its Trump, how can 60 million people be that dumb! Many are trying to put the spin on it, that it was working class Americans in rust belt states fed up with how they are treated in Washington that swung the election. Well no, the polling data (both before and after the election) shows the vast majority of Trump voters are middle class or upper class whites who generally have a better than average income. The majority of low income whites still voted for Hillary. Certainly some more of them than did vote for Trump than would normally be expected in an election, but in theory this was cancelled out (to some degree) by an increased level of turn out and voting for Hillary by ethnic minority voters.

Indeed its worth remembering that she carried the popular vote, Trump carried the key swing states by only a tiny margin. The reality is that a Trump victory should have been mathematically impossible had it not been for large number of both wealthy or middle class Americans turning out to vote for him. So Trump is on their head, they are now responsible for whatever mess he makes.

A more crucial factor was that the “never Trump” block within the GOP clearly dithered at the final moment. I mean Republicans are such hypocrites. They launch all of that assault on Bill Clinton and Obama, go around thumping their bible complaining about how America now has no morals anymore….then vote for “grab them by the pu%&X” Trump, who is worse than Bill and far more corrupt than any president or candidate has ever been (Trump university for example, shady deals, Mafia connections) and will be spending some portion of his presidency in court. He may actually end up being indicted on bribery charges before he takes up office. And we can’t just point the finger at white men, the polling data shows a majority of white women also voted for him in certain older age groups. And least we forget Trump is likely to run up a massive deficit, far larger than Obama, so all that BS from the GOP about the debt ceiling over the last few years was clearly just political street theatre.

One fact is clear, is that facts no longer matter anymore. We are truly in the post truth world. And don’t even take my word for it. The analysis of a neuroscientist of Trump supporters is that there’s something wrong with their brains. They have an enlarged and overactive Amygdala, which means they are much more likely to overreact to perceived threats (whether real or imagined). They also have demonstrated an inability to be capable of separating fact from opinion, a trend we saw over in the UK prior to the brexit vote. In short, they believe crazy things because they don’t want to look bad in the eyes of their peers and because they gain some sort of sadistic pleasure out of the fact that it winds up liberals when they do this. Many of these are also increasingly getting their news from Facebook, or Alt-right websites who have both been accused of polarising subscribers by only showing them web pages that won’t challenge their views in an effort to get up site hits.

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And there is also the Dunning-Kruger Effect, by which many overestimate their own ability. I see this all the time as a lecturer. The people who will most overestimate their performance tend to the low achievers, who then can’t understand how it is that they failed (I’m not joking they’ll be on like 18% and want it remarked convinced that somehow we got it wrong). By contrast some of the high achievers tend to underestimate their performance (and come to me straight after the exam with the “well I know I’ve failed, what now?” line….when in fact they finished top of the class!). Or put another way, many Republicans don’t realise how dumb they actually are.

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And finally there is the racism. As in the brexit vote, some will try to argue that Trump winning had nothing to do with racism. Actually no, it very much had everything to do with it. Again the polls show that. The two leading reasons given for voting Trump were terrorism and immigration (i.e. no more darkies). On economic issues, even with low wage blue collar workers, Hillary won out easily. The simple fact is that many Americans who voted for Trump were quite willing to sacrifice some of their economic well being to see the wall build and America become a more racist place. There’s no way to sugar coat it. What Trump shows is that America is a very racist and misogynistic place.

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If Trump and his supporters aren’t fascist, why do they keep getting caught making fascist salutes

Which is hardly surprising given how the GOP have been pushing those over stimulated Amygdala buttons for many decades now. They’ve effectively brainwashed a large chuck of the US population to the point where they cannot separate fact from fiction and believe in new age myths over real data and statistics. Where some fantasy pedalling creationist, climate denying whack-job is given the same credibility as a Nobel prize winning scientist. In doing so they’ve done great damage to American democracy. I mean I was talking to someone from China the other day and enquired what he thought of democracy and he just laughed. I mean seriously, if you were Chinese, horrible thought the Communist party is, would you rather have a system that elects Putin, Trump or votes for brexit?

Trump’s other supporters
And then there’s the other group of Trump supporters, Jill Stein and Gary “Aleppo” Johnson voters. Let’s be clear, you effectively voted for Trump. Go through the data, you’ll see that in the 5 key swing states (any 3 of which would have handed the election to Hillary) and if only half of those who voted for Stein and Johnson voted for Hillary she’d have won (or if all those in 3 of those states who voted for Stein voted Hillary, she would have won).

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When Jill met Putin…..

One can’t argue with the maths, Hillary is not the president thanks to these voters. In effect by voting for either of these candidates in a swing state was the moral equivalent of taking part in a firing squad, but convincing yourself that you fired the blank round every time. Trump is on your head as well. I hope you like him, because its now your fault as much as it is the Republicans.

Hillary robbed at email point

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Hillary tries on her inaugural gown

And given how narrow the victory was one has to look back at the e-mail scandal and the FBI’s last minute intervention. This clearly had an impact, its difficult to believe it didn’t. Now while its clear the polling data was off, it still had Hillary in about an 8% lead prior to Comey’s letter. The final polls put Hillary about 4% up. So one assumes that it caused a 4% swing against Hillary, while the polls were actually off by about 4% as well. I’m reminded of this scence from the Simpsons where Mr Burns runs for office.

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Hillary had a massive lead prior to the Comey’s intervention

While Hillary has to take some of the blame, she may not have been the best choice of candidate (recall I never said I liked her much myself, its just I could see the difference between her and Mr Disaster). And she lost this election more than Trump won it (she got several million less votes than Obama got, while Trump got less votes that Romney got!). But clearly she’s right in pointing the finger at the FBI’s intervention, noting that if true, then Comey broke a long standing electoral law and should, along with Rudolph Giuliani and Senator Chaffetz be subject to a criminal investigation. Of course with Mr stop and frisk now likely to be the attorney general, that seems unlikely to actually happen.

Bernie
Inevitably some of the Bernie brigade are chirping about how Bernie would have won it. And yes I’ve seen polls showing that. However we have to put this in context. He hadn’t just fought an election campaign and have baseless racist/sexist smears thrown at him by the GOP, with the direct assistance of the FBI. Yes, he might just have pulled it off (this election favoured the outsider), but equally its possible is that he’d have still lost, perhaps by a larger margin.

Most Americans are trained from birth to consider anyone calling themselves a socialist to be coming for their wallet, their gun and their bible,in that order. Now I know that’s BS, but that’s still what many think. And there are large number of Americans, including quite a lot in the electoral block that typically vote democrat, who will not vote for an atheist as president. Bernie may have tied down a bit more of the white working class vote, but he’d have seen lower turn out among ethic minority groups from strongly religious backgrounds. And Blomberg would have followed through with his threat to run as a 3rd party candidate.

Again, look at the demographics of those who voted for Trump (who actually voted, ignore this myth about angry blue collar voters) its difficult to see Bernie making a bigger dent. Yes he might have won, but it would have been close. Then again, technically Hillary won, it was only this dumbass electoral college system that stopped her.

Trump v’s reality
So what can we expect from Trump? Well he’s biggest opponent is likely to be this little thing called “reality” and he can’t build a wall around that. Take for example his plan to put a 45% tariff on China and 35% on Mexico. Ya, that’s the thing, stick it to the Chinese, that’ll show’em….hay why’s my I-phone now 45% more expensive? And gas prices just went up, and when I went to buy new tires for my buick they were 35%….oh wait, now I see!

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The only thing protectionism will achieve is it will make everything more expensive. Now while that’s not a big deal for those who can afford to pay 45-35% more for everything, its not so great news for anyone on a tight budget. Yes some companies might move their factories into the US, but only those who exclusively sell to Americans. As other nations will retaliate with tariffs of their own, they’d be shutting themselves out of the international market by moving into the US. It would in short, make more economic sense for Apple to relocate out of the US and abandon the American market than lose the rest of its world sales. America simply lacks the economic clout to fight a trade war with China or the EU. Trump and his supporters might think its 1928, but its not.

Then he wants to build the wall and deport all of the immigrants. Now ignoring the engineering and practical problems with all of that, the enormous costs and the fact that the Wall has been obsolete since the Wright brothers invented this thing called “planes. And who is going to do their jobs? Do you think unemployed people in the rust belt are going to trek halfway across the country to take up manual labour jobs picking crops and cleaning toilets in California or Texas for 6 months a year, then go home again? The end result of his policy will be labour shortages and crops left to rot in the fields. As a result of Trump’s policy we could well see queue’s forming outside shops, much like in Venezuela recently, as certain items become scarce.

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Economists fear the US deficit exceeding 100%….

Then there’s the deficit, his plan is to run up a massive deficit, up to $5.3 trillion to $10 trillion. Certainly, he’d push America pass the long feared threshold of 100%, at which point its likely investors will start to panic, US debt will be downgraded and interest rates will soar.

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…..because it raises the risk of national bankrupcty

Now Trump says, oh I’ll renegotiate the debt or print more money. Ya, and you do realise that will devalue the US dollar? Meaning beyond a certain point, he’s no longer a billionaire (because a billion bucks suddenly ain’t worth that much). And this would also have to push up salaries, including those of state employees. government contractors will start charging the state more for their services. Lenders will charge a higher rate of return, so again interest rates go up. In short economic meltdown.

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Another member of the Billionaire’s club! Trump’s plans would make everyone a billionaire just like him!

Certainly the “print money” option is a good idea, in a crisis, as a temporary means of restoring order. But as a long term debt management strategy its the equivalent of buying Trump wine and mixing it with water and then trying to sell it, only nobody wants to buy it at the original price, instead they’ll only buy it at a discount price. Trump is basically trying to argue that he can still make money selling this diluted wine at a lower price than he buys it. And recall the largest holder of US debt is pension funds based in the US not China.

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Trump v’s congress
The second problem for Trump is that a number of his policies will not last long in congress.

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For example one of the first groups he’ll be upsetting with any trade tariffs will be the US automotive lobby. This is a cabal of car makers, fossil fuel companies, construction firms (who build and maintain roads) and auto dealerships. A lot of US auto parts are shipped in from abroad (most notably Mexico), as is lots of its fossil fuel supply. They will be more than a little upset at the thought that their cars should be more expensive and their profits should take a hit. And these are not the sort of people you want to mess with. Keep in mind the global warming denial machine is just one tiny part of this lobby group. At a local politics level, these guys wield a lot of power (as this Adam ruin’s everything mentions), typically 20% of local sales tax comes from automobile sales. Who do you think local politicians will listen too, Trump or the guys who fund their campaign and the main source of local tax revenue?

In short, Trump messes with these guys, and they’ll see to it that the GOP will get crucified in the mid-terms. And the GOP know that, so they ain’t going to endorse a lot of the things he’s proposed. Likely they’ll pick and chose. For example his tax cut plans, they’ll go for the idea of cutting taxes to the wealthy or getting rid of estate taxes, but likely leave out the bit about closing off loopholes. Which given how ruthlessly Trump has relied on those loopholes himself (he’s probably not paid any tax for 18 years), its likely he’ll go along with. This will, as noted, push up the deficit, leave many poor Americans worse off, while the wealthiest one % are much better off. As fo

The GOP will also go after various ideological issues that play well with their electorate, e.g. repeal Obamacare, ban abortion and gay marriage, deport migrants (although oddly enough not his wife!), make gun ownership compulsory (except for Muslims and minorities of course!), etc. The environment, well they’re pretty much going to ban that, with consequences much like in this Simpson’s sketch  (its scary how old Simpson’s episodes are starting to play out in reality).However, they will likely face Filibustering tactics from the democrats, who will effectively now try to shut down congress and count down the clock on Trump’s presidency. And the GOP can hardly complain as this was essentially their tactics under Obama. In short, its likely the log jam in US politics will get worse under Trump not better.

There are some positive policies that might emerge, the GOP and Trump being the hypocrites that they are, they can be prone to a strong element of “not invented here” syndrome. e.g. Obamacare. Mitt Romney was dead set against this, and I mean who the hell came up with this job killing idea?Mitt Romney did, Obamacare was modelled along the lines of similar policies in various American states…including one brought in by Mitt Romney! This explains Trump’s dithering on repealing Obamacare. He’d be replacing it with something very similar, just a bit more expensive and not as effective.

Similarly he might get certain things passed, who knows maybe even some modest gun control measures, some job creation through another stimulus package (much of which will inevitably find its way into his and his supporters pockets of course), simply because he proposed these things rather than Obama or Hillary. But beyond that, I’d brace yourself for disappointment.

Trump v’s the world
Trump will also face opposition worldwide. Pulling back from the Paris climate deal is not that straightforward, its now entered into international law, he’s going to find it very difficult to pivot away without suffering blow back. And the deal explicitly states that a country must give 4 years notice before leaving, so that’s not even possible within his presidency.

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He also wants to make friends with Putin and break with the NATO alliance. Ya, run that by your generals first! They would be appalled and point out the dangers in such a policy towards US interests. Most of America’s forward deployed forces are in Europe. They rely on European airspace to supply forces in the middle east, conduct intelligence in Russia and watch for possible missile launches. Losing that is simply not acceptable as far as his generals will be concerned.

And I take it he doesn’t want to get re-elected? You do know that one of Putin’s allies happens to be a little place called IRAN who took delivery incidentally of S-300 anti-aircraft missiles a few weeks back. These missiles effectively make it very unlikely that Israel could now carry out any attacks against Iran without losing a lot of aircraft. As one US general put itIran is now Israel proof”. Even the US forces would now have to accept causalities from any bombing missions against Iran. Which means Trump would upset the Israeli lobby by cosying up to Putin.

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And it takes some doing to have the Israeli’s and the Arab world against you. Those Muslim’s he wants to stop from coming into the US happen to control over 50% of the world’s oil production and hold many strategic bases. They now might just go away and form an alliance with the Chinese.

More worryingly its very easy to see how Trump and Putin could get into conflict with each other. For example, egged on by pro-Putin rhetoric from Washington Putin goes into the Baltic states, much like how Saddam mis-read signals from Washington and went into Kuwait. NATO forces, including American forces respond. And note that US commanders in the field don’t necessarily have to call the president before opening fire. If US forces or civilians come under attack, (or NATO allies ask the US commander for assistance) they can respond without waiting for a presidential order. So Trump would have to explicitly order his forces to stand down, even if it meant abandoning American civilians and military forces to be shelled and bombed. He’d be committing the very crime that the GOP tried to claim Hillary committed with regard to Benghazi, except on a much larger scale. He would be vilified, even by his own supporters as a new Benedict Arnold and likely Congress will have him out of office so fast his wig will spin.

Wall street’s man
And the bad news for anyone who did vote for him because your angry about the elites in Wall street in congress, well your a moron, stay away from ballot boxes in future. One little feature of election night I noted, firstly the Asian stock market crashed, dropping 1000 points in a few hours (as you’d expect if you’d followed the campaign). So heavy were these losses that the Dow didn’t open the next day, as it had lost 5% as a consequence of these losses in Asia. Then when it opened rather than the expected falls continuing, instead it barely moved.

Then the Asian markets regained their earlier losses within 24 hrs. To me this indicates that Wall street insiders knew something the Asian stockbrokers didn’t know (but quickly worked out), the fix is in. This behaviour means one of two things A) Wall street knows that something’s planned, Trump will not be president, he’ll have himself a little “accident” in a few days time, the electoral college will vote for Mike Pence or Hillary instead, etc. Or B) He’s been fixed, they’ve got some dirt on him or bought him, he’s their man.

I’m tending towards the second option, given that he’s now talking of repealing the Dodd-Frank act, a key bill brought in by Obama to prevent another financial crisis. In short all that BS during the rallies about going after wall street and draining the swamp, no it was all lies. He’s going to do nothing of the sort. If anything he’s going to make it easier for Wall street to screw the little guy, not the other way around.

Either that or the first option is correct and he’s not going to be president for some reason.

Trump and the UK
There are some in the UK who cheered Trump’s election. Theresa May won’t have been one of those. Firstly, after going to all this trouble to get brexit to kill off UKIP it does not suit the Tory agenda to now have UKIP going around portraying themselves as the UK Trump party. Also there has never been any doubt the UK could get a trade deal from the US, the question was always how beneficial it will be. Its a bit like trying to buy a car. If you’re in a hurry you’ll get it if you pay more than its worth. You want a fair price it takes a lot longer. You may have to walk away from a few deals first.

And again, remember Trump will have to get the details of such a deal past Congress. Recall the US auto lobby. Recall May has essentially committed to getting tariff free trade for the UK car industry. Its not possible to square those two circles. If Trump concedes on this point, he’ll face massive opposition from a very powerful lobby group (who been trying to stop European made cars, essentially those owned by their bitter rivals in Japan, from gaining a foothold in the US market), with their fingers in many swing states (and the pockets of many politicians) and some of the very voters who put him in power work in this industry. If Theresa May concedes, she can be looking at hundreds of thousands of job losses in the lead up to an election. There’s a solution, but its not that easy, it will take time and careful negotiation.

And if the UK ends up part of some sort of transatlantic trading bloc, they could face sanctions and punitive tariffs from the EU and China. Given that the UK does more of its trade with the EU than America, if it has to pick a side, the logical thing to do would be to pick the EU (of course there I go with my “logic” and “facts” again). This is the whole reason why so many voted remain. The UK is too small to be a world power by itself anymore. Its option are to either pool its resources with the rest of Europe, or become a vassal state of an existing empire, literally the 51st state in all but name.

And another reason for voting remain, is that the fear of the UK becoming essentially airstrip one (of 1984 fame) if it leaves the EU. You may enquire what’s to stop the US moving its forces in Europe and stationing them in Britain. Well, firstly geography (the Middle East is too far away! And you’d still need overflight rights from the Europeans). Secondly, this would be political suicide for the Tories. All of that controversy back in the 80’s over US missiles in the UK would spark off again. This is exactly the sort of controversy that could blow the Scottish independence referendum wide open or give Corbyn a fighting chance in 2020.

Trump’s Impeachment
The GOP wanted to impeach Hillary “in her ball gown. This does seem unlikely, most of the controversies she has been accused of were simply made up or over-egged. More importantly the GOP have now set the bar for what constitutes grounds for presidential impeachment so low, its basically a given that any president whom they don’t like, if they can get the necessary votes, he can be removed from office.

And Trump has been involved in numerous scandals already, as noted he will be spending quite a bit of time in and out of court as it is. Also there are already warning signs of where a possible future scandal will erupt. Making white supremacist Steve Bannon as possible white house chief of staff for example, or that odorous brown envelope distributing toad Myron Ebell as head of the EPA, appointing his own relatives to senior posts, yet they also are trustees on the trust fund that will manage his finances during the presidency. You could start a sweepstake on how long before the balloon goes up.

And the democrats show every sign that they are going to come out of the gate swinging on the 21st of January. They feel that they have been cheated out of the presidency and are likely out for blood. They don’t have a majority enough to start impeachment, but they can start making waves. The GOP will likely try to hang onto Trump, so long as he’s useful. If he proves himself to be the disaster many expect him to be, the democrats won’t have to try very hard to convince enough of the Republicans to back impeachment. Personally I reckon a Trump impeachment attempt (successful or not) is essentially a matter of when not if.

Rise of Fascism

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Of course we are making a very dangerous assumption here. That all the checks and balances of the US government will work. But what if they don’t? G. W. Bush should have been at the least investigated over the Iraq war and those “black flights” but he wasn’t (even Trump agrees with this). Its quite clear that Trump and a number of his inner circle have fascist tendencies. The way he’s now flip flopping like John Kerry at a summer footwear convention does suggest that they regard their own supporters as sheep. Mindless drones in a cult of personality who are too be manipulated, control and where necessary betrayed.

Keep in mind that Hitler was helped into power by the very sort of people who helped Trump into power, because they saw him as a useful idiot, who could be used to keep the plebs in line, while they the establishment still secretly ran things. Of course they didn’t count on Hitler ending democracy and relying on his cult of personality to rule by degree. The checks and balances of the US state are about to be subject to destructive testing that will test them to their limits.

If they fail the consequences are pretty grim. As Obama pointed out, one has to worry about a vain insecure man like him, who can’t be trusted with a Twitter account, having access to the nuclear codes. We are very close to midnight I fear.

And if the checks and balances fail, let us remember who got us here. Republicans, (so called) conservatives, plus Jill Stein and Libertarian voters, this one is on all of you. Historians of the future may judge your actions very harshly. My own guess its we that Trump in power probably signals that the US has receded from its high water mark. The US has essentially voted to go backwards, to retreat from the world, to be a less progressive place, to be the new “sick man” of world politics (by putting a sick man in charge). And that is the real problem with this election result.

You’ve been Trumped too

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All in all, I think Trump was summed up rather well by Michael Forbes, the farmer who opposes Trump up in Aberdeenshire. In the recent film you’ve been Trumped Too, he reminisced that when Trump came to Scotland half the country loved him (including Alex Salmond) and half hated him. Now everyone hates him as they realised he’s a complete con artist, who tells tall tales, never delivers, he just fills his own pockets and massages his own ego.

My guess is that this is the reality, Trump is out for one person – himself. He doesn’t care if the country falls apart so long as he comes out on top. And that’s who America voted for!

Globalisation and its discontents

A couple of years ago, if you were protesting against globalisation, you were assumed to be an anarchist or an eco-warrior. Nearly every major political party of right and left was signed up to the idea that globalisation was a good idea and that anyone who said otherwise was a wholly eared nutter.

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Globalisation has many opponents, anarchists, eco warriors, Trump, the far right….clowns, UKIP…..

However we now face the situation where the two major parties in the UK are essentially anti-globalisation (one hard left, the other authoritarian right). In America Trump is running on an anti-globalisation platform, while even Hilary has had to row back from her support of international trade agreements. What went wrong?

Firstly, I think it has to be acknowledged the benefits globalisation has brought. While I’d take the figures below from the world bank with a pinch of salt, it has to be said that globalisation has help lift millions out of poverty. It has helped push forward technological process, introduced us all to new ideas, its brought us multiculturalism, new and exotic tastes from far afield, and countries aren’t fighting world wars anymore (which is just as well given that we now have nuclear weapons). However it also must be said that experiences may vary. A rising tide has not lifted all ships.

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This can be illustrated by the next graph, the so called “Elephant Graph” which plots the relative change in income over the last twenty years, depending on whether you are among the world’s poorest or richest. If you a subsistence farmer in the developing world (i.e. the very poorest) you’ve probably seen no change at all. If your one of the 10% of the world’s richest, you’ve had it pretty good over the two last decades. The working class and middle classes in Asia and the developing world have seen the most dramatic improvements of all, going in many cases from poverty to complaining about first world problems. If you are middle class in the West, you’ve seen some benefit, but you’ve probably noticed that others have gotten a lot better off and keeping up with the Joneses is that little bit harder. However, the working class in the West have seen very little change, indeed some are even worse off. This essentially is the heart of the problem.

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And the problem, I would argue, is that somewhere along the way globalisation got bundled up, much like those toxic CDO’s that brought on the financial crisis, it got repacked with a lot of toxic neo-liberalism and outdated and rotting lassie-faire nonsense. It was then sold on as a complete package. Countries and electorates were told that they couldn’t have one without the other. That they must sacrifice their labour rights, wages, privatise public services and downside the state, all for the sake of globalisation. Now that everyone’s worked out that out that this globalisation CDO is filled with neo-liberal dog shit, people want to throw it away rather than simply unpick the good bits from the bad.

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Not least because often the very people who sold this toxic CDO were the very neo-liberal types who packaged it up in the first place (i.e. parties like the Tories or the GOP) and the very same who are catching blowback from the consequences. And they are obviously reluctant to admit their error or abandon their long held ideology. Also their lies have started to catch up with them.

For years the go-to lie of many right wingers was to blame foreigners, poor people and organisations like the EU for all the worlds ills. Your local water supply has been privatised? Not our fault (even thought it was in our parties manifesto and one of our donors is on the hook to get the contract), the EU made us do it (only because we got the very legislation passed by them so we could dodge the flak!). Can’t get a hospital bed? that’s not because we failed to fund the NHS to account for an ageing society, its the fault of them nasty evil hobbits foreigners comin over here and overloading local services. Your taxes too high? No, its not because of our failure to make the rich pay their taxes, its them scroungers living on benefits that’s the problem.

So when Corbyn tries to blame globalisation for causing brexit, I would argue that this is not entirely correct. It was this toxic neo-liberal agenda that along the way got mixed up with globalisation that’s the problem, plus the aforementioned lies of the right wing media. Like the boy who cried wolf, unwilling to admit to their error, they proceeded with the referendum. But the pleb’s, who they’d spent the last twenty years telling that everything was the fault of the EU and foreigners, actually voted leave. Confronted with the fact that actually you can’t keep the single market and end free movement, so they’ve doubled down and are going for a hard brexit. Similarly in the US, Trump is the inevitable consequences of this bundling of globalisation with neo-liberalism and the decades of lies told to the public by the right wing media (i.e. blame foreigners, China and poor people for everything….so a guy who blames these for all of America’s problems is suddenly popular!). In both cases baby, bath, water, tub and rubber ducky goes over the side.

There is no reason why we can’t unpick the two things however. The countries that have done best out of globalisation have certainly done so, to varying degrees. Unsurprisingly, communist China does not subscribe to the principle of lassie faire. They will intervene to protect local industries when they feel its necessary. The Germans and many other EU countries have hung on to their welfare state, offering some protection to those effected by the negative consequences of globalisation. They’ve also resisted, to varying degrees, the privatisation of public services (often merely floating public services off into state owned quangos). And they are willing incentivize growth in certain key industries (German renewables for example). Brazil and India have also adopted a policy of resisting privatisation and are trying to build up their welfare states to make sure the benefits are more evenly distributed.

Granted not everything is rosy in these countries, China for example has a lot to do to improve workers rights and there’s still lots of people in India who are desperately poor. The defacto coup by right wing politicians in Brazil (essentially a neo-liberal push back against the aforementioned measures) is hardly a positive. However, one has to compare and contrast with the pre-globalisation situation – workers in China then had no rights period, pretty much everyone in India was desperately poor and Brazil was ruled by a military Junta. But clearly there is no reason for globalisation to remain coupled to neo-liberalism. There is in essence another way. But as noted, the political right, and even some elements of the hard left, are unlikely to do this as this would be a direct affront to their long held ideologies.

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However, rolling back globalisation will have consequences. Already there has been a growing trend of beggar-thy-neighbour style tit for tat protectionism. Unsurprisingly the US, the United States of France (a Time magazine jibe which is actually unfair on the French!) has been the worst offender. These measures however often end up being counter productive. As the BBC reports:

There was an outcry in 2012 when cheap Chinese tyres flooded into the US market, putting the viability of the domestic producers in question.

President Obama responded with punitive tariffs to get China “to play by the rules”.
The protectionist measures were well received in the US, but a study by the Peterson Institute established that the tariffs meant US consumers paid $1.1bn more for their tyres in 2011.

Each job that was saved effectively cost $900,000 with very little of that reaching the pockets of the workers.

Or put it another way, what the Trump’s, Theresa May’s or Corbyn’s of this world don’t tell you is that by opposing globalisation they think that the computer in front of you should cost you two or three times as much. It shouldn’t be nearly as advanced as those available in other parts of the world and it should be less reliable and less energy efficient. Now okay, those on a descent salary, like me, could still afford to pay such prices (or slip one into our luggage when we’re overseas on business). But I suspect those on a lower income will suddenly find that things like mobile phones, TV’s, laptops, cars, central heating, foreign holidays etc. all just became luxuries they can no longer afford. In short, roll back globalisation and suddenly many will find that the UK (or US) just became very unequal and life just became very unfair, very quickly.

The fact is we’ve all benefited from globalisation in ways the elephant graph above perhaps does not capture. I’m not that old and yet I remember when mobile phones were the size of a brick. When cars were so unreliable you had to carry tools around and work time into your morning schedule to account for the inevitable breakdown. When TV’s were so prone to failure some manufacturers made more money selling warranties on them breaking down than on selling TV’s. And your choice of drink in a cafe was builders tea or brown muddy water laughably referred to as “coffee” (Now we have lattes, cappuccinos, green teas and this thing called “salad”). Globalisation and the international competition that it brought forced companies to change. It provided them with the incentive to change, it drove technological progress, allowed them to buy in parts and materials or bring in expertise and investment from abroad to implement these changes.

Yes there were winners but also losers, some jobs did move overseas. Although it has to be said that other countries (not run by neo-liberals) fared better than either the UK or US. And, as I noted in a prior article, a lot of the job losses we blame on globalisation were largely a consequence of increasing automation (the UK now produces nearly as many cars as it did in the 1970’s, but with only a fraction of the work force). And there is little evidence to support the notion that foreigners are taking people’s jobs. Indeed the danger is jobs moving overseas (due to immigration restrictions making it impossible to recruit), or machines taking them. Both these mechanisms are in fact the main reason for the trends in the graph below.

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Germany & the Eurozone has held on to more of its manufacturing than the UK or US

Restricting immigration and leaving the free market will inevitably mean some companies will leave the UK (or the US in the case of Trump winning). The recent “flash crash” of the pound is a case in point. Its now believed to have been caused by a computer engaged in high frequency trading reading an FT article which had key words like “hard brexit”, “crisis” and “far right” in it, shat its electronic pants and sold everything it had. Now while human traders will be a little more discreet and careful about what they do, but they will essentially do the same….then relocate to Dublin or Frankfurt.

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And the decline of 20% in the value of the pound to date essentially means you just lost 2 & a half a month’s salary, once those currency exchange differences work their way into retail and energy prices (oil and natural gas recall are generally priced in dollars). And WTO tariffs would push prices up yet further. A leaked treasury report now suggests brexit could cost the UK treasury £66 billion a year (£1.2 billion a week….rather than the extra £350 million the Brexiters promised).

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Brexit is already causing major problems, for pension funds for example

Post-brexit the UK will find it increasingly hard to export, given the consequences of tit for tat tariff imposition and the fact that we’ll have cut ourselves off from the rest of the globalised world, which will mean the UK will no longer be able to attract the best and brightest (case in point, the Tories recently announced that no foreigners would be asked to advice on brexit policy, or in other words they don’t want the best and brightest available to advise them!). The country will slip further and further behind to the point where UK companies can’t export, unable to sell outside of the closed shop of the UK economy because anything we try to sell is just Lada like obsolete.

Over a long enough time period, the anti-globalisation brigade may well get their wish – more jobs for British people. Foreign multinationals will be streaming into the country, because the UK will have fallen so far behind that it essentially now counts as a developing world country and these companies will want to exploit an impoverished UK and its cheap labour costs. As Paul Mason puts it:

What happens when the investment banks move to Frankfurt, the carmakers to Hungary, the offshore finance wizards to Dublin, the tech companies to newly independent Scotland? What happens when, instead of Poles, it is poor white English pensioners herded into the polytunnels of Kent to pick strawberries for union-busting gangmasters?

Certainly there is a need to rethink globalisation. It needs to work for the benefit of everyone and we need to quit thinking that this “benefit” is measured in the form of dollar bills. The world faces many major problems, overpopulation, peak oil, climate change, ISIS you name it. These are global problems, they need global solutions, which means international co-operation, not more division.

But we also need to acknowledge that getting rid of globalisation would be a very bad idea. If the neo-liberals were correct, that downsizing government and privatising public services was a good idea, then Somalia, which hasn’t had a functioning government in several decades, would be the richest country in the world (instead its one of the poorest and most dangerous places on the planet). Similarly if the Brexiters (or Trump) are right, then North Korea, the country with the tightest border controls and lest free market trade agreements would be the worlds most dynamic economy….of course the opposite is true!

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Opponents of globalisation, simply don’t seem to realise how much the world has changed and hence why we can’t just wind back the clock a few decades. And in many cases the medicine they proscribe would be much worse than what the propose to cure.

 

Weekly roundup

Veto warning

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At a conference to discuss the post-Brexit future of the EU, the UK was warned that the EU would make leaving “very painful”, if any form of immigration controls were included. Indeed, the threat was made of a possible veto of any deal by four Eastern European countries, if the UK refused to guarantee freedom of travel. Its unclear if this applies to just current EU citizens in the UK or future arrivals. However, the message is clear, the Brexit position on immigration is not going to be allowed, it is not and never was a deliverable possibility.

But we do 60% of our trade with the EU the brexiters claim, why would the EU jeopardise that? Well because it might be 60% of the UK’s trade, but its only about 10% of the EU’s trade. And certain countries will bear the brunt of that. Others, such as the Eastern European countries making these threats, will not be seriously effected. There is no way the rEU or the UK can bully them out of a veto. So if the UK tries to stonewall the EU, as the three brexiters seem to plan on doing, they will be in for a rude awakening.

Keep in mind at the point where this veto will be made it would be at the back end of negotiations where the UK has likely just days or weeks away from essentially being chucked out of the EU and EEA if it doesn’t get a deal. In such circumstances a panicked climb down by the UK seems very likely.

As always my suspicion is that cooler heads will prevail long before we get to this stage. Some sort of horse trade will be done, EU citizens will have to fill out some forms and will not be entitled to benefits for a few years (although that could result in a rebate of their taxes back to their country of origin). The swivel eyed loons will be told they’d got immigration controls, but in truth nothing substantial will have changed.

 

Academic poaching

And as if to underline what’s at stake here, there have been warning about how much of the UK’s key science centres are now a risk of being poached. Either individual scientists, or the entire institutes themselves might well move in the next few years.

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As I mentioned in previous posts, a lot of the funding for these institutes comes from the EU. And they also get quite a bit of private sector funding too (often the EU funding is dependant on them raising matching funds from the private sector). And many research centres and university’s in Britain will have a small network of high-tech start ups around them, which will both assist and be dependant on the success of said institute at securing funding. Getting that funding outside the EU gets very complicated very quickly. Freedom of travel is also crucial to science and I can’t see how these institutes could function if that were to end.

So the price the UK could pay, is much of its very best and brightest, everything from Fusion energy research to graphene could potentially move overseas in the next few years. Then again, many Brexiters seem to be the anti-science troglodytes who’d rather go back to the 1950’s. Well be careful what you wish for……

 

ITT Tech

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Just prior to the Brexit vote the Universities minister issued two statements which caused great concern in academia. The first was his intention of allowing for-profit universities in the UK. The 2nd was his statement that “some providers may exit the market”, or in other words, the government is okay with the thought of universities going bankrupt.

Well we had a warning this month of what the likely consequences of such a policy would be. ITT Tech, the parent company of several for-profit universities across the US went bankrupt just before the start of term. This left tens of thousands of students out of pocket and with no university place to start or continue their studies at. Many of them have now been left in limbo.

And the reasons for their collapse? Poor standards of education, well below those of mainstream universities and accusations of predatory practices. ITT tech students were some of the the most heavily indebted students in America. And incidentally some of that debt was owed to the US government. Students are now refusing to pay back these loans, arguing the collapse is the fault of the government for failing to regulate ITT tech properly.

So I would ask anyone in the Tory party or any government minster, do you really want to see this sort of scandal play out in the UK? And before you answer that question, take out an electoral map of the UK, work out how many marginal seats are in (or near) a university town and after you’ve worked out how, estimate by how much you’d lose the next election, perhaps then you might decide to reconsider this policy.

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Tweeting twits in cars

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There was recent talk about increasing the number of penalty points for mobile phone use in cars to 6 . In some respects I can see the point of this. Far too often I’ve seen people driving along, not just talking on a mobile held to their ear, but texting with it. And I mean sometimes when I’ve been cycling or walking along at night I’ve noticed drivers gliding along with their face down at the phone, trying to drive with one hand and half an eye on the road. You do have to worry about some people.

However, the danger with such knee jerk legislation, is that it can often lead to overzealous enforcement by the police. Keep in mind the cops have done people for blowing their nose at a traffic light or threatened to arrest a four year old child for riding a kiddies bike on the pavement. Given the cops an inch in the UK and they will take things to an illogical extreme.

What counts as mobile phone use in a car? For example, I’ll sometimes use my mobile as an Mp3 player. Now I’ll plug it in and set everything up before I start driving, but occasionally I might need to just hit the volume button or turn it on/off (without taking my eyes off the road of course and only when its safe to do so). Does that count? Should I get 6 points for that? Now okay, maybe you say yes it does count, in which case I suppose I’ll just listen to the radio instead, will adjusting the volume on the radio now get me 6 points? Because its essentially doing the same thing. Or how about adjusting the air-con, or the sat nav? Keep in mind that there are time you’ll need to adjust these systems for safety reasons (e.g. its night, the sat nav display is too bright so you turn it off or tap it into night mode, your coming up to a busy junction, you hit the mute button on the radio so it doesn’t distract you, windows start to fog up, you need to clear them, etc.).

And I bring this up because it has a legal bearing for me. I have an Irish license and while the Irish government does transfer points issued by the UK authorities onto Irish license, they don’t give the UK courts a rubber stamp. We have this long standing principle in Ireland of “rights” and “due process”. And any Irish court would likely take a dim view of saying doing such and such a thing with a mobile is enough to lose you your license, but doing the same thing with the car radio is okay. Indeed the Irish government has been having difficulty securing convictions for its own laws against in car mobile use.

And to go slightly off topic, but there’s a Brexit dimension here. While I suspect the transfer of penalty points across the Irish border will continue (its a bilateral agreement and nothing to do with the EU) I’m not sure about other EU countries. I suspect any such rules the UK has with the rest of the EU will end with Brexit. Meaning Polish lorry drivers will be able to not only use their phones while driving without fear, but speed as fast as they like and park wherever they like and there’s basically nothing that plod can do about it other than go whistle Dixie. Keep in mind I already know people from the continent who regularly just tear up parking tickets they get in the UK and put them straight in the bin. Such rules are difficult to enforce at the moment, post Brexit it will be impossible. And again its the tendency of the UK legal system to ignore the basic principles upon which any proper legal system is supposed to work that’s to blame.

But I digress. Clearly one has to wonder how out of hand such measures could get and how difficult it becomes to enforce. Might I suggest a more common sense approach. If you are so addicted to your phone that you can put it down for a few minutes while driving maybe you need to decide which is more important, your ability to drive safely or your phone? Keep in mind that if you travel by public transport instead not only can you text and tweet to your hearts content, but many buses and trains theses days come with free wifi. #OMG

And in much the same way that anyone stumbling out of pub with car keys is likely to be rugby tackled and subject to a citizens arrest these days, if you see someone in the car behaving recklessly with a phone (or turning his head away from the road and trying to tune the radio), point out to them how dangerous this is. #where_did_that_tree_come_from? #Sad face

 

Unsporting behaviour

There was some controversy this week when one of the Brownlee brothers helped the other across the line to win a bronze medal. The British media looked on this as brothers in arms, or good sportsmen ship. Ah, no! I’m afraid its what’s known as “cheating”.

The rules of individual sports like the triathlon are very clear, you cannot assist in any way another competitor, nor can they or should they except such help. Riders have been disqualified in the past just because a spectator (never mind another runner) was seen to push them. Until a few years ago triathletes weren’t even allowed to slipstream during the cycling stage of a triathlon. Giving or accepting aid like this isn’t just against the rules, it violates the very spirit of the sport itself.

Put it this way, if a Polish or Chinese athlete had done the same thing and a British athlete had been denied a medal, would the UK media be reacting the same way? Probably not. We can’t have one rule for those who are popular with the media (and have a good sponsorship deal) and another rule for everyone else. There’s little point in getting worked up about Russian doping, if were going to apply the full weight of the law to one group of athletes and ignore them for others.

So while I hate to be mean, but both brothers should have been disqualified for this. And should another “hand of god” like moment happen in a future football match, I don’t want to hear any English whinging about how unfair it all is. You’ve gain just as much, if not more, unfair advantage in sports as everyone else.

 

Not so fancy bears

And speaking of sports there were more revelations about the medical records of British athletes. Now to be fair, if the Russians are trying to tar everyone with the same brush, they are failing. What these records show is that the sort of massive state sponsored doping isn’t going on in the UK or US. However, that’s not to say all of the UK’s athletes are angels. The revelations do flag up some worrying questions.

Quite a few appear to regularly be benefiting from what’s called TUE’s basically an excuse to use a banned substance for medical reasons. The problem is that known drug cheats like Lance Armstrong were known to use these as a way of getting around tests, when they realised (or feared) they might fail a test. So an athlete regularly getting these, while it doesn’t prove anything, it certainly doesn’t look good. In short, anyone who believes doping begins and ends with Russian, think again.

 

The Empire club

A restaurant in Australia is in hot water after calling itself the Colonial club, a sort of colonial themed restaurant for public school boys who are ignorant of history. Naturally this is causing much offence and there are calls for it to be closed down. One wonders if they do a Jallianwahla Bagh cocktail, or an Irish Famine potato salad or how about the Hola special?

What is it about Empire that the Brit’s don’t get? One of the Brexiters put up a tweet (in reaction to another one showing the EU top of the medal table at the Olympics) claim the British Empire “won” the Olympics. British need to understand that to some people this is the equivalent of going up to a Polish person and saying how much better they were under the third reich. There are only two occasions where bringing up the British Empire isn’t going to get you in trouble:
A) You’re Prince Philip (we sort of expect this stuff from him!)
B) At a memorial for the victims of a British empire massacre, explaining why it was so terrible

 

The joys of Hitchhiking

A French hitchiker in New Zealand went beserk this week after spending 4 days by the side of the road and not getting picked up. To be honest, I think if you are hitch-hiking, you need to have a better strategy. And in a remote area, you need to have a plan B in case you don’t get picked up, e.g. walk to where you want to go and if you don’t get picked up along they way, you’ll get there anyway. Or have a public transport option you can call on.

One of the issues I take with this story was how he was called “a spoilt millennial”. First of all, Millennials are really an invention of marketeers who like to segment people into neatly defined groups. An many of those qualities they ascribe to “millennials” don’t actually gel with the facts, as this Adam Conover video discusses. I teach a lot of “millennials” and I know of just as many who are spoilt selfie takers with a sense of some sort of god given entitlement, as I know similar people from previous generations. It certainly does not fit the description of the average Millennial I know. Indeed it was mostly baby boomers with there sense of entitlement who voted for Brexit, not millennial’s (whom the baby boomers screwed over).

Brexit now comes with a price tag

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The Tories have been accused of pulling the pin on the Grammar school hand grenade, not because they think its a good idea, but because they want to distract from the shambles of the Brexit fallout. We’ve already learnt that a points system isn’t going to happen. Then it was a restriction on entry unless migrants had a job. They’ve gone quiet on that one too now, so presumably that’s been ditched also, for what should be obvious reasons. Now they seem to be planning on requiring entrants to have a work visa.

What’s wrong with that? Well because it constitutes what Sarah Palin would describe as “central planning”. Its distinctly anti-business and authoritarian. Decisions on recruitment will be taken away from employers and they’ll be left at the whims of government policy. This is the sort of thing that will result in crops rotting in the field, projects put on hold because of a lack of skilled labour or businesses shutting down as they can’t get the staff they need. Inevitably employers will relocate outside of the UK to the rest of the EU where they can recruit more freely. Indeed its interesting to note that the post-Brexit shares rally now appears to be over, the FTSE 100 & 250 have been falling for the last few days, possibly because the penny is finally dropping that it might not be business as usual.

Keep in mind that British citizens count towards inward migration figures. And perhaps not surprisingly UK nationals make up the vast majority of those entering the country. Last time I checked the figures of those entering the UK to permanently take up residence 83,000 of them (25%  of the total if we include students, 55% if we exclude students) were British. As the EU states will reciprocate with any restrictions, its likely that what you’ll see is a slight drop in EEA citizens coming, cancelled out by a sudden jump in UK citizens coming home permanently. Only difference is instead of getting nice young Polish people with skills the country needs, we’ll be getting older people (in many cases retired) who’ll be taking more money out of the state than they contribute.

The only way net migration could be cut to “the tens of thousands” is by bringing in North Korea like border controls and essentially banning British people from moving abroad (or moving back to the UK).

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Its likely that the only way this visa idea would work is by doing something along the lines of the Swiss, with no specific restrictions on numbers allowed in, just so long as they fill in the necessary paperwork. In other words it will be an empty formula, consisting of a bit of form filling and paying a fee. It will change nothing, aside from making the job of EU citizens coming in, or British going out, that little bit more bureaucratic.

And speaking of the Swiss, a situation in Switzerland whereby the people voted for immigration restrictions mirrors the situation in the UK. The Swiss tried to stonewall the Europeans, the EU refused to budge, guess whose blinked first? Yep, the Swiss seem to be on the verge of caving in. They’re looking for some window dressing so that they can claim to be compiling with the wording of the referendum decision while perverting its original intend, much as Theresa May will be doing in about two years time.

And if the stakes weren’t high enough, there’s the matter of the Etias. This was an anti-terrorism measure proposed back in 2011, similar to the visa entry system to the US. Whereby non-Schengen citizens (i.e. anyone outside the EU, Norway and Switzerland) will have to pay a fee and fill in an online form 72 hours before entering the EU. Now originally the UK was supposed to get a pass on this, or some sort of opt in. However, given the recent talk of immigration restrictions, its increasingly unlikely the UK will get any leeway from the EU (short of the UK joining the single market without condition).

Now for a tourist having to apply 72 hours in advance of travel to the EU is just plain inconvenient. But to some British, airline staff, truck drivers, salesmen, its potentially crippling. We could see waves of these people loosing their jobs, replaced by EU citizens or their company relocating across the channel. Its increasingly likely I would therefore argue that the UK will be sent packing with their tail between their legs once these Brexit negotiations start. The EU won’t get nasty, they don’t need too. All they’ll do is read the UK the riot act and force them to confront the cold hard facts of life.

Indeed the very fact Theresa May has resorted to chucking around dead moggies and bringing up Grammar schools, does tend to suggest they know they’re not going to get their way. And the frustrations seem to be building. Liam Fox, who was recently sent packing by the Australians (he’d been talking up the possibility of a trade deal with them), went so far as to insult UK small business owners for not being suitably patriotic. Ya, like the Russian cosmonauts who weren’t suitably patriotic enough to hold their breath for ten minutes after their soviet leaders sent them up in a shoddy capsule. Business leaders have naturally pointed out they are doing the best they can but some dickheads decided to have a referendum on EU membership and that’s kind of screwed them over.

In short, the Tories lies on Brexit are starting to catch up with them.

Sunday service

A few stories that caught my eye over the last week……

Blackouts & Newspeak

With Hinkley C now hanging in the balance, the National Grid seem to be waking up to the realisation that its unlikely we’ll be getting any new power infrastructure in time to offset the likely decommissioning of the UK’s ageing coal and nuclear plants. So they seem to be putting their faith in energy efficiency measures instead.

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Keep in mind a few years ago, I was scoffed at for making such a suggestion at a conference by someone from NG, who felt such measures were unnecessary or that they won’t work (he was trying to argue the case for Hinkley C and how the ground would open and swallow the country if it isn’t built). And these very measures were part of the so-called “Green crap” Cameron cut to keep his allies in the fossil fuel and nuclear industry happy, just a few years ago. So there’s a certain “newspeak” element to this whole story as a result.

Now, I’m all for energy efficiency measures. I have long argued they are a big part of the solution. If we can’t build renewables quickly enough (nor nuclear for that matter) to meet the growing need for power and reduce carbon emissions, then we need to cut consumption. However, this road to Damascus conversion ignores three crucial points.

Firstly, there’s a law of diminishing returns in play here. You can make some big drastic savings early on (if you build the right infrastructure of course), but beyond a certain tipping point, you’ll be scrapping the bottom of the barrel. Energy efficiency, by saving people money, can actually encourage further energy use. Think about it, if I could double the fuel economy of your car, you’d probably drive it more regularly won’t you? Ultimately you still need to be producing power, and you will need to build some new power plants (be they renewable, fossil fuel fired or nuclear). This whole crisis is a result of the UK government’s failure to adopt a long term energy policy, throwing one industry under the bus after another, to the point nobody in their right mind would invest in a power station in the UK (renewable, nuclear or otherwise) unless you basically bribe them.

Secondly, a lot of the better energy efficiency measures require changes to how the grid works. They will not go ahead unless the government gives firm signals that it is adopting an appropriate long term energy policy. For example, the most obvious way of cutting carbon emissions is to switch from a handful of centralised thermal power stations, to a network of smaller decentralised CHP plants. Even running on fossil fuels, this cuts carbon emissions by at least 25%. Some European countries get 40% of their electricity from such power stations. They can also effectively backup intermittent renewable energy sources. But again, without building the hardware, you can’t implement it. And they will only work as part of a coherent overall strategy.

And thirdly there’s the ticking clock. Any energy plan for the UK needs action to be taken now. There are no quick fixes, no easy short cuts. Those boats sailed some time ago. The government has to take action asap and put its money where its mouth is, or any energy plan no matter how well meaning it is, will fail.

Irish apple…..and not the fruit!

For years Apple had been playing the double Irish tax dodge, only to recently get caught out. The EU’s just tapped them for 13 billion euro in back taxes. To put that in prospective, that’s about Ireland’s health budget for a year.

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Oddly enough rather than Leinster house cracking open champagne bottles and starting to work out what we’re going to spend all this money on (that’s enough to buy every adult in the country about 900 pints of the black stuff…now there’s a thought…), they are thinking of appealing. Why? Okay it does hurt Ireland reputation a bit, but so what, if Apple was here for the reasons it claims (i.e. to take advantage of a well educated workforce, I know they do a lot of co-funded research with Irish uni’s), then this ruling shouldn’t change anything.

If they were here for the tax dodge then feck em. They want to piss off back to California, fair enough. The Brexiters were dancing a jig about how Apple might move to the UK. That’s unlikely as the rate of taxation in Ireland is still lower than the UK’s. And lets be clear about what the Brexiters are proposing, they think that British tax payers should subsidise the profits of one of the world’s largest and most profitable companies. Seriously? Try selling that one in the middle of the next election! Voting for Corbyn suddenly starts to sound like a good idea.

So I say hang’em out to dry!

Olympic hijackings

And speaking of which, Brexiters have been trying to talk up how great everything is post-Brexit. They’ve picked up on everything from the Olympics, ignoring the fact how most medal winners are mostly young people, i.e. the people who voted remain, plus quite a few are from immigrant families and won’t be here if the UKIP brigade had its way, doubly so if lottery funding was ended, as some on the right have been long calling for. UK sports also receives money from the EU btw.

Speaking of which, Trump has been unusually quiet about the Olympics. Probably because it doesn’t fit into his narrative of a “broken” America, when they are finishing top of the medal table. And if Mexico isn’t sending the US their best, how about those Mexican American medal winners? Or what about the American Muslim and Jewish athletes? How unamerican of them to train hard and win medals! I particularly like Libertarian Gray Johnson’s tweet, he questioned if Trump was only watching the Olympics to see how high the Mexican pole vaulters could go.

Oh and incidentally, while many athletes didn’t want to talk about Brexit or Trump, those that did ain’t exactly supporters.

Brexit blues

But I digress, Brexiters have also jumped on the slightest hint of good economic news, ignoring the fact that things like factory output or employment figures often reflect conditions several months ago, i.e. before Brexit was announced, or can be thrown off by seasonal factors.

The real threat from Brexit was, and still is long term trends. As the saying goes its the bears that get you in the end, not the stags running for cover. Brexiters might want to spare a thought for example to the workers at Catepillar in Northern Ireland, who were told this week, hundreds of whom were losing their jobs. Further job losses appear to be imminent in ICL. Its possible they may follow in Ford and Nissan over the next few months and years, with other car makers likely to follow. Lloyds of course axed 3,000 last month over Brexit.

Solent News

Indeed recruiters argued that they were seeing a slow down in recruitment levels even before Brexit, as companies brought in hiring freezes in advance of the referendum. In some sectors recruitment rates are now “in freefall, as many companies have held onto those hiring freezes since then. Also even if you’ve been given leave to recruit, as my uni’s been finding, its next to impossible to hire new staff. Think about it, if you’ve got a job already would you risk changing jobs in the present climate? If you move jobs and your new employer decides to start down sizing, it will likely be last in first out, so who in their right mind would want to move? They only way we can recruit now is by hiring people on contract and paying them exorbitant day rates.

And yes, I’m aware there are employment laws meant to prevent LIFO type layoff’s, however I think you’ll find the fine print says they are EU laws. And the chances of a Tory government protecting the rights of employees is somewhere between slim and none.

Now all of this was inevitable. As I’ve pointed out before, UK manufacturing is going to take a hit and Northern Ireland is going to have it the worst post-Brexit. Companies aren’t going to rush for the exits, but they will slow down investment in the UK and stop hiring. Of course this will leave UK factories uncompetitive, meaning any time things are looking lean, they will inevitably pull production in UK firms first, particularly those in Northern Ireland. So let’s not kid ourselves people are losing jobs, or the opportunity to get a job as a result of Brexit. And if you think things are bad now, wait a few years!

Ambushed on Brexit

Indeed Theresa May appears to have been ambushed at the latest G20 talks, by both the Japanese and Americans, who are starting to put the squeeze on the Brits. As I mentioned in prior posts a UK government post-Brexit is going to come under enormous pressure, from international leaders, business, the army and even the government’s own civil servants. This means Brexit, actually might not mean Brexit, or it might just mean the UK becoming a sort of side kick to the EU (sorry, hero support!).

A winter of discontent?

The doctors are threatening a 5 day strike, so I hope everyone’s feeling fit and healthy and not planning on getting ill for a while. And southern rail is still in the grip of industrial action by disgruntled staff…while announcing a £100 million in profit! In both cases the employers are blaming the workers for the strikes…or even Jeremy Corbyn! Which is a bit like overloading a donkey with stuff and then getting angry with the donkey when it collapses from exhaustion.

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The fact is that the government’s policy of squeezing doctors isn’t working, its creating major problems for the NHS. And their policy on privatisation (health care or the railways) is inherently flawed. So their solution is to paper over the cracks and pretend they aren’t there. And likely thanks to Brexit, make strikes harder to hold in future. Will this means things improve post-Brexit? No! Doctors will likely move overseas, we’ll find it even harder to recruit new ones and similarly the situation on the UK’s trains will get even more strained.

You could argue that both junior doctors and the southern rail company are the canaries in the coal mine for problems the rest of the NHS and the rail network will experience further down the line.

Corbyn caught out

And speaking of trains, Corbyn claimed to have sat on the floor the other week all the way to Newcastle, as the train was “ram packed”. But Virgin revealed that actually that wasn’t how things had panned out. Clearly this was a half arsed attempt at the sort of political street theatre other parties engage in all of the time. The trouble is that Corbyn is such a hate figure for many that he can’t pull something like this off. He seems to drive people to a level of maddening hatred. He’s less a party leader and more of a punch bag.

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Consider that I once lost my bag on a Virgin train. I reported it, but they were never able to relocate it. They knew the train, the carriage and the seat number I was in, how much trouble would it have been to go through the CCTV and try to trace the bag? But instead they were quite happy to look at the CCTV footage for several carriages on likely more than one train for several hours to see what Corbyn got up too. This should show you how far Corbyn’s opponents will go to stick the knife in….and how little Virgin cares about its customers.

SpaceX explosion

SpaceX the upstart rocket company founded by Elon Musk suffered a serious technical failure the other day, with a rocket exploding on the pad. They’ve not said why yet, but I could not help but notice that the explosion seemed to start at the upper stage. This suggests some sort of malfunction with the rockets controls (e.g. the upper stage motor fired early), or perhaps a flash fire further down precipitating upwards (think of a champagne bottle…just one filled with rocket fuel).

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Some have started to question if this accident now threatens the future of SpaceX. Well it shouldn’t. Rockets are the very definition of extreme engineering. The most reliable rockets in the world have a success rate of 92%….or put it another way they blow up 1:12 of the times they are launched. SpaceX’s record, if we count this explosion as its 2nd failure out of 29 attempts counts as a 1:14.5 failure rate, well below the best the rest of the industry can manage. Its just that most of the other rockets tend not to fail so publicly, so the media don’t notice.

And SpaceX has pointed that even if the rocket was manned, its escape rocket system would likely have saved the crew. So rumours of SpaceX’s demise are perhaps greatly exaggerated.

Pulling power

One of the first things you notice state side is how much bigger cars are there. There seems to be lots of people who opt for some outrageously large SUV or pick up truck. The perfect thing for towing the boat they don’t own up the mountain they don’t live near. I’ve always felt skeptical of these behemoths feeling they are more pony and less draft horse. Well now I’ve got proof.

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Consider this video of a tug of war between a British Land Rover defender, with a 2.5L engine (at most 160 hp) and a kerb weight of about 1.6 tonnes (they do aluminium bodied versions that weight even less than this, I’m assuming this is the standard steel bodied version) against a Dodge Ram 3500 (Cummin’s Diesel version) with a 5.9L engine and weighing in at closer to 3 tonnes. Who wins?

Well if you watch the video, you’ll see its the Land Rover. Which is not that huge a surprise if you know anything about power to weight ratios. The Land Rover might be smaller and lighter, but that just means its got more power to devote to pulling the Dodge backwards. Driver skill and a manual transmission (with I assume a low torque selector and a diff-lock) also probably makes a big difference.

Plus a lower kerb weight means for lower ground pressure, an important feature in a 4×4 given the need to drive across muddy fields. Hence why real farmers or off road drivers use a Land Rover (or a range of other similar and more practical vehicles, the Toyota Hilux for example). While things like the Dodge Ram are aimed at men, with Trump like small hands, seeking to compensate for something else that’s very small.

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