And what about Volkswagen and Glencore?

The other highly significant events of the past five days are the plunging fortunes of Volkswagen (diesel cars) and Glencore (miners).  These are losses of $10 to $40 billion in extent and these are beginning to be measurable on the same balance scales as countries margins of trade.

Then consider what is actually driving the whole economy forward in terms of value of goods.  There continues to be high consumer goods (status goods) rate of trade —  but not growth — between the Advanced World and also between the AW and the rich of the Third World.  But there is no uniquely new consumer good on the horizon. So we can’t have the sort of annual growth rate of 2% to 3% as we were having in the 1960s, ’70’s and ’80’s that central banks are desperately calling for.

Then there is the extraordinary growth of the 3rd, 4th, 5th generation mobile phones.  These are not status goods and don’t empower economic growth.  They are the equivalent if the massive growth in domestic power tools in the 1980s and ’90s..  They are superb life tools.  Like PCs, they’re useful to run businesses but not to actually produce wealth themselves. They are going through a phase of extraordinary profits but how much longer are they going to improve and justify their high prices to teenagers (though note they are low priced goods compared with status goods).   Huawei, already a large world class manufacturer with a high reputation for quality electrical goods is moving soon onto 4th generation mobiles — all adding to a gentle, but powerful pulling down effect  on the underbelly of the world economy, something that was already apparent 20 years ago and growth economists simply can’t understand.

Four substantive changes in five days

I’ve been in hospital for five days. In that  period there have been four changes in national relationships.  They all seem substantial to me and have all been caused by international tensions which are arising from a baseline of deeply increasing worry about the instability in the Third World and the lack of economic growth in the Advanced World.  I’ll list them below without comment:

1   .America now seems to be associating with Russia over Assad;
2,  Britain has suddenly switched it position, too;
3.  France’s finance minister is putting forward strong policies for further bailouts. It is now in straight conflict with Germany;
4. Besides the north-side divide in the EU a sudden new, and sharply spoken divide on both sides has broken out between Germany,  Sweden and the ‘racism’ of Hungary, Poland and Czech Republic against any possibility of Muslim immigrants being quota’d with them by EU.

I also get the impression, based on no hard evidence, that definite changes have been made in border patrol policy, and the enforced return of migrants when rescues have been made.

Notice: Interruption in Regular Postings

Dear Readers:

My name is Atanu Dey and I am an old friend of Keith. I occasionally help out with this blog. I received an email from another friend of Keith, Frank Thynne, saying:

Yesterday Keith fell and injured his hip and has had a hip replacement operation. He is in good spirits but will be in hospital for a while. He would be grateful if you would make a posting to his blog to advise his readers that he will be unable to make further postings for some days.

I am sure we all wish Keith a speedy recovery from his injury and we look forward to his resuming his blog. Please feel free to add your thoughts in the comments to this post. I will be in touch with Frank to inquire about Keith’s progress and keep you all informed on this blog.

Sincerely,
Atanu

Welcome to the Sharing Economy

The Sharing Economy is a new term for the economic text books. Not only is this the latest growth sector of the present economy but it’s probably going to be a primary characteristic of the next one into which the advanced countries are now steadily moving.  Share your house drive, share your car, share your spare room for B&B, share your time, share your expertise, share your investing for old age, share your medical treatment, share your experience, share your genes.  Now we have the internet, all this peer-to-peer activity had to come about.

Even our Chancellor, George Osborne, is recommending it and wants to help.  Conventional businesses are losing their profit margins, governments are losing their ability to tax further, there are no more unique consumer goods on the horizon — it’s a new post-industrial world, pro-personal services world into which we are moving and which, as yet has no name — although there’s a trade body with a name already in this country catering to the 72 sharing economy start-ups, Sharing Economy UK.

Better hire a few mavericks, Mr Draghi

I see that Mario Draghi, the President (that is, chief executive) of the European Central Bank (ECB) is coming to his senses.  He’s decided to put further Quantitative Easing on hold.  He’s citing China’s recent wobble — and apparent recent recovery — as the reason.  He’s waiting to see whether there will be more wobbles.  There probably will be but it’s little to do with China.  China’s wobbles have not been the cause of anything. They are the result of a wider phenomenon — world-wide wobble, principally visible in the Third World but present everywhere else also.

It really doesn’t matter whether Draghi decides on more QE or not.  He won’t change the world-wide situation, even less the European.  He’d be wiser in retrospect not do any more QE because the money will only have to be sweated out of the system one day anyway.

The ECB’s brief life is already coming to an end as an effective institution.  It’s joining the Bank for International Settlements, the World Bank, the International Monetary Fund, the Organisation for Economic Co-operation and Development in becoming mainly a think tank. Recruit a few maverick economists, Mr Draghi, and see what they might say about the situation.

Angela Merkel needs to recalibrate a lot more yet

We are driven by our instincts.  Nothing else drives us.  If our rational minds can modify our instincts on some occasions and then we learn retrospectively that it’s been wise, so much the better.  But first, if you also want to understand situations such as the one we have now with a long and gathering tide of humans from Asia and Africa making for Europe, cherchez l’instinct.

Thee are two instincts involved.  The one that is very visible and elicited by the media is that of compassion — the urge to help.  It arouses our instinct for altruism.  The three year-old boy washed up on a Turkish beach a week or so ago aroused a compassion in each of us and created a tsunami all round Europe which totally changed attitudes to Syrian refugees — about whom, previously, Europeans cared scarcely a jot except to pay a few pennies to buy tents for them in refugee camps.

Less visible is the instinct of territorial protection.  In hunter-gatherer times, the protection of our immediate food sources.  In modern times, the protection of our jobs and incomes.  Outside the professionals — who usually protect their own jobs very well indeed — most working people become fearful when too many strangers enter the scene and might possibly take their jobs.  Far less articulate than the professionals — in this case in the media and in politics —  most protective instincts are slower to express themselves but, being more numerous than the professionals, are more powerful when they do.  In their own way, they are acting no differently from the professionals themselves when they are concerned about their own jobs.

Media people and the politicians are used to manipulating people.  That’s their job, and that’s what we expect and what we pay them for, but there are always limits to what they can achieve. This morning, Angela Merkel has said that the compassion plan of refugee quotas around the countries of Europe is not going as well as it might.  Angela Merkel is already re-calibrating.  She needs to re-calibrate a lot more yet in order to understand the majority of the electorate better than she has done so far.

Reaching Rosling’s Nirvana — but no further

Hans Rosling gave his standard lecture on BBC 2 last night.  Brilliant as always. And his exposition is correct as always. But only so far.  He reaches an awful yawning gap in the story of advancement and that’s where he visibly hesitated at a late stage in his talk — before swiftly moving on before we noticed.

What is he saying that is correct?  Three things. Firstly, that there are only two ways in which poor over-populated countries can get out of their initial trap of many of their people being on the edge of individual and family survival. One is by economic growth and the other is by developing basic social welfare.

Secondly, that only a few countries — such as England and Germany — have managed to become advanced by means of economic growth — with social welfare trailing alongside it. But that this takes a long time — roughly 200 years — altogether.

Thirdly, that most other countries have managed to lift themselves out of abject poverty very quickly indeed — 15-30 years — by attending to social welfare first. In this way, their birth rates and family sizes can fall quite quickly, too.  Excellent, of course.

But this is where he reaches an hiatus.  Embarrassing for him, Rosling doesn’t know what to say next.  When 180 countries of the world have moved out of abject poverty, where women don’t die in childbirth so often, when most children, including girls these days, are getting an elementary education, what then?  They’ll still have far too high populations, even if they’re stabilised now.  How do they grow economically?

They can’t.  Unless they can break into making ever-improving consumer products made ever-improving industrial efficiencies then they can’t break into the ring of half-a-dozen advanced countries which trade as much between themselves as with the rest of the world put together.  They can’t do so because they haven’t enough leading edge scientific research centres.  They’ll have reached their Rosling-like Nirvana but they’ll be stuck there at varying subpar standards of living and can’t proceed further for a very long time to come — until, hopefully, their populations are very much lower still and they’ve developed such scientific skills that they’re able to fully trade with the advanced dozen.

Good-bye Yogi Berra–all over again

To my astonishment I learn today that Yogi Berra has just died, aged 90 years.  Well . . . good-bye again.  He may not have been as productive of quotations as William Shakespeare or Doctor Johnson but he certainly has a double play when it comes to repeats. “This is like deja vu all over again” will live for a very long time.

He may have been the greatest baseball player — as hitter and catcher — and I wouldn’t quarrel with that.  But he was also a great banterer of batsmen when he was fielding in order to put them off their stroke.  Whether Yogi Berra’s type of bantering transformed into the rather nasty barracking that goes over here in cricket — particularly Test cricket — I don’t know.  It might have been a classic Darwinian case of co-evolution — spontaneous and entirely separate in origin.

So we’ll let him off that particular deja vu, and simply remember that Yogi Berra has made an awful lot of people chuckle awfully many times and his name will be fondly remembered.

The next Dalai Lama might be a beautiful woman

This is what the present Dalai Lama has said — astonishing (alarming?) everybody.  The beautiful part of it is not surprising.  The monks who have chosen Lamas throughout the ages have always chosen beautiful babies. They’ve also made sure that the selected baby is at least the third- or fourth-born in the family.  This helps to avoid any incipient genetic faults in the family line.  The present Dalai Lama was the sixth child in his original family.  Furthermore, the monks also enquire from all the families around about the antecedents of the family.  Have there  been any physical or mental handicaps in the family in last few generations?  The Buddhist monks of Tibet have known a thing or two about genetics!

A woman — that is, will a baby-girl be chosen next time?  Well, on reflection, why not?  There’s women’s liberation in China now just as everywhere else.  There’s even a woman in the present Politburo.  There’ll probably be two or three in the next 5-year term.  So a woman Dalai Lama would be perfectly acceptable to the  Chinese government.  Just so long as, unlike the present Dalai Lama, she doesn’t want to see any sort of restoration of the feudal system that existed before the ousting of the aristocratic landowners and the freeing of the peasants in 1960.

How long will Angela Merkel remain?

The EU leaders’ meeting yesterday decided on nothing substantive. They’ve pledged money — so easy — and they’ve agreed on what they’d like to see happen —  reception centres at borders in Greece and Italy — no chance — and to arrest the traffickers — no chance.

It is psychologically impossible for a meeting of 28 adults — particularly male politicians with power needs — to agree on anything for the longer term.  On the other hand, one person of overwhelming prominence or power in Europe (Angela Merkel, for example) simply doesn’t have enough data to take sensible decisions.

Meanwhile, the supply chains of refugees and economic migrants thicken and lengthen throughout Asia and Africa, and the instinctive employment fears of millions of people in Europe grows.  How long will Angela Merkel remain in power one wonders?

Warfare in Syria that makes sense to me

Obama’s top strategy man for fighting the Islamic State in Syria is stepping down, it is reported.  Foreign Policy magazine doesn’t say why but one presumes that lack of success means he has to move on.

Meanwhile, General David Petraeus of the notorious surge strategy in Iraq, and lately the boss of CIA, has suggested to a Congressional committee that he would recommend using cruise missiles from American ships and planes to clear large safe zones for Syrian refugees.  It’s the first sensible idea I’ve heard yet.

Keep on non-printing, boys and girls!

The Bank of England these days is very worried about the world economy.  Mark Carney, its governor, and other members of his entourage are constantly sounding off about the fragile state of things (as though they had the answers!). The latest one is Minouche Shafik, the deputy governor, who is frightened that there’ll be runs on governments in much the same way that there used to be runs on banks in pre-First World War times (or, more recently — horror of horrors! — when we actually had a run on our great Northern Rock Bank in 2007 — the Bank of England had totally screwed up by not anticipating it — will we ever live it down?).

Minouche Shafik reckons that the world’s monetary system needs a safety net, so she told some learned financial people at Edinburgh yesterday.  The powers of financial institutions such as the International Monetary Fund must be “beefed up”.  Really?  How do we do that?  And by how much?  Its biggest contributor, America, is refusing to pay its dues and China, the only advanced country in the world with a positive balance sheet, has been black-balled from membership in the past few years.

According to the Financial Stability Board composed of international financial regulators (chaired by Mark Carney), businesses in the West are in debt to the tune of $45 trillion, and businesses in the Third world to the tune of $22 trillion which — excluding ordinary private debts such as yours and mine — adds up to the approximate $70 trillion lopsided-ness of total world trade. What a total mess that has accumulated since we started printing money in 1917 to pay for the First World War!

Sit it through, dear Shaffik and Carney — not to mention dear Janet Yellen of the US central bank.  Be patient.  Stay with your 0% central bank rates (you can do little else anyway) and sit it out while the above firms go bankrupt one by one. And, as they do so, the world’s financial system will correct itself little bit by little bit.  The world’s economy won’t stop.  Profitable firms will keep it going.

And, at the same time, the values of the world’s nationalistic currencies will adjust little bit by little bit. And, if you don’t print any more money (apart from replacing used banknotes), nationalistic currencies as a whole will gain value.  You don’t really need to back them up with anything if you don’t want to — so long as you stop printing the stuff.  Well, you’ve been good boys and girls for a few years now.  Keep it up. The therapy will be hard going, but nowhere near as hard as the next catastrophe if you keep on interfering with the real world by printing money, thinking you know how to steer things when you really haven’t the faintest idea.

New methods for human breeding

In a few years every intelligent well-educated post-pubescent girl will want to have her DNA sequenced to see whether any harmful recessive gene variation lurks there. No matter how good-looking or healthy or intelligent she is, she’ll have a few among the 4,000 already identified by geneticists. Being recessive, these mutations won’t be doing her any harm but she’ll be a carrier.

Then, within a few more years, when she’s interested enough in a man as to be seriously thinking of marrying him and having children, she’ll be persuading him to have his DNA sequenced also in case any of her unfortunate mutations coincide with identical ones of his.  This would mean that one in four of their children will have a genetic disease and will either die young or perhaps have to have full-time care for the rest of his or her life.

The cost of DNA sequencing has cone down steeply.  Originally $3 billion for the first one sequenced in 2000, it’s now down to about $500.  It won’t be terribly long before it’s $50 or $100 — not prohibitive for any intelligent young woman anyhow.  The problem is that DNA read-outs from sequencing machines are not fully accurate yet. Short sequences of the four nucleotides from which DNA is composed might be missing. so any collation between a male and a female DNA might be out of sequence and thus miss some dangerous mutation matches. Also, some genes are palindromic — where one sequence of nucleotides is closely followed by its mirror image — and some method miss out on one or the other, not knowing that there were actually two sequences there.

But they are becoming steadily more accurate as they are becoming cheaper, albeit by slightly slower methods.  One developed by a team at the Ecole Polytechnique Federale de Lausanne and announced a day or two ago forces a single DNA strand through nanopores so that each nucleotide appears and is identified one by one.  At least a dozen teams elsewhere in the world are developing similar nanopore methods.  It will not be long before totally accurate sequencing will be possible and cheaply available.  Thus, very gradually, the human programme of genetic disease reduction will be starting.

Caste-system slave labour alive and well in this country

Those who are expert in the matter tell just that there are thousands of cases of slave labour in this country. Quite a few of them are to be found in London homes owned by Middle East sheikhs and royalty.  Of course, the government prevents the police from investigating those for fear of upsetting the rich owners.  If only we had a Wilberforce among our MPs!

But we’ve just had an astonishing case of an Indian couple, Pooja and Ajay Chandhok, hiring a woman in India from the Adivasi caste, Permila Tirkey, 39, and bringing her to this country in 2008 when her passport was removed, she was not allowed to learn English, worked 18 hours a day for 11p an hour, slept on a foam mattress on the floor and was not allowed to phone her family back home.

What’s astonishing about it is not that it happened in this country but how she ever did manage to escape from it.  Thankfully, it was discovered by one means or another — how, we are not told — and the Chandhocks were fined £184,000 by a tribunal in Cambridge.

But, of course, the caste system exists everywhere in every country of varying degrees of severity and visibility, albeit described very differently in many cultures so that you’d hardly recognize it.  Hierarchy and the conditioning of minds in childhood is the key instinctive method by which human society of different sizes and sorts is pinned together.  Without it we should shatter into chaos.  But, please, do let us clean up more cases of the sort of brutality as formerly practised by the Chandhocks!

We don’t need to kowtow to the Chinese

George Osborne, the real prime minister of this country, is spending a week in China.  Osborne, being an intellectual, is highly impressionable — as all intellectuals are — is already being bowled over by the wonders that he’s seeing over there.  He’s  already saying, even before he gets back, that the “our two great nations ought to be trading more together”.

I bet the Chinese are chuckling over that!  This country a great nation?  We had our day 100 years ago.  We still have many rich people among us.  But we’re an ordinary country now, and the quicker we get used to it the better.  What we still have, fortunately, as a residue from the industrial revolution is a good science research base.  But the fact is that almost half of our leading scientists were originally educated in private schools — which serve 7% of the population.  It’s their services that we’ll need to trade with China in the coming years.

There’s no need to kowtow to the Chinese in such an obsequious way, Osborne.  Just get on with helping the education minister to steer Free Schools and Academies away from the state system as soon as you can.

For when we all eat ready-made meals

And now we have rumours that car manufacturers have been fiddling their exhaust emissions for petrol-driven cars!  Are car manufacturers any less responsible than any other manufacturers?  Not really.  They’re all human.  And all humans will attempt to get away with anything short of murder in order to protect their jobs. And when one gets away with it, it’s a race to the bottom among all the others.

The key point is whether irresponsible behaviour is detectable or not and, having been detected, whether the general public are educated enough to understand the implications. For example, because children are not taught basic physiology and health care at school, cigarette manufacturers had full freedom to destroy lungs for decades before good sense finally percolated among most of the population.

The same applies to the addition of sugar to processed foods. Tbis will take another two or three decades of education before any real progress is made.  If anything, this is even more important than cigarette smoking because we are all steadily heading towards eating more processed foods and ready-made meals — they are cheaper, are often a great deal more tasty than home-cooked fodder and save large amounts of time for more leisure activities.  For some, of course, cooking is a superb leisure activity — and all strength to them — but for the rest of us it’s a chore as we continue to eat at restaurants more frequently and buy more ready-made meals for home.

Oh no, not bridge as well!

The Olympic Games has become such a monstrous event that English bridge players are now going to the High Court to be legally pronounced a sport so they, too, can make the Games even more monstrous.  Besides, most events are boring for most people most of the time.  There are only about half-a-dozen key events among them all.

Why don’t we go back to the original spirit of the Olympic Games of 2,000 years ago which was young men showing off so the best of them could be selected by the most beautiful of the young ladies of Greece who wanted partners and children.

Notwithstanding the fact that the Olympic Games is now a useful diversion from nationalistic warfare, we could still reduce the number of sports to those in which only young people, say up to the age of 30 years, can take part. This would knock out a many so-called sports, such as chess, and make the Games more amenable to more people — such as the vastly more entertaining Games such as World Cup Soccer or 20-over cricket (confidently anticipating that it will become a world sport before too long).

Will the European leaders have the courage today?

What is now going on in Europe over the immigration problem has complex mixed agendas on both sides of the argument, but what it essentially boils down to is a tussle between Brussels bureaucrats who, in their own protected environment, are still under the sway of excessive liberal carry-overs from a century ago and politicians who have to keep their eyes over their shoulders at the votes of the broad masses of people who are worried for the long term future of their jobs as automation steadily creeps in.  This is the sort of democracy that neither civil servants nor politicians fully allow for when they talk of the virtues of Western systems of elected governments.

The 28 leaders of the European countries who are meeting today know what a reasonable and practical solution should be but do they have the courage to over-ride the Brussels bureaucrats?

The EU is becoming as dysfunctional as the Middle East

Yesterday’s meeting of EU foreign ministers became an imbroglio.  Four countries — Romania, the Czech Republic, Slovakia and Hungary — are refusing point-blank to accept quotas of refugees from Syria.

Did the foreign ministers decide that the problem is too big for them and there had to be an emergency meeting — this time of leaders — today?  What can they possibly decide?

The ideologists of the Brussels Commission are pushing one way and the politicians, aware of the growing anger of their electorates — worried for their own jobs in the coming years — are wanting to go in the other direction.  Just like the Greek financial problem — far from resolved and probably never will be — the refugee/economic migrant problem is becoming something that the EU can’t solve.  The EU is proving to be as dysfunctional as the Islamic world in the Middle East.

Why we like gangster films and Downton Abbey

BBC magazine has an interesting dissertation about the hundreds of films and books about the exploits of gangsters and that they never fail to be fascinating to large audiences.

David Wilson, Professor of Criminology at Birmingham City University, has put his finger exactly on the right spot. “There’s something immensely aspirational about [the gangster film or book] — this sense that they can do anything. They take risks that we would never take in real life. Often there’s a good-looking actor playing the lead. They look cool. They wear clothes that are fashionable.”

This is exactly the same reason why Downton Abbey, now currently starting on its latest and last series on ITV (sorry it’s so successful, BBC!).  Both genres are about rank ordering — how individuals rise and fall socially.  It is the central feature that holds all the different parts of society together in every culture ancient or modern, religious or secular, artistic or scientific.

Social hierarchy is all!  So long as there’s social movement — that’s what makes life so very fascinating, whether as participants or spectators.  Why we like gangster films and Downton Abbey.

Central banks of the West are no longer lenders of last resort

In 1745, Charles Edward Stuart (“Bonnie Prince Charlie”) had raised an army in Scotland while most of the British Army was on the Continent and was marching south.  By the time it reached Derby, the merchants of London were in a panic.  They met at their usual coffee house, Garroways, and were on the point of going to the Bank of England to draw their money out — that is, gold coins — but were persuaded to accept £5 notes instead because the bank didn’t have enough gold.  This was the first time, since it was founded in 1694, that the Bank of England stopped acting as a bank — albeit a privileged one — and became a lender of last resort.

Thenceforth it was no longer a real bank but only a lender of last resort.  This meant that all the ordinary high street banks needn’t worry overmuch about not having sufficient reserves of gold in their vaults because they could always go to the ‘Bank of England’ to be rescued whenever there was a panic.

The irony is that since basic rates in all advanced countries (except China) are zero, the Bank of England, the US Fed and other central banks can’t even act as lenders of last resort because they have no money.  They have some gold, of course — it has always remained precious to central banks whatever they say about to Joe Public about it — but this would be nowhere near sufficient in a economic recession.  All they have are governmental debts which they hope the government will pay back one day.

So, today, the central banks of the advanced countries are neither banks nor lenders of last resort. They can’t even carry out any more Quantitative Easing.  It’s interesting, is it not, that the world trading system continues?  It’s very shaky, of course, because of past governmental monetary interferences, but if government can keep their hands away from the printing presses there’s a very real chance that the economic system will correct itself in due course.

What about a realistic policy for the EU?

The foreign ministers of 28 EU countries are meeting as I write to decide what to do about the wave of mainly Asian immigrants already upon them — only some of them from Syria now.  Or, rather, only 120,000 of them are on the agenda, about a third of the number already stretched out somewhere along the roads and railways of Europe.  And there’ll be another 120,000 on the roads and the railways between Afghanistan, Pakistan, Iran, and Iraq as well as Syria.

Even if they get agreement today to share out 120,000 immigrants among themselves and impose it by a majority verdict, do the larger countries of the EU think that the smaller EU countries of Eastern Europe are going to obey them?  What about a once-and-for-all meeting of EU countries’ leaders and decide on a realistic policy for the EU?

The Global Innovation Index is seriously defective

Cornell University’s annual Global Innovation Index for 2015 is now out.  Here are the first ten:

1. Switzerland (Number 1 in 2014)
2. United Kingdom (2)
3. Sweden (3)
4. Netherlands (5)
5. United States of America (6)
6. Finland (4)
7. Singapore (7)
8. Ireland (11)
9. Luxembourg (9)
10. Denmark (8)

The GI index is very carefully done with 79 factors assessed.  What is important, though, is how the factors are weighted in the final formula producing the score for each country.  In my view, it doesn’t give anywhere near sufficient weight on a population basis and gives too much weight on the basis of numbers of patents (95% of which are merely trivial improvement to existing production methods).  Thus Cornell’s listing is improperly weighted if it is to be regarded as a listing of the innovative ability of the actual cultures within the countries.

On a true basis of cultural creativity, Germany, listed 12th, and Israel, listed 22nd, should both appear in the top ten on account of the large number of Nobel prizes they win based on populations and the number of leading edge firms within them. Sweden shouldn’t be there because of the large numbers of patents from only one predominant firm (Ericsson).  Singapore, Ireland and Luxembourg shouldn’t be there on account of the large numbers of foreign (mainly American) firms and research labs invited there.

Taking 79 indicators into account produces a list of 180 countries in which the country scores change in smooth gradations from Switzerland at 1.00 to Venezuela at the bottom at 0.06.  These scores are supposed to correlate with economic performance. Yet in real life only about ten or twelve countries account for half the world’s trade and the other 170 countries account for the rest!  There are some steep discontinuities going on in reality.  Cornell’s list would have it that there are none! There’s too much political correctness in their score formula.  In my view the Global Innovation Index is seriously defective.

Germany’s politicians will lie low now

The other big story of today is rocking Germany, the car industry, millions of car owners, millions of other people who’ve been breathing unnecessary nitrous oxide in diesel car fumes, Volkswagen shares and — who knows? — even the stock market itself.  In the course of today VW might even be the trigger that causes the next financial collapse — something that more than a few central bankers are fearful of.

It has already caused VW’s shares to slide 20% and is going to cost at least $20 billion in fines, it is estimated. My guess is that there’ll be more than a few class actions by the relatives of the additional thousands of people who’ve died prematurely.  I wouldn’t be surprised if it ends with the closing down of Volkswagen as it now stands — at least the forced sale of some or all of its luxury brand car firms.

Above all else, much more diffusely, but importantly, is that VW’s criminality in falsifying its exhaust tests will badly affect Germany’s reputation in the world.  Ever since the Second World War, Germany’s politicians have worked hard to redeem Germany’s reputation from the guilt of its systematic slaughter of European Jewry.  In PR terms, in keeping away from American, British and French interference in the Middle East, topped up by Angela Merkel’s recent welcome to Syrian refugees, it has pretty well succeeded.  No longer.  Germany’s reputation has been dragged low by the senior people at Volkswagen — unbelievable, considering previous attempts by car firms to avoid recalls.

Germany’s reputation in engineering is indisputable.  But the way it has handled the Greek problem and, more recently, the refugee problem has cast doubt on its political/managerial competence.  This Volkswagen episode will set the seal on this for some time to come.  Germany’s politicians will lie low now.

But Cameron is not a nasty man

The unauthorized biography of David Cameron by Michael Ashcroft and Isabel Oakeshott, Call me Dave, is one of the two big news items this morning in this country.  It’s being serialised in the Daily Mail, which is about halfway house in the gutter press league. As one might expect, the first instalment yesterday tells us that Cameron was a typical silly young rich man’s son while at Oxford University — perhaps more imaginative in sexual larks among his pals than most — one apparently involving a pig (a dead one it must be said) — but little more than that.

One has seen plenty of our Prime Minister on television in the last few years to be able to come to a fairly accurate idea of him.  He’s not, one might say, statesman material, but he’s exceptionally good at public relations — the front man for the political Svengali behind the scene, George Osborne, the Chancellor of the Exchequer.  One thing Cameron isn’t is nasty.  That must be reserved for Lord Ashcroft, one of the authors of the book, who is piqued that he was not offered a senior ministerial job in exchange for donating huge sums to the Tory party.  As for Isabel Oakeshott, beautiful and beautifully articulate though she is will, I think, come to regret taking part in this unnecessary book.  There’ll be other unauthorized biographies coming along in due course which historians in the future will pay much more attention to.

What is Islam?

It is a religious organisation and of different complexions in different countries.  However, exactly like the history of Christianity, or Buddhism, or Hinduism, Islam anywhere today is nothing like it was when its original founder Muhammad was alive, preached and led the movement. As to textual sources, the Qur’an today has become a heavily annotated edition of the original over the centuries just as the original texts of the Bible, Buddhavacana and Sutras have been.

One thing for sure is that Islam today — besides existing in many different varieties — is nothing like it was.  The original Islamic faith, springing forth from Muhammad’s Qur’aysh tribe not only had to defend itself against persecution from other Arab tribes in Saudi Arabia but also from massive occupation waves from Roman and Persian armies which, in fighting each other, swept backwards and forwards over the whole of the Middle East for more than a century.

They were dangerous and chaotic times and other religious faiths besides Islam, such as Zoroastrianism, Christianity and Judaism had a hard time surviving. More often than not in Muhammad’s time they helped one another when persecuted by more powerful forces. Because all these sects were monotheistic, Muhammad saw no reason to treat them as enemies.  He preached reconciliation.  Muslims frequently allied themselves with Jews or with Christians when they needed help and, in turn helped them when necessary.

Islam, as practised by Abu Bakr al-Baghdadi, exists by causing shock and fear, hating even fellow Muslims such as Shias, never mind Christians or Jews, and is a very different movement from the way Muhammad originally framed it. The jihadis of Iraq and Syria are treated with contempt by the vast majority of Muslims — that is, those larger populations who live in India and Indonesia. Al-Baghdadi’s assumption of Caliph-hood is laughed at by leading Muslim theologians elsewhere in the Middle East.

I’m prompted to write this blog because I’ve been reminded of Christopher Caldwell’s book, Reflections on the Revolution in Europe, which created a great stir when published (2009).  According to the New York Times, Caldwell’s argument is that “When an insecure, malleable, relativistic culture [meaning Europe] meets a culture that is anchored, confident, and strengthened by doctrines [meaning al-Baghdadi’s version of Islam] it is the former that changes to suit the latter.”

I disagree. It’s true that Europe, in the throes of great economic and cultural adjustments as we leave the industrial age and enter a period of increasing automation and high cognitive skills (for those who are educated sufficiently), is politically confused.  But it’s still stronger than the ad hoc, anti-scientific terrorists who are so easily promoting fear among the impressionable.  An organisation that can only exist by means of fear is vulnerable to reactive anger at any time.  Just like most of the Caliphs of old, Abu Bakr al-Baghdadi, will not have a long reign. His closest allies, the Sunnis, will probably be the first worms to turn.

What the EU needs to be worried about is not Islam itself, nor even the small number of unstable, impressionable youngsters within them — even though they’re dangerous in the interim —  but the sheer volume of immigration that has now been encouraged by Angela Merkel. Hundreds of thousands more would-be immigrants are now moving in one way or another along a line more than a thousand miles long through Turkey, Greece, the Balkans and onwards and there’ll be hundreds of thousands more starting out until the EU seals its borders. In the coming years, European countries will have enough on its plate with a lack of decently-paid jobs for its own people, never mind millions more immigrants.

The inevitability of euthanasia

In the northern-most reaches of Sweden and Finland when farming families thought that they might not have had enough food to survive the winter they would clonk the eldest member on the head. Families had special rock-sites for this and, at the final ceremony, each member of the family, according to their age, would hold the club, the next eldest nearest the club end.  This is one of many different euthanasia customs in both farming societies and hunter-gatherer groups when in survival extremis.

Increasingly, in more prosperous times we have not needed to practise euthanasia in order for society to be able to survive economically during inclement periods.  The necessity, however, is gradually creeping towards us as we find that we can’t maintain old persons’ homes with the dignity and care that the law expects.  Every few months — in this ‘advanced’ country at least — we read yet another official report of the cruelty and suffering going on either by neglect or by physical torture by an increasing number of untrained, badly paid ‘carers’.

It is not  beyond the wit of man to devise some reasonable guidelines for kindly euthanasia to be delivered when an old person is becoming too great an emotional, physical or economic burden to be kept alive in a dignified manner — or, indeed, when an old person has lost all signs of personality.  A lot of it goes on already beneath the law — kindly or cruelly given,  We really need a Euthanasia Society to start collecting evidence and discussion in order to start formulating civilized criteria against the inevitable day when governments are too strapped for cash to sustain all old people, and when euthanasia will be regularised and culturally acceptable.

Electricity alternatives

Which would you rather have?  A nuclear power station on a 50 acre site paid for with predominant public funds producing electricity for 60 years that would then have to be totally guarded and isolated for 1,000 years at least until its spent fuel rods had lost a great amount of their radioactivity. Even then, further long term quarantining of radioactive wastes would have be be sought and paid for.

OR

A shale gas well on a 5 acre site paid for by private funds producing electricity for 30 years which, after a probable recovery period of maybe 30-100 years, could resume production of gas and, in this way, visually guarded by trees, could possibly continue production for 1,000 years with no release of radioactivity.  After then, equipment can be taken down and the nature can take its course.

Greek negotiations overtaken by refugees

So Tsipras and his left-wing Syriza Party has been returned to power in the latest Greek election with four fewer seats than before.  He’ll still have to form a coalition — probably with the right-wing New Democratic Party as before. The latter strongly believes in Greece becoming independent, and thus in the re-introduction of its old currency, the drachma.  If the talks with the EU don’t result in a write-off for a proportion of Greece’s enormous debts, then Greeks will be a lot nearer taking the sensible independence step.

But the Greek issue, however crucial it may be for the reputation of the EU, may be completely submerged under the Syrian refugee problem, with most EU countries refusing to accept more than nominal numbers, and Hungary and two others refusing to take any at all because they are Muslims. This surely strikes at the ideological roots of the EU far more deeply than the Greek problem ever did.

A real “Brave New World” in the making

A story about a most unusual medical condition in an isolated village in the Dominican Republic fascinated me this morning.  This condition probably doesn’t exist anywhere else in the world yet the genetic cause of it is of far wider relevance.  It involves in-breeding.  There are, in fact, hundreds of other cases of in-breeding all over the world in isolated villages — or even in strict religious groups living within a dense society all around them (such as the Amish in America) — giving rise to conditions that vary from handicaps that are relatively trivial to those of the most debilitating nature and those sudden deaths of young children which are so poignant.

The one I’m reading about concerns a village where dome of the children who are born girls become boys at puberty.  They are not actually girls but boys who look like girls because they don’t have the usual penis and testicles.  In their mother’s womb, they missed out on the natural injection of a specific form of testosterone into their gonads which occurs in the early weeks.

Because they look identical to girls when born they are given girls’ names — though, interestingly, some of them don’t think like girls, behave like tomboys and are exhilarated when they discover that they are becoming boys later.  At puberty, when every boy receives another surge of testosterone — this time a more powerful one — these ‘girls’ also get a charge and quite quickly develop the appropriate male apparatus and can become normal male adults

The cause of this condition is a double charge of a particular recessive mutation derived from parents who each had a single copy.  Such parents don’t always produce children with a double mutation.  On average, only one in four children will be affected.  Two in four of their children will only have one copy each and they’ll have no physiological consequence.  And one in four of their children on average will have no copies of the mutation at all.  Although in this particular village, only 1 in 90 children are these ‘delayed-boys’, working backwards mathematically suggests that approximately 1 in 19 of all the adults in that village, whether males or females, have a single copy.

This mutation incidence of 1 in 19 is too high to be comfortable and, when it is common in a wider region than individual villages it is, in fact, rather similar to the rate of recessive mutations which cause some well-known serious genetic diseases.  For example the incidence of single mutation copies of cystic fibrosis in certain regions of the southern Mediterranean countries is about 1 in 19 adults also.

However, in more modern times as young women are able to travel further before they choose their partner — perhaps in a distant university — the risks of children with cystic fibrosis decreases in those Mediterranean countries.  But the total risk, though much more diffuse, remains.  The incidence of single-copy cystic fibrosis occurs in only one in several hundred individuals in northern Europe.

Eggs that are fertilized externally with a male sperm in an IVF clinic are tested for cystic fibrosis and up to 100 other genetic diseases, before the mutation-free eggs (1 in 4 of them) are re-inserted in their mothers’ wombs.  These are only a few of the 4,000 genetic diseases that are caused by the matching of single copies of mutations.

However, several research teams are now developing methods of detecting double-copies of genetic diseases of a foetus from mothers’ urine very early in pregnancy when abortion can be easy and safe.  They’re not available yet but soon will be for one or two conditions and, in due course, will be able to detect increasing numbers in the list of 4,000.  But this would be an expensive and very long term programme before serious ‘genetic cleansing’ on a wide scale could ever be achieved.

In fact, it would never be perfectly achieved because, as it happens, every time a sperm fertilizes an egg, mutational mishaps occur and a small proportion of them turn out to be responsible for genetic diseases at some point in the future.  Because of this, the whole human population is gradually accumulating recessive mutations and this is why at least 4,000 genetic diseases are identified already. In due course, as is already happening with some genetic diseases such as cystic fibrosis, the risk of any child  being born with a genetic disease is gradually rising, albeit very slowly for now.

For the almost complete elimination of genetic diseases working one by one down the known list, it would require a highly systematic programme over a period of many centuries, perhaps millennia.  Governmental structures are relatively ephemeral.  Such a programme is therefore unlikely ever to be achieved except by a much faster process of voluntary choice within self-conscious populations or classes.  The research projects bringing about tests for early identification will be expensive.  In other words this will become a personal service available on a cost basis in the same way that  normal consumer goods and services already are. The possibility of a Huxleyian “Brave New World” is already strongly apparent or at least social bifurcation.

Double shambles

What a shambles the boundary jurisdictions of the European Union are proving to be!  The EU had the happy idea of a Schengen zone so it would be just like a nation-state where there are no internal borders and where travellers don’t need visas.

But what has happened in actuality?  It has countries with borders where visas have to be shown. It has countries with borders but where no visas need be shown.  It has countries with no borders but where visas need to be shown. And it incorporates a country not in the EU with borders where visas need not be shown.

However, the Brussels bureaucrats did not think of a EU external border at all where visas need to be shown or at least where potential immigrants can be assessed before deciding whether to grant them asylum or work permits or not and thus where the above shambles need not have happened.  Instead we have a shambles inside the EU and causing shambles in countries outside the EU.

The Tree of Life 1.0

The first Tree of Life has just been published.  It is a prodigious data achievement of 2.3 million named species animals, plants, fungi and microbes.  It is already out of date.  Even as I write this blog at least one or two other species will be identified somewhere in the world. Until now these new species would have been added to a smaller tree that has been convenient for the specialist to use when communicating with his closest colleagues.  But from now onwards it can be added to the full tree.

It’s been an enormous piece of data collating because, until now, there have been 500 trees in the various branches of life-forms, the majority of which are not been available digitally on the net but only on paper and as a PDF.  It is described in the current Proceedings of the National Academy of Sciences and any one can see it on: https://tree.opentreeoflife.org/opentree/argus/opentree3.0@1

The ‘trunk’ of the tree is what OOL (Origins of Life) specialists call LUCA (Last Universal  Common Ancestor).  Why OOL biologists think that there was, in fact, only one common ancestor is that all organisms discovered so far use RNA (a ‘messenger’ form of DNA) and that all proteins that are made consist of left-handed amino acids. Their mirror versions, right-handed amino acids can easily be made in the lab but they simply never appear in any life form. If there had been more than one life form at the beginning then almost certainly there’d have been both left-handed and right-handed versions.

Nevertheless, the Tree of Life 1.0 doesn’t start with one LUCA but with  “cellular organisms”.  There may well have been many “lively” events going on in the wider environment before life could reproduce itself — the sine qua non of what life means essentially — but until some lively events could be protected within a barrier or cell wall, the successful reproductive ‘event’ couldn’t have remained pristine long enough to be able to reproduce itself exactly.  And why plural cells?  Because there might have been some more than one closely similar cells with slightly different repertoires of RNA within them.

There is a difference of opinion at present as to whether the trunk of the Tree of Life divided into two main branches or three.  The latter is the predominant opinion at present and this is what version 1.0 shows.  The “cellular organisms” divide into Bacteria (single celled creatures), Eukaryota (multi-cellular creatures, including ourselves, of course) and a third branch which is still mysterious, and has only recently been discovered, the Archaea (also single-cells) and this is what appears in all current text books.

But there is also a more recent view that there are only two main branches — Archaea and Bacteria.  And then, according to this view, an Archaean cell ate a Bacterium cell and instead of digesting it found it useful because it gave it more energy.  What’s more, this new composite cell found it was able to reproduce into another composite cell.  Thus, in every cell there were two different packages of DNA, the Archaean original and the Bacterial one.  Then this creature subsequently found it was an advantage to clump together with another. This was when Eukaryota formed.

So, according to the latest view, we are of Archaean ancestry.  The Bacterium cell that every one of our cells carry as a passenger is what everybody knows as a Mitochondrion.  In fact, each of our cells many thousands of such mitochondria — and very hard-working they are, too, giving our cells the ability to absorb oxygen and thus all the energy it needs.  This phenomenon of two separate DNA entities living in each of our cells gives rise to two general sorts of genetic diseases.

There is a general category of several thousand genetic diseases which both males and females can suffer from, and there is a much smaller family of mitochondrial diseases which only females can suffer from.  Because there are no mitochondria in male sperm at the time of fertilisation it’s only the mitochondria that are present in the egg that can be passed down.  Accordingly, genetic diseases that affect mitochondrial DNA can only be passed down through the female line.  It is these genetic diseases of mitochondria which have been controversial of late because, when in females, they can now be prevented from being passed on further by a technique of extracting the mother’s DNA from one of her eggs and placing it in another female’s egg continuing only healthy mitochondria and then, after fertilisation, re-implanting the completely egg in the original mother.

The Tree of Life 1.0 is not of the same epochal importance as the elucidation of the structure of DNA in 1953.  Nothing in biology could beat that.  But ToL 1.0 is extremely important nevertheless.  It is going to stimulate and accelerate the classification of life-forms, clarify existing ambiguities and also prevent some researchers going up a blind alley.  The product of an immense piece of work by 11 research institutions is a major step forward which will, among many other things, expedite the development of remedies for many genetic diseases — some of what will require the contribution of small pieces of DNA from some other species on the Tree of Life.

The post-McKinsey era

The Schumpeter page of the Economist this week has a subtitle “The golden age of the Western corporation may be coming to an end” and refers to a major review by McKinsey Global Institute (MGI) of 30,000 firms around the world over a 30 year period.  What it says in brief is that the extraordinary success of the typical ‘imperial’ Western multinational is now coming to an end.

Muscling in are now a new breed of high-tech firms from both the West and Asia, particularly China, that start out as high-tech from their inception and achieve massive sales in the blink of an eye so that, unlike the older sort, the dominant owners are not wide swathes of shareholders so much as their original founders with more political power than even the robber barons of a century ago.

So far so good but, as to political power of the modern firms, the MGI doesn’t mention what I’ve referred to several times in these blogs, that it’s much more than that of influencing governments these days, but of facing up to them if necessary — such as Google, Apple and others are doing today in flatly challenging the power of governments on matters of the privacy of their customers’ communications. Furthermore, what is also happening as a correlate is that advanced government corporate tax-takes have declined to a half in the same 30-year period.

Another big deficiency of the McKinsey report is that when trying to suggest what the more traditional advanced countries should do in retaining former shares of global trade and thus prosperity, all it can suggest is to continue cultivating their existing success in the “ideas sector”.  By way of examples, it gives our present apparent predominance in financial services, the media, pharmaceuticals, logistics and luxury goods.  Well, I’m not so sure that Asian firms, particularly Chinese, are not already catching up fast in these more ‘refined’ areas.

It is astonishing that McKinsey doesn’t mention the two fastest growing consumer sectors of them all — education and health.  And in these two areas, the West has a distinct advantage in the necessary scientific research underlying them — brain-mapping and gene-mapping.  Eastern Asia, steeped as it is in Buddhism (fatalism) and Confucianism (deference), won’t be catching up anytime soon until its culture changes greatly. The scientific rigidity and the social isolationism of Japan, despite 150 years of industrialism and international trade, is a very good example of how slowly such a culture changes.

But there’s another characteristic of education and health that’s quite unlike the ‘imperial’ firms, youthful high-tech corporations and the supposed ‘ideas sector’ firms.  Whereas their goods and services are mass producible good education and good health care depend very much on the individual — his or her unique blend of genes, unique upbringing in childhood and, thus, unique needs. The very best education and health care have to be individually delivered.

And it is in these areas where capitalism breaks down completely.  Whereas business investment hitherto in goods and infrastructural services can be assessed against likely, or possible, future profits, investment in the training of educational and medical service professionals cannot be assessed. Training is very long and expensive and while it lasts there can be no guarantees of what by way of skills is going to emerge at the other end — if indeed those who were trained remain in them.   There can be only one investment source for this unknown return — governmental.

Mass production for standard consumer goods will continue, of course (we all need some physical signs of our social status!), but what is already beginning to follow are educational and health care services which are already taking up a larger proportion of personal expenditure. For nation-state governments (or regions, or cities or whatever governmental domains there may be in future years) a great deal of present expenditures will have to be skimmed away and applied to investment in vocational training in the two new growth areas.

And, in future years, when global competition has driven most businesses down to near-zero profit margins, there’ll be no further need for business consultancy firms which are presently in the business of advising others how to maximise profits by various methods of physical efficiency in mass production and delivery.

Visiting totally different cultures

One day — and it might not be very far away — we might be able to talk to some of the big-brained sea mammals such as porpoises, dolphins and some whales that have already been shown to be highly intelligent.  This intrigues me, as I suppose it does most people.  What I can’t get out of my mind is a clip on Thursday’s Chris Packham’s BBC show taken by a biologist filming a pair of killer whales swimming near her boat. They then became aware of a white shark approaching.  This was a large shark and more than a match for either of the killer whales individually.

Evidently, the killer whales decided to attack the shark and a furious fight ensued, followed by one of the whales swimming on the surface holding an upside-down shark in its mouth above water.  Apparently, upside-down sharks go into a hypnotised state.  Whether the whales already knew of this susceptibility and had shaped their attack accordingly, or whether they discovered it there and then, I don’t know, and the biologist didn’t give her opinion either.  What struck me, however, was that the whale with the placid, suffocating shark in its mouth not only kept the sight visible to the human onlookers but swam four or five times around the boat.  Why were they doing this unless they were not showing the humans on board the boat that they were clever, too.

This interpretation is easily criticised for anthropomorphising what goes on in animals’ minds  — a fault that we all too readily made, say 100 years ago, in the early days of serious observation of wildlife.  But the pendulum has swing a very long way back towards a more middle position since then and biologists are realising that, in a great many ways — but far from all, of course — the higher animals do, in fact, think and experience events and relationships in much the same way that we do. So it occurs to me that these two killer whales, before they decided to eat the choice bits of the shark — which they did — wanted to show us that they were intelligent, too.  why swim round and round the boat if not to emphasise the point?

That incident has stayed in my mind since Thursday but what prompted me further this morning was to read of another incident observed by a marine biologist, Maddelena Bearzi, this time swimming with a pod of dolphins who had herded a shoal of fish into a tight bundle and were about to eat them.  Suddenly they left the scene.  She followed them to find that the dolphins were encircling a teenage girl about to drown.  Presumably she was able to rescue the girl.  But were the dolphins intending to rescue her if they were able to?  Was it just because it was a poignant sight to observe?  Or did they know that Bearzi would follow them in order to save the girl?

So far, we are far from being able to communicate with some of those animals who have brains similar to ours, but we want to rather badly.  But  besides the two stories above there’s more than enough evidence that they want to communicate with us, too.  Will either party be able to fully enter into the cultural world of the other even when we can communicate?  It’s doubtful, but the visits will be enormously fascinating.

Is Artificial Intelligence a mare’s nest?

It’s been Artificial Intelligence week at the BBC. We’ve seen robots galore walking, jumping, picking things up from the floor and doing all sorts of supposedly intelligent things.  But I’ve seen no evidence that they’re any closer to being creative than they were 50 years ago when the Japanese first got excited about the possibilities. Robots still only operate by means of  algorithms pushing their instructions backwards and forwards until the task is complete.

AI is still a digital process of black and white decisions whereas the human brain works in analogue fashion also — grey matter — before sending digital messages onwards — white matter.  Different specialised clusters of analogue micro-computers deliver synchronised digital waves that then impinge on other processing centres which then send an analogue verdict to our muscles or our glands.  The brain is not a separate unit.  It is perceptions plus processing plus a final action (or an emotional feeling) all rolled into one unbroken sequence.

I don’t see computers ever being creative like a brain which can ricochet problems constantly until a new solution emerges — if necessary for days or weeks or even years sometimes if it’s the brain of a genius who likes to tackle really serious problems.  Such a person was Alan Turing who invented the computer software algorithms.  It’s going to take another genius to get us to computers which are even minimally creative — if we ever do, which I personally doubt.  I think AI is probably a mare’s nest.

An independent BBC no longer

Now that two senior British politicians, Sir Malcolm Rifkind (Tory) and Jack Straw (Labour) have been let off the hook of being corruptible by Kathryn Hudson (no relation!) — the Parliamentary Commissioner for Standards — and a bunch of fellow politicians — the House of Commons Committee on Standards — then why haven’t the two gentlemen decided to sue the Daily Telegraph and the Dispatches programme of Channel 4 for compensation for the ‘grievous’ loss to their reputations over the past few months?  If successful each of them could receive £millions.

I don’t know what Jack Straw has said on the matter, but Sir Malcolm Rifkind has said that he hasn’t the time to be bothered!  That speaks for itself.

Incidentally this important concern which is at the very heart of the British electorate’s deep cynicism about government appears nowhere on the BBC website Home page — so much for the independence of the BBC!

The practicality of devolution

Jeremy Corbyn’s naive left-winger’s heart is in the right place.  Despite the venom that is now being thrown at him he has the priorities in the right order.  Government’s main function — alongside protecting its people from invasion or annihilation — is to keep the peace and to look after the general welfare of its people.

The problem is, for one reason or another, all the highly centralised governments of the world can no longer afford to do so — that is, if they do their sums correctly and work out just what the costs are going to be in ten, twenty or thirty years’ time.

The only way any benificent agency can accurately dispense charity to the deserving poor and needy is by knowing them intimately. Under the present centralised, distant system it’s no use saying that the proportion of the free-loaders in the population is only a small one.  It is far larger than is publicised by exemplary court cases. We all know of undeserving recipients and it is these which cause demoralisation among the public.

Some essential functions have got to be highly centralised — defence and infrastructure. for example — but there’s no reason why most of the functions that governmental civil servants lay claim to cannot be devolved to increasingly smaller and smaller managements.  Now that the internet has arrived where comparative costs can be readily checked against one another — allowing for environmental circumstances — then there’s no excuse for not systematically carrying out devolution instead of pandering to the personal power needs of politicians and civil servants.

Over to the real manufacturers of money

So what does it mean that America’s central bank — the Fed — didn’t raise its basic rate yesterday?  Absolutely nothing!  As far as the real world is concerned, it doesn’t matter any longer whether the Fed exists at all except for a few minor purposes such as being a repository for the nation’s gold, to print new banknotes for old ones, and to keep a register of the title deeds of the government’s debts.  Apart from a dozen or two security guards to look after the gold and half-a-dozen bureaucrats, it needn’t exist.

In other words, the Fed, along with the Bank of England, the Bank of Japan, and the European Central Bank are, in effect, redundant.  They’re playing all sorts of financial games and saying all sorts of things but they’ve been redundant for a number of years during the period that the basic rate — a so-called interest rate, which it isn’t — has remained at zero.  Of course, thousands of people employed by the Fed and other central banks don’t think their institutions are redundant! And Janet Yellen, the Chairman of the Fed certainly doesn’t think so, her job being one of the top status jobs in the world.

The fact is that, with the central banks having bought $15 trillion of government debts in the last six years since the 2008 debacle — and printing the money accordingly — plus large amounts of of additional credit created by investment banks and shadow banks between them by means of all sorts of imaginative documentation, the world’s economy is awash with the oil that lubricates the trading system, the real economy.

The surplus oil is at present stacked away in various places — such as unused money stuck in the central banks that the ordinary high street banks don’t want to borrow, share prices that are far too high, and huge numbers of collectibles such as ridiculous modern art and ‘assets’ such as town houses in the glamour cities. And, correspondingly there are massive debts all over the world — private and corporate — besides governmental debts.

Altogether, there’s something like a $70 trillion imbalance between governments in the world total trading balance sheet.  Which is a nonsense, of course.  It ought to be zero.  If all the credits and debits were to be squared off then the world would find itself with a trading system (the real economy) at perhaps 70% or 80% (it can only be a guess) of its present size.  In short, a severe depression that would cause revolutions in almost every country in the world.

So the process of readjustment had  better be gradual while the world trading market sorts itself out.  Janet Yellen has been unable to raise the so-called basic interest rate of 0% at the Fed because she and her 10 members of the Fed’s Open Market Committee are afraid of bringing an intermediate depression down upon the Third World countries.

Now that the advanced governments of the world have spent all the money and economic wisdom that they’re capable of, then they’ll just have to sit it out while the real world more gradually works through all the governmental, corporate and private bankruptcies that are necessary to get back onto an even keel.  China no doubt will continue to sell in modest amounts every year all the US Treasury bonds it has bought, as will Japan no doubt, so this will help.

So the 0% basic rates of the central banks will continue as long as it takes until we get back to reality regarding money.  If the advanced country governments don’t have the patience for that and try to interfere, once again, with artificial printing of extra money to create consumer demand, then it is more than likely that businesses, starting with the immensely large ones in the telecoms field will decide to impose a new trading currency of their own. After all, business created money in the first place.  If there’s any possibility that governments will mess it all up again, then those institutions which actually create added value (money) had better take the initiative.

The EU politicians will have to take the flak now

What went wrong very early on in the development of what is now called the European Union is that the Brussels Commissioners — those civil servants who’ve never been elected — were not content with their original six member countries.  Instead of consolidating and discovering what the EU’s ultimate career problems might have been, the instinct for political power — always a problem in our species (and particularly the males) — took over and they began expanding.

By offering juicy financial incentives to countries on its fringes, the EU started expanding with gently accelerating celerity.  The commissioners were only finally stopped when France — one of the few sensible decisions that country has taken concerning the EU — reacted against Turkey joining. France found several political reasons to object to Turkey’s membership but not the one that Turkey was a full-blown Muslim country — the real reason. For reasons of political correctness — already burgeoning quite well 20 years ago — that reason couldn’t be mentioned in polite circles.

What also couldn’t be mentioned is that several ex-communist countries who were nowhere near culturally ready to join Europe, shouldn’t have been included.  But what with them already invited  and Turkey — an Asian country — as a possibility 10 years ago, are there any doubts that the Brussels Commissioners would have stopped there? What with being so clever, rational and systematic in everything they do, they would certainly have been tempted to expand into the Middle East.

But the resistance to Turkey — an Asian country after all — finally stopped them.  And now, with the disgraceful scenes going on now in Hungary between the authorities and the immigrants, the EU Commissioners are now finally discovering how silly they were for being too greedy for power in the first place.  They are already having problems with Poland which is already showing itself to be politically obstreperous within the EU, but now that Hungary is close to being criminal to immigrants — in the same way that it’s always been to gypsies and other small minorities — then perhaps they will now realise for the first time that they have taken on far more than they can chew.  As always, the politicians whom civil servants usually manipulated so successfully, will have to take the flak.

Meeting Putin halfway

Now that Putin is sending troops and weapons on a fairly substantial scale into Syria in order to help the fight against Isis — also America’s enemy — we ought to have the first really hopeful opportunity for Putin and Obama to meet together and begin to be sensible about Middle East events more generally.

America, this country and several others made a serious mistake when they decided that Basher al-Assad was a bad un, and declared war.  In that way, Isis saw a wonderful opportunity to invade a weakened country.  Assad and his ruling Baathist clique may well have been as ruthless and cruel as was said of them, but at least it was a secular government trying to bring a religion-sodden country into the 21st century and gradually succeeding. Instead, the country is now in danger of being set back 100 years and being more religiously-obsessed than ever.

America and this country and several more made the same serious mistake when they decide to invade Iraq in 2003 on the grounds that Saddam Hussein was a bad un.   Saddam and his ruling Baathist clique may well have been as ruthless and cruel as was said of them, but at least it was a secular government trying to bring a religion-sodden country into the 20th century and gradually succeeding. Instead the country was definitely set back 100 years and is now but a simmering religious war between Sunnis and Shias.

Putin might also not be the ideal leader that one would like but if he’s on the side of the angels on the Isis issue then the least that Obama could do would be to go halfway and work with him on the problem in Syria.

Rank Order

What left-wing politicians and right-wing politicians alike don’t realise — though from opposite points of view — is that humans are instinctively a rank-ordering species.  The real point at issue is not what our political attitude is to this but how open the rank order is in every generation to the natural talent of children born in any rank.

The newest advanced country

This week’s Economist contains one of its occasional Special Reports for which it is famous.  The latest is a 14-pager on China, written by Vijay Vaitheeswaran with a list of acknowledgements to experts as long as your arm. It probably won’t wake up the country as did the extraordinary one on Japan some 45 years ago — that is, before Japan was recognized as resurging — which went the rounds of management at that time as a shock as I well remember. This time, we already know that China is resurging.

The Report is well worth reading, of course, but it discusses only one of China’s two major deficiencies.  The one to which it refers many times is the bias of central bank support for state-owned industries which are far less efficient than private industries — although the tide is turning.  The one to which they didn’t refer specifically was the doctrinaire, learning-by-rote methods of its state schools which more or less squeezes out any latent ability to be innovative by the time students reach their most creative years between puberty and 30 years of age when their frontal lobes are developing.

The Chinese government, the 8-person Politburo, are well aware of this but know that the 2,500 years weight of Confucian tradition means that its authoritarian educational culture will not be able to change radically for a very long time to come, perhaps decades.  This is why tens of thousands of Chinese schoolchildren and post-grads are allowed to go abroad every year in the hope that the more relaxed, more free-ranging frame of mind they experience there may be inculcated in China when they return. Also, of course, that post-doc researchers, with more thoroughly re-programmed minds will be able to take China to the forefront in important scientific research areas.

And China seems to have done so already in what must be two of the most important economic sectors of them all — namely telecoms and genetics.  Two paragraphs jumped out at me.  As to the first, concerning the firm Huawei, I’ll quote directly: ” . . . has emerged as a world-class telecoms equipment firm. It spend some $5 billion a year on R&D . . . along with Sweden’s Ericsson, it is now at the forefront of research on 5G technology for the next generation of mobile phones.”

The other paragraph concerns the BGI, a genomics research institute which has hundreds of PhDs on its staff, Illumina DNA sequencers powered by the fastest supercomputer in the world, the Tianhe-2.  “It has won accolades for sequencing the SARS virus and decoding the genomes of birds and the friendly microbes that live in the human gut.  It advises most of the world’s large pharmaceutical companies on drug discovery and development.”  (The Report doesn’t mention the Ebola virus but Chinese geneticists were the first to develop an Ebola vaccine and this possibly came from BGI.).

Thus, despite most economic sectors where the Chinese are still catching up, it would seem that they’re already at the leading edge in two of the most transformative of them all.  The mobile phone will continue to give revolutionary social and political power to ordinary people and genetics will soon lead to  improvement in human health and breeding, particularly in weeding out genetic diseases.

This country, and indeed all advanced countries, ought therefore to be very afraid that their present advantage in scientific research may be taken away from them, or at least shared, unless their typical state educational systems are either transformed or replaced.  In this respect, despite its still modest per capital income of its people, China must now be regarded as an advanced country.

All strength to Liz Kendall in the coming years

British politicians and British civil servants have only recently started waking up to the facts of modern life.  It is only in the last few years that they have begun to trust groups of parents to start their own schools so that their children can learn subjects that are more relevant to modern, highly specialised, scientifically based skills than those of the usual curricula of the state secondary schools.

This was due mainly to a close association between Tony Blair, the Labour Prime Minster until 2007 and his chief advisor, Jonathan Powell, an ex civil servant.  It was because Powell had been an ex-Treasury civil servant, and was therefore the  recipient of a great amount of obeisance from senior civil servants in the Department of Education, that Free Schools ever got started in the first place against the fierce resistance of the teachers’ trade unions.  It was an extraordinary event of successful politics that even the Conservative opposition probably could not have managed had they been in power at that time.

And it’s an abiding resistance, too, from the teaching trade unions.  Despite the fact that the first few Free Schools are now producing students with better results than state schools, the teaching unions, if they’re ever given the chance of influencing government again, would scrap them. And they would undoubtedly have the support of the Department of Education because it would restore in full their previous power over directing what state schools should teach and the supply of insufficiently qualified teachers for the state secondary schools where there were scarcely any scientists, engineers or mathematicians among them.

Thankfully, the succeeding Conservative administration, as the present one, continued the policy of allowing parents to start new Free Schools. I haven’t yet heard what Jeremy Corbyn, the new leader of the Labour Party, has to say on the matter, but as he hasn’t said anything in Free Schools’ favour — nor even mentioned them at all — I would judge from what I’ve seen of him so far that he would be too weak to resist the teachers’ trade unions if he ever got into power.  A new Labour administration might well scrap the Free Schools in the same way that the first Labour administration after the Second World War scrapped the old grammar schools of this country which were the only ones, besides the very small number of private schools, who were supplying enough students well trained in science and engineering.

Given the resurgence of China, particularly in regard to two key areas of research and future economic development — which I will write about in the next blog — then extreme left-wingers now gathering like flies around Jeremy Corbyn should be resisted and why I would hope that sensible Labour Party MPs, such as Liz Kendall, will gain more influence in the coming years.

A ponderous public intellectual

Americans — but not yet the Brits — delight in an appellation they apply to those eminently intelligent people who bring out well-acclaimed books and then, from time to time, pop up into the public domain with pronouncements on this or that recent development or event.

Such a one is Stephen Pinker and he’s probably America’s No. 1 public intellectual.  He’s certainly in the top half-dozen anyway.  He’s recently been totally irresponsible by throwing what amounts to a mortar bomb into the controversy now building up about the new biological techniques, such as Crispr, which allow researchers to precisely extract and replace the errant version of someone’s gene and replace it with a healthy product.  This is known as gene editing.  There are other much slower techniques beside Crispr, and no doubt there’ll be faster neater techniques in due course.  Suffice it to say that gene editing has now arrived.

As soon as the implications of Crispr sank in — only in the last few months or so — there has been an outcry from those who say we shouldn’t tamper with the human genome.  On principle!  It’s contrary to human dignity. In effect, they think that the human DNA is sacred.

Never mind that we have already been practising something similar to gene editing of the Crispr sort for 20 or 30 years without these sort of objectors making a cheep of protest. Why?  Because they would have been onto a loser from the word Go.  Gene editing is practised in many IVF clinics around the world when they test the fertilised eggs of two parents who might, unknown to themselves, be carrying a copy of the recessive gene variation which is responsible for producing cystic fibrosis or many other serious genetic diseases in their children — or at least one in four of their children.  Instead the clinicians make sure that only the one-in-four eggs that are completely free of the mutation are selected for insertion in the mother.

But Pinker’s comprehensive pronouncement also railed against any form of supervision over Crispr-type gene editing.  But this is what research scientists themselves are now calling for because genes are so complex that very little is as straightforward as might seem initially.  Removing deleterious variations causing known genetic diseases of a serious nature in children is one thing but anything beyond this can be dangerous because once a change is made to someone’s DNA then it has a chance of continuing forever — not only that but causing other serious consequences that don’t reveal themselves until much later when they have spread too widely that they can’t be remedied.  They want to have overseers among themselves or those deeply versed in genetics — though not of the amateur do-gooding or religious variety who are now making a clamour.

Stephen Pinker has not improved the situation by weighing in so ponderously.

Will central banks go to sleep from now onwards?

We keep on being told that the low inflation of the advanced countries is due to the low price of commodities, fuel and clothing.

It’s nothing to do with that!  We had low inflation when the cost of commodities and fuel was much higher than now only eighteen months ago, several times higher in the case of the latter. It’s due to the fact that, since massive money printing by Japan, America and Europe we are awash with money.  Never mind the documentation created by the shadow banks which is effectively additional money.

We are at 0% basic interest rate, or 0.5% in the case of central  banks that don’t want to lose face completely, or negative basic rates when we dip into temporary deflation from time to time.

The truth of the matter is that the central banks of the advanced countries have almost done themselves out of a job.  All that central  banks really need to do from now onwards is to print new banknotes to replace used banknotes that are returned to hem.  In its own way, the market — the summation of billions of decisions made by people moving their money around — is endeavouring to heal itself and, without interference of governments, and with sufficient therapeutic bankruptcies over the coming years, will do so.

The big question is will central  banks — that is, governments — try to force themselves back into the money creation system?  Will they have the sense to leave it to the businesses that actually create added value — and thus real money — as they did in the past?  We’ll have to see, won’t we?

Real warfare is too dangerous for you, Sir George!

“Warships to fit laser cannon as new generation of lethal weapon begins” says one headline in my paper this morning.

But what’s the point of all this old-fashioned type of warfare?  Both of the major powers, and probably Russia, too, could bring the other to its knees instantly and comprehensively with electronic methods if warfare were really intended.  Otherwise all these new weapons are just the residue of a culture that went out of business historically at the time that the nuclear bomb was dropped on Hiroshima.

For this particular hoped-for development, proponents are attempting to treat us like idiots also.  Admiral Sir George Zamellas praised  “high powered beams to damage and burn up targets at the cost of a few pence per shot.”  Really?  For the warship carrying such a laser would have to store up a town’s worth of electricity for each shot.  A few thousand pounds’ worth per go I would suggest.

If you really want ultra-cheap warfare Sir George, try electronic warfare.  The truth of the matter is, though, that this is far too dangerous a form of warfare to leave in the hands of the typical military chiefs who, more often than not, are the products of the C streams at our private schools.

Chinese moon visit soon?

Writing my previous blog has reminded me that the Chinese are due to land men on the moon sometime this year — at least, that’s what they said last year.  But what’s the point?  Exactly the same reason that America put men on the moon in 1969 — to cock a snoop.  China will be telling America: “We’re as clever as you are.”

There’s no other reason.  It’s just a marker for the history books against the day when the Chinese — or anybody else — might have robotic mining going on there.  Once again, as with the Mars proposal, if anybody wants to create a habitus there, a large infrastructure would have to be built by robots first. It would have an enormous cost also, and none of the advanced countries, China included, would be able to afford it for the next 50 years at least as they endeavour to pay welfare benefits for all their people who will be thrown out of work by the earth’s robots.

Come off it Buzz!

Buzz Aldrin is a very brave man — no doubt about that.  But he only went to the moon because (a) he was convinced that the engineers at NASA had covered every foreseeable risk, and (b) that the four-day trip there and back wouldn’t cause him to go mad. Perhaps one should also mention (c) because America wanted to poke Russia in the eye in 1969, when tension between the countries was very high– a propaganda victory.

Buzz Aldrin is now over here, speaking at the London Science Museum, telling young people that Mars awaits them and it’s man’s destiny to go there. But can he guarantee that they won’t go mad on the journey there?  It would involve at least 150 days’ travel, cooped up with a few others — or about 300 days if it’s a round trip.  The evidence so far from various 6, 12 and 18 months’ simulations in Russia and America is not good.  There’ll be dissention along the way with at least one of a group — perhaps you — probably going right round the twist and having to be drugged into a coma to ensure the safety or sanity of the others.

And what to do when you get there?  The best would be a walk in a space suit or a trip in a buggy over rocky ground.  You’d be able to do all sorts of scientific experiments no doubt, but nothing that couldn’t be done by robots. And how long are you going to stay there? A day or two?  If so, there’d be the boredom and the tension of another 150 day’s travel back again?

Man will undoubtedly go to Mars one day and might even try to make the planet habitable again — though that’s exceedingly doubtful.  If we do go, we’d have to build a very large comfortable environment there well beforehand.  Come off it Buzz!

“Cash will survive”

To all those silly people — including someone at the Financial Times recently — who say that, because most of us hardly use cash in our daily lives, therefore we don’t need it at all, the Bank of England has replied as authoritatively as anybody can.

Banknotes with a value of £63 billion were estimated to be in circulation — that is, printed at some time or other by the Bank of England — at the end of July, but at least £40 billion of it is either held overseas by the mafia or the tax dodgers, stuffed in our mattresses or used on the black market. About £30 billion is therefore used as discretionary money for small items by most of us or, in the case of poor people or those who don’t qualify for cash cards or bank accounts, as their only medium of exchange.

Even if the need of banknotes by the latter category could somehow be magicked away, the majority holders of cash would still need it or its equivalent.  If BofE banknotes weren’t available they’d invent their own form of ready cash.  While there are governments and central banks there will always be mafias and tax dodgers.

I said “Nonsense” in a recent blog as my response to the Financial Times’ silliness.  The Bank of England says “Cash will survive”.

Jeremy Corbyn represents a protest vote

Ever since the election of left-wing Jeremy Corbyn to the leadership of the Labour Party, I can’t recall another political topic in the last few decades that has prompted so many column inches in the press and sound-bites on television. Everybody, but almost everybody in the ‘serious’ camp —  politicians, economists, financial journalists — have been falling over themselves in various emotional states between fury and exasperation, pointing out how foolish, impractical, disastrous, etc his policies would be if the Labour Party ever came to power and if Jeremy Corbyn remained the leader at the time.

Not once, not a single once, have all these out-pourers recognized the real reason why he was elected — or indeed why the Scottish National Party almost swept the board with 46 seats out of 49 or why four million English voters chose Ukip candidates  in last May’s General Election.

This is that our MPs — of whatever party — have become a Westminster coterie which is far too self-centred to be thinking much about the problems in the rest of the country outside London.  In terms of services and investment per head, Londoners receive far more than anybody else in the country.

It is the total reform of our political system, repeatedly described as “broken”, which is what by far the most of the electorate are calling for.  That, and an opening up of our civil service, about which, and about whose relevant expertise, most of us are largely mystified.

Jeremy Corbyn is a decent fellow and he doesn’t deserve the venom.  That he is naïve about human nature and about economics is besides the point.  The Labour Party choice of Jeremy Corbyn is one of the few protest votes that are available.  In due course, he’ll be torn to shreds by the Labour Party MPs and ignored by the Labour Party supporters who voted for him.