There is a saying about being careful about what you wish for which seems to apply rather aptly to current developments in the housing market. Reducing house prices has been an objective of policy for some time - and one that seems to be about to be delivered well ahead of schedule. A few braver commentators are venturing to say that a house price correction may not be the end of the world, may indeed be rather overdue and could be good news for first time buyers - and flicking through the property brochure at the breakfast table this morning there seemed rather a lot of scope for corrective adjustment. But am not sure that the housing market is flashing green as a success in performance reports at the moment.
Which is a shame - because a saner attitude to housing - where prices related more to actual consumption of housing services and less to prospective untaxed capital gains - would reduce the strange and pernicious housing bias of our economy. It would stop people being driven into massive overextension to buy - because renting was a "waste" - and stop mortgage lenders being tempted into lending to doubtful risks. It would stop people like me from feeling foolish for not being overhoused - and not borrowing to ensure I was - and missing out on the chance to stack up even more unproductive equity.
But even though anyone who is interested in housing as housing can be pretty sanguine about general house price movements, the fact that we ask housing to play to many roles - as investment portfolio, as future pension, as collateral for other borrowing, as a general source of feeling "rich" means that when the housing market starts to droop, the rest of the economy heads lemming like for the cliff.
Which always made reducing house prices an interesting policy objective - but one only to be achieved by stealth over years of gradual erosion relative to rising incomes - not by a step change in delivery of the sort we are witnessing now. And what would be interesting is whether this downturn changes attitudes to housing - or whether after a couple of slightly hairy years of market dislocation - with rising repossessions, thin markets as sellers strike, and new build dries up - we return to the same old spiral as happened last time round. Or will anyone fight the next election on policies explicitly designed to restrain demand as well as increase supply?
Friday, 11 April 2008
Monday, 7 April 2008
Brain numb
and that is after only three and a half days back at work... how is it that being back in the office seems to have deleted all interesting thoughts from my head -- well actually just all thoughts full stop.
But the exciting stuff -- since may have to wait until a bit later to get back into proper blog mode - is that I managed the assault on the north face of my flat - got up in two minutes and even managed a rather scary attempt to plant new maple tree (a present from Civil Service Live! - not sure whether there is an exclamation mark but I feel there should be) on my roof terrace. And, since coming down is even harder than going up, the very good news is that I was no longer there when the snow came down.
Didn't stick around in NHG for the chance to mug Konnie Huq or Tim Henman outside my door or be roughed up by spooky Chinese bouncers in what looked like UN blue. Decided to take refuge in Chichester. But the major development is exponential growth in walking ability. Can now move around my mother's house without crutches (key thing about here is that there is a lot of soft stuff to fall on).
So will continue reduced hours schedule. Have discovered work is quite tiring -- not quite worked out yet why. But sort of good to be back and have more to worry about than whether Federer will ever win another tennis tournament or how the Indians managed to get bowled out before lunch for 76 or whether Angela Lansbury will solve yet another death in Cabot Cove which makes Morse's Oxford or the killing fields of Midsomer look safe(though the former both interesting questions in their own way -- and quite interesting to wonder why Serbia has two of the top three women - while they had to play under bombing raids - and the top British woman is ranked 122.... but then that moves onto the vexed Britishness question of whether the new Tebbit test is to support Andy Murray at tennis when I think he is a boring brat and, as he falls down the rankings, clearly Scottish.)
Am doing the blog on my lunch break (that is in case the thought police are on to me at the moment -- if i were at work I would be sipping a low fat cap in the atrium now). So its back to the grindstone and then the gym where am now using a range of fancy new machines on the lowest imaginable settings.
But the exciting stuff -- since may have to wait until a bit later to get back into proper blog mode - is that I managed the assault on the north face of my flat - got up in two minutes and even managed a rather scary attempt to plant new maple tree (a present from Civil Service Live! - not sure whether there is an exclamation mark but I feel there should be) on my roof terrace. And, since coming down is even harder than going up, the very good news is that I was no longer there when the snow came down.
Didn't stick around in NHG for the chance to mug Konnie Huq or Tim Henman outside my door or be roughed up by spooky Chinese bouncers in what looked like UN blue. Decided to take refuge in Chichester. But the major development is exponential growth in walking ability. Can now move around my mother's house without crutches (key thing about here is that there is a lot of soft stuff to fall on).
So will continue reduced hours schedule. Have discovered work is quite tiring -- not quite worked out yet why. But sort of good to be back and have more to worry about than whether Federer will ever win another tennis tournament or how the Indians managed to get bowled out before lunch for 76 or whether Angela Lansbury will solve yet another death in Cabot Cove which makes Morse's Oxford or the killing fields of Midsomer look safe(though the former both interesting questions in their own way -- and quite interesting to wonder why Serbia has two of the top three women - while they had to play under bombing raids - and the top British woman is ranked 122.... but then that moves onto the vexed Britishness question of whether the new Tebbit test is to support Andy Murray at tennis when I think he is a boring brat and, as he falls down the rankings, clearly Scottish.)
Am doing the blog on my lunch break (that is in case the thought police are on to me at the moment -- if i were at work I would be sipping a low fat cap in the atrium now). So its back to the grindstone and then the gym where am now using a range of fancy new machines on the lowest imaginable settings.
Monday, 31 March 2008
Rumsfeld woz right?
well no, not about everything.... much of today's carnage in Iraq seems to fall into the eminently predictable. But having just read "The Black Swan" there might be rather more in the much mocked "unknown unknowns" - apparently a key part US DOD thinking rather than an example of another US politician misspeaking - than we normally give credit for.
The main message of the Black Swan is that turkeys would quite rationally vote for Christmas. After all, the average turkey day (subject to animal welfare standards) is pretty good - so a rationally forecasting turkey, basing predictions on past experience would quite reasonably think that December would be pretty much like November (assuming no turkey email with the US). But its the catastrophic last day which changes everything. So the message of the book is that unless we want to be suckers like the poor old turkey, we need to be much more aware that - to quote DR again - "stuff happens" - and that is all too often the stuff that renders all our forecasts meaningless and changes the course of history (and also may account for who you marry, and the very fact you exist at all - an occurrence with a very low probability.).
So apart from a lot of bile against social scientists and economists of all sorts, what are the useful lessons from assuming we know less about the future than we think (a case the book makes quite convincingly). The first message is to elevate preparedness over predictive capacity - predictive capacity is overdependent on normal distributions and assume that the future is like the past- and breaks down when it isn't. The second is to recognise that Black Swans can be good as well as bad -- so minimise exposure to bad Black Swans - and give yourself every opportunity to benefit from positive black swans - by for example taking chances to meet new people; hear new ideas, and put a small amount of money - money you are prepared to lose - invested in risky ventures with low downside but big upside potential.
The third recommendation is much more relevant for policy-making - that rather than overinvest in theoretical models trying to predict the world, adopt a more venture capital approach to policy-making. Don't assume you know what works in advance - better to try lots of things and then scale up the ideas that work and kill off those that don't. Substitute experience-based policy making for "evidence-based policy making". This accords with many of the prescriptions around for improving aid policy. Less Jeffrey Sachs and more Jeff Bezos.
The only problem is that a venture capital approach implies a number of failures - indeed that the majority of ideas might fail (and it also assumes we can understand and replicate the ideas that work) - and finding the Black Swan may not be enough to substitute for a bunch of dying white swans littering the street. But not clear that taxpayers or Ministers would be pleased to see that.
This is likely to be the last blog for a bit - finally back to work and to stay with a friend whose broadband doesn't work. Back to the dark ages. But latest news from the physio today is that am still on track - more, harder exercises and have just discovered I have been underutlizing the gym. I just need to make sure that Defra doesn't impede recovery - I can treat my personal "renewal" as a metaphor for the department.
The main message of the Black Swan is that turkeys would quite rationally vote for Christmas. After all, the average turkey day (subject to animal welfare standards) is pretty good - so a rationally forecasting turkey, basing predictions on past experience would quite reasonably think that December would be pretty much like November (assuming no turkey email with the US). But its the catastrophic last day which changes everything. So the message of the book is that unless we want to be suckers like the poor old turkey, we need to be much more aware that - to quote DR again - "stuff happens" - and that is all too often the stuff that renders all our forecasts meaningless and changes the course of history (and also may account for who you marry, and the very fact you exist at all - an occurrence with a very low probability.).
So apart from a lot of bile against social scientists and economists of all sorts, what are the useful lessons from assuming we know less about the future than we think (a case the book makes quite convincingly). The first message is to elevate preparedness over predictive capacity - predictive capacity is overdependent on normal distributions and assume that the future is like the past- and breaks down when it isn't. The second is to recognise that Black Swans can be good as well as bad -- so minimise exposure to bad Black Swans - and give yourself every opportunity to benefit from positive black swans - by for example taking chances to meet new people; hear new ideas, and put a small amount of money - money you are prepared to lose - invested in risky ventures with low downside but big upside potential.
The third recommendation is much more relevant for policy-making - that rather than overinvest in theoretical models trying to predict the world, adopt a more venture capital approach to policy-making. Don't assume you know what works in advance - better to try lots of things and then scale up the ideas that work and kill off those that don't. Substitute experience-based policy making for "evidence-based policy making". This accords with many of the prescriptions around for improving aid policy. Less Jeffrey Sachs and more Jeff Bezos.
The only problem is that a venture capital approach implies a number of failures - indeed that the majority of ideas might fail (and it also assumes we can understand and replicate the ideas that work) - and finding the Black Swan may not be enough to substitute for a bunch of dying white swans littering the street. But not clear that taxpayers or Ministers would be pleased to see that.
This is likely to be the last blog for a bit - finally back to work and to stay with a friend whose broadband doesn't work. Back to the dark ages. But latest news from the physio today is that am still on track - more, harder exercises and have just discovered I have been underutlizing the gym. I just need to make sure that Defra doesn't impede recovery - I can treat my personal "renewal" as a metaphor for the department.
Saturday, 29 March 2008
A small step for womankind
Not the best of weeks for progress -- was supposed to do a couple of days at work but managed to catch flu from the physio (he in turn blames some 85 year old for giving it to him) - confirmation of general thesis that seeing medical professionals is bad for health. So no swimming, only a couple of gym visits which interestingly had a six week waiting list for half-price medical referrals - I think we need a new target on that.
But, despite all that, two minor triumphs today - first, I managed to get myself into the two new suits I bought for work just before my hip gave out - had been worried that two months of custard tarts and no cycling and still bulging hip would have meant I needed the excellent Mary to let the seams out and, second, I managed to walk five steps across my bedroom and back without a "walking aid". Not quite up for the marathon in two weeks time, but on schedule for the 10k at next year's Chichester triathlon (veteran's category).
So its back to work next Tuesday - or is that just an April fool?
But, despite all that, two minor triumphs today - first, I managed to get myself into the two new suits I bought for work just before my hip gave out - had been worried that two months of custard tarts and no cycling and still bulging hip would have meant I needed the excellent Mary to let the seams out and, second, I managed to walk five steps across my bedroom and back without a "walking aid". Not quite up for the marathon in two weeks time, but on schedule for the 10k at next year's Chichester triathlon (veteran's category).
So its back to work next Tuesday - or is that just an April fool?
Thursday, 27 March 2008
Expensive failures
I don't think I have admitted to date that I am one of the happy crew aka a Northern Rock shareholder. I don't think I paid anything for them, have no clue how to trade shares, but can worry myself with a nominal loss of about £18k over the past year.
So it was with a degree of personal interest that I read the reports of the FSA's internal audit on the supervisory failures around Northern Rock tinged with an added degree of personal interest as one of the former FSA employees who left with what appeared to be quite a big pay-off was a university contemporary of mine. Which all provokes a variety of thoughts.
First is that we need to get away from the culture of big-time rewards for failure in the public sector. People in senior jobs who screw up need to be held to account for that and need to expect to leave without a pay-off which would keep a hospital ward open for a year. If this means we need to pay people more to get them to do the jobs in the first place, so be it -- but I can't believe that the implicit pay-off for failure is a salient consideration in salary discussions (I may be wrong). But huge handouts for getting things spectacularly wrong fail the Dog and Duck test. We should establish a presumption of no pay out - and let an Employment Tribunal decide on the merits afterwards whether that is fair - that would prevent cosy deals within organisations against the public interest and ensure a missing degree of transparency.
Of course, one of the usual protections - not available in the FSA - is Ministerial accountability. And there is any interesting distinction to be drawn on the source of failure - the most spectacular policy failure I was ever involved in was the community charge - though looks cheap compared to the potential contingent liability on NR even at 2008 prices - but whole books have been written on who was to blame for what there - but that was more a failure of policy assumption rather than implementation. People in the FSA could I assume claim that the initial set up and split of responsibilities between the Bank and the FSA was wrong - but they joined the FSA either as those decisions were being made and if they might have thought more about whether the institutional arrangements were right if they felt they might be personally at risk if they failed. It could concentrate the mind wonderfully.
But I don't want the private sector to get away with it either. One of the most galling stories - be it Northern Rock, be it Enron (not sure when NR the movie comes out - but the Enron movie "The Smartest Guys in the Room" is highly recommended for an evening in) is of senior management selling shares at the top of the market while assuring muggins investors that all is well or encouraging staff to put more of their money into the company. So my second rule is that no senior executive should be allowed to deal in company shares until three years after they leave - so they really do have an interest in long(er) term shareholder value. And the ABI and other investors who have done so much to look at executive remuneration need to exercise their muscle over the price of failure.
So in the week that Alan Sugar has come back to our TV screens, it would be good to see more people who fail leaving with a briefcase in a taxi to the words "You're fired" - without passing go and collecting a big brown envelope.
So it was with a degree of personal interest that I read the reports of the FSA's internal audit on the supervisory failures around Northern Rock tinged with an added degree of personal interest as one of the former FSA employees who left with what appeared to be quite a big pay-off was a university contemporary of mine. Which all provokes a variety of thoughts.
First is that we need to get away from the culture of big-time rewards for failure in the public sector. People in senior jobs who screw up need to be held to account for that and need to expect to leave without a pay-off which would keep a hospital ward open for a year. If this means we need to pay people more to get them to do the jobs in the first place, so be it -- but I can't believe that the implicit pay-off for failure is a salient consideration in salary discussions (I may be wrong). But huge handouts for getting things spectacularly wrong fail the Dog and Duck test. We should establish a presumption of no pay out - and let an Employment Tribunal decide on the merits afterwards whether that is fair - that would prevent cosy deals within organisations against the public interest and ensure a missing degree of transparency.
Of course, one of the usual protections - not available in the FSA - is Ministerial accountability. And there is any interesting distinction to be drawn on the source of failure - the most spectacular policy failure I was ever involved in was the community charge - though looks cheap compared to the potential contingent liability on NR even at 2008 prices - but whole books have been written on who was to blame for what there - but that was more a failure of policy assumption rather than implementation. People in the FSA could I assume claim that the initial set up and split of responsibilities between the Bank and the FSA was wrong - but they joined the FSA either as those decisions were being made and if they might have thought more about whether the institutional arrangements were right if they felt they might be personally at risk if they failed. It could concentrate the mind wonderfully.
But I don't want the private sector to get away with it either. One of the most galling stories - be it Northern Rock, be it Enron (not sure when NR the movie comes out - but the Enron movie "The Smartest Guys in the Room" is highly recommended for an evening in) is of senior management selling shares at the top of the market while assuring muggins investors that all is well or encouraging staff to put more of their money into the company. So my second rule is that no senior executive should be allowed to deal in company shares until three years after they leave - so they really do have an interest in long(er) term shareholder value. And the ABI and other investors who have done so much to look at executive remuneration need to exercise their muscle over the price of failure.
So in the week that Alan Sugar has come back to our TV screens, it would be good to see more people who fail leaving with a briefcase in a taxi to the words "You're fired" - without passing go and collecting a big brown envelope.
Tuesday, 25 March 2008
Happy of Himalayas
Doesn't quite have the ring of Disgusted of Tunbridge Wells, but news at the weekend that the good people of Bhutan are about to enjoy democracy for the first time. The ruler of Bhutan is famous and revered in many quarters for attempting to measure Gross National Happiness as opposed to simply relying on GDP. So is his imposition of democracy (itself a rather unusual development) going to make his people happier?
Not according to Professor Robert Lane if you read his book "Loss of happiness in market democracies". According to Professor Lane democratic rights are a bit of a bore and a chore and do nothing special for our happiness (though the good news for the Bhutanese is that happy people tend to have better democracies). Indeed Professor Lane's thesis is that people in advanced economies don't know what is good for them, so an effective democratic system has failure built-in. The problem is that people are seduced by the economistic fallacy (more money is what you want) when, in a developed economy, what people really really want is more companionship and to value their children more (and not just by buying them bigger and better computers for their bedroom). Or at least that is what he thinks Americans should want and what would reverse the massive rise in depression.
The Good news for economics is that he thinks economics does get it right for most of the world's population and for most of humanity's time on earth -- when people are poor the equation of being better off and happiness works. Its just when you get to that pesky bend in the curve and diminishing returns set in -- but people don't realise it.
Not that Professor Lane thinks there is much governments can do - promote job security and make it easier for people to have time for companionship - and perhaps pay more attention to moves that break up communities. And not watch TV or play on the computer.
But for a book that purports to be about happiness, Prof L has managed to produce one of the most turgid and pompous tomes I have read. A danger of thinking that something on Amazon looks interestingf..Just when I thought all American professors could be relied on to convey knowledge and insights in the style of Paul Merton or Stephen Fry comes along someone with the stylistic flair of an HMRC press release (actually they are usually livelier). So don;t bother with the book and do something companionable - with person or pet - instead.
Not according to Professor Robert Lane if you read his book "Loss of happiness in market democracies". According to Professor Lane democratic rights are a bit of a bore and a chore and do nothing special for our happiness (though the good news for the Bhutanese is that happy people tend to have better democracies). Indeed Professor Lane's thesis is that people in advanced economies don't know what is good for them, so an effective democratic system has failure built-in. The problem is that people are seduced by the economistic fallacy (more money is what you want) when, in a developed economy, what people really really want is more companionship and to value their children more (and not just by buying them bigger and better computers for their bedroom). Or at least that is what he thinks Americans should want and what would reverse the massive rise in depression.
The Good news for economics is that he thinks economics does get it right for most of the world's population and for most of humanity's time on earth -- when people are poor the equation of being better off and happiness works. Its just when you get to that pesky bend in the curve and diminishing returns set in -- but people don't realise it.
Not that Professor Lane thinks there is much governments can do - promote job security and make it easier for people to have time for companionship - and perhaps pay more attention to moves that break up communities. And not watch TV or play on the computer.
But for a book that purports to be about happiness, Prof L has managed to produce one of the most turgid and pompous tomes I have read. A danger of thinking that something on Amazon looks interestingf..Just when I thought all American professors could be relied on to convey knowledge and insights in the style of Paul Merton or Stephen Fry comes along someone with the stylistic flair of an HMRC press release (actually they are usually livelier). So don;t bother with the book and do something companionable - with person or pet - instead.
Monday, 24 March 2008
Taking dictation
My vote in a general election has never counted for anything (though if today's AV proposals being floated in the press come to pass that may change) so this can all be treated as entirely hypothetical - but if my vote did count this weekend's rumpus over conscience might cause me to rethink how I vote.
In a party ridden Parliamentary democracy I have always assumed that the dominant issue in how I vote is which party I think would make the less bad government. I can't claim that is always how I vote as last time I discovered in the polling booth (one consequence in living in a one-party fiefdom is you don't get much election literature as all the parties concentrate on those voters lucky enough to live in marginals) that one of the candidates was someone I loathed at university so I had to rethink with pencil in hand... But generally I pay little attention to the personal views and still less to the religious affiliations of the candidates. And as a general thesis I want MPs who who aren't just grade A lobby fodder -- and indeed when I was out of government I was part of a Hansard Society commission that looked at ways of strengthening the capacity of MPs to hold the executive to account.
But the recent furore over embryo research causes me to rethink. If there are some MPs who on some issues simply take dictation from their church then I think I need to know that they are going to do that before I vote - or don't - for them. I don't mind voting for an MP who rebels over Post Office or local A and E closures (though would regard them as pretty hypocritical if they don't have a view on how to finance that) or maybe even on Europe if they came clean on that in advance - but those are issues where there is a party line to vote for. On "ethical" issues where there is a free vote there is no party line for me to choose - and therefore I am lumbered with being represented by the personal views of my MP however alien they are to me -- and that is even more difficult to accept if those views are not susceptible to any sort of logical reasoning - and ones informed by deeply and genuinely held religious faith are hardly likely to be.
But at the same time, I think we have benefited from depoliticising moral issues and avoiding the so-called culture wars and values voting that has poisoned US politics for so long. And making some issues subject to free votes has been part of that. It may be that this is an area where we have to accept that our elected representatives are not really fit for purpose and opt instead for farming out the issue to a more technocratic organisation informed by a more genuinely representative citizen's jury and some proper deliberation.
Until then, I will just have to pay a bit more attention to whom I am voting for - well I would if it was likely to make one jot of difference.
In a party ridden Parliamentary democracy I have always assumed that the dominant issue in how I vote is which party I think would make the less bad government. I can't claim that is always how I vote as last time I discovered in the polling booth (one consequence in living in a one-party fiefdom is you don't get much election literature as all the parties concentrate on those voters lucky enough to live in marginals) that one of the candidates was someone I loathed at university so I had to rethink with pencil in hand... But generally I pay little attention to the personal views and still less to the religious affiliations of the candidates. And as a general thesis I want MPs who who aren't just grade A lobby fodder -- and indeed when I was out of government I was part of a Hansard Society commission that looked at ways of strengthening the capacity of MPs to hold the executive to account.
But the recent furore over embryo research causes me to rethink. If there are some MPs who on some issues simply take dictation from their church then I think I need to know that they are going to do that before I vote - or don't - for them. I don't mind voting for an MP who rebels over Post Office or local A and E closures (though would regard them as pretty hypocritical if they don't have a view on how to finance that) or maybe even on Europe if they came clean on that in advance - but those are issues where there is a party line to vote for. On "ethical" issues where there is a free vote there is no party line for me to choose - and therefore I am lumbered with being represented by the personal views of my MP however alien they are to me -- and that is even more difficult to accept if those views are not susceptible to any sort of logical reasoning - and ones informed by deeply and genuinely held religious faith are hardly likely to be.
But at the same time, I think we have benefited from depoliticising moral issues and avoiding the so-called culture wars and values voting that has poisoned US politics for so long. And making some issues subject to free votes has been part of that. It may be that this is an area where we have to accept that our elected representatives are not really fit for purpose and opt instead for farming out the issue to a more technocratic organisation informed by a more genuinely representative citizen's jury and some proper deliberation.
Until then, I will just have to pay a bit more attention to whom I am voting for - well I would if it was likely to make one jot of difference.
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