Category: politcs

Why the deficit is good

I had considered writing a weekly post in the run up to the election. I didn’t do this because I didn’t have enough time to do so and there are hundreds of other people writing who are much smarter and much more clued up about politics than I am. So instead, I did a lot of reading and tried to learn a lot more about how the political system works and what is going on. There is one thing that has been bugging me which hasn’t got a lot of coverage and that – as a qualified accountant – I’d like to think I understand and have some handle on.

As I have woken up early on election morning, I figured it is something I would get off my chest, even if there is minimal chance that it will persuade anyone to vote differently. I think it’s fairly obvious from other things I have written that I lean to the left. I’m not trying to persuade you to vote that way. I just think it’s more important for you to make an informed decision which is quite difficult in among all of the hyperbole that you get whilst the electioneering process is going on.

The thing that has been bugging me is George Porgey and Davey Wavey’s (and some other parties) obsession on getting the deficit down. They have done this by the measure called austerity, which is effectively just cutting spending. However, it is worrying to me that our chancellor appears to not understand the concept of leverage.

Debt is actually good. Companies have what is called a gearing level. This is the ratio of debt to total debt plus equity. It is essentially shows what percentage of a company is funded by debt. Debt for a company is actually cheaper than equity. Banks generally want a lower return on a loan than an investor would want on their equity (for example 5% against 10% – these figures have been plucked out of the air but are probably in the ball park). Therefore, it is cheaper for a company to repay a bank loan than it is to pay dividends on equity. It will also mean not selling off a large portion of your company.

A great example of this in practice is Duncan Bannatyne. Ages ago I read his book “Anyone Can Do It” which explains his business model. The model was just borrow some money, buy an ice cream van, borrow some more money and buy another. And then move on to more profitable businesses. He will be getting himself in more debt, sure, but his business empire (and you can be sure a man like him must call it an empire. I know I would. It would make me feel Star Wars-y) was growing at a phenomenal rate. I’d recommend reading it if you want to see it in action, even if you hate the guy. I can lend you my copy.

There are other examples of good debt. A number of you, may have a mortgage. This is a loan which you are using to get yourself something you couldn’t afford initially. You believe that you will be able to make the repayments and you think that the cost of the interest payments is worth the long term goal of being a home owner, something that D-Cizzle is very keen for you to do. (Too much so in my opinion – we need more social housing rather than right to buy, but that’s another debate).

Another version of this is a student loan. You don’t think you can afford university now, but you can see the benefit of going and believe that you will be able to repay it in the future. You are not even taking as much of a gamble with this as you don’t pay it back until you reach certain earnings.

The principle should be the same with our economy. It is not doing great, so we need to borrow money (increase the deficit) to be able to do more things that will make us more money in the future (through taxes) in order to be more prosperous now.

It is my opinion that this obsession on the deficit is a fallacy and that the way out of our economic problems is not austerity but more spending now on things that will make the Kingdom more prosperous and allow us to raise more taxes to pay off the current borrowing.

As mentioned before, I am not as clued up as I would like to be and am happy to discuss this with anyone. I now await my fellow accountants to rip my argument apart as it’s been at least 5 years since I studied any of this stuff. Please be kind. It’s 6am and my brain doesn’t switch on until at least 10am.

Guy Fawkes versus Russell Brand

I love traditions. I love the fact that everyone is doing the same thing and having fun together. Quite a lot of the time, the meaning is lost or forgotten or – mainly for children – unknown.

Kids just know that sometime in February they get pancakes, in March/April they get chocolate eggs, in October they dress up scary, in November there are fireworks and in December they get presents. I don’t actually think that’s a bad thing. I’m quite happy for traditions to continue as long as they are fun and don’t hurt people.

The other day, though, as I was going “ooh” and “aah” I was thinking about Guy Fawkes and Russell Brand. I imagine everyone watching fireworks that night must have made the same connection but for anyone who missed it, this was my line of thought.

Guy Fawkes was a dissident. He was part of a group with a specific goal, definite plans and very well co-ordinated. He wanted to overthrow the ruling power (King James) and replace them with another (Princess Elizabeth).

Russell Brand is a dissident. He is part of no group, has no specific goal, no definite plans and is not co-ordinated in any way.

I feel that in telling people not to vote, Brand is actually a danger to society. The people that Brand is telling not to vote are more likely to be the middle ground voters – and by that I mean the non-extremists. The extremes are the ones who are almost guaranteed to turn out and vote regardless of anything else. The Ukips and the BNPs, the Greens and the Socialists.

By encouraging people to not vote, the number of votes required for one of these parties to get in is therefore reduced and we have seen numbers of these gain seats over the recent years.

Brand’s solution may actually condemn us Nazi-ism and we don’t have an Indiana Jones around to save us this time. Thanks, Russell.

What he should be doing, is encouraging people to vote for the least bad option whilst he figures out his grand plans for an alternative system. However, I doubt that any system will be forthcoming, at least in my life time. Other systems have been tried in the past 100 years – communism, dictatorships – but have been fought down by the good old Western democracies.

Brand’s solution is to make the ruling power work for the people better and provide a more egalitarian system. Democracy is currently the best solution for this. The only logical way to take this further that I have been able to think of since watching his interview with Paxman is to have all decisions made by all of the people.

Give everyone little yes/no/abstain buzzers in their homes, linked up to the TV set and pop up exciting questions such as Should abortion be legal?, Should we invade Syria? and Should we stop all of the foreigns coming in? and I’m sure you’ll get lots of interaction and popular consensus. Good luck getting decisions made about sewers or tax though.

Me, I prefer to leave the power in the hands of the people who spend their whole working lives thinking about these problems and working towards solutions together. Sure, some of them might be complete idiots, whack jobs or repulsive people. That’s why there’s 600-odd of them, to try and have a consensus between the people we elect to represent us.

Whilst I have a lot of faith in my fellow citizens, I’m sure not all of them are educated enough on Israel/Palestine, the NHS and the school system among other things to be able to make important informed choices. Leave it up to the people who train to do this, even if they are complete douches.

We need to learn from our history. Our government is the result of years of trial and error at different systems and this is the one that the majority believe works best. When you think about it, compared to other situations in the world right now (Zimbabwe, North Korea) and those in the past (Nazis, McCarthyism) the current system isn’t too bad really.

Notes:

1. I would vote Green if they fielded a candidate in my area. I am aware that the word extreme might seem odd in this context but they are one of the more left-field parties.

2. Robert Webb wrote a much better response to Brand which is here but I have been needing to get this out for a while.

3. I was going to do an amazing Photoshop of Brand wearing a Guy Fawkes mask but a) I left it too late and have to go to work, b) I don’t have Photoshop, c) I’m not good at Photoshop and d) the internet has a picture of him wearing one from the Million Mask March.

Why politics mustn’t die out

There was an article on the BBC website yesterday which stated that more people are members of the caravan club than of all the political organisations in the country. This is a shame. Partly because I find caravans really dull and partly because I believe that politics and all the social issues surrounding it is one of the most important elements of our society.

However, I’m aware that my views and those of the people I associate with are very different to large parts of society. In the AV referendum earlier this year, I think 98% of the people I know voted in favour of change while the actual percentage was closer to one third of the population. So I can only assume that I don’t have my finger on “the pulse” and that the large majority of people don’t share the view that politics is important.

To be honest, I did had absolutely no interest in politics until I was at university and did a module in social philosophy, so I can completely understand that others would have no interest as well. This is a shame and I think should be addressed by making politics compulsory at GCSE level to prepare you people for voting as the current citizenship syllabus obviously isn’t working enough.

Although it has picked up recently, voter turnout has been substantially lower since Labour took power in 1997. Lack of preparation of young voters is probably one cause of this.

More prominent though must be the disillusionment and distrust of the government.

“No matter who you vote for the government always wins.” – The King Blues

When politicians tell you one thing and then do another, it’s no surprise that the public at large becomes disillusioned with them and feels like their vote is irrelevant.Nick Clegg and the Liberal Democrats forming a coalition with the Conservatives may turn out to be the death of their party. After making promises on issues such as student fees and then backing down to get their share of the power, voter confidence in the party dropped and they will struggle to regain it.

If you feel like you are going to vote for someone who will then change their policies, what would incentive you to vote at all? The fact that voters see little change from voting and often between the political parties is what gives them this view.

There’s a great South Park episode about voting (people who know me well will know that I reference pretty much every debate to a South Park episode) where Stan is being asked to vote to choose a new school mascot. His choice is between a giant douche and a turd sandwich. The conclusion – or at least my interpretation of it – is that every election is a choice between a douche and a turd but you have to go for the one which is least dumb.

There is also distrust at the way the government acts. The expenses scandal and the way they have treated the banks have meant that the public views them predominantly as selfish and self-serving.

The government is obviously interested in keeping democracy in place. What other reason can there be for giving 40% longer sentences than if they had committed their crimes at another time. The government seems to be scared that rioters will become political activists and attempt to overthrow the democratic system. I think this is an overreaction as revolutions need a leader and a poliical focus – something that the riots seemed to lack.

Britons also feel their voices aren’t heard. When a million people march against a war but have no effect, they will feel that their protests are in vain. When Climate Camp is heavily policed despite the fact it is basically just a bunch of hippies sitting in a field, they will start to feel that the police have a Big Brother presence and that they will soon be forced to believe that 2+2=5.

When there are harsh sentences for the discontented who riot but the bankers who plunge the country into crisis, the media who hack telephones and the politicians who illegally claim on expenses generally just receive a slap on the wrist, it is hard not to feel that the political structure is geared to looking after certain sections of society.

We need politicians, even when we take all of the above into account because they are intended to be there to take a considered view of all the arguments (even if they don’t always). If we didn’t have politicians in place but instead resorted to mob rule than anyone who is accused of crimes deemed most horrid in society, e.g. peadophilia, would get lynched regardless of whether or not they were guilty.

Without a ruling body, we would be forced to go with popular opinion which is often reactionary. We would have removed benefits from anyone who rioted recently, which in effect would incentivise them to riot further. We would have Jeremey Clarkson as Prime Minister and be killing off the planet quicker than we already are and several other such ridiculous things that the public have created e-petitions for.

We need our democracy and therefore politicians because there is no genuinely viable alternative. I know several advocates of anarchism but I feel that we are not ready to move into this sort of state with the way that our society currently thinks. Our society would need to be much more liberal and tolerant of others for anarchism to stand a chance of not descending into a chaotic dystopia.

Having said that, the governement does have too much power over us, and doesn’t speak for all us. Something needs to change, although I am not sure what.

The difference between reasons and excuses

When I was at school, one of my best teachers once told me: “There’s no such thing as a good excuse, only a good reason.” Or words to that effect. I wasn’t really paying attention.
I was struck by the words again when reading several of the reactionary comments that people have beening posting on Facebook over the 4 days since the riot in Tottenham kicked off what basically appears to be the end of civilisation as we know it. Or so some people would have you believe.
In my opinion and, I’m sure, the opinion of over 99% of the country, is that there is no excuse for what has been happening. Theft, arson, destruction, mugging and murder. These have been directed at members of the public and not at the target that would be most obvious if the motivation for all of this was political, if it was a protest at the death of Mark Duggan.
There is no excuse for these acts.
The explanations that have been given by rioters when they have been approached by the press have ranged from completely illogical (“getting our taxes back”) to honest (“because we can”).
Sure, some of these people are just nicking trainers and TVs because they are able to and they think they’ll get away with it. However, at the heart of this, there has to be some general underlying discontent which first caused these people to act in this way, even if they don’t know themselves what it is. This is what we need to uncover and fix.
 Obviously, the first priority is to prevent further riots and make the streets safe for everybody. Beyond this, we need to address the sociological issues which have caused the discontent. This will not be an easy task, as there is likely to be a myriad of complex reasons why everything erupted and indeed, the reason why one individual rioted may be completely different to the person standing next to them as they steal iPhones from Currys.
There has been a lot of reactionist calls to arms, which is the wrong approach. Several suggestions put forward will actually inflame the situation and potentially cause more and even worse riots. The petition to remove the benefits of any convicted rioters (The petition to remove the benefits of any convicted rioters) is one such example.
There are a number of flaws with these suggestions, aside from that fact that our prison system is founded on reform and not punishment  (which is also one reason why we don’t have the death penalty.)
The possibility of catching all of any one rioter is so small as to be almost laughable. The sheer numbers involved in the riots, the fact that most of them are hiding their faces and also the amount of work involved in identifying them render it practically impossible.
This proposed solution will actually make any individual who is caught even more impoverished and is therefore likely to make them even more likely to riot in the future.
Many suggested solutions, including this one, as to what the government should do are based solely on punishing those involved, rather than reforming these people and tackling the underlying causes in order to prevent any future riots.
Any reaction to these riots needs to be a fully thought out and reasoned solution and not based on the emotions that we have all been feeling as we have been watching our country burn to the ground.