What Goes Up……….

Spain’s troubled banking sector is back in the news again. Despite the apparently succesful stress tests carried out over the summer problems persist, and don’t seem likely to go away soon. Foremost among these is the steady rise in problem loans which have now risen to an all-time high, potentially endangering the credit rating of the country’s financial institutions, according to a recent report from the credit ratings agency Moody’s. Continue reading

paranoia is total awareness

A quick Woerth/Bettencourt note. The prosecutor-general for Versailles has intervened in the complex dispute between jurisdictions in the case, in which the prosecutor for Nanterre, Philippe Courroye, an old political chum of Nicolas Sarkozy’s, has been trying to prevent the case being sent to an investigating judge. As the Versailles prosecutor is Courroye’s official superior, they’re in a position to simply order the whole mess shifted out of his responsibility, which would trigger a judicial inquiry.

Meanwhile, just to add an extra something to the general atmosphere of paranoia and zizanie, journalists’ laptops keep disappearing, in a string of burglaries at Le Point, Le Monde, and Mediapart. There’s an interview with one of the journalists here, who turns out to be the same one who was being illegally wiretapped.

He says he doesn’t want to “wallow in paranoia”, but frankly, who’d pass up an opportunity like this?

…In Fact, It Has Never Been Tried

Everyone’s het up about Angela Merkel’s speech in which she said that multiculturalism had failed in Germany. Here’s the King’s College London War Studies blog, for example, being overheated. Here’s respected correspondent Tom Ricks being even more overheated.

There is one problem with this whole festival of Terribly Serious People stroking their beards about The Problems Of Integration. It is this: Multiculturalism is not German policy and never has been. It is true that Germany doesn’t have a policy of deliberate official racism. But the word “multiculturalism” doesn’t mean very much if you define it as the absence of apartheid, in much the same way that “peace” isn’t just the absence of war.

In fact, official Germany pretended for years that there were no immigrants in Germany, which is about as far from multiculturalism as you can get while remaining a liberal democracy. And it’s not as if it was hard for journalists and others to find this out:

“We kidded ourselves for a while that they wouldn’t stay, but that’s not the reality,” she told members of the youth group of her Christian Democratic Union party, referring to the influx of workers, known as guest workers, who helped fuel the country’s postwar economic boom. “Of course the tendency had been to say, ‘let’s adopt the multicultural concept and live happily side by side, and be happy to be living with each other’. But this concept has failed, and failed utterly,” she said.

Yes, she referred to it two sentences before the bit everyone freaked out about.

Of course, you could go on to ask in what way this concept has failed utterly – Germany had not, when I last checked, descended into race war – but that would be to lend the whole affair a dignity it does not deserve. Banging on about “christliche Leitkultur” is an utterly routine and tedious habit of right-wing German politicians. It’s depressing that Angela Merkel of all people should descend to this, but it’s of a piece with the generally crappy performance of the CDU-FDP government – her version of the special tax break for hoteliers.

Veteran journalist Michael Spreng‘s excellent blog has reasons why this has come up just now – basically, the coalition has lost its way and there is trouble in the ranks. Important people in the CDU (and even more so in the CSU) have become keen on the idea of Karl Theodor zu Guttenberg, the aristocratic defence minister, as an alternative chancellor. You have to remember that large chunks of the party, and especially the Bavarians, have never been reconciled with Merkel to begin with – she has usually been significantly more liberal, more northern, more Protestant, and more female than the party.

So this should really be considered a bit of cynical fan service, intended to queer the rivals’ pitch. Now can you all calm down?

Why make things worse than they need to be, Nick?

Apologies for the continuation in blatantly political UK-centric blogging, but I couldn’t pass on this one:

Deputy Prime Minister Nick Clegg has defended planned cuts to housing benefit after Labour accused the government of “threatening people’s homes”. He said the changes, announced in the Spending Review, were “fair”. And it was not fair that people who went out to work got less help with accommodation than those who did not.

Nick Clegg does give the impression here that he doesn’t know that being without a job isn’t a condition of eligibility for housing benefit. You can work like a draft horse and still get housing benefit: the principal eligibility condition is low income. Details of this are widely available. I wonder if Nick could come to see a mild irony in that the only way to guarantee that people with jobs always get at least as much housing benefit as those without is either to pay everyone housing benefit, or to cut it completely for the unemployed (or both, of course). I don’t know, maybe it’d be worth it, if we could avoid a situation where upon getting a proper job (one that pays £145,492 p.a., say) a person suffers the appalling unfairness of having to see someone on a lesser income get more help with the rent.

As a side-note, yes, this does mean that we don’t just subsidise fields and hedgerows here in the UK, we also subsidise some of the roofed-over parts. Not only that, it’s been arranged so that those who benefit from this housing subsidy are all mixed in with everyone else. That’s because – historically – we’ve preferred this arrangement to townships and bussed-in labour.

See also this.

Frankly you are frightening people

The policy changes of the British government’s recent spending review are set out in a Treasury report. Attached as an appendix is a ‘distributional analysis’. You can get the whole thing here.

The Treasury has also published an equality impact assessment. It has to be said it looks like a pretty poor effort. Since 2006, it’s been a legal requirement for the government to assess its own measures in this way. As it happens, the coalition didn’t bother to carry out any sort of equality impact assessment for the post-election budget; as a consequence – and thanks to the efforts of Yvette Cooper and the Fawcett Society – we may now see a judicial review of the budget (although not of the spending review). The Fawcett Society’s assessment is that the government’s policies will directly affect women much more than they will directly affect men. They may well be right. This Guardian story has more details.

By contrast, there’s no law requiring the government to make a distributional analysis of what it does, so at first glance it looks as though they’re simply doing us a favour with that one. Perhaps the coalition saw it as having potential to persuade us that the cuts will be fair. If so, it hasn’t worked very well: you don’t need to do any sums to see that the Treasury analysis omits to include the impact of cuts to housing benefit, disability benefit(s), tax credits and council tax benefit. The IFS has been doing some of the hard work with numbers – taking account of all the things just mentioned that should have been in there to begin with – and you can see their preliminary findings here. In short, the government says that their spending review is progressive, but they’re wrong: it’s regressive.

My own small beer assessment, echoing Alex’s recent comment over at Crooked Timber, is this: the distributional analysis codifies long-standing conservative prejudices in a novel way. In what follows I’ll focus on paragraphs B.6 to B.28 of the report, which is a section that aims to show the distributional impact of changes to departmental spending. Paragraphs B.16 and B.17 say:

The modelling shows that all households benefit substantially from expenditure on public services. The mapping of the baseline consumption of public services (benefits in kind) … demonstrates that the consumption of services is skewed towards lower income households. This is explained by the following:

• demographic factors: lower income groups contain a higher proportion of children and pensioners, who are the most intensive users of welfare services;

• other factors affecting need, such as long standing illness, which is reported more in lower income groups;

• the targeting and means testing of certain services, such as social housing, social care and free school meals; and

• differential use of private alternatives, including private schools and health care.

The first thing to note is the use of the word ‘benefit’ and the phrase ‘benefits in kind’. They’re being offered up as substitutes for the more familiar ‘services’ or ‘public services’. Normally, in the context of welfare, ‘benefit’ means money. So what’s the coalition up to here? A fairly frequent theme in my parents’ house (it came up about once a term) was that people who paid to send their kids to private schools were doing everyone else a favour. Twice over, in fact. Once by continuing to subsidise public schooling through taxation, and again through lessening demand. Call this the ‘what dad said when the school fees came due’ principle. The coalition has taken the first half of this prejudice closer to bureaucratic reification by calling a universal non-monetary provision a ‘benefit’ and assigning it a monetary quantity. It used to be that the rhetoric of privatisation was about choice. This was when services that few would dream of attempting to do without (electricity, say) were being privatised. We’re probably beyond that now. In the Tory future, it seems, privatisation will be about private services – 16-18 schooling, say – that many people will have to do without, simply because they won’t be able to afford them. Those public services that remain will be tagged with a number prefixed with a pound sign, to emphasise just how generous, just how god damned progressive the government really is.

I disagree with this attitude, of course, just as I disagree with the notion that poorer people are better off than you might have thought because they get to consume more services. This is the second half of the ‘what dad said …’ principle. That it’s now official can be seen in the paragraph I’ve quoted, and also in that it’s supposed – at least I think so – to form the basis of our understanding of the graph in figure B.3 (p. 95) of the report. The graph shows a slope across quintiles that’s progressive rather than regressive. There are two problems here. The first problem is this. The government’s argument is that since the reduction in the total of non-monetary provisions received by poorer households will be smaller – as a proportion of what they received before – than the reduction in the total received by richer households, the spending review is progressive. However, when you consider any single non-monetary provision in itself, it may be far from obvious that it has redistribution as its aim. For example, health care. It seems that we don’t give people medical treatment because they’re poor, by way of compensating them for their lot in life; we treat them because they’re sick. This certainly seems true at the point of use – NHS doctors don’t hand out income questionnaires before admitting patients – and I suspect it’s also true at just about every level of NHS administration, up to and including ministerial level. If this is what we all believe, then we shouldn’t count such a provision into a quantified calculation that aims to show an overall progression or regression. We’ve already decided that it isn’t to be measured like that.

The second problem also has to do with incommensurability. Even if you believe that you can include a non-monetary provision into a distributional analysis, you still need to decide what the numbers are supposed to attach to. The report’s authors seem to have used numbers that reflect costs. But what have costs got to do with distributive justice? What we’re evaluating is who’ll get to have a better or worse time of it than they did previously, which is something that needn’t be connected to provider costs at all. Something along these lines clearly gets at the consciences of the report’s authors, since they say:

… there are a number of caveats to [our] methodology. It does not reflect the value people place on the services they consume nor how effective those services are at delivering desired outcomes (for example, low value programmes that are being stopped are measured at the same rate as high value programmes that are being kept)

You can do your own thought experiment on this one. Say you get sick, such that you need complicated and effortful hospital treatment. You get the treatment and it makes you healthy again. A lot of money has been spent on you, possibly. Do you feel grateful? Maybe so. But do you feel better off? Do you feel richer? If so, by how much? And would you rather have had the money? There’s an entanglement with counterfactuals here. It makes itself felt in the apparently absurd construction: ‘low value … measured at the same rate as … high value’.

Finally, it’s worth noting that the report reheats the old Tory favourite: aspiration. The idea is to get us to think of the lowest quintile / decile households as being rich in potential, and as such, not really in poverty. Am I excessively sarcastic? Well, Nick Clegg calls it ‘long-term fairness’, and I don’t see how I could beat that for taking the piss. Others, including the IFS, have commented already. I’m confident this’ll be coming up regularly over the next couple of years, since the coalition clearly thinks it’s a powerful concept that they’ve got hold of, and the criticisms just don’t wash. After all, just look how successful they are, being exemplars of the ‘jam tomorrow’ ethos.

Mr Zapatero Said What……….?

Spain’s Tinsa Price Index was out last week, and showed Spanish property prices fell again in September, and at an accelerating rate. As Tinsa point out in their report, both “Metropolitan Areas and municipalities on the Mediterranean Coast,” whose rates experienced a significant drop from the previous month, have contributed decisively to this steep decline”.

Continue reading

oil leaks continue

So, remember the 10 million francs in 500 franc notes, that were meant to have come from passing round the hat at campaign rallies? Sure you do. Those will be the ones Nicolas Sarkozy personally banked in his capacity of treasurer to Edouard Balladur’s presidential campaign in 1995. Well, back in April, it was alleged that they originated from a large kickback paid as part of the deal under which France sold three submarines to Pakistan. Not good. Thanks to Mediapart, you can consult the original receipts here, as issued by the Boulevard Haussmann branch of Crédit du Nord.

Now, you may also recall that in 2002, terrorists blew up a busload of French engineers in Karachi, working on one of the boats. Everyone took this for an Al-Qa’ida or related job at the time, not surprisingly, but some people later began to doubt this. The latest news is that the judge investigating the affair, Renaud Van Ruymbeke has decided to inquire into the possibility that considerable sums of money were paid both to Pakistani officials to achieve the sale, and that some of this money made its way back to France and into the Balladur campaign’s accounts.

When Jacques Chirac beat both Balladur and the Socialists to the presidency in 1995, he ordered a stop to all the commissions paid as part of the contract. This was almost certainly out of revenge on Balladur for running in the first place, which implies he knew about the campaign funding. The whole affair seems to have turned on the vicious rivalry between the circle around Chirac and that around Balladur (and Nicolas Sarkozy). It’s also well worth remembering that the tiny but then influential Parti Républicain’s leaders were heavily involved in a whole succession of arms contracts a few years before this, which also involved the payment of large commissions and resulted in some of the commissions being paid back to important people in France.

If you want to know more, Mediapart has a sort of bible of the issue. You’ll need it.

So the president is accused of having cleared the creation of a special shell company and having banked the money himself. As well as the newspapers wanting him prosecuted for illegal wiretapping. And they’re demonstrating all over France.

An Unusual But Interesting Argument Which May Help To Understand Why QE2 Is Now Almost Inevitable

For reasons which aren’t worth going into now, I’m reading through a recent report by Deutsche Bank Global Markets Research entitled “From The Golden To The Grey Age” this afternoon. The report (all 100 pages of it, many thanks to researchers Jim Reid and Nick Burns who produced the thing) looks at the extent to which a variety of macro indicators – like GDP growth, inflation rate, equity yields, etc – may have been influenced by demographic forces over the last 100 years or so. It is certainly one of the most systematic reports of its kind I have seen, and well worth losing a Saturday afternoon to read. Continue reading

West Point trolleyology

I blogged about the doctrine of double effect at the beginning of last year. It comes up just about any time there’s mention of the morality of warfare, and here it is in a piece by David Edmonds, writing for Prospect, on the popularity of trolley problems. Edmonds reports that West Point cadets engage in tutored discussions on ethics (this is actually something I’d heard about before). Double effect and trolley problems come up in these discussions. The cadets interviewed by Edmonds are unanimous in saying that it’s wrong to push the fat man off the bridge but OK to switch the trolley onto the spur. This – the cadets say – is because pushing the fat man intends the death of the fat man, whereas switching the trolley involves no intention to kill the lone person tied to the track of the spur. Likewise – according to the cadets – it’s wrong to intentionally target civilians (like Al Qaeda does) but OK to carry out a bombing in which civilians might be killed as – yes – collateral damage.

I’m not going to attempt to dissect double effect again. It does, though, disturb me that trolley problems seem to have carved out some sort of justificatory pattern in the minds of West Point cadets. Double effect considerations might explain why certain people give certain answers to certain trolley problems (apparently most people think it’s OK to switch the trolley onto the spur). Trolley problems as a set of thought experiments might help to explain why we make the ethical decisions that we do in fact make. However, I don’t see that worked out answers to trolley problems are therefore adequate guides to action. If you’re a military person tasked with dropping bombs on targets of opportunity, the plane you’re piloting (or directing) is not a trolley and there isn’t anyone tied to the track; there is no track. Trolley problems are highly stipulated; real life usually presents additional options. Likewise with many double effect characterisations. We’re not required to operate as though the use of JDAMs were an institution, such that the only moral problem concerns targetting. This is part of what I was trying to get at before.

Update: More – much more – on trolley problems here and here.