Archive for the ‘chance’ Category

“We’re all in this together” is what the UK prime minister tells us as he continues to tout out the same old line that the economy’s not his fault and it’s all down to the mess left by the last administration. Partisan politics gets a little boring when it’s so obviously untrue, Britain’s path through the current depression could have been better laid in 2008 but it’s a global recession caused by industry wide provision of sub-prime mortgages and dissemination of toxic debt. The Conservative/Liberal party’s policy of cutting back on all areas of public spending, raising taxes and increasing the retirement age are all strategies which would work in theory. Unfortunately the economy doesn’t respond well to a political agenda as opposed to thorough economic modelling and putting all these strategies in place in one fell swoop won’t, indeed can’t do what is expected of them. What happens is that they become a portmanteau of punishment directed at us, the humble citizen (we aught to remind government that we citizens will be voters and constituents in about three years and we’re not happy).

So, instead of punitively taxing banks and investment houses they are rewarded while the poorest, least economically empowered are seeing their meagre incomes reduced yet further. Instead of pulling us out of the current economic mire by the time of the next election Britain is instead facing a double dip recession which will continue well into the next administration’s purview.

Most economists would agree that the way to work ourselves out of this would be to reduce fuel prices across the board, making manufacture and transportation more affordable. Reduce, not increase VAT and income tax. People spend more when they have more money and goods are cheaper, this spending will stimulate the economy, create jobs and therefore reduce the amount necessary to spend on pensions and unemployment benefits, and generate more money for the treasury’s coffers. Increasing taxes would ideologically create more money for the government, however, in reality, people with less money facing higher prices spend less.

So, while ministers chant the mantra “we’re all in this together” and “the previous government’s mis-management…” what they’re actually doing is continuing to reward the people who caused the mess by punishing the victims of their avarice and rapacious greed.

We’re told “The Banks say we need to do this” or “The Banks are threatening more gloom if we don’t do that.” And we’re so inculcated that they’re the experts and they know best that we kowtow to their demands while they sit high on the hog after causing every recession, depression and bust that’s ever existed. If they’re the experts, how come they get it wrong every five to ten years? The last time the economy was as bad as it is today it took a conflict on a global scale to give people enough jobs to work out of it and while Europe and Asia were decimated a select few made a lot of money.

Alfred P Sloan said that “If you do it right 51 percent of the time you will end up a hero.” In economics you only have to be right in your judgment 51% of the time to become rich. That means that you only need the wit to spell your own name correctly on three consecutive occasions and the ability to toss a coin to make it big on Wall Street. The fact that banks don’t seem able to make money under these circumstances should have us all significantly more worried than we actually are!

The problem is that experts become complacent; they use their judgment and experience to inform them what they think should happen, not what will happen. This has been borne out in scientific study.Philip Tetlock reports in his book Expert Political Judgment that when experts, lay people and a chimpanzee were set tasks to see how well they could judge the future an ape throwing darts could do as well as or even better than one of these so called experts. Aside from the health and safety issues involved, would you like to see the world’s economic strategies dictated by a primate playing bar-room games? No-one would like it but it might actually be better for us!

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