Society

What the popularity of university subjects amongst graduates (a) in the UK, (b) in Westminster and Whitehall, and (c) in other European nations tells us about the UK and its Establishment.

(a) are keen on sciences (esp. biology), arts and humanities, and not keen on practical/commercial subjects.

(b) disproportionately studied politics, economics, philosophy, history and law at Oxbridge/Russell Group universities, to an extent that makes them completely atypical for the population they represent, and far too lacking in diversity of interest and experience.

The latest Economic Affairs (the quarterly journal of the Institute of Economic Affairs) arrived today. Its leading topic - Corporate Social Responsibility (CSR) - reminded me that I never published the short talk I gave at an EU "stakeholder" workshop on CSR (or Environmental Social and Governance [ESG] disclosure, as they have re-named that rancid and decaying rose) in Brussels a few months ago. I thought it might be of some interest: (I didn't choose the title.)

Why do some enterprises choose not to disclose ESG information? 

Let me be clear first about two reasons why I am not opposed to ESG Disclosure.

1. I am not opposed to companies taking account of environmental and social issues. We do, to a greater extent (relative to our size) than most companies who are enthusiasts for CSR.
2. I do not argue that small companies should be treated differently to big companies. A sign of a bad system is one where it is necessary to treat small companies differently to big ones.

Indeed, I am not opposed to companies choosing to promote their environmental and social activities in any way they choose, including ESG Disclosure if they want.

What I oppose is any attempt to make it mandatory, or to give preference to companies who do it, or to make it a condition of doing business, or indeed to portray it as somehow virtuous or effective.

Running a business is not easy. Businessmen have large amounts of information to digest, possibilities to consider, and responsibilities to uphold. They must be good at predicting the future course of events, and at reacting quickly to changes they didn't foresee. They must be able to tell the difference between conventional wisdom and fundamental truth. Failing to do so can be catastrophic, as we have had to learn yet again.

Anything that distracts them from this focus - that complicates their judgments or clouds the information available to them - can be detrimental not just to their business, but to society at large. CSR does exactly that.

Accounts and prices are ways of condensing a lot of information into an easily-comprehensible, commensurable form. Commensurability is key to business information, and it is absent from the many CSR standards. What does it mean when we quote an “employee engagement score”? How do we weigh a change in that score against a change in our “business practices measure”? Can we compare our “business practices measure” against other companies' “business practices measure”? And where these scores are achieved through surveys, what are we really measuring – fundamental performance, or how we have influenced people's perceptions on the issue?

Even where you think you have something objective, like a firm's carbon footprint, it often turns out to be illusory. For example, BT (a firm with a strong reputation for CSR) claimed to have cut their carbon footprint dramatically by buying "green electricity", when in reality their contribution to the carbon savings was negligible. Despite an unfavourable decision by the energy regulator, BT maintain this fiction in their latest CSR report.

Where you have a material externality, the right approach is to create an appropriate institutional framework to internalize it. Businessmen and other leaders will then be able to take account of it through their conventional business tools and will have sufficient incentive to act where appropriate. Investors will be able to measure a business's success in acting on the externality through their single bottom line.

What drives real change is not fine words and woolly numbers in glossy reports, but incentives of sufficient value that they justify action. One danger of CSR is that, by creating greenwash for companies to pretend that their minimal and often illusory contributions are somehow significant, it provides cover for those companies to oppose measures that would have real effect.

We must judge, promote and reward businessmen according to their entrepreneurial ability, not their ability to direct or present their company's activities in a way that accords with some prescriptive attitudes to certain social and environmental issues. Otherwise, we will end up with the wrong type of people leading homogenised businesses, undermining the diversity that is vital to the effective functioning of markets.

All of the following businesses were strong proponents of CSR: ABN Amro, ING, Bradford & Bingley, Northern Rock, HBOS, RBS, Woolworths, Anglo Irish Bank, AIG, Bear Sterns, Lehman Bros, Merrill Lynch, Morgan Stanley, Washington Mutual, Fannie Mae, Freddie Mac, SachsenLB, Hypo Bank, Kaupthing, Martinsa Fadesa, General Motors, Chrysler, Nortel, and of course Enron before that.

I don't intend to be that type of businessman running that type of business.

Further to the earlier post about the dumbest economic argument in the world, the perpetrator (Mark) has now published the results of his poll, which asked "Who is best placed to decide what to build on any particular plot of land?" He has discovered that most people think that the owner is. Well, knock me down with a feather. Of course they do. So do I.

But in Mark's strange world, dreamt up to justify his devotion to LVT, this somehow means that whatever use gets the best value for the landowner also is most beneficial for the neighbours. Gems from his analysis include:

"Interestingly, even though each of these uses must have some 'external costs', it must also have 'external benefits', and the rental value of each shop reflects the profit value to the owner/occupier, plus the external benefits and minus the external costs of the neighbouring businesses."

"as the rental values of premises in the same street are going to be broadly the same, the external benefits generated by each occupant must exceed the external costs (or else rental values would tend to nil rather than skywards)."

"So the 'location value' of any site, being a positive figure, consists to a large extent (I can't quantify this as a fraction of the total rental value, but it it very significant) of the external benefits created by neighbouring occupants"

Notice how Mark is rather casual about the direction and extent of externality. So long as there are some external costs and benefits floating around, it doesn't much matter in Mark's world whether you are the inflicter or the inflictee. Somehow, this has all magically coalesced into fair value for all.

The latest spate of humbug surrounded the "British Jobs for British Workers" strikes.

Even the application of the term "strike" was a piece of humbug. The protesters didn't work there, so how could they go on strike? This was secondary picketing, but no one dared to call it by its real name.

Why has there been no comment on whether there were issues over foreign workers at the sites where sympathy action was taken? If so, were these contracts excluding local workers suddenly awarded in a spate at power stations around the country? Or had no action been taken at these sites previously because (a) there weren't many foreign workers there, and (b) people didn't have a problem with the foreign workers at those sites until they were prompted by the protest at Lindsay? Unless there was a very strange set of coincidences going on, weren't the sympathy actions entirely illegitimate secondary action, against companies unrelated to the Lindsay strike, by people with no previous inclination to protest against those companies, with no obvious achievable objective at those locations?

And what about the original letting of the contract to the foreign firm? Several contractors bid for the work. Labour costs would have been a major component of their bids. Cost and expectations of quality of work would have been major factors in Total's decision. The foreign firm was able to put in a winning bid because, by employing foreign workers, it was able credibly to promise a decent-quality job at lower cost than the British contractors who priced in the costs of using British workers. Should we be surprised about this? Should we criticise Total for taking the obvious business decision? Or should British contractors and British workers be asking themselves if they aren't overpricing themselves? If most of the politicians, commentators and businessmen involved hadn't been so feeble in failing to point about this fundamental reality, this could have been a painful but useful lesson in the realities of the labour market in an economic contraction. Instead, our "leaders" behaved as though they believed the protests to be justified, and allowed it to become a debate about how much and what type of action should be taken to try to buck the market.

All the same, I have sympathy with the protesters and the vast majority of British people struggling to make ends meet: not because there is an iota of sense in the claims that we should somehow try to ring-fence jobs and rates for British workers at a time when the economy is collapsing (the fastest way to repeat the 1930s experience in America, which seems to be the direction of policy in most countries anyway); but because they have been slowly trapped, by 15 years or more of lousy policy and hopeless management of the economy, into a situation where the average British worker can barely afford to live on the average British wage. Many of them were, of course, complicit in this development, not only because they voted for the idiots who mismanaged our affairs, but also because they happily racked up the debts, luxuriated in the bloated public services, and developed a sense of entitlement from the vast amount of over-protection provided to the under-deserving by the state. But whether or not they were complicit (and those who were not are in no better a position than their profligate compatriots), their situation is almost untenable now, and that is not anything you would wish on anybody, let alone a whole nation.

Just consider one component of the economic choice of the contractors. Look at the barge that the foreign workers are living on, and compare it with the typical cost of rent or mortgage to live in a British house. Of course the foreign workers can afford to bid a lower price for their labour. We have created a situation where we can't afford to work at wages that would be competitive even against other developed nations, let alone developing nations. We can't afford to take lower wages, but we can't compete at the wages that we need for even the most menial quality of life.

No wonder the pound has collapsed, and thank goodness it has and that we have a currency that allows that adjustment. Without realising it, every Briton has in the past year effectively taken a 40% pay cut, in international terms. And the value of all our assets, including our homes, have been similarly cut, even before we take into account the falls in prices. Yet, even now, we are not competitive. Does that give some idea how fat, complacent and lazy we had got? And of the pain we are in for if (as looks likely) the pound now strenthens again, and with it the costs of our labour and assets increase?

I won't go in to the stupidity of Gordon's use of the term "British Jobs for British Workers", and the disingenuity of his claim that the phrase was intended to be interpreted as referring solely to the question of training. Nor will I discuss the absurdity of the internal debate within the Labour party and parts of the media about whether European law is to blame, is right or wrong, and ought to be changed, knowing full well that there is not a hope of changing it, and that plenty of Britons have been on the other side of this fence and taken advantage of these freedoms. These true but somewhat facile points have been well-dissected by our commentariat.

But I am tempted briefly to point out that this yet again demonstrates that the supposed "far-right nationalists", to whom our struggling working classes are supposedly attracted by this sort of problem, are actually far-left nationalists. Lefties are always amazed that it is their voters who most easily cross over to the BNP. Like Billy Bragg on tonight's This Week, they claim that these people have leapt across the political spectrum, from Labour on the left to the BNP on the right, for some reason not pausing en route to consider the LibDems and Conservatives who supposedly lie in between.

Of course, to those of an Austrian persuasion, who define the left-right political spectrum as being from more (on the left) to less (on the right) bureaucracy, authoritarianism, and expectation that the state is all-seeing, all-knowing and will make everything right, the step from Labour to BNP is an easily explicable, small progression for people to make. By voting Labour, they expressed the hope that government could solve all their problems. When government fails to do so, they look for other parties who claim that still more draconian government action is needed. They take for granted that their travails are other people's fault and other people's job to put right. If other people (i.e. the government) try but fail to put things right, it must be because some evil forces are preventing the government's interventions from working. It has nothing to do with the unsuitability of the government's measures, the impossibility of achieving these ends by these means, or the individual's failure to help himself. It is all down to powerful, mysterious, external forces. And who are more mysterious, external, and easy to blame than people who are different to us?

The far-right extreme is not fascism, it is anarchism. Fascism and communism sit side-by-side on the authoritarian, socialistic extreme left (remember, the Nazis were National Socialists). They are distinguished mainly by their emphasis on a nationalist or internationalist scope to their ambitions, not by any fundamental differences of philosophy. But our intellectuals (in the Hayekian sense) persist in placing them at opposite ends of the spectrum, and then create all sorts of convoluted arguments and analogies (perhaps the spectrum isn't a straight line, it's a circle or a cross) to try to explain away the repeated anomalies thrown up by their failed paradigm. Some do it from simple intellectual laziness, others do it to justify their socialistic bias (after all, anything that is opposite to fascism must be right, mustn't it?). But whatever their motivations, it is pure humbug.

Between the points that the media have picked up on, and those that they never would, the analysis of this dispute was a real pick-and-mix of glistening, tooth-rotting, bloating, nutritionless confectionery.

Vote Dave!  He has come up with a sure fire, water tight, can not fail, genius idea to save the future of this country.  It won't be long until we leave our front doors open again, teenagers will stop their underage drinking, boys will stop fighting, drugs will disappear and we'll come together in one big brotherly love fest.  This is the future ladies and gentlemen and all because Dave has worked it out - he must have done, the Sun called his plan genius.  So, what is it?  Send teenagers on national service.  And put £500 in the pocket in the process - not to blow on booze, of course.  Cameron wants to send every 16 year old on a six week jolly where the bone idle will, for some unknown reason, suddenly want to climb three peaks and the book obsessed class swots will suddenly become sport mad jocks. 

Just lent my copy of P.J.O'Rourke's Give War A Chance to a friend, so decided to replace my lost copies of Eat The Rich and Parliament of Whores, to re-read them (and extract a few quotes for this site in the process). Went into the local W.H.Smiths and couldn't find an appropriate section. Would it be Politics or Philosophy or Economics or Current Affairs or Humour? Strangely, there didn't seem to be sections for the former, or anything targeted at the over-14 age-bracket in the latter. There were, on the other hand, several bookcases devoted to "Tragic Life Stories" (a sub-genre of autobiography that I hadn't realised the need to distinguish, like the big sections for the "life-stories" of 22-year-old footballers and media celebrities). Rows and rows of fantasy books and puzzles, too, but nothing too taxing.

Decided I must just be being obtuse, so asked at the desk. "Is that P.J. as in the letters, and how do you spell O'Rourke?". Oh dear. Nothing in the computer. Curiosity piqued that they seemed only to offer books for the lobotomised, I enquired where I would find the sections for P or P or E or CA. "We don't really have a section for them, but you might find something in the History section." A bit of lateral thinking required: "Where do you keep your Boris Johnson, then?" This is Maidenhead, and Boris is not only hopefully a well-enough known celebrity even to oiks, but MP for the neighbouring constituency of Henley. Must be a bit of Boris on the shelves.

Taken to look at the History section. Logical enough, given his excellent Dream of Rome. But no Boris in History, which is 80% Military History, and 80% of that about WWII. Instead, tucked away amongst the Spitfires and Shermans are a couple of shelves of "General Interest", which is intended to cover P,P,E, CA and much else besides. Finally, there is Boris, but sadly Maidenhead's intellectual capacity will only stretch to his book on cars (gives you an idea of the range of interests intended to be covered by those two shelves). That, it seems, is all we want to hear about from our politicians and pundits.

Maidenhead is typical of every bland High Street in the country, and it seems that, judging by their reading tastes, the typical shopper in the typical High Street in England is BRAINDEAD. Mind you, some more than others. At least Maidenhead's Smiths carries some current-affairs magazines, though tucked away at the back as though they are a little ashamed of them. And so infrequently attended that they are still displaying the Spectator from the week before last.

Still, that beats Newton Abbot, where I once got stuck for a couple of hours on the way back from Torquay. Looking for some reading material, I walked into town, stopping into each newsagent for a current-affairs magazine. After three failures, I asked the shopkeeper if he had anything suitable - something like The Economist, or Time or Newsweek, or some other obscure intellectual magazine like them. "Not much call for that round here." But there was clearly plenty of call for magazines about tractors and carp-fishing. Jethro is not exaggerating about the west-country.

Anyway, to the point. Below the General Interest shelves (back in Maidenhead) was one for books to help with your Citizenship test (another sign of the times). The Government's official publication, Life in the United Kingdom - A Journey to Citizenship, caught my eye. A theory and a game suggested themselves.

It's been reported on the BBC website that the cost of the ID card scheme has risen to £5.31bn. Why can't the government make estimates that are even in the same ball park as the final figures? Every time they value it, the cost seems to rise by another few hundred million. And you just know it isn't going to work when we all have to take them up in 2010 - there are going to be errors left, right and centre - a hacker's dream.

I attended a lunchtime talk today by Harriet Sergeant, who has written a booklet ("Handle with Care", published by the Centre for Young Policy Studies back in September), on the disgrace that is our care system for children who have to be removed from the parental home. The booklet can be ordered or downloaded from the CPS website, and I cannot recommend it highly enough. I hope Harriet will forgive me for quoting the first couple of paragraphs, as the best way to illustrate what an important and depressing story she has to tell:

"THIS YEAR approximately 6,000 young people will emerge from the care of the state. What is their future?

Of these 6,000, 4,500 of them will leave with no educational qualifications whatsoever. Within two years of leaving care 3,000 will be unemployed, 2,100 will be mothers or pregnant and 1,200 will be homeless. Out of the 6,000 just 60 will make it to university. Care is failing on a scale that is catastrophic.

It is not just a tragedy for the individual. A successful system of care would transform this country. At a stroke, it would empty a third of our prisons and shift half of all prisoners under the age of 25 out of the criminal justice system. It would halve the number of prostitutes, reduce by between a third and a half the number of homeless and remove 80% of Big Issue sellers from our street corners. Not only is our system failing the young people in care, it is failing society and perpetuating an underclass."

When will this government learn that the more it interferes in our lives the worse things get? Why do they insist they know better all the time? The latest piece of interfering comes in the form of a £30m initiative (paid for by us...) for a new academy to coach parents on how to control tearaway children.

A report by the London School of Economics for the Prince's Trust charity, entitled The Cost of Exclusion gives us a very dim view of our future. It appears that the benefits handout culture of Great Britain is producing a population of "Neets" - people not in education, employment or training. Astonishingly, roughly one in five young people faces a lifetime on government handouts, under-achieving in education and runs the risk of falling into crime!

Sharp as always, Wat Tyler at Burning Our Money has posted today about the Waste Resources Action Programme or WRAP (how clever - I wonder what came first, the name or the acronym... mmm, I wonder?). Now, as you will have probably guessed already WRAP is a Quango, but what makes them particularly special is they are challenging the British Potato Council for the most pointless use of public money. Indeed, the Quango that gave us National Chip Week is now being challenged by the Quango that gives us its research in to household food waste. Yes it does happen, folks - we throw away 6.7m tonnes of food every year. Incredible. What are we thinking throwing away all that perfectly good food? Well half of it is not perfectly good food, it's waste. Potato peelings, teabags, bones, that sort of thing. Why did they include old bones in this total, the overpaid bunch of clueless goons (see Wat's picture). That 6.7m tonnes statistic is probably the most pointless, meaningless stat of the year so far. And it costs us £80m a year to receive these nuggets of information. Great find Wat - if it wasn't true I'd probably be laughing even more.

The current government has taken the nanny state to new levels in the UK and now it is taking the term quite literally. Its latest piece of interfering is with the development of our young children - after all nanny knows best. The Guardian reports that every nursery, child minder and reception class in Britain will have to monitor children's progress towards a set of 69 government-set "early learning goals", recording them against more than 500 development milestones as they go. 500 milestones!?

Can someone please inject some common sense in to the Environment debate? It is really starting to get out of hand and I fear will bankrupt us all! It seems that the major parties can justify doing anything just by linking it to the doomsday apocalypse that is climate change. It is more effective at getting policies accepted by the electorate than the cold war or the war on terror ever was. And it is David Cameron who is really leading the field at the moment.

After promising that his brilliant new idea to tax the frequent (and not so frequent) flier would be offset by tax breaks elsewhere, we now know what he meant. It means that he is going to tax the hell of us and then use the money to interfere with our lives. The Independent reports "Money that a Conservative government would raise from taxing air travel will be used on schemes such as tax breaks for married couples, David Cameron has promised." It goes on "His aim is to offer a double whammy to encourage people to behave in ways that the Tory leader thinks are good for society." In a BBC interview yesterday he incredibably called it "taxing the bad and rewarding the good". Who does he think he is? Is he some sort of modern day twisted Robin Hood? Since when was he crowned the moral judge of what is right and what is wrong? I do not not need this buffoon guiding me through the moral maze. I just hope for his sake that one day something isn't revealed to show him up not to be the righteous, moralistic, perfect man that he likes to portray - but I think that day will come and we all know what it's going to be. If Dave has indulged in activities of an shady nature in the past, then that is his business as far as I'm concerned, but I won't be defending him if he thinks that he has some sort of right to interfere and comment on my private life.

He's at it again, our Chancellor, talking about Britishness. That is one paranoid Scot. Does he not realise that dissecting Britishness is profoundly unBritish, and that real Brits have the self-confidence in our culture not to need to define it endlessly? Has he not noticed that we've been pretty fond of some Scots even in recent times. If we don't like Gordon Brown as much as we liked Robin Cook or John Smith, or even as much as we like John Reid, Ming Campbell and Charlie Kennedy still, it is not because he is Scottish, but because he is Gordon.

It is one thing to be the pub bore on the subject. It is another to try to get sympathy by picking on others less fortunate than himself. Gordon thinks that "it is right to consider asking men and women seeking citizenship to undertake some community work in our country or something akin to that that introduces them to a wider range of institutions and people in our country prior to enjoying the benefits of citizenship". It's a garbled sentence expressing garbled thought.

What immigrants need as much, if not more than anyone, is to find a job and make a life. That is how they will fit into and contribute to our society. Why would we place on them a burden that is otherwise placed only on convicted petty criminals? What will that prove? How will that help them to adapt to a British way of life (other than the criminal British way of life)?

If we want a test by which we will judge whether an immigrant is fit to enjoy British citizenship, having held down a job for a sufficient period of time would be a much better test than having undertaken community work.

David “Dave” Cameron (the most socially responsible man in the UK) has just dipped his hand back in to his policy lucky dip tombola and come out with a real cracker. Today he is expected to outline (does he ever do more than outline?) policy designed to ‘encourage’ more couples to get married and stay together. This will include premarital counselling and relationship classes.

Britons have been indulging in a bout of self-flagellation over our bottom-ranking in a recent UNICEF report on childhood well-being. Each person, of course, chooses to blame the result on their personal bête noire. No doubt there are many things wrong with British society and many complex causes, but before rushing to our knee-jerk reactions, no one seems to have bothered to consider how much water this report holds. It's from the international body representing children, so it must be impartial and accurate, right?

Well, not exactly....

Who is Mr Blair trying to kid? Yesterday he unveiled a swath of policy initiatives covering compulsory uniforms for punishment in the community, greater private sector delivery of welfare, personal carbon budgets and a switch in funding from national Muslim groups to smaller local groups.

Just stop it! Your time is up; no-one is listening. Stop wasting time and money unveiling so called initiatives when all that is going to happen is Gordon Brown is going to succeed you, completely ignore what you have said and pursue other ways to spend our money. You may think that you are going out with all guns blazing and laying down your legacy, but the truth is you are smouldering out and you blew any chance of a decent legacy many years ago. If you must hang on to power and really want to make a difference in your dying months – do nothing. Absolutely nothing. It would be the most productive few months of your premiership and set a real legacy that Mr Brown would be wise to follow.

The tensions of excess, both in private and public sectors, are starting to display themselves in debates over the just level of wages for various occupations. These debates occur every now and then, usually provoked by a sense of disparity related to imbalances in the economy, themselves created by lopsided government intervention. Not surprisingly, given Gordon's predilections for the City, big corporates and micro-management by an overweening bureaucracy, the focus at the moment is on the remuneration of bankers, business leaders, management consultants, politicians and senior civil servants.

Following the recent announcement of record profits and record bonuses at many of the leading Wall Street and City banks, the Telegraph reports today that the number of public sector staff on six-figure salaries (i.e. > £100,000) has trebled in the past five years, whilst Brendan Barber (general secretary of the TUC, but usually a measured critic of business) has called for a "debate" about "how big and how justified" the rewards of directors of FTSE 100 companies should be, given that they have increased 105% in real terms since 2000, while average wages have increased only 6%. Put another way, these bosses now earn 98 times more than their employees. Bosses of AIM-listed businesses haven't been doing too bad either, some of them being paid over £1m for the first time. MPs' recent claims that they deserve an increase in their basic salary from around £60,000 to £100,000 received mixed press - some people feeling that it was worth paying to get a better quality of politician, others feeling that they didn't deserve a pay increase given their supposedly poor levels of performance and the pay squeeze on other public servants. There was further criticism of the high levels of pay for many public-sector executives (i.e. quangocrats), whose average pay awards are now second only to bosses in the City financial sector. Quangocrats' pay levels have been causing concern for a while now, without any sign of a retreat.

These debates are always characterised by an absence of intellectual consistency. Most participants argue that those they favour should be paid as much as is necessary to get "the best person for the job", whilst those they do not favour should be paid no more than is necessary to fill the post. Some eschew these generalisations for even greater simplicities - people should be paid according to the amount of work they put in, according to their performance / the results of their efforts, or, for the unreformed socialists, according to their needs. Whatever system is used, what unites almost all commentators is that they seem determined to invent their own personal scale of worth, as though it would be possible to devise a just scale of wages that could be imposed from above if only people would recognise the truth of the commentator's personal value system.

What is the truth? How are we to know whether people are being paid enough or too much?

The Home Secretary announced yesterday that its ID card scheme will be linked to existing Whitehall databases. This is a complete U-turn from the plans the government has been pushing through for years to build a new clean system from scratch.

Also, there is a huge number of companies that are interested in bidding for the new ID database and that have prepared and spent money to take part in the procurement process. But now it appears that this has been done in vain and our data will be stored on 3 different and inaccurant computer systems.

Home Office, the deprtment declared "not fit for purpose" is still struggling to make any improvements. Today's papers are reporting that the two terror suspects who went on the run in August are still at large. According to the National Audit Office (NAO) there is a lack of financial management and the accounts are still in a mess. The NAO found that the Home Office does not know exactly how many staff it employs and is £240m in the red. Sounds like a department fit to secure law and order....