My first Prezi

Here is my first Prezi!

It is a presentation of my recent blog entry.

Prezi is an online presentation design website. The idea that is that there is a canvas with text and pictures and during the presentation you zoom around the canvas to look at the different parts according to a path that you have set. This is a bit more intuitive than powerpoint, as it works like a mand-map, enabling the presenter and audience to see how things fit together. During the question and answer session it is easy to scroll around the presentation to see the different elements as required.

I was a bit daunted about how long it would take to produce a presentation on this but it didn't seem difficult after watching the online explanation.

Bank failure contingency plans

Contingency planning for bank failures sounds like a very uninteresting topic. Perhaps it is. But it’s pretty important, since all banks nearly failed (and some did) in 2008 and most seem quite vulnerable to deterioration in asset prices in light of a major recession/depression. Yet despite this, banks continue largely as they did before, with huge rewards to those in the financial industry.

The financial industry appears to me to have successfully operated to transfer huge amounts of wealth from governments, taxpayers, workers, pension funds, developing countries, banking shareholders, and so on, to the financial ‘talent’ and perhaps some very wealthy people. The financial ‘masters of the universe’ appeared all powerful both before and after the financial crash.

One suggestion is that the prospect of being bailed out leads to the moral hazard of a riskier culture within the banking industry. We heard about how the banks had to be saved in order to keep cash machines and cards working, in order for the economy to function. However, if banks are too important (let alone big) to fail, then there is a big moral hazard problem. I always assumed that governments had good contingency plans, but I haven’t heard anything about the one I am about to describe. I really hope it is in place, for reasons I will explain.

My hope is that the next time there is a banking crisis there will not automatically be a recapitalisation of the existing banks at taxpayer (or more accurately, government benefit recipient) expense. Instead, I think the bank should be allowed to fail, but in such a way that the depositors have a certain degree of security (as they do) and that they can access this security without any problems.

This seems relatively easy to achieve from the perspective of the government. They just have to have in the conditions of a retail bank that they should have certain rules in place in the case of failure of a bank group. Should such a failure occur, the bank should have a contingency plan in place whereby certain designated members of staff and the bank’s information transfer immediately to a new public body charged with the orderly break-up of the bank and maintenance of the card network. The break up and so on could take a while, as there would be many assets to unravel and sell, and creditors to pay. However, the system needs to keep working in the very short term at the street level.

To achieve this I propose that the following be done beforehand. The bank would have had to pre-designate each cash and credit card with an amount of ‘credit’ (like an overdraft) in such a situation. This amount would be revised as regularly as feasible to take account of the money available to each person. Then, if the bank were to collapse, the new public body would set up a new account for each person/account with that institution. People could then use this account—with a daily limit up—to its pre-determined limit. People would be eating into the guaranteed amount of their savings that are guaranteed by the government (currently limited to £50,000). But at least they would still be able to obtain cash and obtain their necessities.

Having this smooth contingency plan in place would mean that banks would have no leverage to demand a bail-out in order to stop total Armageddon on the streets. Banks would know that if they got in to trouble they would have to get themselves out of it, which would reduce the prospect that they would take too many risks (though I’m not totally convinced of this, if banks are acting—as they seem to be—in the interests of their ‘talent’ rather than their shareholders).

One important difference between this approach and the bail-out approach is that the bank staff would work at a civil service approved wage. In 2008, bankers continued to get their huge incomes and even bonuses, supported by taxpayers, and there was nothing anyone could do about it. However, the new public body I propose would not have to honour the contracts of workers with the old company. Some would be retained, but on new temporary civil service terms. This would not only serve to incentivise shareholders to avoid risk-taking, but also the decision makers (referred to above as the ‘talent’), as they would face the loss of their contract in the event of bank failure.

Perhaps such rules are in place, but I don’t know about them. Could anyone enlighten me? Or explain why this is a bad idea?

Review: The Courageous State by Richard Murphy

Richard Murphy tells us that he felt an urgent need to write ‘The Courageous State’ and that he wrote it in a hurry. This is because a neoliberal (free market libertarian) agenda has infected public discourse and is becoming more and more dominant in public policy circles; it appears to be the only game in town. It will take a courageous state with courageous state to arrest this unfortunate slide, and with this I agree. As with tax havens, Murphy has correctly identified and diagnosed the problem. Fortunately, his urgency has not stilted his clear writing and explanations of what he takes to be a new approach to economic thinking. Unfortunately, he does not show awareness of the many others who have been making similar points in fields like political philosophy, and that it is not necessary to take his approach in order to attack libertarian ideas.

The book begins with an attack on basic “neoliberal” economic thinking. On this front, I think that sophisticated economists would claim that they do not do what he takes them to. However, Murphy has a valid response to this in insisting that the problem is the simplified notion of economics that has an impact upon policy debates, which insists that the market is always right and government intervention in markets always wrong. I would refer to this line of thought as “libertarian” rather than neoliberal, but Murphy is certainly right that this view is pernicious and wrong. Murphy explains why and how the market goes wrong and needs correction. Murphy rightly criticises the neoliberal approach for enabling material interests to dominate (most particularly those of the well off and corporations over the interests of the less well off) and for encouraging unsustainable overconsumption. In chapter seven, he explains why states have a right to tax, which is very similar to that provided in the Myth of Ownership by Thomas Nagel and Liam Murphy. These points are certainly very important, and I agree with Murphy that it there is an urgent need to attack the unfounded libertarian views that appear overly dominant in politics.

In part two, Murphy presents his alternative approach to economic thinking, about which I have various worries. It is not clear what motivates the view aside from the values that Murphy himself has. Now, I personally agree with a lot of his values, but it is illiberal and unscientific—as well as seeming a bit presumptuous—to base analysis of the world on a set of potentially controversial values. It is at this point that my main concern about the book comes in. The book is largely engaging in issues of political philosophy, but is presented as a work of economics. I have attempted to reconstruct the political philosophy within the work in a previous blog. However, the work of prominent political philosophers such as John Rawls, Ronald Dworkin and Amartya Sen has also attacked the neoliberal approach on a clear normative basis.

I share a lot of the values that Murphy presents (such as that conspicuous "show-off" consumption is a bad thing). However, I do not think it is right for a state to align itself with a particular set of values. I fear that the author’s own values and obsessions permeate the work, with little justification for these in terms that all could accept. I therefore find an illiberal paternalist and perfectionist streak in the work, as evinced with the circular depiction of human economic life (which I discuss in my previous post). The valuation of the various incommensurable goods found in these circles are going to subjective, and are therefore no basis for public policy.

Part three presents Murphy’s practical proposals. Some of these I agree with, such as those regarding tax havens (or secrecy jurisdictions). A lot of his domestic proposals involve state intervention, unionisation, and nationalised industries. However, it is not necessary to take a state led approach in response to the libertarian worldview. It seems equally adequate to simply ensure that everyone (including the disabled and those without natural talents to earn money in a competitive job market) has access to resources on fair terms. Personally, I would wish to do this through a negative income tax to those with a low hourly wage. This alternative would solve the de-legitimising aspects of free market capitalism, and do so in a more liberal way. The advantage of Murphy’s approach is presumably that if you give poor people more money they might waste it instead of using it to improve their non-material lives. This is perhaps true, but at the same time people should be free to choose their own values in life, and be held responsible for what they do with their resources.

Richard Murphy has clearly put a lot of thought into the way that the economy works, and has very strong and laudable values. He is right to attack the unfounded libertarian views that seem so dominant (partly no doubt because wealthy people fund patsies to spread them), and that it is urgently important to challenge these views. He is also right that GDP and material growth are not the most important thing for governments to concern themselves with, as material goods are only means to other things. He is also right that we need a Courageous State to stand up to corporate and financial interests in the name of everyone else. I have mentioned my worries about the illiberal aspects of the book, and have discussed Murphy's political philosophy in a previous post. However, liberal egalitarian political philosophers would readily agree with Murphy that there is a need for a Courageous State to stand up to libertarian economic assumptions. However, it is not necessary to take Murphy’s problematic economic approach in order to do so.

Some problems with Richard Murphy’s circles

Richard Murphy seeks to replace economics with a more human-oriented approach. In order to do so he creates circles to express the purpose of human activity. These are supposed to emphasise that there is more to human life than that expressed in economic and material transactions (p113). I’m not sure who actually thinks the opposite is the case, and I imagine they would probably be sectioned if they did. I’m all for challenges to economistic thinking, and alternatives are therefore to be welcomed. However, I have some worried about Murphy’s circles.

First, I will explain the approach. The circles are split into the various valuable things about a human life. It therefore includes the fulfilment of material needs, but also of emotional needs, intellectual fulfilment, and purpose. The outer limit of the circle represents the limits of potential achievement on each of these values, given that we only limited time, energy and resources with which to achieve. When someone focusses on any one area of achievement, they will lower their potential to achieve in the others. This ability to choose is attractive to liberals: people can choose which aspect(s) of life on which to focus.

Unfortunately, Murphy’s own values come in when explaining the over-emphasis on material goods over the others. I agree with this on a personal level, but I worry that his approach only works if these values are taken to be correct tout court.

The outer edge of the circle is initially explained as the limit of what someone can achieve in that domain or dimension of life. However, as time goes on, Murphy insists that people can overconsume. This occurs where people spend more on goods than they should and waste goods that should belong to others (p144). It is not clear where “should” comes in here, but it seems to be an instance of Murphy inserting his own values (attractive as they are) into other people’s lives.

The problem I would like to point out is that the material dimension works differently from the others, which renders his circle somewhat inconsistent as the basis of a new approach. The fact that it is possible to go outside the edge of the material dimension shows that the edge of the circle is not in fact a limit but a value judgment of what level would be sufficient material wealth. This is all very well and good, but the other parts of the circle do not work in the same way. It would presumably be possible for someone to emphasise the ‘purpose’ dimension of life at the expense of the others, and we might want to say that person has done more on this dimension than they should have done. On the other dimensions, there is a sufficient level somewhere inside the outer limit circle. However, on the material dimension the outer limit of the circle is a ‘should’ not a limit. This must be the case if it is possible to go outside the limit.

Murphy has come up with a neat way to express the point that many people overemphasise material “conspicuous consumption” (which comes from Thorstein Veblen’s excellent Theory of the Leisure Class) over other aspects of their lives. The view also illustrates that those with little material means have to sacrifice other areas of their lives as they struggle to take care of their material needs. It also allows him to illustrate that much financial activity doesn’t seem to relate to the goods of human life (though financiers would presumably claim that it does so in an indirect way). However, it is not a consistent basis on which to analyse anything, as it requires the imputation of values into the model, something which is contentious and subjective

What is the political philosophy of “The Courageous State”?

There is a strong case to say that Richard Murphy’s new book ‘The Courageous State’ is a work of political philosophy, given that it engages with normative issues. However, it is not pitched as such, and contains virtually no references to any political philosophers or their ideas. I thought it might be interesting and useful, therefore, to try to reconstruct a political philosophy from what he says. I found a few candidates, but these might be contradictory with one another, in which case it would be necessary for him--or those who follow his ideas--to choose. My hunch is that his views fit in best with those of Amartya Sen, but there are other threads in there as well.

A good first question is what debates the book seeks to engage with. On the one hand, it is clearly focussed at public policy. However, it strays often into the territory of what the good life is. Liberals (that is, those who have the dominant liberal political philosophy, which would encompass people in all parties of modern UK politics) would worry at this point that the state should not be in the business to getting people to live what it has decided to be the good life. Murphy at times strays into paternalist territory (p60, 61, 113), where he seems to suggest that people are not able or responsible enough to look after their own interests in a market setting.

There are aspects of the book that appear opposed to liberal thinking. One is the references to the public good, which appears communitarian (p6, 19, 115). At these points, Murphy seems to be suggesting that the good in life should be determined by the community itself, and not something that people should decide for themselves, which places him in similar territory to Aristotle and Sandel. Another thread is one that is found in the work is the idea that people have a duty to contribute to society (p118). This places Murphy with other Labourite socialist thinkers such as Stuart G. White (See his “Civic Minimum”). This duty is something with which I broadly agree on a personal level, but which—as a political liberal—I could not approve of the state enforcing. These threads show that Murphy isn’t troubled with the usual liberal concern to keep personal answers to the question “what is the good life” separate from state policy that should take no position on this question.

Distributive justice is a crucial aspect of the book, since it largely about taxes, redistribution and market regulation. However, the book makes no reference to any political philosophy on this front. Murphy is clearly focussed on the poorest in society, and this potentially places him in a socialist or Rawlsian framework. However, he implies throughout that there is a correct distribution which has been violated (p100-1) without ever saying what that correct distribution is. We are left to assume that it is a very egalitarian one. I should mention though, that there are also sufficientarian strands in his view; He uses words like satisficed and satisfied at various points, particularly in relation to his invocation of overconsumption.

Regarding the “equality of what” question, it would appear (p6, 114-5) that Murphy’s view is close to that of Amartya Sen, as expressed in its fullest in his “Idea of Justice.” On this view, what matters when considering distributive matters is the capability of realising one’s functionings (“potential” is Murphy’s expression). This motivates Murphy’s circles of value (as I would call them), which contain material needs, emotional needs, intellectual fulfilment, and purpose (p114-5). He also shares with Sen an emphasis on democracy as a means to answering the difficult political questions. He is explicitly anti-utilitarian when criticising economists (p110, 115). Murphy may be happy to be a capability egalitarian, then, or a socialist resource-based egalitarian. I myself have a problem with these views. The first struggles to avoid answering questions about which capabilities matter and by how much (which implicitly requires answers to question of what is a good life to enter policy at a very basic level). The socialist approach explicitly places the interests of the worst off in society (however defined, and presumably often controversially defined) above the interests of all others, which seems unwarranted. For these reasons I prefer a resource egalitarian approach of the sort taken by Dworkin, as explained in Sovereign Virtue.

References:

Aristotle, The Nicomachean ethics (Penguin classics; Harmondsworth; New York: Penguin, 1976).

Dworkin, Ronald, Sovereign Virtue (Cambridge, Mass: Harvard University Press, 2000).

Rawls, John, A Theory of Justice: Revised Edition (Oxford: Oxford University Press, 1999).

Sandel, Michael J., Liberalism and the limits of justice (Cambridge [Cambridgeshire]; New York: Cambridge University Press, 1982).

Sen, Amartya, The Idea of Justice (London; New York: Allen Lane, 2009).

White, Stuart, The civic minimum : on the rights and obligations of economic relationship (Oxford; Oxford University Press, 2003).

Collaborative Working tools

This week's bloggy things are about collaborative working.

Quite an easy one this week as I had already done two of the things. I used dropbox a lot until it was blocked from campus computers, and had used it to share files. I had also updated wikipedia pages on my sad geeky interests such as football stadia and statistics.
I had not done the third thing, which was to create and share a google doc. I produced one and shared it with Katy. Job done.

Mendeley.com

I have also signed up to Mendeley.com, which is a reference and article library.

The features overlap with endnote.web, which I already use, but they are mutually compatible which is handy. The advantage of endnote is that they should provide support (though as its endnote web this is delegated to someone at each university, and the error I reported on my preferred style has not been resolved).

Mendeley has various advantages over endnote. First of all, it is free to use, whereas Endnote is expensive unless you are a member of a university which subscribes. Secondly, it is set up to allow collaboration and sharing of ideas and suggestions. Third, it will store your pdfs for you. This could be handy if you need it on another computer (though you could presumably just as easily download the original again), or if your hard drive breaks (as has happened to me).

Since I've invested so much in endnote I will stick to this for the time being, but there is a chance I will move over to Mendeley at some point in the future.

Delicious.com

I have signed up with Delicious.com. It is a website onto which people add links to interesting web pages, with tags. People can then search for these tags to find webpages in which they might be interested.

That is all very straightforward, but it also has the 'stacks' feature. This allows people to put 5 or more sites on a theme together to make an interesting stack which others can browse. I started to put together a stack on tax justice but ran out of ideas. If you have any suggestions regarding websites, let me know.

Doodle

I have used doodle before as a participant, but I have used it as an administrator of a meeting. It is very easy to do and I didn't even need to set up an account.

I couldn't think of anything to set up, so I listed a few times I hope to be available on my trip to next Warwick on Tuesday and Wednesday. I emailed the link to three friends. One has responded, another told me he hasn't because he doesn't know yet, and the third has his viva today so I'll go easy on him.