28 Sep 2010, 5:13pm
reflections
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  • A dry run, a lost opportunity, and something needs to change

    Several weeks ago I applied for voluntary redundancy; the terms aren’t bad at a year’s worth of salary tax-free if you spread it out enough and lob some of the redundancy into AVCs. In practice, this means the equivalent of nearly a year and a half nett if I were to use some of my cash savings and replenish them with the AVCs in a few years. My timeframe for saving enough to buy my own freedom is about two years, so the difference is not worth sweating. And the advantage is that I get out now, rather than in two years. These are two years I don’t get to live again, so going for it is a no-brainer.

    It wasn’t to be, since my employer decided they didn’t want to accept my offer to save them money. There’s some sort of power struggle going on in rarefied levels – it is clear that HR want to off as many people as possible because the company is still somewhat overstaffed with skilled people from its earlier history as a technology leader, whereas what is needed now is grunt coding from India and rock-bottom wages. Set against that, the local management hierarchy is managed on achieving their objectives, and obviously they feel they’re short of men, at least that seemed to be the feedback before the decision was made, and it seems borne out by the people who got it and those who didn’t. I don’t know anyone in my area that did.

    I’ve been here before, this isn’t the first time I have tried for a VR package. At the moment I still need this, it is transformative and I haven’t saved enough money to go it alone. It would have been rude to pass on the opportunity :)

    Working through the period between applying and hearing the result is soul-destroying – I did that last year, so this year I took some leave which I had saved up just for this eventuality. Because I’m saving I wanted to keep outgoings down, so I tried out what being retired would be like.

    Many people fear not working, losing their sense of purpose and identity. Let’s just say that from my experience this is probably not going to be a problem for me, though naturally a dry run of two weeks is different from the full works. I kept outgoings down, tried to cycle as much as possible rather than drive and took the time to do things for myself and make do rather than buying replacements on a whim. It was rewarding, a sense of engagement and attention with the world.

    I listened more intently to what goes on around me, such as this charming plaintive bird in the hedgerow. I don’t know what it is, though it is probably some common sort but I’m not familiar with the call as opposed to the song.  It doesn’t matter, what mattered was that it caused me to dwell and to appreciate the sound for itself. It is good to see clearer the turning of the wheel of the year as the mists and mellowness sets in and the harvest hangs heavy. Set against that was the uncertainty of not knowing whether I was in the last month of my working life or not.

    So financially I will maintain current course and speed, no doubt much to the disgust of Mr Bean. There is something to be said for remaining employed through the forthcoming financial firestorm. Other things could do with changing, I should take heed…

    27 Sep 2010, 9:28pm
    simple living:
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  • Holkham Gap

    Holkham Gap

    Okay, so the picture is a bit cheesy. It’s from this time a couple of years ago, needed something to clear away the gloom. Holkham in Norfolk is a fabulous place for birds, on the classic North Norfolk coastline.

    23 Sep 2010, 5:09pm
    reflections
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  • the Autumnal Equinox, when the light surrenders to the darkness

    Autumn tree in Rendlesham forest

    Autumn tree in Rendlesham forest

    Today is the Autumnal equinox, the process of decline is in full swing. There is a sweet smell of the decaying leaves in the air, and the winds blow as the forces of light and darkness find their balance. It is the time of harvest, of plenty, but it also holds the bittersweetness of the long and lonely night of Winter yet to come.

    This cycle is needed, no natural system can run flat out all the time. There needs to be the time to project force, to conquer, to overcome. Less clear is the need to retreat, to survey the field, to reflect, draw down the reserves. In that time to come, some will find that the reserves are not enough, and for them the winter will hold no spring.

    Not all of these sparrows will see the returning warmth of spring

    Not all of these sparrows will see the returning warmth of spring

    Capitalist economies also seem to need phases of creative destruction – and every so often they seem to have spasms that destroy accumulated paper wealth. There is a theory that as the people that weathered the last Depression start to die off, people forget the reasons for the controls being there. Clinton’s repeal of the Glass-Steagall Act seems to be one such event. This paper describes the poetic concept of the Kondratieff Winter, where the assumptions that underpin the economic system begin to fray at the edges, then begin to fail under the weight of their internal contradictions. In particular, the skyrocketing debts, both personal and more importantly sovereign debts described in that article do seem to be taking place.

    It seems to me to be a wider metaphor for the coming storms on the economic horizon.  In terms of my shares ISA Britain is booming – indeed for all the talk of emerging markets a sturdy old investment trust I bought in July has appreciated by more than 12%. I wish I knew why – I bought it as part of a re-orientation of my portfolio towards being able to produce an income without having to sell slices of it off. The reasons I bought it were the NAV, yield and the fact that its aims seemed to broadly align with what I would do if I had, say, Monevator’s more detailed knowledge. This article of his describes the particular qualities of ITs.

    Compared to the 5% performance of my Emerging markets ETF in a country with a young population and decent alternative energy prospects doughty old Blighty seems to deliver at the moment. Some part of me suspects this is because I am being paid in an increasingly worthless currency that has depreciated by about 25% in the last year, presumably as a result of QE. This should, however, pump up the ETF too.

    The reason I don’t feel good is because though finance may recover this feels awful from the point of view of the people of this country. Perhaps with the exception of the wealthy ;) And possibly the debt-free, which I have managed after 30 years of working.

    There are two areas things seem set to really get worse. One is the horrific state of employment in this country. We don’t have jobs for many of the the graduates pouring out of our universities. One in three call centre workers in the UK has a degree. You don’t need a degree to work in call centre FFS, and on minimum wage it’ll take a while to pay back the student loan, plus of course you have the opportunity cost of three years not working.

    The other area is the continual train wreck that is housing in Britain. Half the population can’t buy a house, the other half seems scared to death that their mortgages will be more than the amount their houses are worth. While I do feel that some of the latter have got only themselves to blame I am not devoid of compassion for them. In the end this is a zero-sum game, for one group to gain the others must lose.

    Something that will clearly be toxic in times to come is debt. Of all forms, including mortgage debt. Just as in normal times, non mortgage debt is toxic because the underlying assets or purchases do not have a value that can settle the debt, now the same will apply to mortgage debts. Credit controls will mean that remortgage costs may be prohibitive, and I am glad to see that finally the interest-only mortgage is to be challenged. It staggered me when I moved in 1998, increasing the mortgage by 50%, that the  broker waved a cheery ‘don’t worry about it’ when I raised that half the capital was not covered by the endowment. I had to push to get the mortgage on a part interest only/part repayment basis.

    Is a Kondratieff Winter looming?

    During the Kondratieff winter the economy dies because the debt bubble, which has been massively inflated during the Kondratieff autumn, explodes. Effectively, this destroys both creditors and the debtors alike.

    Ian Gordon, longwavegroup.com

    I had reason to consider recently how I could preserve enough cash to pay my way for five years without working. I have assets equivalent to about three years running costs which I saved the ERE way in two years. Some of that is in shares ISAs which the oncoming Kondratieff Winter * could write off. Some of it is in cash ISAs which are already dying slowly, as the interest, though a decent tax-free 3.2% isn’t enough to compensate for the corrosive effects of inflation. N&SI index-linked certs carry a little bit of the rest, but I was trying to create a laddered sequence of these to mature over the period I want an income. What I didn’t allow for was the fact that the buggers would can these.

    * The theory of a Kondratieff Winter is a little bit too chartist for my own liking, but I’m open to the concept of historical parallels, even though they are depressingly hard to use for forward planning :( “History doesn’t repeat, but it does often rhyme”

    The opportunity I was aiming for didn’t turn up. Since I am still working, I can live with eating the devaluation of my cash assets, though I can hardly say I am chuffed at the Government using inflation to destroy my wealth so they can sub homeowners that paid too much for their houses via low interest rates. This would hack me off a lot more if I were retired and relying on this cash.

    In my ISA I also hold a significant gold ETF position. Reflection has shown me that this is not a good investment to hold for gold in particular. Gold’s pure purpose in a portfolio is to act as a store of value, representing cash of last resort.

    For stock market indices, an ETF is a reasonable market proxy. Under the sort of turmoil that would lift my gold holdings to about 50% of total shares ISA investments, ie the conditions where this would matter, it is quite likely that the ETF provider would be destroyed. Gold is about insurance, and insurance that is likely to fail you in your hour of need is worse than not having insurance at all. In the latter case, at least you know you are hosed.

    I will sell this ETF holding and try and get my head round the more fundamental methods of investing in gold which, in an ISA, usually means mining shares which have unusual pathologies of their own. As a slightly peak oiler I am a commodity bull, particular when I read of this sort of aggro going on (interestingly a parallel drawn with Smoot-Hawley by the longwave paper), or even this. But in the end my paper assets are not part of my tin hat portfolio. Under certain wintry conditions I should be resigned to seeing them become worthless, or at least so illiquid as to be effectively worthless. Then it will be the time for other things and skills I am investing in. I expect a long winter ahead. The last one, from 1933-1949 took 16 years, so if the pattern were to repeat itself it would take until 2026 to come good. We may be facing other resource challenges by then…

    22 Sep 2010, 9:56pm
    reflections:
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  • Time for the Craftsman again?

    ERE introduced me a while ago to the four types of personality suited to differing phases of colonising new fields. These are the Craftsman, the Jungle Fighter, the Company Man and the Gamesman. The craftsmen are geeks, they know stuff but aren’t perhaps best with people. They value technical skill over people skills. The Jungle Fighters are the robber barons, taking the results of the craftsmen’s work and fighting turf wars to expand scale. The Company Men are the white collar workers of the 1970s t o 1980s, and the Gamesmen are the spivs and bansters Vince Cable is getting all uptight about – playing the system to their advantage.

    I haven’t quite worked out what I am. The obvious one is Company Man, which is why I am somewhat of a fish out of water with the institutionalised sadism of modern performance management systems. I feel somewhat drawn towards the Craftsman approach, which if anything is even less well adapted to modern work.

    The oldest culture, the craftsman culture, is hard to find. If you want to see the difference try to contrast and compare an popular science magazine of a hundred year ago, full of information and requiring a solid foundation to understand (if you can get your hands on old copies, get them!), and a present popular science magazines with it’s glossy pictures and prose written to entertain rather than inform.

    Thet struck me too, recently. Google books has scanned back-issues of Poular Mechanics – take a look at one from 1950 and compared the content of one from 2005 and it is clear that the latter is much more consumer oriented whereas the former was for guys that made stuff and knew how to use tools. In PM’s defence, I did learn something from the how to use screws article which perhaps indicates I’m rather less than Craftsman in things mechanical ;)

    One of the interesting things in Jacob’s analysis was that two of the forms are essentially parasitic. The Jungle Fighters tend to get ahead by destroying, and it appears that the Gamesmen do too, introducing fiendish complexity and benefiting from it, as perhaps we have recently found out in the field of banking and finance, hence Vince spitting bricks.

    I don’t get on well in a work environment dominated by Gamesmen – all procedure and little rooms for creativity and substance. There’s probably not enough left of my working life to go through the next cycle, since the Gamesman is in the ascendant at the moment. If peak oil happens and enegy and resource crunches causes a shift down to more fundamental things then perhaps it will become the time of the Craftsman again.

    That might suit me in some ways, though somehow I need to learn how to use my screws and building tools right, as electronics and software aren’t going to be tremendously useful skills in a post-peak oil world…

    17 Sep 2010, 10:55pm
    economy:
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  • What’s gone wrong with work – 2

    back to part 1 – what I think has gone wrong with work

    On here at the moment I spend far more time on breaking free of the rat race than on living intentionally. Part of that is for journalistic reasons. Pick up any paper and most of the articles are about stuff that has gone wrong  it gives a more dramatic story. It is also the area which takes up most of my time at the moment.

    So is work getting worse or not?

    My job is getting worse. It has been getting less intellectually interesting since the year 2000. From an income point of view this is somewhat offset by me rising up the greasy pole. It’s become more stressful all the time. Some of that is because some old clauses in the pension scheme make it expensive to have compulsory redundancies, so HR is trying to bully the weaker people out with nasty perfomance management system abuses and buy others out with voluntary redundancy.

    This is an enervating environment to work in, but is understandable; the company clearly has too many people and would dearly love to replace them with Indian IT guys at a lower cost. So I feel the chill winds directly and am only shielded somewhat by the idealism of the people that negotiated the pension scheme terms in the 1970s and 1980s. I’m lucky enough to be old enough that soon I will have enough to be out and free of this rat-race.

    Obviously my vision is coloured by my own experiences, and heck, it’s my blog and if my experience of work is that it’s going to the dogs then that’s what I’ll be ranting about. However I do generalise about work getting worse, and Monevator is quite right to pull me up on that. So, after considering the issues let’s take a look at the whole related areas of education and work -

    What’s gone wrong with school

    I don’t have children so I don’t have personal experience of this. However, the damage that has been done to the qualifications systems by moving away from norm referenced grading means that you can’t tell bright kids from dumb ones. That’s good for the self-esteem of the dumb ones, but probably not so good for the UK’s competitiveness. This crabby old git from the QCA describes the UK exams system as diseased. Call me old-fashioned, but I also always like to see people leave school able to read and write and use a calculator to add up a bill. I don’t expect them to be able to write deathless prose, solve quadratic equations or know what Gauss’ theorem means, but you need some basic skills to survive in an industrial society.

    What’s gone wrong with university

    University degrees are worth a lot less now than they were 30 years ago, but they cost students a lot more. How did that happen? We bottled the tough task of telling dumb people they were dumb in the name of equality. That meant we couldn’t tell which were the clever ones that would give the taxpayer a return on investment, so we said let everybody pay.

    There’s a recurring theme here. If you want to treat everyone equally, then by definition you can’t identify the bright from the dim. That’s fine if the aim of education is to build students’ self esteem. That’s bad if the aim is to target scarce resources at the able so they can invent and discover new technologies and stuff, or create inspirational designs. It’s also, incidentally, bad if you want to target other scarce resources at the dim to enable them to make the bst they can of themselves. If no child is left behind, then no child will get ahead.

    On the upside, nowadays university is mainly about finding the money. It appears you don’t have to be that smart to go to uni. On the downside, you now start people off in their working lives with more unsecured personal debt than I have ever borrowed in my life. Is it any wonder that people get personal finance wrong? When I borrowed £3k to buy a car early in work it scared the hell out of me and I focused on paying that back ASAP, it was gone in less than a year. If I already had 30k of personal debt at the time it would look so huge in comaprison to my outgoings I’d go whatever and borrow the £3k and not be scared by it.

    In the past you had to be bright to get into university.

    Monevator explains

    The small number of 50- to 60-somethings who were educated in the grammar school system after passing their 11+ and who went on to university were cut from entirely different intellectual cloth to the great mass of the near-50% of students that now enjoy higher education.

    [...]

    All students from across the eras were not created equally. The 11+ passer was the elite achiever of his (or more rarely her) generation – the equivalent of today’s multiple A* student who aspires to earn a fortune in law or The City or medicine. And if anything, those that climbed out of the comprehensive school system were even brighter.

    So students are getting a different deal nowadays – less work needed, fewer rewards in the end and more debt. Me, I’d take the old version of harder work needed and no debt, but then I would say that wouldn’t I, it worked for me. The 93% of my school cohort that didn’t get to uni might feel differently, though as I recall it they were too busy driving fast cars and pulling girls to be that bothered – there were jobs waiting for them, remember. Other European countries have the same system we used to have, such as the German numerus clausus.

    I haven’t got great experience working with Gen Y’ers because my company takes on very few graduates – they’re trying to reduce numbers so this is only to be expected. Monevator seems to find a lack of work ethic there

    chimes with my own experiences. Well, I find originality/smart thinking much more than 10% of the time – maybe 30% – but it’s too often outweighed by their ‘what are you doing for me?’ attitude. They seem to take an employer as the next step of their academic career, rather than at the point where they start paying back (for their mutual benefit, of course)

    I think I’ll have to charge him with being more of a crabby old git than me there. In my first company I was a cocky young pup, educating the digital design engineer in a troubleshooting meeting that the reason we were having grief was that a virtual earth input is a low impedance, the clue was in the name, rather than the high impedance he thought it was. This is an issue in analogue electronics, not digital electronics, so he wasn’t necessarily to know that, but I was a complete and utter tw*t. I was right, but in the wrong way. I didn’t quite understand why when I related this story to my mother she suggested that might have been unwise. The qualities than make a decent engineer are not a million miles from those that make a sociopath, particularly when combined with the arrogance of youth. Never did work out why it seemed hard to get ahead in that firm, but I left after 9 months so it didn’t matter ;) I also wasn’t that dependable, and the Television Centre bar was the location of many a long lunch. There at least I was taking a lead from the old hands…

    I think the their ‘what are you doing for me?’ attitude goes with the patch of being young. They also think they know it all, which is different from knowing it all. When young folk stop thinking they know it all and that the world owes them a living, the human race is doomed :)

    What’s gone wrong with scientific and technical jobs

    In startups and small to medium companies, probably not too much. We’ve got more of these than people give credit for, because a lot of them are B2B and therefore tucked away in anonymous industrial estates. I’ve only had experience of these as a corporate customer and consultant once I left my first company way back in the 1980s. Obviously job security ain’t all that in small companies and startups. In big companies, well, line up the usual suspects

    • bureaucratic management
    • death of leadership
    • outsourcing to lower-wage economies
    • ossification due to the above

    My company has peculiar issues of its own, but looking at what happened to other great British engineering companies many of the pathologies are replicated. Something very nasty has happened to the management of multinational companies, it has become sytematized and dehumanised. In the past they offered great career paths, training, less of the dead mens shoes progression of small firms and chances to job-hop for the ambitious. Now they are front-ends for outsourcing jobs. Project management is the thing to go for to get places in vaguely technical fields there.

    What’s gone wrong with manual jobs

    Most of them disappeared! That’s a bugger if you’re academically challenged. I fully agree with Monevator that a lot of these were crap, but when I part company with him is viewing the absence of a job as a better option to a crap one. It’s nice to at least have the choice.

    What’s gone wrong with skilled manual jobs

    they’ve largely disappeared. We don’t fix or custom build things where we can avoid it, commercial off the shelf is king.

    Work in general has gone wrong in some areas across the board

    • pensions – largely gone in the private sector
    • job security – what’s that?
    • training – employers want to hire in from abroad rather than train graduates

    This litany of lament applies to regular jobs where you become an employee. Against that should be set the vastly improved opportunities for the self-motivated to set out their stall and sell their skills as freelancers and consultants. This employment pattern suits the self-motivated, the talented and the entrepreneurial among us – computers, the internet and better communications generally allow these guys to compete with the big guys for a fraction of the cost.

    Unfortunately, they are at the extremes of the bell curve. Most people don’t want the stress, they want an employer to deal with the risks. So the opportunities are opening up massively for a minority, while closing off for the majority. I’m not at the extreme of that bell curve, and I’ve been a company director for more than a decade before packing it in because I hated the sales side of things.

    So the overall problems with work is that the opportunities for the majority of averagely skilled Brits are fast disappearing, big companies are ossifying into shell companies for outsourced workers elsewhere, UK unemployment is well into double digits when you factor in all the not economically active adults of working age. Monevator comes across as a bright and above all, highly entrepreneurial chap and is probably drowning in opportunities, but I’m not sure that experience is so widespread. It’s the people that would once upon a time have staffed the office typing pool, the auto shops and the book-keeping department that are taking the shaft, and they are going to be bored and very pissed off at the lack of jobs.

    17 Sep 2010, 10:53pm
    economy:
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  • what I think has gone wrong with work

    Ever the cheery optimist, UK PF blogger Monevator has made some pretty good observations about some of my views on work, and takes issue with a recurrent theme on here that basically work has gone to pot over the last 30 years. He’s not actually saying that work is a bed of roses -

    It’s my contention though that work was mostly always rubbish for the educated classes, and that it’s only nostalgia that causes people to believe otherwise.

    I didn’t have this experience of work being rubbish, at any rate once I’d job switched a couple of times early in my career. It is only towards the end in the last few years, coincident with globalisation and business process outsourcing. Looking back, however, the rot set in in the late 1990s, but for various reasons I was sheltered from it.

    Monevator continues

    Ermine’s post follows a coherent and consistent line on his blog – modern life is rubbish, it’s increasingly justifiable to hate work, and he’s determined to get out.

    It’s largely a fair cop. Guilty as charged, though I’d say modern working life is rubbish rather than modern life is rubbish. There’s actually rather a lot to be said for modern life, though much of it is unsustainable and I expect living standards to decline very seriously in the West at some point. I don’t think short-haul city breaks are going to be common in 10 years’ time, at least for the average income punter.

    I’ve had a pretty rose-tinted experience of work for most of my 30 years of it. I was one of the grammar school kids that was among the 7% or so that went to university. Science and engineering were what I was interested in, and I pursued design and research jobs in industry, I’ve never worked for the public sector, other than having the local council as a customer for a web design and software company I ran as a sideline for several years.

    Work, what’s it all about and what is it for, anyway?

    Monevator makes a fair point that a lot of the gritty manual work of the past we are well shot of. Although things like coal mining and car construction employed whole towns, it seemed, the jobs themselves were pretty ropey and industrial accidents and degenerative effects like deafness, respiratory ailments and suchlike were a high human cost of this sort of employment, which often led to early death due to the physical toll it took.

    These rotten jobs have been replaced by a combination of two things in our society now. One of them is the equivalent sort of rotten jobs but with fewer of the physical costs – these are generally service industry jobs like call centre workers, shop workers and the like. The other thing that has replaced this sort of work is unemployment – although the figures have been fixed by changing the criteria of what counts as unemployed these days. It is shown in the suspicious variance between the official unemployment rate of 8% and the official employment rate of 71%, in 16-64 year olds. When I went to school, 8% and 71% didn’t add up to 100%, so the true UK unemployment rate is greater than 8% and could be as high as 29%.

    Let’s take a look at what’s gone wrong with work. Most people want to live life, and work gives them cash to do it. They want to have a good time, find love, raise kids in many cases and enjoy life. For many, work is a means to an end, rather than the aim of living, though there does seem to be a strong Calvinist streak in the PF blogosphere that seems to be of the opinion work is good for the soul. I think they’re nutters, but each to their own :) In modern industrial societies, you need a certain amount of money simply to exist, and you sell some of your productive capacity to do that. In return, people grow food for you, dig stuff from the ground and generate power for you, rent you a roof over your head. You may also buy trinkets and gewgaws to amuse you, Christian Louboutins to make yourself look good/connect you in your mind’s eye with people richer and prettier etc etc.

    Productive capacity, in terms of intelligence, diligence, smarts, brawn and physical prowess is not even spread evenly throughout humanity. As a result, as a society we need jobs across the spectrum to match people’s capability to wealth production. In the past we had such a spectrum. It is a tragedy that most people are of average ability and so they need mostly averagely stretching jobs. Previously, we managed this because communications and transport were expensive, and as a result we needed to do many things in the countries they were consumed. It is all too easy to lose sight of the fact that we humans have an economy to enable us to trade things with each other to enhance our quality of life, we aren’t actually indentured servants of a pre-existing economic system created by God. The economy is a human/societal construct, and if our economy doesn’t work for us, it behooves us to change the damn thing so that it does work for us. That’s the theory, at least.

    Monevator makes a good case for free trade,  and so far it has been the least worst of all the alternatives tried. His example of North Korea shows what the opposite, called autarky is like, but free trade and autarky are extremes. Very few real-world optimal outcomes are all one thing or all another.

    What we call free trade isn’t really that free at all. For instance there are all sorts of subsidies to large-scale agricultural production in the West. From one perspective these should all be removed, and we should give up growing food in the West. The sun shines stronger in equatorial regions for simple physical reasons, and equatorial regions are far more productive as a result (I rudely simplify a lot of issues, for instance the Sahara might be put to better use for solar panels rather than attempting to grow carrots, but in general Northern Europe isn’t the most efficient place to grow lots of food compared with parts of the US, Africa and Asia). Not only do we have passive distortions like that, but we have active ones too. The World Bank spent millions to get people in Peru to grow asparagus to sell to the UK market. We can grow it here. They get them to do it in unsustainable ways that destroys their water supplies. It’s all part of free trade, apparently…

    This shows one of the really bad downsides of free trade, it has a nasty habit of trashing the environment, because environmental downsides tend to show up in the longer term, a long time after the money has been made. Or they affect people who aren’t part of the group making the money, so their costs aren’t factored into the trade price. Slash and burn free trade works, but the aftermath isn’t pretty. The wandering invisible hand of the free market needs a good smack every so often to stop it straying into all sorts of places and making a mess there – places like the Niger Delta show this all too well. Compared with that BPs tribulations in the Gulf of Mexico were a paragon of virtue. You can’t have economic activity without risk, but you should make the polluter pay for restoration…

    Since free trade is an extreme position let us look at where it would go. Do we really want to become megacities in the West and depend entirely on imported food? With true free trade we would probably have done that, however, should oil become scarce we may come to value the fact that we can still produce food in Europe… The agricultural subsidies in the UK are a historical relic of the Second World War when Britain found itself cut off from supplies, and there is some case to be made for retaining some capacity for the basics of life, even at the cost of some inefficiency. Resilience and efficiency are often at odds.

    There are all sorts of trade-offs, distortions and horse-trading that make free trade more free for the stronger trading parties and less free for others. Some of the issue we are starting to have now is that we are used to the West giving other countries the shaft, and rather less used to being shafted by others, hence for instance the current US/China spat about the value of the Chinese currency being held down relative to the dollar.

    It is also worth observing that a lot of our Western lifestyle isn’t really sustainable in the long-term (another 50 years or more) – it was built with a lot of equity that was effectively pillaged from external sources. These sources include the energy stored over millennia by life-forms that were converted into oil, and some pretty unsavoury practices carried out on other groups of people.

    What seems to be going wrong now for Western workers is globalisation. The upside of globalisation in that we get cheap TVs and DVD players. The downside of globalisation is a lot of those jobs for average ability people are disappearing, because average ability is to be had cheaper in China and India. Hence the increasing unemployment and economically inactive people here, some of which was disguised by Labour in inflating public sector employment and some of New Labour’s public works. More jobs and buildings are good, but not so good when they do this to the economy.

    Public spending relative to income

    Public spending relative to income

    Somewhere around 2002 it all started to go pear-shaped as the cost of public sector employment and works outstripped government income. There is a theory that some of the business process outsourcing to India was the result of the rush to work on the Millennium bug, that was beyond the capacity of Western IT departments, and the work jumpstarted the Indian IT industry. That would stack up with the great sucking force of back-office administrative and IT jobs in the UK due to BPO after the dot-com bust. Sure, these jobs weren’t inspiring, but for many people they put food on the table and paid for the annual package holiday to Spain. What do we want those people to do now?

    Although my background was in physics and electronics, I moved to IT as my company’s focus shifted in the direction. To outsiders, IT is some really hard techy geekfest, but it has a dirty little secret. The vast majority of IT work is routine. IT qualifications such as Cisco’s CCNA are largely memory tests of the worst kind, and even the higher-level ones test for skills that are gained by repetition and honing response times. It doesn’t involve the creativity needed to solve Fermat’s Last Theorem, or even the originality and creativity to write a decent short story. That’s not to say some of the qualifications aren’t hard to pass, but they’re not intellectually demanding.

    My company is all for professional development in IT qualifications. I switched to using a legacy skill rather than jump through these hoops. I’ve got ten years to go, tops, before reaching normal retirement age for the company. There’s no point in me doing these IT qualifications because a) I can’t be arsed to do the memory cramming and b) I’ve got eyes in my head even if my company’s  management hasn’t. This sort of work will be outsourced within the next two years. The very fact that they are trying to standardise and template designs point that way.

    There’s a big picture going on here, and it isn’t good for a lot of people in the West. Early Retirement Extreme’s Jacob is brighter than me and has summarised the trends pretty well. I didn’t see quite as much of the big picture until my nose was rubbed in it in 2007, but once it was, I made it my job to find out because I don’t like being sideswiped by crap flying out of the blue.

    Monevator makes the excellent point that the world has been getting richer over the last 100 years. Someone on unemployment benefit today has a better standard of living than a middle class family in the 1970s, in purely material terms. Unfortunately what we have also been doing with the world is filling it up with people, so I don’t know whether the world has been getting richer per capita.

    Much of those riches have been predicated on cheap oil, and we may be having issues with that in the not too distant future. The good thing about oil running out is that it will kill off the excesses of globalisation, and the world will become a bigger place again. The bad thing about oil running out is that a lot of that so called wealth will disappear, but unfortunately all the extra people we’ve been adding to the world won’t. I don’t have a good answer for what to do about that.

    on to part 2 what’s gone wrong with work 2

    saving electricity at home

    Saving electricity at home is all round a good thing to do. It saves money, it reduces your carbon footprint if you care about that sort of thing, and it cuts down on waste. What’s not to like?

    For some reason the subject has been hijacked by two small changes that seem to capture  lots of column-inches but aren’t that effective in the grand scheme of things – changing your lightbulbs and unplugging your phone chargers when not in use. Sorry to rain on the green parade, but these aren’t the chief power hogs in most people’s homes. This is a straightforward engineering problem, one that is best tackled by measurement and the application of science, not mantras.

    You need two tools for the job, one temporarily and the other is a nice to have to keep on top of things. It’s all down to Kipling’s serving-men, though we can stick with What, Where and When.

    Tool #1 – Appliance consumption meter

    This measures the amount of power used by an individual appliance- you plug it into the socket and plug the appliance into the meter’s socket. It’s nice to get one that measures the cumulative power used over a period, because to get an accurate idea of a fridge’s daily use you want to accumulate the consumption over a week and divide by 7. Most people have a different daily lifestyle on the weekend compared to the weekday, so capturing over a week gets information representative of all types of use.

    Appliance consumption meter

    Appliance consumption meter

    Unfortunately you only need this temporarily while you’re in the Identify the Power Hog stage – they’re not horribly expensive but it’s worth trying to borrow one first. These are also not very accurate at low power consumption devices, such as mobile phone chargers. Presumably the stories about unplugging your chargers came from somebody at Greenpeace measuring a charger with something like this and seeing about 50W or so. If I saw a charger using 50W I would reach for a fire extinguisher. A bit of common sense is needed – a charger is about the same size as a old-skool light bulb. If it’s dissipating 50W, it will be getting about as hot as a light bulb, and anybody who has tried to change one of those that has just blown will know they are damned hot. If it were the phone dissipating the 50W rather than the charger I’d still be very afraid….

    View the results for loads less than ~50W with suspicion. Fortunately that isn’t really a problem, you are after hunting the big game here, unless you’re already living off-grid. I was an early adopter, so I got taken for a ride when I bought mine for £20, people like Maplin sell these. You’ll get your money back in power saving unless you’re a hermit.

    It’s the things that change temperature that are the power hogs. Hit these guys first, and preferably measure their power usage over a week to know what they are costing you.

    Everybody knows electric heating is expensive – every kilowatt-hour in the UK costs you between 12 and 20p on a standard domestic rate. Three kilowatts is about the maximum you can draw from a standard UK power socket, and a typical fan heater is about 2kW. Use one of these suckers for 4 hours and the kWh is 2kW x 4 hours = 8kWh, which could set you back £1.60. If you’re a homeowner using electric heating then look at alternatives such as using a woodburning stove – almost any other fuel is cheaper per unit heat.

    It’s hard to live without heating and changing the heat source usually demands capital spend. However, two other domestic energy hogs need to be tackled before the light bulbs -

    Fridges/Freezers. These bad guys are on all the time, and worse still, their performance tends to deteriorate gradually over time. I had a Zanussi fridge freezer which was a few years old that drew over 4kWh a day, ie 1500 kWh a year. This punk was costing me £210 a year to run (@14p a unit on average). The one I replaced it with is A rated, and uses about 1.7kWh a day, a saving of ~£120 a year. That cost me £230 in October last year, so it has already paid me back about £100 in power costs this year, and by the end of next year I will have broken even. After that I am in extra time – what investment can you get that gives a 50% ROI year on year these days…

    Tumble Dryer/Washing Machine

    I was of the view that washing machines were power hogs but mine isn’t, it takes less than 1kWh for a wash. That’s pretty much over a cycle at 40deg  and it doesn’t matter how full it is. So fill it, but not so much the washing can’t move.

    The tumble dryer, however, is another matter – it takes about 3kWh to dry a load of washing. There’s a free alternative that doesn’t take power, it’s called a washing line :) Unfortunately this is a change in lifestyle, and not one for the better – hanging washing out is a right PITA. At least the weather forecast is better now so you can usually work out whether it’s going to rain and hence if it’s worth doing a wash in the morning.

    The cost of using a tumble dryer is only about 40p a go, but it is a regular cost so like any regular cost it adds up over time. It also knackers your clothes, so the actual cost is probably more like 50p a go when that is taken into account.

    Immersion Heater

    These guys are such power hogs you can’t usually run them off a 13A plug, though that didn’t stop one landlord of mine doing that, and the plug did get mighty warm too. There are three things you can do here: get a timer, use less hot water, lag the tank as much as you can. if you have one it is worth getting a feel for how much it is drawing – even if you have to switch everything else in the house off and read the meter before you go to bed and then in the morning. When I did that I turned mine off and it stays off – I use my gas central heating on water only mode, it’s still cheaper than using one of these infernal devices.

    Use a Whole House Monitor to keep Power Usage down

    Once you’ve taken these high-power devices out or got them under control/started saving for efficient versions you can then start fiddling about with mobile phone chargers and light bulbs. There’s a nasty tendency for new things to get added to the background drain of your house, particularly it seems if you have children :) That’s where you need a whole-house monitoring device, which clamps around the main live intake wire and sends the whole house usage. Mine is an Efergy monitor (I got rushed for that too, they’re now less than £50)

    Efergy whole house monitor

    Efergy whole house monitor

    These allow you to keep an eye on total consumption. You soon get used to the background usage of your house with the fridge on and off (mine is 0.12kW and 0.04kW respectively). It’s good because before you go to work you take a look and if it says anything else you’ve left something on that doesn’t have to be on. And you get to see if it creeps up for any reason…

    See -nary a word about light bulbs. What about them? My maximum wattage was 60W light bulbs, assume two of these are on all the time 6pm to 11:59 pm for half the year. That’s £18. That duff fridge freezer was costing me five times that much. Using a tumble dryer twice a week costs you twice as much. I can’t get excited about sweating the small stuff. Want to save money on lighting without spending a bean? Never underestimate the energy saving potential of the humble light switch set to the off position. Switch the buggers off when you’re not using them, just like your parents and mine did when electricity was more expensive in real terms….

    So where did all this fuss get me then?

    My power usage, cost and cost per unit

    My power usage, cost and cost per unit

    The dip in 2005 and the subsequent peak is an artifact of changing provider then. I got all this kit early 2008. One the one hand it is depressing, I’ve sweated hard to get my power bill back to a shade under where it was in 2003.

    On the other hand, I’ve more than halved my power consumption, and the reason the bill is the same is because the cost of electricity has gone up more than two times in seven years. Look at the monotonic rise in the cost graph. This is because North Sea Gas is running out, it is because the Pound in falling, it is because there are lots more people in the world wanting a slice of a limited energy pie. I don’t expect it do come down any time real soon. So although in financial terms I’m not going anywhere, it is still worth doing, else I’d have to find another £500 a year. And personally, I’d rather consume that as decent red wine rather than making a donation to EDF’s slush fund…

    There is a nasty little wrinkle in this – look at the unit prices charged:

    Differential unit pricing hides the standing charge

    Differential unit pricing hides the standing charge

    A shade under half my usage is charged at higher rate, which is used to hide the quarterly standing charge of about £16, because most electricity consumers are not adult enough to be prepared to see the cost for the provision of service separately.  So it’s hidden as an extra unit cost for the first 240 units. EDF presumably think that nobody can get the quarterly consumption down below 240 kWh. Now I am half way there. If I could get the rest of the way, by taking over some of my demand by alternative means, or by say using a gas fridge, then I could get a much better marginal rate for energy saving :)

    None of the steps taken so far  is anything that uses my specific knowledge of engineering, it is simply common sense that anybody can do. It means I don’t have to get uptight about my light bulbs or my mobile phone chargers, and indeed I still use incandescent light bulbs and a LED lamp for reading. In the future I may shift my lighting load to LEDs and renewables, more from a resilience/off-grid POV because I expect Britain to suffer power shortages as a result of a lack of capital investment in its generating capacity in the medium term future, and this sort of solution is specific to me. However, it won’t particularly change my power bill because I switch lights off if I am not using them.

    8 Sep 2010, 6:29pm
    economy
    by

    2 comments

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  • Darkness at the Edge of Town

    I know the Boss sang darkness on the edge of town but this is a story of decay at the edge…

    guy holding a Dominos Pizza ad

    something Depression-era about this sort of thing, even if the iPod earbuds and mini-roundabout give the lie to the 1930's connotation

    Something dark is being said by people standing by roundabouts holding up a board advertising Domino’s pizza. Firstly there’s the obvious issue of advertising mass-produced processed pap which is only barely fit for human consumption, which is presumably some of the reason we have an obesity problem. The next thing is that £7.99 strikes me as damned expensive for a pizza unless it’s two foot in diameter and can feed eight people. But most of all, what disturbs me about this is that this is reminiscent of Depression-era photographs. What is the story behind this? Will we be seeing this sort of thing in the years to come

    Breadlines:courtesy the Franklin D roosveldt Presidential Library & Museum

    I have a few days off so I wandered into town, which I don’t do very often even though I am only a couple of miles out, because work is in the opposite direction, and the Internet saves me shoe-leather and easy comparison shopping. And I’m a guy, so I don’t buy loads of clothes and shoes and don’t enjoy the pastime either.

    In town was the usual bustle, with a strange prevalence of pushchairs which I don’t normally see. Going in on weekends or after work you don’t get the density of young mums, but also all around there is the palpable sense of decline and decay. Ipswich is relatively affluent, and yet the signs of economic decline are all around me, particularly at the edge of the town centre.

    Boarded Victoria pub

    They haven't been pulling pints here for a while

    Polish Delicatessen closed

    even the Poles can't make ends meet now

    fresh veg is out of fashion

    Looks like folks round here can’t afford fresh veg anymore, or getting their hair cut. Mind you, the British Heart Foundation and Ipswich Furniture Project are doing a roaring trade in secondhand furniture and the BHF does small household appliances, giving Cash Converters some welcome competition.

    lots of money around to justify an iStore

    Somebody's got money burning thorugh their pockets to go in here

    Lest I be accused of being overly selective, I note that in Ipswich town centre we are rich enough to be buying overpriced computing and mobile phone equipment at an iStore, though the Big Issue seller on the right kind of breaks the mood of this photo.

    Free stuff for £15, what's up with that then?

    Is this free, or is it £15? Inquiring minds would like to know...

    The whole brash advertising thing was tedious and got on my wick. For a start I wouldn’t pay £15 a month for a phone anyway, but when did it become okay to put a price on free, FFS?

    the White Horse Hotel immortalised by Dickens has fallen on hard times

    the White Horse Hotel immortalised by Dickens has fallen on hard times

    No room at the inn for Charles Dickens who immortalised the White Horse coaching inn in Pickwick Papers. At least Starbucks can fix him some foul-tasting coffee a tall latte in a cardboard cup. I think he’d be with terminology refusenik Lynne Rosenthal though more robust, along the lines of “what part of a pint of foaming English Ale do you not understand, punk”. And although I am being a crabby old git in this post, Dickens’ request wouldn’t be too unreasonable – I’ve drunk more than my fair share of beer up to the 1990s when this was still a beer-serving establishment with original Victorian stained glass leaded interior windows.

    Staying with the crabby theme, but on a geeky vein, a modern digicam is truly abysmal for street photography like this, where I want to have people in the pictures. The random delay between pressing the shutter and the picture getting taken nukes any attempt at finding the decisive moment. Henri Cartier-Bresson would not be chuffed one little bit.