27 Oct 2013, 6:18pm
living intentionally personal finance reflections:
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  • create more, consume less – it’s cheaper and more fun

    The Ermine household decamped to North Norfolk over the last week, to reflect upon the world, eat seafood and wonder on the meaning of life. The North Norfolk coast is an unspoiled part of the country noted for its birdlife and fine beer.

    North Norfolk

    North Norfolk

    It’s been a couple of years since I’ve been up here, we rented a cottage for the week in Brancaster. Mrs Ermine delivered herself of the opinion that the coast was becoming “chi-chi” which I think means gentrified somewhat. . Burnham Market seems to have become a kind of culinary haven. There was lots of reasonably tasteful housebuilding going on on the south side of the coast road, though the usual 3,4,5 bedroom sizes, ‘cos house building is more profitable at the ‘executive homes’ end of the market, so all the people who are making things happen for the holidaymakers seem to have moved to the towns such as Hunstanton. On the personal finance angle this sort of thing gave me the willies –

    Help to Buy

    Help to Buy – don’t do it

    Seriously, good people of Hunstanton, don’t do it to yourselves. I bought my first house with effectively an 80% mortgage in one of these pump-up-the-market fiascos in ’89 – I had 20% down and I bitterly regretted it. House prices don’t always go up. If you have only got 1/20th of the cash to buy a house and need a mortgage for the rest then you can’t afford to take out a mortgage when interest rates are at historic lows because you will be killed when they rise. I paid 14% at one time. But you won’t listen, so the best of British luck to you, you’re gonna need it…

    Aye, it could get you moving. Could get you repossessed later on, too...

    Aye, it could get you moving. Could get you repossessed later on, too…

    However, my third holiday of the year seemed to be a good time to ponder on that numinous quantity known as ‘living life to the full’. I normally hear the latter in terms of ‘I want to spend loadsamoney on manufactured experiences and extreme sports on the few days that The Man lets me off the leash, which is why I need to spend more than I earn, and YOLO 1

    My journey out of the rat-race wasn’t as measured as, say RIT, who carefully plans it and track progress. However, I did discover some odd things about my life as a consumer, and then as a consumer of less. I discovered some of these by sounding the extremes – by first consuming at a average middle class level (couple of foreign holidays, Sky TV 2, loads of driving etc) and then by slamming the brakes on – no foreign holidays for a few years. Like many things in life, the optimum is to be found not at the extremes, but somewhere in between. However, it is surprising how far towards the low-consumption end the optimum is, for me.

    You see, the trouble is that we humans are creatures of difference – we observe things as dynamic contrast, rather than absolute levels. This is good, in a way, because it helps us adapt to the stupendous variation in the natural world. We can see a candlelit face, and recognise the same in full sun – we pick out the differences in shade, not the absolute levels. We do that at the macro level too – too many studies show that happiness is in our relative position to others in many things. We all want to be king of the hill, and consumerism increasingly plays towards this ‘lifestyle’ element.

    I was able to break the hold because the experience of working was worse than the upside of consuming, but the aim of marketing is to keep us in the zone – where there are improvements to be had, but that each hit gives us the feel of a slightly improved lifestyle. It struck me when I inquired of Quicken 3  how things had turned out since I left work.

     

    An Ermine's net worth

    An Ermine’s free cash net worth

     

    Although Mr Micawber wouldn’t approve 4, it isn’t a precipitous crash, and, indeed, since the original plan was predicated on a two or three year stretch before I draw my pension, and I am nearly a year and a half on, I actually have more options than at the start. Quicken seems to indicate I’d have about four more years of burn from now before I’d have to start liquidating non-ISA holdings.

    This is a subset of what most PF folk count as net worth. It doesn’t include my house, because despite what some people say, it isn’t part of my financial net worth 😉 I list my non-ISA investment portfolio at the price it cost me to buy,  underestimating it because a lot of this was stock options, and The Firm has been going strong since 2009. Some of the drift upwards early in 2013 wasn’t moonlighting, it was taking vesting stock options onto my books at option price. It shows nothing of my pension, either the AVCs that I poured money into for three years nor the capital equivalent value of the main pension. I don’t count what I can’t touch.  It doesn’t show the value of my ISA, because I can’t make Quicken show it at purchase price – it always uprates the value from the last transaction. If I allowed Quicken to include the ISA it seem to indicate a gradual rise in free cash net worth, which is barmy – my total income is a long way below the personal tax threshold, and stock gains aren’t real till you either take the divi or sell up. It appears the Man from the Clapham Omnibus is back in town, which roughly translated means the figure for market value at the bottom of my ISA statement is overvalued compared with what it should be. I struggled to find value earlier in the year so I did a Bed and ISA capital gains defuse rather than buy.

    Quicken is all about cold hard cash going in and out. It tracks the bills going out and non-ISA dividends and stuff coming in, because I take all my dividends as cash. It’s a shame that there’s no decent alternative to Quicken, which is ten years old and no longer downloads stock prices. I did look at alternatives to this over 10-year old program, but unlike MMM I just don’t do cloud.

    What every wannabe early retiree is scared of, while working, is that they quit and find their expenses are a lot higher than they anticipated. I was scared of this too over three years ago. I was really scared of it when I retired as such, because once your rattle over the tracks past the point of no return there is no way back. It caused me to over-estimate spending, big-time.

    It also caused me to underestimate income. Share dividends come in ratty little onesy-twosey bits, but they add up over time. I’ve only ever had one main source of income, and I find it hard to see small bits that rattle in from disparate holdings as income, it just doesn’t feel real. Although Quicken counts them in, I don’t know how to budget for that.

    Why did I over-estimate spending so badly?

    There are some things that are easier to see in the rear-view mirror. Working really screws up your life in some ways. It means you have to buy control over some things, and pack the rest of your life into evenings, weekends and four to six week’s annual holiday. It pays you handsomely, hopefully, so you can pay for that control, you can buy experiences that are as much unlike work as possible and try and recover in that time, it makes you pay for other people to do what you may be able to do yourself. And it’s really, really, amazing how much that adds up. It’s not just amazing, it’s actually quite scary. If I’d know that earlier I would have done quite a lot of things differently.

    And yet, that doesn’t totally explain the dramatic over-estimation. I pinched the title from this great article which pointed to another reason – because the blog is the Art of Manliness it talks to the masculine but I don’t think it’s just a guy thing –

    Men have an inherent desire to be creators, to change the landscape, to turn wood into furniture, to transform a blank canvas into a work of art-to alter the world and leave a legacy. It’s the denial of this aspect of manliness that is perhaps most plaguing modern men. Young men are taught to think of life past 30 as a certain death, a time when they have to stop being selfish and live for others. The paradox that’s never talked about is that consuming is the real dead end when it comes to happiness. Your mind gets caught in an fruitless cycle-new experiences initially give you intense pleasure, but the more you consume of it, the more saturated your pleasure sensors become until you have to ratchet up the intensity and quantity of the experience to get the same “high” you used to. And the cycle endlessly continues.

    I did some of this – all the way from teenage years to my 40s I was creative, outside work I would develop things and design stuff, poke around on how things worked. But slowly the wellspring of creativity dried and I became that consumer. I had plenty of hints of consumerism earlier in life with too much spent on hi-fi and photography, but as a form of anomie started to settle in as I found the workplace more alienating my creativity fell away and passive consumption rose.

    It was a vicious circle, because it started to rob meaning – the process of originating, creating, directing and learning and becoming more aware is part of what I find gives meaning to life. I’m uncomfortable with some of the Calvinist terminology in the AoM post, but I admire its resonance with some degree of inner truth. I may not share their terminology or world-view, but I recognise the map and the territory described. As working life faded to grey after two or three decades, I became reactive. In build resiliency by taking control they have a summary of the characteristics of having an internal or external locus of control

    Those with an internal locus of control:

    1. Are confident that they can be successful.
    2. Tend to be leaders (leading those with an external locus of control).
    3. Exhibit greater control over their behaviour.
    4. Seek to learn as much as they can.
    5. Take personal responsibility for their actions.
    6. Deal with challenge and stress better.
    7. Use challenges to come out stronger than before.
    8. Thrive in the midst of change.
    9. Are less likely to submit to authority.

    Those with an external locus of control:

    1. Feel like they’re a victim.
    2. Are quick to blame everyone but themselves.
    3. Want to be led by others.
    4. Avoid responsibility.
    5. Are more prone to stress, anxiety, and depression

    Here’s a test you can take to observe your own Locus of Control. To me its 1966 provenance shows in the unusual question bias, but I guess the principles still hold.

    If I lose internal reference I drift towards the second list. As a younger Ermine (20-40) I had more characteristics from the first list, particularly 1,4 and 9, although I was weak on 5, tending to blame circumstances though fighting them nevertheless. And as far as the right royal shafting I took from the housing market I had 1 and 2 off the second list in spades – I could whinge like the best housepricecrash.co.uk-er, just 20 years early 😉 But at least I did do something about it.

    From 40 onwards though I made some progress outside of work intellectual creativity began to fade, part of this was rising up the greasy pole, and part of it was shifts in work from electronics design to software design, then networking, all coinciding with increasing managerial role while The Firm was getting less hierarchical but more command and control 5. Once upon a time I probably had the potential to be outstanding with electronics design, just as The Firm moved away from that. It obviously wasn’t such a burning ambition as else I would have switched job, maybe moved to Cambridge which has numerous little companies in need of designers. I learned to be mostly competent at software but code is probably something where you should have started in your teens if you want to be brilliant at it. I was too broadly based whereas what IT wants nowadays  is depth – I’d programmed in Pascal, Modula-2, C, c#, c++, Visual Basic, Z80, assembler, Perl, PHP, Python, Javascript, Java, ASP – a motley mishmash of technologies depending on what I was doing at the time.

    IT networking bores me senseless, I could do it serviceably but all the daftness of Cisco accreditation 6 struck me as tedious. and by the time that became the Next Big Thing at The Firm I was burned out, and displayed too many characteristics of the second list. I never looked to work to give meaning to life the way many do, but I wanted to at least pass the time doing something vaguely interesting that offered challenge. Anomie is a warning sign that says ‘Self, thou art not true to thyself’ but like many such warning signs they only become apparent once you have passed the point of no return. By the time I got that way I was well into List 2 territory, and an external signal was necessary.

    The Pleasure of Walking Tall (cringe)

    A Man with Savings…doesn’t have to kiss The Man’s ass…

    It came in a performance review in 2009 that I interpreted as a charge of incompetence. One project had collapsed, I hadn’t found another, and this manager was fitting a distribution that was squeezed down because of some ghastly Group financial results. 7

    The narrative I told myself in the next three years until I retired was that this was a dreadful experience in which I lost – the wheels came off a a serviceable career as it exploded on me in the home straight. However, on reflection, it discounts an important part of the story, once again, one of those things that is clearer in the rear-view mirror than as you drive over it. In one way this tosspot did me a favour, because he made me angry. The signal reached the jammed creative centre, and a spark was struck across the fallen poles, and I remembered the values of the first list. I decided that I really was an awkward bastard and didn’t want anybody being able to push me around like that. It helped that I soon found out this manager had had a new baby (he was in his early 40s and on a second marriage) and was therefore particularly financially fearful himself in those troubled times of 2009 and needed the security. He was the antithesis of where I wanted to be – The Man owned his ass. As The Pleasure of Walking Tall narrates, the point of having savings is not to end up in that sort of hole. So I needed to get me some, and sharp.

    Two days later I committed savings to filling a Cash ISA, and two weeks later I read this and opened an III S&S ISA all before the financial year end, to clear the way to repeat the exercise the next month, derisking the impact of getting ejected from the company. An internal application launched earlier paid off and The Firm discovered I had a unique skill they needed for the Olympics work.

    Although I perpetrated a bit of old trading  folly in the ISA at first before I straightened myself out and learned some of the art of sitting on my hands, the next year I read this and got myself onto the right track. One of the entries in my ISA, Merchant’s Trust is still one of my favourite portfolio lines because buying that marked my transition from a trader to an investor. I still look at it fondly, because MRCH has now repaid me 1/5th of my capital stake in dividends over the years and appreciated in value by about 50%, it’s the oldest holding I have. Other shares have appreciated by more, and I was far too slow to build on that by buying other investment trusts on a discount but it marked the turning point, and a shift from thinking like #1 on List 2 to #1 on List 1. I was repossessing my locus of control, and MRCH gave me hope when I needed it that this investing malarkey could work to help me gain control of my financial destiny. I built on that, although it is my non-ISA investments and other motley bits that have headed off the expected decline in cash networth sine 2012, the ISA is growing well.

    It’s a gradual shift in perspective, to come to see this manager not just as someone who stiffed me to save themselves, but also as a wraith that woke the slumbering pilot at the controls drifting aimlessly in the foggy murk. The external signal highlighted what I needed to do and the choices before me. The low-risk option was to try and find a job elsewhere, and the long shot was to chance it and buy my way out of the rat-race. I favoured the latter, because it attacked the cause, another job would have been attacking the symptoms. I didn’t want to appease The Man, I wanted to eliminate the sonofabitch from my life. That needed three years – however I sliced the spreadsheets it was going to take that long 8.

    Casual consumption showed up as something that was standing in my way, and by force of will I grounded as much of it as possible. An awful lot of people call casual consumption ‘living life to the full’ which is great if it works for them, but it doesn’t wash for me. Meaning doesn’t come for me with what I buy, it comes from what I do and what I am. It’s funny how easily The Man gets people to identify with an advertising slogan so they keep working for him. Inadvertently I discovered what the AoM said was true

    Your mind gets caught in an fruitless cycle-new experiences initially give you intense pleasure, but the more you consume of it, the more saturated your pleasure sensors become until you have to ratchet up the intensity and quantity of the experience to get the same “high” you used to. And the cycle endlessly continues.

    You only get to see that in the rear-view mirror after you’ve won the battle, the sulphurous stench of the slayed dragon stinks up the place and you wonder how you missed it for so long. Maybe it’s swept away in the tailwind of all that consumption.  Now I wasn’t exceptionally susceptible to consumerism – I didn’t do consumer debt f’rinstance, but it still called me off course. Consumerism is designed to do that, it’s how profits are made, by getting people to think they want things that they don’t need, and getting them to depend on stuff for their happiness. This is, indeed, being honed to a higher plane as I write – businesses are increasingly selling experiences rather than Stuff, and even experiences that ‘lead to personal transformation’. If you think about it, paying someone to transform you is a little bit bizarre, perhaps with the exception of medical intervention. Take Weight-Watchers for example. Customers are basically paying the company in the hope of avoiding using self-control. After all it’s fairly well-known how you get fat – you eat too much 9. Apparently doctors

    should also explain to patients “how much motivation and commitment” is needed to complete weight management schemes and that enrolling on one will not be a “magic bullet”.

    No shit Sherlock. If this comes as news to you then I’d say your weight is not necessarily your most pressing problem…

    Consume Less – YOLO and life is too short to sell it for trinkets and baubles when you can create more

    I shot the beast of Consumerism in the three years of saving, and that is long enough to break the chain, I don’t identify with what I buy any more. If I have a requirement, I will go on the Net and see if I can find something that will help me with that at a price I am prepared to pay.  And it’s increasingly tools that I want to pay for, that help me transform my world, and create stuff.

    Consumerism tries to make everything easy for a price, but it carries the corollary, that in making everything easy, the blade of directing your path through life loses its edge. It  holds people in thrall to working for The Man and weakens their ability to take action to shift their destiny. And it did that to me. I’m not inviting this sucker back into my life any time real soon, though I shall make peace with it.

    As a welcome side-effect of that my costs go down. I hear from other retirees that they were often pleasantly surprised by the lower spending rate. So much of consumer spending is compensating for flushing away one’s life 8 hours a day, five days a week. It doesn’t hold for everybody, there are many people who do enjoy what they do at work and the way in which they do it, though the latter seems to be dropping away with the way finance seems to drive human values out of managing people at work.

    What do I spend less on –

    • cars. I sold my car soon after retiring and the ermine household is a one-car household. If I wanted to enterprise rent-a-car is just up the road but I haven’t felt any need
    • transport generally. I walk a lot more, and I’m ready to fit in with other people for rides – to lend a hand in return for seeing new places, I have a perfectly serviceable bicycle
    • holidays (compared to my wage-slave self, not ultra-frugal Saving Madly self) – I go on holiday more often, but fit in with other opportunities. Like going to a campsite in the Cotswolds while Mrs Ermine was at a spa – I do the driving, get a free ride, and spas are not my thing at all so it would have been a sheer waste of money to join her 😉
    • casual eating out
    • anything to do with work, natch – clothes, meals, commuting etc

    What do I spend more on

    • Wine. Given up using supermarkets and I use a local firm Wines of Interest because I’m prepared to pay for people to screen out ropey wine for me. We drink less than through some of the ghastly period but better, so overall cost has gone up
    • Things to make things with – tools, components, materials. I don’t spend money on training or learning because I have time and Google is my friend 😉
    • decent eating out. The overall total is probably lower but when I do I want it good. Seems to be a theme on retirement spending – it has to be good or not at all. Better and fewer times beats often and crap

    I am easy with slowly losing the fight to inflation as well as the slings and arrows of spending and monthly bills, because at the moment I have no pension income, which will more than fix that. I reinvest ISA divis back into the ISA, natch, so these don’t show. Too many people labouring away at the coalface believe that once you’d retired you end up eating roadkill by the flickering light of a paraffin lamp under the railway arches unless you have stupendous amounts of capital. Even without a pension and no access to a significant part of my savings there isn’t the precipitous fall that scenario would imply.

    I can also now  strike a better balance with consumption. One of the things I discovered by cutting as much as possible out is that you do miss some gratuitous consumption. Some consumption adds colour to life, but like herbs in cooking, a little goes a long way. My biggest loss was no holidays for three years. I haven’t continued with that policy, because holidays are a lot cheaper when you have control of your time. I discovered several shorter ones more local are the right balance for me at this time – so that’s what I’ve done – three out of my four holidays this year are in the UK.

    Another thing I discovered was that you get a lot more bang for the buck if your consumption is infrequent. You just notice it more and get more from it – it’s that human sensitivity to differences again. For instance, in Norfolk a couple of times we walked about fifty yards to the pub round the corner, the White Horse, to have a meal and a couple of drinks, despite having a generous stock of fine beers with us. We had discovered Tesco had an offer on Adnams bottles beforehand, so we had taken some with us.

    1310_adnams_IMG_9873

    However, there’s that dynamic contrast thing again. We could have eaten out in the White Horse every night, and indeed the first night we dined well there. It’s apparently a Telegraph favourite though Guardinistas favour it in the summer. Presumably they divide up the year that way there aren’t any fights in the bar given the differing world-views 😉

    But eating out and drinking every night would have been too much, and would have doubled the cost of the holiday. A couple of times, however, was just right, and if you are going to do consumerism then savour it – infrequently but well scores over frequently and routine to me. Plus, let’s face it, you can’t do this too often

    they had a wonderful plum and ice cream dessert

    they had a wonderful plum and ice cream dessert

    because otherwise you become a fat bastard 😉 I can vouch for the fish and chips which are a step apart from the usual pub fare, and Mrs Ermine can vouch for the mussels which are from about 100 yards away. It is a transformation when you reasise the truth of what Mr Money Mustache opined. Restaurants aren’t a place to get food. They are a place to get experience, preferably enjoying good company. At a single stroke that destroys the raison d’etre of all fast food and coffee experiences, and almost forces you to raise your game.

    Consumerism isn’t inherently the devil in disguise, it is the degree to which you do it. Without thinking what is of value to you, it’s easy to end up doing way too much. RIT has a nice  post on how to qualify what matters to you and spend accordingly. I have to admit that I don’t follow his step 1. I have never run a budget – I have always used Quicken to observe and analyse spending in the rear view mirror, and adjust accordingly. But this was probably born from not spending more than I earned (using the feedback from Quicken, or the balance in my bank account before I had Quicken). Whenever I’ve tried to do a monthly budget it made me annoyed because it forced things into monthly cycles, so you’d have to divide annual spends like insurance, TV licence and road tax by 12 and they’d still catch you out. Must be just me that has the problem though. I’m absolutely behind RIT from Stage 2 onwards.

    I had no idea that I could ground spending enough while still consuming at a level that gives me 80% of the enhancement of quality of life consuming can do for be with less than 20% of the cost. I underestimated the yield from non-ISA investments, which appears as cash in Quicken, paying things like bills and general running costs. More importantly, however, I consumed less than I thought I would, and created more…

    Hat tip to the Art of Manliness 10 for summarising how to control your costs and have some fun so well. It works particularly well in retirement because you control your time, but the principle is general.

    Create more, consume less

    Notes:

    1. I like the Urban Dictionary’s definition of ‘The dumbass’s excuse for something stupid that they did’
    2. DxGF was the main consumer, I didn’t miss it after we parted
    3. Intuit’s Quicken, and Microsoft Money, were programs on a PC that used to be the ways people tracked spending before we all decided to surrender control, lose resilience and invite all sorts of bad guys to observe our finances using web-based ‘services’ in The Cloud. I don’t do Cloud, unless broadcasting is the nature of the product, I think it’s mad, insecure and leaves you hostages to fortune as companies turn things off or hike fees.
    4. This is the reason why early retirees are usually advised to retain their mortgage and not pay it down before they draw their pension. They can smooth out the suckout in income during the intercession between stopping work and getting hold of their pension commencement lump sum, which they then use to discharge the mortgage. I will have to invest mine.
    5. When I started as a grunt in 1988 I could sign a purchase order for up to £500. When I was working on the Olympics in 2012 I had to get rail tickets authorised in advance from two levels up
    6. the world of IT networking involves Cisco (or vendor of choice) accreditation exams, which, I’m sorry, but in my view are a combination of vendor lock-in, memory tests and low-level technician qualifications about how to use the specific unix-like command set and feature set of the specific boxes. And it’ll be outsourced to India by the time I manage to cram all that stuff, after all, connecting disparate locations together is what computer networking does to earn its rent, and it’s easy enough to remote the management network.
    7. There was a financial silver lining in that a sharesave came out right at the low-water mark -I dropped every single previous scheme I had running to reallocate to that one, split across the three and five year terms, because I didn’t know how long I could stick it for. These, plus a lot of Share Incentive Programme shares  are a large lump of my non-ISA shareholdings and The Firm is now working for me rather than the other way round.
    8. on the original spending assumptions – in hindsight I could have probably done it earlier
    9. For the likely customers of Weight Watchers it’s not about exercise. Although there are good health reasons to do exercise, for non-athletes the effort of the amount of exercise you need to do to burn off calories is unrealistic compared to the effort of not eating them in the first place – most of the win is in consuming less IMO
    10. I see absolutely no reason why this should be particularly applied to men specifically
    11 Oct 2013, 2:20pm
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  • the Ermine gets away with not getting struck off the Royal Mail IPO

    I’ll probably get slated as a scumbag capitalist running-dog for this but though I staked £10k on the RM IPO I didn’t get struck off the issue for being a filthy rich bastard, because I used Mr and Mrs Ermine’s ISA allocations and staked £5k on each 1. According to the Grauniad it’s all about the Sids 2, and not those disgustingly rich barstewards who regularly play the stock market. The schadenfreude is already dripping from the headline

    Royal Mail shares: thousands fail in applications for larger stake

    going on to explain

    Anyone who applied for more than £10,000 3 of Royal Mail shares – an estimated 36,500 individuals – will be left empty handed after the government chose to favour small investors over those who regularly play the stock market.

    So There! One in the eye for the 1%. Who of course bought theirs via the institutional offer which covers the majority of the shares but we won’t tell the little people that, shall we 😉

    Nice Royal Mail picture, Guardian - thanks for that, saves me from getting wet taking one and if you are going to call be a capitalist running-dog then I'll pinch your pic ;)

    Nice Royal Mail picture, Guardian – thanks for that, saves me from getting wet taking one in the rain  and if you are going to imply I’m a capitalist running-dog who shouldn’t have got a look-in then I’ll play true to type and pinch your pic 😉

    I can’t say I’m stupendously overwhelmed with two lumps of £750-worth, and an apparent £500 total profit at today’s price but so be it.It’s not a huge compensation for the slow destruction of my cash holdings by the Bank of England’s devaluation of the pound and attendant failure to hold inflation under control for the last five years but I guess every little helps 😉

    I suppose RM does fit well into a high-yield portfolio (HYP), and if I could consolidate the two holdings it would be about right for a single holding in my HYP – with the requirements of diversification I target single holdings at a roughly £2000 purchase price.  But I can’t as I don’t have another share dealing account yet. I did consider making even more applications but though I need to split my ISA soon because it is now well over the FSCS limit I avoided doing so because of the retail distribution review.

    Can I have my money back ASAP because there’s something interesting happening over the Pond…

    Now we have all the Sturm und Drang out of the way about Royal Mail can I have my £8500 back ASAP because our American friends are still playing silly buggers which should be good for share prices if you are a buyer. My ISA is maxed, and I could use some RDSB which has been falling nicely (I have no oilies at all so it’s an obvious hole in my sector diversification). And it’s October, always a great time of year for a jolly good punch-up in the markets. I don’t know what they do for Halloween on Wall Street but it clearly makes ’em nervous this time of year.

    And what exactly is the organisation formerly known as the US government doing at the moment? How did they get here, and how the hell do they get out?

    The American government shutdown beats the hell out of me as far as getting my head round it. They seem to have a genuinely bizarre case when both houses have been democratically elected, it appears at different times. So the electorate presumably felt a bit right wing when they elected the house of representatives and a bit left wing a couple of years later when they elected the senate. And a bit left again when they elected the president. Or the other way round, God knows.

    Now oscillating from a little bit right to a little bit left is fine, it’s how Anglo-Saxon democracies work with first past the post systems. There’s a great big rump of people that always feel one way balanced out against an equal rump who always feels the other way, who are basically deadweight as far as changing things though I guess they are reflected in the two poles, if many of them felt differently the poles would have to shift. There there is a smaller remainder of fickle bastards such as ermines who sometimes vote one way and sometimes another. So the overall direction stumbles like a drunk between two narrow walls, first going one way before the pain gets too much then the other way. And some general directions of the poles go in the same way and the electorate doesn’t get any say in the matter, we need a third dimension for the drunk in the analogy, say going up a hill or something. He doesn’t get a choice about that, so things like State ownership of the means of production is currently out of favour 4 whatever party is likely to get in.

    The trouble is that the time-spaced sampling method of the American system means that we have contradictory views of what the electorate wants, because one lot was voted in a couple of years apart form the other. And the system seems to have ended up with these two opposing views glowering at each other, both with veto control. So we have a situation of a couple of alleycats who have come across each other in the night, and they’re a hissin’ and a-spittin’ at each other and neither can pass. Let’s hear it from some alleycats, shall we –

    There also seems to be a fair amount of argy-bargy and aggravation within one of the cats, as in the back legs and front legs aren’t in tremendously huge agreement about what to do. It seems to be a uniquely American problem – other countries have it set so all the elections happen at once so parties have to agree and set up coalitions before they get to throw their weight around. I can see why the Americans might want to space the elections out temporally, because of the sheer scale and logistics of the place. But it doesn’t seem to be reflecting the will of anybody at the moment 😉

    The stock market has been terribly boring this year, rocketing away from January and no really good buying opportunities, but now the Ermine’s snout is getting twitchy with the scent of a good fight brought on by the Americans, which should hopefully make buying an income cheaper. Hell, I might even be able to diversify with a US tracker is the S&P takes a hammering, and perhaps even the USD. At the moment the S&P500 is just too dear for me. Others markets will take a hit too, perhaps time to consider the FTSE100, which starts off more reasonably priced. It could be like being a stoat in a hen-house 😉

     

    Notes:

    1. in retrospect this was dumb, I should have gone 8k:2k or some such split, to spread my targets and opportunities against political fiddling
    2. Something vaguely disturbs me about encouraging Sids into a single, undiversified stock without at least providing them with the background information – which is that if you really are a new Sid to the stock market perhaps you should stag this issue and invest in a FTSE tracker with the proceeds in the interest of diversification. At least they should be exposed to the idea and why some people consider this a good idea. Unlike commercial IPOs such as the Direct Line one Vince Cable presumably owes his electors some duty of care 😉
    3. The Guardian confused me with the statement “Vince Cable, the business secretary, said that everyone who applied for less than £10,000 of shares would receive shares worth £749.10” which implied I would have been outta luck. However, according to TD direct “all members of the public who applied for shares, up to and including applications of £10,000 will receive an allocation of 227 shares which is equivalent to £749.10 at the offer price.” so I would have just scraped through but with half as much allocated.
    4. I think the Green Party is in favour of that “We support high-quality public services run for people not private profit. We will protect the NHS and Post Office from privatisation and return our energy, water and rail networks to public ownership.” but they aren’t big at the moment
    9 Oct 2013, 8:55pm
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  • Frozen supermarket food has more vitamins and antioxidants than fresh

    Yes, really. In studies coincidentally sponsored by the frozen food industry it appears that supermarket fresh food can have fewer vitamins and all round Good Stuff than frozen food. Yesterday I railed against the Daily Telegraph for reading into the OECD survey on skills a result that favoured their own prejudices that the world’s all gone to hell but I’m thinking they’ve got a point, what passes for public discourse could use a bit of common sense.

    Let’s take the headline:

    Frozen food IS better than fresh: Higher levels of vitamins and antioxidants in frozen fruit and vegetables say scientists

    Now let’s think about what this claim actually means, shall we? On the face of it, it means that the very process of freezing food improves its nutritional quality. Doesn’t something strike you as ever so slightly odd about this assertion?

    Fresh fruit and veg is often still alive

    I didn’t realise this until recently Mrs Ermine showed me some time ago that a head of broccoli would last longer in the fridge if you stick the cut end in a cup of water, and tastes better for it. In just the same way as if you bought a bunch of flowers – you put them in a vase with some water, so that some of the processes of life continue, else you end up with a wilted bouquet in half a day. Obviously without the root structure and connection with the soil this isn’t going to last for ever, but you can buy useful time against the  processes of decay. This is why you shouldn’t trim all the leaves and bits you don’t eat until just before cooking.

    Let’s take a look at some sweetcorn growing

    Sweetcorn growing in a field (you can't see the corn cobs because it's the devil's own job to see them as they are covereed by leaves lower down the plants)

    Sweetcorn growing in a field (you can’t see the corn cobs because it’s the devil’s own job to see them as they are covered by leaves lower down the plants)

    It’s basically minding its own business, with the structure of the plant turning water and carbon dioxide into carbohydrates using the energy from sunlight. Sugar and starch, in the case of the bits we eat, the seed-bearing bits. The sugar is what makes sweetcorn sweet, and the process of photosynthesis is very noticeable in sweetcorn. The best way to have sweetcorn is to start in the noonday sun, and get a pan of boiling water ready on a camping stove. Crucially, do not add salt.

    Then send a small child up to the corn to harvest a couple of cobs, and get them to run, not walk, the 100 yards back. Get parent to take cobs, trim all the stringy stuff and leaves, boil for a couple of minutes and definitely less than five (depends on size and how windy it is giving the stove a hard time). Fish out insert fork into either end, add butter and salt and hand to child. And watch the amazing smile – because this is SWEETcorn and they have never understood why it was called sweetcorn. Freshly harvested contain about 5-10% sugar by weight of the kernels. The sugar is turned into starch by the endosperm of the kernels. Sweetcorn is picked immature, before this conversion is complete otherwise you end up with maize – sweetcorn is a variety of maize.

    This is how nature meant us to eat sweetcorn. Freshness is critical in Britain because sweetcorn originated in sunnier climes in the Americas, and we are at a much higher latitude, our sunlight is weak compared to there. Cynical readers might think that freshness can’t matter that much, I was chuffed to find backup in the Wikipedia article when I researched where sweetcorn originated from 😉

    Su varieties are best when cooked within 30 minutes of harvest.

    Leave it kicking around for an hour and it is very noticeably less sweet. Still thoroughly decent, but it shows that once the processes of life are slowed, the sugar begins to turn into starch. I don’t know enough about biology to know if that builds up the body of the corn cob, after all this process must cycle daily.

    At The Oak Tree we harvest corn on the day it’s collected, it should be less than 12 hours old. Ideally it doesn’t see the dawn before it’s eaten…

    Sweetcorn - needs to be < 12 hours old IMO

    Sweetcorn – needs to be < 12 hours old IMO

    If it’s older than that it doesn’t go to waste, but it’s not good enough for humans. We have other ways of dealing with it

    Chickens will run, not walk or hop, for sweetcorn

    Chickens will run, not walk, for sweetcorn

    So what exactly do we mean by fresh these days?

    Earlier this year I was in the Cotswolds, in the chi-chi town of Stow-on-the-Wold. There is serious money in this part of the world – these good people think nothing of shelling out more for fancy water than they do for diesel.

    Wow. Borehole water at nearly £3 a litre, there's some money around these parts

    Wow. Water at nearly £3 a litre, there’s some money around these parts

    Tesco sell the good people of this discriminating part of the country sweetcorn labelled as fresh. I took this photograph just before noon on the 31st of August

    Tesco sweetcorn - as sold on the 31st August

    Tesco sweetcorn – as sold on the 31st August

    Eat fresh, eh, Tesco 1? Putting lipstick on pigs, are we? Indeed at three days old we’d probably feed old sweetcorn to the pigs. It won’t do you any harm at three days old, but it’s not exactly fresh, is it? No wonder kids don’t understand why it’s called sweetcorn!

    Here is a video from Tesco, where their poor producer gets to tell you that they have packaging keeps the corn fresh for a week after purchase!

    I have no beef with Barfoot’s, whose job is done when they deliver Tesco fresh sweetcorn. It’s now Tesco’s job as wholesaler and retailer combined to get that sweetcorn in good eating condition to you, and removing the husk and topping and tailing it reduces the chance for your corn to stay alive. That endosperm will still be there, turning the sugars into starch. In theory it would be easier for Tesco to get that product to you within 24 hours than those stallholders getting it from the 1970s Covent Garden wholesalers, because Tesco and the other supermarkets have eliminated the wholesaler.

    But they can’t be arsed. We’ll leave it kicking around for up to a whole week shall we – and to add insult to injury they’ll tell you about it in their magazine titled Real Food. It’s not what it looks like, it’s what it tastes like you toe-rags. And a week is not fresh. What ordinary people knew in the 1970s was don’t take all the flippin’ leaves and husk off either – because your produce will fade faster. Remember it’s alive, and it dies from the cut point in. Bunch of shysters. No doubt Tesco corporate PR will tell you that today’s food consumer is frightened enough of veg that doesn’t come in a ready meal, so they don’t recognise the husk is to be discarded just before cooking. Maybe they’re right. But it’s cheap, innit?

    The meaning of fresh is something that we lost all contact with as the supermarkets have taken over the role as single supplier of our cheap food. This is cheap, at £1 a pop, and it is from Suffolk, so it is local in a relative sense of the word. But it’s crap, because it’s too old. My mother bought her sweetcorn decades ago from market stalls in London, and these guys would go up to Covent Garden market early in the morning to get their fresh produce 2. They would aim to sell all they bought wholesale in the morning to their customers by 6pm that day – i.e. in 12 hours. They could achieve field to fork in 24 hours if necessary, as the suppliers harvested and took to market the day before for leafy and easy-spoiling items.

    produce wholesaling before Tesco

    produce wholesaling before Tesco

    In the primitive systems of food distribution we used to have before the fantastic marvel of cheap supermarket food fresh actually meant fresh. These market stallholders wouldn’t have got away with selling sweetcorn more than 24 hours old – their customers knew what fresh food tasted like, and they’d have the traders’ guts for garters if they tried to palm off two-day old sweetcorn on them. We, of course, are so much more advanced, so we spend all our time working for The Man so that we can’t buy fresh food on the day we eat it. Every so often we look around and wonder why there are so many lardy butts, obviously the cheap food’s all right then, it’s not like people’s ribs are showing…

    random picture from local paper on QD bargain hunters

    cheap food fills you up okay 😉

    Chub rub is the problem these days, as prepared meal manufacturers use our ancient instincts for sweetness and fat. They concentrate these, making  things moreish before the “I’ve had enough” messages can get to the brain. As evidenced in this random photo from a local press article 😉

    Just like in Orwell’s 1984, a lie repeated often enough gets accepted as the truth, and so Tesco can get away with describing this as ‘fresh’ though it went from Suffolk (let’s assume they harvested and packed it in a day) to the Tesco regional distribution centre that serviced Stow (probably Tesco RDC Didcot) and back out to Stow, so it’s probably already 24 hours at least off the stalk before I snapped this, and it’ll stay on the shelves for up to two more days.

    So unless you get up in the morning, look in the bathroom mirror and see this looking back at you

    1310_hogs_IMG_7746

    then that Tesco fresh sweetcorn ain’t fresh enough. Not in the way that someone in the 1970s or before would call fresh. They’d probably know what do do with stuff that old too, because in another example of outstanding modern progress and an inability to balance risks and rewards we have decided to do away with Northern European’s waste management traditions and banned feeding food leftovers to pigs in 2001. We’re flippin’ clever that way, aren’t we, so now we get three problems for the sake of none. We landfill food waste instead to of turning it into sausages, feeding our pigs with cereals instead. So our diminishing holes in the ground fill up with decaying food, stinking the joint up needlessly, releasing greenhouse gases like methane, and stopping us filling up the holes with other stuff we’d like to go away for good, like bags of dog shit, old iPads,  last year’s must-have Christmas toys and plastic junk food wrappers. We lose out on about £1billion worth of fine British pork sausages, according to Simon Fairlie’s calulations. Oh and we now have to grow the cereals to feed to the pigs we used to feed the waste to, rather than  turning the cereals into, y’know, human food maybe. I don’t even think there was any hazard to human health in the 2001 foot and mouth epidemic, that caused all this knee-jerkery, just a hazard to the profits of concentrated pig operators where disease runs through a massive herd like a dose of salts.

    The Mayor of London, aware that the Great Wen generates an awful lot of food waste, bitched about it entertainingly and lent his support to The Pig Idea. I see his point, I wouldn’t like to have to think up a solution for where to bury London’s food waste either. The whole point of a pig is to recycle waste – as Fairlie puts it in Meat: a Benign Extravagance

    8000 years ago, when herds of wild swine were attracted to the settlements of early agriculturalists, an interspecies bargain was negotiated.
    ‘You give us your waste food and a bit of that extra juicy grass seed you have, and well keep your camp clean and let you eat our surplus offspring, of which we have many’

    I guess if Tesco had any of that sweetcorn left over after the 2nd they landfill it. Barmy as hell, though the regs aren’t Tesco’s fault.

    Now it’s easy to see why frozen supermarket food has more vitamins and antioxidants than fresh

    …because fresh supermarket food ain’t fresh, not in the way people of my parents’ generation and before knew as fresh. Now supermarkets do use some wheezes like nitrogen-enriched protective atmospheres in some packaging to slow the process of decay, and I’ve used a particularly rapidly ageing vegetable as illustration, but it gives the lie to the claim of fresh food. Freezing operations can be gotten closer to the harvest than supermarket fresh delivery with the hub and spoke RDC system. Although freezing does considerable damage to the texture and structure of many foods, it does almost arrest the chemical processes of decay, so if I were to freeze sweetcorn within hours of harvesting then it would be sweeter than Tesco’s fresh sweetcorn after 24 hours. Let’s just not think about what that fresh sweetcorn is like after a week…

    We have gotten much smarter and cleverer since the 1970s, we can now make our food still look fresh, although it doesn’t taste fresh. On those market stalls the produce looked distinctly tired by the end of the day, and what was left over probably did go to London’s pigs. We have used our cleverness to make our food a lot cheaper. Shame we’ve made it taste insipid and crap, but hey, it’s convenient. Oh and did I say cheap? And all this cleverness means you have the choice – if you want nice fresh food then you can buy it fresh, well, labelled as such and looking as such.

    Except it isn’t. Which is why frozen is better than fresh, from a supermarket 😉 There’s no problem with that, the evidence seems to be that most of us can’t be arsed to maintain standards of taste and quality with food, we just want it cheap. Eventually we probably can get it down to popping a custom-tailored ‘nutrient pill’ just like in those sci-fi movies of old. At least that would be honest. We could save ourselves all the other rotten crap associated with ‘cheap’ food, like concentrated animal feeding operations, our inability to tell farm animals apart, disease running through massive confined herds so we have to dope the beasts up with antibiotics leading to antibiotic resistance.

    Fresh. It means up to 48 hours from harvest in fruit and veg, and less than 24 hours in some cases

    It has only been the advancement of technology with the RDC hub and spoke based system and the elimination of the wholesaler that has made our fresh food stale, because of the imperative to reduce labour. Look at the photos of 1970s Covent Garden here with what looks like horrific amounts of manual handling to modern eyes. Something had to give – and quality and taste went. Progress is fantastic. We can’t tell horse from beef, there’s shit in the meat, most of our fresh veg would have been fed to the pigs in earlier times for being stale, frozen food is better than so-called fresh food, it all tastes of diddly squat, McCance and Widdowson tell us the trace mineral content of our fresh produce has more than halved over the decades and for some reason we are all becoming fat bastards but damn, did I forget to say – it’s cheap. Cheap is like that, it sometimes costs in sneaky ways .

    loss of minerals in seven vegetables  analysed by McCance and Widdowson

    loss of minerals in seven vegetables
    analysed by McCance and Widdowson

    I am the world’s most incompetent gardener, but even years ago I used to grow tomatoes in the back garden to occasionally have some of the blighters that tasted of something. I didn’t understand rotation so eventually I was nuked by blight, but even my early September crops tasted far better than the insipid taste-free ‘taste the difference’ vine-ripened tomatoes 3. What was my secret?

    • I grew them in the ground (my later downfall as I didn’t understand rotation) not in growbags. So there were trace minerals
    • I picked the tomatoes when they were red
    • I ate them within half an hour

    I never realised you could ripen green tomatoes, so when the sun gave out and they stayed green I chopped the lot down and threw it out till next year. Vine ripened, FFS, lying sacks of shit that supermarkets are.

    Cheap food, don’tcha just love it, but if we we really want cheap and aren’t bothered about taste let’s take it all the way to synthesising those NASA style pills and lose some of the nasty externalities of industrial agriculture and food distribution… If we want vitamins and antioxidants we’ll just put ’em there. I’ve never bothered with supplements and vitamins and all that clobber, on the grounds that humans and food have worked okay for tens of thousands of years, so I should be able to get all I need from food. It’s starting to look as if that’s not a wise assumption if you get your fresh food from supermarkets, which I don’t. Let’s have some TV ads with the strapline

    Frozen – fresher than supermarket fresh

    Notes:

    1. I don’t particularly mean to pick on Tesco – they are what I have a photo of, but they aren’t any worse or better than other supermarkets
    2. Covent Garden was a wholesale fruit and veg supplied by farmers
    3. I learned while researching this article that vine ripened tomatoes are simply cut off the plant with a bit of vine while green and then ripened using ethylene gas unattached to the plant. Isn’t industrial farming lovely, eh? And there I was thinking they were ripened on the vine attached to the plant, boy was I a sucker, though at least I tasted the difference and observed it was no good
    8 Oct 2013, 2:02pm
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  • School leavers falling behind in Literacy and Numeracy according to the OECD – Not

    You know how it goes – lovely bright sunny day here in the East of England, sparrows chirping, and it’s time to see what’s new in the world. The Torygraph tells me it’s all going to hell in a handcart, the old buffers at DT towers tell me

    School leavers in England have lower levels of basic skills than their grandparents and now perform worse than young people in almost every other developed nation, according to a major international report.

    Cripes. Okay, this is the Torygraph and the sky’s been falling in for decades. Frustratingly, they don’t give you a reference to this OECD report, presumably because as a reader you’re too thick as shit to be able to understand it, in some ironic post-modern self-referencing proof. However, the Ermine is tenacious and I have been digging for it so I have the reference for you 1

    The whole document is strange – it is comprehensive but tries to slice and dice the survey of adult skills in all sorts of ways. The data is derived from interviewing and testing 5000 people in each country in their homes apparently. It would have been interesting to see what the tests were.

    Now if we look at literacy proficiency 2

    Mean literacy proficiency

    Mean literacy proficiency

    and we lop out the 16-24 year olds, because a) they haven’t been to university yet and b) half of them aren’t adults IMO then the Torygraph’s snarl is not substantiated. Scores for old gits are 267 (chaps, 55-65) whereas for the 25-34 year olds it’s 281 (chaps, 25-34). Advantage, handsomely, to the young pups methinks.

    Let’s take a look at numeracy 3

    Numeracy

    Mean numeracy proficiency

    Scores for old gits are 265 (chaps, 55-65) whereas for the 25-34 year olds it’s 275 (chaps, 25-34). Once again, advantage, handsomely, to the young pups, making it game,set and match.

     

    University. Despite the fears of the Telegraph's retired colonels, something useful does seem to happen here

    University. Despite the fears of the Telegraph’s retired colonels, something useful does seem to happen here (photo iStock)

    I suspect the page that got the Telegraph’s dander up was this one

    OECD literacy by age group

    OECD literacy by age group

    You can find this here and it clearly shows that the 16-24 years olds are short relative to the about to be retired. Unfortuately the tabular formation of this sucks, and even worse because I’m not entitled to get the PDF version I had to rekey some of these into Excel, to show this thusly

    Hey, Torygraph, leave them kids alone!

    Hey, Torygraph, leave them kids alone!

    I’ve picked out the England results 4 in the heavy blue line. Note that our kids start about midway in this motley collection of First World countries, and get a lot better by the time they leave university. Which implies to me that for literacy our schooling is serviceable, and that our universities are remarkably successful in building on that, making the assumption that since about half of all English schoolkids go to university they lift the average, though of course it could be the non-uni half also make a decent fist of it. We also keep our literacy well in this country, by the time we become grizzled old gits like me (and I’m not even in the last cohort 😉 ) we are still able to read.

    Note that this data has been adjusted for various factors. That may favour English old gits – when I went to university only about 11% of school leavers went, so higher education adjustments would up the scores for older people to compensate. There may be other factors – the trouble with compensating data for confounding factors is that you have to agree on the amount of detriment to compensate for.

    I didn’t expect to come to that conclusion

    When  I started writing this I was expecting to have a laugh with the Torygraph’s line. But it doesn’t stack up to my reading of the OECD data, and although I can be  stuck in my ways I try not to hold too many opinions that clearly at variance with the data. I used those ageing numeracy and literacy tables to come to a conclusion that isn’t the same as the Torygraph, and in general I charge the Torygraph with an across the board fail in their article.The OECD data does not show

    [British] Young worse at maths and English than grandparents and behind ‘almost every other nation’

    The writer knew the end of the article before they started writing it, and didn’t let the facts get in the way of a good story. No wonder they didn’t cite their sources properly, either 😉

    I’m not saying it’s all hunky-dory – it may well be that the Chinese and Indians are miles ahead of us, work harder and the rest of it. The bar required for getting a job paying enough to enter the middle class is rising with globalisation, and living standards relative to the rest of the world will probably fall, though not necessarily absolute living standards.

    I also have a suspicion that the young Ermine leaving Imperial with his Physics degree in 1982 might hold a decent candle to one leaving now, relatively speaking. My time in industry didn’t give me an overwhelming feeling that we were becoming better at general problem-solving, inferring knowledge and perhaps wisdom from data, and indeed on more than one occasion I had to stop someone about to so something that was going to be seriously dangerous. Even simple things that were universal knowledge (of electronics engineers) like the difference between audio Vrms and Vp-p, which can spoil an engineer’s day if not right 5 were sometimes increasingly unfamiliar to those who should have known. But that’s probably why you need some old gits to leaven the young-uns – who were more open to new ideas, risk-taking and in specific fields knew far more even fresh out of university than I did after 30 years of working, though The Firm employed fewer and fewer graduates as its business changed.

    But saying that the youth of today are less literate and innumerate compared to their grandparents is bollocks. We spend a shedload of money on tertiary education, so if some of that didn’t improve things from the 16-24s to the 24+  we really would have a problem. Graeme Paton is the Telegraph’s Education Editor, and while he delivered customer satisfaction to the Telegraph’s readership with a list of dog-whistle phrases

    • policies followed by the last Labour government had led to a decline
    • drop in achievement levels being disguised by years of “grade inflation” (yes, I’ve moaned about that too but the OECD tests were independent of O and A levels)
    • OECD data suggests that the UK has effectively gone backwards while other countries have surged ahead in terms of the basic skills needed in the workplace (err, no it doesn’t)
    • England’s position internationally is being dragged down by a long tail of underachievement
    • These are Labour’s children, educated under a Labour government and force-fed a diet of dumbing down and low expectations

    I don’t find the data backs him up. I think the grade is “Could do better” me old boy…

     

    Notes:

    1. It’s really maddening on some proprietary system because as an ordinary non-paying grunt you can’t d/l the PDF, but start at http://www.oecd-ilibrary.org/education/oecd-skills-outlook-2013_9789264204256-en.

      (edit) that was apparently a press preview – get the full monty PDF for free with Greg’s link! (end edit)

      There’s a more user-friendly interactive summary version at http://skills.oecd.org/informationbycountry/unitedkingdom.html

    2. to be found at http://www.keepeek.com/Digital-Asset-Management/oecd/education/oecd-skills-outlook-2013/oecd-skills-outlook-additional-tables_9789264204256-12-en#page26
    3. to be found at http://www.keepeek.com/Digital-Asset-Management/oecd/education/oecd-skills-outlook-2013/oecd-skills-outlook-additional-tables_9789264204256-12-en#page26
    4. I’m not really sure why Scotland and Wales aren’t part of the OECD, while Northern Ireland is (and is comparable with England). Perhaps the OECD knows something about the Scottish referendum we don’t
    5. the former is about a third of the latter, so getting this wrong can really piss you off if one end of the interface didn’t realise what’s meant; this is something I learned in 1976 O level Physics, not at university
    4 Oct 2013, 2:40pm
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  • We’re back to paying people to dig holes, and paying others to fill them in again with IDS

    Apparently George Osborne had to deny Matthew d’Ancona’s report of him saying 1

    “You see Iain giving a presentation,” George Osborne, right, is reported to have observed during a turf war, “and realise he’s just not clever enough.”

    I think this is a bit harsh on IDS. There seems to be a general shortage of brainpower in the political sphere, or a general shortage of cojones in levelling with the electorate. I suspect here are more fundamental problems than the skivers and strivers rhetoric allows.

    Apparently the unemployed are going to be given a 35-hour a week detention for being unemployed, or do community service/workfare. Lest it be said I’m picking on the Tories, Rachel Reeves of Labour delivered herself thusly

    But this policy is not as ambitious as Labour’s compulsory jobs guarantee, which would ensure there is a paid job for every young person out of work for over 12 months and every adult unemployed for more than two years.

    Compulsory jobs, eh? Labour seems to believe more an more in its overwhelming power to control things, from the price of electricity to the jobs market. The Condems claim the problem started with the previous lot…

    The Tories argue that the number of households where no member has ever worked doubled under Labour from 136,000 in June 1997 to 269,000 in June 2010. They claim that in the decade to 2010, 1.4 million people had spent nine out of the previous 10 years on out-of-work benefits.

    Now the Ermine is not a bleeding heart liberal. In the decade of plenty under Labour no doubt many people did come to the same conclusion as I did, that work is overrated. Some people wouldn’t or couldn’t save up first to buy themselves out of the rat race, so they do it on other people’s dime. And yet even I think it’s time to stop, and think, and ask more searching questions about what it means that 1.4 million people spending 90% of a decade on out of work benefits. According to the ONS we have thirty million souls in employment, so we are talking 5% long-term unemployed, out of an unemployment rate of 7.7%. The traditional viewpoint of unemployment is it is something that people cycle through every once in a while, after all, an Ermine has been unemployed for 2% of his working life 2.

    And yet when when you look at the stats and two-thirds of the unemployed have been on out-of-work benefits for many years then something else is going on. This could be explained by –

    1. many of the unemployed are lazy bastards and chose this as a lifestyle
    2. sickness and pestilence stalks the land such that 1 in 20 of the workforce is seriously ill or disabled – God help those of pension age in that case
    3. our economy has changed and cannot gainfully employ 5% of the workforce due to them not fitting the requirements an employer needs

    or some combination of all three, and maybe factors I failed to spot.

    I favour an increasing amount of 3. There are undoubtedly some lazy barstewards about. But not enough to explain two-thirds of the unemployed being long-term unemployed IMO. I suspect the answer is that globalisation, outsourcing and automation has raised the bar on what is required of an employee – after all the Flynn Effect is apparently traceable to the fact that an industrial economy requires its workforce to infer the particular from the general, extrapolate and make mental models of an increasingly complex and abstract world.

    James Flynn on the Flynn effect – increasing IQ over the 20th century (hat tip to Greg).

    Flynn asserts that IQ scores at the end of the 19th century would be averaging 70, on the verge of mental retardation, if ours are normalised to 100. However, as technology progresses, requirements presumably increase, and the bar for employability is probably scanning across the bell-curve of IQ distribution, leaving increasing numbers of people behind. IQ is not the only parameter employers need, but there’s less call for sheer physical strength, for instance, of even skilled craftsmanship. Humans are adaptable, but not infinitely adaptable, and I think we are beginning to lose the race.

    And there, I believe, is where politicians are failing us. We pay them to lead, and to adapt our societies to changing conditions, be that increasing industrialisation, global warming or societal changes. And adapting to a world where there is not enough work for people, in particular if an increasing number of people are becoming unemployable, is as much a political issue as it is of one of ‘fairness’. After all, it is perfectly possible to postulate a world where all the work is done by machines 3. Such a world would not be divided into workers and shirkers. If we are on our way to a society when fewer and fewer people produce the GDP in association with machines then none of these get people back to work initiatives will work, for the simple reason that there aren’t enough jobs that match the abilities across the working-age population. Do we even need everybody in work for the economy to grow? After all, Britain doesn’t need me to be in work – although I am technically ‘economically inactive’ I don’t know what the Government thinks I am doing with my investment portfolio.

    At the moment the discussion on unemployment is predicated on an assumption that nearly anybody is employable – hence all the emphasis on

    ‘Claimants will attend a local centre full-time for up to 6 months, with support and supervision to look for work and apply for jobs,’ Mr Duncan Smith will add.

    ‘No attendance. No benefit. That is only fair.’

    There’s a hidden assumption, there, IDS. And that is that, assuming everyone were willing, and took your training to the best of their ability, that the economy can find gainful work for all these people. I am not so sure, in which all you are doing is the equivalent of Depression era digging holes and filling them in again.

    There are similar fallacies in the under-occupancy levy, leading me to suspect a lack of smarts at the Dept of Work & Pensions. I’m all for the principle that if you want to to live in a bigger house than you need, that you pay for it yourself, and if you live on the public purse then you don’t get to do that automatically. However, changing the housing benefit terms without having looked to see if what you’re asking people to do – downsize to social housing that fits their household size – is possible is just as bloody unfair as people living large while taxpayers have to scrimp and save. It wouldn’t have been beyond the wit of man to say that if you refuse the offer of a smaller sized place then your housing benefit gets docked, rather than we will take the money off you but tough luck, buster, we can’t offer you a smaller house, so you’re SOL on that one. On the other hand, I don’t find it unreasonable to ask people to move out of damned expensive places like London – after all I had to.

    Perhaps it is time for us to ask ourselves what a successful first-world human economy looks like in the 21st century. Maximizing the amount of consumer goods and services in the country, with all the attendant damage to the environment is one option. Is the 35-40 hour five day week the optimum? Do we need to maximise GDP? Is the world changing, an increasing competition in the workplace? Can we design a society to maintain living standards in the face of that, and if not, what are the alternatives? What do we mean by living standards anyway? Modern Britain  seems to have a high material living standards compared to a few decades ago but shockingly high levels of stress and job insecurity, unhealthy physically inactive lifestyles and an increasing difficulty of doing something most people want to do – have children and perhaps get to see them grow up.

    I don’t know what the answers to any of that is, but I do know that from observation the assumption that 1950s and 1960s levels of employment are possible looks less and less tenable to me. This debate needs to be widened out from skivers and strivers, to ‘what would an economy with 100% strivers look like? How about 100% skivers (a bit like Solaria, or Japan in 100 years)

    The former looks too much like that hole-digging and hole-filling to me. Labour attempted that – throw money at problem and hope some of it sticks to the sides on its way down the drain. We ended up with a lot of middle-class welfare jobs and diversity outreach coordinators, basically white-collar hole-digging and filling. Unwinding that is causing much hurt and loss of employment now, but it shows how much make-work covered up for some fundamental problems – there just doesn’t seem enough work for everyone in Britain now. Telling the unemployed that it’s possible for all of them to get jobs is bollocks.

    We need to understand, or at least debate what we think we are up against, preferably not in a sectarian black-and-white way. Understanding of the physical world has helped make Britain a rich nation; more understanding of the human world can hopefully make us a rich society. At the moment we seem to be having a shouting match based on a Calvinist work-is-inherently-good-for-you lines. It may be the the collective viewpoint of Britons is that paying people for futile work is how we prefer to allocate resources, but at least let’s know that’s what we are doing here 😉

    Notes:

    1. hat tip to the Indy
    2. 6 months, after graduating, out of a 30-year working life
    3. A young Ermine addled his growing mind with far too much science fiction, and I am sure Isaac Asimov’s Solarians featured one such world
     
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