Nick Foster – Page 3 – We Know Zero

The Imagination of our Ancestors

27. July 2023 · Write a comment · Categories: Climate Change, COVID-19, Economics, Science Fiction

Source: One of Henrique Alvim Corrêa’s 1906 illustrations of War of the Worlds. HG Wells himself approved of these incredible drawings, praising them before their publication and saying, “Alvim Corrêa did more for my work with his brush than I with my pen.”

“We are living inside the imagination of our ancestors” said Gaia Vince in an article earlier this year. I was reminded of this more recently when Sandy Trust said something very similar in his excellent presentation on climate scenarios ahead of the publication of the The Emperor’s New Climate Scenarios, which highlights how most climate-change scenario modelling in financial services excludes the possibility of tipping points and secondary impacts of climate change, thereby substantially underplaying the risk of us ending up with a hothouse earth scenario.

So I decided to remind myself of the imagination of one of our more imaginative ancestors and read The War of the Worlds. Despite having recently watched both the 2005 Spielberg/Tom Cruise film and the BBC adaptation, I found the content of the book quite surprising – much more focused on how the society of 1895 dealt with the Martians than the aliens themselves.

Wells delights in revealing the imagined human response at each stage. From concern about Martians trapped in their spacecraft in a pit near Woking, to sending a deputation to negotiate with it, to satisfying ourselves that they cannot escape their landing crater after their “Heat-Ray” has massacred 40 people surrounding it. As he puts it:

So some respectable dodo in the Mauritius might have lorded it in his nest, and discussed the arrival of that shipful of pitiless sailors in want of animal food. “We will peck them to death tomorrow, my dear.”

That was on the Friday. By Saturday night there was still more interest in the breakdown of a train between Byfleet and Woking junction than in whether this had anything to do with Martians. The lack of response continues:

I have read, in another account of these events, that on Sunday morning “all London was electrified by the news from Woking”. As a matter of fact, there was nothing to justify that very extravagant phrase. Plenty of Londoners did not hear of the Martians until the panic of Monday morning. Those who did took some time to realize all that the hastily worded telegrams in the Sunday papers conveyed. The majority of people in London do not read Sunday papers.

Wells has a theory:

The habit of personal security, moreover, is so deeply fixed in the Londoner’s mind, and startling intelligence so much a matter of course in the papers, that they could read without any personal tremors: “About seven o’clock last night the Martians came out of the cylinder, and, moving about under an armour of metallic shields, have completely wrecked Woking station with the adjacent houses, and massacred an entire battalion of the Cardigan Regiment. No details are known. Maxims have been absolutely useless against their armour; the field-guns have been disabled by them. Flying hussars have been galloping into Chertsey. The Martians appear to be moving slowly towards Chertsey or Windsor. Great anxiety prevails in West Surrey, and earthworks are being thrown up to check the advance London-ward.”

By Monday morning London is being evacuated in the wake of death and destruction. Wells could not sound more contemporary if he were to give his views about Lockdown or responses to the climate emergency. And we can look at these Londoners from nearly 130 years ago and see ourselves, busily discounting the far greater saturation of 24 hour television news, radio and social media and reading, watching and listening to the dire warnings of our own time “without any personal tremors”.

But if our children are going to be living inside our imagination, then what are we offering them? Ursula K Le Guin, in a talk originally called “Where Do You Get Your Ideas From?” and then changed to “The Question I Get Asked Most Often”, said this:

“The imagination can transfigure the dark matter of life. And in many personal essays and autobiographies, that’s what I begin to miss, to crave: transfiguration. To recognise our shared, familiar misery is not enough. I want to recognize something I never saw before. I want the vision to leap out at me, terrible and blazing – the fire of the transfiguring imagination. I want the true dragons.”

And that transfiguration of our experience, to embrace things we never saw before but can imagine, must happen in our stories initially. But if the stories are good enough they can then spread – to our homes, our workplaces, other places we meet our friends and people who aren’t our friends, to our politics, our economics, our society.

Roman Kznaric’s asks in his book, The Good Ancestor, whether there is an antidote to political myopia. His response is that there is and it lies in attempting to establish what he calls “deep democracy”.

In 2009, The Observer newspaper reported that a letter had been sent to the Queen after she demanded, during a visit to the London School of Economics in November 2008, to know why nobody had anticipated the credit crunch. There was one particularly telling sentence which was picked up widely at the time:

In summary, your majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.

To force our children to live inside our current imagination is to force them to live in a world stunted by the ever increasing influence and share of our head space which can be bought by the ever shrinking group of people we allocate our wealth to. But somewhere between the transfiguring imagination Le Guin talks about and the practical proposals of Kznaric and others, it seems to me that there is the first draft of an imagination which our children could live inside.

A pandemic of economic stories

21. July 2023 · Write a comment · Categories: Climate Change, Economics

Source: Maya Eilam. You can purchase a poster of this image at https://tenderhuman.com/shop/shapes-of-stories-by-kurt-vonnegut-infographic-print-and-poster

I first came across Maya Eilam’s fabulous infographic of Kurt Vonnegut’s 8 story shapes in 2016. Kurt himself wrote his master’s thesis on it which was rejected by the University of Chicago, and once described it as his “prettiest contribution” to culture – you can find further details about the idea in this article by Stephen Johnson.

The reason I bring Kurt’s story shapes up now is that I have been struck by how, instead of stories making shapes, the shapes are now making our stories. Take inflation, for example.

Yesterday we were told that the headline inflation rate (that average of an average of an average which disguises a continued food inflation rate above 17% alongside much else driven by the manic desire to reduce all inflationary pressures within the economy down to a single number) had fallen further than expected to 7.9%. Cue media stories about the Bank of England being under less pressure to raise interest rates further and the Daily Express to confuse inflation falling (ie the percentage increase in prices falling from one positive number to a slightly smaller positive number) with prices falling.

Last month it was all about Rishi Sunak telling us to hold our nerve and that there was no alternative. In May we apparently had an inflation “surprise” with sugar and milk in particular soaring. In April, the Mirror described inflation as a “living nightmare” and in March the BBC were reflecting on how the hyper-inflation in Germany in 1923 had shaped economies and politics in the 100 years since. And so it goes, as Kurt Vonnegut says throughout Slaughterhouse 5.

Behind all of these stories and the frequent use of the word “surprise” lie expectations of the story arc. These have been partly set by the OBR forecasts from November last year:

This is then compared, month by month in forensic detail, with the emerging reality from the ONS:

This is despite us being fairly early in the OBR’s narrative and broadly following the suggested trajectory, although not as quickly as either the Bank of England or Rishi Sunak’s pledge need it to be. We appear to want our fairy stories to be quite precisely predictable at times.

But which of Vonnegut’s story shapes are we in? Sunak must hope he is Man in Hole and will eventually escape to the sunlit uplands, whereas many of us fear that he is instead condemning us to the From Bad to Worse narrative arc. Under these circumstances, muddying the waters and gaslighting are reasonably successful policies for the government as they can tip us into the less electorally damaging Which Way Is Up? as a story, a strategy employer very successfully by first Big Tobacco and then Big Oil to stop us acting in our own best interests for decades. If you also bring in Brexit, then you are starting to talk about the creation myths on the second row.

Our economics and politics are driven by the stories we tell ourselves. Therefore, to create economic and political change, we need to create new stories to tell. Which brings me to Neil Gaiman and his suggestion that the stories may be living off us as much as we are living off them:

You can just view people as this peculiar byproduct that stories use to breed. Really, it’s the stories that are the life-form — they are older than us, they are smarter than us, they keep going. But they need human beings to reproduce, much as we need food… we need things to keep ourselves alive. Maybe stories really are like viruses…

If stories really are like viruses, then I would really like a vaccine to roll out against some of the economic stories active in the population. The pandemic of daft economic ideas about the cost of climate change for instance, or the idea that a country’s debt is like a household’s. Both have been regularly debunked only to keep returning, often in slightly mutated form, to live amongst us again.

The Government is using the latest pay increase to actually reduce its funding to the NHS for the second year running

19. July 2023 · Write a comment · Categories: Actuarial, Cartoons, Economics

Pinhead and spikes wait on a bench outside the doctor's room

NHS pay is supposed to be set with reference to the recommendations by the NHS Pay Review Body. The terms of reference of this body, often referred to as “independent”, mean that they are unlikely to make truly unaffordable recommendations, as two of their six considerations in making any recommendations are as follows:

the funds available to the Health Departments as set out in the Government’s Departmental Expenditure Limits; and
the Government’s inflation target.

Despite this, as recently as last month, Helen Whately, the minister of state for social care, was saying that the “government has to look overall at what is affordable”, adding that the PM has said ministers must be “responsible with the public finances…We take the advice and recommendations from the pay review bodies, but you’ll understand that government has to be responsible with the public finances. That’s why I can’t say here and now what the outcome of the whole process is going to be”.

The Government then finally confirmed that it would accept the recommendations of the Pay Review Body (report here), but that:

The government will fund this pay award through prioritisation within existing departmental budgets, with front line services being protected.

Existing budgets in the NHS were set on the basis of a 3.5% pay rise, rather than the 6% for most doctors, 8.1-10.3% for junior doctors and 5% for senior leaders which has been agreed. So it will mean a reduction in non pay budgets to meet the shortfall.

The NHS Confederation’s response is that:

If health leaders are expected to raid their own budgets to somehow plug this funding gap at local levels, it will almost certainly result in cutbacks to patient care elsewhere.

What they didn’t say was that the government will effectively be reducing their net spending on the NHS by not funding the award. As Richard Murphy has pointed out:

Firstly, all of these pay awards will be taxed. They extra pay will be the top part of a person’s pay. It’s likely that tax of 20% and NIC of 12% will be paid by each employee as a result.

On top of that employer’s NIC of 13.8% will be paid. In other words, of the gross cost (pay plus employer’s NIC), just over 40% will return to the Treasury in tax.

It makes no sense, in that case, to refuse that 40% back to the departments that are paying these people.

And that is even before you take into account indirect taxation and multiplier effects.

Not only does it make no sense for the government to use this of all moments to reduce their net contribution to the NHS, it also clearly goes against the wishes of the majority of voters. 82% think more funding is needed and support is found across all age groups, UK nations and across the political spectrum (63% among Conservative voters and 94% of Labour voters).

The main reason given by the government is that it “balances the need to keep inflation in check while giving some staff significant pay increases.” If that “balance” is achieved by robbing Peter of his operation due to a lack of beds or equipment in order to pay Dr Paul, then what sort of an achievement is that? And why, if the government are not prepared to actually fund the pay review body recommendations, do they have a say in whether they are accepted or not?

And this is not the first time. In July 2022, the failure to fully fund the recommended pay increase led, according to the NHS Confederation, to a shortfall of £1.8 billion, adding to the shortfall already due to inflation and increasing energy costs of over £4 billion. Then, as now, these increased costs will need to be absorbed by already over-stretched individual NHS trusts.

This will mean further additional avoidable deaths and more record waiting lists. It is a policy which is anything but balanced.

Sleaford-upon-Sea and the future none of us wants

05. July 2023 · Write a comment · Categories: Birmingham, Climate Change, Demographics, Economics, Prediction, Science Fiction

https://coastal.climatecentral.org/map/9/0.0491/52.7048/?theme=warming&map_type=decadal_slr&basemap=roadmap&contiguous=true&elevation_model=best_available&esl_model=ipcc_2021&percentile=p50&refresh=true&slr_year=2100&temperature_rise=2.7&temperature_unit=C

The year is 2100. Earth is approaching a peak population of 9.5 billion people. Despite some notable progress in decarbonising our activities and more progress on carbon capture of various types than expected 80 years ago, overall we have not managed to shift much off the Intergovernmental Panel on Climate Change (IPCC) middle-of-the-road shared socioeconomic pathway (SSP2). Some countries have done much better than others, with income inequality a problem both within and between them. Carbon emissions stayed fairly level until 2050 before starting to fall, but net zero has still not been achieved.¹

Temperatures have risen by 2.7 degrees compared to pre-industrial levels. Africa has split between a north which has seen a recovery of rainfall and a south which is no longer habitable for humans. The Indian monsoon rains have failed. The Himalayan glaciers providing the waters of the Indus, Ganges and Brahmaputra, the Mekong, Yangtze and Yellow rivers have reduced by 90% from their pre-industrial levels.

The Amazonian rain forest basin has dried out completely. In Brazil, Venezuela, Columbia, East Peru and Bolivia life has become increasingly difficult due to wild fires. Drought is now permanent in the sub-tropics and Central America. Australia has become the world’s driest nation.

In the US Gulf of Mexico high sea temperatures drive 180+ mph winds.² Flooding is widespread with sea levels having risen by 0.6 metres on average compared to 2020.³ Many plant species have become extinct as they were unable to adapt to such a sudden change in climate.

Food prices continue to soar, with temperatures, droughts and the inundation of arable land adversely affecting many crops. Massive migrations have led to increasingly severe military and police responses from the most popular destination countries. There is fear that we have not yet seen the end of the terrible costs of climate change, with temperatures continuing to rise.

England has a new Eastern coastline, which became a certainty once the decision was taken that the cost benefit analysis did not justify the expense on the massive coastal defences which would have been required to prevent it. Sleaford is now a seaside town. Birmingham is the only major city which has not been significantly affected by sea level rise⁴ and there are calls for the capital to be moved there. However London hangs grimly on following the failure of the Thames Barrier in the 2040s. An Intertidal Property Pricing Index (IPPI) has sprung up, which sucks in money as investors bet on the development opportunities in the aftermath of the catastrophe.⁵

This, or something like it, is the future we are currently on track for but none of us wants. So let’s change the trajectory.

Notes:

The IPCC’s SSP2 narrative description.
Mark Lynas, Six Degrees: Our Future On A Hotter Planet, Harper Perennial, 2008 for the scientific consensus at the time on the consequences of 3 degrees warming
https://sealevel.nasa.gov/ipcc-ar6-sea-level-projection-tool?type=global (accessed 5 July 2023)
https://coastal.climatecentral.org/ (accessed 5 July 2023) for the maps of England following 2.7 degrees warming by 2100 following current trajectories
IPPI borrowed from Kim Stanley Robinson’s depiction of a future New York after two pulses totalling 15 metres (50 feet) of sea level rise in New York 2140, Orbit, 2018

We have become the nightmare vendor

25. May 2023 · Write a comment · Categories: Cartoons, Climate Change, Demographics, Economics

For those of you who have ever bought or sold a house (and I realise that that is a dwindling proportion as we move down the age ranges), it occurred to me that the UK increasingly resembles the worst kind of vendor. The sort that removes the lightbulbs and the doorknobs before giving up possession.

Harold Macmillan referred to Margaret Thatcher’s Government “selling off the family silver” in response to the widespread privatisations of public assets at the time. This Government has gone further, denying funding to the health and social security safety net we all rely on to such an extent that, as Health Equity in England: The Marmot’s Review 10 Years On found in 2020:

people can expect to spend more of their lives in poor health;
improvements to life expectancy have stalled, and declined for women in the most deprived 10% of areas;
the health gap has grown between wealthy and deprived areas; and
living in a deprived area of the North East is worse for your health than living in a similarly deprived area in London, to the extent that life expectancy is nearly five years less.

However it is even worse than that. I once bought a house from a man who had done all of his own plumbing, despite being a telephone engineer. He proudly took me up to the airing cupboard, where the boiler room displayed piping of complexity which would not have been out of place on a nuclear submarine.

“Everything has its own stop cock.” He said. He might even have called them isolation valves. I just thought of how many different leaks were possible from what he had constructed.

And so it proved. We had a plumber on speed dial before long and, with every new job he undertook for us, most of which was to undo the “work” of which the former owner had been so proud, he used to intone “what a man”, more to himself than to us.

Brexit, even as its architects start to disavow it in the face of the increasingly overwhelming evidence of the bullet holes in our own feet, is our home-made plumbing. And I am sure that there are any number of people around the world, looking at us and intoning “what a man” to themselves. It no longer matters to most of us how much the Brexiteers think they have buffed up their sovereignty isolation valves. Every week brings a new story about another leak of what Macmillan endearingly referred to as our “treasure” that it has enabled.

On immigration, we are like that house on the street which noone from the area wants to go anywhere near. Neighbours only reluctantly enter into any kind of dispute about who should replace the shared fence. There is a huge-sounding dog which barks at you fiercely if you venture up the driveway, on which the only car is on bricks. It feels like, if we were to ultimately die as a nation, noone would notice for years until the smell coming from inside became too much for anyone to ignore any more.

Anyway, enough of all that. I am off to the Hay Festival tomorrow for my annual infusion of ideas, erudition and words just flowing all around me. And so I must leave you with a book recommendation. I will be taking The Golden Mole by Katherine Rundell with me, a brilliant beautifully illustrated book (illustrations by Talya Baldwin) with each chapter focused on a different endangered species. Sounds bleak? No! The writing is so good that you are soon just overwhelmed by the richness you hadn’t even been aware of and might otherwise never have been. I have been reading it very slowly as I really do not want it to end. As Katherine says about The Human at the end of the book, with a different take on treasure:

For what is the finest treasure? Life. It is everything that lives, and the earth upon which they depend: narwhal, spider, pangolin, swift, faulted and shining human. It calls out for more furious, more iron-willed treasuring.

I have this book because Katherine described it so compellingly in an interview at the Hay Winter Festival (a smaller one in November each year). She has also written a book about John Donne, the metaphysical poet, called Super-Infinite. I had not considered until now that I was remotely interested in John Donne, but I also cannot imagine that the week will pass without me buying this and reading it too.

Chasms

12. May 2023 · Write a comment · Categories: Demographics, Economics, Pensions, Science Fiction

I recently finished reading Chasm City by Alastair Reynolds, which I highly recommend. In it, sufficiently rich people have been able to buy a programme of treatments which make them immortal. Not that they can’t die, but they needn’t if they’re careful. Good science fiction, I thought.

Then I read Paul Kitson’s (the new UK Head of Pensions Consulting at EY) piece on LinkedIn where he wrote (bold mine):

Pension schemes, corporate sponsors, members – everyone, in fact – must now contend with a forward looking plan that (somehow!) considers on one side the possibility of future pandemic outbreaks shortening life expectancy, and on the other side the many £billions being spent on ‘regenerative medicine’ (AKA “the ending of ageing” or “escape velocity for death”!).

So perhaps not entirely, I thought.

In Chasm City, the immortals who live in “the Canopy” have two main problems:

Hanging on to their wealth and, if possible, increasing it, as forever is a long time to finance.
Boredom.

One particular group amuse themselves by hunting poor people in “the Mulch” (lower level where the poor live). Others indulge in increasingly dangerous pastimes to inject some urgency into the otherwise featureless expanse of their lives. No wealth moves from the Canopy to the Mulch, not even in a trickle.

I am just finishing Do Androids Dream of Electric Sheep by Philip K Dick (a classic, I know, but I hadn’t read it before, although I have seen Bladerunner). One of the features of the post-apocalyptic world of 1992 described are “mood organs” which allow you to dial up a given mood at any time, eg 481 is “awareness of the manifold possibilities open to me in the future” whereas 888 is the desire to watch TV, no matter what’s on it. Again, good science fiction, I thought.

Then I read a piece in this months’ Actuary magazine called Apt apps, about doctors being recommended by NICE to offer patients with insomnia the Sleepio app as an effective and cost-saving alternative to sleeping pills. So perhaps not entirely, I thought.

The first book was written in 2001 and the second in 1968, so it would seem that lead times are variable.

Both books deal with the fragility of identity, whether via memory implants and religious viruses in Reynolds’ book or how we go about separating androids from people from “chickenheads” in Dick’s. The divisions between the life experiences of the different groups are so stark, but it is the characteristics of the people in them which takes up everyone’s time and attention in both books, rather than the structure of the societies which create such extreme winners and losers. Which suddenly doesn’t feel like science fiction at all.

Meanwhile what has happened to England’s life expectancies by decile of deprivation in the last 10 years?

Source: ONS https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthinequalities/bulletins/healthstatelifeexpectanciesbyindexofmultipledeprivationimd/2018to2020#health-state-life-expectancies-data

So not quite immortality yet at the top, but inequality is clearly worsening in life expectancy. The Government Actuary’s Department gave an upbeat view last year on what the impact of the recent Levelling Up White Paper might be. Others are upbeat too.

However the Government’s track record is not good on inequality. Sir Michael Marmot produced the Marmot Review on health inequalities in the UK in 2010 and then followed this up with a review of what progress had been made 10 years later. As he points out in his recent interview in The Actuary:

Health spending fell from around 42% to 35% during the 2010s. He notes that this reduction was carried out in a regressive way: “There has been a 16% reduction in health spending for the most affluent, but a 32% reduction for the most deprived groups.” In addition, he says, while unemployment fell over the course of the decade, the income of employed people also went down – so the proportion of people living in poverty rose, as did child poverty.

These are the kinds of interventions that matter for most people rather than sleep apps or regenerative medicine to achieve escape velocity from death. And they are definitely not science fiction.

A Tale of Two Weekends

08. May 2023 · Write a comment · Categories: Climate Change, Legal, Regulation

If I were John and John were Me,

Then he’d be six and I’d be three.

If John were Me and I were John,

I shouldn’t have these trousers on.

AA Milne

Two weekends, two weeks apart.

In each children spent hours preparing their own personal tributes to the focus of the weekend. Parents arranged accommodation. Face paints were in profusion. Cardboard constructions abounded. There were placards and banners and flags.

One got minute by minute coverage in hushed tones, with talking heads running out of things to say after 6 hours or so and then needing to start projecting what various people, having their every movement and facial tic filmed, might be betraying in a momentary expression. The other one was almost totally ignored, despite both events occupying almost exactly the same space in central London.

Imagine if the media priorities had been reversed:

“And, as the man with the giant mosquito on his head, slowly makes his way around Parliament Square, we reflect on how many hours must have gone into constructing that mighty insect. And now we see the scientists, garbed in their traditional white coats, making the point that no nature means no future. What a riot of colour it is and so many volunteers have given up their time, not only today but in the months of preparation for the Big One. So, Sir David, are you surprised by the number of children in the procession today?” “Not really, Huw…”

“Meanwhile in other news, police arrested a Mr Charles Windsor and his wife Camilla at their home. Police seized several crowns, an orb, sceptres, rings, some very large chairs and other paraphernalia which could be involved in coronation activity. Royalists claimed that the police had been ridiculously heavy-handed. The police said that their actions had been entirely proportionate.”

In Christopher Clark’s new book about the revolutions throughout Europe in 1848, Revolutionary Spring, he talks about the origins of radicals and liberals in opposition to the establishments of the day, divisions which still seem to be with us today. But it is our Government which is radical, prepared to do great violence to the status quo, the opposition which seems to be liberal, bogged down in endless arguments about tiny differences, and the BBC which appears to be left on its own representing what it sees as the current Establishment.

Now there will be many who say that journalists should not be involved in defending any status quo, and I can understand that. However it can also be argued that a state broadcaster like the BBC does have some responsibilities in this respect. But which status quo do you defend?

The Government’s agenda is problematic – it’s not just about the lying and the corruption, but the constant changing of position, the most obvious being the Kwarteng fiscal event in the autumn. Climate protesters are remarkably consistent by comparison, not surprisingly really as the limits imposed by physics are not changing with each quarter. And their focus of sustainability is surely the most critical part of any status quo which needs defending, ie the ability of the planet to support life in all of its forms.

Television is extremely good at focusing our attention on something, and away from something else. This is why companies spend so much on television advertising and why our televised sports halls and pitches and the combatants within them are festooned with logos and messages from a myriad of sponsors. However, the Communications Act 2003 prohibits political advertising, which includes campaigning for the purposes of influencing legislation or executive action by local or national (including foreign) governments. The BBC have interpreted this as not allowing any form of protest to be visible during televised sporting events (most recent example being the Just Stop Oil protest with the orange powder at the World Snooker Championship), an event for which the title sponsor is Cazoo, Europe’s leading online car retailer. Similarly, the police have said that one of the considerations in their level of policing response to the Republic demonstrations this weekend, including pre-arrests before the procession or any protest had taken place, had been the wall-to-wall television coverage of the event.

46% of the UK population are very or extremely worried about climate change, but the biggest demonstration in the UK in the climate movements’s history was not covered on television at all. 62% of the UK population support the monarchy and we get all the main channels turned over to coronation coverage. I think what I am calling for is a bit more balance here, something we used to think, with some pride, was a national characteristic.

The Parable of the Boiling Frog

28. April 2023 · Write a comment · Categories: Birmingham, Climate Change, Economics, Science Fiction

Source: https://commons.wikimedia.org/wiki/File:Green_frog_(Pelophylax_esculentus_complex)_Danube_delta.jpg by Charles J. Sharp, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

It has been quite a year for reading great books and being inspired by them for me: from An Immense World by Ed Yong last April, to Regenesis by George Monbiot and The Lathe of Heaven by Ursula Le Guin in October, to a great trio of reads in 2023 of The Capital Order by Clara Mattei, When The Lights Went Out by Andy Beckett and The Left Hand of Darkness by Ursula Le Guin. And that is just the books I have blogged about.

However, my stand out book this year is none of these. I have often heard people say they wish they had written some book or other, and I have never understood it until now. This is the book I would hope that a better version of me might have written in a parallel universe. Fortunately for you, Simon Sharpe has written Five Times Faster in this universe, and I am so glad he has.

Five Times Faster is funny, constantly surprising and has reframed my entire attitude to the climate crisis and what can be done about it. Perhaps it had more intensity for me as I read most of it aboard the XR bus from Birmingham down to London last weekend, but it has given me more hope for what Kim Stanley Robinson calls “dodging the mass extinction event” than I have had for some time.

Amongst the many wonders of this book is to reframe the time-worn story of the frog sitting in water which is slowly coming to the boil as a series of conversations with its science adviser, its economics adviser and its diplomatic adviser. To do it full justice you will need to read the book, but the gist of it goes as follows:

First of all, the frog asks its science adviser to investigate whether the water really is getting warmer. The science adviser confirms that it is, and also predicts that, in 5 minutes’ time, it will be a further 2^o warmer, plus or minus 1^o. The frog says it didn’t want a prediction, it wanted a risk assessment. It takes a while to get the science adviser to understand what this is but then, when asked what’s the worst that could happen, the adviser blurts out “That’s easy. You could boil to death.” In response to the question of how likely that is to happen, the adviser says that it would be very unlikely after 5 minutes, more likely than not after 10 and after 15 a certainty. So the frog now realises it needs to jump out of the pot.

The frog now turns to its economics adviser to ask how it should go about it. The economics advisor does a cost benefit analysis by first calculating the energy cost per cm of moving up the pot away from the water, converting this first into food consumption and then money, and equating this with the frog’s willingness to pay for not being boiled, which is derived from its air conditioning bill. The most efficient solution turns out to be to climb 4.73 cm up the side of the pot. Worried that it would just be replacing the risk of being boiled with one of being steamed to death, the frog ignores its economics adviser and jumps out of the pot.

Finally the general problem of the frogs and the relentlessly boiling water is put to the negotiators for a diplomatic solution. The sides of the pot are too high by now for most of them to jump out. The negotiators tell them they just need to raise their ambition and that this is the only game in town. The consequences of not accepting that analysis and looking at alternative salientian strategies make up the final third of the book.

I cannot recommend it highly enough. If enough people read it and act upon it, perhaps we can avoid this:

Source: https://commons.wikimedia.org/wiki/File:2012_Froschschenkel_anagoria.JPG Anagoria, CC BY 3.0 https://creativecommons.org/licenses/by/3.0, via Wikimedia Commons

There are three less visible battles to win if we are to decarbonise five times faster than we have done in the last 20 years – and the good news is that actuaries can help!

20. April 2023 · Write a comment · Categories: Actuarial, Cartoons, Climate Change, Economics

In Simon Sharpe’s great new book Five Time Faster, he points out that, if we are going to decarbonise everything, “it’s not just the physical plumbing of the global economy that needs to be replaced, but the intellectual plumbing.” In a blog post from January, Three less visible battles to win, Simon mentions three targets in particular for this intellectual plumbing:

Infrastructure that makes sure heads of government know just how bad climate change could get;
Ideas in economics that exert a critical influence over governments’ policy decisions; and
Institutions in diplomacy that will get the job done.

The first one means targeting the Integrated Assessment Models which have informed so much of our hesitancy and inappropriate prioritisations over the last 20 years where climate is concerned. I have written about this several times before, and this is something actuaries can contribute to much more in the future.

The second is at a much earlier stage, but the opening session in the current IFoA Presidential Speaker Series programme of talks indicates a greater confidence amongst actuaries to talk about, and influence, a more pluralist economic future.

And the third one will I believe become much more tractable once the intellectual tide starts to change.

I will be heading down with my banner to London tomorrow for Extinctions Rebellion’s Big One, alongside 90 other organisations united in demonstrating for a survivable future. Hope to see you there!

The Governor’s Own Speech Didn’t Even Justify His Monetary Policy

18. April 2023 · Write a comment · Categories: Economics

I am returning to the scene of my ~~crime~~ cartoon, which did not really deal with what the Governor of the Bank of England was saying as it was more a criticism about how he was saying it. However in response to a comment on my piece, I also realised that I was critical of what he was saying too. My criticism centres on the following graph:

*Source: https://www.bankofengland.co.uk/speech/2023/march/andrew-bailey-speech-at-london-school-of-economics*

As Andrew Bailey’s speech acknowledges:

“As you can see in blue…, long-term sickness has driven much of the persistent rise in inactivity amongst 16 to 64 year olds since the start of the pandemic. That is a striking fact.”

This is backed up by recent research carried out by LCP, whose conclusions included the following:

The rise in working age inactivity is not purely amongst those over 50; at the time of the Autumn Statement, nearly half the increase had come from the under 50s, with a big rise in the number of students a major factor;
Data on flows into and out of long-term sickness show that persistently high inflows into long-term sickness are a key problem; one growing group is those who flowed into long-term sickness having been previously categorised as ‘short-term sick’; this suggests that failure to address short-term sickness, including through clinical intervention, could have contributed to the increase in long-term sickness;
Amongst the entire economically inactive population of working age, very few of those who are retired say they ‘want a job’, whereas over 600,000 of the long-term sick say they would like to work if they could; this suggests that policies designed to help the long-term sick are ‘pushing at an open door’ in terms of supporting people who would actually go back to work given the right opportunities and treatment;

The “striking fact” for me is that the Governor of the Bank of England, faced with very similar data to LCP, instead concluded the following:

…the rise in economic inactivity is a change to the supply of labour, independent of demand, in particular by older workers. If those workers have accumulated enough savings to sustain a desired level of consumption much like the one they had before their early retirement, at least for a while, aggregate demand will not have fallen by as much as aggregate supply. We should expect this to put upward pressure on inflation in a way that would call for a higher level of interest rates to dampen demand.

But this is a comment on a dataset which shows most new inactivity is in the over 50s (which it isn’t) and that there is no large group of people currently economically active who wish to return to work given the right levels of support (there are 600,000 of the long-term sick in this category). What the LCP report concludes plausibly from the data is that policies designed to help the long-term sick who want to go back to work given the right opportunities and treatment and those designed to support the NHS to increase its capacity in primary care and mental health services in particular, would have much more impact on the number of people defined as economically inactive. As the LCP report says:

Clearly, a range of policy initiatives will be required to tackle economic inactivity, and these will include measures to reduce the ‘inflow’ into inactivity (eg people currently in work retiring or going off sick), but in terms of measures designed to increase the ‘outflow’ from inactivity, doing more for the long-term sick is likely to be far more effective than concentrating on those people who have already retired.

Meanwhile, the Governor of the Bank of England has an interest rate hammer for a tool and he therefore needs the problems he is addressing to look as much like a nail as possible (my explanations in non-italics):

So while population ageing is very likely to pull long-run R* down (this is the long-run average real equilibrium interest rate, net of inflation, averaged over the economic cycle), as I discussed earlier, the effects on shorter-run r* (which is the theoretical equilibrium rate of interest at a given point in the economic cycle) from a change in labour force participation are harder to assess. In the shorter run, by reducing the productive capacity of the economy, the rise in inactivity driven by early retirement (which is virtually non-existent as his own graph shows) seems likely to have contributed to a rise in cyclical r*. This is part of the reason why we have had to raise Bank Rate by as much as we have.

But what about a rise in inactivity caused by long-term sickness? Interestingly, Jonathan Haskel, another MPC member who also voted for the latest rate rise, recently presented some fascinating work with Josh Martin on long-term sickness and labour market outcomes. Amongst the implications of the rapid rise in long-term sick amongst the UK’s economically inactive population are:
• Long-term sickness is more than just a reason for economic inactivity – many in-work are long-term sick;
• The out of work long-term sick have high rates of wanting jobs, but less success in getting them, which suggests cultural or structural barriers.

Making their lives more difficult by interest rate rises which increase their living costs and reduce the security of any employment they may already have seems an odd way to solve either of these problems.

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