It’s always the story

25. February 2026 · Write a comment · Categories: Actuarial, AI, Economics, Education, Media & Politics, Professions, Risk, Science Fiction

The Actuary magazine recently had a debate about whether the underlying data or the story you wove around it was more important. I’m not sure there is always a clear distinction between the two, as Dan Davies rather neatly illustrates here, but my view is that, if a binary choice has to be made, it is always going to be the story. And there was a great example of this which popped up recently in the FT.

The FT article was ‘Is university still worth it?’ is the wrong question, by John Burn-Murdoch, with great graphs as usual by John. However, as is sometimes the case, I feel that a very different and more convincing story could be wrapped around the same datasets he is showing us.

The article’s thesis is as follows:

The graduate earnings premium, ie how much more on average graduates earn than non-graduates, has only fallen in the UK as the proportion going to university has risen. It has risen in other countries:

In the UK, we have had much weaker productivity growth than the other comparator countries, and also “the steady ramping up of the minimum wage has squeezed the earnings premium from the lower end too”:

We have also had a much smaller increase in the percentage of managerial and professional jobs than a different group of comparator countries (they haven’t mentioned Germany before), meaning graduates are forced to take lower salaried jobs elsewhere:

So the answer according to the FT? We should focus on economic growth rather than “tweaking” higher education intake and funding. Then graduate earnings would be higher, student loans could be more generous(!) and students would have more chance of getting a good job.

Well perhaps. But here’s a different framing of the same data that I find more persuasive.

Let’s start by addressing that point about the minimum wage. According to the House of Commons Library report on this, the UK’s minimum wage is broadly comparable to that of France and the Netherlands, although higher than Canada’s and much higher than that of the United States. The employers who are the FT’s constituency would obviously like us lower down this particular chart:

The main economic framing here is the progress myth of the UK’s business community: economic growth. All problems can be solved if we can just get more economic growth. Apparently we need more inequality in pay between graduates and non-graduates which we can get by generating more economic growth. This is honest of them at least, although I don’t see much evidence that the economic growth they crave will go into skilled job creation rather than stock buy backs (according to Motley Fool, “Companies spent $249 billion on stock buybacks in Q3 2025, and $777 billion over the first three quarters of 2025.”).

There are a lot of problems with framing every economic question with respect to economic growth, memorably illustrated by Zack Polanski of the Green Party in this less than 3 minute video recently (I strongly recommend you watch it before you read on – click on the read in browser link if you can’t see it):

Economic growth is increasingly without purpose, wasteful of energy and poorly distributed. It is chasing outputs, literally any outputs, whatever the cost to the environment, our health system, our education system, our social support systems and our communities. Looking at the framing above, you can see that economic growth as currently pursued will always see anything which stops the concentration of wealth amongst the already wealthy, like a higher national minimum wage or a totally made-up concept like a lower graduate earnings premium (which in itself is a framing trying to make reducing inequality seem undesirable) as a problem. Lack of productivity growth, itself a proxy for this kind of economic growth (because if you ask why we need more productivity the answer is always to get more economic growth), is usually directed as a criticism at “lazy” UK workers, rather than under-investing and over-extracting UK business owners.

But what if, instead of economic growth, your progress myth was reducing inequality? Or growing equality within the economy?

Source: World Inequality Database wid.world

If you focused on inequality rather than economic growth, then you would find it correlates with everything we say we don’t want. Unlike economic growth, having equality as an aim actually has the advantage of having an evidence base for the claim that it improves society:

Source: https://media.equality-trust.out.re/uploads/2024/07/The-Spirit-Level-at-15-2024-FINAL.pdf

If you focused on inequality, then you would be pleased that we have had an increase in our minimum wage. You would think that the same FT article’s admission that UK graduates’ skills levels are higher than those in the United States was more important than something called a graduate earnings premium.

Burn-Murdoch is right to say asking whether university is worth it is the wrong question.

However economic growth is the wrong answer.

And I thought I would probably be stopping there for this week. But then something odd happened. A “Thought Exercise” set in June 2028 “detailing the progression and fallout of the Global Intelligence Crisis” (ie science fiction), published on 23 February, may have tanked the share price of IBM later that day. The fall definitely happened, with IBM’s share price falling 13%, its biggest fall since 2000, alongside smaller falls in other tech stocks.

Source: https://markets.ft.com/data/equities/tearsheet/summary?s=IBM:NYQ

According to the FT:

Investors have recently seized on social media rumours and incremental developments by small AI companies to justify further selling, with a widely circulated blog post by Citrini Research over the weekend describing how AI could hypothetically push the US unemployment rate above 10 per cent by 2028, proving the latest catalyst.

The likelihood of the scenario portrayed is difficult to assess, but the speed with which the total economic collapse happens subsequently as described feels unlikely if not impossible. However the fact that the markets are this jittery tells us something I think. As Carlo Iacono puts it:

We are living through a period in which the gap between “plausible narrative” and “tradeable signal” has collapsed to nearly nothing. When a scenario feels real enough to model, and the underlying anxiety is already there waiting to be organised, fiction and forecast become functionally indistinguishable.

The data underlying the markets hasn’t changed, but the story has. I rest my case.

The fog on AI is all mine, all mine

18. February 2026 · Write a comment · Categories: AI, Prediction, Regulation, Risk, Science Fiction
Het Scheepvaartmuseum, Amsterdam, in the fog. Another museum which is well worth a visit

To be read to the accompaniment of Lindisfarne singing Fog on the Tyne, or possibly Kate Bush singing The Fog.

Reporting on AI is all over the place, in both meanings of that phrase. Some think it is very dangerous but that the people working on it should be trusted to police it themselves. Some are retreating from prediction but are instead trying to draw a coastline “knowing the interior is mostly fog”. Some are playing war games in the Arctic with different LLMs. But everyone seems fairly confident they have a hot take. I wonder.

The book I finished this weekend had a passage about a first experiment with a new substance which could shield against gravity. Mr Cavor, the rather unworldly scientist, is explaining to Mr Bedford, a man with no obvious talents other than to look for a quick buck where he can find one, what would have happened if his substance, Cavorite, had not got dislodged fairly quickly from where they had positioned it:

“You perceive,” he said, “it formed a sort of atmospheric fountain, a kind of chimney in the atmosphere. And if the Cavorite itself hadn’t been loose and so got sucked up the chimney, does it occur to you what
would have happened?”

I thought. “I suppose,” I said, “the air would be rushing up and up over that infernal piece of stuff now.”

“Precisely,” he said. “A huge fountain—”

“Spouting into space! Good heavens! Why, it would have squirted all the atmosphere of the earth away! It would have robbed the world of air! It would have been the death of all mankind! That little lump of stuff!”

“Not exactly into space,” said Cavor, “but as bad—practically. It would have whipped the air off the world as one peels a banana, and flung it thousands of miles. It would have dropped back again, of course—but on an asphyxiated world! From our point of view very little better than if it never came back!”

I stared. As yet I was too amazed to realise how all my expectations had been upset. “What do you mean to do now?” I asked.

“In the first place if I may borrow a garden trowel I will remove some of this earth with which I am encased, and then if I may avail myself of your domestic conveniences I will have a bath. This done, we will converse more at leisure. It will be wise, I think”—he laid a muddy hand on my arm—“if nothing were said of this affair beyond ourselves. I know I have caused great damage—probably even dwelling-houses may be ruined here and there upon the country-side. But on the other hand, I cannot possibly pay for the damage I have done, and if the real cause of this is published, it will lead only to heartburning and the obstruction of my work. One cannot foresee everything, you know, and I cannot consent for one moment to add the burden of practical considerations to my theorising…”

The extract is, of course, from HG Wells’ classic The First Men in the Moon, published in 1901.

In case you are in any doubt, Dario Amodei is our Mr Cavor here. I can just imagine his response to the first disaster attributed to AI research being prefaced by “one cannot foresee everything, you know…”. And there are too many Mr Bedfords out there to shake a stick at, trying to sell you anything they can possibly attribute to AI just to keep the whole thing rolling along.

I am with the fog people. The FT seem to be too, with this pair of diagrams attached to this article.

First the US, where there are tentative signs of something they can possibly use as a proxy for productivity growth as a result of using AI:

Source: https://www.ft.com/content/d6fdc04f-85cf-4358-a686-298c3de0e25b

And this one for the UK, where there aren’t:

And so it was this foggy sensibility about AI which I took with me to the Bletchley Park Museum last weekend, site of the AI Safety Summit in November 2023 which drew in the US Vice President, Kamala Harris, European Commission President Ursula von der Leyen, Elon Musk, then UK Prime Minister Rishi Sunak, Open AI’s Sam Altman, Meta’s Nick Clegg and Prof Yann LeCun, Meta’s chief AI scientist, amongst around 100 guests invited to suck their teeth about AI.

The thing that particularly struck me at Bletchley Park is that it demystified the emergence of the computer for me. The forerunner, which was the mechanisation using punch cards of the process of sorting the massive amounts of data the centre was receiving in war time, smacks of a group of people who had just run out of wall to spread their webs of cards and strings across. It was a crime investigation which had got out of hand.

A highlight for me was Alan Turing’s very prescient little note about AI, written in 1940 but anticipating the arguments which would be raging by 2026 (and how poignant that the man who probably did more than anyone to transform what we are able to do by punching a keyboard was chained to one that could only press hunks of metal against a strip of carbon onto a piece of paper):

There is also a hilarious secrecy pledge from the ancestors of the safety summit people, telling you all the ways in which you just need to shut up:

“There is an English proverb none the worse for being seven centuries old:” it thunders.

Wicked tongue breaketh bone,

Though the tongue itself hath none.

Words to live by, I’m sure we’d all agree.

What Bletchley Park was less good at was explaining how the Enigma code was cracked, despite an excellent collection of the hardware involved. For that, I recommend Simon Singh’s The Code Book.

Here was the world’s first “intelligence factory”, scaling up intelligence gathering and analysis as never before and by so doing also changing the way governments would interact with their populations, with just as many implications for our current times as the development of AI. This cluster of huts around a country house rebranded as GCHQ and moved to Cheltenham a few years after World War 2.

Path dependence is a term which describes a situation where past events or decisions constrain later events or decisions. Bletchley Park feels like the Museum of Path Dependence to me.

And the legacy of the safety summit? Well my “hot take” would be: when you are a little lost in the fog, it is generally advisable to slow down a bit and take steps to reduce your risk of breaking things. I wonder if I can get that on a bumper sticker.

This is one adolescent we don’t want to grow up

03. February 2026 · Write a comment · Categories: AI, Economics, Media & Politics, Regulation, Risk, Science Fiction
In ordering #5, self-driving cars will happily drive you around, but if you tell them to drive to a car dealership, they just lock the doors and politely ask how long humans take to starve to death. Source: https://m.xkcd.com/1613/

To be read to the soundtrack of Bruce Springsteen singing Streets of Minneapolis.

My attention was drawn this week to an article by Dario Amodei, co-founder of Anthropic (a spin off from OpenAI, which was co-founded by Elon Musk and heavily invested in by Microsoft so very much part of the Magnificent 7 architecture), the creator of the large language model Claude, called The Adolescence of Technology. It is hard to overemphasise how much I disagree with everything Dario has written here, but also useful in that it is a long article, which covers a lot of ground, and allows me to define my views in opposition to it.

The irritations start pretty much straight away. So Dario quotes from a science fiction classic (Carl Sagan’s First Contact), but then follows this up under the heading of “Avoid doomerism” with this:

…but it’s my impression that during the peak of worries about AI risk in 2023–2024, some of the least sensible voices rose to the top, often through sensationalistic social media accounts. These voices used off-putting language reminiscent of religion or science fiction, and called for extreme actions without having the evidence that would justify them.

Notice the word “sensible” doing the heavy lifting there. Only science fiction endorsed by Dario will be considered. Dario wants us to consider the risks of AI in “a careful and well-considered manner”, which sounds reasonable, but then his 3rd and final bullet under this (after “avoid doomerism” and “acknowledge uncertainty”) goes as follows:

Intervene as surgically as possible. Addressing the risks of AI will require a mix of voluntary actions taken by companies (and private third-party actors) and actions taken by governments that bind everyone. The voluntary actions—both taking them and encouraging other companies to follow suit—are a no-brainer for me. I firmly believe that government actions will also be required to some extent, but these interventions are different in character because they can potentially destroy economic value or coerce unwilling actors who are skeptical of these risks (and there is some chance they are right!).

So reflexively anti regulation of his own industry, of course. And voluntary actions by corporations, an approach to solving problems which has been demonstrated not to work repeatedly, is apparently “a no-brainer”. Also it is automatically assumed that government actions will destroy value. Only market solutions will be endorsed by Dario, pretty much until they have messed up so badly you are forced to bring governments in:

To be clear, I think there’s a decent chance we eventually reach a point where much more significant action is warranted, but that will depend on stronger evidence of imminent, concrete danger than we have today, as well as enough specificity about the danger to formulate rules that have a chance of addressing it. The most constructive thing we can do today is advocate for limited rules while we learn whether or not there is evidence to support stronger ones.

There is then the expected sales pitch about what he has seen within Anthropic about the relentless “increase in AI’s cognitive capabilities”. And then the man who warned about sensationalist science fiction is off:

I think the best way to get a handle on the risks of AI is to ask the following question: suppose a literal “country of geniuses” were to materialize somewhere in the world in ~2027. Imagine, say, 50 million people, all of whom are much more capable than any Nobel Prize winner, statesman, or technologist.

And the rest of the article is then off solving this imaginary problem in all its facets, rather than the wealth and power concentration problem that we actually have. The only legislation he seems to be in favour of seems to be something called “transparency legislation”, legislation which of course Anthropic would help to write.

However, after suggesting everything from isolating China and using “AI to empower democracies to resist autocracies” to private philanthropy as the solutions to his imagined problems, Dario finally and reluctantly concludes government intervention might after all be necessary as follows:

…ultimately a macroeconomic problem this large will require government intervention. The natural policy response to an enormous economic pie coupled with high inequality (due to a lack of jobs, or poorly paid jobs, for many) is progressive taxation. The tax could be general or could be targeted against AI companies in particular. Obviously tax design is complicated, and there are many ways for it to go wrong. I don’t support poorly designed tax policies. I think the extreme levels of inequality predicted in this essay justify a more robust tax policy on basic moral grounds, but I can also make a pragmatic argument to the world’s billionaires that it’s in their interest to support a good version of it: if they don’t support a good version, they’ll inevitably get a bad version designed by a mob.

That, by the way, is what Dario thinks of democracy: “a bad version designed by a mob” rather than the “good version” that he and his fellow billionaires could come up with in their own self interest. The mask has really slipped by this point. And the following section, on “Economic concentration of power”, just demonstrates that he has no effective answers at all that he deems acceptable on this. It’s just an inevitability for him.

This is what Luke Kemp’s excellent Goliath’s Curse refers to as a “Silicon Goliath”. Goliaths are dominance hierarchies which spread by dominating the areas around them. They need three conditions (which Luke calls “Goliath fuel”): lootable resources (ie resources which can be easily stolen off someone else), caged land (ie land difficult to escape from) and monopolizable weapons (ie ones which require processes which can be developed to give one society an edge over another). We are all Goliath-dwellers in “The West” now, looting resources from other countries in unequal exchanges which impoverish the Global South, with weapons (eg nuclear weapons) available only to the elite few countries and operating within the cages of heavily-policed national boundaries. The Silicon Goliath which is developing will have data as its lootable resource, mass surveillance systems providing its cages and monopolizable weapons such as killer drones. The resultant killbot hellscapes which people like Dario Amodei laughably imagine they have defences against through things like their Claude’s Constitution are almost pitiful in their inadequacy.

Nate Hagens takes Dario’s claims for AI’s cognitive capabilities much more seriously than me, and then considers the risks in a less adolescent way here. As he says:

And here’s what his essay has almost nothing about. Energy, water, materials, or ecological limits.

And also nowhere does Dario talk about the 99% of people who are just spectators in his world, other than to describe them as “the mob”. This is quite a blind spot, as Luke Kemp points out in his exhaustive study of the collapses of “Goliaths” over the last 5,000 years. “The extreme levels of inequality” predicted by Amodei in his essay are not just things we have to put up with, but the reasons the world he predicts is likely to be hugely unstable. Not created by AI, but accelerated by it. Kemp describes it as “diminishing returns on extraction”:

We see a pattern re-emerging across case studies. Societies grow more fragile over time and more prone to collapse. Threats that they had always faced such as invaders, disease and drought seem to take a heavier toll.

As societies grew bigger:

They still faced the underlying (and ongoing) problem of rising inequality creating societies where and institutions more extractive power was more concentrated.

And eventually:

The result is more extractive institutions creating growing instability, internal conflict, a drain of resources away from government, state capture by private elites, and worse decision-making. Society – especially the state – becomes more fragile. Private elites tend to take a larger share of extractive benefits. The state, and many of the power structures it helps prop up, then usually falls apart once a shock hits: for Rome it was climate change, disease, and rebelling Germanic mercenaries; for China it was often floods, droughts, disease and horseback raiders; for the west African kingdoms it was invaders and a loss of trade; for the Maya it was drought and a loss of trade; and for the Bronze Age it was drought, a disruption of trade and an earthquake storm.

The only real answer to combatting existential risks in the hands of adolescents like the Tech Bros is more democracy: over control of decision-making, over control of resources, over control of the threat of violence and over control of information. We are a long way from achieving these within our own particular Goliath at the moment, and indeed there is no sign at all that our elites are interested in achieving them. The Magnificent 7 are propping up the US stock exchange. The promise of perpetual economic growth is the progress myth of our time and leaders who do not provide it will lose the “Mandate of Heaven” in just the same way as Chinese rulers did when they were unable to prevent floods and droughts. Adam Tooze sees the signs of the inner demons of our elites starting to detach them from reality in the latest disclosures from the Epstein files:

Are we, like [Larry] Summers, fantasizing about stabilizing our desires and needs in an inherently dangerous and uncertain world? Are we kidding ourselves?

But, without those controls in place, we would need a lot more than Dario’s Anthropic playing nicely to allow this particular adolescent to grow up. And this is where I am forced to take Nate Hagens’ assessment more seriously. Because if our rulers’ Mandates of Heaven are dependent on eternal economic growth on their watch and they, rightly, think that this is not possible in our current non-AI-enhanced world but, wrongly, think it is possible in a future AI-enhanced world, then that is the way they are going to demand we go. And, if the Larry Summers fantasists really are kidding themselves, it may be very hard to talk them out of it.

Parasol Lost: new mindset needed

20. January 2026 · Write a comment · Categories: Actuarial, Climate Change, Economics, Media & Politics, Pensions, Professions, Regulation, Risk

I have spent many days in rooms with groups of men (always men) anxious about their future income, where I advised them on how much to ask their companies for. Most of my clients as a scheme actuary were trustees of pension schemes of companies which had seen better days, and who were struggling to make the necessary payments to secure the benefits already promised, let alone those to come. One by one, those schemes stopped offering those future benefits and just concentrated on meeting the bill for benefits already promised. If an opportunity came to buy those benefits out with an insurance company (which normally cost quite a bit more than the kind of “technical provisions” target the Pensions Regulator would accept), I lobbied hard to get it to happen. In many cases we were too late though, the company went bust and we moved it into the Pension Protection Fund instead. That was the life of a pensions actuary in the West Midlands in the noughties. I was often “Mr Good News” in those meetings, the ironic reference to the man constantly moving the goalposts for how much money the scheme needed to meet those benefits bills. I saw my role as pushing the companies to buy out funding if at all possible. None of the schemes I advised had a company behind them which could sustain ongoing pension costs long term. I would listen to the wishful thinking and the corporate optimism, smile and push for the “realistic” option of working towards buy out.

Then I went to work at a university, and found myself, for the first time since 2003, a member of an open defined benefit pension scheme. It was (and still is) a generous scheme, but was constantly complained about by the university lecturers who comprised most of its membership. I didn’t see any way that it was affordable for employers which seemed to struggle to employ enough lecturers, were very reluctant to award anything other than fixed term contracts, and had an almost feudal relationship with their PhD students and post docs. Staff went on strike about plans to close the scheme to future accrual and replace it with the most generous money purchase scheme I had ever seen. I demurred and wrote an article called Why I Won’t Strike. I watched in wonder when even actuarial lecturers at other universities enthusiastically supported the strike. However, over 10 years later, that scheme – the UK’s biggest – is still open. And I gained personally from continued active membership until 2024.

Now don’t get me wrong, I still think the UK university sector is wrong to maintain, unique amongst its peers, a defined benefit scheme. The funding requirement for it has been inflated by continued accrual over the last 8 years and therefore so has the risk it will spike at just the time when it is least affordable, a time which may soon be approaching with 45% of universities already reporting deficits. However the strike demonstrated how important the pension scheme was to staff, something the constant grumbling before the strike had led university managers to doubt. And, once the decision had been made to keep the scheme open to future accrual, I had no more to add as an actuary. Other actuaries had the responsibility for advising on funding, in fact quite a lot of others as the UCU was getting its own actuarial advice alongside that the USS was getting, but my involvement was now just that of a member, just one with a heightened awareness of the risks the employers were taking.

The reason I bring this up is because I detected something of the same position as my lonely one from the noughties amongst the group of actuaries involved in the latest joint report from the Institute and Faculty of Actuaries and the University of Exeter about the fight to maintain planetary climate solvency.

It very neatly sets out the problem, that the whole system of climate modelling and policy recommendations to date has been almost certainly underestimating how much warming is likely to result from a given increase in the level of carbon dioxide in the atmosphere. Therefore all the “carbon budgets” (amount we can emit before we hit particular temperature levels) have been assumed to be higher than they actually are and estimates for when we exhaust them have given us longer than we actually have. This is due to the masking effects of particulate pollution in the air, which has resulted in around 0.5C less warming than we would otherwise have had by now. However, efforts to remove sulphur from oil and coal fuels (themselves important for human health) have acted to reduce this aerosol cooling effect. The goalposts have moved.

An additional reference I would add to the excellent references in the report is Hansen’s Seeing the Forest for the Trees, which concisely summarises all the evidence to suggest the generally accepted range for climate sensitivity is too low.

So far, so “Mr Good News”. And for those who say this is not something actuaries should be doing because they are not climate experts, this is exactly what actuaries have always done. We started the profession by advising on the intersection between money and mortality, despite not being experts in any of the conditions which affected either the buying power of money or the conditions which affected people’s mortality. We could however use statistics to indicate how things were likely to go in general, and early instances of governments wasting quite a lot of money without a steer from people who understood statistics got us that gig, and a succession of other related gigs over the years ahead.

The difficult bit is always deciding what course of action you want to encourage once you have done the analysis. This was much easier in pensions, as there was a regulatory framework to work to. It is much harder when, as in this case, it involves proposing changes in behaviour which are ingrained into our societies. If university lecturers can oppose something that is clearly not in the long term financial interests of their employers and push for something which makes their individual employers less secure, then how much more will the general public resist change when they can see no good reason for it.

And in this regard this feels like a report mostly focused on the finance industry. The analogies it makes with the 2008 financial crash, constant comparisons with the solvency regulatory regimes of insurers in particular and even the framing of the need to mitigate climate change in order to support economic growth are all couched in terms familiar to people working in the finance sector. This has, perhaps predictably, meant that the press coverage to date has mostly been concentrated in the pension, insurance and investment areas:

However in the case of the 2008 crash, the causes were able to be addressed by restricting practices amongst the financial institutions which had just been bailed out and were therefore in no position to argue. Many of those restrictions have been loosened since, and I think many amongst the general public would question whether the decision to bail out the banks and impose austerity on everyone else is really a model to follow for other crises.

The next stage will therefore need to involve breaking out of the finance sector to communicate the message more widely, perhaps focusing on the first point in the proposed Recovery Plan: developing a different mindset. As the report says:

This challenge demands a shift in perspective, recognising that humanity is not separate from nature but embedded in it, reliant on it and, furthermore, now required to actively steward the Earth system.
To maintain Planetary Solvency, we need to put in place mechanisms to ensure our social, economic, and political systems respect the planet’s biophysical limits, thus preserving or restoring sufficient natural capital for future generations to continue receiving ecosystem services…

…The prevailing economic system is a risk driver and requires reform, as economic dependency on nature is unrecognised in dominant economic theory which incorrectly assumes that natural capital is substitutable by manufactured capital. A particular barrier to climate action has been lobbying from incumbents and misinformation which has contributed to slower than required policy implementation.

By which I assume they mean this type of lobbying:

And this is where it gets very difficult, because actuaries really do not have anything to add at this point. We are just citizens with no particular expertise about how to proceed, just a heightened awareness of the dangers we are facing if we don’t act.

But we can also, as the report does, point out that we still have agency:

Although this is daunting, it means we have agency – we can choose to manage human activity to minimise the risk of societal disruption from the loss of critical support services from nature.

This point chimes with something else I have been reading recently (and which I will be writing more about in the coming weeks): Samuel Miller McDonald’s Progress. As he says “never before have so many lives, human and otherwise, depended on the decisions of human beings in this moment of history”. You may argue the toss on that with me, which is fine, but, in view of the other things you may be scrolling through either side of reading this, how about this for a paragraph putting the whole question of when to change how we do things in context:

We are caught in a difficult trap. If everything that is familiar is torn down and all the structures that govern our day-to-day disintegrated, we risk terrible disorder. We court famines and wars. We invite power vacuums to be filled by even more brutal psychopaths than those who haunt the halls of power now. But if we don’t, if we continue on the current path and simply follow inertia, there is a good chance that the outcome will be far worse than the disruption of upending everything today. Maintaining status-quo trajectories in carbon emissions, habitat destruction and pollution, there is a high likelihood of collapse in the existing structure anyway. It will just occur under far worse ecological conditions than if it were to happen sooner, in a more controlled way. At least, that is what all the best science suggests. To believe otherwise requires rejecting science and knowledge itself, which some find to be a worthwhile trade-off. But reality can only be denied for so long. Dream at night we may, the day will ensnare us anyway.

One thing I never did in one of those rooms full of anxious men was to stand up and loudly denounce the pensions system we were all working within. Actuaries do not behave like that generally. However we have a senior group of actuaries, with the endorsement of their profession, publishing a report that says things like this (bold emphasis added by me):

Planetary Solvency is threatened and a recovery plan is needed: a fundamental, policy-led change of direction, informed by realistic risk assessments that recognise our current market-led approach is failing, accompanied by an action plan that considers broad, radical and effective options.

This is not a normal situation. We should act accordingly.

Dr Strangelove’s Voting System

16. December 2025 · Write a comment · Categories: Media & Politics, Prediction, Risk
The War Room with the Big Board from Stanley Kubrick’s 1964 film, ”Dr. Strangelove” Source=”Dr. Strangelove” trailer from 40th Anniversary Special Edition DVD, 2004

This is a piece about risk management. To be read to the soundtrack of The Beatles singing Revolution (the slow version from The White Album).

Dr Strangelove is a movie which can be described in many ways, but one way to think of it is as a movie where governance arrangements made in a different time are no longer adequate to the task at hand. General Ripper can only order a nuclear strike as a retaliatory nuclear attack on the Soviets if all of his superior officers have been killed in a first strike on the United States. However the aircraft crew’s knowledge of whether there has been a first strike is dependent upon a communication system which has been set to only accept messages preceded by a secret three-letter code known only to the same General Ripper. The Soviet Union has a Doomsday Machine of cobalt bombs, which would be automatically triggered as a nuclear deterrent if attacked, which would make the Earth uninhabitable for 93 years and only had a point if the United States were aware that it existed. However the Soviet leadership had delayed the announcement of its existence so that it could be a surprise for the following week’s Party Congress.

Our first past the post voting system can be described in many ways, but one way to think of it is as a set of governance arrangements made in a different time which are no longer adequate to the task at hand.

In July 2024, the UK General Election result looked like this:

Labour won 63% of the seats with 34% of the vote. The Government have therefore been reluctant to change the voting system. Despite a conference vote demanding it, it didn’t make it into their election manifesto. However fast forward 17 months and the polls look like this:

With one conversion into projected seats (by Electoral Calculus) looking like this:

So this time, Reform are predicted to have 48% of the seats based on 29% of the vote. This is no way to run a railroad. We need proportional representation now. Join the campaign here.

We have an example playing out across the Atlantic of a government taking on powers they don’t have to enact policies that noone voted for. And that is when they do have a constitution which they could use if they had the will, whereas, as David Allen Green said in October:

Our current constitutional arrangements are our Doomsday Machine. As The Institute for Government have found in their Review of the UK Constitution:

Weaknesses in the system of checks and balances have been exposed – the UK system is in theory self-regulating. It relies on those within it being willing to exercise restraint, adhering to largely unwritten rules of behaviour, and, when they fail to do so, facing political consequences. In recent years, various political actors have shown an increased willingness to test constitutional boundaries – seen most brazenly in proposals to break international law and by the executive repeatedly passing legislation on devolved matters without consent from their respective legislatures – with such political checks providing little impediment to them doing so. Debates over constitutional principle have increasingly been considered secondary to other political goals, and MPs, the media and the public have lacked sufficient understanding of the constitution to hold decision makers to account.

The problem with The Institute for Government in my view is their earnestness. It is the reason we can all remember Dr Strangelove from over 60 years ago when we have forgotten the almost identical subject matter of the far more po-faced Fail Safe (that, and the fact that Kubrick had their release date postponed by launching a lawsuit) and long after I expect us to have forgotten Bigelow’s recent A House of Dynamite. The thing is that, for me, the characters in Dr Strangelove remind me of the general ridiculousness of humanity and I don’t want them to die, even the mad ones. Whereas I find myself fairly indifferent to the fate of the relatively very serious cast of Dynamite. The Institute for Government‘s problem is that I feel the same way about some of their characters. Like Citizen Assembly for instance. Whenever this character is mentioned I find myself thinking of the Lennon line from The Beatles‘ Revolution:

“If you go carrying pictures of Chairman Mao, you ain’t gonna make it with anyone anyhow.”

We badly need a campaign capable of energising people about how we are governed. Something that, in my view, The Institute for Government are not currently providing.

And then there is the money. As Democracy for Sale have revealed, 75% of donations, totalling £23 million, to the likely ruling party at our next election have come from just three people. If you think there should be a cap on political donations you can sign the petition here. Think of the country owned by three people (and all for £23 million) and it starts to make Blackadder‘s Dunny-on-the-Wold, with its constituency of “three rather mangy cows, a dachshund named `Colin’, and a small hen in its late forties”, look positively democratic. You might as well put General Ripper in charge.

Our governance arrangements are satirising themselves at the moment. Let’s do something about it this year.

Boxes

24. October 2025 · Write a comment · Categories: Actuarial, Birmingham, COVID-19, Health, Legal, Media & Politics, Regulation, Risk
The warehouse at the end of Raiders of the Lost Ark

In the year when I was born, Malvina Reynolds recorded a song called Little Boxes when she was a year younger than I am now. If you haven’t heard it before, you can listen to it here. You might want to listen to it while you read the rest of this.

I remember the first time I felt panic during the pandemic. It was a couple of months in, we had been working very hard: to put our teaching processes online, consulting widely about appropriate remote assessments and getting agreement from the Institute and Faculty of Actuaries (IFoA) for our suggested approach at Leicester, checking in with our students, some of who had become very isolated as a result of lockdowns, and a million other things. I was just sitting at my kitchen table and suddenly I felt tears welling up and I was unable to speak without my voice breaking down. It happened at intervals after that, usually during a quiet moment when I, consciously or unconsciously, had a moment to reflect on the enormity of what was going on. I could never point to anything specific that triggered it, but I do know that it has been a permanent change about me, and that my emotions have been very much closer to the surface ever since. I felt something similar again this morning.

What is going on? Well I haven’t been able to answer that satisfactorily until now, but recently I read an article by David Runciman in the LRB from nine years ago when Donald Trump got elected POTUS the first time. I am not sure that everything in the article has withstood the test of time, but in it Runciman makes the case for Trump being the result of the people wanting “Trump to shake up a system that they also expected to shield them from the recklessness of a man like Trump.”. And this part looks prophetic:

[Trump is]…the bluntest of instruments, indiscriminately shaking the foundations with nothing to offer by way of support. Under these conditions, the likeliest response is for the grown-ups in the room to hunker down, waiting for the storm to pass. While they do, politics atrophies and necessary change is put off by the overriding imperative of avoiding systemic collapse. The understandable desire to keep the tanks off the streets and the cashpoints open gets in the way of tackling the long-term threats we face. Fake disruption followed by institutional paralysis, and all the while the real dangers continue to mount. Ultimately, that is how democracy ends.

And it suddenly hit me that this was something I had indeed taken for granted my whole life until the pandemic came along. The only thing that had ever looked like toppling society itself was the prospect of a nuclear war. Otherwise it seemed that our political system was hard to change and impossible to kill.

And then the pandemic came along and we saw government national and local digging mass graves and then filling them in again and setting aside vast arenas for people to die in before quietly closing them again. Rationing of food and other essentials was left to the supermarkets to administer, as were the massive snaking socially-distanced queues around their car parks. Seemingly arbitrary sets of rules suddenly started appearing at intervals about how and when we were allowed to leave the house and what we were allowed to do when out, and also how many people we could have in our houses and where they were allowed to come from. Most businesses were shut and their employees put on the government’s payroll. We learned which of us were key workers and spent a lot of time worrying about how we could protect the NHS, who we clapped every Thursday. It was hard to maintain the illusion that society still provided solid ground under our feet, particularly if we didn’t have jobs which could be moved online. Whoever you were you had to look down at some point, and I think now that I was having my Wile E. Coyote moment.

The trouble is, once you have looked down, it is hard to put that back in a box. At least I thought so, although there seems to have been a lot of putting things in boxes going on over the last few years. The UK Covid-19 Inquiry has made itself available online via a YouTube channel, but you might have thought that a Today at the Inquiry slot on terrestrial TV would have been more appropriate, not just covering it when famous people are attending. What we do know is that Patrick Vallance, Chief Scientific Advisor throughout the pandemic, has said that another pandemic is “absolutely inevitable” and that “we are not ready yet” for such an eventuality. Instead we have been busily shutting that particular box.

The biggest box of course is climate change. We have created a really big box for that called the IPCC. As the climate conferences migrate to ever more unapologetic petro-states, protestors are criminalised and imprisoned and emissions continue to rise, the box for this is doing a lot of work.

And then there are all the NHS boxes. As Roy Lilley notes:

If inquiries worked, we’d have the safest healthcare system in the world. Instead, we have a system addicted to investigating itself and forgetting the answers.

But perhaps the days of the box are numbered. The box Keir Starmer constructed to contain the anger about grooming gangs which the previous 7 year long box had been unable to completely envelop also now appears to be on the edge of collapse. And the Prime Minister himself was the one expressing outrage when a perfectly normal British box, versions of which had been giving authority to policing decisions since at least the Local Government (Review of Decisions) Act 2015 (although the original push to develop such systems stemmed from the Hillsborough and Heysel disasters in 1989 and 1985 respectively) suddenly didn’t make the decision he was obviously expecting. That box now appears to be heading for recycling if Reform UK come to power, which is, of course, rather difficult to do in Birmingham at the moment.

But what is the alternative to the boxes? At the moment it does not look like it involves confronting our problems any more directly. As Runciman reflected on the second Trump inauguration:

Poor Obama had to sit there on Monday and witness the mistaking of absolutism for principle and spectacle for politics. I don’t think Trump mistakes them – he doesn’t care enough to mind what passes for what. But the people in the audience who got up and applauded throughout his speech – as Biden and Harris and the Clintons and the Bushes remained glumly in their seats – have mistaken them. They think they will reap the rewards of what follows. But they will also pay the price.

David Allen Green’s recent post on BlueSky appears to summarise our position relative to that of the United States very well:

War Games

27. August 2025 · Write a comment · Categories: Climate Change, COVID-19, EIOPA, Health, Media & Politics, Risk

I watched The War Game this week, as it had suddenly turned up on iPlayer and I had not seen it before. It was the infamous film from 1966 on the horrors of a nuclear war in the UK that was not televised until 1985. It has been much lauded as both necessarily horrifying and important over the years, but what struck me watching it was how much it looked back to the period of rationing (which had only ended in the UK 12 years earlier) and general war-time organisation from the Second World War. It would be a very different film if made now, probably drawing on our recent experiences of the pandemic (when of course we did dig huge pits for mass burials of the dead and set up vast Nightingale hospitals as potential field hospitals, before the vaccines emerged earlier than expected).

But what about the threat of nuclear war which still preoccupied us so much in the 1980s but which seems to have become much less of a focus more recently? With the New START treaty, which limits the number of strategic nuclear warheads that the United States and Russia can deploy, and the deployment of land and submarine-based missiles and bombers to deliver them, due to expire on 5 February 5, negotiations between Russia and the United States finally appear to be in progress. However China has today confirmed that it does not want to participate in these.

In Mark Lynas’ recent book Six Minutes to Winter, he points to the Barret, Baum and Hostetler paper from 2013 which estimated the probability of inadvertent nuclear war in any year to be around 1%. This is twice the probability of insolvency we think acceptable for our insurance companies under Solvency II and would mean, if accurate, that the probability of avoiding nuclear war by 2100 was 0.99 raised to the power of 75 (the number of years until 2100), or 47%, ie less than a fifty-fifty chance.

That doesn’t seem like good enough odds to me. As Lynas says:

We cannot continue to run the daily risk of nuclear war, because sooner or later one will happen. We expend enormous quantities of effort on climate change, a threat that can endanger human civilisation in decades, but ignore one that can already destroy the world in minutes. Either by accident or by intent, the day of Armageddon will surely dawn. It’s either us or them: our civilisation or the nukes. We cannot both survive indefinitely.

The Treaty on the Prohibition of Nuclear Weapons (TPNW) was adopted at the UN in 2017 and came into force in 2021. In Article 1 of the Treaty, each state party to it undertakes never to develop, test, produce, possess, transfer, use or threaten to use nuclear weapons under any circumstances. 94 countries have signed the TPNW to date, with 73 full parties to it.

The House of Commons library entry on TPNW poses a challenge:

It is the first multilateral, legally binding, instrument for nuclear disarmament to have been negotiated in 20 years. However, the nuclear weapon states have not signed and ratified the new treaty, and as such, are not legally bound by its provisions. The lack of engagement by the nuclear weapon states subsequently raises the question of what this treaty can realistically achieve.

It then goes on to state the position of the UK Government:

The British Government did not participate in the UN talks and will not sign and ratify the new treaty. It believes that the best way to achieve the goal of global nuclear disarmament is through gradual multilateral disarmament, negotiated using a step-by-step approach and within existing international frameworks, specifically the Nuclear Non-Proliferation Treaty. The Government has also made clear that it will not accept any argument that this treaty constitutes a development of customary international law binding on the UK or other non-parties.

There are 9 nuclear states in the world: China, France, India, North Korea, Pakistan, Russia, Israel, the UK and the United States. Israel recently conducted a 12 day war with Iran to stop it becoming the 10th. Many argue that Russia would never have invaded Ukraine had it kept its nuclear weapons (although it seems unlikely that they would have ever been able to use them as a deterrent for a number of reasons). So the claims of these nuclear states that they are essential to their security are real.

But is the risk that continued maintenance of a nuclear arsenal poses worth it for this additional security? For the security only operates at the deterrence level. Once the first bomb lands we are no more secure than anyone else.

Which makes it all the more concerning when Donald Trump starts saying things like this (in response to a veiled threat by the Russian Foreign Minister about their nuclear arsenal):

“I have ordered two Nuclear Submarines to be positioned in the appropriate regions, just in case these foolish and inflammatory statements are more than just that. Words are very important, and can often lead to unintended consequences, I hope this will not be one of those instances.”

But with a probability of avoiding “unintended consequences” less than fifty-fifty by 2100? That really doesn’t feel like good enough odds to me.

The Magnificent 7 and the AI Bubble

19. August 2025 · Write a comment · Categories: AI, Risk
The 1960s version of The Magnificent Seven (itself a remake of Kurosawa’s Seven Samurai) before most of them were shot dead

In my last post, I suggested that there appeared to be a campaign to impugn the character of the younger generation as cover for reducing graduate recruitment, partly because of the desire to make AI systems of various sorts handle a wider and wider range of tasks. However there are other reasons why the value of AI needs to be promoted to the point where if your toaster or fridge is not using a chip they absolutely should be. It is all about the dependence of the US stock market on the so-called Magnificent 7 companies: Alphabet (Google), Apple, Meta (Facebook), Tesla, Amazon, Microsoft and Nvidia whose combined market capitalisation as at 22 July was 31% of the S&P500.

Nvidia? Who are they? They produce silicon chips. As Laura Bratton wrote in May:

As of Nvidia’s 2025 fiscal fourth quarter (the three months ending on Jan. 26 of this year), Bloomberg estimates that Microsoft spends roughly 47% of its capital expenditures directly on Nvidia’s chips and accounts for nearly 19% of Nvidia’s revenue on an annualized basis.

Meanwhile, 25% of Meta’s capital expenditures go to Nvidia and the company accounts for just over 9% of Nvidia’s annual revenue.

Amazon, Alphabet and Tesla are also big customers.

Nvidia is a growth stock, which means that it needs continued growth to support its share price. Once it ceases to be a growth stock then the kind of price earnings ratio it currently enjoys (nudging up to 60, by comparison the price earnings ratio of, say, HSBC is around 17.5) will no longer be acceptable to investors and a large correction in the share price will happen. So a growth slowdown in the Magnificent 7 is big news.

What would prevent a growth slowdown? Well a lot of processing-heavy sales for Facebook, Amazon, Apple and Google primarily. That is why there is now an AI overview of your Google search, why Rufus sits at the bottom of your Amazon search and everything appears to have a voice activated capability which can be accessed via Alexa or Siri these days.

Of course I am not arguing that there are not uses for large language models (LLMs) and other technologies currently wrapped up in the term AI. Seth Godin, usually a first mover in this space, has produced a set of cards with prompts for your LLM that you can tailor for various uses. Many people are seeing how AI applications can cut down the time they spend on everything from diary management to constructing PowerPoint presentations. There is no doubt that use of AI will have changed the way we do some things in a few years’ time. It will not, however, have replaced all of the jobs in Microsoft’s list, from mathematician to geographer to historian to writer. If you want a (much) fuller critique of what is misguided about the AI bubble, I refer you to The Hater’s Guide To The AI Bubble.

There is a lot of rough surrounding a few diamonds and the conditions for a bubble are all there. We know this because we have been here before. On 10 March 2000, the dotcom bubble burst. As Goldman Sachs puts it:

The Nasdaq index rose 86% in 1999 alone, and peaked on March 10, 2000, at 5,048 units. The mega-merger of AOL with TimeWarner seemed to validate investors’ expectations about the “new economy”. Then the bubble imploded. As the value of tech stocks plummeted, cash-strapped internet startups became worthless in months and collapsed. The market for new IPOs froze. On October 4, 2002, the Nasdaq index fell to 1,139.90 units, a fall of 77% from its peak.

Fortune are now claiming that the current AI boom is bigger than the dotcom bubble. And even leading figures in the AI industry admit that it is already a bubble.

This is where it gets interesting. The FT, in its reflection on these parallels, appears to be comforted by the big names involved this time:

To be sure, the parallels are not exact. They never are. While most of the dotcom companies were ephemeral newcomers, the Mag 7 include some of the world’s most profitable and impressive groups including Apple, Amazon and Microsoft, as well as the main supplier to the AI economy, Nvidia.

But of course this is the reason why it’s worse this time. We were able to manage without the “ephemeral newcomers”, although Amazon‘s share price fell by 90% over 2 years and Microsoft lost 60%, so the comparison is not quite true. However these companies were not the foundations of the economy then that they are now.

If Nvidia is the essential supply chain for all the other 6 of the Magnificent 7, then its own supply chain is equally precarious. As Ed Conway’s excellent Material World points out, Nvidia is “fabless” (ie without its own fabrication plant) and relies on Taiwan Semiconductor Manufacturing Company (TSMC) for the manufacture of its processors. They in turn are completely dependent on the company which makes the machines essential to their manufacturing units, ASML. As Conway says:

As of this moment, ASML is the only company in the world capable of making these machines, and TSMC is, alongside Samsung, the only company capable of putting such technology into mass production.

And then there are the raw materials required in these industries. Much has been made, by Diane Coyle and others, of the “weightless” nature of our global economy. Conway demolishes this fairly comprehensively:

In 2019, the latest year of data at the time of writing, we mined, dug and blasted more materials from the earth’s surface than the sum total of everything we extracted from the dawn of humanity all the way through to 1950.

There is a place in North Carolina called Spruce Pines where they mine the purest quartz in the world. As one person Conway interviewed said:

“If you flew over the two mines in Spruce Pine with a crop duster loaded with a very particular powder, you could end the world’s production of semiconductors and solar panels within six months.”

Whereas China controls the solar panel market it is reliant on imports for its semiconductors. In 2017 this cost China more than Saudi Arabia exported in oil or the entire global trade in aircraft.

Conway muses on whether China would invade Taiwan because of this and concludes probably not.

“Even if China invaded Taiwan and even if TSMC’s fabs survived the assault…that would not resolve its issue. Fab 18 [TSMC’s plant] might be where the world’s most advanced chips are made, but they are mostly designed elsewhere”.

However it would certainly be hugely disruptive if that were your goal. So even if the share prices of the Magnificent 7 don’t plummet of their own accord, they might be eviscerated by a crop duster or an assault on Taiwan.

There are so many needles poised to prick this particular bubble it would seem prudent to be cautious as a company in how dependent you should make yourselves to AI technology over the next few years.

The Economics of Laughter and Forgetting

27. March 2025 · Write a comment · Categories: Actuarial, COVID-19, Economics, Health, Media & Politics, Prediction, Risk
https://parliament.assetbank-server.com/assetbank-parliament/images/assetbox/b26cd8f5-538e-4409-b033-f1f02aea6821/assetbox.html

Milan Kundera wrote his The Book of Laughter and Forgetting in 1979, a few years after moving to France and the same year he had his Czech citizenship revoked. His books had all been banned in Czechoslovakia in 1968, as most of them poked fun at the regime in one way or the other. The Book of Laughter and Forgetting was no exception, focusing, via seven stories, on what we choose to forget in history, politics and our own lives. One of the themes is a word which is difficult to translate into English: litost.

Litost seems to mean an emotional state of feeling of being on your own suddenly brought face to face with how obvious your own hopelessness is. Or something to that effect. Kundera explored several aspects of litost at length in the novel. However, for all the difficulties of describing it exactly, litost feels like a useful word for our times, our politics and our economics.

I want to focus on two specific examples of forgetting and the sudden incidents of litost which have brought them back into focus.

The first, although not chronologically, would be the pandemic. There are several articles around suddenly about the lessons we have not learnt from the pandemic, to mark the fifth anniversary of the first lockdown. Christina Pagel, backed up by module 1 of the Covid-19 Inquiry, reckons:

Preventing future lockdowns requires planning, preparation, investment in public health infrastructure, and investment in testing, virology and medical research…

She takes issue with some of the commentary as follows:

But the tenor of reporting and public opinion seems to be that “lockdowns were terrible and so we must not have lockdowns again”. This is the wrong lesson. Lockdowns are terrible but so are unchecked deadly pandemics. The question should be “lockdowns were terrible, so how can we prevent the spread of a new pandemic so we never need one again?”.

However the stampede to get back to “normal” has mitigated against investing in infrastructure and led to a massive reduction in testing and reporting, and the Covid-19 Inquiry has given the government cover (all questions can just be responded to by saying that the Covid Inquiry is still looking at what happened) to actively forget it as quickly as possible. Meanwhile the final module of the Covid-19 Inquiry is not due to conclude until early 2026, which one must hope is before the next pandemic hits. For which, as the former Chief Scientific Adviser and other leading experts have said, we are not remotely prepared, and certainly no better prepared than we were in 2020.

It is tempting to think that this is the first major recent instance involving the forgetting of a crisis to the extent that its repetition would be just as devastating the second time. Which is perhaps a sign of how complete our collective amnesia about 2008 has become.

Make no mistake, 2008 was a complete meltdown of the core of our financial system. People I know who were working in banks at the time described how even the most experienced people around them had no idea what to do. Alistair Darling, Chancellor of the Exchequer at the time, claimed we were hours away from a “breakdown in law and order”.

According to the Commons Library briefing note from October 2018, the Office for Budget Responsibility (OBR) estimates that, as at the end of January 2018, the interventions had cost the public £23 billion overall. The net balance is the result of a £27 billion loss on the RBS rescue, offset by some net gains on other schemes. Total support in cash and guarantees added up to almost £1.2 trillion, including the nationalisation of Northern Rock (purchased by Virgin Money, which has since been acquired by the Nationwide Building Society) and the Bradford & Bingley (sold to Santander) and major stakes in RBS (now NatWest) and Lloyds. Peak government ownership in these banks is shown below:

If you read the Bank of England wacky timeline 10 years on from 2018, you will see a lot about how prepared they are to fight the last war again. As a result of this, cover has been given to actively forget 2008 as quickly as possible.

Except now various people are arguing that the risks of the next financial crisis are increasing again. The FT reported in January on the IMF’s warnings (from their Global Financial Stability Report from April 2024) about the rise in private credit bringing systemic risks.

Meanwhile Steve Keen (one of the very few who actually predicted the 2008 crisis) in his latest work Money and Macroeconomics from First Principles, for Elon Musk and Other Engineers has a whole chapter devoted to triggering crises by reducing government debt, which makes the following point:

A serious crisis, triggered by a private debt bubble and crash, has followed every sustained attempt to reduce government debt. This can be seen by comparing data on government and private debt back to 1834.

(By the way, Steve Keen is running a webinar for the Institute and Faculty of Actuaries entitled Why actuaries need a new economics on Friday 4 April which I thoroughly recommend if you are interested)

Which brings us to the Spring Statement, which was about (yes, you’ve guessed it!) reducing government debt (or the new formulation of this “increasing OBR headroom”) and boosting GDP growth. Watching the Chief Secretary to the Treasury, Darren Jones, and Paul Johnson from the IFS nodding along together in the BBC interviews immediately afterwards, you realised how the idea of allowing the OBR to set policy has taken hold. Johnson’s only complaint seemed to be that they appeared to be targeting headroom to the decimal point over other considerations.

I have already written about the insanity of making OBR forecasts the source of your hard spending limits in government. The backdrop to this Statement was already bad enough. As Citizens Advice have said, people’s financial resilience has never been lower.

But aside from the callousness of it all, it does not even make sense economically. The OBR have rewarded the government for sticking to them so closely by halving their GDP growth projections and, in the absence of any new taxes, it seems as if disabled people are being expected to do a lot of the heavy lifting by 2029-30:

Part of this is predicated on throwing 400,000 people off Personal Independence Payments (PIPs) by 2029-30. According to the FT:

About 250,000 people, including 50,000 children, will be pushed into relative poverty by the cuts, according to a government impact assessment.

As Roy Lilley says:

We are left standing. Abandoned, to watch the idiocy of what’s lost… the security, human dignity and wellbeing of our fellow man, woman and their family… everything that matters.

As an exercise in fighting the last war, or, according to Steve Keen, the wars successive governments have been fighting since 1834, it takes some beating. It was litost on steroids for millions of people.

So what does the government think these people are going to fill the income gap with? It will be private debt of course. And for those in poverty, the terms are not good (eg New Horizons has a representative APR of 49% with rates between 9.3% APR and maximum 1,721% APR).

And for those who can currently afford a mortgage (from page 47 of the OBR report):

Average interest rates on the stock of mortgages are expected to rise from around 3.7 per cent in 2024 to a peak of 4.7 per cent in 2028, then stay around that level until the end of the forecast. The high proportion of fixed-rate mortgages (around 85 per cent) means increases in Bank Rate feed through slowly to the stock of mortgages. The Bank of England estimates around one-third of those on fixed rate mortgages have not refixed since rates started to rise in mid-2021, so the full impact of higher interest rates has not yet been passed on.

So, even before considering the future tax increases the FT appears to be expecting, the levels of private debt look like they will shoot up very quickly. And we all know (excluding the government it seems) where that leads…

The Future

20. March 2025 · Write a comment · Categories: Actuarial, Climate Change, Media & Politics, Prediction, Risk, Science Fiction

This is the 200th post from this blog, so I want to talk about The Future.

The Planetary Solvency Dashboard https://global-tipping-points.org/risk-dashboard/

No. Not that future. Scary though it is.

I want to talk about The Future by Naomi Alderman. I read it last year, after wandering around the Hay Festival bookshop moaning that they don’t do science fiction and then coming across Naomi’s book and realising I had just missed her being interviewed. Then I watched the interview and bought both The Future and The Power (which I will talk about at some future date, but which is equally terrific).

The book is about Lenk Sketlish, CEO of the Fantail social network, Zimri Nommik, CEO of the logistics and purchasing giant Anvil, Ellen Bywater, CEO of Medlar Technologies, the world’ most profitable personal computing company, and the people working for them, and the people linked with those people. Zimri, Ellen and Lenk are at least as monstrous as Jeff, Sundar, Elon, Tim and Mark. And they are all preparing for the end of the world.

(If you need to remind yourself what Elon, Jeff, Mark and Sundar all look like milling around, below is a link to Trump’s inauguration:

https://apnews.com/video/jeff-bezos-district-of-columbia-elon-musk-inaugurations-united-states-government-486ab2a989e94aaa8c9afec15bebeb51)

Anvil is set up with alerts for signs of the end of the world being reported anywhere: giant hailstones, plague of locusts, Mpox, rain of blood which turned out to be a protest for menstrual equity involving blood-soaked tampons being thrown at Lenk and co as they emerged from a courthouse in Washington. The information Zimri, Ellen and Lenk have on everybody else in the world makes them feel all seeing, all hearing, all knowing. Combined with riches unknown to anyone before in history it makes them feel invulnerable, even to the end of the world, even to each other. Which turns out, of course, to be their decisive vulnerability.

It takes in survivalism, religious cults and wraps it all up in a thriller plot which is absolutely the kind of science fiction you want to be reading now instead of listening out for the latest antics of the horse in the hospital. And it was all written over a year before Elon even started with DOGE. The Future by Naomi Alderman is a fantastic read, particularly if you would like to see someone like Musk get an appropriate end to his story. I obviously won’t spoil it by saying what that is, but I don’t think I would be giving anything away by saying rockets are involved!

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